Titan Machinery Inc., a leading network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal fourth quarter and full year ended January 31, 2024.

"We finished fiscal year 2024 with a strong performance that was driven by growth across all of our legacy operating segments and resulted in record revenue of $2.8 billion, consolidated pre-tax margin of 5.5%, and record earnings per share of $4.93," stated Bryan Knutson, Titan Machinery's President & Chief Executive Officer. "The fourth quarter includes financial results of our recent O'Connors acquisition and integration activities are reinforcing the strategic vision we have for this business. In addition to strong retail sales activity during the quarter, our domestic team met demand through improving the pace of customer deliveries following a concerted effort to complete pre-delivery inspections of new machinery - this focus can be seen in the high volume of equipment that was delivered in the quarter. I am also pleased with our ability to continue to advance our customer care strategy and to drive double-digit same store growth for our recurring parts and service business."

Fiscal 2024 Fourth Quarter Results

Consolidated Results

For the fourth quarter of fiscal 2024, revenue increased to $852.1 million, compared to $583.0 million in the fourth quarter last year. Equipment revenue was $714.0 million for the fourth quarter of fiscal 2024, compared to $471.0 million in the fourth quarter last year. Parts revenue was $90.8 million for the fourth quarter of fiscal 2024, compared to $72.2 million in the fourth quarter last year. Revenue generated from service was $35.1 million for the fourth quarter of fiscal 2024, compared to $28.0 million in the fourth quarter last year. Revenue from rental and other was $12.2 million for the fourth quarter of fiscal 2024, compared to $11.8 million in the fourth quarter last year.

Gross profit for the fourth quarter of fiscal 2024 was $141.0 million compared to $108.9 million in the fourth quarter last year. The Company's gross profit margin was 16.6% in the fourth quarter of fiscal 2024, compared to 18.7% in the fourth quarter last year. The year-over-year decrease in gross profit margin in the fourth quarter was primarily due to lower equipment margin as we are experiencing some normalization of equipment gross margin across each of our segments. The fourth quarters of fiscal 2024 and fiscal 2023 each included benefits related to manufacturer incentive plans of $7.8 million and $1.8 million, respectively.

Operating expenses were $100.3 million for the fourth quarter of fiscal 2024, compared to $83.7 million in the fourth quarter last year. The year-over-year increase was driven by additional operating expenses associated with acquisitions that have taken place in the past year, as well as an increase in variable expenses. However, operating expenses as a percentage of revenue decreased 260 basis points to 11.8% for the fourth quarter of fiscal 2024, compared to 14.4% of revenue in the prior year period.

Floorplan and other interest expense aggregated to $9.3 million for the fourth quarter of fiscal 2024, compared to $2.1 million for the same period last year, with the increase led by a higher level of interest-bearing inventory, the usage of existing floorplan capacity to finance the O'Connors acquisition, and higher interest rates.

In the fourth quarter of fiscal 2024, net income was $24.0 million, or earnings per diluted share of $1.05, which included approximately $0.26 per share of benefits associated with manufacturer incentive plans. This compares to net income of $18.1 million, or earnings per diluted share of $0.80, for the fourth quarter of last year, which included approximately $0.06 per share of benefits associated with manufacturer incentive plans.

The Company generated $45.3 million in EBITDA in the fourth quarter of fiscal 2024, reflecting an increase of 42.2% versus the $31.8 million generated in the fourth quarter of last year.

Segment Results

Agriculture Segment - Revenue for the fourth quarter of fiscal 2024 was $620.6 million, compared to $440.9 million in the fourth quarter last year. The 40.8% revenue increase was led by strong same-store sales growth of 35.5% which was aided by strong demand and improved equipment availability. Segment revenue growth was also supported by contributions from the acquisitions of Pioneer Farm Equipment in February 2023 and Scott Supply in January 2024. Pre-tax income for the fourth quarter of fiscal 2024 was $28.8 million, compared to $19.3 million in the fourth quarter of the prior year; both periods reflect benefits associated with manufacturer incentive plans in the amounts of $7.8 million and $1.8 million, respectively.

