Founder of Equities Research. Stockdiagnostics Specialist

Founder of Equities Research. Stockdiagnostics Specialist
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Friday, December 12, 2014

After the close: William Blair Analysts Lowers Price Target on Titan to $10

Titan Machinery (NASDAQ: TITN) closed yesterday at a new 5 year low @ $11.75.

Titan Machinery $150 million convertible note closed at an all time low @ $72.38 w 12.03% yield.


Since the Equities Research Warning on February 1,2013 shares of Titan @ $29.07, the stock has declined 60% while the Standard & Poors 500  Index has advanced 33%. (source: bigchart.com)



Titan filed their FY2015 3rd Quarter 10Q for the period ending October 31,2014 on Wednesday. Included in the SEC disclosure were two footnotes:

After the close yesterday William Blair Analyst lowered Price target on Titan from $12 to $10.
Pre-market yesterday analyst at Stephens lowered Price Target on Titan.

Wednesday, December 10, 2014


$TITN LOWERS FULL YEAR EPS GUIDANCE to Loss Per Share ($0.02) to ($0.23).

 

From 10Q
NOTE 4—LINES OF CREDIT / FLOORPLAN PAYABLE

Floorplan Lines of Credit

Floorplan payable balances reflect the amount owed for new equipment inventory purchased from a manufacturer and for used equipment inventory, which is primarily purchased through trade-in on equipment sales. Certain of the manufacturers from which the Company purchases new equipment inventory offer financing on these purchases, either offered directly from the manufacturer or through the manufacturers’ captive finance subsidiaries. CNH Industrial America LLC's captive finance subsidiary, CNH Industrial Capital America LLC ("CNH Industrial Capital"), also provides financing of used equipment inventory. The Company also has floorplan payable balances with non-manufacturer lenders for new and used equipment inventory. Changes in manufacturer floorplan payable are reported as operating cash flows and changes in non-manufacturer floorplan payable are reported as financing cash flows in the Company's consolidated statements of cash flows.

As of October 31, 2014, the Company had discretionary floorplan lines of credit for equipment inventory purchases totaling approximately $1.16 billion, which includes a $350.0 million Floorplan Payable Line with a group of banks led by Wells Fargo Bank, National Association ("Wells Fargo"), a $450.0 million credit facility with CNH Industrial Capital, a $225.0 million credit facility with Agricredit Acceptance LLC and the U.S. dollar equivalent of $135.0 million in credit facilities related to our foreign subsidiaries. Floorplan payables relating to these credit facilities totaled approximately $696.9 million of the total floorplan payable balance of $761.2 million outstanding as of October 31, 2014 and $692.8 million of the total floorplan payable balance of $750.5 million outstanding as of January 31, 2014. As of October 31, 2014, the Company had approximately $411.7 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 Wells Fargo credit agreement, and rental fleet financing and other acquisition-related financing arrangements under the CNH Industrial Capital credit agreement). The U.S. floorplan payables carried various interest rates primarily ranging from 2.78% to 4.98%, and the foreign floorplan payables carried various interest rates primarily ranging from 1.59% to 10.50%, as of October 31, 2014.

Effective October 31, 2014, the Company amended its credit facility with Wells Fargo. The amendment, among other things, replaced the consolidated net income financial covenant with a minimum consolidated income before income taxes

10


covenant, calculated as the income before income taxes for the last four quarters, adjusted for certain impairment charges, realignment charges, and foreign currency remeasurement losses resulting from a devaluation of the Ukrainian hryvnia. The minimum income before income tax covenant is $10.0 million for the four quarter period ended October 31, 2014, $5.0 million for the period ended January 31, 2015, $6.0 million for each of the two periods ended April 30, 2015 and July 31, 2015, $10.0 million for each of the two periods ended October 31, 2015 and January 31, 2016, and $15.0 million for each period thereafter. The amendment also modified certain borrowing base advance rates and changed the interest rate margin from 1.5% to 2.625% to 1.5% to 2.875% per annum.

Effective October 31, 2014, the Company also amended its credit facility with CNH Industrial Capital. The amendment, amongst other things, replaced the minimum debt service ratio financial covenant with a minimum fixed charge coverage ratio financial covenant of not less than 1.25:1.00, and added or modified related definitions.

Working Capital Line of Credit
As of October 31, 2014, the Company had a $112.5 million working capital line of credit under the credit facility with Wells Fargo. The Company had $75.6 million and $47.8 million outstanding on its working capital line of credit as of October 31, 2014 and January 31, 2014, 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.


