Titan Machinery Inc. (Nasdaq: TITN), a leading network of
full-service agricultural and construction equipment stores, today
reported financial results for the fiscal third quarter ended
October 31, 2019.
David Meyer, Titan Machinery’s Chairman and
Chief Executive Officer, stated, "Our higher margin parts and
service business experienced strong growth during the seasonally
important third quarter and drove higher gross profits across all
three of our segments. This strong parts and service activity
helped generate solid performance in our Agriculture segment, which
grew top and bottom line despite very difficult harvest conditions
and persistent macroeconomic uncertainty. While we wait for the
environment to stabilize, we remain focused on providing
exceptional customer care and managing the controllable aspects of
our business, which poises us well for growth and enhanced
profitability once industry conditions improve."
Fiscal 2020 Third Quarter Results
Consolidated ResultsFor the third quarter of
fiscal 2020, revenue was flat versus the prior year at $360.9
million. Equipment sales were $246.0 million for the third quarter
of fiscal 2020, compared to $253.8 million in the third quarter
last year. Parts sales were $70.8 million for the third quarter of
fiscal 2020, compared to $64.6 million in the third quarter last
year. Revenue generated from service was $27.6 million for the
third quarter of fiscal 2020, compared to $24.8 million in the
third quarter last year. Revenue from rental and other was $16.6
million for the third quarter of fiscal 2020, compared to $17.7
million in the third quarter last year.
Gross profit for the third quarter of fiscal
2020 was $71.8 million, compared to $69.5 million in the third
quarter last year. Gross profit margins increased 60 basis points
to 19.9% versus the comparable period last year. The increase in
gross profit and margin percentage is due to the strong performance
of our parts and service business in the current quarter.
Operating expenses increased by $4.9 million to
$58.2 million, or 16.1% of revenue, for the third quarter of fiscal
2020, compared to $53.3 million, or 14.8% of revenue, for the third
quarter of last year. Current quarter expenses were impacted by ERP
transition costs incurred in the quarter and increased costs
associated with supporting increased activity levels in our
Agriculture and Construction segments.
Floorplan and other interest expense, which
totaled $2.4 million in the third quarter of fiscal 2020, decreased
a combined $1.1 million, or 30.8%, compared to the third quarter of
last year. Most of the decrease was due to lower interest expense
resulting from the May 1, 2019 retirement of the remaining balance
of the Company’s convertible notes.
Net income in the third quarter of fiscal 2020
was $8.2 million, or earnings per diluted share of $0.37, compared
to net income of $10.8 million, or earnings per diluted share of
$0.48, for the third quarter of last year.
On an adjusted basis, net income for the third
quarter of fiscal 2020 was $9.9 million, or adjusted earnings per
diluted share of $0.44, compared to adjusted net income of $10.9
million, or adjusted earnings per diluted share of $0.49, for the
third quarter of last year.
Our net income and adjusted net income for the
third quarter of fiscal 2020 were impacted by a higher effective
tax rate due to foreign currency taxable gains in our Ukrainian
business. These gains increased our effective tax rate by
approximately seven percentage points, which negatively impacted
our earnings per diluted share and adjusted earnings per diluted
share by approximately $0.04 in the current quarter.
Adjusted EBITDA was $21.8 million in the third
quarter of fiscal 2020, compared to $21.0 million in the third
quarter of last year.
Segment ResultsAgriculture Segment - Revenue for
the third quarter of fiscal 2020 was $214.1 million, compared to
$209.7 million in the third quarter last year. The increase in
revenue was driven by increased parts and service revenues. Income
before income taxes for the third quarter of fiscal 2020 was $10.3
million, compared to $9.4 million of income before income taxes and
$9.9 million of adjusted income before income taxes, in the third
quarter last year.
Construction Segment - Revenue for the third
quarter of fiscal 2020 was $78.0 million, compared to $77.0 million
in the third quarter last year. The increase in revenue was the
result of increased parts and service revenues. Income before
income taxes for the third quarter of fiscal 2020 was $0.3 million,
compared to $1.2 million in the third quarter last year. Adjusted
income before income taxes for the third quarter of fiscal 2020 was
$0.4 million, compared to $0.8 million in the third quarter last
year.
