In the latest episode we look at the fourth quarter and year-end financial results for Titan Machinery, Rocky Mountain Dealerships and Cervus Equipment and the moves they've made with reducing used equipment inventories, the creation of the Agricultural Data Coalition and more on how dealers are viewing both their new and used equipment inventories.


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I’m managing editor Kim Schmidt, welcome to On The Record. Here’s a look at what’s currently impacting the ag equipment industry.

Titan Releases Preliminary 4Q Results

The three publicly owned dealerships — Titan Machinery, Rocky Mountain Dealerships and Cervus Equipment — all released their year-end results in the last week.

Case IH dealership group Titan Machinery offered a preliminary look into its fiscal year 2016 fourth quarter earnings on March 17.

Fourth quarter revenues are expected to be about $335 million, a 32% drop from the fourth quarter of 2015. 


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AFN:$35.08 +5.42

AGCO: $51.01 –0.43

AJX: $0.50 +0.01

ALG: $55.37 –1.53

ARTW: $2.70 –0.34

BLT: $9.91 +0.09

BUI: $4.86 –0.09

CAT: $73.68 +2.32

CNHI: $6.81 +0.10

DE:$80.84 –1.54

KUBTY: $66.50 –2.30

LNN: $76.42 +2.12

RAVN: $15.46 +1.96

TWI: $5.06 –0.71

TRMB: $24.39 –0.26

VMI: $121.08 +3.39

CVL: $10.64 –1.85

RME: $5.87 –0.12

TITN: $11.29 –0.61

TSCO: $89.06 +0.22  

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Closing Stocks as of 03/23/16 (Compared to Close on 03/10/16)


The ag segment recorded a loss of $26 million in the quarter — including equipment inventory impairment charges of about $11 million — vs. income of $2.4 million in the fourth quarter of last year.

Titan chairman and CEO David Meyer said, “The headwinds we continue to face in the agriculture and construction industries have resulted in our decision to take prudent steps in reducing our aged equipment inventory, which we began to implement in the fourth quarter. As a result of this new plan, we incurred a $27 million impairment charge in the fourth quarter of fiscal 2016. We will continue to manage our equipment inventories and plan to reduce it by another $100 million in fiscal 2017, which would amount to a total reduction of approximately $450 million, or 48%, over a 3-year period.”

We spoke with Igor Maryasis (Mary ahhh sis), an analyst with Avondale Partners, about Titan and other dealers selling used equipment at auction and taking a loss on it. While it may be painful initially, he says it’s important for the long-term health of the industry:

“It’s like you’re ripping off the Band-Aid, if you will. You do it once and you deal with the pain, but at the same time you are approaching or getting closer to a more acceptable inventory levels in your business and that is essentially what is happening. So longer term, obviously the dealer inventories coming down is good for the industry and that essentially sets the stage for an eventual recovery whenever it comes.”

Titan will release its complete financial report on April 13.

Rocky Mountain Dealerships’ Full-Year 2015 Revenues Increase 1%

Rocky Mountain Dealerships, Case IH’s largest Canadian dealer group, announced fourth quarter and full-year 2015 results with revenues for the quarter down 2.9% year-over-year and revenues for the full year up 1%.

While inventory for the fourth quarter increased by $10.1 million, inventory for full-year 2015 decreased by $69.8 million, which the company credits to continued demand for lightly-used equipment. Rocky Mountain’s sales of used equipment increased in both the fourth quarter and for the full year at up 16.1% and 24.4% respectively.

Sales of new equipment, on the other hand, were down 11% for the fourth quarter and down 14% for full-year 2015. Sales from service increased about 2% for the full year, while sales of service in the fourth quarter decreased 9%. Sales from parts were down 3% for the fourth quarter, but up 6% for full-year 2015.

In addition to inventory reductions, Rocky Mountain credits its positive full-year revenues to the acquisition of fellow Case IH dealer Chabot Implements in Manitoba and NGF Geomatics. The company says these acquisitions helped consolidate its position in Manitoba as well as enhance its product and service offering in the precision farming and geomatics area.

Analyst for Raymond James, Ben Cherniavsky said in a note to investors:

“Although we were encouraged to see inventories (excluding acquisitions) fall by $68 million from the fourth quarter of 2014, Rocky’s balance sheet remains relatively leveraged, in our view, with net debt-to-capital of 64%, up from 63% in the third quarter of 2015 ... For the year ahead, we expect lower commodity prices combined with higher equipment pricing will continue to present a challenging environment for Rocky.”

Cervus Equipment Revenues Break $1 Billion

Cervus Equipment, John Deere’s largest dealer group in Canada, reported its financial results for 2015 on March 16.

