Titan Machinery’s agricultural segment revenue increased in the second quarter of fiscal 2024 due to recent acquisitions and consumer demand.
Titan Machinery’s agricultural segment revenue in Q2, which ended July 31, was $469.1 million, up 34.4% year over year, according to the company’s earnings presentation. Revenue growth was largely due to recent acquisitions and same-store sales growth, Bo Larsen, treasurer and chief financial officer, said during the company’s earnings call today.
“This growth was driven by our acquisitions of Heartland AG Systems and Pioneer Equipment, as well as same-store sales growth of 10% [year-over-year], which was achieved on top of a strong performance in the prior-year period,” he said. “Despite the strong quarterly performance, second quarter revenues continued to be constrained by the equipment availability of high- demand cash crop product categories.”
The Fargo, N.D.-based equipment vendor’s construction revenue for Q2 was $82.9 million, up 18.3% YoY, according to the presentation. The segment’s same-store sales grew 18.5% YoY, as construction activity in the United States remained strong despite some inventory shortages, Chief Operating Officer and President Bryan Knutson said during the call.
“General construction activity remains strong as infrastructure, energy and agriculture projects continue to support demand for construction equipment,” he said. “Although availability is also a limiting factor in the near term for certain types of construction equipment, we continue to see a favorable backdrop and, as a result, are increasing our full-year modeling assumptions for this segment.”
For the full year, Titan Machinery forecasts construction revenue to be up between 5% and 10% YoY which is a 5% increase compared with the first quarter, while agriculture segment revenue is expected to grow between 20% and 25% YoY, mirroring the Q1 forecast, according to the presentation.
Equipment inventory up 48% YoY
Titan Machinery’s equipment inventory at the end of Q2 was $794 million, up 48.4% compared with fiscal 2023 yearend on Jan. 31, according to the presentation. The company’s total inventory at the end of Q2 was $979.4 million, up 32.9% since the end of fiscal 2023. The growth is due to increases of $229.1 million in new equipment, $30 million in used equipment and $15 million in parts inventory during fiscal 2024, according to the release.
“Overall, we are still a bit short of targeted stocking levels of available for-sale inventory,” Larsen said, adding that the dealer group is short $60 million in inventory across its 74 domestic ag dealerships. “Driving by some of our ag store locations, the lack of high-horsepower display units is clearly notable.”
Total equipment revenue was $480.1 million in Q2, up 28% YoY, according to the release. Meanwhile, total Q2 revenue, which includes equipment, parts, services, rental and other revenue, was $642.6 million, up 29.4% YoY.
Outstanding floorplan payables landed at $596 million of $781 million in total available floorplan lines of credit as of July 31, up 34.5% QoQ and 130.5% year-to-date driven by higher supply, according to the release. Floorplan interest expense was $3.7 million, up 131.3% YoY due to elevated interest rates.
Titan Machinery announced the acquisition of J.J. O’Connor & Sons. on Wednesday. O’Connor’s dealership group is the largest Australia Case IH dealership group, and Titan expects the sale to close in October, Chairman and Chief Executive David Meyer said during the earnings call.
Shares of Titan Machinery Inc. [Nasdaq: TITN] were trading at $31.02 at market close today, up $1.94 or 6.67% from market open. Titan Machinery has a market capitalization of $703.14 million.
