Wednesday, December 11, 2013

Reseller Can't Compete with Manufacturers

The business model of Titan Machinery (NASDAQ: TITN) can't be compared to John Deere (NYSE: DE) , CNH Inc (NYSE: CNH) or Caterpillar (NYSE: CAT).
DE,CNH and Cat are manufacturers with their own financing arms, while TITN is nothing more than a reseller. The space is under pressure and competition is fierce which is squeezing margins, more so on a reseller who is at a major disadvantage against behemoth manufacturers.

Titan's bigger problem is that their management has signed ridiculously high lease contracts with outside entities that they personally have interest in (over $100million). Just in the past 12 months alone they increased these contracts from $50 million to over $100million.) Top execs make money with these outside entities even if titan doesn't do well.

The top two execs have each increased their annual salaries by 48% this year.

All the new construction TITN has been spending money on is bleeding the company and is only profiting the top exec's brother-in-law who owns the construction company doing the building.

Tthe high debt is another obstacle. Its hard enough to earn a profit, paying nearly $6 million annually in interest, "just" on the Convertible Note alone is a major drain on the stockholders (profits).

If you read the new Q3 10Q you'll see some last minute (desperate type) debt restructuring (extensions) they created.
check out:
NOTE 9.
Item 2.
Item 5.
Exhibit 10.1
Exhibit 10.2

On the inventory front, the tractors building up in inventory are depreciating assets (and with the new technologies, GPS, Fuel friendly machines etc ) and favorable terms being offered by manufacturers to buy new equipment, the used equipment is becoming obsolete.

Just look at the statement of cash flow and you'll see the results of a poor business model.



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.
 
Cash Flow Hedges
 
On October 9, 2013, the Company entered into a forward-starting interest rate swap instrument which has a notional amount of $100.0 million dollars, an effective date of September 30, 2014 and a maturity date of September 30, 2018. The objective of the instrument is to, beginning on September 30, 2014, protect the Company from changes in benchmark interest rates to which the Company is exposed through certain of its variable interest rate credit facilities. The instrument provides for a fixed interest rate of 1.901% up to the maturity date.
 
The instrument has been designated as a cash flow hedging instrument and accordingly changes in the effective portion of the fair value of the instrument are recorded in other comprehensive income and only reclassified into earnings in the period in which the related hedged item affects earnings or the anticipated underlying hedged transactions are no longer probable of occurring. Any hedge ineffectiveness is recognized in earnings immediately.
 
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
 
12


 
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 $23.4 million as of October 31, 2013. There were no foreign currency forward contracts designated as net investment hedges outstanding as of January 31, 2013.





NOTE 9 -      SUBSEQUENT EVENTS
 
In November 2013, the Company modified its credit facility with Wells Fargo to increase its working capital line of credit from $75.0 million to $112.5 million, decrease its floorplan line of credit from $375.0 million to $350.0 million, extend the expiration date of the agreement from March 30, 2016 to August 31, 2018, and adjust certain financial covenants. Other terms of the agreement did not materially change.
 
The Company plans to close two Construction stores prior to January 31, 2014. The store in Big Sky, Montana and one of the stores in Billings, Montana will be merged with the Company’s nearby Construction stores. The Company expects the primary cost of closing these locations to be estimated lease termination costs, and will record a liability for the net present value of any remaining lease obligations, net of estimated sublease income, at the date we cease using the property, in accordance with Accounting Standards Codification 420, Exit or Disposal Cost Obligations . We expect the accrual of these costs to be approximately $0.5 million.
 
17




Page 30
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.

The increase in revenue for the third quarter of fiscal 2014, as compared to the same period last year, was due to acquisitions contributing $32.2 million, offset by a decrease in same-store sales of $26.4 million. This decrease in same-store sales reflected a 4.5% decrease over the prior year period and was primarily driven by lower equipment revenue.



