North Dakota-based Titan Machinery, which carries construction, agriculture, aggregate and forestry equipment, has reported first quarter fiscal year 2018 (ended April 30) revenue of $264.1 million, a 7.3 percent decline compared to the same period last year.
Gross profit for the quarter reached $48.9 million, a drop of 8.6 percent compared to the $53.5 million the company reported in Q1 2017. Operating expenses improved a bit, dropping to $52 million compared to $54.5 million a year ago. Titan’s adjusted net loss was $4.2 million, but represented a 12.5 percent improvement over Q1 2017’s $4.8 million net loss.
This report comes in the midst of a restructuring effort the company announced earlier this year that includes the closing and consolidation of multiple dealerships as a means of cutting expenses.
“Overall first quarter financial results were generally in line with our expectations,” says David Meyer, Titan Machinery’s Chairman and CEO.“Due to the stabilizing Agriculture equipment inventory environment and the progress we have made in reducing our equipment inventory, we are seeing equipment margin improvement sooner than originally expected, as well as stronger equipment demand within our International segment. Offsetting these developments were higher than anticipated operating expenses due to delayed benefits resulting from our restructuring efforts.”
Meyer says the company believes the restructuring effort will give it $25 million in expense reductions, but the impact on FY2018 won’t be as high as expected due to implementing the plan later than the company had anticipated.
“We continue to be well positioned for improved bottom line results in fiscal 2018 despite continued soft demand in our domestic Agriculture and Construction markets,” Meyer adds. ‘In addition, our restructuring efforts and continued focus on reducing equipment inventory positions us well for the future.”
Titan’s restructuring costs for the quarter were $2.3 million, compared to roughly $0.2 million last year. Non-recurring pre tax costs related to the restructuring efforts are expected to reach $7 million for the rest of FY2018 and will be made up of mainly lease termination costs and termination beneftis.
Construction equipment revenue in the first quarter dropped by nearly 19 percent, to $63.4 million compared to the $78 million reported in the same period last year. The company says Q1 last year included roughly $9 million from “aggressive selling efforts” employed for “aged equipment inventory” using “alternative marketing channels.” The pre-tax loss for this most recent quarter reached $2.6 million, compared to $2 million in Q1 2017.
“The many improvements we are implementing in our operating structure combined with the deleveraging we’ve accomplished in the past couple years has us better positioned to generate positive earnings in the future,” Meyer says. “In addition, our cash flow generated from operations allows us to make appropriate investments in our business to take advantage of future opportunities and drive long-term profitability.”
Titan Machinery carries construction equipment brands Case, Grove, JLG, K-Tex and Wacker Neuson and has more than 2,500 employees.