The company generated a record $1.1 billion in revenue in 2015, surpassing its 2018 strategic revenue goal 3 years early.

2015 total revenue for the ag segment was up 13%, but on a same-store basis was down 5% at $602 million.

Same-store results were impacted by lower equipment demand due to weather concerns early in the season, followed by the appreciation of the U.S. dollar later in the season.

For the full-year, same-store new ag equipment sales were down 12%. But, same-store used equipment sales were up 5%. Parts sales were up 6% and service sales were up 3%, both on a same-store basis.

Commenting on Raymond James’ outlook for Cervus, Cherniavsky said “For the year ahead, we expect lower commodity prices combined with higher equipment pricing in Canadian dollars will continue to present a challenging environment for Cervus. It is for these reasons, as well as our concerns over the company’s leverage and inventory levels, that we remain on the sidelines.”

Organization Banks on New Data Portal

As farmers continue to amass an arsenal of field data, questions remain as to how they can safely store and use the information to improve profitability.

While there are a variety of companies offering data collection and analysis services, a recently formed organization is seeking to be a neutral player in the data management market for farmers, dealers and other ag service providers.

Launched earlier this month, the Agricultural Data Coalition, or ADC, is a diverse group of 10 companies, universities and associations with a common goal of being a data bank for farmers to securely store and access farm information.

One of the key benefits of the initiative, according to Jeremy Wilson, technology specialist with Crop IMS, and ADC member, is that farmers have complete control and ownership of their data, allowing them to decide who has access and when.

Farmers can literally give their dealer or service provider a key to their data, for processing and analysis. Then depending on the level of satisfaction, farmers can continue sharing information, or take that key back, along with all of their data.

"Now the farmers can upload this data to one spot, grant that access to share that with a particular dealer. Now he’s got it all in one spot. And at the end of the day, if we’re going in and doing some historical data, maybe we’re looking at creating some variable-rate application maps that takes 2 or 3 years worth of yield data, if a piece of that is missing, we have one spot to go back and get it. It’s all there. We can import it into that and create those reports or those recommendations or things that our customers have as for from us and have one spot where we let all that happen.”

The ADC is currently working with different farm leaders and cooperatives on making sure the platform is structured and organized in the most beneficial way for end users, along with their dealers and other service providers.

Dealers on the Move

Dealers on the Move this week include Faber’s Farm Equipment, AgPro Equipment Services and Van Wall Equipment.

Faber’s Farm Equipment, based in Inwood, Iowa, is building a second location in Watertown, S.D. The dealership sells and services McCormick, Vermeer, Krone and Versatile equipment.

AgPro Equipment Services, based in Hettinger, N.D., will also open a second location in Washburn, N.D. The dealership carriers Versatile, McCormick, Cub Cadet and Summers Mfg. equipment, among other lines.

John Deere dealer Van Wall Equipment has acquired Schenkelberg Implement. With the acquisition the dealer adds stores in Carroll, Denison, Onawa and Sac City, Iowa for a total of 21 locations.

Inventory Woes Continue

Both new and used equipment inventories continue to be a concern for dealers, according to our latest Dealer Sentiments and Business Conditions Update survey.

One dealer commented, “Managing inventory turns has been difficult in this environment; historical sales are no longer a good indicator of future demand, as they had been over the last 10 years. Attempting to forecast demand in a declining environment continues to be a challenging endeavor.”

A net 42% of dealers reported new equipment inventories were too high in February vs. 60% in January and an average 50% in 4Q. This marks 18 months of more than a net 30% of dealers reporting new equipment inventory levels as too high.

When it comes to used equipment, a net 40% of dealers report their inventory is too high, which is inline with January’s results. However, the percentage of dealers reporting their used combine inventories were “too high” increased in February to a net 49%.

The last two months appear to have signaled a trend reversal in the used combine market, as inventory had been improving/stabilizing from March to December before weakening at the beginning of the year. Given the continuation of monthly budget misses it appears that combine sale assumptions were overestimated.

Another dealer commented saying, “I think we’re going to see some competitive dealers that haven’t reduced their inventory introducing fire sales to move aged pieces in the coming months. I wouldn’t be shocked to see pricing step down again.”

Implement & Tractor Archives

Around 1915, J.I. Case Plow Works developed the Case Power Drive planter, billed as “The World’s Most Accurate Corn Planter.” Various test scores at the time reported the planter had an accuracy of 99% when set to drop 2 kernels, 96% for 3 kernels and 98% when set to drop 4 kernels. The row width was adjustable from 38-48 inches and the distance between hills could be varied from 24-50 inches.

We always like hearing from you. You can send comments and story suggestions to kschmidt@lessitermedia.com. Thanks for watching, I’ll see you next time.