Titan Machinery Inc. (TITN) reported fiscal 2010 fourth-quarter results yesterday. The company posted a 6.1% growth in net income to $3.4 million or 19 cents per share, up from $3.2 million or 18 cents per share in the year-ago period. However, quarterly EPS came in way behind the Zacks Consensus Estimate of 26 cents as lower gross margin and increased overheads partially offset strong revenues.
Fargo, North Dakota-based Titan Machinery owns and operates a network of full service agricultural and construction equipment stores in the U.S. The company’s stores are spread across 73 dealerships in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska and Wyoming.
During the quarter, total revenue recorded a robust growth of 33.5% to $252.3 million from $189.0 million in the year-ago quarter. The growth was mainly attributable to a 22.1% increase in same-store sales. In terms of segments, agricultural equipment same-store sales grew by 25.1%, while construction equipment same-store sales decreased 1.9%.
Titan Machinery’s gross margin fell by 250 basis points (bps) to 14.7%, compared to 17.2% in the year-ago quarter. The decline was mainly attributable to reduced equipment margins as a result of lower manufacturer program incentives. Quarterly operating expenses increased 14.2% year-over-year to $29.8 million. Operating income grew by 12.4% year-over-year to $7.1 million, primarily due to higher sales. However, operating margin dipped by 50 bps to 2.8% from 3.4% in the year-ago period, mainly due to lower gross margin.
At the end of the quarter, Titan Machinery had cash and cash equivalents of $76.2 million and long-term debt of $21.9 million, compared to $41.0 million of cash and $14.8 million of long-term debt in the year-ago period. During fiscal 2010, the company raised $23.9 million in long-term borrowings and utilized $19.1 million of cash towards debt repayments.
Moving forward, Titan Machinery anticipates revenue of $920 million to $980 million for the fiscal year ending January 2011. Net income for the fiscal is expected between $16.7 million and $18.5 million or $0.92 to $1.02 per share. The guidance is in line with the Zacks Consensus Estimate of $0.97 per share, which moved down by 4 cents in just the past week.
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