GlobeNewswire Inc | Mar 18, 2021 06:45AM EDT

March 18, 2021

- Revenue for Fiscal 2021 Increased 8.1% to $1.4 billion -

- GAAP EPS for Fiscal 2021 was $0.86 and Adjusted EPS was $1.26, an increase of 36.5% and 50.0%, respectively -

WEST FARGO, N.D., March 18, 2021 (GLOBE NEWSWIRE) -- Titan Machinery Inc. (Nasdaq: TITN), a leading network of full-service agricultural and construction equipment stores, today reported financial results for the fiscal fourth quarter and full year ended January 31, 2021.

David Meyer, Titan Machinerys Chairman and Chief Executive Officer, stated, "We completed fiscal 2021 with a strong finish in fourth quarter, driven by our equipment business which grew 35% for the quarter. From a segment perspective, our Agriculture segment was the standout performer for the quarter and fiscal year, generating very strong top and bottom line performance. We are also pleased with the operating improvement in our Construction segment this fiscal year, which generated positive pre-tax income in fourth quarter and full year. While the pandemic and adverse weather conditions have created additional obstacles across our international store footprint, we experienced growth in our International segment parts and service business during the fourth quarter and full year, which has been a focus for us. Looking ahead to fiscal 2022, Titan Machinery is in a great position we are benefiting from renewed strength in the commodities cycle, we've stayed close to our customers with exceptional service, and we've carefully managed our cost structure and balance sheet to ensure that we drive profitability and remain nimble to react to future opportunities."

Fiscal 2021 Fourth Quarter Results

Consolidated ResultsFor the fourth quarter of fiscal 2021, revenue was $436.7 million, compared to revenue of $351.0 million in the fourth quarter last year. Equipment revenue was $354.0 million for the fourth quarter of fiscal 2021, compared to $262.8 million in the fourth quarter last year. Parts revenue was $49.8 million for the fourth quarter of fiscal 2021, compared to $52.3 million in the fourth quarter last year. Revenue generated from service was $22.9 million for the fourth quarter of fiscal 2021, compared to $22.0 million in the fourth quarter last year. Revenue from rental and other was $9.9 million for the fourth quarter of fiscal 2021, compared to $13.9 million in the fourth quarter last year.

Gross profit for the fourth quarter of fiscal 2021 increased to $67.7 million compared to $61.1 million in the fourth quarter last year. The Company's gross profit margin decreased to 15.5% in the fourth quarter of fiscal 2021, compared to 17.4% in the fourth quarter last year. Gross profit margin decreased primarily due to mix, with a greater proportion of equipment revenue in the fourth quarter of fiscal 2021 compared to a greater proportion of higher margin parts and service revenue in the fourth quarter last year.

Operating expenses were essentially flat at $60.5 million for the fourth quarter of fiscal 2021, compared to $60.1 million in the fourth quarter last year. Operating expenses as a percentage of sales improved 320 basis points to 13.9% for the fourth quarter of fiscal 2021, compared to 17.1% of revenue in the prior year period. The Company recognized impairments related to intangible and long-lived assets of $0.4 million in the quarter compared to $3.6 million in the prior year quarter.

Floorplan and other interest expense was $1.5 million for the fourth quarter of fiscal 2021, compared to $2.5 million for the same period last year. The decrease was due to a lower interest rate environment, a lower interest rate spread under our new five-year Amended and Restated Credit Agreement that was finalized in April 2020, and lower borrowings on our lines of credit.

In the fourth quarter of fiscal 2021, net income was $0.8 million, or earnings per diluted share of $0.03, compared to $0.7 million, or earnings per diluted share of $0.03 for the fourth quarter of fiscal 2020.

On an adjusted basis, net income for the fourth quarter of fiscal 2021 was $5.3 million, or $0.23 per diluted share, compared to net income of $0.6 million, or $0.02 per diluted share for the fourth quarter of fiscal 2020. The adjusted fourth quarter fiscal 2021 net income of $5.3 million excludes a $3.3 million charge for Ukraine income tax valuation allowance adjustments, while the adjusted fourth quarter fiscal 2020 net income excludes a $4.6 million benefit for domestic income tax valuation adjustments.

