10-Q 1 a13-15523_110q.htm 10-Q

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 


 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended July 31, 2013

 

Commission File No. 001-33866

 

TITAN MACHINERY INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

No. 45-0357838

(State or Other Jurisdiction of
Incorporation or Organization)

 

(IRS Employer
Identification No.)

 

644 East Beaton Drive

West Fargo, ND 58078-2648

(Address of Principal Executive Offices)

 

Registrant’s telephone number (701) 356-0130

 


 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES x NO o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer x

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

 

The number of shares outstanding of the registrant’s common stock as of August 31, 2013 was: Common Stock, $0.00001 par value, 21,239,391 shares.

 

 

 



Table of Contents

 

TITAN MACHINERY INC.

QUARTERLY REPORT ON FORM 10-Q

 

Table of Contents

 

 

Page No.

PART I.

FINANCIAL INFORMATION

3

 

 

ITEM 1.

FINANCIAL STATEMENTS

3

 

 

 

 

Consolidated Balance Sheets as of July 31, 2013 and January 31, 2013

3

 

 

 

 

Consolidated Statements of Operations for the three and six months ended July 31, 2013 and 2012

4

 

 

 

 

Consolidated Statements of Comprehensive Income for the three and six months ended July 31, 2013 and 2012

5

 

 

 

 

Consolidated Statements of Stockholders’ Equity for the six months ended July 31, 2013 and 2012

6

 

 

 

 

Consolidated Statements of Cash Flows for the six months ended July 31, 2013 and 2012

7

 

 

 

 

Notes to Consolidated Financial Statements

9

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

17

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

29

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

30

 

 

PART II.

OTHER INFORMATION

30

 

 

ITEM 1.

LEGAL PROCEEDINGS

30

 

 

 

ITEM 1A.

RISK FACTORS

30

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

30

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

30

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

30

 

 

 

ITEM 5.

OTHER INFORMATION

30

 

 

 

ITEM 6.

EXHIBITS

30

 

 

 

Signatures

31

 

 

Exhibit Index

32

 



Table of Contents

 

PART I. — FINANCIAL INFORMATION

 

ITEM 1.                FINANCIAL STATEMENTS

 

TITAN MACHINERY INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)

 

 

 

July 31,

 

January 31,

 

 

 

2013

 

2013

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash

 

$

102,407

 

$

124,360

 

Receivables, net

 

94,432

 

121,786

 

Inventories

 

1,105,819

 

929,216

 

Prepaid expenses and other

 

27,113

 

8,178

 

Income taxes receivable

 

5,767

 

503

 

Deferred income taxes

 

8,411

 

8,357

 

 

 

 

 

 

 

Total current assets

 

1,343,949

 

1,192,400

 

 

 

 

 

 

 

INTANGIBLES AND OTHER ASSETS

 

 

 

 

 

Noncurrent inventories

 

4,865

 

3,507

 

Goodwill

 

30,959

 

30,903

 

Intangible assets, net of accumulated amortization

 

14,019

 

14,089

 

Other

 

7,894

 

8,534

 

Total intangibles and other assets

 

57,737

 

57,033

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, net of accumulated depreciation

 

235,125

 

194,641

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

1,636,811

 

$

1,444,074

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable

 

$

39,724

 

$

28,282

 

Floorplan notes payable

 

851,185

 

689,410

 

Current maturities of long-term debt

 

16,518

 

10,568

 

Customer deposits

 

26,721

 

46,775

 

Accrued expenses

 

34,854

 

29,590

 

Income taxes payable

 

32

 

310

 

 

 

 

 

 

 

Total current liabilities

 

969,034

 

804,935

 

 

 

 

 

 

 

LONG-TERM LIABILITIES

 

 

 

 

 

Senior convertible notes

 

127,252

 

125,666

 

Long-term debt, less current maturities

 

82,657

 

56,592

 

Deferred income taxes

 

47,603

 

47,411

 

Other long-term liabilities

 

6,608

 

9,551

 

 

 

 

 

 

 

Total long-term liabilities

 

264,120

 

239,220

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $.00001 per share, 45,000 shares authorized; 21,239 shares issued and outstanding at July 31, 2013; 21,092 shares issued and outstanding at January 31, 2013

 

 

 

Additional paid-in-capital

 

237,772

 

236,521

 

Retained earnings

 

164,143

 

160,724

 

Accumulated other comprehensive loss

 

(1,075

)

(735

)

Total Titan Machinery Inc. stockholders’ equity

 

400,840

 

396,510

 

Noncontrolling interest

 

2,817

 

3,409

 

Total stockholders’ equity

 

403,657

 

399,919

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,636,811

 

$

1,444,074

 

 

See Notes to Consolidated Financial Statements

 

3



Table of Contents

 

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

Equipment

 

$

358,388

 

$

306,170

 

$

693,133

 

$

628,698

 

Parts

 

70,633

 

57,895

 

133,470

 

116,739

 

Service

 

39,872

 

30,466

 

71,870

 

60,218

 

Rental and other

 

19,287

 

15,540

 

31,381

 

26,139

 

TOTAL REVENUE

 

