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Titan Machinery (TITN) Q3 Earnings Beat Estimates, FY23 View Raised

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Titan Machinery Inc. (TITN - Free Report) reported adjusted earnings per share (EPS) of $1.83 in third-quarter fiscal 2023 (ended Oct 31, 2022), beating the Zacks Consensus Estimate of $1.15. The bottom line increased 91% from the EPS of 96 cents reported in the year-ago fiscal quarter.

The upside can be attributed to solid performances in the Agricultural segment as well as strong contributions from each of its revenue streams - equipment, parts and service.

On a reported basis, TITN delivered an EPS of $1.82 in the quarter, marking the highest quarterly earnings performance in the company’s history. The figure marked an 88% surge year over year.

Total revenues in the reported quarter were $669 million, up 47% from the year-ago fiscal quarter. The top line surpassed the consensus mark of $655 million.

Equipment revenues rose 54% year over year to $509 million, while parts revenues were up 35% to $109 million. Revenues generated from service were $39 million in the reported quarter, up 22% from the year-ago fiscal quarter. Meanwhile, rental revenues were up 4% year over year to $12.1 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

The cost of sales was up 46% to $529 million from the prior fiscal year’s quarterly reading. Gross profit increased 51% year over year to $140 million. The gross margin was 20.9%, up from 20.4% in the last fiscal year’s quarter, driven by strong equipment margins, partially offset by revenue mix with a greater proportion of equipment revenue in the third quarter of fiscal 2023, as compared to the third quarter of the prior year.

Operating expenses increased 35% from the prior fiscal year’s tally to $85 million. Adjusted EBITDA surged 80% year over year to $63 million. The adjusted EBITDA margin in the fiscal second quarter was 9.5% compared with 7.8% in the prior-year fiscal quarter.

Segmental Performance

Agriculture revenues rose 75% to $493 million from the last fiscal year’s comparable quarter on strong demand and contributions from acquisitions. The segment’s income before taxes flared up 114% year over year to $42 million.

Construction revenues were $86 million in the fiscal third quarter, up 8% from the comparable quarter in the prior fiscal year. Same-store sales increased 34% on strong equipment demand, offset by the lost contributions from the divestiture of construction stores in Montana and Wyoming and the consumer products stores in North Dakota. The segment reported income of $6 million before taxes, up from the prior-year fiscal quarter’s $3.6 million.

International revenues were $89 million, declining 4% from the year-ago fiscal quarter’s figure of $92 million. The segment reported income of $8.5 million before taxes compared with $6.3 million reported in the previous year’s quarter.

Financial Position

Cash used for operating activities was $7 million in the nine-month period ended Oct 31, 2022 compared with cash generation of $72 million in the prior-year comparable period. Titan Machinery ended the third quarter of fiscal 2023 with a cash balance of around $46 million. Long-term debt, as of Oct 31, 2022, was around $91 million compared with $75 million as of Jan 31, 2022.

Guidance for Fiscal 2023

Titan Machinery expects Agriculture revenues to increase 55-60% in fiscal 2023, up from the previous guidance of 50-55%. The Construction segment’s revenue growth is projected to be down 0-5% from the last fiscal year’s actuals. It suggests an improvement from the 5-10% decline expected earlier. The International segment’s revenues are expected to decline by 0-5%. TITN expects EPS for fiscal 2023 to be around $4.70 per share, compared to the previously guided range between $3.70 and $4.00.

Share Price Performance

Zacks Investment Research
Image Source: Zacks Investment Research

In the past year, shares of Titan Machinery have gained 40.3% compared with the industry’s growth of 0.9%.

Zacks Rank & Other Stocks to Consider

Titan Machinery currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the Retail - Wholesale sector are Chico's FAS , Dillard's (DDS - Free Report) and Dollar General (DG - Free Report) . While CHS and DDS sport a Zacks Rank #1 at present, DG carries a Zacks Rank #2.

Chico’s has an expected earnings growth rate of 127.5% for fiscal 2023. The earnings estimate for fiscal 2023 is pegged at 91 cents per share. The estimates have moved up 7% in the past 30 days. CHS has a trailing four-quarter earnings surprise of 87.5%, on average. The stock has gained 11% during the year.

The Zacks Consensus Estimate for Dillard's fiscal 2023 earnings per share is pegged at $41.39, indicating 3.35% growth from the year-ago reading. The estimates have moved 14% north in the past 30 days. DDS has a trailing four-quarter earnings surprise of 144%, on average. Its shares have gained 32% in the past year.

The Zacks Consensus Estimate for Dollar General’s fiscal 2023 earnings per share of $11.57 suggests growth of 13.8%, from fiscal 2022.  The estimate has moved up 0.1% over the past 30 days. DG has a trailing four-quarter earnings surprise of 2.2%, on average. Its shares have gained 15% in the past year.


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