Titan Machinery, a leading network of full-service agricultural and construction equipment stores, including a number of rental branches, last week reported revenue for first quarter of fiscal 2013 increased 32.5 percent to $421.7 million from revenue of $318.2 million in the first quarter last year. All four of the company’s revenue sources — equipment, parts, service, and rental and other — contributed to this period-over-period revenue growth.
Equipment sales were $322.5 million for the first quarter of fiscal 2013, compared to $249.2 million in the first quarter last year. Parts sales were $58.8 million for the quarter, compared to $41.9 million in the first quarter last year. Revenue generated from service was $29.8 million for the first quarter of fiscal 2013, compared to $21.0 million in the same period last year. Revenue from rental and other increased to $10.6 million from $6.1 million last year.
Gross profit for the first quarter was $70.4 million, compared to $52.8 million in the first quarter last year. The company’s gross profit margin was 16.7 percent in the first quarter of fiscal 2013, compared to 16.6 percent in the first quarter last year. Gross profit from parts, service, and rental and other for the first quarter of fiscal 2013 was 57 percent of overall gross profit and increased to $40.0 million from $26.9 million in the year-ago period.
“During the first quarter, we generated strong organic and acquired revenue growth in both our Agriculture and Construction segments as our business continues to benefit from a favorable operating environment, including a healthy agriculture economy and steady improvements in the construction market in our footprint,” said David Meyer, Titan Machinery’s chairman and CEO. “We have recently made several key acquisitions across all growth platforms including agriculture retail, construction retail, international and rental.”
For the first quarter of fiscal 2013, operating expenses were 13.0 percent of revenue compared to 12.4 percent for the first quarter of last year, reflecting a larger portion of overall business coming from the Construction segment, which generally has higher operating expenses such as occupancy costs and expenses related to the Construction segment’s rental business.
Pre-tax income for the first quarter of fiscal 2013 was $12.4 million, flat compared to the first quarter last year. In the Construction segment the company reported a pre-tax loss of $0.4 million in the quarter, compared to pre-tax Construction segment income of $0.7 million in the first quarter last year. The year-over-year decline in company pre-tax margin was primarily because of increased operating expenses associated with the recently expanded rental business occurring in the seasonally slower first quarter as well as increased floorplan expense due to higher inventory levels.
In fiscal 2013 to date, the company has completed five acquisitions, including three agriculture equipment dealership locations in the United States, three construction equipment dealership locations in the U.S., one independent rental location in the U.S., and seven agriculture equipment dealership locations in Europe. The company also opened one new agriculture equipment dealership in Europe.
Titan Machinery’s expansion into Europe represents an additional growth platform and an opportunity to capture a larger percentage of the global agriculture economy by leveraging the company’s operating model and dealership experience. In addition, the company expanded its construction footprint into Colorado with the acquisition of three locations and increased the size of its rental business with an additional rental company acquisition.
“Based on our first-quarter results and the outlook for remainder of this fiscal year, we are reiterating our annual revenue and net income guidance and remain on track to deliver another record year in fiscal 2013,” Meyer said.
Titan Machinery, headquartered in West Fargo, N.D., 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 98 North American dealerships in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming, Wisconsin, and Colorado, including two outlet stores, as well as 10 European dealerships in Romania and Bulgaria. It is No. 41 on the RER 100.