WEST FARGO, N.D. — Titan Machinery Inc. (Nasdaq:TITN), a global dealership with a network of full-service agricultural and construction stores, today reported financial results for the fiscal first quarter ended April 30, 2017.

David Meyer, Titan Machinery's chairman and chief executive officer, stated, "Overall first quarter financial results were generally in line with our expectations. Due to the stabilizing agriculture equipment inventory environment and the progress we have made in reducing our equipment inventory, we are seeing equipment margin improvement sooner than originally expected, as well as stronger equipment demand within our International segment. Offsetting these developments were higher than anticipated operating expenses due to delayed benefits resulting from our restructuring efforts. We are confident in our estimate that the restructuring initiative will result in annual expense reductions of $25 million, however due to later than anticipated implementation, the cost savings for fiscal 2018 will be less than previously expected. We continue to be well positioned for improved bottom line results in fiscal 2018 despite continued soft demand in our domestic Agriculture and Construction markets.  In addition, our restructuring efforts and continued focus on reducing equipment inventory positions us well for the future."

Fiscal 2018 First Quarter Results

Consolidated Results

For the first quarter of fiscal 2018, revenue was $264.1 million, compared to $284.9 million in the first quarter last year. Equipment sales were $167.9 million for the first quarter of fiscal 2018, compared to $184.9 million in the first quarter last year. Parts sales were $56.6 million for the first quarter of fiscal 2018, compared to $57.5 million in the first quarter last year. Revenue generated from service was $28.8 million for the first quarter of fiscal 2018, compared to $31.0 million in the first quarter last year. Revenue from rental and other was $10.9 million for the first quarter of fiscal 2018, compared to $11.5 million in the first quarter last year.

Gross profit for the first quarter of fiscal 2018 was $48.9 million, compared to $53.5 million in the first quarter last year. The Company's gross profit margin was 18.5% in the first quarter of fiscal 2018, compared to 18.8% in the first quarter last year. Gross profit from parts, service and rental and other for the first quarter of fiscal 2018 was 74.7% of overall gross profit, compared to 72.8% in the first quarter last year.

Operating expenses decreased by $2.5 million to $52.0 million, or 19.6% of revenue, for the first quarter of fiscal 2018, compared to $54.5 million, or 19.1% of revenue, for the first quarter of last year. The increase in operating expenses as a percentage of revenue was primarily due to the decrease in total revenue in the first quarter of fiscal 2018, as compared to the first quarter of fiscal 2017.

Floorplan interest expense was $2.7 million for the first quarter of fiscal 2018, compared to $3.7 million in the first quarter of last year. The decrease in floorplan interest expense is primarily due to a decrease in the level of interest-bearing inventory in the first quarter of fiscal 2018. Other interest expense was $2.1 million for the first quarter of fiscal 2018, compared to $1.0 million in the first quarter of last year. Other interest expense for the first quarter of fiscal 2017 included a $2.1 million gain recognized as a result of repurchases of our senior convertible notes during the quarter.

Restructuring costs were $2.3 million for the first quarter of fiscal 2018, compared to $0.2 million for the same period last year. The restructuring costs recognized in the first quarter of fiscal 2018 are the result of our restructuring plan announced on Feb. 9, 2017 to consolidate certain dealership locations and to implement a reorganization of our operating structure. The company closed one construction location during the fourth quarter ended Jan. 31, 2017 and expects to close 14 agriculture locations during the first half of fiscal 2018. The restructuring plan is expected to result in a significant reduction in expenses while allowing the Company to continue to provide a leading level of service to its customers. The non-recurring pre-tax costs associated with this restructuring plan, consisting primarily of lease termination costs and termination benefits, are estimated to be an additional $7.0 million for the remainder of fiscal 2018.

In the first quarter of fiscal 2018, net loss including noncontrolling interest was $5.9 million, or loss per diluted share of $0.27, compared to a net loss including noncontrolling interest of $3.9 million, or loss per diluted share of $0.17 for the first quarter of last year.

On a non-GAAP basis, adjusted net loss including noncontrolling interest for the first quarter of fiscal 2018 was $4.2 million, or adjusted loss per diluted share of $0.19, compared to adjusted net loss including noncontrolling interest of $4.8 million, or adjusted loss per diluted share of $0.21, for the first quarter of last year. The Company generated $1.6 million in adjusted EBITDA in the first quarter of fiscal 2018, compared to $1.8 million in the first quarter of last year.

Segment Results
Agriculture Segment - Revenue for the first quarter of fiscal 2018 was $163.6 million, compared to $178.8 million in the first quarter last year. Pre-tax loss for the first quarter of fiscal 2018 was $3.9 million, compared to pre-tax loss of $3.8 million in the first quarter last year.

Construction Segment - Revenue for the first quarter of fiscal 2018 was $63.4 million, compared to $78.0 million in the first quarter last year. Revenue for the first quarter of fiscal 2017 included approximately $9.0 million of equipment revenue associated with our aggressive selling efforts through alternative marketing channels for certain aged equipment inventory. Pre-tax loss for the first quarter of fiscal 2018 was $2.6 million, compared to a pre-tax loss of $2.0 million in the first quarter last year.

InternationalSegment - Revenue for the first quarter of fiscal 2018 was $37.1 million, compared to $28.1 million in the first quarter last year.  The increase in revenue is primarily due to increased equipment revenue as the result of the build out of our footprint, availability of subvention funds and positive crop conditions in certain of our markets. Pre-tax earnings for the first quarter of fiscal 2018 was $0.6 million, compared to pre-tax loss of $0.5 million in the first quarter last year.

Mr. Meyer concluded, "The many improvements we are implementing in our operating structure combined with the deleveraging we've accomplished in the past couple years has us better positioned to generate positive earnings in the future. In addition, our cash flow generated from operations allows us to make appropriate investments in our business to take advantage of future opportunities and drive long-term profitability."