488,180

 

410,071

 

929,854

 

831,794

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

 

 

 

 

 

 

 

 

Equipment

 

329,083

 

279,284

 

632,906

 

571,369

 

Parts

 

48,022

 

40,357

 

92,733

 

81,010

 

Service

 

14,383

 

10,474

 

25,746

 

20,837

 

Rental and other

 

13,150

 

9,592

 

20,979

 

17,805

 

TOTAL COST OF REVENUE

 

404,638

 

339,707

 

772,364

 

691,021

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

83,542

 

70,364

 

157,490

 

140,773

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

70,145

 

56,507

 

139,078

 

111,363

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

13,397

 

13,857

 

18,412

 

29,410

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

Interest and other income

 

337

 

119

 

934

 

607

 

Floorplan interest expense

 

(3,723

)

(2,420

)

(7,165

)

(5,318

)

Other interest expense

 

(3,455

)

(2,774

)

(6,622

)

(3,567

)

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

6,556

 

8,782

 

5,559

 

21,132

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR INCOME TAXES

 

(2,589

)

(3,477

)

(2,195

)

(8,368

)

 

 

 

 

 

 

 

 

 

 

NET INCOME INCLUDING NONCONTROLLING INTEREST

 

$

3,967

 

$

5,305

 

$

3,364

 

$

12,764

 

 

 

 

 

 

 

 

 

 

 

LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

134

 

96

 

(55

)

(42

)

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO TITAN MACHINERY INC.

 

$

3,833

 

$

5,209

 

$

3,419

 

$

12,806

 

 

 

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER SHARE - NOTE 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE - BASIC

 

$

0.18

 

$

0.25

 

$

0.16

 

$

0.61

 

EARNINGS PER SHARE - DILUTED

 

$

0.18

 

$

0.25

 

$

0.16

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES - BASIC

 

20,882

 

20,781

 

20,868

 

20,752

 

WEIGHTED AVERAGE COMMON SHARES - DILUTED

 

21,029

 

21,000

 

21,027

 

20,981

 

 

See Notes to Consolidated Financial Statements

 

4



Table of Contents

 

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

NET INCOME INCLUDING NONCONTROLLING INTEREST

 

$

3,967

 

$

5,305

 

$

3,364

 

$

12,764

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE LOSS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(30

)

(1,185

)

(827

)

(936

)

Unrealized gain (loss) on net investment hedge derivative instruments (net of tax of ($121) for the three months ended July 31, 2013 and $193 for the six months ended July 31, 2013)

 

(182

)

 

289

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL OTHER COMPREHENSIVE LOSS

 

(212

)

(1,185

)

(538

)

(936

)

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

3,755

 

4,120

 

2,826

 

11,828

 

 

 

 

 

 

 

 

 

 

 

LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

71

 

(83

)

(253

)

(154

)

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO TITAN MACHINERY INC.

 

$

3,684

 

$

4,203

 

$

3,079

 

$

11,982

 

 

See Notes to Consolidated Financial Statements

 

5



Table of Contents

 

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

Total Titan

 

 

 

 

 

 

 

Common Stock

 

Additional

 

 

 

Other

 

Machinery Inc.

 

 

 

Total

 

 

 

Shares

 

 

 

Paid-In

 

Retained

 

Comprehensive

 

Stockholders’

 

Noncontrolling

 

Stockholders’

 

 

 

Outstanding

 

Amount

 

Capital

 

Earnings

 

Loss

 

Equity

 

Interest

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JANUARY 31, 2012

 

20,911

 

$

 

$

218,156

 

$

118,251

 

$

(70

)

$

336,337

 

$

1,002

 

$

337,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior convertible notes offering

 

 

 

 

 

15,501

 

 

 

 

 

15,501

 

 

15,501

 

Common stock issued on grant of restricted stock, exercise of stock options and warrants, and tax benefits of equity awards

 

120

 

 

915

 

 

 

915

 

 

915

 

Issuance of subsidiary shares to noncontrolling interest holders

 

 

 

 

 

 

 

2,464

 

2,464

 

Stock-based compensation expense

 

 

 

764

 

 

 

764

 

 

764

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

12,806

 

 

12,806

 

(42

)

12,764

 

Other comprehensive loss

 

 

 

 

 

(824

)

(824

)

(112

)

(936

)

Total comprehensive income (loss)

 

 

 

 

 

 

11,982

 

(154

)

11,828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JULY 31, 2012

 

21,031

 

$

 

$

235,336

 

$

131,057

 

$

(894

)

$

365,499

 

$

3,312

 

$

368,811

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JANUARY 31, 2013

 

21,092

 

$

 

$

236,521

 

$

160,724

 

$

(735

)

$

396,510

 

$

3,409

 

$

399,919

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued on grant of restricted stock, exercise of stock options and warrants, and tax benefits of equity awards

 

147

 

 

259

 

 

 

259

 

 

259

 

Stock-based compensation expense

 

 

 

992

 

 

 

992

 

 

992

 

Other

 

 

 

 

 

 

 

(339

)

(339

)

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

3,419

 

 

3,419

 

(55

)

3,364

 

