Tuesday, Titan Machinery Inc. (TITN), a network of full service agricultural and construction equipment stores, reported a decline in first quarter earnings, which came below analysts' forecast, despite a 9% increase in revenue. The company also reaffirmed its forecast fiscal 2010.
Net income for the quarter slid to $1.8 million from $3.4 million reported in the corresponding period last year. Earnings per share declined to $0.10 from $0.24 per share in the same period last year. On average, four analysts polled by Thomson Reuters expected the company to earn $0.13 per share for the quarter. Analysts' estimates typically exclude special items.
Share count increased 29% to 17.9 million from 13.9 million in the year-ago quarter due to the company's May 2008 follow-on offering.
Quarterly revenue grew by 9% to $166.3 million from $152.6 million in the corresponding period last year. Street analysts expected the company to report revenue of $160.11 million for the quarter. Equipment sales were $124.9 million, up from $120.9 million in the same period last year. Parts sales increased to $26.4 million from $21.5 million in the prior-year period.
Revenue generated from service increased to $12.5 million in the quarter from $8.9 million in the same period of the previous year. The higher margin parts and service revenue represented 55% of total gross profit for the first quarter and contributed to a 100 basis point improvement in gross margin, the company said.
Gross profit increased 16% to $29 million from $24.6 million in the prior year period. Operating income for the quarter slid to $3.8 million from $6.4 million in the same quarter of the previous year.
David Meyer, Titan Machinery's chairman and chief executive officer said, "Operating expenses during the first quarter of 2010 were in line with our expectations, and we expect operating margins to increase during the remainder of fiscal 2010."
Looking ahead, Titan Machinery reaffirmed its revenue and net income guidance for fiscal 2010. The company continues to expect to achieve revenue in the range of $750 million to $790 million. Net income is expected to be in the range of $16.6 million to $18.7 million and earnings per share in the range of $0.92 to $1.04. Analysts currently expect the company to earn $0.96 per share on revenue of $734.56 million for fiscal 2010.
TITN closed Monday's regular trading session at $15.04.
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