Titan Machinery Inc. (Nasdaq: TITN), a leading network of full-service
agricultural and construction equipment stores, today reported
preliminary financial results for the fiscal fourth quarter and full
year ended January 31, 2015.
Preliminary Fiscal 2015 Fourth Quarter Results
For the fourth quarter of fiscal 2015, revenue is expected to be
approximately $491 million compared to revenue of $708.6 million in the
fourth quarter last year.
The Company is recognizing non-cash impairment charges of approximately
$31 million in the fourth quarter of fiscal 2015, primarily related to
goodwill and other intangible assets within the Agriculture segment.
Pre-tax loss for the fourth quarter of fiscal 2015 is expected to be
approximately $37 million. Excluding the aforementioned non-cash
impairment charges, realignment costs of $0.5 million and Ukraine
currency devaluation of $0.8 million, adjusted pre-tax loss for the
fourth quarter of fiscal 2015 is expected to be approximately $5
million. This compares to pre-tax income of $2.8 million in the fourth
quarter last year, which included a $10.0 million non-cash impairment
charge; fourth quarter of fiscal 2014 adjusted pre-tax income was $12.8
million. Adjusted pre-tax Agriculture segment income is expected to be
approximately $2 million for the fourth quarter of fiscal 2015, compared
to pre-tax income of $25.1 million in the fourth quarter last year.
Adjusted pre-tax Construction segment loss is expected to be
approximately $5 million for the fourth quarter of fiscal 2015, compared
to adjusted pre-tax loss of $8.2 million in the fourth quarter last
year. Adjusted pre-tax International segment loss is expected to be
approximately $3 million for the fourth quarter of fiscal 2015, compared
to adjusted pre-tax loss of $2.3 million in the fourth quarter last year.
Net loss attributable to common stockholders for the fourth quarter of
fiscal 2015 is expected to be in the range of $26.3 million to $27.4
million, or $1.25 to $1.30 per diluted share. This net loss includes the
non-GAAP adjustments totaling approximately $22.6 million (or $1.07 per
diluted share). Excluding these non-GAAP items, adjusted net loss
attributable to common stockholders for the fourth quarter of fiscal
2015 is expected to be in the range of $3.7 million to $4.8 million, or
$0.18 to $0.23 per diluted share. For the fourth quarter of fiscal 2014,
net loss attributable to common stockholders was $0.4 million, or a loss
per diluted share of $0.02. Excluding non-GAAP items totaling $7.8
million (or $0.37 per share) related to impairment and income tax
valuation allowance on certain deferred tax assets of its International
dealerships, adjusted net income attributable to common stockholders for
the fourth quarter of fiscal 2014 was $7.4 million, or $0.35 per diluted
share.
Balance Sheet and Cash Flow
The Company ended the fourth quarter of fiscal 2015 with cash of
approximately $128 million, which is an increase of approximately $54
million over the cash balance of $74.2 million as of January 31, 2014.
The Company's inventory level decreased to approximately $879 million as
of January 31, 2015, compared to $1.08 billion as of January 31, 2014.
This includes a $168 million reduction in equipment inventory. The
Company had $629 million outstanding floorplan payables on $1.2 billion
total discretionary floorplan lines of credit as of January 31, 2015.
Floorplan payables decreased by approximately $122 million over the
balance of $750.5 million as of January 31, 2014.
For the fiscal year ended January 31, 2015, the Company's net cash
provided by operating activities is expected to be approximately $41
million on a GAAP basis. The Company evaluates its cash flow from
operating activities net of all floorplan payable activity. Taking this
adjustment into account, adjusted net cash provided by operating
activities is expected to be approximately $82 million for the fiscal
year ended January 31, 2015.