International Segment - Revenue for the third
quarter of fiscal 2020 was $68.8 million, compared to $74.2 million
in the third quarter last year. The decrease in revenue was the
result of lower equipment sales, partially offset by increased
parts and service revenues. Income before income taxes for the
third quarter of fiscal 2020 was $2.1 million, compared to $2.6
million in the third quarter last year.
Fiscal 2020 First Nine Months
Results
Revenue was $954.2 million for the first nine
months of fiscal 2020, compared to $901.9 million for the same
period last year. Net income for the first nine months of fiscal
2020 was $13.3 million, or $0.60 per diluted share, compared to a
net income of $14.3 million, or $0.65 per diluted share, for the
same period last year. On an adjusted basis, net income for the
first nine months of fiscal 2020 was $17.2 million, or $0.77 per
diluted share, compared to adjusted net income of $15.5 million, or
$0.71 per diluted share, in the same period last year. Adjusted
EBITDA was $45.0 million in the first nine months of fiscal 2020,
compared to $43.0 million in the same period last year.
Balance Sheet and Cash Flow
The Company ended the third quarter of fiscal
2020 with $52.4 million of cash. The Company’s inventory level
increased to $624.2 million as of October 31, 2019, compared
to $491.1 million as of January 31, 2019. This inventory
increase includes a $126.6 million increase in equipment inventory,
which reflects an increase in new equipment inventory of $159.6
million, partially offset by a $33.0 million decrease in used
equipment inventory. The Company had $445.7 million outstanding
floorplan payables on $660.0 million total floorplan lines of
credit as of October 31, 2019, compared to $273.8 million
outstanding floorplan payables as of January 31, 2019. The
increase in our floorplan payable balance is primarily due to
increased equipment inventory levels and the payoff of the
Company's convertible notes on May 1, 2019.
In the first nine months of fiscal 2020, the
Company’s net cash used for operating activities was $8.3 million,
compared to net cash provided by operating activities of $11.7
million in the first nine months of fiscal 2019. The Company
evaluates its cash flow from operating activities net of all
floorplan payable activity and maintaining a constant level of
equity in its equipment inventory. Taking these adjustments into
account, adjusted net cash used for operating activities was $35.0
million in the first nine months of fiscal 2020, compared to net
cash provided by operating activities of $1.5 million in the first
nine months of fiscal 2019.
Closing of Northwood
Acquisition
On October 1, 2019, the Company closed on its
acquisition of Uglem-Ness Co., which consists of one CaseIH
agriculture dealership location in Northwood, North Dakota. In its
most recent fiscal year, Northwood generated revenue of
approximately $25 million. The total purchase price was $8.8
million, which does not include the future purchase of $2.1 million
in real estate as well as $7.4 million of associated new inventory
that the Company concurrently purchased from CNH Industrial under
standard terms. The Company expects the acquisition to be accretive
to earnings in the first year of ownership.
Mr. Meyer concluded, "We are extremely excited
about bringing Northwood into the Titan Machinery family and
expanding our footprint in the Red River Valley. The addition of
this location will further support the service network we provide
our customers in this important growing region. We are including
Northwood's expected contributions in our modeling assumptions for
the balance of the year and remain confident in our ability to
achieve our Agriculture growth assumption for Fiscal 2020 despite
the difficult harvest conditions our customers continue to
experience. However, a higher effective consolidated tax rate and
continued market driven challenges within our International Segment
are pressuring our previous modeling assumptions. As a result, we
are refining our Diluted and Adjusted Diluted EPS assumptions to
the lower half of our prior expected ranges."