The Company generated $13.7 million in adjusted EBITDA in the fourth quarter of fiscal 2021, compared to $8.1 million for the fourth quarter of fiscal 2020.

Segment ResultsAgriculture Segment - Revenue for the fourth quarter of fiscal 2021 was $303.2 million, compared to $215.5 million in the fourth quarter last year. Pre-tax income for the fourth quarter of fiscal 2021 was $7.9 million, compared to a pre-tax loss of $0.3 million in the fourth quarter last year. Adjusted pre-tax income for the fourth quarter of fiscal 2021 was $8.0 million, compared to $2.5 million in the fourth quarter last year.

Construction Segment - Revenue for the fourth quarter of fiscal 2021 was $88.9 million, compared to $87.2 million in the fourth quarter last year. Pre-tax income for the fourth quarter of fiscal 2021 was $0.2 million, compared to a pre-tax loss of $1.8 million in the fourth quarter last year. Adjusted pre-tax income for the fourth quarter of fiscal 2021 was $0.6 million, compared to a pre-tax loss of $1.0 million in the fourth quarter last year. At the end of fiscal 2021, the Company divested its Phoenix and Tucson, Arizona construction equipment store locations.

International Segment - Revenue for the fourth quarter of fiscal 2021 was $44.6 million, compared to $48.2 million in the fourth quarter last year. Pre-tax loss for the fourth quarter of fiscal 2021 was $2.9 million, compared to $2.3 million in the fourth quarter last year. Adjusted pre-tax loss for the fourth quarter of fiscal 2021 was $2.7 million, compared to $2.3 million in the fourth quarter last year.

Fiscal 2021 Full Year Results

Revenue increased 8.1% to $1.4 billion for fiscal 2021. Net income for fiscal 2021 was $19.4 million, or $0.86 per diluted share, compared to $14.0 million, or $0.63 per diluted share, for the prior year. Adjusted net income for fiscal 2021 was $28.2 million, or $1.26 per diluted share, compared to an adjusted net income of $18.6 million, or $0.84 per diluted share, for the prior year. The Company generated adjusted EBITDA of $65.4 million in fiscal 2021, representing an increase of 24.6% compared to adjusted EBITDA of $52.5 million in fiscal 2020.

Balance Sheet and Cash Flow

Cash at the end of the fourth quarter of fiscal 2021 was $79.0 million. Inventories decreased to $418.5 million as of January31, 2021, compared to $597.4 million as of January31, 2020. This inventory decrease includes a $177.8 million decrease in equipment inventory, which reflects a decrease in new equipment inventory of $151.7 million and a $26.1 million decrease in used equipment inventory. The lower year-end inventory also reflects the divestiture of the Company's two Arizona construction stores. Outstanding floorplan payables were $161.8million on $773.0million total available floorplan lines of credit as of January31, 2021, compared to $371.8 million outstanding floorplan payables as of January31, 2020.

For the fiscal year ended January31, 2021, the Companys net cash provided by operating activities was $173.0 million, compared to $1.0 million for the fiscal year ended January31, 2020. The Company evaluates its cash flow from operating activities net of all floorplan payable activity and maintaining a constant level of equity in its equipment inventory. Taking these adjustments into account, adjusted net cash provided by operating activities was $148.5 million for the fiscal year ended January31, 2021, compared to $17.8 million for the fiscal year ended January31, 2020.

Mr. Meyer concluded, "We expect another strong year of growth in fiscal 2022. While fiscal 2021 was a great success, especially in light of the unforeseen challenges brought about by the global pandemic, we believe there are additional areas of opportunity in this new fiscal year. Our entire organization has done an amazing job and we are ideally positioned to take advantage of the improving industry conditions with our healthy inventory position, which helped drive a record $148 million in adjusted operating cash flow during fiscal 2021 and is supporting our business in a variety of ways such as improved equipment margins and lowering our floorplan interest expense. These dynamics have improved our cash flow, reduced our debt, and put the business on a strong foundation to generate profitable growth across our segments in fiscal 2022."