The Company is working with the lenders in its bank syndicate with
respect to its expected noncompliance with the current minimum income
before income tax covenant as of the end of its January 31, 2015 fiscal
year. The Company anticipates amending this covenant associated with
this credit facility effective as of the end of its January 31, 2015
fiscal year and for future periods, and therefore does not anticipate
being in violation of any covenants as of January 31, 2015. The
Company's successful working capital management during fiscal 2015
provided strong balance sheet metrics as of January 31, 2015, including
a $54 million increased cash balance, increased availability under other
existing credit facilities, and reduced level of financial leverage, as
evidenced by improvement in the Company's total liabilities to tangible
net worth ratio from 3.1 as of January 31, 2014 to 2.6 as of January 31,
2015. Moreover, the Company believes its balance sheet metrics will be
further enhanced in fiscal 2016 from initiatives to further reduce
inventory and generate additional cash from operating activities in
fiscal 2016.
Preliminary Fiscal 2015 Full Year Results
For the full year ended January 31, 2015, revenue is expected to be
approximately $1.90 billion compared to $2.23 billion last year. Pre-tax
loss for fiscal 2015 is expected to be approximately $38 million.
Excluding the aforementioned non-cash impairment charge of $31 million,
realignment costs of $3 million and Ukraine currency devaluation of $6
million, adjusted pre-tax income is expected to be approximately $2
million. This compares to pre-tax income of $18.4 million, or adjusted
pre-tax income of $28.4 million last year. GAAP net loss attributable to
common stockholders for fiscal 2015 is expected to be in the range of
$30.9 million to $32.0 million, or $1.48 to $1.53 per diluted share.
Adjusted net loss attributable to common stockholders for fiscal 2015 is
expected to be in the range of $1.4 million to $2.5 million, or $0.07 to
$0.12 per diluted share. For fiscal 2014, GAAP net income attributable
to common stockholders was $8.7 million, or $0.41 per diluted share.
Adjusted net income attributable to common stockholders for fiscal 2014
was $16.5 million, or $0.78 per diluted share.
First Quarter Fiscal 2016 Realignment
To better align its business in certain markets, the Company is reducing
its headcount by approximately 14%, which includes headcount reductions
at stores in each of its operating segments and its Shared Resource
Center. This includes the closing of three Agriculture stores and one
Construction store. In addition, the Company is reducing discretionary
spending levels across all parts of the business and is restructuring
certain employee compensation and benefit programs to better align pay
for performance. The realignment costs associated with the headcount
reductions and store closings are estimated to total approximately $2.0
million, of which $0.1 million was recognized in the fourth quarter of
fiscal 2015 and $1.9 million (or $0.05 per diluted share) is expected to
be recognized in the first quarter of fiscal 2016. The full-year pro
forma benefit to pre-tax earnings of this headcount reduction is
estimated to be approximately $21 million (or $0.59 per share), which
equates to a pro forma benefit of approximately $20 million (or $0.56
per share) for fiscal 2016.
Management Comments
David Meyer, Titan Machinery's Chairman and Chief Executive Officer,
stated, "Our Agriculture segment performance was impacted by continued
industry headwinds in this segment. We reduced our equipment inventory
by approximately $168 million in fiscal 2015, which enabled us to
generate approximately $82 million of adjusted cash flow from
operations. We believe we are well positioned to achieve further
inventory reductions and strong adjusted cash flow from operations in
fiscal 2016."
Mr. Meyer continued, "We are implementing a realignment plan in the
first quarter of fiscal 2016. These actions, combined with previously
implemented initiatives in our International segment, are better
aligning our cost structure with the markets we serve."
"As we begin fiscal 2016, we remain focused on managing the controllable
aspects of our business, including taking steps to further reduce our
inventory levels and operating expenses. We are confident that these
improvements, combined with our focus on improving operational
performance, will drive strong cash flow from operations in fiscal 2016
and better position our business for future growth opportunities."
