Titan Machinery Continues Downward Revenue Trend in Fiscal Second Quarter
Titan Machinery, a network of full-service agricultural and construction equipment store posted $278.3 million in revenue for the second quarter of fiscal 2017 compared to $334.2 million in the second quarter of fiscal 2016, a 16.7-percent decrease. Revenue from rental and other, which is primarily rental, was $15.4 million for the quarter, compared to $18.3 million in the year-ago quarter, a 15.8-percent slide.
Equipment sales declined 21.6 percent from $221 million a year ago to $173.3 million in the recently concluded quarter. Parts sales declined a more modest 6.1 percent from $62.1 million a year ago to $58.3 million, while revenue generated from service was almost flat, dropping from $32.8 million to $31.3 million.
Gross profit for the second quarter of fiscal 2017 was $52.9 million compared to $62.1 million in the year-ago period, reflecting a decrease in revenue. Gross profit from parts, service and rental and other for the second quarter of fiscal 2017 was 76.6 percent compared to 71.2 percent a year ago.
For the first six months of the fiscal year, revenue was $563.2 million compared to $687.4 million for the same period a year ago, an 18-percent decline.
“In the second quarter, we focused on managing the controllable aspects of our business to best navigate the challenging operating environment,” said David Meyer, Titan Machinery’s chairman and CEO. “We continue to concentrate on our inventory reduction, its positive impact on our balance sheet and expect to achieve the $100 million inventory reduction goal for fiscal 2017. We reduced used inventory in the first half of fiscal 2017 by $39 million or 15 percent and through the first six months of this year we exceeded our target by $13 million or 40 percent on our marketing plan of aged inventory through alternative channels.”
Meyer told an investor conference call that equipment and rental demand remain low in energy markets because of depressed oil prices. “Rental equipment continues to be relocated to the surrounding regions, which is creating a competitive rental market and keeping rental rates low in many of our locations in the upper Midwest,” he said, adding that the company expects its construction segment revenue to be flat in fiscal 2017 with improved operating results compared to last year “as we benefit from the operating and inventory initiatives we have put in place.”
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.