NOTE 5—SENIOR CONVERTIBLE NOTES
The Company’s 3.75% Senior Convertible Notes issued on April 24, 2012 (“Convertible Notes”) consisted of the following:









October 31, 2014
January 31, 2014
(in thousands except conversion
rate and conversion price)
Principal value
$
150,000

$
150,000

Unamortized debt discount
(18,544
)
(21,107
)
Carrying value of senior convertible notes
$
131,456

$
128,893

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

Conversion price (per share of common stock)
$
43.17

     
The Company recognized interest expense associated with its Senior Convertible Notes as follows:

















Three Months Ended October 31,
Nine Months Ended October 31,
2014
2013
2014
2013
(in thousands)
(in thousands)
Cash Interest Expense
Coupon interest expense
$
1,406

$
1,406

$
4,219

$
4,219

Noncash Interest Expense
Amortization of debt discount
864

806

2,563

2,392

Amortization of transaction costs
135

131

402

391

$
2,405

$
2,343

$
7,184

$
7,002


As of October 31, 2014, the unamortized debt discount will be amortized over a remaining period of approximately 4.5 years. As of October 31, 2014 and January 31, 2014, the if-converted value of the Senior Convertible Notes does not exceed the principal balance. The effective interest rate of the liability component was equal to 7.0% for each of the statements of operations periods presented.

Wednesday, December 10, 2014

$TITN LOWERS FULL YEAR EPS GUIDANCE to Loss Per Share ($0.02) to ($0.23).

Titan Machinery Inc. Announces Results for Fiscal Third Quarter Ended October 31, 2014

 



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Monday, October 13, 2014

Opportunist Magazine Interviews Tom Renna


http://opportunistmagazine.com/tom-renna/


Tom Renna

Tom Renna began his professional career on Wall Street 25 years ago after graduating Rutgers University. In 2005 Tom founded Equities Research LLC, a small boutique investment research firm where he provides market research analysis and consulting services to both Issuers (private and public) and Wall Street professionals. Tom’s experience as an investment banker, financial advisor, institutional equity broker, bond broker, entrepreneur and director of a public company gives him the unique ability to see all sides of Wall Street. Tom provides invaluable insight to both issuers and investors, from the novice to top Wall Street executives. In 1997 Tom was an original owner of Newsgrade Corporation, a private online publishing company, a private online publishing company that annually generated millions of timely and actionable automated unique stories that were streaming on Bloomberg Terminals for institutional investors. By 2003 Tom had become Managing Director of National Sales for Stockdiagnostics.com, a subsidiary of Newsgrade that he helped to create. Tom has made some of the top long and short calls over the last 25 years on Wall Street and his work has been mentioned on CNBC TV among other financial news sources. Visit equitiesresearch.com or email Tom directly: tom@equitiesresearch.com

Wednesday, September 24, 2014

Radio Host Annette Raynor Talks Today Live with Tom Renna of Equities Research

This afternoon at 1pm est. radio host Annette Raynor of The Financial U will have Tom Renna of Equities Research LLC as her guest.

Listen Live :  http://www.voiceamerica.com/episode/80574/lets-trade-the-market



Tom Renna

Tom Renna began his professional career on Wall Street 25 years ago after graduating Rutgers University. In 2005 Tom founded Equities Research LLC, a small boutique investment research firm where he provides market research analysis and consulting services to both Issuers (private and public) and Wall Street professionals. Tom’s experience as an investment banker, financial advisor, institutional equity broker, bond broker, entrepreneur and director of a public company gives him the unique ability to see all sides of Wall Street. Tom provides invaluable insight to both issuers and investors, from the novice to top Wall Street executives. In 1997 Tom was an original owner of Newsgrade Corporation, a private online publishing company, a private online publishing company that annually generated millions of timely and actionable automated unique stories that were streaming on Bloomberg Terminals for institutional investors. By 2003 Tom had become Managing Director of National Sales for Stockdiagnostics.com, a subsidiary of Newsgrade that he helped to create. Tom has made some of the top long and short calls over the last 25 years on Wall Street and his work has been mentioned on CNBC TV among other financial news sources. Visit equitiesresearch.com or email Tom directly: tom@equitiesresearch.com




Episode Description

So you want to trade the stock market, you know it’s important, you want to be a part of it, but exactly where do you start? Do you listen to the industry analysts? a broker? a friend? Today The Financial U discusses trading the market. How and where to start and what pitfalls should be avoided. In spite of the “greed” we read about in the headlines, the U.S. stock market remains a free market allowing individuals to participate in the profit and growth of public companies. As we know, there deceit and fraud in every aspect of life but that should not deter us from participating, the number one source of wealth for the top 1% remains “equity investing” followed by real estate and then inherited wealth. Where else can you own a piece of Google anytime you want? Tom Renna, Industry Analyst joins The Financial U this week to help you trade the market! The Financial U – because your money matters!

