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Titan Machinery Inc. Announces Results for Fiscal Fourth Quarter and Full Year Ended January 31, 2025
Source: Nasdaq GlobeNewswire / 20 Mar 2025 03:45:00 America/Los_Angeles
- Achieved Approximately $304 Million of Inventory Reduction in the Fiscal Fourth Quarter, Bringing Total Inventory Reduction Since Fiscal Second Quarter Peak to $419 Million -
- Service Revenue Increased 14.5% , or 7.1% on a Same-store Basis, for the Full Year Fiscal 2025 -
- Provides Fiscal 2026 Modeling Assumptions -
WEST FARGO, N.D., March 20, 2025 (GLOBE NEWSWIRE) -- Titan Machinery Inc. (Nasdaq: TITN), a leading network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal fourth quarter and full year ended January 31, 2025.
"Our fiscal fourth quarter results reflect a significant step forward in the execution of our inventory reduction initiative, particularly in our domestic Agriculture segment. We reduced inventory by approximately $304 million during the fourth quarter, bringing our total reduction since our fiscal second quarter peak to approximately $419 million," commented Bryan Knutson, Titan Machinery's President and Chief Executive Officer. "While this accelerated reduction came at the expense of our equipment margins in the short-run, this was a key lever that we felt was necessary to improve our position as we transition into fiscal 2026 with a more subdued demand environment. Looking ahead, we expect to make further headway on our equipment inventory initiatives both domestically and abroad this fiscal year. This will be comprised of a further reduction in absolute dollars and optimizing our product mix to best meet demand in this phase of the industry cycle."
Mr. Knutson continued, "I'm incredibly proud of the entire Titan team for their focus on this initiative, which required coordination across all facets of our business, while not losing sight of our broader initiatives surrounding our customer care strategy, which delivered strong service revenue growth of 14.5% for the full fiscal year."
Fiscal 2025 Fourth Quarter Results
Consolidated Results
For the fourth quarter of fiscal 2025, revenue was $759.9 million, compared to $852.1 million in the fourth quarter of last year. Equipment revenue was $621.8 million for the fourth quarter of fiscal 2025, compared to $714.0 million in the fourth quarter last year. Parts revenue was $89.3 million for the fourth quarter of fiscal 2025, compared to $90.8 million in the fourth quarter last year. Revenue generated from service was $36.6 million for the fourth quarter of fiscal 2025, compared to $35.1 million in the fourth quarter last year. Revenue from rental and other was $12.1 million for the fourth quarter of fiscal 2025, compared to $12.2 million in the fourth quarter last year.Gross profit for the fourth quarter of fiscal 2025 was $51.0 million compared to $141.0 million in the fourth quarter last year. The Company's gross profit margin was 6.7% in the fourth quarter of fiscal 2025, compared to 16.6% in the fourth quarter last year. The year-over-year decrease in gross profit margin was primarily due to lower equipment margins, particularly on used equipment, driven by softer retail demand and the Company's initiative to accelerate its inventory reduction efforts to achieve targeted levels sooner.
Operating expenses were $96.7 million for the fourth quarter of fiscal 2025, compared to $100.3 million in the fourth quarter last year. The decrease was driven primarily by lower variable expenses driven by the year-over-year decline in revenue and profitability. Operating expense as a percentage of revenue was 12.7% for the fourth quarter of fiscal 2025, compared to 11.8% of revenue in the fourth quarter last year.
Floorplan interest expense and other interest expense was $13.1 million for the fourth quarter of fiscal 2025, compared to $9.3 million for the same period last year. On a sequential quarter basis, floorplan and other interest expense decreased 8.5% reflecting our efforts to reduce interest-bearing inventory in the fourth quarter.
In the fourth quarter of fiscal 2025, net loss was $43.8 million, with loss per diluted share of $1.93. This compares to net income of $24.0 million, with earnings per diluted share of $1.05, for the fourth quarter of last year. Adjusted net loss, which excludes the reversal of certain sale-leaseback financing expenses that the Company incurred in the second quarter, was $44.9 million or $1.88 per diluted share in the fourth quarter of fiscal 2025.
Adjusted EBITDA in the fourth quarter of fiscal 2025 was negative $46.0 million, compared to positive $45.3 million of EBITDA generated in the fourth quarter of last year.
