Equities Research

Wednesday, May 27, 2015

TITAN MISSED FY2015 EPS GUIDANCE BY $62 Million

Gave FY2015 EPS GUIDANCE OF $1.00 (In June 2014)

vs.

Actual FY2015 LOSS ($1.51) (less than 7 Months Later)

In June 2014, Titan Machinery reported FY2015 1st quarter financials and gave forward annual EPS guidance for the year ending January 31,2015 on the high end of $1.00 per share.

• The Company expects adjusted net income attributable to common stockholders to be in the range of $14.8 million to $21.1 million, and adjusted earnings per diluted share to be in the range of $0.70 to $1.00 based on estimated weighted average diluted common shares outstanding of 21.1 million.

In April 2015, Titan Machinery reported FY2015 year end EPS LOSS of $31 million ($1.51 per share) for the period ending January 31,2015.

Pattern of Poor Guidance/Insider Selling into Hyped Guidance

Titan Machinery has a history of making aggressive guidance and under delivering.

April 11,2014 Titan Machinery's guidance yesterday was laughable. Yesterday Titan Machinery shares went flying higher after the company announced they missed revenue guidance for the Q4 FY2014 quarter by 10%. It was just 8 weeks ago in December 2013 when the company lowered their 4th quarter guidance with only 8 weeks before the quarter ended and they still missed by a wide margin.

* Excluding non-cash items, totaling $7.8 million (or $0.37 per share), adjusted net income attributable to common stockholders for fiscal 2014 was $0.41 per diluted share.

April 2013 the company made the following guidance:

• Income forecast of $2 to $2.30 per share. It reiterated its revenue forecast of $2.35 billion to $2.55 billion.

The Next month, May 2013 guidance was changed:

• The company now anticipates earning $1.70 to $2 per share, down from its prior forecast of $2 to $2.30 per share. It reiterated its revenue forecast of $2.35 billion to $2.55 billion. "

The Next Month, June 2013, guidance:

• For the full year ending January 31, 2014, the Company anticipates revenue in the range of $2.35 billion to $2.55 billion, net income attributable to common stockholders in the range of $36.4 million to $42.8 million, and earnings per diluted share in the range of $1.70 to $2.00

September 2013 they made the following Guidance:

• For the full year ending January 31, 2014, the Company now expects revenue to be in the range of $2.25 billion to $2.45 billion compared to the previous range of $2.35 billion to $2.55 billion. The Company expects net income attributable to common stockholders to be in the range of $25.4 million to $31.8 million, and earnings per diluted share to be in the range of $1.20 to $1.50 based on estimated weighted average diluted common shares outstanding of 21.2 million, primarily reflecting the lower expected equipment margins. This compares to previous net income attributable to common stockholders guidance in the range of $36.4 million to $42.8 million, and earnings per diluted share in the range of $1.70 to $2.00 based on estimated weighted average diluted common shares outstanding of 21.4 million.

December 2013 the following guidance

• The Company is adjusting its annual guidance based on increased visibility of market conditions. For the full year ending January 31, 2014, the Company now expects revenue to be in the range of $2.15 billion to $2.35 billion compared to the previous range of $2.25 billion to $2.45 billion. The Company expects net income attributable to common stockholders to be in the range of $11.6 million to $15.8 million, and earnings per diluted share to be in the range of $0.55 to $0.75 based on estimated weighted average diluted common shares outstanding of 21.1 million, primarily reflecting the lower expected equipment sales and margins. This compares to previous net income attributable to common stockholders guidance in the range of $25.4 million to $31.8 million, and earnings per diluted share in the range of $1.20 to $1.50 based on estimated weighted average diluted common shares outstanding of 21.2 million.

The Actual Results for FY2014 that the above guidance refered to :

• Fiscal 2014 Full Year Results

For the full year ended January 31, 2014, revenue increased 1.3% to $2.23 billion from $2.20 billion last year. Gross profit margin for fiscal 2014 was 15.6%, compared to 15.4% last year. Pre-tax income for the fiscal 2014 was $18.4 million. Excluding the aforementioned non-cash impairment charge of $10.0 million, adjusted pre-tax income was $28.4 million, for a pre-tax margin of 1.3%. This compares to pre-tax income of $70.7 million, or a pre-tax margin of 3.2%, last year. GAAP net income attributable to common stockholders for fiscal 2014 was $8.7 million, or $0.41 per diluted share. Adjusted net income attributable to common stockholders for fiscal 2014 was $16.5 million, or $0.78 per diluted share. This compares to $42.0 million, or $2.00 per diluted share, last year.

In June 2012:

After giving a $2.55-$2.75 range guidance company reported $2.00 EPS for year ending January 31,2013.

Instead of earning $53.8million to $58 million for year the company only reported $42million.

But Management's Mission was accomplished by getting stock up to $30 so they could sell shares @ $30.