Updated Fiscal 2020 Modeling
Assumptions
The following are the Company's current expectations for fiscal
2020 modeling assumptions:
|
Current Assumptions |
|
Previous Assumptions |
Segment Revenue |
|
|
|
Agriculture(1) |
Up
2-7% |
|
Up
2-7% |
Construction |
Up
5-10% |
|
Up
5-10% |
International(2) |
Flat |
|
Up
2-7% |
|
|
|
|
Diluted EPS |
$0.50 -
$0.60 |
|
$0.50 -
$0.70 |
Adjusted Diluted EPS(3) |
$0.75 -
$0.85 |
|
$0.75 -
$0.95 |
|
|
|
|
(1) Includes the partial year impact of the Northwood, ND
acquisition completed on October 1, 2019. |
(2) Includes
the full year impact of the AGRAM acquisition completed on July
2, 2018. |
(3) Excludes approximately $0.25 per diluted share impact of
anticipated ERP-related expenses to be incurred with external
consultants/vendors as well as the incremental impact of
accelerated amortization of our existing ERP platform such that the
assets are fully amortized when replaced, which is anticipated to
occur in the first half of fiscal 2021. |
Three and Nine Months Ended October 31, 2018 Revenue and
Cost of Revenue Amounts
The revenue and cost of revenue amounts reported
for the three and nine month periods ended October 31, 2018 are
presented on an as corrected basis following the correction of an
immaterial error as previously reported in our Annual Report on
Form 10-K for the fiscal year ended January 31, 2019. See this
Annual Report on Form 10-K and the to-be-filed quarterly report on
Form 10-Q for the three and nine months ended October 31, 2019 for
additional information.
Conference Call and Presentation
Information
The Company will host a conference call and
audio webcast today at 7:30 a.m. Central time (8:30 a.m. Eastern
time). Investors interested in participating in the live call can
dial (877) 705-6003 from the U.S. International callers can dial
(201) 493-6725. A telephone replay will be available approximately
two hours after the call concludes and will be available through
Tuesday, December 10, 2019, by dialing (844) 512-2921 from the
U.S., or (412) 317-6671 from international locations, and entering
confirmation code 13696348.
A copy of the presentation that will accompany
the prepared remarks on the conference call is available on the
Company’s website under Investor Relations at
www.titanmachinery.com. An archive of the audio webcast will be
available on the Company’s website under Investor Relations at
www.titanmachinery.com for 30 days following the audio webcast.
Non-GAAP Financial Measures
Within this release, the Company refers to
certain adjusted financial measures, which have directly comparable
GAAP financial measures as identified in this release. The Company
believes that these non-GAAP financial measures, when reviewed in
conjunction with GAAP financial measures, can provide more
information to assist investors in evaluating current period
performance and in assessing future performance. For these reasons,
internal management reporting also includes non-GAAP financial
measures. Generally, the non-GAAP financial measures include
adjustments for items such as costs associated with our
restructuring activities, impairment charges, and the charges
associated with our ERP transition. These non-GAAP financial
measures should be considered in addition to, and not superior to
or as a substitute for the GAAP financial measures presented in
this release and the Company's financial statements and other
publicly filed reports. Non-GAAP measures presented in this release
may not be comparable to similarly titled measures used by other
companies. Investors are encouraged to review the reconciliations
of adjusted financial measures used in this release to their most
directly comparable GAAP financial measures. These reconciliations
are attached to this release. The tables included in the Non-GAAP
Reconciliations section reconcile net income (loss), diluted
earnings (loss) per share, income (loss) before income taxes, and
net cash provided by (used for) operating activities (all GAAP
financial measures) for the periods presented to adjusted net
income (loss), adjusted EBITDA, adjusted diluted earnings (loss)
per share, adjusted income (loss) before income taxes, and adjusted
net cash provided by (used for) operating activities (all non-GAAP
financial measures) for the periods presented.
About Titan Machinery Inc.
Titan Machinery Inc., founded in 1980 and
headquartered in West Fargo, North Dakota, owns and operates a
network of full service agricultural and construction equipment
dealer locations in North America and Europe. The network consists
of US locations in Arizona, Colorado, Iowa, Minnesota, Montana,
Nebraska, New Mexico, North Dakota, South Dakota, Wisconsin and
Wyoming and its European stores are located in Bulgaria, Germany,
Romania, Serbia and Ukraine. The Titan Machinery locations
represent one or more of the CNH Industrial Brands, including Case
IH, New Holland Agriculture, Case Construction, New Holland
Construction, and CNH Industrial Capital. Additional information
about Titan Machinery Inc. can be found at
www.titanmachinery.com.