Segment Results
Agriculture Segment - Revenue for the fourth quarter of fiscal 2025 was $534.7 million, compared to $620.6 million in the fourth quarter last year. The decrease reflects a same-store sales decrease of 15.5%, partially offset by contributions from the acquisition of Scott Supply in January 2024. The revenue decrease resulted from a softening demand for equipment being driven by the decline of net farm income and sustained high interest rates. Pre-tax loss for the fourth quarter of fiscal 2025 was $55.3 million, compared to $28.8 million pre-tax income in the fourth quarter of the prior year, the decrease was driven by accelerated inventory reduction measures.Construction Segment - Revenue for the fourth quarter of fiscal 2025 was $94.6 million, compared to $100.1 million in the fourth quarter last year. The year-over-year decrease in revenue reflects a same-store sales decrease of 5.5%, which was impacted by expected timing differences of equipment deliveries between the third and fourth quarter of fiscal 2025 compared to fiscal 2024. Pre-tax loss for the fourth quarter of fiscal 2025 was $1.1 million, compared to $4.6 million pre-tax income in the fourth quarter last year.
Europe Segment - Revenue for the fourth quarter of fiscal 2025 was $65.4 million, compared to $61.6 million in the fourth quarter last year, which includes a $0.2 million decrease in revenue from foreign currency fluctuations. Net of the effect of these foreign currency fluctuations, revenue increased $4.0 million or 6.5%. Pre-tax loss for the fourth quarter of fiscal 2025 was $1.8 million, compared to a pre-tax loss of $0.6 million in the fourth quarter of the prior year.
Australia Segment - Revenue for the fourth quarter of fiscal 2025 was $65.3 million, compared to $69.8 million in the fourth quarter last year, which includes a $0.6 million increase in revenue from foreign currency fluctuations. Net of the effect of these foreign currency fluctuations, revenue decreased $5.1 million or 7.3%. Pre-tax income for the fourth quarter of fiscal 2025 was $2.3 million, compared to $4.1 million pre-tax income in the fourth quarter last year.
Fiscal 2025 Full Year Results
Revenue was $2.7 billion for fiscal 2025 compared to $2.8 billion for fiscal 2024. Net loss for fiscal 2025 was $36.9 million, or $1.63 loss per diluted share. This compares to prior year net income of $112.4 million, or $4.93 earnings per diluted share. Adjusted net loss, which excludes the net impact of items related to sale-leaseback financing expenses, was $29.7 million or $1.31 loss per diluted share for fiscal 2025. The Company generated adjusted EBITDA of $12.8 million in fiscal 2025 compared to EBITDA of $189.3 million in fiscal 2024.
Balance Sheet and Cash Flow
Cash at the end of the fourth quarter of fiscal 2025 was $35.9 million. Inventories were $1.1 billion as of January 31, 2025, down approximately $304.4 million from $1.4 billion as of October 31, 2024, and down approximately $419.1 million from peak inventory of $1.5 billion as of July 31, 2024. This reflects the Company's progress in executing its equipment inventory reduction initiative. Outstanding floorplan payables were $755.7 million on $1.5 billion total available floorplan and working capital lines of credit as of January 31, 2025, compared to $893.8 million outstanding floorplan payables as of January 31, 2024.
For the fiscal year ended January 31, 2025, the Company’s net cash provided by operating activities was $70.3 million, compared to net cash used by operating activities of $32.3 million for the fiscal year ended January 31, 2024. The increase in net cash provided by operating activities was primarily driven by a decrease in inventory and favorable collection of outstanding receivables, which was partially offset by a decrease in manufactured floorplan payables and net income for fiscal 2025 compared to the prior year period. Net cash used for financing activities was $23.6 million in fiscal year 2025, which compared to $188.6 million net cash provided by financing activities in fiscal year 2024. This change was primarily driven by a $220.8 million decrease in non-manufacturer floorplan payables, which represents the Company's other credit lines including its Bank Syndicate Agreement.
Additional Management Commentary
Mr. Knutson concluded, "We are introducing modeling assumptions for fiscal 2026 that are consistent with industry forecasts which are suggesting that demand for North American large agriculture equipment will be down approximately 30% year-over-year. Although the demand environment is expected to weaken in the near-term, the acceleration of significant inventory reduction efforts achieved in fiscal 2025 will allow us to be much more nimble as we seek to operate in tandem with evolving market conditions. Our outlook implies continued margin pressure associated with our ongoing inventory reduction and mix optimization efforts. While we will be working hard to mitigate this impact, we believe it is prudent to set expectations conservatively in this fluid environment where demand is subdued. Our aim is to ensure that we are well positioned heading into fiscal 2027 where we expect to drive toward more normalized levels of profitability relative to the demand environment at that time."
