14.04.2014

Titan to restructure after profit slump

US based equipment distributor Titan Machinery has published its 2014 results and announced location closures and layoffs.

Total revenue for the full year were $2.23 billion, slightly higher than in 2012, with increases in replacement parts sales, service and rental offset my slower sales of new equipment. Pre-tax profits were less than a third of the previous year at $18.43 million, compared to $70.7 million the prior year.

The fourth quarter was particularly bad for new equipment sales causing total revenues to fall almost 10 percent to $708.6 million, with pre-tax profits barely a 10th of what they were in 2012 at $2.8 million. The revenue drop was caused by slower sales in the company’s agricultural division, with construction and international both improving. However the agricultural sector produces all of the profits, while the other two both lose money.

The company’s main construction products are Case New Holland, but it also offers Grove, Wacker Neuson, Pettibone and National Crane and a range of aerial lifts.

The company also announced that it will reduce the headcount in its construction division by almost 12 percent, through the closure of seven locations in: Bozeman, Big Sky and Helena, Montana - Cheyenne, Wyoming - Clear Lake - Iowa, Flagstaff - Arizona and Rosemount in Minnesota. The company is also consolidating one agriculture store in Oskaloosa, Iowa, into an existing Titan agriculture dealership. The costs of these closures will be approximately $4.2 million and will be taken in the first quarter.

Chief executive David Meyer said: “Our top line results for fiscal 2014 were within our expectations and our adjusted net income and earnings per share exceeded our guidance range. In the fourth quarter, our parts and service business performed well, while our equipment sales and margins continued to experience challenges due to industry headwinds across our segments. We achieved our equipment inventory reduction targets in the fourth quarter, which is an important step in enabling us to improve our cash flow in coming quarters.”

“We are confident the realignment we are implementing during the first quarter of fiscal 2015 will position our Construction segment for improved pre-tax profits and enable us to better serve our Construction and rental customer base going forward. While we are not satisfied with the recent overall performance of our Construction business, the changes we are making will enhance the overall performance of this segment.”

“As we begin fiscal 2015, we continue to believe that our Construction and International segments are important parts of our long-term growth opportunities. We remain focused on managing the controllable aspects of our business, including taking steps to further reduce our inventory levels. We are confident that these improvements, combined with our proven operational strength, will help drive strong cash flow from operations in fiscal 2015 and enable us to navigate macroeconomic conditions and better position our business for future opportunities.”