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Titan Machinery Meets on Q2 Earnings, Lowers FY25 View on Soft Demand
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Titan Machinery Inc. (TITN - Free Report) reported adjusted earnings per share (EPS) of 17 cents in second-quarter fiscal 2025 (ended Jul 31, 2024), in line with the Zacks Consensus Estimate. The bottom line fell from an EPS of $1.38 reported in the year-ago quarter due to weak agricultural demand.
Total revenues in the reported quarter were $634 million, down 1.4% from the year-ago quarter, reflecting weak demand. The top line missed the consensus mark of $662 million.
Equipment revenues fell 3.1% year over year to $465 million, whereas parts revenues rose 1.2% to $110 million. Revenues generated from service were $47 million in the reported quarter, up 11.6% from the year-ago quarter. Meanwhile, rental revenues were down 0.9% year over year to $11.3 million.
Titan Machinery Inc. Price, Consensus and EPS Surprise
Cost of sales rose 2.4% to $521 million from the prior-year quarter. Gross profit decreased 15.7% year over year to $112 million. The gross margin was 17.7%, down from 20.8% in the prior-year quarter.
Operating expenses increased 7.2% year over year to $95 million due to acquisitions in the past year. Adjusted EBITDA fell 59.8% year over year to $20 million. The adjusted EBITDA margin in the fiscal second quarter was 3.2% compared with 7.8% in the prior-year quarter.
Q2 Segmental Performance of Titan Machinery
Agriculture revenues fell 9.6% to $424 million from the prior-year quarter. Due to lower farm income and high interest rates, spending on agriculture equipment has been impacted. The segment’s income before taxes fell to $0.6 million from the prior-year quarter’s $33 million.
Construction revenues were $80 million in the fiscal second quarter, down 3.3% year over year. The segment reported income before taxes of $4.9 million, up from the prior-year quarter’s $5.2 million.
Europe revenues were $68 million, down 24.8% from the year-ago quarter’s $91 million, reflecting weak demand for new equipment owing to lower commodity prices and drought conditions in Eastern Europe. This was somewhat offset by growth in parts and service revenues. The segment reported income before taxes of $2.3 million, which plunged 58.9% from $5.6 million in the second quarter of fiscal 2024.
TITN began reporting its Australia segment in the fourth quarter of fiscal 2024. The segment reported revenues of $61 million and a loss before taxes of $1.4 million in the second quarter of fiscal 2025.
TITIN’s Cash Flow & Balance Sheet as of Q2 End
Cash used for operating activities was $47 million in the first half of fiscal 2025 compared with $123 million in the prior-year period. Titan Machinery ended the reported quarter with a cash balance of around $31 million. The company’s long-term debt was $117 million compared with $106 million as of the second-quarter fiscal 2024 end.
Titan Machinery’s FY25 Guidance
The company anticipates low demand in fiscal 2025 due to a decrease in net farm income and broader macroeconomic uncertainty. The Agriculture segment's revenues are anticipated decline in the range of 5% to 10% compared with the prior stated expectation of 2.5% decline to a 2.5% increase.
The Construction segment’s revenues for fiscal 2025 are expected between a 2.5% decline to a 2.5% increase, updated from previous expected growth of 0-5%. Year-over-year revenue growth in Europe is anticipated between a negative 12% and a negative 17% compared with a negative 5% to flat mentioned earlier.
The Australia segment's revenues are estimated between $230 million and $250 million.
The company expects an EPS between breakeven and 50 cents, whereas it recorded an EPS of $4.93 in fiscal 2024. The company earlier expected EPS of $2.25-$2.75.
TITN Stock Price Performance
In the past year, shares of Titan Machinery have lost 51% against the industry’s growth of 4.1%.
Caterpillar Inc. (CAT - Free Report) reported second-quarter 2024 adjusted earnings per share of a record $5.99, which beat the Zacks Consensus Estimate of $5.53 by a margin of 8.3%. The bottom-line figure marked an 8% year-over-year improvement. CAT reported second-quarter revenues of $16.69 billion, which missed the Zacks Consensus Estimate of $16.76 billion by a slight margin of 0.4%.
Deere & Company (DE - Free Report) reported third-quarter fiscal 2024 earnings of $6.29 per share, which beat the Zacks Consensus Estimate of $5.80. The bottom line, however, plunged 38% from the prior-year quarter.
DE’s net revenues of equipment operations (comprising Agriculture, and Turf, Construction and Forestry) were $11.39 billion, down 19.9% year over year. However, net sales topped the Zacks Consensus Estimate of $10.87 billion.
AGCO Corp. (AGCO - Free Report) delivered an adjusted earnings per share of $2.53 in second-quarter 2024 compared with the prior-year quarter’s $4.29. The reported figure missed the Zacks Consensus Estimate of $2.88.
AGCO’s revenues decreased 15.1% year over year to $3.25 billion in the quarter. The top line missed the Zacks Consensus Estimate of $3.49 billion. Excluding the unfavorable currency-translation impacts of 0.9%, net sales fell 14.2% year over year.