Forward Looking Statements
Except for historical information contained
herein, the statements in this release are forward-looking and made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The words “potential,” “believe,”
“estimate,” “expect,” “intend,” “may,” “could,” “will,” “plan,”
“anticipate,” and similar words and expressions are intended to
identify forward-looking statements. Such statements are based upon
the current beliefs and expectations of our management.
Forward-looking statements made in this release, which may include
statements regarding Agriculture, Construction, and International
segment initiatives and improvements, segment revenue realization,
growth and profitability expectations, inventory expectations,
leverage expectations, agricultural and construction equipment
industry conditions and trends, and modeling assumptions and
expected results of operations for the fiscal year ending
January 31, 2020, involve known and unknown risks and
uncertainties that may cause Titan Machinery’s actual results in
current or future periods to differ materially from the forecasted
assumptions and expected results. The Company’s risks and
uncertainties include, among other things, a substantial dependence
on a single distributor, the continued availability of organic
growth and acquisition opportunities, potential difficulties
integrating acquired stores, industry supply levels, fluctuating
agriculture and construction industry economic conditions, the
success of recently implemented initiatives within the Company’s
operating segments, the uncertainty and fluctuating conditions in
the capital and credit markets, difficulties in conducting
international operations, foreign currency risks, governmental
agriculture policies, seasonal fluctuations, the ability of the
Company to reduce inventory levels, climate conditions, disruption
in receiving ample inventory financing, and increased competition
in the geographic areas served. These and other risks are more
fully described in Titan Machinery’s filings with the Securities
and Exchange Commission, including the Company’s most recently
filed Annual Report on Form 10-K, as updated in subsequently filed
Quarterly Reports on Form 10-Q, as applicable. Titan Machinery
conducts its business in a highly competitive and rapidly changing
environment. Accordingly, new risk factors may arise. It is not
possible for management to predict all such risk factors, nor to
assess the impact of all such risk factors on Titan Machinery’s
business or the extent to which any individual risk factor, or
combination of factors, may cause results to differ materially from
those contained in any forward-looking statement. Other than
required by law, Titan Machinery disclaims any obligation to update
such factors or to publicly announce results of revisions to any of
the forward-looking statements contained in this release to reflect
future events or developments.
Investor Relations Contact:ICR, Inc.John Mills,
jmills@icrinc.comPartner646-277-1254