Other comprehensive loss

 

 

 

 

 

(340

)

(340

)

(198

)

(538

)

Total comprehensive income (loss)

 

 

 

 

 

 

3,079

 

(253

)

2,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JULY 31, 2013

 

21,239

 

$

 

$

237,772

 

$

164,143

 

$

(1,075

)

$

400,840

 

$

2,817

 

$

403,657

 

 

See Notes to Consolidated Financial Statements

 

6



Table of Contents

 

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

Six Months Ended July 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

Net income including noncontrolling interest

 

$

3,364

 

$

12,764

 

Adjustments to reconcile net income including noncontrolling interest to net cash used for operating activities

 

 

 

 

 

Depreciation and amortization

 

13,342

 

10,214

 

Deferred income taxes

 

(64

)

14

 

Stock-based compensation expense

 

992

 

764

 

Noncash interest expense

 

2,245

 

1,279

 

Other, net

 

404

 

192

 

Changes in assets and liabilities, net of purchase of equipment dealerships assets and assumption of liabilities

 

 

 

 

 

Receivables, prepaid expenses and other assets

 

25,305

 

17,694

 

Inventories

 

(218,580

)

(189,358

)

Floorplan notes payable

 

140,858

 

93,379

 

Accounts payable, customer deposits, accrued expenses and other long-term liabilities

 

(10,807

)

(44,814

)

Income taxes

 

(5,540

)

4,524

 

 

 

 

 

 

 

NET CASH USED FOR OPERATING ACTIVITIES

 

(48,481

)

(93,348

)

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

Rental fleet purchases

 

(432

)

(16,512

)

Property and equipment purchases (excluding rental fleet)

 

(12,523

)

(7,722

)

Net proceeds from sale of property and equipment

 

415

 

934

 

Purchase of equipment dealerships, net of cash purchased

 

(4,848

)

(16,175

)

Other, net

 

695

 

9

 

 

 

 

 

 

 

NET CASH USED FOR INVESTING ACTIVITIES

 

(16,693

)

(39,466

)

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

Proceeds from senior convertible notes offering, net of direct issuance costs of $4,753

 

 

145,247

 

Net change in non-manufacturer floorplan notes payable

 

21,517

 

55,037

 

Proceeds from long-term debt borrowings

 

31,113

 

27,728

 

Principal payments on long-term debt

 

(9,105

)

(49,952

)

Proceeds from sale of subsidiary shares to noncontrolling interest holders

 

 

2,464

 

Other, net

 

(196

)

(333

)

 

 

 

 

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

43,329

 

180,191

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH EQUIVALENTS

 

(108

)

(710

)

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

(21,953

)

46,667

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

124,360

 

79,842

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

102,407

 

$

126,509

 

 

See Notes to Consolidated Financial Statements

 

7



Table of Contents

 

TITAN MACHINERY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) — Page 2

(in thousands)

 

 

 

Six Months Ended July 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

Cash paid during the period

 

 

 

 

 

Income taxes, net of refunds

 

$

7,676

 

$

3,479

 

 

 

 

 

 

 

Interest

 

$

11,618

 

$

6,324

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

Net property and equipment financed with long-term debt, accounts payable and accrued liabilities

 

$

13,527

 

$

25,785

 

 

 

 

 

 

 

Net transfer of assets to property and equipment from inventories

 

$

42,113

 

$

14,387

 

 

See Notes to Consolidated Financial Statements

 

8



Table of Contents

 

TITAN MACHINERY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 -  BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The unaudited consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The quarterly operating results for Titan Machinery Inc. (the “Company”) are subject to fluctuation due to varying weather patterns, which may impact the timing and amount of equipment purchases, rentals, and after-sales parts and service purchases by the Company’s Agriculture, Construction and International customers. Therefore, operating results for the six-month period ended July 31, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2014. The information contained in the balance sheet as of January 31, 2013 was derived from the audited financial statements for the Company for the year then ended. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended January 31, 2013 as filed with the SEC.

 

Nature of Business

 

The Company is engaged in the retail sale, service and rental of agricultural and construction machinery through stores in the United States and Europe. The Company’s North American stores are located in Arizona, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Wisconsin and Wyoming, and its European stores are located in Bulgaria, Romania, Serbia and Ukraine.

 

Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, particularly related to realization of inventory, initial valuation and impairment analyses of intangible assets, collectability of receivables, and income taxes.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All material accounts, transactions and profits between the consolidated companies have been eliminated in consolidation.

 

Reclassifications

 

Certain reclassifications of amounts previously reported have been made to the accompanying consolidated statements of cash flows to maintain consistency and comparability between periods presented. These reclassifications had no impact on previously reported cash flows from operating, investing or financing activities.

 

Fair Value of Financial Instruments

 

The carrying amount of cash, receivables, payables, short-term debt and other current liabilities approximates fair value because of the short maturity and/or frequent repricing of those instruments, which are Level 2 fair value inputs.

 

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The Company recognized a derivative liability for outstanding foreign currency forward contracts which are recorded at fair value in an amount equal to $0.8 million and $0.1 million as of July 31, 2013 and January 31, 2013, respectively.  Fair value was determined based on Level 2 inputs which include observable, market-based pricing components.