2026 Modeling Assumptions
The following are the Company's current expectations for fiscal 2026 modeling assumptions.
Current Assumptions Segment Revenue Agriculture Down 20% - Down 25% Construction Down 5% - Down 10% Europe Flat - Up 5% Australia Down 15% - Down 20% Adjusted Diluted Loss Per Share ($1.25) - ($2.00) 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) 704-4453 from the U.S. International callers can dial (201) 389-0920. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, April 3, 2025, by dialing (844) 512-2921 from the U.S., or (412) 317-6671 from international locations, and entering confirmation code 13751822.
A copy of the presentation that will accompany the prepared remarks from 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. 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 financial 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 adjusted net income (loss), EBITDA and adjusted EBITDA, adjusted diluted earnings (loss) per share, and adjusted income (loss) before income taxes (all non-GAAP financial measures) for the periods presented, to their respective most directly comparable GAAP financial measures.
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, Europe and Australia, servicing farmers, ranchers and commercial applicators. The network consists of US locations in Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Washington, Wisconsin and Wyoming. The international network includes European stores located in Bulgaria, Germany, Romania, and Ukraine and Australian stores located in New South Wales, South Australia, and Victoria in Southeastern Australia. Our stores offer 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. These statements are based upon the current beliefs and expectations of our management. Forward-looking statements made in this release, which include statements regarding modeling assumptions and expected results of operations for the fiscal year ending January 31, 2026, statements regarding the Company's ability to reduce inventory levels and enhance profitability, and may include statements regarding Agriculture, Construction, Europe and Australia segment initiatives and improvements, segment revenue realization, growth and profitability expectations, inventory availability and customer demand expectations, and agricultural and construction equipment industry conditions and trends, involve known and unknown risks and uncertainties that may cause Titan's actual results in future periods to differ materially from the forecasted assumptions and expected results. These risks and uncertainties include, among other things, our ability to successfully integrate, and realize growth opportunities and synergies in connection with the O'Connors acquisition and the risk that we have assumed unforeseen or other liabilities in connection with the O'Connors acquisition. In addition, risks and uncertainties also include the impact of the Russia-Ukraine conflict on our Ukrainian operations, our substantial dependence on CNH Industrial including CNH Industrial's ability to design, manufacture and allocate inventory to our stores necessary to satisfy our customers' demands, supply chain disruptions impacting our suppliers, including CNH Industrial, 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 manage inventory levels, weather conditions, disruption in receiving sufficient inventory financing, and increased competition in the geographic areas served. These and other risks are described in Titan's filings with the Securities and Exchange Commission. Titan conducts its business in a highly competitive and rapidly changing environment. Accordingly, new risks and uncertainties may arise. It is not possible for management to predict all such risks and uncertainties, nor to assess the impact of all such risks and uncertainties on Titan's business or the extent to which any individual risk or uncertainty, or combination of risks and uncertainties, may cause results to differ materially from those contained in any forward-looking statement. Other than as required by law, Titan disclaims any obligation to update such risks and uncertainties or to publicly announce revisions to any of the forward-looking statements contained in this release to reflect future events or developments.
Investor Relations Contact:
ICR, Inc.