TITAN MACHINERY INC. |
Consolidated Balance Sheets |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
October 31, 2019 |
|
January 31, 2019 |
Assets |
|
|
|
Current Assets |
|
|
|
Cash |
$ |
52,420 |
|
|
$ |
56,745 |
|
Receivables, net of allowance for doubtful accounts |
88,907 |
|
|
77,500 |
|
Inventories |
624,215 |
|
|
491,091 |
|
Prepaid expenses and other |
7,857 |
|
|
15,556 |
|
Total current assets |
773,399 |
|
|
640,892 |
|
Noncurrent Assets |
|
|
|
Property and equipment, net of accumulated depreciation |
148,090 |
|
|
138,950 |
|
Operating lease assets |
92,124 |
|
|
— |
|
Deferred income taxes |
3,398 |
|
|
3,010 |
|
Goodwill |
2,291 |
|
|
1,161 |
|
Intangible assets, net of accumulated amortization |
9,059 |
|
|
7,247 |
|
Other |
1,163 |
|
|
1,178 |
|
Total noncurrent assets |
256,125 |
|
|
151,546 |
|
Total
Assets |
$ |
1,029,524 |
|
|
$ |
792,438 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
24,439 |
|
|
$ |
16,607 |
|
Floorplan payable |
445,726 |
|
|
273,756 |
|
Senior convertible notes |
— |
|
|
45,249 |
|
Current maturities of long-term debt |
13,280 |
|
|
2,067 |
|
Current operating lease liabilities |
12,002 |
|
|
— |
|
Deferred revenue |
12,878 |
|
|
46,409 |
|
Accrued expenses and other |
39,392 |
|
|
36,364 |
|
Total current liabilities |
547,717 |
|
|
420,452 |
|
Long-Term Liabilities |
|
|
|
Long-term debt, less current maturities |
35,754 |
|
|
20,676 |
|
Operating lease liabilities |
90,063 |
|
|
— |
|
Deferred income taxes |
5,586 |
|
|
4,955 |
|
Other long-term liabilities |
8,125 |
|
|
11,044 |
|
Total long-term liabilities |
139,528 |
|
|
36,675 |
|
Stockholders' Equity |
|
|
|
Common stock |
— |
|
|
— |
|
Additional paid-in-capital |
249,984 |
|
|
248,423 |
|
Retained earnings |
97,044 |
|
|
89,228 |
|
Accumulated other comprehensive loss |
(4,749 |
) |
|
(2,340 |
) |
Total stockholders' equity |
342,279 |
|
|
335,311 |
|
Total Liabilities and
Stockholders' Equity |
$ |
1,029,524 |
|
|
$ |
792,438 |
|
TITAN MACHINERY INC. |
Consolidated Condensed Statements of
Operations |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
Nine Months Ended October 31, |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Revenue |
|
|
|
|
|
|
|
Equipment |
$ |
245,986 |
|
|
$ |
253,793 |
|
|
$ |
654,376 |
|
|
$ |
625,188 |
|
Parts |
70,788 |
|
|
64,609 |
|
|
181,928 |
|
|
166,923 |
|
Service |
27,553 |
|
|
24,808 |
|
|
77,215 |
|
|
68,013 |
|
Rental and other |
16,609 |
|
|
17,703 |
|
|
40,688 |
|
|
41,734 |
|
Total Revenue |
360,936 |
|
|
360,913 |
|
|
954,207 |
|
|
901,858 |
|
Cost of Revenue |
|
|
|
|
|
|
|
Equipment |
219,484 |
|
|
225,520 |
|
|
583,345 |
|
|
555,923 |
|
Parts |
49,834 |
|
|
45,666 |
|
|
128,380 |
|
|
118,254 |
|
Service |
8,950 |
|
|
7,756 |
|
|
25,170 |
|
|
21,918 |
|
Rental and other |
10,894 |
|
|
12,429 |
|
|
27,612 |
|
|
29,762 |
|
Total Cost of Revenue |
289,162 |
|
|
291,371 |
|
|
764,507 |
|
|
725,857 |
|
Gross Profit |
71,774 |
|
|
69,542 |
|
|
189,700 |
|
|
176,001 |
|
Operating Expenses |