Fiscal 2016 Modeling Assumptions
The following are the Company's current expectations for certain fiscal
2016 modeling assumptions:
-
Agriculture Same Store Sales Down 20% to 25%
-
Construction Same Store Sales Flat
-
International Same Store Sales Flat
-
Equipment Margins Between 7.7 % and 8.3%
-
Expect to be profitable on an adjusted diluted earnings per share basis
Conference Call Information
The Company will release its complete financial results for the fourth
quarter and full year ended January 31, 2015, on April 15, 2015,
followed by an investor conference call at 7:30 a.m. Central time (8:30
a.m. Eastern time).
Investors interested in participating in the live call can dial (888)
504-7963 from the U.S. International callers can dial (719) 325-2315. A
telephone replay will be available approximately two hours after the
call concludes and will be available through Wednesday, April 29, 2015,
by dialing (877) 870-5176 from the U.S., or (858) 384-5517 from
international locations, and entering confirmation code 7972387.
There also will be a simultaneous, live webcast available on the
Investor Relations section of the Company's web site at www.titanmachinery.com.
The webcast will be archived for 30 days.
Non-GAAP Financial Measures
Within this announcement, the Company makes reference to certain
adjusted financial measures, which have directly comparable GAAP
financial measures as identified in this release. These adjusted
measures are provided so that investors have the same financial data
that management uses with the belief that it will assist the investment
community in properly assessing the underlying performance of the
Company for the periods being reported. The presentation of this
additional information is not meant to be considered a substitute for
measures prepared in accordance with GAAP. A reconciliation of adjusted
measures to the comparable GAAP financial measures is included with this
release.
About Titan Machinery Inc.
Titan Machinery Inc., founded in 1980 and headquartered in West Fargo,
North Dakota, is a multi-unit business with mature locations and
newly-acquired locations. The Company owns and operates a network of
full service agricultural and construction equipment stores in the
United States and Europe. The Titan Machinery network consists of 92
North American dealerships in North Dakota, South Dakota, Iowa,
Minnesota, Montana, Nebraska, Wyoming, Wisconsin, Colorado, Arizona, and
New Mexico, including two outlet stores, and 16 European dealerships in
Romania, Bulgaria, Serbia, and Ukraine. The Titan Machinery dealerships
represent one or more of the CNH Industrial Brands (CNHI), including
CaseIH, New Holland Agriculture, Case Construction, New Holland
Construction, and CNH Capital. Additional information about Titan
Machinery Inc. can be found at www.titanmachinery.com.
Forward Looking Statements
Except for historical information contained herein, the statements in
this release are forward-looking and made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements made herein, which include statements
regarding our preliminary financial results, Company initiatives and
improvements, our revenue realization, growth and profitability
expectations, the planned sale of two Agriculture stores, leverage
expectations, and the expected results of operations for upcoming
quarters and the fiscal year ending January 31, 2016, including
components of such expected results of operations, involve known and
unknown risks and uncertainties that may cause Titan Machinery's actual
results in current or future periods to differ materially from
forecasted results. The Company's risks and uncertainties include, among
other things, a substantial dependence on a single distributor, the
continued availability of organic growth and acquisition opportunities,
potential difficulties integrating acquired stores, industry supply
levels, fluctuating agriculture and construction industry economic
conditions, the success of recently implemented initiatives within the
Company's Construction segment, the uncertainty and fluctuating
conditions in the capital and credit markets, difficulties in conducting
international operations, governmental agriculture policies, seasonal
fluctuations, climate conditions, disruption in receiving ample
inventory financing, and increased competition in the geographic areas
served. These and other risks are more fully described in Titan
Machinery's filings with the Securities and Exchange Commission,
including the Company's most recently filed Annual Report on Form 10-K.
Titan Machinery conducts its business in a highly competitive and
rapidly changing environment. Accordingly, new risk factors may arise.
