Titan Machinery Inc. · NASDAQ:TITN
Titan Machinery — Q2 2023 Earnings Presentation
23 slides from Titan Machinery's earnings presentation, Aug 25, 2022
Slide 1: Second Quarter FY2023 Earnings Conference Call
Second Quarter FY2023 Earnings Conference Call August 25, 2022
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws. Statements about our beliefs and expectations and statements containing the words “may,” “could,” “would,” “should,” “believe,” “expect,” “antic
Slide 3: Financial Overview
Financial Overview ▪ Second Quarter FY 2023 Results • Revenue $496.5 Million • Adjusted Pre-Tax Income $33.2 Million(1) • Adjusted Diluted EPS $1.10(1) ▪ Conference Call Discussion Points • Industry Overviews • Financial Results • Modeling Assumptions (1) See the Non-GAAP Reconciliations included in
Slide 4: Agriculture Segment Overview
Agriculture Segment Overview ▪ Equipment demand continues to outpace supply • Continuation of elevated commodity prices going into fall harvest • Despite long lead times, presell deliveries positioning Titan well for 2H FY23 • Future new equipment allocation and shorter pricing windows ▪ Increased f
Slide 5: Construction Segment Overview
Construction Segment Overview ▪Higher oil prices positively impacting construction activity in key regions ▪New housing starts and infrastructure projects support demand for construction equipment ▪Construction equipment being sold to Farmers & Ranchers for land improvement, feedlots and material ha
Slide 6: International Segment Overview
International Segment Overview ▪ Summary of crop production conditions across Titan's footprint: • Spring grain crop harvest mainly completed; yield was consistent with the 5- year average • Late season harvest yields expected to be substantially reduced - hot/dry conditions in large parts of Europe
Slide 7: FY2023 Near-Term Objectives
FY2023 | Near-Term Objectives ▪ Recruitment and retention of service technicians and parts support personnel ▪ Onboarding and integration of recent acquisitions: • Heartland Ag Systems, Mark's Machinery, Jaycox Implement ▪ Target additional U.S. agriculture M&A opportunities ▪ Source new and used eq
Slide 8: Second Quarter Revenue Analysis
Second Quarter Revenue Analysis (in millions of dollars) Q2 FY2023 Q2 FY2022 Change Total Revenue $496.5 $377.6 +31.5% Equipment $375.2 $272.7 +37.6% Parts $77.7 $65.3 +18.9% Service $33.4 $29.7 +12.4% Rental & Other $10.3 $9.9 +3.7% 8
Slide 9: Second Quarter Financials
Second Quarter Financials (in millions of dollars, except per share) Q2 FY2023 Q2 FY2022 Change Total Revenue $496.5 $377.6 +31.5% Gross Profit $102.7 $75.0 +36.9% Gross Profit Margin 20.7% 19.9% +80 bps Operating Expenses $68.8 $57.1 -20.6% Operating Expense Margin 13.9% 15.1% +120 bps Floorplan an
Slide 10: Second Quarter Segment Overview
Second Quarter Segment Overview % of % of Change (in millions of dollars) Q2 FY2023 Q2 FY2022 Revenue Revenue ($) Revenue $496.5 $377.6 +31.5% Agriculture $349.0 $219.4 +59.1% Construction $70.0 $80.9 -13.5% International $77.6 $77.3 +0.3% Adjusted Pre-Tax Income(1) $33.2 6.7% $17.1 4.5% +94.2% Agri
Slide 11: Six Months Revenue Analysis
Six Months Revenue Analysis First 6 Months First 6 Months (in millions of dollars) Change FY2023 FY2022 Total Revenue $957.5 $750.3 +27.6% Equipment $731.6 $548.7 +33.3% Parts $146.3 $127.9 +14.3% Service $62.9 $57.4 +9.6% Rental & Other $16.8 $16.3 +3.2% 11
Slide 12: Six Months Financials
Six Months Financials (in millions of dollars, except per share) First 6 Months First 6 Months Change FY2023 FY2022 Total Revenue $957.5 $750.3 +27.6% Gross Profit $191.4 $146.0 +31.1% Gross Profit Margin 20.0% 19.5% +50 bps Operating Expenses $133.0 $113.5 -17.2% Operating Expense Margin 13.9% 15.1