 

The carrying value of long-term debt approximates fair value as of July 31, 2013 and January 31, 2013.  Fair value was estimated based upon current borrowing rates with similar maturities, which are Level 2 fair value inputs. The fair value of senior convertible notes was approximately $140.1 million and $152.8 million as of July 31, 2013 and January 31, 2013, respectively. The face value of senior convertible notes was $150.0 million as of July 31, 2013 and January 31, 2013. The carrying value of senior convertible notes was approximately $127.3 million and $125.7 million as of July 31, 2013 and January 31, 2013, respectively. The difference between the face value and the carrying value of these notes is the result of the allocation between the debt and equity components. Fair value of the senior convertible notes was estimated based on Level 2 fair value inputs.

 

Earnings Per Share (“EPS”)

 

The Company uses the two-class method to calculate basic and diluted EPS. Unvested restricted stock awards are considered participating securities because they entitle holders to non-forfeitable rights to dividends during the vesting term. Under the two-class method, basic EPS were computed by dividing net income attributable to Titan Machinery Inc. after allocation of income to participating securities by the weighted-average number of shares of common stock outstanding during the year.

 

Diluted EPS were computed by dividing net income attributable to Titan Machinery Inc. after allocation of income to participating securities by the weighted-average shares of common stock outstanding after adjusting for potential dilution related to the conversion of all dilutive securities into common stock. All potentially dilutive securities were included in the computation of diluted EPS. There were approximately 99,000 and 66,000 stock options outstanding that were excluded from the computation of diluted EPS for the three and six months ended July 31, 2013, respectively, because they were anti-dilutive. There were approximately 10,000 and 10,000 stock options outstanding that were excluded from the computation of diluted EPS for the three and six months ended July 31, 2012, respectively, because they were anti-dilutive. None of the approximately 3,474,000 shares underlying the Company’s senior convertible notes were included in the computation of diluted EPS because the Company’s average stock price was less than the conversion price of $43.17.

 

The following table sets forth the calculation of basic and diluted EPS:

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(in thousands, except per share data)

 

(in thousands, except per share data)

 

Numerator

 

 

 

 

 

 

 

 

 

Net income attributable to Titan Machinery Inc.

 

$

3,833

 

$

5,209

 

$

3,419

 

$

12,806

 

Less: Net income allocated to participating securities

 

(56

)

(54

)

(45

)

(125

)

Net income attributable to Titan Machinery Inc. common stockholders

 

$

3,777

 

$

5,155

 

$

3,374

 

$

12,681

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

 

Basic weighted-average common shares outstanding

 

20,882

 

20,781

 

20,868

 

20,752

 

Plus: Incremental shares from assumed conversions of stock options and warrants

 

147

 

219

 

159

 

229

 

Diluted weighted-average common shares outstanding

 

21,029

 

21,000

 

21,027

 

20,981

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

$

0.18

 

$

0.25

 

$

0.16

 

$

0.61

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - diluted

 

$

0.18

 

$

0.25

 

$

0.16

 

$

0.60

 

 

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NOTE 2 -  INVENTORIES

 

 

 

July 31,

 

January 31,

 

 

 

2013

 

2013

 

 

 

(in thousands)

 

New equipment

 

$

705,389

 

$

542,180

 

Used equipment

 

270,541

 

275,626

 

Parts and attachments

 

118,085

 

103,456

 

Work in process

 

11,804

 

7,954

 

 

 

 

 

 

 

 

 

$

1,105,819

 

$

929,216

 

 

In addition to the above amounts, the Company has estimated that a portion of its parts inventory will not be sold in the next year. Accordingly, these balances have been classified as noncurrent assets.

 

NOTE 3 -  PROPERTY AND EQUIPMENT

 

 

 

July 31,

 

January 31,

 

 

 

2013

 

2013

 

 

 

(in thousands)

 

Rental fleet equipment

 

$

148,585

 

$

105,681

 

Machinery and equipment

 

23,752

 

21,086

 

Vehicles

 

42,463

 

38,742

 

Furniture and fixtures

 

32,586

 

27,766

 

Land, buildings, and leasehold improvements

 

55,554

 

56,845

 

 

 

 

 

 

 

 

 

302,940

 

250,120

 

Less accumulated depreciation

 

(67,815

)

(55,479

)

 

 

 

 

 

 

 

 

$

235,125

 

$

194,641

 

 

NOTE 4 -  LINES OF CREDIT / FLOORPLAN NOTES PAYABLE

 

Working Capital Line of Credit

 

As of July 31, 2013, the Company had a $75.0 million working capital line of credit under an amended and restated credit agreement with a group of banks led by Wells Fargo Bank, National Association (“Wells Fargo”). The Company had $16.2 million and $7.1 million outstanding on its working capital line of credit as of July 31, 2013 and January 31, 2013, respectively. Amounts outstanding are recorded as long-term debt, within long-term liabilities on the consolidated balance sheets, as the Company does not have an obligation to repay amounts borrowed within one year.