It is not possible for management to predict all such risk factors, nor
to assess the impact of all such risk factors on Titan Machinery's
business or the extent to which any individual risk factor, or
combination of factors, may cause results to differ materially from
those contained in any forward-looking statement. Titan Machinery
disclaims any obligation to update such factors or to publicly announce
results of revisions to any of the forward-looking statements contained
herein to reflect future events or developments.
| |
| |
| |
| |
| |
| TITAN MACHINERY INC. |
| Preliminary Non-GAAP Reconciliations |
| (in thousands, except per share data) |
| | | | | | | | |
|
| | | | | | | | |
|
| | |
Three Months Ended January 31,
| |
Year Ended January 31,
|
| | |
|
2015
|
| |
|
2014
|
| |
|
2015
|
| |
|
2014
|
|
| | |
(Unaudited)
| |
(Unaudited)
| |
(Unaudited)
| |
(Unaudited)
|
| Net Income (Loss) Attributable to Titan Machinery Inc. Common
Stockholders (1) | | | | | | | |
|
Net Income (Loss) Attributable to Titan Machinery Inc. Common
Stockholders
| |
$
|
(26,800
|
)
| |
$
|
(387
|
)
| |
$
|
(31,400
|
)
| |
$
|
8,722
| |
|
Non-GAAP Adjustments (2)
| | | | | | | | |
|
Impairment
| | |
21,200
| | | |
6,088
| | |
|
21,400
| | | |
6,091
| |
|
Realignment / Store Closing Costs
| | |
300
| | | |
-
| | | |
2,100
| | | |
-
| |
|
Ukraine Remeasurement
| | |
800
| | | |
-
| | | |
5,700
| | | |
-
| |
|
Income Tax Valuation Adjustments
| |
|
300
|
| |
|
1,700
|
| |
|
300
|
| |
|
1,701
|
|
|
Adjusted Net Income (Loss) Attributable to Titan Machinery Inc.
Common Stockholders
| |
$
|
(4,200
|
)
| |
$
|
7,401
|
| |
$
|
(1,900
|
)
| |
$
|
16,514
|
|
| | | | | | | | |
|
| Earnings (Loss) per Share - Diluted (1) | | | | | | | | |
|
Earnings per Share - Diluted
| |
$
|
(1.27
|
)
| |
$
|
(0.02
|
)
| |
$
|
(1.50
|
)
| |
$
|
0.41
| |
|
Non-GAAP Adjustments (2)
| | | | | | | | |
|
Earnings per Share - Diluted Impact of Impairment
| | |
1.01
| | | |
0.29
| | | |
1.02
| | | |
0.29
| |
|
Earnings per Share - Diluted Impact of Realignment / Store Closing
Costs
| | |
0.01
| | | |
-
| | | |
0.10
| | | |
-
| |
|
Earnings per Share - Diluted Impact of Ukraine Remeasurement
| | |
0.04
| | | |
-
| | | |
0.27
| | | |
-
| |
|
Earnings per Share - Diluted Impact of Income Tax Valuation
Adjustments
| |
|
0.01
|
| |
|
0.08
|
| |
|
0.02
|
| |
|
0.08
|
|
|
Adjusted Earnings per Share - Diluted
| |
$
|
(0.20
|
)
| |
$
|
0.35
|
| |
$
|
(0.09
|
)
| |
$
|
0.78
|
|
| | | | | | | | |
|
|
(1) Amounts for the three months and year-ended January 31, 2015
reflect the approximate mid-point of the expected range of
preliminary results.
|
|
(2) Adjustments are net of the impact of amounts related to income
taxes, attributable to noncontrolling interests, and allocated to
participating securities.
|
| | | | | | | | |
|
| Net cash provided by (used for) operating activities | | | | | | | | |
|
Net cash used for operating activities
| | | | | |
$
|
41,300
| | |
$
|
(82,243
|
)
|
|
Net change in non-manufacturer floorplan payable
| | | | | |
|
40,800
|
| |
|
31,395
|
|
|
Adjusted net cash provided by (used for) operating activities
| | | | | |
$
|
82,100
|
| |
$
|
(50,848
|
)
|
Investor Relations Contact:
ICR, Inc.
John Mills,
Partner
646-277-1254
jmills@icrinc.com