Friday, September 12, 2014

TITAN MACHINERY Lowers FY2015 EPS Guidance: $0.00-$0.30

Titan Machinery reported a loss for their third consecutive quarter on Tuesday morning that sent shares down to a new 4 year low @ $11.85, a price that it had previously traded at in March 2010.
    
Aside from lowering their net income guidance dramatically, the company also lowered their cash flow and sales outlook as well.


chart source: (bigcharts.com) click chart to enlarge.


The stock has closed under $14 per share for 21 consecutive days and saw a brief spike yesterday after the CEO bought 90,000 shares @ 13.03. The trade in my opinion is insignificant in light of the most recent prior trade the CEO did when he  appeared on Jim Cramer's MAD MONEY  and touted TITAN MACHINERY's future. 30 days later DAVID MEYER SOLD 300,000 shares @ $27.80 and received proceeds of $8,340.00.00 and CEO Peter Christianson sold 200,000 shares $27.80 for proceeds of $5.56 million. (more on Hyping of Shares (Unrealistic Guidance) that Directors used to take advantage of Stock Sales can be found here)

 
In their FY2015 2nd quarter 10Q filed on Tuesday afternoon with the Securities and Exchange Commission the company stated that they realized that they had inflated their assets and understated their losses in their 1st quarter 10Q filed back in June. Although they previously reported an Earnings Per LOSS of ($0.20) for Q1, it came to their attention that had actually loss ($0.31) for the quarter. The company determined that the error on the loss of over 50% was immaterial and that they won't deem it necessary to Refile their FY2015 Q1 10Q. I am wondering if the SEC will think otherwise?
  •  "The incorrect classification of the VAT asset as a non-monetary asset coupled with the significant devaluation of the UAH resulted in an overstatement of the Company’s assets (Prepaid expenses and other) as of April 30, 2014 and an understatement of the Company’s loss (Interest income and other income (expense)) for the three months ended April 30, 2014. This correction increased the Company’s Net Loss Attributable to Titan Machinery Inc. by $2.3 million (from the previously reported $4.2 million to $6.5 million) and increased the diluted loss per share by $0.11 (from the previously reported $0.20 loss per share to a $0.31 loss per share). This correction is reflected in the accompanying unaudited Consolidated Statements of Operations for the six-month period ended July 31, 2014.

    Based on an evaluation of all relevant factors, the Company concluded that this correction was immaterial to the Company’s results for the three months ended April 30, 2014; therefore, the Company determined that an amendment of its previously filed Form 10-Q for the quarterly period ended April 30, 2014 was not necessary, and the correction will be reflected in future 10-K and 10-Q filings."




Wall Street Money Mangers and Brokerages Are Looking the Other Way

The trailing twelve months ending July 31,2014 Titan has total net income of $690,000 and the stock @$13 a share values the company at $275 million. (or a PE of 398 on ttm basis)

With FY 2015 EPS Guidance now at $0.00 to $0.30 per share , if use the mid range of $0.15 eps, the shares are currently trading at PE of nearly 100!

Why is there such a disconnect with the fundamentals of this underlying business and the price of its stock market valuation? I am seriously thinking that these shares may be being manipulated. One director on the board who is also a founder of the company is the general partner of an underwriting firm for the company and may know more about why shares trade at such a huge premium. 

Management of Titan can blame price of corn, the weak construction & agricultural economy,  poor farming, the unrest with their footprint in the UKRAINE, but I blame The company's poor financial condition on GREED AND RELATED PARTY TRANSACTIONS



Tuesday, September 9, 2014

Titan Machinery 10Q Includes Footnote Disclosing 4th Wells Fargo Debt Amendment

2nd Quarter 10Q 


Footnote with Wells Fargo's 4th Amendment to Debt Disclosure

TITAN Machinery Reports Disastrous Q2 Financials Pre Market, Shares Lower

T I T N down to $11.95 pre-market