Construction Segment - Revenue for the fourth quarter of fiscal 2024 was $100.1 million, compared to $85.1 million in the fourth quarter last year. The year-over-year increase in revenue was driven by a same-store sales increase of 17.7%, which resulted from the timing of equipment deliveries which shifted some revenue into the fourth quarter of this year as compared to the timing of deliveries to customers in the second half of last year. Pre-tax income for the fourth quarter of fiscal 2024 was $4.6 million, and compared to $5.4 million in the fourth quarter last year.

Europe Segment - Revenue for the fourth quarter of fiscal 2024 was $61.6 million, compared to $57.0 million in the fourth quarter last year; foreign currency fluctuations accounted for a $2.6 million increase in revenue. Net of the effect of these foreign currency fluctuations, revenue increased $2.1 million or 3.6%. Pre-tax loss for the fourth quarter of fiscal 2024 was $0.6 million, compared to pre-tax income of $1.5 million in the fourth quarter of the prior year. The decrease in profitability was primarily driven by a partial normalization of equipment margins and higher operating expenses.

Australia Segment - Revenue for the fourth quarter of fiscal 2024 was $69.8 million, pre-tax income for the fourth quarter of fiscal 2024 was $4.1 million.

Fiscal 2024 Full Year Results

Revenue increased 24.9% to $2.8 billion for fiscal 2024. Net income for fiscal 2024 was $112.4 million, or a record $4.93 per diluted share, which included approximately $0.26 per share of benefits associated with manufacturer incentive plans. This compares to $101.9 million, or $4.49 per diluted share, for the prior year, which included approximately $0.21 per share of benefits associated with manufacturer incentive plans. The Company generated EBITDA of $189.3 million in fiscal 2024, representing an increase of 14.6% compared to EBITDA of $165.2 million in fiscal 2023.

Balance Sheet and Cash Flow

Cash at the end of the fourth quarter of fiscal 2024 was $38.1 million. Inventories increased to $1.3 billion as of January 31, 2024, compared to $703.9 million as of January 31, 2023. This change in inventory reflects increases of $375.6 million, $182.3 million, and $38.6 million in new equipment, used equipment and parts inventory, respectively. The increase in inventory includes $110.1 million that was attributable to acquisitions made during fiscal 2024. Outstanding floorplan payables were $893.8 million on $1.4 billion total available floorplan and working capital lines of credit as of January 31, 2024, compared to $258.4 million outstanding floorplan payables as of January 31, 2023.

For the fiscal year ended January 31, 2024, the Company's net cash used for operating activities was $32.3 million, compared to net cash provided by operating activities of $10.8 million for the fiscal year ended January 31, 2023. This decrease in operating cash flow was driven by an increase in inventories and timing and collections of accounts receivable, which was partially offset by an increase in floorplan lines of credit from manufacturers and higher net income for fiscal year 2024. Net cash provided by financing activities increased year over year to $188.6 million in fiscal year 2024 compared to $22.0 million in fiscal year 2023. This increase was driven by a $160.8 million increase in non-manufacturer floorplan payables, which represents the Company's other credit lines including its Bank Syndicate Agreement.

Additional Management Commentary

Mr. Knutson concluded, "Looking ahead to fiscal 2025, we are forecasting consolidated revenue growth primarily led by annualization of the O'Connors acquisition as well as steady growth in our parts and service business. In consideration of the shifting Ag cycle dynamics, we believe Titan and the industry are significantly healthier than the prior cycle. However, we do expect compression of equipment margins in this transition period and will continue investing in our customer care strategy to build out additional service capacity across our network. As such, we are setting expectations for earnings per share that we believe are appropriate and achievable. Our business remains in a position of strength and we expect to demonstrate the durability of our earnings through this cycle following a multi-year effort to implement greater efficiency across our organization."

2025 Modeling Assumptions

The following are the Company's current expectations for fiscal 2025 modeling assumptions.

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