Titan Machinery Boosts Balance Sheet despite Agricultural Weakness
Titan Machinery continued its downward revenue spiral with fiscal 2017 first quarter total revenue at $284.9 million compared to $353.2 million in the first quarter of 2016, a 19.3-percent drop. “Rental and other” declined 16.7 percent from $13.8 million a year ago to $11.5 in this year’s first quarter. The numbers cover the company’s 2017 fiscal first quarter ended April 30.
The decline is primarily in the agricultural arena for the North Dakota-based distributor, with a 25.5-percent revenue plunge from $239.9 million a year ago to $178.8 million this year. Construction equipment-related revenues only declined 3.9 percent, from $81.2 million to $78 million. Revenue for the companys international distributorships declined 12.8 percent.
While revenue has declined during the past couple of years, Titan has made adjustments in its organizational cost structure.
“First quarter financial results were in-line with our expectations and we are on track to achieve our $100 million inventory reduction goal and modeling assumptions for fiscal 2017,” said David Meyer, Titan Machinery’s chairman and CEO. “As expected, we continue to face headwinds in the agricultural and construction segments, but believe we are well positioned to generate positive adjusted operating cash flow for fiscal 2017 due to improvements we have made in our operating expenses and planned reduction in our inventory.
“We are confident we are taking the necessary steps to navigate through this challenging environment and are ahead of schedule in the marketing of our aged inventory, having sold $25 million of the $74 million targeted aged equipment inventory in the first quarter of fiscal 2017, which exceeded our first quarter target of $22 million. The deleveraging that we’ve accomplished in the past couple of years and our expected continued operating cash flow enabled us to buy back $30.1 million of our senior convertible notes ahead of the maturity date and at a meaningful discount. This transaction further strengthened our balance sheet while providing a positive financial gain to our stockholders in the first quarter of fiscal 2017.”
Based in West Fargo, N.D., Titan Machinery is No. 43 on the RER 100.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.