Based upon balances and interest rates as of October 31, 2013, holding other variables constant, a one percentage point increase in interest rates for the next 12-month period would decrease pre-tax earnings and cash flow by approximately $5.5 million



31
ITEM 2.                UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
On September 6, 2013, the Company issued 22,321 shares of its common stock in exchange for the purchase of 20% ownership interest in Titan Machinery Romania SRL and Titan Machinery Austria GmbH. We believe that this transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(2) thereof and Regulation S promulgated thereunder, based on the limited number of offerees in such offering and certain representations and warranties made by such offeree in the transaction.
 
ITEM 5.                OTHER INFORMATION
 
Effective October 31, 2013, the Company entered into an amended and restated wholesale financing plan with Agricredit Acceptance LLC, which increased the size of the floorplan credit facility by $75.0 million, from $150.0 million to $225.0 million. Other terms of the agreement did not materially change.
 
Effective November 14, 2013, the Company entered into a Second Amendment to its amended and restated credit agreement, dated March 30, 2012, by and among the Company, Wells Fargo Bank, National Association, and the other lenders party thereto. The amendment increased the aggregate working capital commitments by $37.5 million to $112.5 million, extended the maturity dates of the working capital line of credit and floorplan line of credit from March 30, 2016 to August 31, 2018, and changed certain financial covenants.
 


Exhibit 10.1
 
AMENDED AND RESTATED WHOLESALE FINANCING PLAN
Agricredit Acceptance LLC
8001 Birchwood Court | PO Box 2000 | Johnston, IA 50131-0020
PH: 800 873 2474 FAX: 515-334-5862
www.agricredit.com
 
Debtor Name:
Titan Machinery, Inc.
(the “Debtor”)
 
 
Date of this Wholesale Financing Plan:
October 31, 2013
 
 
Address of Principal Place of Business and Chief Executive Office:
644 East Beaton Drive
West Fargo, ND 58078-2648
 
 
Additional approved locations where the Collateral will be kept and stored:
See Exhibit A to the Amended and Restated Inventory Security Agreement






Tuesday, December 10, 2013

Olstein Says "Cash is King"

In the New York Times this weekend, Jeff Sommers published an article "Beating the Market, A Reachable Goal" , where he interviews money manager Bob Olstein.

"Mr. Olstein looks for stocks that are under appreciated, and that are strong in a metric he has always favored: “free cash flow yield.” (It is cash, after subtracting capital expenditures and working capital, divided by market capitalization.) “Cash is king,” he says. “That’s what you’re paying for when you buy a stock — the ability to generate cash. But few people even bother with it these days.” He says he prefers “boring companies” — if their free cash flow excites him"

Equities Research archives of Bob Olstein articles 

 



Friday, December 6, 2013

Equities Research Gets Recognized For Titan Machinery Warning

Yesterday Titan Machinery (NASDAQ: TITN) reported 3rd quarter financials for the period ending October 31,2013.
Titan traded over 3 million shares and closed below $15 for the first time since August 2010 and was a top ten loser on NASDAQ.


Wednesday, December 4, 2013

Greg Harmon Technical Chart of Titan Machinery

This afternoon Greg Harmon of DragonFly Capital shared a technical chart of Titan Machinery (NASDAQ: TITN) on StockTwits .


Tuesday, December 3, 2013

Warning: Titan Machinery Reports Thursday Pre-Market

On Thursday morning Titan Machinery (NASDAQ: TITN) will report 3rd quarter financials for the period ending October 31,2013.  Equities Research continues to remain bearish on Titan Machinery and believes share are headed to single digits.

Shares of Titan today are trading @ $16.65 down nearly 5% on the day.

