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Titan Machinery (TITN) Q2 Earnings & Sales Top Estimates, Up Y/Y

Titan Machinery's (TITN) Q2 results reflect benefits from upbeat performance across its segments, encouraging the company to raise the fiscal 2022 ear...

This story originally appeared on Zacks

Titan Machinery Inc. TITN reported adjusted earnings per share of 57 cents in second-quarter fiscal 2022, reflecting a year-over-year surge of 97% on improved performance across all three segments — Agricultural, Construction and International. The bottom-line figure also beat the Zacks Consensus Estimate of 45 cents.

On a reported basis, the company delivered earnings per share of 50 cents in the reported quarter compared with the prior-year quarter’s 28 cents.

Total revenues in the reported quarter were $378 million, up 24.4% from the year-ago period. The top line also topped the consensus mark of $365 million. Equipment revenues jumped 35% year over year to $273 million and parts revenues were up 6.2% to $65.3 million.  Revenues generated from service came in at $29.7 million in the reported quarter compared with the prior-year quarter’s $28 million. However, rental revenues declined 13.2% to $9.9 million.

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Costs and Margins

Cost of sales went up 26% year over year to $303 million. Gross profit increased 19.6% year over year to $75 million. Gross margin contracted to 19.9% from the year-ago quarter’s 20.7%.

Operating expenses flared up 7.5% year over year to $57.1 million due to higher variable expenses on increased revenues. Adjusted EBITDA climbed 49% year over year to $23.5 million. Adjusted EBITDA margin in the reported quarter was 6.2% compared with the prior-year quarter’s 5.2%.

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

Segmental Performance

Agriculture revenues grew 29.8% to $219 million from the year-ago quarter’s $169 million on strong demand for equipment. The segment’s adjusted income before taxes soared 78% year over year to $12.1 million.

Construction revenues were up 4.1% year over year to $81 million in the fiscal second quarter, driven by increased equipment sales, which was partly offset by lower parts, service and rental revenues. The segment reported adjusted income before taxes of $2.8 million compared to the year-ago quarter’s $1.4 million.

International revenues came in at $77 million, reflecting a 36.4% improvement from the year-ago period on solid equipment sales. The segment reported an adjusted income before taxes of $1.9 million as against the year-ago quarter’s loss of $0.6 million.

Financial Position

Titan Machinery used adjusted operating cash flow of around $19 million in the first half of fiscal 2022 compared with the prior-year period’s cash generation of $16.1 million. The company ended second-quarter fiscal 2022 with a cash balance of $65.6 million compared with $79 million at the end of fiscal 2021. Long-term debt, as of Jul 31, 2021, was around $64 million compared with $45 million as of Jan 31, 2021.

Guidance for Fiscal 2022

For fiscal 2022, Titan Machinery expects Agriculture revenues to increase 18-23% year over year compared with its previous guidance of 15-20% growth. The company continues to project Construction segment’s year-over-year revenue growth of 2-7%. The International segment’s revenues are projected to increase 27-32% year over year in fiscal 2022, up from the previous guidance of 17-22% growth.

Backed by the ongoing momentum in its markets, the company expects earnings per share for fiscal 2022 to lie between $2.00 and $2.20, higher than the previous estimate of $1.65 to $1.85.

Share Price Performance

Year to date, shares of Titan Machinery have gained 48.3% compared with the industry’s growth of 32.8%.

Zacks Investment Research

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Zacks Rank & Stocks to Consider

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

Better-ranked stocks in the Retail - Wholesale sector include Abercrombie ANF, Citi Trends, Inc. CTRN and Foot Locker, Inc. FL, each sporting a Zacks Rank #1 (Strong Buy), at present.You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie has a projected earnings growth rate of 576.7% for fiscal 2022. So far this year, the company’s shares have gained 75.3%.

Citi Trends has an expected earnings growth rate of 110% for fiscal 2022. The stock has appreciated 67.7%, year to date.

Foot Locker has an estimated earnings growth rate of 141% for fiscal 2022. The company’s shares have gained 44.5%, so far this year.

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