Titan Machinery Inc. · NASDAQ:TITN
Titan Machinery — Q3 2023 Earnings Presentation
23 slides from Titan Machinery's earnings presentation, Nov 30, 2022
Slide 1: Third Quarter FY2023 Earnings Conference Call
Third Quarter FY2023 Earnings Conference Call November 30, 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 ▪ Third Quarter FY 2023 Results • Revenue $668.8 Million • Adjusted Pre-Tax Income $54.9 Million(1) • Adjusted Diluted EPS $1.83(1) ▪ Conference Call Discussion Points • Industry Overviews • Financial Results • Modeling Assumptions (1)See the Non-GAAP Reconciliations included in t
Slide 4: Agriculture Segment Overview
Agriculture Segment Overview • Equipment demand continues to outpace supply • Continuation of elevated commodity prices • Excellent harvest conditions across footprint • Strong demand for quality used equipment • Future new equipment allocation methodology and shorter pricing windows • Supply-side c
Slide 5: Construction Segment Overview
Construction Segment Overview • Higher oil prices positively impacting construction activity in key regions • Construction activity and infrastructure projects support solid demand for construction equipment • Residential market remains intact, but moderating • Construction equipment being sold to F
Slide 6: International Segment Overview
International Segment Overview • Summary of crop production conditions across Titan's footprint: • Grain crop harvest completed; yield was slightly below the 5-year average • Below average yields for late season crops due to dry weather • September moisture delayed Germany harvest but welcomed for w
Slide 7: FY2023 Near-Term Objectives
FY2023 | Near-Term Objectives ▪Source new and used equipment to meet customer demand ▪Integration of Heartland Ag Systems acquisition ▪Continued progress of ERP and IT systems phase-in plan ▪Recruitment and retention of service technicians and parts support personnel ▪Target additional U.S. agricult
Slide 8: Third Quarter Revenue Analysis
Third Quarter Revenue Analysis (in millions of dollars) Q3 FY2023 Q3 FY2022 Change Total Revenue $668.8 $454.0 +47.3% Equipment $509.0 $329.8 +54.3% Parts $108.7 $80.5 +35.0% Service $39.0 $32.0 +21.7% Rental & Other $12.1 $11.6 +4.2% 8
Slide 9: Third Quarter Financials
Third Quarter Financials (in millions of dollars, except per share) Q3 FY2023 Q3 FY2022 Change Total Revenue $668.8 $454.0 +47.3% Gross Profit $139.6 $92.5 +50.9% Gross Profit Margin 20.9% 20.4% +50 bps Operating Expenses $84.9 $62.9 -34.8% Operating Expense Margin 12.7% 13.9% +120 bps Floorplan and
Slide 10: Third Quarter Segment Overview
Third Quarter Segment Overview Q3 FY2023 % of Q3 FY2022 % of Revenue Change ($) (in millions of dollars) Revenue Revenue $668.8 $454.0 +47.3% Agriculture $493.3 $281.5 +75.2% Construction $86.4 $79.7 +8.4% International $89.0 $92.7 -4.0% Adjusted Pre-Tax Income(1) $54.9 8.2% $28.7 6.3% +91.3% Agricu
Slide 11: Nine Months Revenue Analysis
Nine Months Revenue Analysis (in millions of dollars) First 9 Months First 9 Months Change FY2023 FY2022 Total Revenue $1,626.3 $1,204.3 +35.0% Equipment $1,240.6 $878.5 +41.2% Parts $255.0 $208.5 +22.3% Service $101.8 $89.4 +13.9% Rental & Other $28.9 $27.9 +3.6% 11
Slide 12: Nine Months Financials
Nine Months Financials (in millions of dollars, except per share) First 9 Months First 9 Months Change FY2023 FY2022 Total Revenue $1,626.3 $1,204.3 +35.0% Gross Profit $331.0 $238.5 +38.8% Gross Profit Margin 20.4% 19.8% +60 bps Operating Expenses $217.8 $176.5 -23.5% Operating Expense Margin 13.4%
Slide 13: Nine Months Segment Overview
Nine Months Segment Overview (in millions of dollars) First 9 Months % of First 9 Months % of Change FY2023 Revenue FY2022 Revenue Revenue $1,626.3 $1,204.3 +35.0% Agriculture $1,160.8 $730.4 +58.9% Construction $223.4 $229.3 -2.6% International $242.1 $244.6 -1.0% Adjusted Pre-Tax Income(1) $112.0
Slide 14: Balance Sheet Highlights
Balance Sheet Highlights ▪ $46 Million of Cash ▪ Equipment Inventory Increased $150 Million to $474 Million as of October 31, 2022 vs. $324 Million as of January 31, 2022 • $150 Million increase in new equipment while used equipment remained flat • Equipment inventory turn(1) of 3.6 vs. 3.1 in the p
Slide 15: Equipment Inventory
Equipment Inventory 39.8% 47.4% 44.6% 41.2% 29.2% 33.0% 15
Slide 16: FY2023 Outlook
FY2023 Outlook Updated FY2023 Modeling Assumptions: Current Assumptions Previous Assumptions Segment Revenue Agriculture(1) Up 55-60% Up 50-55% Construction(2) Down 0-5% Down 5-10% International(3) Down 0-5% Down 0-5% Diluted EPS(4) $4.55 - $4.85 $3.70 - $4.00 (1)Includes the full year impact of the
Slide 17: Appendix
Appendix TITAN MACHINERY Power & Precision to Grow”
Slide 18: Operating Expenses & Absorption
Operating Expenses & Absorption(1) (1)Absorption is calculated in a given period by dividing our gross profit from sales of parts, service and rental fleet activity by our operating expenses, less commission expense on equipment sales, plus $5.7 million gain on the MT/WY divestiture and $1.4 million
Slide 19: Same Store Results
Same Store Results(1) (in millions of dollars) Three Months Ended October 31, Percent Nine Months Ended October 31, Percent 2022 2021 Change 2022 2021 Change Same Store Sales Agriculture $ 412.1 $ 281.5 46.4 % $ 1,021.7 $ 730.4 39.9 % Construction 86.4 64.3 34.2 % 221.8 177.7 24.9 % International 89
Slide 20: Adjusted Debt to Tangible Net Worth
Adjusted Debt to Tangible Net Worth Note: Adjusted debt is calculated as total liabilities less non-interest bearing floorplan payables. Adjusted debt measured after Q4 FY19 includes the impact of adopting new lease accounting rules on February 1, 2019. 20
Slide 21: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables (in thousands, except per share data) Three Months Ended October 31, Nine Months Ended October 31, 2022 2021 2022 2021 Adjusted Income Before Income Taxes Income Before Income Taxes $ 54,678 $ 28,823 $ 111,412 $ 58,133 Adjustments Impairment charges — — — 1,498 Ukraine
Slide 22: Non-GAAP Reconciliation Tables, continued
Non-GAAP Reconciliation Tables, continued (in thousands, except per share data) Three Months Ended October 31, Nine Months Ended October 31, 2022 2021 2022 2021 Adjusted EBITDA Net Income $ 41,257 $ 21,816 $ 83,756 $ 43,612 Adjustments Interest expense, net of interest income 1,170 840 3,562 2,941 P
Slide 23: Non-GAAP Reconciliation Tables, continued
Non-GAAP Reconciliation Tables, continued (in thousands, except per share data) Three Months Ended October 31, Nine Months Ended October 31, 2022 2021 2022 2021 Adjusted Income Before Income Taxes - International Income/(Loss) Before Income Taxes $ 8,488 $ 6,260 $ 18,683 $ 9,498 Adjustments Impairme