Titan Machinery (TITN) Up on Q1 Earnings Beat & Raised View

Titan Machinery (NASDAQ:TITN) Inc.’s TITN shares have gained 20% since the company reported impressive first-quarter fiscal 2022 results and raised its guidance for fiscal 2022 on May 27. Notably, its shares also touched a 52-week high of $32.49 on May 28, before closing the session at $30.68. Adjusted earnings per share was 46 cents in the quarter – a whopping 207% year-over-year jump, driven by improved performance across all three segments — Agricultural, Construction and International. Earnings also beat the Zacks Consensus Estimate of 13 cents by a wide margin of 254%.

On a reported basis, the company delivered earnings per share of 47 cents in the reported quarter compared with 10 cents in the prior-year quarter.

Total revenues in the quarter were $373 million, up 20% from the year-ago quarter. The top line also surpassed the consensus mark of $335 million. Equipment revenues rose 26% year over year to $276 million and parts revenues were up 11% to $63 million. Revenues generated from service were $27.7 million in the reported quarter, up 8% from the year-ago quarter. However, rental revenues slumped 33% to $6.4 million.

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 20% to $369 million from the prior-year quarter. Gross profit increased 21.5% year over year to $71 million. Gross margin was 19% compared with 18.8% in the year-ago quarter, driven by higher equipment sales and improved equipment margins.

Operating expenses increased 6% year over year to $56.4 million due to higher variable expenses on increased revenues. Adjusted EBITDA surged 79% year over year to $19.8 million. Adjusted EBITDA margin in the quarter was 5.3% compared with 3.6% in the prior-year quarter.

Segmental Performance

Agriculture revenues rose 19% to $230 million from $194 million in the year-ago quarter, driven by strong demand for equipment. The segment’s adjusted income before taxes soared 81% year over year to around $11 million.

Construction revenues rose 14% year over year to $69 million in first-quarter fiscal 2022. Increased equipment sales helped offset the impact of lower rental revenues. The segment reported adjusted income before taxes of $0.1 million, which marked a turnaround from the loss of $2.7 million in the first quarter of fiscal 2021.

International revenues were $74.5 million, reflecting a 32% improvement from the year-ago quarter, attributable to strong equipment sales. The segment reported an adjusted income before taxes of $2.7 million compared with a $0.5 million in the year-ago quarter, indicating a massive year-on-year surge of 440%.

Financial Position

Titan Machinery generated adjusted operating cash flow of around $7 million in first-quarter fiscal 2022 against $3.6 million in the prior-year quarter. The company ended first-quarter fiscal 2022 with a cash balance of around $90 million compared with $79 million at the end of fiscal 2021. Long-term debt, as of Apr 30, 2021, was around $65 million compared with $45 million as of Jan 31, 2021.

Guidance for Fiscal 2022

Titan Machinery expects Agriculture revenues to increase 15-20% year over year, compared with its previous guidance of 10-15% growth. The Construction segment’s year-over-year revenue growth is projected to be 2-7%, in contrast to the previous expectation of a decline of 0-5%. The International segment’s revenues are expected to increase 17-22% year over year in fiscal 2022, up from the prior guidance of 12-17% growth.

Backed by the ongoing momentum in its markets, the company expects earnings per share for fiscal 2022 between $1.65 and $1.85, higher than the previously provided range of $1.25 to $1.45. The mid-point of the new guidance projects year-over-year growth of 39%.

Share Price Performance

Image Source: Zacks Investment Research

Year to date, shares of Titan Machinery have gained 57.0% compared with the industry’s growth of 31.2%.

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 industrial products sector are AutoNation (NYSE:AN), Inc. AN, Asbury (NYSE:ABG) Automotive Group, Inc. ABG and Rush Enterprises, Inc. RUSHA. While AutoNation sports a Zacks Rank #1 at present, Asbury Automotive Group and Rush Enterprises carry a Zacks Rank #2.

AutoNation has an expected earnings growth rate of 43% for the current fiscal year. The company’s shares have gained around 46% year to date.

Asbury Automotive Group has a projected earnings growth rate of 36% for the current fiscal year. The stock has appreciated around 36% so far this year.

Rush Enterprises has an estimated earnings growth rate of 69% for the current fiscal year. Year to date, the company’s shares have gained nearly 15%.

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