Sunday, December 13, 2015

Titan Machinery: New 6 Year Low and Conditions are Getting Worse

TITAN MACHINERY (NASDAQ:  TITN  $9.18 ) Friday traded at a 6 Year intra day low of $8.92. All time low for TITN is $7.50 set in March 2009.

  • 21.5 million shares outstanding
  • $200 million market Capitalization
  • Revenue for 9 months ending October 31,2015 : $1 Billion 
  • Net Income for 9 months ending October 31,2015 : neg -($2.8 million)
DECEMBER 2015 10Q states: 
" a one percentage point decrease in interest rates for the next 12-month period would result in an increase to pre-tax earnings and cash flow of approximately $3.3 million"

TradeCard TITN can be found at CMLVIZ

On December 13,2015 Motley Fool published the following article by author Lee Samaha:

"It's getting worseTitan's third-quarter 2016 revenue came in significantly below analyst estimates, with revenue declining 30% and equipment sales down a whopping 37%. Moreover, its updated full-year guidance reflected a weakening in its end markets"

My Comment to the Motley Fool Article:
Tom Renna
great work. I also thought it was interesting that Meyer said on conference call that Titan would not be profitable for FY2016 which ends January 31,2016. On September conference call he said they would be profitable for year.

To your point that revenue for Q3 missed analyst estimates, to put a number to that: Analyst estimates called for $416 million in revenue and company came in at $344 million. A $72 million miss (or -17%).

Prior to the Q3 call on december 3,2015, all 7 analysts estimated FY2016 to be profitable with significantly higher revenue estimates. I am curious how much longer it will take for analyst to update their research and estimates for FY2016.

Analyst Feltl estimates still read FY2016 net income estimates of $0.26 EPS, that would be $5.6 million net income. And as mentioned in call, Meyer says there will be NO PROFIT.

Not sure if you noticed this spin by management.

In the FY2015 Q3 10Q Titan showed Construction sales of $110m Up from $109m in FY14 Q3 and touted the Q3 improvement vs. Fy 2014 Q3 on December 2014 call.  

In the FY2016 Q3 10Q reported this week the $110 million in construction revenue in the Fy2015 Q3 has now been changed to $98m in FY2016 Q3 10Q.

So on the call and on the investor relations slide presentation they show Construction being lower by 11% using the $98 million revenue figure.
But if TITAN used the $110 million construction revenue number that appears in FY2015 Q3 10Q then Construction Revenue actually declined 21%.

Your point about the service profit margins is perfect. If sales of rental, parts and equipment weren't so horrible, the profit margins would have shrunk for the overall business.

CLIFF NOTES: $35 to $9 

December 5,2015 News Break from FlyOntheWall

09:53 EDTCAT, TITN, DE, CNHI, AGCOTitan Machinery inventory cut negative for CNH Industrial, says Wells Fargo
Titan Machinery's (TITN) inventory reduction forecast this morning appears negative for CNH Industrial (CNHI), said Wells Fargo, noting that Titan is a large CNH distributor. Titan's results and cautious outlook also have a negative read through for AGCO (AGCO), Deere (DE), and Caterpillar (CAT), according to the firm.

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