 

Floorplan Lines of Credit

 

As of July 31, 2013, the Company had discretionary floorplan lines of credit for equipment purchases totaling approximately $975.0 million with various lending institutions, including $375.0 million under the aforementioned credit agreement with Wells Fargo, a $450.0 million credit agreement with CNH Capital America LLC (“CNH Capital”) and a $150.0 million credit agreement with Agricredit Acceptance LLC. Floorplan notes payable relating to these credit agreements totaled approximately $751.5 million of the total floorplan notes payable balance of $851.2 million outstanding as of July 31, 2013 and $629.8 million of the total floorplan notes payable balance of $689.4 million outstanding as of January 31, 2013. As of July 31, 2013, the Company had approximately $130.4 million in available borrowings remaining under these lines of credit (net of adjustments based on borrowing base calculations and standby letters of credit under the aforementioned Wells Fargo credit agreement, and rental fleet financing and other acquisition-related financing arrangements under the CNH Capital credit agreement). These floorplan notes carried various interest rates primarily ranging from 2.81% to 7.25% as of July 31, 2013,

 

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subject to interest-free periods offered by CNH Capital. As of July 31, 2013, the Company was in compliance with all floorplan financial covenants.

 

NOTE 5 -  SENIOR CONVERTIBLE NOTES

 

The Company’s 3.75% Senior Convertible Notes issued on April 24, 2012 (“Convertible Notes”) consisted of the following:

 

 

 

July 31,

 

January 31,

 

 

 

2013

 

2013

 

 

 

(in thousands except conversion

 

 

 

rate and conversion price)

 

Principal value

 

$

150,000

 

$

150,000

 

Unamortized debt discount

 

(22,748

)

(24,334

)

Carrying value of senior convertible notes

 

$

127,252

 

$

125,666

 

 

 

 

 

 

 

Carrying value of equity component, net of deferred taxes

 

$

15,546

 

$

15,546

 

 

 

 

 

 

 

Conversion rate (shares of common stock per $1,000 principal amount of notes)

 

23.1626

 

23.1626

 

Conversion price (per share of common stock)

 

$

43.17

 

$

43.17

 

 

As of July 31, 2013, the unamortized debt discount will be amortized over a remaining period of approximately six years. As of July 31, 2013 and January 31, 2013, the if-converted value of the Senior Convertible Notes does not exceed the principal balance.

 

For the six months ended July 31, 2013, the Company recognized coupon interest expense of $2.8 million, and non-cash interest expense of $1.6 million related to the amortization of the debt discount and $0.3 million related to the amortization of the liability-allocated transaction costs. For the six months ended July 31, 2012, the Company recognized coupon interest expense of $1.5 million, and non-cash interest expense of $0.8 million related to the amortization of the debt discount and $0.1 million related to the amortization of the liability-allocated transaction costs. The effective interest rate of the liability component was equal to 7.00% for the period ended July 31, 2013.

 

NOTE 6 -  DERIVATIVE INSTRUMENTS

 

The Company holds derivative instruments for the purpose of minimizing exposure to fluctuations in foreign currency exchange rates to which the Company is exposed in the normal course of its operations.

 

Net Investment Hedges

 

To protect the value of the Company’s investments in its foreign operations against adverse changes in foreign currency exchange rates, the Company may, from time to time, hedge a portion of its net investment in one or more of its foreign subsidiaries.  Gains and losses on derivative instruments that are designated and effective as a net investment hedge are included in other comprehensive income and only reclassified into earnings in the period during which the hedged net investment is sold or liquidated. Any hedge ineffectiveness is recognized in earnings immediately.

 

The notional amount of outstanding foreign currency forward contracts designated as net investment hedges was approximately $22.6 million as of July 31, 2013.  There were no foreign currency forward contracts designated as net investment hedges outstanding as of January 31, 2013. For the six months ended July 31, 2013, the maximum notional amount outstanding at any point during the period was approximately $23.6 million. No derivative instruments designated as net investment hedges were outstanding during the six months ended July 31, 2012.

 

Derivative Instruments Not Designated as Hedging Instruments

 

The Company uses foreign currency forward contracts to hedge the effects of fluctuations in exchange rates on outstanding intercompany loans.  The Company does not formally designate and document such derivative instruments as

 

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hedging instruments; however, the instruments are an effective economic hedge of the underlying foreign currency exposure.  Both the gain or loss on the derivative instrument and the offsetting gain or loss on the underlying intercompany loan are recognized in earnings immediately, thereby eliminating or reducing the impact of foreign currency exchange rate fluctuations on net income.

 

The notional amount of outstanding foreign currency forward contracts not designated as hedging instruments was approximately $40.5 million and $4.0 million as of July 31, 2013 and January 31, 2013, respectively. For the six months ended July 31, 2013 and 2012, the maximum notional amount outstanding at any point during the period was approximately $40.5 million and $1.2 million, respectively.

 

The following table sets forth the fair value of the Company’s outstanding derivative instruments.

