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Associated Press, Published September 10 2012

Titan Machinery shares fall on weak second-quarter net income

WEST FARGO – Titan Machinery Inc. shares tumbled more than 19 percent Monday morning after the company posted lower-than-expected net income for its fiscal second quarter and cut its profit prediction for the full year.

Despite a 32 percent jump in revenue, profitability fell as a result of lower used equipment margins, increased price competition and a shift in sales mix away from the company’s more profitable parts and service businesses, the company said.

Titan said that while its agricultural customers got a boost from higher commodity prices in the second half of the quarter, sales and profitability continued to be hurt by drought conditions across the Midwest.

Meanwhile, profitability from construction equipment was hurt by increased competition in certain markets.

For the quarter ended July 31, Titan earned

$5.2 million, or 25 cents per share, down 17 percent from $6.2 million, or 30 cents per share, in the same quarter last year.

Revenue rose 32 percent to $410.1 million from

$310.8 million, boosted by increases at all four of its businesses.

The profit fell short, but the revenue exceeded Wall Street expectations. Analysts, on average, expected earnings of 43 cents per share on $402 million in revenue, according to a FactSet poll.

Titan cut its fiscal 2013 earnings per share prediction, but backed its previous revenue prediction, saying it now expects net income of $2.10 to $2.30 per share, down from its previously predicted range of $2.55 to $2.75 per share. Revenue is still expected to total between $1.95 billion and $2.1 billion.

Analysts expect earnings of $2.64 per share on

$2.02 billion.

Titan shares tumbled $4.92, or 19.3 percent, to $20.44 in morning trading. They have tumbled 45 percent since hitting a 52-week high of $36.92 in mid-April. They traded as low as $15.58 last October.