Why Titan Machinery Shares Are Rocketing Today?

Titan Machinery Inc TITN shares are shooting higher by around 12% after reporting better-than-expected Q2 FY24 results. 

The company recorded revenue growth of 29.4% Y/Y to $642.57 million, beating the consensus of $602.41 million.

The agricultural and construction equipment stores company registered an EPS of $1.38, beating the consensus of $1.17.

Segment Results: Agriculture Segment revenues totaled $469.1 million (+34.4% Y/Y), Construction totaled nearly $82.9 million (+18.3% Y/Y), and Europe (formerly International) totaled $90.6 million (+16.9% Y/Y).

Equipment sales increased to $480.1 million (from $375.2 million a year ago), and Parts sales rose to $108.5 million (from $77.7 million a year ago).

The gross profit margin increased to 20.8%, up 10 basis points Y/Y on to a slight mix shift to higher margin parts sales compared to equipment sales. 

The company exited the quarter with cash worth $52.8 million. 

Inventories increased to $979.4 million as of July 31, 2023, compared to $703.9 million as of January 31, 2023.

Operating cash flow was negative $(122.7) million versus $(21.0) million a year ago.

Yesterday, the company entered a definitive purchase agreement to acquire J.J. O'Connor & Sons Pty. Ltd. for $63 million in cash.

FY24 Outlook: The company reiterated its already increased FY24 outlook. Titan Machinery sees EPS of $4.60 - $5.25 against the consensus of $4.90.

The company expects construction segment revenue to grow at around 5%-10% (previous range of flat-up 5%) and sees Europe segment sales to increase 5%-10% vs. the prior range of 8%-13%.

"Despite constraints on the availability of key equipment categories, the year-to-date performance of our Agriculture segment has been consistent with our expectations, underpinned by strong organic growth and operating performance. While we are reaffirming our assumptions for the Agriculture segment, we are updating our assumptions for both the Construction and International segments. Construction has been outperforming revenue growth expectations, which we expect to continue through the balance of the fiscal year. Conversely, our International business in Europe is trending toward the low-end of our previous assumptions for revenue growth," said David Meyer, Chairman and Chief Executive Officer.

Price Action: TITN shares are up 12.2% at $32.64 on the last check Thursday.