Fiscal 2022 Modeling Assumptions

The following are the Company's current expectations for fiscal 2022 modeling assumptions. We believe modeling assumptions will continue to be impacted by the challenging global economy due to the COVID-19 pandemic, creating a higher degree of uncertainty in these assumptions compared to a normal environment.

Current AssumptionsSegment Revenue Agriculture^(1) Up 10-15%Construction^(2) Down 0-5%International Up 12-17% Diluted EPS^(3) $1.25 - $1.45 ^(1) Includes the full year impact of the HorizonWest acquisition completed inMay 2020.^(2) Includes the full year impact of the Phoenix and Tucson, AZ storedivestitures in January 2021. Adjusting full year fiscal 2021 net sales by $27million, representing the 2021 net sales of these divested stores, results in asame-store sales assumption of up 3-8%.^(3) Includes expenses related to ERP implementation.

Conference Call Information

The Company will host a conference call and audio webcast today at 7:30 a.m. Central time (8:30 a.m. Eastern time). Investors interested in participating in the live call can dial (877) 705-6003 from the U.S. International callers can dial (201) 493-6725. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, April 1, 2021, by dialing (844) 512-2921 from the U.S., or (412) 317-6671 from international locations, and entering confirmation code 13716797.

A copy of the presentation that will accompany the prepared remarks from the conference call is available on the Companys website under Investor Relations at www.titanmachinery.com. An archive of the audio webcast will be available on the Companys website under Investor Relations at www.titanmachinery.com for 30 days following the audio webcast.

Non-GAAP Financial Measures

Within this release, the Company refers to certain adjusted financial measures, which have directly comparable GAAP financial measures as identified in this release. The Company believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance and in assessing future performance. For these reasons, internal management reporting also includes non-GAAP measures. Generally, the non-GAAP measures include adjustments for items such as valuation allowances for income tax, impairment charges, Ukraine remeasurement gains/losses and costs associated with our Enterprise Resource Planning (ERP) system transition. The non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for the GAAP financial measures presented in this release and the Company's financial statements and other publicly filed reports. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies. Investors are encouraged to review the reconciliations of adjusted financial measures used in this release to their most directly comparable GAAP financial measures. These reconciliations are attached to this release. The tables included in the Non-GAAP Reconciliations section reconcile net income, diluted earnings per share, income (loss) before income taxes, and net cash provided by operating activities (all GAAP financial measures) for the periods presented to adjusted net income, adjusted EBITDA, adjusted diluted earnings per share, adjusted income (loss) before income taxes, and adjusted net cash provided by operating activities (all non-GAAP financial measures) for the periods presented.

About Titan Machinery Inc.

Titan Machinery Inc., founded in 1980 and headquartered in West Fargo, North Dakota, owns and operates a network of full service agricultural and construction equipment dealer locations in North America and Europe. The network consists of US locations in Colorado, Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming and its European stores are located in Bulgaria, Germany, Romania, Serbia and Ukraine. The Titan Machinery locations represent one or more of the CNH Industrial Brands, including Case IH, New Holland Agriculture, Case Construction, New Holland Construction, and CNH Industrial 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. The words potential, believe, estimate, expect, intend, may, could, will, plan, anticipate, and similar words and expressions are intended to identify forward-looking statements. Such statements are based upon the current beliefs and expectations of our management. Forward-looking statements made herein, which include statements regarding Agriculture, Construction, and International segment initiatives and improvements, segment revenue realization, growth and profitability expectations, inventory expectations, leverage expectations, agricultural and construction equipment industry conditions and trends, and modeling assumptions and expected results of operations for the fiscal year ending January 31, 2022, involve known and unknown risks and uncertainties that may cause Titan Machinerys actual results in current or future periods to differ materially from the forecasted assumptions and expected results. The Companys risks and uncertainties include, among other things, the duration, scope and impact of the COVID-19 pandemic on the Company's operations, 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 Companys operating segments, the uncertainty and fluctuating conditions in the capital and credit markets, difficulties in conducting international operations, foreign currency risks, governmental agriculture policies, seasonal fluctuations, the ability of the Company to reduce inventory levels, weather 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 Machinerys filings with the Securities and Exchange Commission, including the Companys most recently filed Annual Report on Form 10-K, as updated in subsequently filed Quarterly Reports on Form 10-Q, as applicable. 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 Machinerys 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. Other than as required by law, 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.

