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Titan Machinery (TITN) Q4 Earnings Beat Estimates, Surge Y/Y

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Titan Machinery Inc. (TITN - Free Report) reported fourth-quarter fiscal 2022 (ended Jan 31, 2022) adjusted earnings per share (EPS) of 99 cents, beating the Zacks Consensus Estimate of 58 cents by a margin of 71%. The bottom-line figure also marked a solid improvement from the earnings per share of 9 cents reported in the last fiscal year’s comparable quarter. The upside can be attributed to solid performances across all three segments, namely Agricultural, Construction and International.

On a reported basis, TITN delivered an EPS of 99 cents in the fiscal fourth quarter compared with 3 cents in the prior fiscal year’s corresponding quarter.

Total revenues in the fiscal fourth quarter were $508 million, up 16% from the levels reported in the previous fiscal year’s comparable quarter. The top line missed the consensus mark of $556 million.

Equipment revenues rose 17% year over year to $413 million and parts revenues were up 17% to $58 million. Revenues generated from service were $26 million in the reported quarter, up 14% from the year-ago quarter’s levels. However, rental revenues declined 1% year over year to $9.8 million.

Titan Machinery Inc. Price, Consensus and EPS Surprise Titan Machinery Inc. Price, Consensus and EPS Surprise

Titan Machinery Inc. price-consensus-eps-surprise-chart | Titan Machinery Inc. Quote

Costs and Margins

Cost of sales was up 12% to $413 million from the prior fiscal year’s quarterly reading. Gross profit increased 39% year over year to $94 million. The gross margin was 18.6%, up from 15.5% in the last fiscal year’s relatable quarter, driven by robust equipment margins, which were enhanced by increased amounts earned from the manufacturer’s incentives.

Operating expenses increased 7% from the earlier fiscal year’s tally to $64.6 million. Adjusted EBITDA soared 162% year over year to $36 million. Adjusted EBITDA margin in the fiscal fourth quarter was 7.1% compared with 3.1% in the prior fiscal year’s relevant quarter.

Segmental Performance

Agriculture revenues rose 31% to $346 million from $303 million in the preceding fiscal year’s comparable quarter. The segment’s adjusted income before taxes surged 121% year over year to $17.6 million.

Construction revenues were $87.9 million in the fiscal fourth quarter, down 1% from the comparable quarter’s level in the prior fiscal year. Same-store sales increased 7.2% on strong equipment demand, offset by the lost contributions from Titan Machinery's Arizona stores following the January 2021 divestiture. The segment reported an adjusted income before taxes of $9 million compared with the prior-year quarter’s $0.6 million.

International revenues were $73 million, reflecting growth of 64% from the last fiscal year’s quarterly levels, attributable to strong equipment sales. The segment reported an adjusted income before taxes of $3 million against a loss of $3 million in the previous fiscal year’s quarter.

Financial Position

Cash generated by operating activities was $159 million in fiscal 2021 compared with the prior fiscal year’s $173 million. Titan Machinery ended fiscal 2022 with a cash balance of around $146 million compared with $79 million at the end of fiscal 2021. Long-term debt as of Jan 31, 2022, was around $75 million compared with $45 million as of Jan 31, 2021.

Fiscal 2022 Results

For fiscal 2022, TITN’s adjusted earnings were $2.98, surpassing the Zacks Consensus Estimate of $2.56. The metric marked a 173% surge from the last fiscal year’s number. Including one-time items, Titan Machinery’s earnings were $2.92 per share in fiscal 2021 compared with 86 cents in fiscal 2020.

Total revenues advanced 21% from the previous fiscal year’s tally to $1.71 billion, which fell short of the Zacks Consensus Estimate of $1.76 billion. Titan Machinery also announced that it entered into a definitive purchase agreement to acquire the assets of Mark's Machinery, Inc., which consists of two full-line Case IH agriculture dealerships located in Wagner and Yankton, SD. Mark's Machinery generated revenues of approximately $34 million in the trailing 12-month period ended Dec 31, 2021. This transaction is expected to close in early April 2022. The acquisition is expected to be accretive to TITN’s earnings per share.

Guidance for Fiscal 2023

Titan Machinery expects Agriculture revenues to increase 22-27% from the last full-fiscal level. The Construction segment’s revenue growth is projected to be down 12-17% from the last fiscal year’s actuals. The International segment’s revenues are expected to decrease 8-13% from the last fiscal year’s finals in the current fiscal year. Titan Machinery expects EPS for fiscal 2023 between $2.55 and $2.85.

Share Price Performance

In the past year, shares of Titan Machinery have gained 36.5% compared with the industry’s growth of 11.5%.

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Zacks Rank & Stocks to Consider

Titan Machinery currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Retail - Wholesale sector are Tapestry (TPR - Free Report) , Tractor Supply Company (TSCO - Free Report) and Sprouts Farmers (SFM - Free Report) .

Tapestry, which provides luxury accessories and branded lifestyle products, carries a Zacks Rank #2 (Buy). TPR has a trailing four-quarter earnings surprise of 28.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the comparable year-ago period’s reported numbers. TPR has an expected EPS growth rate of 10% for three-five years.

Tractor Supply Company, a rural lifestyle retailer in the United States, carries a Zacks Rank #2 at present. TSCO has an expected EPS growth rate of 9.8% for three-five years.

The Zacks Consensus Estimate for Tractor Supply Company’s current financial-year sales and EPS suggests growth of 8% and 8.9%, respectively, from the corresponding year-ago period’s actuals. TSCO has a trailing four-quarter earnings surprise of 22%, on average.

Sprouts Farmers offering fresh, natural and organic food products, currently carries a Zacks Rank of 2. SFM has an expected EPS growth rate of 7.3% for three-five years.

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and EPS suggests growth of 4.5% and 5.2%, respectively, from the corresponding year-ago period’s readings. SFM has a trailing four-quarter earnings surprise of 17.9%, on average.