Titan Machinery Inc. · NASDAQ:TITN
Titan Machinery — Q2 2024 Earnings Presentation
21 slides from Titan Machinery's earnings presentation, Aug 31, 2023
Slide 1: Second Quarter FY2024 Earnings Conference Call
Second Quarter FY2024 Earnings Conference Call August 31, 2023
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 FY2024 Results • Revenue $642.6 Million • Pre-Tax Income $41.6 Million • Diluted EPS $1.38 ▪ Conference Call Discussion Points • Industry Overviews • Financial Results • Modeling Assumptions • O'Connors Acquisition 3
Slide 4: Agriculture Segment Overview
Agriculture Segment Overview Q2 FY24 Recap • Precision technology, productivity/yield/efficiency gains, along with an aging fleet, continue to drive strong demand for equipment sales • Same-store sales growth of 10% • Equipment availability remained a limiting factor for certain product categories •
Slide 5: Construction Segment Overview
Construction Segment Overview Q2 FY24 Recap • Robust construction activity and improved equipment availability helped drive same-store sales growth of 18.5% • Pre-tax margins of 6.2%, up 60 bps YOY • Expense absorption of 91.2% Rest of Year Expectations • Construction activity remains strong, suppor
Slide 6: International Segment Overview
International Segment Overview Q2 FY24 Recap • Same-store sales growth of 15.9% led by sustained customer demand • Revenue growth of 14.9%, net of 190 bps of favorable foreign currency impact • Maintained pre-tax margins greater than 6%, supported by strong equipment margins • Excellent growing cond
Slide 7: Second Quarter Revenue Analysis
Second Quarter Revenue Analysis (in millions of dollars) Q2 FY2024 Q2 FY2023 Change Total Revenue $642.6 $496.5 +29.4% Equipment $480.1 $375.2 +28.0% Parts $108.5 $77.7 +39.7% Service $42.5 $33.4 +27.3% Rental & Other $11.5 $10.3 +11.6% 7
Slide 8: Second Quarter Financials
Second Quarter Financials (in millions of dollars, except per share) Q2 FY2024 Q2 FY2023 Change Total Revenue $642.6 $496.5 +29.4% Gross Profit $133.4 $102.7 +29.9% Gross Profit Margin 20.8% 20.7% +10 bps Operating Expenses $88.8 $68.8 -28.9% Operating Expense Margin 13.8% 13.9% +10 bps Floorplan an
Slide 9: Second Quarter Segment Overview
Second Quarter Segment Overview % of % of Change (in millions of dollars) Q2 FY2024 Q2 FY2023 Revenue Revenue ($) Revenue $642.6 $496.5 +29.4% Agriculture $469.1 $349.0 +34.4% Construction $82.9 $70.0 +18.3% International $90.6 $77.6 +16.9% Pre-Tax Income(1) $41.6 6.5% $33.2 6.7% +25.5% Agriculture
Slide 10: Six Months Revenue Analysis
Six Months Revenue Analysis First 6 Months First 6 Months (in millions of dollars) Change FY2024 FY2023 Total Revenue $1,212.2 $957.5 +26.6% Equipment $909.5 $731.6 +24.3% Parts $205.1 $146.3 +40.2% Service $77.4 $62.9 +23.1% Rental & Other $20.2 $16.8 +19.9% 10
Slide 11: Six Months Financials
Six Months Financials First 6 Months First 6 Months (in millions of dollars, except per share) Change FY2024 FY2023 Total Revenue $1,212.2 $957.5 +26.6% Gross Profit $252.0 $191.4 +31.7% Gross Profit Margin 20.8% 20.0% +80 bps Operating Expenses $170.1 $133.0 -27.9% Operating Expense Margin 14.0% 13
Slide 12: Six Months Segment Overview
Six Months Segment Overview First 6 Months % of First 6 Months % of (in millions of dollars) Change FY2024 Revenue FY2023 Revenue Revenue $1,212.2 $957.5 +26.6% Agriculture $892.3 $667.5 +33.7% Construction $154.9 $137.0 +13.0% International $165.1 $153.1 +7.8% Pre-Tax Income(1) $77.0 6.4% $56.7 5.9
Slide 13: Balance Sheet Highlights
Balance Sheet Highlights ▪ $53 Million of Cash ▪ Equipment Inventory Increased $259 Million to $794 Million as of July 31, 2023 vs. $535 Million as of January 31, 2023 • $229 Million increase in new equipment and a $30 Million increase in used equipment ▪ Parts Inventory of $180 Million as of July 3
Slide 14: Equipment Inventory
Equipment Inventory (1) (1) Inventory turns are calculated by dividing cost of sales on equipment for the last twelve months by the average of the month-end balances of our equipment inventory 14
Slide 15: FY2024 Outlook
FY2024 Outlook Updated Fiscal 2024 Modeling Assumptions: Current Assumptions Previous Assumptions Segment Revenue Agriculture(1) Up 20-25% Up 20-25% Construction Up 5-10% Flat - Up 5% Europe (formerly "International")(2) Up 5-10% Up 8-13% Australia (O'Connors)(3) $70-90 million $70-90 million Dilute
Slide 16: Appendix
Appendix TITAN MACHINERY Power & Precision to Grow”
Slide 17: Operating Expenses & Absorption
(1) Operating Expenses & Absorption Operating Expenses Absorption Rate $400 90.0% 83.5% 85.0% $350 82.2% 82.2% 80.0% 77.7% $300 Millions Rate 75.0% 71.6% 72.0% $250 70.0% $200 65.0% $150 60.0% FY19 FY20 FY21 FY22 FY23 TTM FY24 (1) Absorption is calculated in a given period by dividing our gross prof
Slide 18: Same Store Results
Same Store Results(1) Three Months Ended July 31, Percent Six Months Ended July 31, Percent (in millions of dollars) 2023 2022 Change 2023 2022 Change Same Store Sales Agriculture $ 383.8 $ 349.0 10.0 % $ 705.4 $ 658.3 7.2 % Construction 82.9 69.9 18.5 % 154.9 135.5 14.3 % International 89.9 77.6 15
Slide 19: Adjusted Debt to Tangible Net Worth
Adjusted Debt to Tangible Net Worth Adjusted Debt Tangible Net Worth Adjusted Debt to Tangible Net Worth $700 4.5 4.0 $600 3.5 $500 3.0 $400 Millions 2.5 Ratio $300 2.0 1.3 1.5 $200 1.0 1.0 1.0 1.0 0.9 1.0 $100 0.5 $— — Q4 FY20 Q4 FY21 Q4 FY22 Q4 FY23 Q1 FY24 Q2 FY24 (1) The debt covenant limit for
Slide 20: Non-GAAP Reconciliation Table
Non-GAAP Reconciliation Table Titan Machinery Inc. (in thousands) Three Months Ended July 31, Six Months Ended July 31, 2023 2022 2023 2022 EBITDA Net Income $ 31,321 $ 24,959 $ 58,287 $ 42,499 Adjustments Interest expense, net of interest income 1,110 1,283 2,275 2,392 Provision for income taxes 10
Slide 21: Non-GAAP Reconciliation Table (continued) O'Connors
Non-GAAP Reconciliation Table (continued) O'Connors Fiscal Year ended (in thousands) June 30, 2023 EBITDA Net Income $ 13,060 Adjustments Interest expense, net of interest income 1,417 Provision for income taxes 5,592 Depreciation and amortization 1,299 EBITDA $ 21,368 21