Investor Relations Contact:ICR, Inc.John Mills, jmills@icrinc.comManaging Partner646-277-1254

TITAN MACHINERY INC.Consolidated Balance Sheets(in thousands)(Unaudited) January 31, January 31, 2021 2020Assets Current Assets Cash $ 78,990 $ 43,721 Receivables, net of allowance for expected 69,109 72,776 credit lossesInventories 418,458 597,394 Prepaid expenses and other 13,677 13,655 Total current assets 580,234 727,546 Noncurrent Assets Property and equipment, net of accumulated 147,165 145,562 depreciationOperating lease assets 74,445 88,281 Deferred income taxes 3,637 2,147 Goodwill 1,433 2,327 Intangible assets, net of accumulated 7,785 8,367 amortizationOther 1,090 1,113 Total noncurrent assets 235,555 247,797 Total Assets $ 815,789 $ 975,343 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 20,045 $ 16,976 Floorplan payable 161,835 371,772 Current maturities of long-term debt 4,591 13,779 Current maturities of operating leases 11,772 12,259 Deferred revenue 59,418 40,968 Accrued expenses and other 48,791 38,360 Income taxes payable 11,048 49 Total current liabilities 317,500 494,163 Long-Term Liabilities Long-term debt, less current maturities 44,906 37,789 Operating lease liabilities 73,567 88,387 Deferred income taxes ? 2,055 Other long-term liabilities 8,535 7,845 Total long-term liabilities 127,008 136,076 Stockholders' Equity Common stock ? ? Additional paid-in-capital 252,913 250,607 Retained earnings 116,869 97,717 Accumulated other comprehensive income (loss) 1,499 (3,220 )Total stockholders' equity 371,281 345,104 Total Liabilities and Stockholders' Equity $ 815,789 $ 975,343



TITAN MACHINERY INC.Consolidated Statements of Operations(in thousands, except per share data)(Unaudited) Three Months Ended Twelve Months Ended January January 31, 31, 2021 2020 2021 2020Revenue Equipment $ 354,011 $ 262,826 $ 1,016,071 $ 917,202 Parts 49,830 52,289 244,676 234,217 Service 22,947 21,950 107,229 99,165 Rental and other 9,890 13,899 43,246 54,587 Total Revenue 436,678 350,964 1,411,222 1,305,171 Cost of Revenue Equipment 318,122 235,362 911,170 818,707 Parts 35,668 36,810 171,873 165,190 Service 8,429 8,276 36,692 33,446 Rental and other 6,745 9,398 30,125 37,010 Total Cost of Revenue 368,964 289,846 1,149,860 1,054,353 Gross Profit 67,714 61,118 261,362 250,818 Operating Expenses 60,523 60,128 220,774 225,722 Impairment of Goodwill ? ? 1,453 ? Impairment ofIntangible and 409 3,578 1,727 3,764 Long-Lived AssetsIncome (Loss) from 6,782 (2,588 ) 37,408 21,332 OperationsOther Income (Expense) Interest and other 194 439 527 3,126 income (expense)Floorplan interest (528 ) (1,630 ) (3,339 ) (5,354 )expenseOther interest expense (959 ) (890 ) (3,843 ) (4,452 )Income (Loss) Before 5,489 (4,669 ) 30,753 14,652 Income TaxesProvision for (Benefit 4,707 (5,342 ) 11,397 699 from) Income TaxesNet Income 782 673 19,356 13,953 Diluted Earnings per $ 0.03 $ 0.03 $ 0.86 $ 0.63 ShareDiluted Weighted 22,143 21,977 22,104 21,953 Average Common Shares