 

 

 

Fair Value as of:

 

Balance

 

 

 

July 31,

 

January 31,

 

Sheet

 

 

 

2013

 

2013

 

Location

 

 

 

(in thousands)

 

 

 

Liability Derivatives:

 

 

 

 

 

 

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

Net investment hedges:

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

237

 

$

 

Accrued expenses

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

Foreign exchange contracts

 

551

 

86

 

Accrued expenses

 

 

 

 

 

 

 

 

 

Total Derivatives

 

$

788

 

$

86

 

 

 

 

The following table sets forth the gains and losses recognized on the Company’s derivative instruments for the three months ended July 31, 2013 and 2012:

 

 

 

Three Months Ended July 31, 2013

 

Three Months Ended July 31, 2012

 

 

 

 

 

Amount of Gain (Loss) Recognized in

 

Amount of Gain (Loss) Recognized in

 

 

 

 

 

Other

 

 

 

Other

 

 

 

 

 

 

 

Comprehensive

 

 

 

Comprehensive

 

 

 

Income Statement

 

 

 

Income

 

Income

 

Income

 

Income

 

Classification

 

 

 

(in thousands)

 

(in thousands)

 

 

 

Dervatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

Net investment hedges:

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

(182

)

$

 

$

 

$

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

Dervatives Not Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

 

(650

)

 

(17

)

Interest and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Derivatives

 

$

(182

)

$

(650

)

$

 

$

(17

)

 

 

 

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Table of Contents

 

The following table sets forth the gains and losses recognized on the Company’s derivative instruments for the six months ended July 31, 2013 and 2012.

 

 

 

Six Months Ended July 31, 2013

 

Six Months Ended July 31, 2012

 

 

 

 

 

Amount of Gain (Loss) Recognized in

 

Amount of Gain (Loss) Recognized in

 

 

 

 

 

Other

 

 

 

Other

 

 

 

 

 

 

 

Comprehensive

 

 

 

Comprehensive

 

 

 

Income Statement

 

 

 

Income

 

Income

 

Income

 

Income

 

Classification

 

 

 

(in thousands)

 

(in thousands)

 

 

 

Dervatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

Net investment hedges:

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

289

 

$

 

$

 

$

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

Dervatives Not Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

 

70

 

 

(17

)

Interest and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Derivatives

 

$

289

 

$

70

 

$

 

$

(17

)

 

 

 

NOTE 7 -  BUSINESS COMBINATIONS

 

The Company continued to implement its strategy of consolidating dealerships in desired market areas. Below is a summary of the acquisitions completed for the six months ended July 31, 2013. In certain of the business combination transactions the Company recognized goodwill. Factors contributing to the recognition of goodwill include an evaluation of future and historical financial performance, the value of the workforce acquired and proximity to other existing and future planned Company locations. Pro forma results are not presented as the acquisitions are not considered material, individually or in aggregate, to the Company. The results of operations have been included in the Company’s consolidated statements of operations since the date of each respective business combination.

 

On February 16, 2013, the Company acquired certain assets of Tucson Tractor Company. The acquired entity consisted of one construction equipment store in Tucson, Arizona which is contiguous to the Company’s existing locations in Phoenix and Flagstaff, Arizona and expands the Company’s construction presence in Arizona. The acquisition-date fair value of the total consideration transferred for the store was $4.1 million.

 

On March 1, 2013, the Company acquired certain assets of Adobe CE, LLC. The acquired entity consisted of one construction equipment store in Albuquerque, New Mexico and expands the Company’s presence into New Mexico. The acquisition-date fair value of the total consideration transferred for the store was $1.2 million.

 

As of January 31, 2013, the final valuation of the intangible assets acquired in the Toner’s, Inc. acquisition consummated on November 1, 2012 was not complete.  As a result, the recorded intangible asset values were based on provisional estimates of fair value.  The valuation of such assets was completed during the period ended April 30, 2013 and resulted in a $0.1 million decrease in the value of the distribution rights, a $0.2 million decrease in the value of customer relationships and a $0.3 million increase in the value of goodwill arising from the acquisition.  The comparative information as of January 31, 2013 was retrospectively adjusted to reflect the final values assigned to each of the intangible assets.

 

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The allocations of the purchase prices in the above business combinations are presented in the following table. The estimated fair values of the intangible assets acquired are provisional estimates which are subject to change upon completion of the final valuation.

 

 

 

July 31,

 

 

 

2013

 

 

 

(in thousands)

 

ASSETS

 

 

 

Cash

 

$

2

 

Receivables

 

270

 

Inventories

 

2,658

 

Property and equipment

 

2,119

 

Intangible assets

 

182

 

Goodwill

 

71

 

 

 

 

 

Total assets

 

$

5,302

 

 

 

 

 

LIABILITIES

 

 

 

Customer deposits

 

$

4

 

 

 

 

 

Total liabilities

 

$

4

 

 

 

 

 

Cash consideration

 

4,850

 

Non-cash consideration: liabilities incurred

 

448

 

Total consideration

 

$

5,298

 

 

 

 

 

Goodwill related to the Agriculture operating segment

 

$

 

Goodwill related to the Construction operating segment

 

$

71

 

Goodwill related to the International operating segment

 

$

 

 

 

 

 

Goodwill expected to be deductible for tax purposes

 

$

71

 

 

NOTE 8 -  SEGMENT INFORMATION AND OPERATING RESULTS

 

The Company owns and operates a network of full service agricultural and construction equipment stores in the United States and Europe. During the three months ended April 30, 2013, the Company determined that its International operations were a separate reportable segment. As of July 31, 2013, the Company has three reportable segments: Agriculture, Construction and International. The Company’s segments are organized based on types of products sold and geographic areas, as described in the following paragraphs. The operating results for each segment are reported separately to the Company’s senior management to make decisions regarding the allocation of resources, to assess the Company’s operating performance and to make strategic decisions.

