David Meyer, Titan Machinery's chairman and chief executive officer, stated, "Equipment demand momentum continued through our second fiscal quarter with our equipment revenues increasing 35% vs. prior year. The current environment is supported by our healthy inventory position and robust demand, along with continued strength in our parts and service business, driving strong consolidated pre-tax income growth of 89% during second quarter compared to prior year second quarter. From a segment perspective, our Agriculture business was well-positioned and produced exceptional growth as high commodity prices are offsetting drought conditions in areas of our footprint. However, we are especially pleased with the improved performance of both our Construction and International segments."

Fiscal 2022 Second Quarter Results

Consolidated Results

For the second quarter of fiscal 2022, revenue increased to $377.6 million compared to $303.5 million in the second quarter last year. Equipment sales were $272.7 million for the second quarter of fiscal 2022, compared to $202.7 million in the second quarter last year. Parts sales were $65.3 million for the second quarter of fiscal 2022, compared to $61.5 million in the second quarter last year. Revenue generated from service was $29.7 million for the second quarter of fiscal 2022, compared to $28.0 million in the second quarter last year. Revenue from rental and other was $9.9 million for the second quarter of fiscal 2022, compared to $11.4 million in the second quarter last year. Rental revenue was down due to a decrease in inventory rentals, a reduced rental fleet and the January 2021 divestiture of the company's construction stores in Arizona. While the fleet was smaller compared to the prior year, the dollar utilization of the fleet improved to 26.6% in the quarter compared to 22.2% in the same period last year.

Gross profit for the second quarter of fiscal 2022 was $75.0 million, compared to $62.7 million in the second quarter last year. The Company's gross profit margin decreased to 19.9% in the second quarter of fiscal 2022, compared to 20.7% in the second quarter last year. Gross profit margin decreased due to mix, with a greater proportion of equipment revenue this year versus higher margin parts and service revenue as compared to the second quarter of the prior year.

Floorplan and other interest expense was $1.5 million in the second quarter of fiscal 2022, compared to $1.9 million for the same period last year. The decrease was primarily due to lower borrowings.

In the second quarter of fiscal 2022, net income was $11.2 million, or earnings per diluted share of $0.50, compared to net income of $6.4 million, or earnings per diluted share of $0.28, for the second quarter of last year.

Segment Results

Agriculture Segment - Revenue for the second quarter of fiscal 2022 was $219.4 million, compared to $169.1 million in the second quarter last year. The increase in revenue was primarily driven by strong demand for equipment. Pre-tax income for the second quarter of fiscal 2022 was $12.1 million, compared to $6.8 million in the second quarter last year.

Construction Segment - Revenue for the second quarter of fiscal 2022 was $80.9 million, compared to $77.7 million in the second quarter last year. The increase in revenue was driven by increased equipment sales partially offset by lower parts, service and rental revenue as a result of our previously announced divestment in Arizona. Pre-tax income for the second quarter of fiscal 2022 was $2.8 million, compared to $1.4 million in the second quarter last year.

International Segment - Revenue for the second quarter of fiscal 2022 was $77.3 million, compared to $56.7 million in the second quarter last year. The increase in revenue was driven by strong equipment sales. Pre-tax income for the second quarter of fiscal 2022 was $0.4 million, compared to a pre-tax loss of $0.4 million in the second quarter last year. Adjusted pre-tax income for the second quarter of fiscal 2022 was $1.9 million, compared to an adjusted pre-tax loss of $0.6 million in the second quarter last year.

Fiscal 2022 First Six Months Results

Revenue was $750.3 million for the first six months of fiscal 2022, compared to $613.7 million for the same period last year. Net income for the first six months of fiscal 2022 was $21.8 million, or $0.97 per diluted share, compared to a net income of $8.7 million, or $0.39 per diluted share, for the same period last year. On an adjusted basis, net income for the first six months of fiscal 2022 was $23.4 million, or $1.04 per diluted share, compared to an adjusted net income of $10.0 million, or $0.44 per diluted share, in the same period last year. Adjusted EBITDA was $43.3 million in the first six months of fiscal 2022, compared to $26.9 million in the same period last year.

Balance Sheet and Cash Flow

Cash at the end of the second quarter of fiscal 2022 was $65.6 million. Inventories increased to $427.1 million as of July 31, 2021, compared to $418.5 million as of January 31, 2021. This inventory increase includes a $10.6 million increase in parts inventory and a $2.5 million decrease in equipment inventory, which reflects an increase in new equipment inventory of $31.4 million and a $34.0 million decrease in used equipment inventory. Outstanding floorplan payables were $185.5 million on $771.0 million total available floorplan lines of credit as of July 31, 2021, compared to $161.8 million outstanding floorplan payables as of January 31, 2021.

In the first six months of fiscal 2022, net cash provided by operating activities was $28.6 million, compared to net cash provided by operating activities of $13.0 million in the first six months of fiscal 2021. The Company evaluates its cash flow from operating activities net of all floorplan payable activity and maintaining a constant level of equity in its equipment inventory. Taking these adjustments into account, adjusted net cash used for operating activities was $19.0 million in the first six months of fiscal 2022, compared to adjusted net cash provided by operating activities of $16.1 million in the first six months of fiscal 2021.