TITAN MACHINERY INC.Consolidated Condensed Statements of Cash Flows(in thousands)(Unaudited) Year Ended January 31, 2021 2020Operating Activities Net income $ 19,356 $ 13,953 Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization 23,701 28,067 Impairment 3,180 3,764 Other, net 9,313 13,284 Changes in assets and liabilities Inventories 199,245 (99,469 )Manufacturer floorplan payable (110,084 ) 49,601 Other working capital 28,285 (8,245 )Net Cash Provided by Operating Activities 172,996 955 Investing Activities Property and equipment purchases (20,089 ) (25,016 )Proceeds from sale of property and equipment 6,592 2,415 Acquisition consideration, net of cash acquired (6,790 ) (13,887 )Other, net (10 ) 19 Net Cash Used for Investing Activities (20,297 ) (36,469 )Financing Activities Net change in non-manufacturer floorplan payable (106,414 ) 50,158 Repurchase of senior convertible notes ? (45,644 )Net proceeds from (payments on) long-term debt (10,616 ) 18,864 Other, net (909 ) (509 )Net Cash Provided by (Used for) Financing Activities (117,939 ) 22,869 Effect of Exchange Rate Changes on Cash 509 (379 )Net Change in Cash 35,269 (13,024 )Cash at Beginning of Period 43,721 56,745 Cash at End of Period $ 78,990 $ 43,721



TITAN MACHINERY INC.Segment Results(in thousands)(Unaudited) Three Months Ended January 31, Twelve Months Ended January 31, 2021 2020 Change 2021 2020 ChangeRevenue Agriculture $ 303,161 $ 215,508 40.7 % $ 886,485 $ 749,042 18.3 %Construction 88,883 87,220 1.9 % 305,745 320,034 (4.5) %International 44,634 48,236 (7.5) % 218,992 236,095 (7.2) %Total $ 436,678 $ 350,964 24.4 % $ 1,411,222 $ 1,305,171 8.1 % Income (Loss)Before Income TaxesAgriculture $ 7,933 $ (275 ) n/m $ 34,422 $ 18,036 90.9 %Construction 236 (1,750 ) n/m 186 (2,290 ) n/mInternational (2,890 ) (2,279 ) (26.8) % (6,025 ) 504 n/mSegmentincome before 5,279 (4,304 ) n/m 28,583 16,250 75.9 %income taxesShared 210 (365 ) n/m 2,170 (1,598 ) n/mResourcesTotal $ 5,489 $ (4,669 ) n/m $ 30,753 $ 14,652 109.9 %