Jeff Sonnek, jeff.sonnek@icrinc.com
Managing Director
646-277-1263TITAN MACHINERY INC. Consolidated Condensed Balance Sheets (in thousands) (Unaudited) January 31, 2025 January 31, 2024 Assets Current Assets Cash $ 35,898 $ 38,066 Receivables, net of allowance for expected credit losses 119,814 153,657 Inventories 1,108,672 1,303,030 Prepaid expenses and other 28,244 24,262 Total current assets 1,292,628 1,519,015 Noncurrent Assets Property and equipment, net of accumulated depreciation 379,690 298,774 Operating lease assets 27,935 54,699 Deferred income taxes 2,552 529 Goodwill 61,246 64,105 Intangible assets, net of accumulated amortization 48,306 53,356 Other 1,581 1,783 Total noncurrent assets 521,310 473,246 Total Assets $ 1,813,938 $ 1,992,261 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 37,166 $ 43,846 Floorplan payable 755,698 893,846 Current maturities of long-term debt 10,920 13,706 Current maturities of operating leases 5,747 10,751 Deferred revenue 91,933 115,852 Accrued expenses and other 59,492 74,400 Total current liabilities 960,956 1,152,401 Long-Term Liabilities Long-term debt, less current maturities 157,767 106,407 Operating lease liabilities 25,588 50,964 Deferred income taxes 8,818 22,607 Other long-term liabilities 46,732 2,240 Total long-term liabilities 238,905 182,218 Stockholders' Equity Common stock — — Additional paid-in-capital 262,097 258,657 Retained earnings 360,314 397,225 Accumulated other comprehensive income (loss) (8,334 ) 1,760 Total stockholders' equity 614,077 657,642 Total Liabilities and Stockholders' Equity $ 1,813,938 $ 1,992,261 TITAN MACHINERY INC. Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Three Months Ended
January 31,Twelve Months Ended
January 31,2025 2024 2025 2024 Revenue Equipment $ 621,829 $ 714,044 $ 2,050,298 $ 2,145,316 Parts 89,339 90,763 428,457 410,841 Service 36,639 35,137 180,107 157,315 Rental and other 12,114 12,188 43,260 44,973 Total Revenue 759,921 852,132 2,702,122 2,758,445 Cost of Revenue Equipment 619,981 626,898 1,912,803 1,864,558 Parts 63,302 63,146 294,233 279,921 Service 16,070 12,971 66,823 53,981 Rental and other 9,565 8,082 32,633 28,631 Total Cost of Revenue 708,918 711,097 2,306,492 2,227,091 Gross Profit 51,003 141,035 395,630 531,354 Operating Expenses 96,693 100,328 389,780 362,509 Impairment of Goodwill — — 531 — Impairment of Intangible and Long-Lived Assets 105 — 1,311 — (Loss) Income from Operations (45,795 ) 40,707 4,008 168,845 Other Income (Expense) Interest and other income (expense) 62 2,173 (4,178 ) 3,300 Floorplan interest expense (8,435 ) (6,028 ) (34,710 ) (13,802 ) Other interest expense (4,626 ) (3,294 ) (15,105 ) (7,303 ) (Loss) Income Before Income Taxes (58,794 ) 33,558 (49,985 ) 151,040 (Benefit from) Provision for Income Taxes (15,033 ) 9,595 (13,074 ) 38,599 Net (Loss) Income $ (43,761 ) $ 23,963 $ (36,911 ) $ 112,441 Diluted (Loss) Earnings per Share $ 1.93 $ 1.05 $ (1.63 ) $ 4.93 Diluted Weighted Average Common Shares 22,632 22,517 22,606 22,499 TITAN MACHINERY INC. Consolidated Condensed Statements of Cash Flows (in thousands) (Unaudited) Year Ended January 31, 2025 2024 Operating Activities Net (loss) income $ (36,911 ) $ 112,441 Adjustments to reconcile net (loss) income to net cash provided by (used for) operating activities Depreciation and amortization 38,601 31,479 Impairment 1,842 — Other, net 7,256 12,941 Changes in assets and liabilities, net of effects of acquisitions Inventories 166,182 (476,389 ) Manufacturer floorplan payable (82,724 ) 368,111 Other working capital (23,955 ) (80,863 ) Net Cash Provided by (Used for) Operating Activities 70,291 (32,280 ) Investing Activities Property and equipment purchases (51,845 ) (62,361 ) Proceeds from sale of property and equipment 4,160 7,134 Acquisition consideration, net of cash