Titan was the top short pick in the Equities Research February 2013 Newsletter when it was trading above $32. YTD chart below from www.bigcharts.com  Russell 2000 index vs.TITN



Equities Research Archives on Titan Machinery

Wednesday, November 20, 2013

Stockdiagnostic Upgrades Hit All Time Highs: DSW, TJX, CYBX

EquitiesResearch.com morning post
(charts are at date of upgrade and downgrade)


11/20/2013

Apogee Enterprises (NASDAQ:APOG) closed yesterday @$33.28. Stockdiagnostics upgraded APOG @ $9.48 (dividend adjusted) on October 10,2011 after the company reported 2nd quarter financials for the period ending August 31,2011. In 2 years since the upgrade shares are up 251%.
<click to APOG Stockdiagnostics OPS chart<


11/20/2013

AngloGold Ashanti (NYSE: AU) closed yesterday @ $12.73.Stockdiagnostics downgraded AU @ $46.88 on February 18,2011 after the company reported 4th quarter financials for the period ending December 31,2010. Since the downgrade 35 months ago shares are down 69%.
<click to AU Stockdiagnostics OPS chart


11/20/2013

Barrett Business Services, Inc. (NASDAQ: BBSI) closed yesterday @ $85.51. Stockdiagnsotics upgraded BBSI @ $12.43 (dividend adjusted) on August 19,2010 after the company reported 2nd quarter financials for the period ending June 30,2010. Since the upgrade 39 months ago have gained 588%.
<click to BBSI Stockdiagnostics OPS chart 5 year
<click to BBSI Stockdiagnostics OPS chart
<click to BBSI GFNN news story

11/20/2013

Brown Shoe Company, Inc. (NYSE: BWS) traded at a 52 week high yesterday before closing @ $25.12. Stockdiagnostics upgrade BWS @ $6.96 (dividend adjusted) on September 27,2011 after the company reported FY2012 2ns quarter financials for the period ending July 31,2011. Since the upgrade 26 months ago shares have gained 261%.
<click to BWS Stockdiagnostics OPS chart 5 yr
<click to BWS Stockdiagnostics OPS chart

11/20/2013

CalAmp Corporation (NASDAQ: CAMP) closed the week @ $8.36. Stockdiagnostics upgraded CAMP @ $3.18 on May 16,2011 after the company reported FY2011 4th quarter financials for the period ending February 28,2011. Shares are up 647% in 30 months.
<click to CAMP Stockdiagnostics OPS chart 4q
<click to CAMP Stockdiangostics FCF chart 20q

<click to CAMP Stockdiagnostics FCF chart

<click to CAMP Stockdiagnostics OPS chart

11/20/2013

Cardtronics, Inc. (NASDAQ: CATM) closed Friday @ $25.27. Stockdiagnostics upgraded CATM @ $3.02 on May 12,2009 after the company reported 1st quarter financials for the period ending March 31,2009. Since the upgrade 54 months ago shares have gained 1286%.
<click to CATM Stockdiagnostics OPS 20 quarter chart
<click to CATM Stockdiagnostics OPS 5 year chart
<click to CATM Stockdiagnostics FCF 20 quarter chart
<click to CATM Stockdiagnostics FCF 5 year chart

11/20/2013

Cyberonics, Inc. (NASDAQ: CYBX) traded yesterday at an all time high before closing  @ $61.92. Stockdiagnostics upgraded CYBX @ $13.91 on November 26,2008 after the company reported FY2009 2nd quarter financials for the period ending October 31,2008.  In 5 years since the upgrade shares have appreciated 345%.

11/20/2013

Denny's Corporation (NASDAQ: DENN) traded at a 52 week high yesterday before closing @ $6.97. Stockdiagnostics upgraded DENN @ $3.81 on August 15,2011 after the company reported 2ndt quarter financials for the period ending June 30,2011. Since the upgrade 27 months ago shares have gained 82%.
<click to DENN Stockdiagnsotics OPS chart
<click to DENN Stockdiagnsotics FCF chart



11/20/2013

Discovery Communications, Inc. (NASDAQ: DISCA) closed yesterday @ $85.23. Stockdiagnostics upgraded DISCA @ $34.75 on August 8,2011 after the company reported 2nd quarter financials for the period ending June 30,2011. Shares are up 145% in 27 months since the upgrade.

