Titan Machinery equipment revenue up 21% YoY

Titan Machinery’s equipment revenue increased in the first quarter of fiscal year 2024 due to recent acquisitions and consumer demand. 

The Fargo, N.D.-based equipment vendor’s equipment revenue was $429.4 million in Q1 2024, ended April 30, up 20.5% year over year, according to the company’s earnings release. Total Q1 revenue, which includes equipment, parts, services, rental and other revenue, was $569.6 million, up 23.6% YoY. 

The company’s acquisitions of Mark’s Machinery, Heartland and Pioneer accounted for $94 million of Titan’s total revenue, Chairman and Chief Executive David Meyer, said during the company’s Thursday earnings call. 

The increase in revenue “represents record first-quarter revenues supplemented with significant contributions from our most recent acquisitions,” he said.

Rising interest rates and increased costs are likely to contribute to further dealership consolidation in 2023, Meyer said.

“There are some motivated sellers out there as you see the interest rates increasing and increased cost of equipment and the capital needs with that, [combined with] increased OEM demands, the complexity and sophistication of this equipment and the shortage of the skilled product support people out there to support that equipment,” he said. “We’re getting into a new round of regulations and employer mandates. There are challenges out there, especially on the HR side from the recruiting and retaining of employees.” 

If the acquisition pipeline remains consistent, Meyers expects Titan Machinery to look for more dealerships to purchase. 

“We’re seeing continued consolidation ownership and there’s a good pipeline out there,” Meyer said. “We continue to focus on integrating the acquisitions we did, but, at the same time, we’re actively looking for quality and strategic acquisitions going ahead.” 

Ag, construction continue growth 

Titan Machinery’s agricultural segment revenue in Q1 2024 was $423.2 million, up 33% YoY, according to the company’s earnings release. The ag segment had same-store sales growth of 3.8% YoY, which Bryan Knutson, president and chief operating officer, attributed to planting and supply chain delays. 

“Our domestic agriculture segment produced organic growth on top of last year’s strong performance, which was further bolstered by revenue contributions from our most recent acquisitions,” Knutson said. “While planting progress is largely on track across the farm belt, we are experiencing some delays in our northern markets due to the late spring. Our same-store sales growth in the first quarter reflects the delayed start to spring field work as well as the continued limitations on equipment availability and timing of deliveries for cash crop products.”

Construction revenue for Q1 was $72 million, up 7.5% YoY, according to the earnings release. The segment’s same-store sales grew 9.9% YoY, which Knutson credited to diversification and low volatility in the Midwestern construction market despite supply issues. 

“Construction activity was strong throughout our footprint during our fiscal first quarter, and we generated a great performance across the board,” he said. “Not unlike our ag segment, equipment availability is a limiting factor in the near term for certain types of equipment; however, we continue to feel good about our ability to achieve our full-year modeling assumptions for this segment.” 

For the full year, Titan Machinery forecasts construction revenue to be between flat growth and a 5% gain, while agriculture segment revenue is expected to grow between 20% and 25%, according to the company’s earnings presentation. 

Floorplan costs rise 

Titan Machinery’s equipment inventory at the end of Q1 was $679 million, up 26.9% quarter over quarter, according to the presentation. The company’s total inventory at the end of Q1 was $854.2 million, up 21.4% QoQ, due to increases of $127.8 million in new equipment, $16.8 million in used equipment and $4.1 million in parts inventory, according to the release. 

“We foresee a little more build in new-equipment inventory in the second quarter before leveling off and decreasing as we work through the rest of the fiscal year,” Bo Larsen, chief financial officer and treasurer, said during the earnings call. “Overall inventory available for sale is below targeted levels, with timing and other constraints causing higher-than-normal levels of presold units sitting in inventory at a given point in time.” 

Outstanding floorplan payables were $443 million on $781 million total available floorplan lines of credit as of April 30, up 71.4% QoQ, according to the release. Floorplan interest expense was $1.2 million, up 401% YoY driven by higher interest rates. 

Shares of Titan Machinery Inc. [Nasdaq: TITN] were trading at $27.62 at 2:12 ET today, down 68 cents or 2.4% from market open. Titan Machinery has a market capitalization of $633.48 million.