acquired (260 ) (107,548 ) Other, net 199 (597 ) Net Cash Used for Investing Activities (47,746 ) (163,372 ) Financing Activities Net change in non-manufacturer floorplan payable (37,694 ) 183,148 Net proceeds from long-term debt 18,792 6,554 Other, net (4,717 ) (1,125 ) Net Cash (Used for) Provided by Financing Activities (23,619 ) 188,577 Effect of Exchange Rate Changes on Cash (1,094 ) 1,228 Net Change in Cash (2,168 ) (5,847 ) Cash at Beginning of Period 38,066 43,913 Cash at End of Period $ 35,898 $ 38,066 TITAN MACHINERY INC. Segment Results (in thousands) (Unaudited) Three Months Ended
January 31,Twelve Months Ended
January 31,2025 2024 Change 2025 2024 Change Revenue Agriculture $ 534,687 $ 620,593 (13.8 )% $ 1,888,428 $ 2,044,263 (7.6 )% Construction 94,603 100,095 (5.5 )% 331,574 332,463 (0.3 )% Europe 65,368 61,635 6.1 % 261,005 311,910 (16.3 )% Australia 65,263 69,809 (6.5 )% 221,115 69,809 N/M Total $ 759,921 $ 852,132 (10.8 )% $ 2,702,122 $ 2,758,445 (2.0 )% Income (Loss) Before Income Taxes Agriculture $ (55,329 ) $ 28,761 N/M $ (39,773 ) $ 121,072 N/M Construction (1,085 ) 4,599 N/M (6,652 ) 18,346 N/M Europe (1,779 ) (610 ) (191.6 )% (3,893 ) 16,487 N/M Australia 2,311 4,115 (43.8 )% 2,889 4,115 N/M Segment (loss) income before income taxes (55,882 ) 36,865 N/M (47,429 ) 160,020 (129.6 )% Shared Resources (2,912 ) (3,307 ) (11.9 )% (2,556 ) (8,980 ) (71.5 )% Total $ (58,794 ) $ 33,558 N/M $ (49,985 ) $ 151,040 (133.1 )% *N/M = not meaningful TITAN MACHINERY INC. Non-GAAP Reconciliations (in thousands, except per share data) (Unaudited) Three Months Ended
January 31,Twelve Months Ended
January 31,2025 2024 2025 2024 Adjusted Net (Loss) Income Net (Loss) Income $ (43,761 ) $ 23,963 $ (36,911 ) $ 112,441 Adjustments Impact of sale-leaseback financing expense (1) (1,509 ) — 9,650 — Total Pre-Tax Adjustments (1,509 ) — 9,650 — Tax Effect of Adjustments (2) 385 — (2,460 ) — Total Adjustments (1,124 ) — 7,190 — Adjusted Net (Loss) Income $ (44,885 ) $ 23,963 $ (29,721 ) $ 112,441 Adjusted Diluted (Loss) Earnings per Share Diluted (Loss) Earnings per Share $ 1.93 $ 1.05 $ (1.63 ) $ 4.93 Adjustments Impact of sale-leaseback financing expense (1) (0.07 ) — 0.43 — Total Pre-Tax Adjustments (0.07 ) — 0.43 — Tax Effect of Adjustments (2) 0.02 — (0.11 ) — Total Adjustments (0.05 ) — 0.32 — Adjusted Diluted (Loss) Earnings per Share $ 1.88 $ 1.05 $ (1.31 ) $ 4.93 Adjusted (Loss) Income Before Income Taxes (Loss) Income Before Income Taxes $ (58,794 ) $ 33,558 $ (49,985 ) $ 151,040 Adjustments Impact of sale-leaseback financing expense (1) (1,509 ) — 9,650 — Total Adjustments (1,509 ) — 9,650 — Adjusted (Loss) Income Before Income Taxes $ (60,303 ) $ 33,558 $ (40,335 ) $ 151,040 EBITDA Net (Loss) Income $ (43,761 ) $ 23,963 $ (36,911 ) $ 112,441 Adjustments Interest expense, net of interest income (3) 4,369 3,104 14,489 6,759 (Benefit from) Provision for Income Taxes (15,033 ) 9,595 (13,074 ) 38,599 Depreciation and amortization 9,914 8,608 38,601 31,479 EBITDA $ (44,511 ) $ 45,270 $ 3,105 $ 189,278 Adjustments Impact of sale-leaseback financing expense (1) (1,509 ) — 9,650 — Total Adjustments (1,509 ) — 9,650 — Adjusted EBITDA $ (46,020 ) $ 45,270 $ 12,755 $ 189,278 (1) Accounting impact of a non-cash, sale-leaseback financing expense related to the Company's umbrella purchase for 13 of its leased facilities in fiscal year 2025. (2) The tax effect of U.S. related adjustments was calculated using a 25.5% tax rate, determined based on a 21% federal statutory rate and a 4.5% blended state income tax rate. (3) The interest expense add back excludes floorplan interest expense, which was $8.4M and $6.0M for the three months ended January 31, 2025 and 2024, respectively, and $34.7M and $13.8M for the twelve months ended January 31, 2025 and 2024, respectively. 