11/20/2013

DSW Inc. (NYSE: DSW) traded yesterday at an all time high (8 year) before closing @ $45.75. Stockdiagnostics upgraded DSW @ $21.47 (split & dividend adjusted) on September 14,2011 after the company reported 2nd quarter financials for the period ending July 31,2011. Since the upgrade 26 months ago shares are up 113%. (41.4% annualized total return)
<click to DSW Stockdiagnostics OPS chart
<click to DSW Stockdiagnostics FCF chart
<click to DSW Stockdiagnostics FCF chart 5 year

11/20/2013

Eagle Materials, Inc. (NYSE: EXP) closed yesterday @ $76.29. Stockdiagnostics upgraded EXP @ $28.02 (dividend adjusted) on May 31,2011 after the company reported FY2011 4th quarter financials for the period ending March 31,2011. Since the upgrade 30 months ago shares are up 172%.
<click to EXP Stockdiagnostics OPS chart
<click to EXP Stockdiagnostics OPS chart 5 year

<click EXP Stockdiagnostics OPS chart 4q

11/20/2013

Kid Brands, Inc. (NYSE: KID) closed yesterday @ $1.10. Stockdiagnostics downgraded KID @ $8.98 on November 15,2010 after the company reported 3rd quarter financials for the period ending September 30,2010.
Since the downgrade 3 years ago shares have declined 88%.
<click to KID Stockdiagnostics OPS chart

11/20/2013

Kansas City Southern (NYSE: KSU) closed yesterday @ $121.52. Stockdiagnostics upgraded KSU @ $36.66 (dividend adjusted) on August 2, 2010 after the company reported 2nd quarter financials for the period ending June 30,2010. Shares are up 231% since the upgrade 3.3 years ago. (43.8% annual return)
<click to KSU Stockdiagnostics OPS chart
<click to KSU GFNN news story

11/20/2013

MasterCard Inc. (NYSE:MA) closed yesterday @ $746.95.  Stockdiagnostics upgraded MA on February 24,2010 @$219.49 (dividend adjusted) after the company reported 4th quarter 2009 financials for the period ending December 31,2009. Since the upgrade 45 months ago shares have gained 240%.
<click to MA Stockdiagnostics FCF chart
<click to MA Stockdiagnostics FCF chart 5 year


11/20/2013

McKesson Corporation (NYSE: MCK) closed yesterday @ $159.21. Stockdiagnostics upgraded MCK @ $43.04 (dividend adjusted) on February 2,2009 after the company reported FY2009 3rd quarter financials for the period ending December 31,2008. In 5 years since the upgrade shares are up 270%. (31% total annualized return)
<click to MCK Stockdiagnostics OPS chart 5 year

11/20/2013

Pharmacyclics Inc. (NASDAQ: PCYC) closed yesterday before closing @ $124.43. Stockdiagnostics upgraded PCYC @ $23.23 on February 13,2012 after the company  reported FY2012 2nd quarter financials for the period ending December 31,2011. Since the upgrade 21 months ago shares have appreciated 435%
<click to PCYC Stockdiagnostics OPS chart
<click to PCYC Stockdiagnostics OPS 5 year chart

11/20/2013

Salem Communications Corp. (NASDAQ: SALM) closed yesterday @ $8.49. Stockdiagnostics upgraded SALM @ $2.74 (dividend adjusted) on August 16,2011 after the company reported 2nd quarter financials for the period ending June 31,2011. In 27 months since upgrade, shares have appreciated 209%.
<click to SALM Stockdiagnostics OPS chart 5 year
<click to SALM Stockdiagnostics OPS chart
11/20/2013

Susser Holdings Corporation (NASDAQ:SUSS) traded yesterday at an all time (7 year) high before closing @ $63.53. Stockdiagnostics upgraded SUSS @ $13.64 on March 24,2011 after the company reported financials for the 2010 4th quarter ending December 31,2010. Since the upgrade 32 months ago shares have gained 366%.
<click to SUSS Stockdiagnostics FCF chart