 

The Company’s Agriculture segment sells, services, and rents machinery, and related parts and attachments, for uses ranging from large-scale farming to home and garden use to customers in North America. This segment also includes ancillary sales and services related to agricultural activities and products such as equipment transportation, Global Positioning System (“GPS”) signal subscriptions, hardware merchandise and finance and insurance products.

 

The Company’s Construction segment sells, services, and rents machinery, and related parts and attachments, for uses ranging from heavy construction to light industrial machinery use to customers in North America. This segment also includes ancillary sales and services related to construction activities such as equipment transportation, GPS signal subscriptions and finance and insurance products.

 

The Company’s International segment sells, services, and rents machinery, and related parts and attachments, for uses ranging from large-scale farming and construction to home and garden use to customers in Eastern Europe. It also includes export sales of equipment and parts to customers outside of the United States.

 

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Table of Contents

 

Revenue, income (loss) before income taxes and total assets at the segment level are reported before eliminations. The Company retains various unallocated income/(expense) items and assets at the general corporate level, which the Company refers to as “Shared Resources” in the table below. Shared Resources assets primarily consist of cash and property and equipment. Intersegment revenue is immaterial.

 

Certain financial information for each of the Company’s business segments is set forth below. The financial information for the three and six months ended July 31, 2012 and as of January 31, 2013 has been reclassified for comparability with current year presentation.

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(in thousands)

 

(in thousands)

 

Revenue

 

 

 

 

 

 

 

 

 

Agriculture

 

$

367,544

 

$

314,091

 

$

727,888

 

$

667,671

 

Construction

 

97,946

 

95,268

 

180,787

 

176,876

 

International

 

39,870

 

19,609

 

67,600

 

25,539

 

Segment revenue

 

505,360

 

428,968

 

976,275

 

870,086

 

Eliminations

 

(17,180

)

(18,897

)

(46,421

)

(38,292

)

Total

 

$

488,180

 

$

410,071

 

$

929,854

 

$

831,794

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

 

 

 

 

 

 

 

 

Agriculture

 

$

9,775

 

$

9,990

 

$

17,774

 

$

24,712

 

Construction

 

(1,697

)

628

 

(8,235

)

248

 

International

 

107

 

410

 

(419

)

7

 

Segment income (loss) before income taxes

 

8,185

 

11,028

 

9,120

 

24,967

 

Shared Resources

 

(1,113

)

(1,751

)

(2,351

)

(2,503

)

Eliminations

 

(516

)

(495

)

(1,210

)

(1,332

)

Income before income taxes

 

$

6,556

 

$

8,782

 

$

5,559

 

$

21,132

 

 

 

 

July 31,

 

January 31,

 

 

 

2013

 

2013

 

 

 

(in thousands)

 

Total Assets

 

 

 

 

 

Agriculture

 

$

940,480

 

$

781,382

 

Construction

 

376,179

 

346,554

 

International

 

167,123

 

119,132

 

Segment assets

 

1,483,782

 

1,247,068

 

Shared Resources

 

156,822

 

199,849

 

Eliminations

 

(3,793

)

(2,843

)

Total

 

$

1,636,811

 

$

1,444,074

 

 

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Table of Contents

 

ITEM 2.        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim unaudited consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report, and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended January 31, 2013.

 

Critical Accounting Policies

 

There have been no material changes in our Critical Accounting Policies, as disclosed in our Annual Report on Form 10-K for the year ended January 31, 2013.

 

Overview

 

We own and operate a network of full service agricultural and construction equipment stores in the United States and Europe. Based upon information provided to us by CNH Global N.V. or its U.S. subsidiary CNH America, LLC, we are the largest retail dealer of Case IH Agriculture equipment in the world, the largest retail dealer of Case Construction equipment in North America and a major retail dealer of New Holland Agriculture and New Holland Construction equipment in the U.S. We operate our business through three reportable segments, Agriculture, Construction and International. Within each segment, we have four principal sources of revenue: new and used equipment sales, parts sales, service, and equipment rental and other activities.

 

Our net income attributable to Titan Machinery Inc. common stockholders was $3.8 million, or $0.18 per diluted share, for the three months ended July 31, 2013, compared to $5.2 million, or $0.25 per diluted share, for the three months ended July 31, 2012. Significant factors impacting the quarterly comparisons were:

 

·                  Increase in revenue due to acquisitions and same-store sales growth in our Agriculture and International segments, partially offset by a decrease in same-store sales in our Construction segment;

 

·                  Increase in total gross profit due to an increase in revenue. Total gross profit margin remained relatively consistent at 17.1% for the second quarter of fiscal 2014, as compared to 17.2% for the second quarter of fiscal 2013, caused by positive effects of a change in gross profit mix and offset by decreases in the gross profit margin for equipment and rental and other; and

 

·                  Operating expenses as a percentage of total revenue increased to 14.4% for the three months ended July 31, 2013 compared to 13.8% for the three months ended July 31, 2012, primarily due to additional expenses associated with acquired stores and expanding our distribution network.

