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Titan Machinery Inc. Announces Fiscal Second Quarter Ended July 31, 2012 Results

About Titan Machinery Inc.

Titan Machinery Inc., founded in 1980 and headquartered in West Fargo, North Dakota, is a multi-unit business with mature locations and newly-acquired locations. The Company owns and operates a network of full service agricultural and construction equipment stores in the United States and Europe. The Titan Machinery network consists of 99 North American dealerships in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming, Wisconsin, and Colorado, including two outlet stores, as well as 12 European dealerships in Romania and Bulgaria. The Titan Machinery dealerships represent one or more of the CNH Brands (NYSE: CNH), a majority-owned subsidiary of Fiat Industrial (Milan: FI.MI), including Case IH, New Holland Agriculture, Case Construction, New Holland Construction, Kobelco and CNH 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. Forward-looking statements made herein, which include statements regarding new and used equipment inventory levels, additional growth and domestic and international acquisition opportunities and the Company’s ability to capitalize on such opportunities, growth and profitability expectations, and the expected results of operations for the fiscal year ending January 31, 2013 and the components of such expected results of operations, involve known and unknown risks and uncertainties that may cause Titan Machinery’s actual results in current or future periods to differ materially from forecasted 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 Construction segment, the uncertainty and fluctuating conditions in the capital and credit markets, difficulties in conducting international operations, governmental agriculture policies, seasonal fluctuations, 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. 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. Titan Machinery disclaims any obligation to update such factors or to publicly announce results of revisions to any of the forward-looking statements contained herein to reflect future events or developments.

 
TITAN MACHINERY INC.
Consolidated Balance Sheets
(in thousands, except per share data)
           
July 31, January 31,
2012 2012
ASSETS (Unaudited)
 
CURRENT ASSETS
Cash and cash equivalents $ 126,509 $ 79,842
Receivables, net 66,203 82,518
Inventories 938,267 748,047
Prepaid expenses and other 2,972 2,108
Income taxes receivable - 3,140
Deferred income taxes   5,147     5,370  
Total current assets   1,139,098     921,025  
 
INTANGIBLES AND OTHER ASSETS
Noncurrent parts inventories 3,469 2,792
Goodwill 29,529 24,404
Intangible assets, net of accumulated amortization 12,631 10,793
Other   7,545     2,776  
Total intangibles and other assets   53,174     40,765  
 
PROPERTY AND EQUIPMENT, net of accumulated depreciation   182,534     126,282  
 
TOTAL ASSETS $ 1,374,806   $ 1,088,072  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES
Accounts payable $ 31,024 $ 28,424
Floorplan notes payable 707,459 552,428
Current maturities of long-term debt 4,600 4,755
Customer deposits 12,163 49,540
Accrued expenses 23,263 26,735
Income taxes payable   1,381     -  
Total current liabilities   779,890     661,882  
 
LONG-TERM LIABILITIES
Senior convertible notes 124,132 -
Long-term debt, less current maturities 61,102 57,405
Deferred income taxes 38,721 28,592
Other long-term liabilities   2,150     2,854  
Total long-term liabilities   226,105     88,851  
 
STOCKHOLDERS' EQUITY

Common stock, par value $.00001 per share; authorized - 45,000shares, issued and outstanding - 21,031 at July 31, 2012 and authorized- 25,000 shares, issued and outstanding - 20,911 at January 31, 2012

- -
Additional paid-in-capital 235,336 218,156
Retained earnings 131,057 118,251
Accumulated other comprehensive loss   (894 )   (70 )
Total Titan Machinery Inc. stockholders' equity 365,499 336,337
Noncontrolling interest   3,312     1,002  
Total stockholders' equity   368,811     337,339  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,374,806   $ 1,088,072  
 
 
TITAN MACHINERY INC.
Consolidated Statements of Operations
(in thousands, except per share data)
 
 
      Three Months Ended July 31,       Six Months Ended July 31,
2012       2011 2012       2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUE
Equipment $ 306,170 $ 225,283 $ 628,698 $ 474,512
Parts 57,895 49,292 116,739 91,202
Service 30,466 25,395 60,218 46,359
Rental and other   15,540     10,879     26,139     16,941  
TOTAL REVENUE   410,071     310,849     831,794     629,014  
 
COST OF REVENUE
Equipment 279,284 204,430 571,369 427,731
Parts 40,357 34,426 81,010 64,146
Service 10,474 8,963 20,837 16,871
Rental and other   9,592     7,179     17,805     11,612  
TOTAL COST OF REVENUE   339,707     254,998     691,021     520,360  
 
GROSS PROFIT 70,364 55,851 140,773 108,654
 
OPERATING EXPENSES   56,507     44,060     111,363     83,496  
 
INCOME FROM OPERATIONS 13,857 11,791 29,410 25,158
 
OTHER INCOME (EXPENSE)
Interest and other income 119 267 607 552
Floorplan interest expense (2,420 ) (1,334 ) (5,318 ) (2,496 )
Interest expense other   (2,774 )   (341 )   (3,567 )   (616 )
 
INCOME BEFORE INCOME TAXES 8,782 10,383 21,132 22,598
 
PROVISION FOR INCOME TAXES   (3,477 )   (4,092 )   (8,368 )   (9,039 )
 
NET INCOME INCLUDING
NONCONTROLLING INTEREST 5,305 6,291 12,764 13,559
 
LESS: NET INCOME (LOSS) ATTRIBUTABLE
TO NONCONTROLLING INTEREST 96 - (42 ) -
 
NET INCOME ATTRIBUTABLE TO
TITAN MACHINERY INC. $ 5,209   $ 6,291   $ 12,806   $ 13,559  
 
NET INCOME ALLOCATED TO
PARTICIPATING SECURITIES (54 ) (56 ) (125 ) (124 )
 
NET INCOME ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ 5,155   $ 6,235   $ 12,681   $ 13,435  
 
EARNINGS PER SHARE - DILUTED $ 0.25   $ 0.30   $ 0.60   $ 0.69  
WEIGHTED AVERAGE COMMON SHARES - DILUTED   21,000     20,617     20,981     19,392  
 
 
TITAN MACHINERY INC.
Segment Results
(in thousands)
 
      Three Months Ended July 31,       Six Months Ended July 31,
2012       2011       % Change 2012       2011       % Change
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue
Agriculture $ 336,495 $ 266,353 26.3 % $ 696,630 $ 553,331 25.9 %
Construction   95,268     59,821   59.3 %   176,876     103,960   70.1 %
Segment revenue 431,763 326,174 32.4 % 873,506 657,291 32.9 %
Eliminations   (21,692 )   (15,325 ) (41.5 %)   (41,712 )   (28,277 ) (47.5 %)
Total $ 410,071   $ 310,849   31.9 % $ 831,794   $ 629,014   32.2 %
 
Income (Loss) Before Income Taxes
Agriculture $ 10,573 $ 10,937 (3.3 %) $ 24,911 $ 23,896 4.2 %
Construction   628     576   9.0 %   248     1,228   (79.8 %)
Segment income (loss) before income taxes 11,201 11,513 (2.7 %) 25,159 25,124 0.1 %
Shared Resources (1,751 ) (887 ) (97.4 %) (2,503 ) (2,014 ) (24.3 %)
Eliminations   (668 )   (243 ) (174.9 %)   (1,524 )   (512 ) (197.7 %)
Total $ 8,782   $ 10,383   (15.4 %) $ 21,132   $ 22,598   (6.5 %)
 
 
Note: The Company reports its revenue and income (loss) before income taxes at the segment level before inter-company eliminations.




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