<click to SUSS Stockdiagnostics OPS chart
11/20/2013

The TJX Companies, Inc(NYSE: TJX) traded at an all time (25 year) high yesterday before closing @ $63.12. Stockdiagnostics upgraded TJX to a "1" ranking on September 17,2001 when the shares were at $6.67 (adjusted for splits and dividends). In 12 years since the upgrade, shares have appreciated 846%.
<click to TJX Stockdiagnostics FCF chart
click to TJX GFNN news story
<click to TJX Stockdiagnosics OPS Chart
11/20/2013

Visa, Inc (NYSE:V) closed  yesterday @ $197.39.Stockdiagnostics upgraded Visa @ $72.21 (dividend adjusted) on February 7,2011 after the company reported 2011 1st quarter financials for the period ending December 31,2010. In 33 months since the upgrade, shares have gained 173%<click to Visa Stockdiagnostics OPS chart

Monday, November 18, 2013

Stockdiagnostics Pick: FONR Up 950%

Fonar Corporation (NASDAQ: FONR) is trading at a 7 year high this morning @ $19.00. Stockdiagnostics upgraded FONR @ $2.00 on March 3,2011 after the company reported FY2011 2nd quarter financials for the period ending December 31,2010. Since the upgrade 32 months ago shares have appreciated 950%.
<click to FONR Stockdiagnostics OPS chart
<click to FONR Stockdiagnostics OPS 5yr chart


ARCHIVES

March 14, 2013 : There Are Nice People on Wall Street (FONR $7.08) )

  •  High Risk, High Reward (SEEKINGALPHA)
    Apr 16, 2012 12:13 PM | about stocks: FONR
    Originally posted this morning at www.equitiesresearch.com
    The biggest winners in the history of the stock market are investments made in micro cap stocks that grow their business from $0 to $100 million. The great majority of businesses never achieve such success and investors for the most part lose their entire investment.
    Fonar Corporation (NASDAQ: FONR) has a long way to go before reaching $100 million in revenue and it's a very high risk that they will ever reach the sales milestone. The challenge isn't only to triple sales, but to attain the mark and be profitable at the same time.
    Based on Fonar's quarterly operational cash flow growth over the last 7 consecutive quarters the company is headed in the right direction.
    Fonar Corporation (NASDAQ: FONR) is trading at a 4 year high this morning @ $4.25. Stockdiagnostics upgraded FONR @ $2.00 on March 3,2011 after the company reported FY2011 2nd quarter financials for the period ending December 31,2010. Since the upgrade 13 months ago shares have appreciated 112%.
    click to FONR Stockdiagnostics OPS chart
    click to FONR Stockdiagnostics OPS 5yr chart
 
 4/24/2012

Fonar Corporation (NASDAQ: FONR) was a top performing stock in the market yesterday trading up 29% and closing at a 4 year high @ $6.40.Stockdiagnostics upgraded FONR @ $2.00 on March 3,2011 after the company reported FY2011 2nd quarter financials for the period ending December 31,2010. Since the upgrade 13 months ago shares have appreciated 220%.
Since Equities Research post on Seeking Alpha 7 days ago, shares are up 50%.
<click to FONR Stockdiagnostics OPS chart
<click to FONR Stockdiagnostics OPS 5yr chart

<Seeking Alpha Post 4/16/2012 (Renna) 



MARCH 8,2013 Newsletter Pick $6.17

March 8,2013
Newsletter Picks (subscription Service)
Best Pick on the long side is Web.com (NASDAQ: WWWW)
(click ticker to view Stockdiagnostics upgrade charts and performance)
Long Picks
TICKER
PRICE
First Solar,Inc
$26.10
Rosetta Stone,Inc
RST
$13.26
Barnes & Nobles
BKS
$16.56
Stewart Information
STC
$25.26
Staples, Inc
SPLS
$12.76
AutoZone, Inc
AZO
$381.52
Web.com
WWWW
$17.32
Fonar Corp
FONR
$6.17
Short Picks
Ticker
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Titan Machinery, Inc
TITN
$29.03
NetFlix, Inc.
NFLX
$181.56

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