Slide 13: Six Months Segment Overview
Six Months Segment Overview First 6 Months % of First 6 Months % of (in millions of dollars) Change FY2023 Revenue FY2022 Revenue Revenue $957.5 $750.3 +27.6% Agriculture $667.5 $448.9 +48.7% Construction $137.0 $149.6 -8.4% International $153.1 $151.9 +0.8% Adjusted Pre-Tax Income(1) $57.0 6.0% $30
Slide 14: Balance Sheet Highlights
Balance Sheet Highlights ▪ $142 Million of Cash ▪ Equipment Inventory Increased $121 Million to $444 Million as of July 31, 2022 vs. $324 Million as of January 31, 2022 • $130 Million increase in new equipment and $9 Million decrease in used equipment • Equipment inventory turn(1) of 3.6 vs. 2.7 in
Slide 15: Equipment Inventory
Equipment Inventory Used Inventory New Inventory Non-Interest Bearing Inventory Inventory Turns 4.0 3.6 3.5 3.4 3.5 3.1 3.0 2.7 2.3 2.5 Millions Ratio 2.0 1.8 2.0 39.8% 47.4% 1.5 1.5 36.4% 44.3% 45.5% 36.4% 41.2% 1.0 29.2% 33.0% 0.5 0.0 Q4 FY19 Q4 FY20 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23
Slide 16: FY 2023 Outlook
FY 2023 Outlook Updated FY2022 Modeling Assumptions: Current Assumptions Previous Assumptions Segment Revenue Agriculture(1) Up 50-55% Up 37-42% Construction(2) Down 5-10% Down 10-15% International(3) Down 0-5% Down 0-5% Diluted EPS(4) $3.70 - $4.00 $2.90 - $3.20 (1) Includes the full year impact of
Slide 17: Appendix
Appendix TITAN MACHINERY Power & Precision to Grow*
Slide 18: Operating Expenses & Absorption
Operating Expenses & Absorption(1) Operating Expenses Absorption Rate $300 85.0% 83.9% 82.2% 82.5% 80.0% $250 77.7% 77.5% Millions Rate 75.0% 72.0% 72.5% 71.6% $200 70.0% 68.9% 67.5% $150 65.0% FY18 FY19 FY20 FY21 FY22 TTM FY23 (1) Absorption is calculated in a given period by dividing our gross pro
Slide 19: Same Store Results
Same Store Results(1) Three Months Ended July 31, Percent Six Months Ended July 31, Percent (in millions of dollars) 2022 2021 Change 2022 2021 Change Same Store Sales Agriculture $ 319.6 $ 219.4 45.7 % $ 609.6 $ 448.9 35.8 % Construction 69.9 60.9 14.9 % 135.5 113.3 19.5 % International 77.6 73.2 5
Slide 20: Adjusted Debt to Tangible Net Worth
Adjusted Debt to Tangible Net Worth Adjusted Debt Tangible Net Worth Adjusted Debt to Tangible Net Worth Covenant Limit $600 4.0 3.0 $400 Millions Ratio 2.0 1.3 $200 1.1 1.0 1.0 0.9 0.9 1.0 $— — Q4 FY19 Q4 FY20 Q4 FY21 Q4 FY22 Q1 FY23 Q2 FY23 Note: Adjusted debt is calculated as total liabilities le
Slide 21: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables (in thousands, except per share data) Three Months Ended July 31, Six Months Ended July 31, 2022 2021 2022 2021 Adjusted Income Before Income Taxes Income Before Income Taxes $ 33,150 $ 15,632 $ 56,734 $ 29,311 Adjustments Impairment charges — 1,498 — 1,498 Ukraine rem
Slide 22: Non-GAAP Reconciliation Tables, continued
Non-GAAP Reconciliation Tables, continued (in thousands, except per share data) Three Months Ended July 31, Six Months Ended July 31, 2022 2021 2022 2021 Adjusted EBITDA Net Income $ 24,959 $ 11,249 $ 42,499 $ 21,796 Adjustments Interest expense, net of interest income 1,283 1,049 2,392 2,100 Provis
Slide 23: Non-GAAP Reconciliation Tables, continued
Non-GAAP Reconciliation Tables, continued (in thousands, except per share data) Three Months Ended July 31, Six Months Ended July 31, 2022 2021 2022 2021 Adjusted Income Before Income Taxes - International Income/(Loss) Before Income Taxes $ 5,870 $ 430 $ 10,195 $ 3,238 Adjustments Impairment charge