Agricultural and construction equipment store operator Titan Machinery Inc. (TITN) said Wednesday its second-quarter net income decreased substantially, hurt mainly by lower gross margins as well as higher expenses. Quarterly earnings as well as revenues missed market projection. Going forward, the company reaffirmed its financial outlook for the fiscal 2011.
For the second quarter, net income declined to $2.71 million or $0.15 per share from $4.85 million or $0.27 per share in the same quarter last year. On average, six analysts polled by Thomson Reuters expected earnings per share of $0.19 for the quarter. Analysts' estimates typically excludes one-time items.
The Fargo, North Dakota-based company's total revenue for the quarter grew 8.5% to $209.67 million from $193.19 million in the prior-year quarter, helped mainly by strong performance from the company's all three main revenue sources - equipment, parts and service. Analysts estimated revenues of $215.95 million for the quarter.
Gross margin for the latest quarter declined to 17.2% from 18.6% last year, primarily due to lower equipment margins in the Agriculture and Construction businesses. Operating expenses for the recent quarter increased to $29.21 million from $26.66 million in the year-ago quarter.
Chief Executive Officer, David Meyer said, "Decreased global supply coupled with strong demand should increase revenues for our Agriculture customers. In addition, the upcoming Tier 4 emission requirements are expected to increase demand for our current Tier 3 inventories. The combination of these factors should drive strong organic growth for our Agriculture business."
For the fiscal 2011, the company still expects net income in the range of $16.7 million to $18.5 million resulting in an earnings per share range of $0.92 to $1.02. Also, the company anticipates revenue in a range of $920 million to $980 million. Analysts project earnings per share of $0.93 on revenues of $948.38 million for the fiscal 2011.
TITN is currently trading at $15.67, down $0.57 or 3.51%, on the Nasdaq.
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