58,184 |
|
|
53,306 |
|
|
165,594 |
|
|
147,665 |
|
Impairment of Long-Lived
Assets |
51 |
|
|
304 |
|
|
186 |
|
|
459 |
|
Restructuring Costs |
— |
|
|
(151 |
) |
|
— |
|
|
414 |
|
Income from Operations |
13,539 |
|
|
16,083 |
|
|
23,920 |
|
|
27,463 |
|
Other Income (Expense) |
|
|
|
|
|
|
|
Interest income and other income (expense) |
1,273 |
|
|
160 |
|
|
2,687 |
|
|
2,002 |
|
Floorplan interest expense |
(1,448 |
) |
|
(1,856 |
) |
|
(3,724 |
) |
|
(4,932 |
) |
Other interest expense |
(955 |
) |
|
(1,617 |
) |
|
(3,562 |
) |
|
(6,137 |
) |
Income Before Income
Taxes |
12,409 |
|
|
12,770 |
|
|
19,321 |
|
|
18,396 |
|
Provision for Income
Taxes |
4,195 |
|
|
1,994 |
|
|
6,041 |
|
|
4,055 |
|
Net Income |
8,214 |
|
|
10,776 |
|
|
13,280 |
|
|
14,341 |
|
|
|
|
|
|
|
|
|
Diluted Earnings per
Share |
$ |
0.37 |
|
|
$ |
0.48 |
|
|
$ |
0.60 |
|
|
$ |
0.65 |
|
Diluted Weighted Average
Common Shares |
21,976 |
|
|
21,842 |
|
|
21,942 |
|
|
21,806 |
|
TITAN MACHINERY INC. |
Consolidated Condensed Statements of Cash
Flows |
(in thousands) |
(Unaudited) |
|
|
|
|
|
Nine Months Ended October 31, |
|
2019 |
|
|
2018 |
|
Operating Activities |
|
|
|
Net income |
$ |
13,280 |
|
|
$ |
14,341 |
|
Adjustments to reconcile net income to net cash used for operating
activities |
|
|
|
Depreciation and amortization |
21,061 |
|
|
17,889 |
|
Impairment |
186 |
|
|
459 |
|
Other, net |
12,281 |
|
|
8,325 |
|
Changes in assets and liabilities |
|
|
|
Inventories |
(133,929 |
) |
|
(28,704 |
) |
Manufacturer floorplan payable |
113,632 |
|
|
28,992 |
|
Other working capital |
(34,800 |
) |
|
(29,576 |
) |
Net Cash Provided by (Used
for) Operating Activities |
(8,289 |
) |
|
11,726 |
|
Investing Activities |
|
|
|
Property and equipment purchases |
(20,402 |
) |
|
(9,120 |
) |
Proceeds from sale of property and equipment |
1,386 |
|
|
1,101 |
|
Acquisition consideration, net of cash acquired |
(11,752 |
) |
|
(15,299 |
) |
Other, net |
13 |
|
|
(399 |
) |
Net Cash Used for Investing
Activities |
(30,755 |
) |
|
(23,717 |
) |
Financing Activities |
|
|
|
Net change in non-manufacturer floorplan payable |
62,387 |
|
|
43,896 |
|
Principal payments on senior convertible notes |
(45,644 |
) |
|
(20,025 |
) |
Net proceeds from (payments on) long-term debt and finance
leases |
18,668 |
|
|
(11,919 |
) |
Other, net |
(509 |
) |
|
(643 |
) |
Net Cash Provided by Financing
Activities |
34,902 |
|
|
11,309 |
|
Effect of Exchange Rate
Changes on Cash |
(183 |
) |
|
(471 |
) |
Net Change in Cash |
(4,325 |
) |
|
(1,153 |
) |
Cash at Beginning of
Period |
56,745 |
|
|
53,396 |
|
Cash at End of Period |
$ |
52,420 |
|
|
$ |
52,243 |
|
TITAN MACHINERY INC. |
Segment Results |
(in thousands) |
(Unaudited) |
|
|
|
|
|
Three Months Ended October 31, |
|
Nine Months Ended October 31, |
|
2019 |
|
|
2018 |
|
|
% Change |
|
2019 |
|
|
2018 |
|
|
% Change |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
Agriculture |
$ |
214,073 |
|
|
$ |
209,697 |
|
|
2.1 |
|
% |
|
$ |
533,538 |
|
|
$ |
503,526 |
|
|
6.0 |