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Titan Machinery Meets on Q2 Earnings, Lowers FY25 View on Soft Demand
Titan Machinery Inc. (TITN - Free Report) reported adjusted earnings per share (EPS) of 17 cents in second-quarter fiscal 2025 (ended Jul 31, 2024), in line with the Zacks Consensus Estimate. The bottom line fell from an EPS of $1.38 reported in the year-ago quarter due to weak agricultural demand.
Total revenues in the reported quarter were $634 million, down 1.4% from the year-ago quarter, reflecting weak demand. The top line missed the consensus mark of $662 million.
Equipment revenues fell 3.1% year over year to $465 million, whereas parts revenues rose 1.2% to $110 million. Revenues generated from service were $47 million in the reported quarter, up 11.6% from the year-ago quarter. Meanwhile, rental revenues were down 0.9% year over year to $11.3 million.
Titan Machinery Inc. Price, Consensus and EPS Surprise
Titan Machinery Inc. price-consensus-eps-surprise-chart | Titan Machinery Inc. Quote
TITN’s Costs Rise, Margins Dip in Q2
Cost of sales rose 2.4% to $521 million from the prior-year quarter. Gross profit decreased 15.7% year over year to $112 million. The gross margin was 17.7%, down from 20.8% in the prior-year quarter.
Operating expenses increased 7.2% year over year to $95 million due to acquisitions in the past year. Adjusted EBITDA fell 59.8% year over year to $20 million. The adjusted EBITDA margin in the fiscal second quarter was 3.2% compared with 7.8% in the prior-year quarter.
Q2 Segmental Performance of Titan Machinery
Agriculture revenues fell 9.6% to $424 million from the prior-year quarter. Due to lower farm income and high interest rates, spending on agriculture equipment has been impacted. The segment’s income before taxes fell to $0.6 million from the prior-year quarter’s $33 million.
Construction revenues were $80 million in the fiscal second quarter, down 3.3% year over year. The segment reported income before taxes of $4.9 million, up from the prior-year quarter’s $5.2 million.
Europe revenues were $68 million, down 24.8% from the year-ago quarter’s $91 million, reflecting weak demand for new equipment owing to lower commodity prices and drought conditions in Eastern Europe. This was somewhat offset by growth in parts and service revenues. The segment reported income before taxes of $2.3 million, which plunged 58.9% from $5.6 million in the second quarter of fiscal 2024.
TITN began reporting its Australia segment in the fourth quarter of fiscal 2024. The segment reported revenues of $61 million and a loss before taxes of $1.4 million in the second quarter of fiscal 2025.
TITIN’s Cash Flow & Balance Sheet as of Q2 End
Cash used for operating activities was $47 million in the first half of fiscal 2025 compared with $123 million in the prior-year period. Titan Machinery ended the reported quarter with a cash balance of around $31 million. The company’s long-term debt was $117 million compared with $106 million as of the second-quarter fiscal 2024 end.
Titan Machinery’s FY25 Guidance
The company anticipates low demand in fiscal 2025 due to a decrease in net farm income and broader macroeconomic uncertainty. The Agriculture segment's revenues are anticipated decline in the range of 5% to 10% compared with the prior stated expectation of 2.5% decline to a 2.5% increase.
The Construction segment’s revenues for fiscal 2025 are expected between a 2.5% decline to a 2.5% increase, updated from previous expected growth of 0-5%. Year-over-year revenue growth in Europe is anticipated between a negative 12% and a negative 17% compared with a negative 5% to flat mentioned earlier.
The Australia segment's revenues are estimated between $230 million and $250 million.
The company expects an EPS between breakeven and 50 cents, whereas it recorded an EPS of $4.93 in fiscal 2024. The company earlier expected EPS of $2.25-$2.75.
TITN Stock Price Performance
In the past year, shares of Titan Machinery have lost 51% against the industry’s growth of 4.1%.
Image Source: Zacks Investment Research
Titan Machinery’s Zacks Rank
TITN currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Performances
Caterpillar Inc. (CAT - Free Report) reported second-quarter 2024 adjusted earnings per share of a record $5.99, which beat the Zacks Consensus Estimate of $5.53 by a margin of 8.3%. The bottom-line figure marked an 8% year-over-year improvement.
CAT reported second-quarter revenues of $16.69 billion, which missed the Zacks Consensus Estimate of $16.76 billion by a slight margin of 0.4%.
Deere & Company (DE - Free Report) reported third-quarter fiscal 2024 earnings of $6.29 per share, which beat the Zacks Consensus Estimate of $5.80. The bottom line, however, plunged 38% from the prior-year quarter.
DE’s net revenues of equipment operations (comprising Agriculture, and Turf, Construction and Forestry) were $11.39 billion, down 19.9% year over year. However, net sales topped the Zacks Consensus Estimate of $10.87 billion.
AGCO Corp. (AGCO - Free Report) delivered an adjusted earnings per share of $2.53 in second-quarter 2024 compared with the prior-year quarter’s $4.29. The reported figure missed the Zacks Consensus Estimate of $2.88.
AGCO’s revenues decreased 15.1% year over year to $3.25 billion in the quarter. The top line missed the Zacks Consensus Estimate of $3.49 billion. Excluding the unfavorable currency-translation impacts of 0.9%, net sales fell 14.2% year over year.