Monday, December 15, 2008
-The Company raises full year fiscal 2009 revenue and earnings guidance- -Third quarter revenue increased 62% to $214 million- -Third quarter pre-tax income grew to $13.9 million- -Company completed two acquisitions during the quarter- 
Titan Machinery Inc. (Nasdaq:TITN - News), a leading network of full service agricultural and construction equipment stores, today reported financial results for the third quarter and nine-month period ended October 31, 2008.
For the third quarter of fiscal 2009, revenue increased to $214.0 million from revenue of $132.2 million in the third quarter of the prior year. All three of the Company’s main revenue sources - equipment, parts and service - contributed to this period-over-period revenue growth. Equipment sales were $168.0 million, compared to $103.4 million in the same period last year. Parts sales were $29.8 million in the third quarter, up from $18.4 million in the prior-year period. Revenue generated from service improved to $12.9 million in the quarter, compared to $7.9 million in the third quarter of last year.
Gross profit for the fiscal third quarter increased to $37.3 million, compared to $20.4 million in the third quarter of the prior year. The Company's gross profit margin was 17.5% in the fiscal third quarter, compared to 15.4% in the third quarter of fiscal 2008 reflecting the strong market we are experiencing. Gross profit from parts and service revenue contributed 46% of overall gross profit for fiscal third quarter 2008 compared to 48% in the third quarter last year.
Operating income for the fiscal third quarter increased to $14.2 million compared to $6.0 million in the same period a year ago. Pre-tax income for the fiscal third quarter increased to $13.9 million, compared to $4.5 million in the same period last year. Pre-tax margin was 6.5% for fiscal third quarter 2009, compared to 3.4% in the third quarter last year.
Net income for the fiscal third quarter was $8.2 million, compared to net income of $2.7 million in the third quarter last year. After giving effect to the increase in share count to 18,041,197 million shares from 7,675,831 million shares due to the Company’s initial public offering in December 2007 and its May 2008 follow-on offering, earnings per diluted share were $0.45 per share in the current quarter as compared to $0.36 per share, for the third quarter last year.
For the nine month period ended October 31, 2008, revenue increased to $501.4 million from $297.8 million for the same period last year. Net income for the first nine months of fiscal 2009 was $14.9 million, or $0.91 per diluted share, compared to $4.9 million, or $0.72 per diluted share, in the same period last year.
“We are pleased with our performance in the third quarter and first nine months of fiscal 2009, and based on our stronger than anticipated financial results, we are again raising our full-year outlook,” said David Meyer, Titan Machinery’s Chairman and Chief Executive Officer. “We increased both our revenue and gross profit from all three of our revenue sources—equipment, parts, and service. Our revenue growth benefitted from the continuation of the robust agriculture economy, as well as our organic and acquired growth. During the third quarter we improved our gross margins from 15.4% to 17.5% and our pre-tax margins from 3.4% to 6.5% to create strong earnings growth.
Mr. Meyer continued, “Looking forward, we remain confident in our long-term growth opportunities. We continue to see an excellent pipeline of acquisition candidates as well as organic growth opportunities. Importantly, our newly acquired stores are performing very well, as we are continuing our strong track record of retaining acquired store employees and customer relationships while implementing the Titan operating model.”
Acquisitions
The Company closed two acquisitions in the third quarter fiscal 2009, consisting of four stores with historical revenues of $63.0 million.
Wolf’s Farm Equipment, Inc., with one store in Kintyre, North Dakota, is a farm equipment dealership selling the New Holland brand. Wolf’s Farm Equipment reported revenues of approximately $3.0 million in its most recent fiscal year ended December 31, 2007. This New Holland Dealership is strategically located between the Company’s Jamestown, Wishek, and Mandan, North Dakota stores.
Pioneer Garage, Inc., with three stores in South Dakota, is a farm equipment dealership selling the Case IH and New Holland brands. Pioneer Garage has Case IH and New Holland dealerships in Pierre and Highmore, South Dakota, and a New Holland dealership in Miller, South Dakota. Pioneer Garage reported revenues of $60.0 million in its most recent fiscal year ended September 30, 2008. The three locations are contiguous to the existing Titan Machinery stores in Huron and Redfield.
Outlook
The Company evaluates its financial performance based on its customers’ annual production cycles as opposed to a quarterly basis, due to weather fluctuations and the seasonal nature of the Company’s business. Based on better than anticipated third quarter results and increased growth expected in the fourth quarter, the Company is raising its revenue outlook for the full year ending January 31, 2009 to a range of $635 million to $675 million, compared to previously issued guidance of $590 million to $635 million. The Company is also raising its fiscal year ending January 31, 2009 EPS guidance to a range of $1.07 to $1.11 from a range of $0.89 to $0.94. Weighted average diluted shares outstanding for the fourth quarter and fiscal year ending January 31, 2009 are expected to be approximately 18.1 million and 16.8 million, respectively.
Conference Call and Powerpoint Presentation Information
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.
The Company will host a conference call and audio webcast today at 3:30 p.m. Central time (4:30 p.m. Eastern time). Investors interested in participating in the live call can dial (800) 762-8779 from the U.S. International callers can dial (480) 629-9041. A telephone replay will be available approximately two hours after the call concludes and will be available through Monday, December 29, 2008, by dialing (800) 406-7325 from the U.S., or (303) 590-3030 from international locations, and entering confirmation code 3947934. There also will be a simultaneous, live webcast available on the Investor Relations section of the Company's web site at www.titanmachinery.com. The webcast will be archived for 30 days.
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