TITAN MACHINERY INC.Non-GAAP Reconciliations(in thousands, except per share data)(Unaudited) Three Months Ended Twelve Months Ended January 31, January 31, 2021 2020 2021 2020Adjusted Net Income Net Income $ 782 $ 673 $ 19,356 $ 13,953 Adjustments ERP transition costs 740 2,397 2,990 7,175 Impairment charges 409 3,578 3,180 3,764 Ukraine remeasurement (gain) / 201 (28 ) 1,174 (616 )lossTotal Pre-Tax Adjustments 1,350 5,947 7,344 10,323 Tax Effect of Adjustments (1) 386 (1,452 ) (2,227 ) (1,036 )Adjustment for Tax Valuation 2,741 (4,611 ) 3,759 (4,611 )AllowanceTotal Adjustments 4,477 (116 ) 8,876 4,676 Adjusted Net Income $ 5,259 $ 557 $ 28,232 $ 18,629 Adjusted Diluted EPS Diluted EPS $ 0.03 $ 0.03 $ 0.86 $ 0.63 Adjustments (2) ERP transition costs 0.03 0.11 0.13 0.32 Impairment charges 0.02 0.16 0.14 0.17 Ukraine remeasurement (gain) / 0.01 (0.01 ) 0.05 (0.02 )lossTotal Pre-Tax Adjustments 0.06 0.26 0.32 0.47 Tax Effect of Adjustments (1) 0.02 (0.06 ) (0.10 ) (0.05 )Adjustment for Tax Valuation 0.12 (0.21 ) 0.18 (0.21 )AllowanceTotal Adjustments 0.20 (0.01 ) 0.40 0.21 Adjusted Diluted EPS $ 0.23 $ 0.02 $ 1.26 $ 0.84 Adjusted Income Before Income TaxesIncome (Loss) Before Income $ 5,489 $ (4,669 ) $ 30,753 $ 14,652 TaxesAdjustments ERP transition costs 740 2,397 2,990 7,175 Impairment charges 409 3,578 3,180 3,764 Ukraine remeasurement (gain) / 201 (28 ) 1,174 (616 )lossTotal Adjustments 1,350 5,947 7,344 10,323 Adjusted Income Before Income $ 6,839 $ 1,278 $ 38,097 $ 24,975 Taxes Adjusted Income Before Income Taxes - AgricultureIncome (Loss) Before Income $ 7,933 $ (275 ) $ 34,422 $ 18,036 TaxesImpairment charges 28 2,807 272 2,807 Adjusted Income Before Income $ 7,961 $ 2,532 $ 34,694 $ 20,843 Taxes Adjusted Income (Loss) Before Income Taxes - ConstructionIncome (Loss) Before Income $ 236 $ (1,750 ) $ 186 $ (2,290 )TaxesImpairment charges 381 771 597 957 Adjusted Income (Loss) Before $ 617 $ (979 ) $ 783 $ (1,333 )Income Taxes Adjusted Loss Before Income Taxes - InternationalIncome (Loss) Before Income $ (2,890 ) $ (2,279 ) $ (6,025 ) $ 504 TaxesAdjustments Impairment charges ? ? 2,311 ? Ukraine remeasurement (gain) / 201 (28 ) 1,174 (616 )lossTotal Adjustments 201 (28 ) 3,485 (616 )Adjusted Loss Before Income $ (2,689 ) $ (2,307 ) $ (2,540 ) $ (112 )Taxes Adjusted EBITDA Net Income $ 782 $ 673 $ 19,356 $ 13,953 Adjustments Interest expense, net of 884 815 3,574 4,121 interest incomeProvision for income taxes 4,707 (5,342 ) 11,397 699 Depreciation and amortization 5,970 7,006 23,701 28,067 EBITDA 12,343 3,152 58,028 46,840 Adjustments ERP transition costs 740 1,384 2,990 2,497 Impairment charges 409 3,578 3,180 3,764 Ukraine remeasurement (gain) / 201 (28 ) 1,174 (616 )lossTotal Adjustments 1,350 4,934 7,344 5,645 Adjusted EBITDA $ 13,693 $ 8,086 $ 65,372 $ 52,485 Adjusted Net Cash Provided by Operating ActivitiesNet Cash Provided by Operating $ 172,996 $ 955 ActivitiesNet Change in Non-Manufacturer (106,414 ) 50,158 Floorplan PayableAdjustment for Constant Equity 81,900 (33,359 )in InventoryAdjusted Net Cash Provided by $ 148,482 $ 17,754 Operating Activities

(1) The tax effect of U.S. related adjustments was calculated using a 26% taxrate, determined based on a 21% federal statutory rate and a 5% blended stateincome tax rate. The tax effect of the Germany related adjustments wascalculated using a 29% tax rate. Included in the tax effect of the adjustmentsis the tax impact of foreign currency changes in Ukraine of ($0.1 million) forthe three months ended January 31, 2021 and $1.2 million for the fiscal yearended January 31, 2021.(2) Adjustments are net of amounts allocated to participating securities whereapplicable.