|
% |
Construction |
78,031 |
|
|
76,994 |
|
|
1.3 |
|
% |
|
232,813 |
|
|
215,560 |
|
|
8.0 |
|
% |
International |
68,832 |
|
|
74,222 |
|
|
(7.3 |
) |
% |
|
187,856 |
|
|
182,772 |
|
|
2.8 |
|
% |
Total |
$ |
360,936 |
|
|
$ |
360,913 |
|
|
— |
|
% |
|
$ |
954,207 |
|
|
$ |
901,858 |
|
|
5.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes |
|
|
|
|
|
|
|
|
|
|
|
Agriculture |
$ |
10,259 |
|
|
$ |
9,383 |
|
|
9.3 |
|
% |
|
$ |
18,312 |
|
|
$ |
15,666 |
|
|
16.9 |
|
% |
Construction |
347 |
|
|
1,154 |
|
|
(69.9 |
) |
% |
|
(541 |
) |
|
(1,773 |
) |
|
69.5 |
|
% |
International |
2,061 |
|
|
2,596 |
|
|
(20.6 |
) |
% |
|
2,783 |
|
|
6,235 |
|
|
(55.4 |
) |
% |
Segment income (loss) before
income taxes |
12,667 |
|
|
13,133 |
|
|
(3.5 |
) |
% |
|
20,554 |
|
|
20,128 |
|
|
2.1 |
|
% |
Shared Resources |
(258 |
) |
|
(363 |
) |
|
28.9 |
|
% |
|
(1,233 |
) |
|
(1,732 |
) |
|
28.8 |
|
% |
Total |
$ |
12,409 |
|
|
$ |
12,770 |
|
|
(2.8 |
) |
% |
|
$ |
19,321 |
|
|
$ |
18,396 |
|
|
5.0 |
|
% |
TITAN MACHINERY INC. |
Non-GAAP Reconciliations |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
Nine Months Ended October 31, |
|
|
2019 |
|
2018 |
|
|
2019 |
|
|
2018 |
|
Adjusted Net
Income |
|
|
|
|
|
|
|
|
Net Income |
|
$ |
8,214 |
|
$ |
10,776 |
|
|
$ |
13,280 |
|
|
$ |
14,341 |
|
Adjustments |
|
|
|
|
|
|
|
|
ERP transition costs |
|
2,062 |
|
— |
|
|
4,778 |
|
|
— |
|
Loss on repurchase of senior convertible notes |
|
— |
|
— |
|
|
— |
|
|
615 |
|
Restructuring and impairment charges |
|
51 |
|
153 |
|
|
186 |
|
|
873 |
|
Total Pre-Tax Adjustments |
|
2,113 |
|
153 |
|
|
4,964 |
|
|
1,448 |
|
Less: Tax Effect of
Adjustments (1) |
|
444 |
|
32 |
|
|
1,042 |
|
|
280 |
|
Total Adjustments |
|
1,669 |
|
121 |
|
|
3,922 |
|
|
1,208 |
|
Adjusted Net Income |
|
$ |
9,883 |
|
$ |
10,897 |
|
|
$ |
17,202 |
|
|
$ |
15,549 |
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted
EPS |
|
|
|
|
|
|
|
|
Diluted EPS |
|
$ |
0.37 |
|
$ |
0.48 |
|
|
$ |
0.60 |
|
|
$ |
0.65 |
|
Adjustments (2) |
|
|
|
|
|
|
|
|
ERP transition costs |
|
0.09 |
|
— |
|
|
0.21 |
|
|
— |
|
Loss on repurchase of senior convertible notes |
|
— |
|
— |
|
|
— |
|
|
0.03 |
|
Restructuring and impairment charges |
|
— |
|
0.01 |
|
|
0.01 |
|
|
0.04 |
|
Total Pre-Tax Adjustments |
|
0.09 |
|
0.01 |
|
|
0.22 |
|
|
0.07 |
|
Less: Tax Effect of
Adjustments (1) |
|
0.02 |
|
— |
|
|
0.05 |
|
|
0.01 |
|
Total Adjustments |
|
0.07 |
|
0.01 |
|
|
0.17 |
|
|
0.06 |
|
Adjusted Diluted EPS |
|
$ |
0.44 |
|
$ |
0.49 |
|
|
0.77 |
|
|
0.71 |
|
|
|
|
|
|
|
|
|
|
Adjusted Income Before
Income Taxes |
|
|
|
|
|
|
|
|
Income Before Income
Taxes |
|
$ |
12,409 |
|
$ |
12,770 |
|
|
$ |
19,321 |
|
|
$ |
18,396 |
|
Adjustments |
|
|
|
|
|
|
|
|
ERP transition costs |
|
2,062 |
|
— |
|
|
4,778 |
|
|
— |
|
Loss on repurchase of senior convertible notes |
|
— |
|
— |
|
|
— |
|
|
615 |
|
Restructuring and impairment charges |
|
51 |
|
153 |
|
|
186 |
|
|
873 |
|
Total Adjustments |
|
2,113 |
|
153 |
|
|
4,964 |
|
|
1,488 |
|
