Titan Machinery Inc. Announces Fiscal Fourth Quarter and Full Year 2008 Results

Titan Machinery Inc. (Nasdaq: TITN), a leading network of full service agriculture and construction equipment stores, today reported financial results for the fourth quarter and year ended January 31, 2008. Fiscal 2008 Fourth Quarter For the fourth quarter of fiscal 2008, revenue increased 61% to $135.2 million from revenue of $84.0 million for the fourth quarter of the prior year. All three of the Company’s main revenue sources - equipment, parts and services - contributed to this period-over-period revenue growth. Equipment sales were $112.5 million, up 66% from $67.9 million in the same period last year. Parts sales increased 56% to $13.2 million for fourth quarter, from $8.4 million in the prior-year period. Revenue generated from services increased 17% to $6.4 million in the quarter compared to $5.5 million in the fourth quarter of last year. Gross profit for the fiscal fourth quarter increased 72% to $23.5 million, compared to $13.7 million in the fourth quarter of the prior year. The Company's gross profit margin increased to 17.4% in the fiscal fourth quarter versus 16.3% in the fourth quarter of the prior year. Operating income for the fiscal fourth quarter was $6.1 million compared to $3.7 million in the same period a year ago. The Company’s operating margin was 4.5% versus 4.4% last year. GAAP net income for the fiscal fourth quarter was $270,000, or $0.02 per diluted share, which is within the Company’s previously issued guidance range of $0.01 to $0.03 per share, versus net income of $1.4 million, or $0.21 per diluted share, for the fourth quarter last year. The Company’s fourth quarter net income and EPS include one-time IPO-related debt conversion and retirement costs of $2.7 million after-tax, or $0.25 per diluted share. Excluding these costs, the Company exceeded its previously issued pro forma guidance and achieved net income of $3.0 million, or $0.27 per diluted share, for the fourth quarter, compared to the Company’s guidance of $0.21 to $0.23 per share. Fiscal 2008 Results For the fiscal year ended January 31, 2008, revenue increased 48% to $433.0 million from revenue of $292.6 million in the fiscal year ended January 31, 2007. GAAP net income was $5.2 million, or $0.67 per diluted share, for the period, which exceeded the Company’s previously issued guidance range of $0.61 to $0.63 per share, compared to net income of $3.6 million, or $0.57 per diluted share, in the same period last year. The Company’s net income and EPS include one-time IPO-related debt conversion and retirement costs of $2.7 million after-tax, or $0.33 per diluted share. Excluding these costs, the Company exceeded its previously-issued pro forma guidance of $0.89 to $0.91 per share and achieved net income of $7.9 million, or $1.00 per diluted share, for the full year. "We are very pleased with our revenue and earnings growth in the fourth quarter and full year of fiscal 2008,” said David Meyer, Titan Machinery’s Chairman and Chief Executive Officer. "Fourth quarter and full year sales and gross profit increased in all three of our revenue sources—equipment, parts, and services. In addition, the higher margin parts and service revenue represented 46% of total gross profit for the year. We attribute the strong performance to our proven operating model, organic and acquired growth, as well as the robust agriculture economy. In the fourth quarter, we acquired four stores, further strengthening our market leading position in the Red River Valley. We believe we are well-positioned to continue to capitalize on our strong Titan Operating Model in fiscal 2009 and beyond.” Acquisitions Peter Christianson, the Company’s President and Chief Financial Officer said, "We continue to execute on our acquisition strategy, which has significantly contributed to our success. During our fiscal fourth quarter, we acquired four dealerships, bringing the total number of dealerships at the end of fiscal 2008 to 38.” In the fourth quarter, the Company acquired Twin City Implement in North Dakota, Reiten & Young International in North Dakota, and Avoca Implement and Greenfield Implement in Southwest Iowa. In the first quarter fiscal 2009, the Company acquired Ceres Equipment, with one dealership in Minnesota. In addition, the Company announced today the signing of a purchase agreement to acquire Quad County Implement, Inc., with one store in Blairstown, IA. The Company expects this acquisition to close on May 1, 2008. Strategically located in contiguous markets to the Company’s Waverly store and Grundy Center store in Iowa, this acquisition expands its footprint in some of the most productive farmland in Iowa. Blairstown reported revenues of $14.8 million during its most recently completed fiscal year ended June 30, 2007. Outlook The Company is raising its revenue outlook for the full year ending January 31, 2009 to $550 million to $600 million, compared to previously issued guidance of $530 million to $590 million. In addition, the Company is also raising earnings per diluted share guidance for the full year to $0.87 to $0.92, compared to previously-issued guidance of $0.77 to $0.82 per diluted share. Fully-diluted shares outstanding for the fiscal year ending January 31, 2009 are estimated to be approximately 13.8 million shares. This outlook discussion does not include the impact of any future equity issuances outside of the Company’s equity incentive plan. Conference Call Information The Company will host a conference call and audio webcast today at 3:30 p.m. Central (4:30 p.m. Eastern) to discuss its financial results. The webcast will be available at www.titanmachinery.com and archived for 30 days. Visitors to the website should select the "Investor Relations" link to access the webcast. In addition, you may call (800) 762-8795 to listen to the live broadcast. International callers can dial (480) 629-9031. In addition, a telephonic replay will be available approximately two hours after the live call ends through May 12, 2008, by dialing (800) 406-7325 from the U.S., or (303) 590-3030 from international locations, and entering confirmation code 3868041. About Titan Machinery Titan Machinery Inc., founded in 1980 and headquartered in Fargo, North Dakota, owns and operates one of the largest networks of full service agricultural and construction equipment stores in North America. Currently, the Titan Machinery network includes 39 dealerships in North Dakota, South Dakota, Minnesota and Iowa, representing one or more of the CNH Brands (NYSE:CNH): CaseIH, New Holland Agriculture, Case Construction, New Holland Construction, Kobelco and CNH Capital. Additional information about Titan Machinery Inc. can be found at www.titanmachinery.com. Forward-Looking Statements Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements made herein, which include statements regarding the Company’s expected results of operations for fiscal 2009 and beyond, the closing of and expected benefits from the anticipated acquisition of Quad County Implement, Inc., and additional acquisition opportunities, involve known and unknown risks and uncertainties, which may cause Titan Machinery’s actual results in current or future periods to differ materially from forecasted results. Those risks and uncertainties include, among other things, a substantial dependence on a single distributor, growth and acquisition opportunities, potential difficulties closing the acquisition of Quad County Implement, Inc., potential difficulties integrating the operations of Quad County Implement, Inc. with Titan Machinery’s operations following the closing of that acquisition, industry supply levels, agriculture and construction industry conditions, governmental agriculture policies, seasonal fluctuations, climate conditions, disruption in receiving ample inventory financing, increased competition in the geographic area served, and the impact of any future equity issuances outside our equity incentive plan. Those and other risks are more fully described in Titan Machinery’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K filed on April 28, 2008. Titan Machinery conducts its business in a highly competitive and rapidly changing environment. Accordingly, new risk factors may arise. It is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on Titan Machinery's business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Titan Machinery disclaims any obligation to update such factors or to publicly announce results of revisions to any of the forward-looking statements contained herein to reflect future events or developments. Non-GAAP Financial Measures In addition to discussing results determined in accordance with GAAP, the Company also has discussed in this press release non-GAAP net income and earnings per share information that excludes certain charges. These results are provided as a complement to results provided in accordance with GAAP. The Company has discussed non-GAAP results in order to better assess and reflect projected operating performance. Management believes the non-GAAP measures help investors understand the Company’s baseline performance before charges that will not recur in the future periods and thus are considered by management to be outside the Company’s ongoing operating results. The Company believes these non-GAAP measures will aid investors' overall understanding of its projected results by providing a higher degree of transparency and by providing a level of disclosure that will help investors understand how the Company plans and measures its business. The presentation of non-GAAP measures is not meant to be considered in isolation or as a substitute for financial measures or information provided in accordance with GAAP. TITAN MACHINERY INC. Statements of Operations   (in thousands except per share data)   Three Months Ended  Twelve Months Ended January 31, January 31,   2008       2007   2008(a)   2007(a) REVENUE (unaudited)   Equipment $ 112,528 $ 67,873 $ 338,382 $ 220,958 Parts 13,182 8,444 58,743 42,619 Service 6,405 5,499 27,344 21,965 Other, including trucking and rental 3,046 2,166 8,502 7,056 135,161 83,982 432,971 292,598     COST OF REVENUE Equipment 97,988 61,096 302,320 200,558 Parts 8,900 5,413 42,568 29,909 Service 2,387 2,046 10,118 8,183 Other, including trucking and rental 2,379 1,771 5,913 5,337 111,654 70,326 360,919 243,987   GROSS PROFIT 23,507 13,656 72,052 48,611   OPERATING EXPENSES 17,358 9,937 53,190 37,399   INCOME FROM OPERATIONS 6,149 3,719 18,862 11,212   OTHER INCOME (EXPENSE) Interest and other income 373 41 577 349 Floorplan interest expense (1,008 ) (858 ) (3,812 ) (3,294 ) Interest expense, including interest on subordinated debentures of $1,552 in 2008 and $1,680 in 2007 (523 ) (585 ) (2,480 ) (2,179 ) Debt retirement costs (3,824 ) - (3,824 ) -   INCOME BEFORE INCOME TAXES 1,167 2,317 9,323 6,088   PROVISION FOR INCOME TAXES (897 ) (936 ) (4,110 ) (2,450 )   NET INCOME $ 270 $ 1,381 $ 5,213 $ 3,638   ADJUSTMENTS TO INCOME Amortization of syndication fees - preferred stock (net of tax effect) (36 ) (5 ) (51 ) (21 ) Unpaid accumulated preferred dividends (11 ) (26 ) (88 ) (102 ) INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 223 $ 1,350 $ 5,074 $ 3,515   EARNINGS PER SHARE - BASIC $ 0.02 $ 0.31 $ 0.90 $ 0.81 EARNINGS PER SHARE - DILUTED $ 0.02 $ 0.21 $ 0.67 $ 0.57                   (a) Derived from audited financial statements as reported in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2008. TITAN MACHINERY INC. Balance Sheets     January 31, 2008 (a) January 31, 2007(a) (in thousands) (in thousands) ASSETS   CURRENT ASSETS Cash $ 42,803 $ 7,572 Receivables, net 22,061 10,921 Inventories 145,767 106,254 Prepaid expenses 215 186 Income tax receivable 1,074 - Deferred incomes taxes 1,027   462   Total current assets 212,947 125,395   INTANGIBLES AND OTHER ASSETS Parts inventory in excess of amounts expected to be sold currently 1,480 1,062 Goodwill 8,271 3,736 Intangible assets, net of accumulated amortization 337 169 Other 312 335 10,400 5,302   PROPERTY AND EQUIPMENT, net of accumulated depreciation 16,022 8,175 $ 239,369 $ 138,872   LIABILITIES AND STOCKHOLDERS' EQUITY   CURRENT LIABILITIES Accounts payable $ 9,244 $ 4,228 Floorplan notes payable 105,848 84,699 Current maturities of long-term debt 5,654 2,824 Customer deposits 19,309 4,608 Accrued expenses 6,138 2,287 Income taxes payable - 378   Total current liabilities 146,193 99,024   LONG-TERM LIABILITIES Long-term debt, less current maturities 13,083 6,788 Deferred income taxes 1,865 925 Other long-term liabilities 811 - Accrued interest on subordinated debt - 330 15,759 8,043   SUBORDINATED DEBENTURES 1,300 16,747   CONTINGENCIES - Note 16   REDEEMABLE SECURITIES Series A Convertible Preferred stock - par value $.00001, authorized- None at January 31, 2008 and 2,000,000 shares at January 31, 2007; issued and outstanding- None at January 31, 2008 and 341,672 shares at January 31, 2007. - 1,193 Series B Convertible Preferred stock - par value $.00001, authorized- None at January 31, 2008 and 2,000,000 shares at January 31, 2007; issued and outstanding- None at January 31, 2008 and 125,001 shares at January 31, 2007 - 486 - 1,679 STOCKHOLDERS' EQUITY Common stock, par value $.00001 per share, authorized- 25,000,000 shares; outstanding - 13,440,654 and 4,344,753 shares at January 31, 2008 and 2007, respectively - - Additional paid-in-capital 58,180 515 Retained earnings 17,937 12,864 76,117 13,379   $ 239,369 $ 138,872   (a) Derived from audited financial statements as reported in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2008.