• The underwriter Cherry Tree (owned by director Tony Christianson, the brother of CEO, was compensated for the $150 million indenture offering in April of 2012. In June 2012 TITAN gave the following guidance in a press release:

"Net income attributable to common stockholders is expected to be in the range of $53.8 million to $58.0 million, resulting in earnings per diluted share range of $2.55 to $2.75". In July 2012 director Tony Christianson and director Irwin James both sold shares of TITAN (TITN) in the market place above $30 per share.

7/13/2011

INSIDER SELLING:
On June 9,2011 Chairman David Meyer 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.

Thursday, May 21, 2015

Will Securities and Exchange Commission Comment On Another Titan Proxy?

In 2013 the Securities and Exchange Commission Division of Corporate Finance sent Titan Machinery Comment letters regarding the company's DEF 14 A proxy statement and also sent comment letters regarding 2 other 2013 separate company filings. (each comment letter with Titan's responses can be found below).

DEF 14 A Proxy
Resignation of Auditor
FY2013 10K

One Month After Shareholders Vote on 8 Board Seats, Management decides to Add A 9th With No Vote

In June 2014 Titan Machinery shareholder meeting listed 8 directors.
On July 15,2014 Management added a 9th director seat and appointed a new director without a shareholder vote.
In May 2015 the New DEF 14 A Proxy removed the 9th board seat and returned to 8 directors.
I wonder if the 9th director was added to merely vote for the removal of PC as president/director?

Vote Required Under applicable Delaware law, the election of each nominee requires the affirmative vote by a plurality of the voting power of the shares present and entitled to vote on the election of directors at the Annual Meeting at which a quorum is present.

Thursday May 7,2015, Titan Machinery (NASDAQ: TITN) filed a DEF 14 A Proxy .
4 Days later.......
On Monday May 11th Titan filed an 8K after the close, disclosing that the President of the Company, who is also listed as a founder, would no longer be president and will also step down from being a member of the board of directors. There has been no comment at this time from the management of Titan nor any information in the press regarding this dramatic and sudden change.

What's the BIG DEAL?
The big deal here is that on March 9,2015 Titan included in an 8K filing that outside director James Williams was retiring and would not stand for reelection. But Titan didn't disclose that the president wouldn't stand for reelection until four days after the DEF 14 A was filed with the SEC.

March 9,2015 8K

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On March 5, 2015, James Williams informed the Board of Directors (the “Board”) of the Company that he will retire at the end of his current term and therefore will not stand for reelection to the Board at the Company’s 2015 Annual Meeting of Stockholders, scheduled to be held June 4, 2015. Mr. Williams' decision not to stand for reelection is the result of his retirement and is not related to any disagreement with the Company’s operations, policies or practices.

May 7,2015 DEF 14 A Proxy .
May 11,2015 8K

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 11, 2015, Titan Machinery Inc. (the “Company”) and Peter Christianson entered into a Services Agreement (the “Agreement”) to provide the terms of Mr. Christianson’s continued service to the Company. Under the terms of the Agreement, Mr. Christianson will conclude his term as President of the Company, and will assume the position of Chairman of International Operations, with his job duties focused on the Company’s international operations, effective as of the Company’s 2015 Annual Meeting, which will be held on June 4, 2015 (the “Annual Meeting”). Mr. Christianson will continue leading the Company’s International segment through the end of the 2016 fiscal year. Following the end of the 2016 fiscal year, Mr. Christianson will serve the Company in a consulting role.

The Agreement provides that upon his transition to a consulting role Mr. Christianson will be paid an annual fee equal to the annual base salary stated in his March 6, 2013, employment agreement for a term of three years, which amount will continue to be paid for the remainder of such term if the Agreement is terminated by the Company without Cause or by Mr. Christianson with Good Reason (each term as defined in the Agreement). Mr. Christianson will also participate in the Company’s medical and dental plans two years following his transition to consulting status. Mr. Christianson will not be entitled to other items of compensation that he is currently entitled to, including incentive compensation and other employee benefits available to Company employees. The terms of Mr. Christianson’s unvested stock option, restricted stock, and restricted stock units awards will be amended to provide that they will continue to vest on their current terms, provided that Mr. Christianson complies with the restrictive covenants contained in his employment agreement as in effect immediately prior to the execution of the Agreement.

Mr. Christianson will also conclude his service on our Board of Directors at the end of his current term, which expires on the date of the 2015 Annual Meeting.

MAY 12,2015 Titan Machinery President to Step Down and Resign as Director (this link includes related party transactions and suspicous trading in the stock)

Will the company need to file an updated DEF 14 A with the SEC prior to this June 2015 shareholder meeting so that all the investors will have full disclosure of this new change?

2013 Securities and Exchange Division of Corporate Finance Comment Letters
On April 24,2013 Titan Machinery filed a DEF 14 A proxy statement with the Securities and Exchange Commission. By the end of 2013 The Securities and Exchange Commission Division of Corporate Finance made the following Comments to Titan Machinery: