Titan Machinery, a network of full-service agricultural and construction equipment stores, reported financial results for the fiscal first quarter ended April 30, 2021.

David Meyer, Titan Machinery's chairman and chief executive officer, stated, "The fiscal first quarter exceeded our expectations on all fronts with impressive operating leverage that showcases the earnings power of our efficient dealership network. On a consolidated basis, we drove a 26% increase in equipment sales and a 10% increase in our combined parts and service business during the quarter compared to the prior year. At the segment-level, we are very happy with our Agriculture segment, which generated pre-tax income growth of 82%. We are also pleased with the continued progress we are making in our Construction segment, which generated solid top-line growth and drove another quarter of positive pre-tax income and builds upon the momentum from its profitable fiscal 2021 performance. Our International segment experienced a resurgence during the quarter with strong equipment demand and delivered a corresponding improvement in pre-tax income as well. I'm proud of our team's performance and pleased to share this success with all our stakeholders."

Fiscal 2022 First Quarter Results

Consolidated Results

For the first quarter of fiscal 2022, revenue increased to $372.7 million compared to $310.2 million in the first quarter last year. Equipment sales were $276 million for the first quarter of fiscal 2022, compared to $218.5 million in the first quarter last year. Parts sales were $62.6 million for the first quarter of fiscal 2022, compared to $56.6 million in the first quarter last year. Revenue generated from service was $27.7 million for the first quarter of fiscal 2022, compared to $25.6 million in the first quarter last year. Revenue from rental and other was $6.4 million for the first quarter of fiscal 2022, compared to $9.5 million in the first quarter last year.

Gross profit for the first quarter of fiscal 2022 was $71 million, compared to $58.4 million in the first quarter last year. Gross profit margin increased 20 basis points to 19% vs. the comparable period last year. The increase in gross profit was primarily the result of increased equipment sales and improved equipment margins compared to the first quarter of last year.

Operating expenses increased by $3.4 million to $56.4 million for the first quarter of fiscal 2022, compared to $53.1 million in the first quarter last year primarily due to higher variable expenses on increased revenues. Operating expenses as a percentage of revenue decreased 200 basis points to 15.1% for the first quarter of fiscal 2022, compared to 17.1% of revenue in the prior year period.

Floorplan and other interest expense was $1.5 million in the first quarter of fiscal 2022, compared to $2.1 million for the same period last year. The decrease was due to lower borrowings and a lower interest rate environment.

In the first quarter of fiscal 2022, net income was $10.5 million, or earnings per diluted share of $0.47, compared to net income of $2.3 million, or earnings per diluted share of $0.10, for the first quarter of last year.

On an adjusted basis, net income for the first quarter of fiscal 2022 was $10.4 million, or adjusted earnings per diluted share of $0.46, compared to adjusted net income of $3.4 million, or adjusted earnings per diluted share of $0.15, for the first quarter of last year. Adjusted first quarter fiscal 2022 net income excludes a $0.1 million Ukraine remeasurement gain, while the adjusted first quarter fiscal 2021 net income excludes $1.7 million of expenses, including ERP transition costs, impairment charges, and a Ukraine remeasurement loss.

Adjusted EBITDA was $19.8 million in the first quarter of fiscal 2022, compared to $11.1 million in the first quarter of last year.

Segment Results

Agriculture Segment - Revenue for the first quarter of fiscal 2022 was $229.6 million, compared to $193.6 million in the first quarter last year. The increase in revenue was primarily driven by strong demand for equipment. Pre-tax income for the first quarter of fiscal 2022 was $11.2 million, compared to $6.2 million of pre-tax income in the first quarter last year.

Construction Segment - Revenue for the first quarter of fiscal 2022 was $68.6 million, compared to $60.1 million in the first quarter last year. The increase in revenue was driven by increased equipment sales partially offset by lower rental revenue. Pre-tax income for the first quarter of fiscal 2022 was $0.1 million, compared to a pre-tax loss of $2.9 million and an adjusted pre-tax loss of $2.7 million in the first quarter last year.

International Segment - Revenue for the first quarter of fiscal 2022 was $74.5 million, compared to $56.5 million in the first quarter last year. The increase in revenue was driven by strong equipment sales. Pre-tax income for the first quarter of fiscal 2022 was $2.8 million, compared to a pre-tax loss of $0.3 million in the first quarter last year. Adjusted pre-tax income for the first quarter of fiscal 2022 was $2.7 million, compared to adjusted pre-tax income of $0.5 million in the first quarter last year.

Balance Sheet and Cash Flow

Cash at the end of the first quarter of fiscal 2022 was $89.7 million. Inventories decreased to $415.7 million as of April 30, 2021, compared to $418.5 million as of Jan. 31, 2021. This inventory decrease includes a $7.7 million decrease in equipment inventory, which reflects an increase in new equipment inventory of $5.3 million and a $13 million decrease in used equipment inventory. Outstanding floorplan payables were $169.1 million on $770.0 million total available floorplan lines of credit as of April 30, 2021, compared to $161.8 million outstanding floorplan payables as of Jan. 31, 2021.

In the first three months of fiscal 2022, net cash provided by operating activities was $27 million, compared to net cash used for operating activities of $5.4 million in the first three 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 provided by operating activities was $7 million in the first three months of fiscal 2022, compared to adjusted net cash used for operating activities of $3.6 million in the first three months of fiscal 2021.

Meyer concluded, "The renewed strength across the agriculture complex, following an improved commodity outlook, is having a positive impact on all our businesses. The positive shift in industry conditions is recognized by our customers, and we are beginning to see some of the pent-up demand come back after several years of more conservative posturing. Titan Machinery continues to be in a strong position to serve our customers, while simultaneously serving shareholders with higher levels of profitability that we knew were possible following our multi-year effort to streamline our organization and improve our balance sheet."