Adjusted Income Before Income
Taxes |
|
$ |
14,522 |
|
$ |
12,923 |
|
|
$ |
24,285 |
|
|
$ |
19,884 |
|
|
|
|
|
|
|
|
|
|
Adjusted Income (Loss)
Before Income Taxes - Agriculture |
|
|
|
|
|
|
|
|
Income Before Income
Taxes |
|
$ |
10,259 |
|
$ |
9,383 |
|
|
$ |
18,312 |
|
|
$ |
15,666 |
|
Restructuring and impairment charges |
|
— |
|
512 |
|
|
— |
|
|
745 |
|
Adjusted Income Before Income
Taxes |
|
$ |
10,259 |
|
$ |
9,895 |
|
|
$ |
18,312 |
|
|
$ |
16,411 |
|
|
|
|
|
|
|
|
|
|
Adjusted Income (Loss)
Before Income Taxes - Construction |
|
|
|
|
|
|
|
|
Income Before Income
Taxes |
|
$ |
347 |
|
$ |
1,154 |
|
|
$ |
(541 |
) |
|
$ |
(1,773 |
) |
Restructuring and impairment charges |
|
51 |
|
(359 |
) |
|
186 |
|
|
(27 |
) |
Adjusted Income Before Income
Taxes |
|
$ |
398 |
|
$ |
795 |
|
|
$ |
(355 |
) |
|
$ |
(1,800 |
) |
|
|
|
|
|
|
|
|
|
Adjusted Income (Loss)
Before Income Taxes - International |
|
|
|
|
|
|
|
|
Income Before Income
Taxes |
|
$ |
2,061 |
|
$ |
2,596 |
|
|
$ |
2,783 |
|
|
$ |
6,235 |
|
Restructuring and impairment charges |
|
— |
|
— |
|
|
— |
|
|
155 |
|
Adjusted Income Before Income
Taxes |
|
$ |
2,061 |
|
$ |
2,596 |
|
|
$ |
2,783 |
|
|
$ |
6,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
Net Income |
|
$ |
8,214 |
|
$ |
10,776 |
|
|
$ |
13,280 |
|
|
$ |
14,341 |
|
Adjustments |
|
|
|
|
|
|
|
|
Interest expense, net of interest income |
|
887 |
|
1,590 |
|
|
3,305 |
|
|
5,854 |
|
Provision for income taxes |
|
4,195 |
|
1,994 |
|
|
6,041 |
|
|
4,055 |
|
Depreciation and amortization |
|
7,797 |
|
6,442 |
|
|
21,061 |
|
|
17,889 |
|
EBITDA |
|
21,093 |
|
20,802 |
|
|
43,687 |
|
|
42,139 |
|
Adjustments |
|
|
|
|
|
|
|
|
ERP transition costs (excluding depreciation) |
|
687 |
|
— |
|
|
1,113 |
|
|
— |
|
Restructuring and impairment charges |
|
51 |
|
153 |
|
|
186 |
|
|
873 |
|
Total Adjustments |
|
738 |
|
153 |
|
|
1,299 |
|
|
873 |
|
Adjusted EBITDA |
|
$ |
21,831 |
|
$ |
20,955 |
|
|
$ |
44,986 |
|
|
$ |
43,012 |
|
|
|
|
|
|
|
|
|
|
Adjusted Net Cash
Provided By (Used for) Operating Activities |
|
|
|
|
|
|
|
|
Net Cash Provided by (Used
for) Operating Activities |
|
|
|
|
|
$ |
(8,289 |
) |
|
$ |
11,726 |
|
Net Change in Non-Manufacturer
Floorplan Payable |
|
|
|
|
|
62,387 |
|
|
43,896 |
|
Adjustment for Constant Equity
in Inventory |
|
|
|
|
|
(89,076 |
) |
|
(54,109 |
) |
Adjusted Net Cash Provided By
(Used for) Operating Activities |
|
|
|
|
|
$ |
(34,978 |
) |
|
$ |
1,513 |
|
|
|
|
|
|
|
|
|
|
(1) The tax
effect of U.S. related adjustments was calculated using a 21% tax
rate, determined based on a 21% federal statutory rate and no
impact for state taxes given our valuation allowance against state
deferred tax assets. No tax effect was recognized for foreign
related items as all adjustments occurred in a foreign jurisdiction
that has a full valuation allowance on its deferred tax
assets. |
(2) Adjustments are
net of amounts allocated to participating securities where
applicable. |
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