 

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Table of Contents

 

Results of Operations

 

Comparative financial data for each of our four sources of revenue are expressed below. The results for these periods include the operating results of the acquisitions made during these periods. The period-to-period comparisons included below are not necessarily indicative of future results. Segment information is provided later in this discussion and analysis of our results of operations.

 

Same-store sales for any period represent sales by stores that were part of the Company for the entire comparable periods in the current and preceding fiscal years. We do not distinguish relocated or newly-expanded stores in this same-store analysis. Closed stores are excluded from the same-store analysis. Stores that do not meet the criteria for same-store classification are described as acquisition stores throughout the Results of Operations section in this Quarterly Report on Form 10-Q.

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(dollars in thousands)

 

(dollars in thousands)

 

Equipment

 

 

 

 

 

 

 

 

 

Revenue

 

$

358,388

 

$

306,170

 

$

693,133

 

$

628,698

 

Cost of revenue

 

329,083

 

279,284

 

632,906

 

571,369

 

Gross profit

 

$

29,305

 

$

26,886

 

$

60,227

 

$

57,329

 

Gross profit margin

 

8.2

%

8.8

%

8.7

%

9.1

%

 

 

 

 

 

 

 

 

 

 

Parts

 

 

 

 

 

 

 

 

 

Revenue

 

$

70,633

 

$

57,895

 

$

133,470

 

$

116,739

 

Cost of revenue

 

48,022

 

40,357

 

92,733

 

81,010

 

Gross profit

 

$

22,611

 

$

17,538

 

$

40,737

 

$

35,729

 

Gross profit margin

 

32.0

%

30.3

%

30.5

%

30.6

%

 

 

 

 

 

 

 

 

 

 

Service

 

 

 

 

 

 

 

 

 

Revenue

 

$

39,872

 

$

30,466

 

$

71,870

 

$

60,218

 

Cost of revenue

 

14,383

 

10,474

 

25,746

 

20,837

 

Gross profit

 

$

25,489

 

$

19,992

 

$

46,124

 

$

39,381

 

Gross profit margin

 

63.9

%

65.6

%

64.2

%

65.4

%

 

 

 

 

 

 

 

 

 

 

Rental and other

 

 

 

 

 

 

 

 

 

Revenue

 

$

19,287

 

$

15,540

 

$

31,381

 

$

26,139

 

Cost of revenue

 

13,150

 

9,592

 

20,979

 

17,805

 

Gross profit

 

$

6,137

 

$

5,948

 

$

10,402

 

$

8,334

 

Gross profit margin

 

31.8

%

38.3

%

33.1

%

31.9

%

 

18



Table of Contents

 

The following table sets forth our statements of operations data expressed as a percentage of total revenue for the periods indicated:

 

 

 

Three Months Ended July 31,

 

Six Months Ended July 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

Equipment

 

73.4

%

74.7

%

74.5

%

75.6

%

Parts

 

14.5

%

14.1

%

14.4

%

14.0

%

Service

 

8.2

%

7.4

%

7.7

%

7.2

%

Rental and other

 

3.9

%

3.8

%

3.4

%

3.2

%

Total revenue

 

100.0

%

100.0

%

100.0

%

100.0

%

 

 

 

 

 

 

 

 

 

 

Total cost of revenue

 

82.9

%

82.8

%

83.1

%

83.1

%

 

 

 

 

 

 

 

 

 

 

Gross profit

 

17.1

%

17.2

%

16.9

%

16.9

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

14.4

%

13.8

%

14.9

%

13.4

%

 

 

 

 

 

 

 

 

 

 

Income from operations

 

2.7

%

3.4

%

2.0

%

3.5

%

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

(1.4

)%

(1.3

)%

(1.4

)%

(1.0

)%

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

1.3

%

2.1

%

0.6

%

2.5

%

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

(0.5

)%

(0.8

)%

(0.2

)%

(1.0

)%

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interest

 

0.8

%

1.3

%

0.4

%

1.5

%

 

 

 

 

 

 

 

 

 

 

Less: Net income (loss) attributable to noncontrolling interest

 

0.0

%

0.0

%

0.0

%

0.0

%

 

 

 

 

 

 

 

 

 

 

Net income attributable to Titan Machinery Inc.

 

0.8

%

1.3

%

0.4

%

1.5

%

 

Three Months Ended July 31, 2013 Compared to Three Months Ended July 31, 2012

 

Consolidated Results

 

Revenue

 

 

 

Three Months Ended July 31,

 

 

 

Percent

 

 

 

2013

 

2012

 

Increase

 

Change

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

Equipment

 

$

358,388

 

$

306,170

 

$

52,218

 

17.1

%