For the third quarter of fiscal 2013, revenue increased 37.6% to $582.1 million from revenue of $423.0 million in the third quarter last year. All four of the Company’s revenue sources-equipment, parts, service, and rental and other-contributed to this period-over-period revenue growth. Equipment sales were $456.2 million for the third quarter of fiscal 2013, compared to $312.3 million in the third quarter last year. Parts sales were $72.1 million for the third quarter of fiscal 2013, compared to $64.5 million in the third quarter last year. Revenue generated from service was $33.4 million for the third quarter of fiscal 2013, compared to $29.8 million in the third quarter last year. Revenue from rental and other increased to $20.5 million from $16.3 million in the third quarter last year.
Gross profit for the third quarter of fiscal 2013 was $94.1 million, compared to $74.0 million in the third quarter last year. The Company’s gross profit margin was 16.2% in the third quarter of fiscal 2013, compared to 17.5% in the third quarter last year. The decrease in gross profit margin was primarily due to the change in sales mix, in which the higher margin parts and service businesses generated a smaller percentage of sales compared to the same quarter last year.
Operating expenses were 11.0% of revenue or $64.0 million for the third quarter of fiscal 2013, compared to 11.8% of revenue or $50.1 million for the third quarter of last year.
Floorplan interest expense increased to $3.7 million for the third quarter of 2013 compared to $2.6 million for the same period last year due to increased levels of interest-bearing equipment inventory. Other interest expense increased to $2.9 million for the third quarter of fiscal 2013 compared to $0.3 million for the same period last year due to the Company’s April 2012 convertible debt offering.
Pre-tax income for the third quarter of fiscal 2013 was $23.8 million, compared to $21.3 million in the third quarter last year. Pre-tax margin was 4.1% for the third quarter of fiscal 2013, compared to 5.0% in the third quarter last year. Pre-tax Agriculture segment income was $26.1 million for the third quarter of fiscal 2013, compared to $20.1 million in the third quarter last year. Pre-tax Construction segment income was $0.5 million for the third quarter of fiscal 2013, compared to $3.3 million in the third quarter last year.
Net income attributable to common stockholders for the third quarter of fiscal 2013 was $13.9 million, compared to $12.7 million in the third quarter last year. Earnings per diluted share for the third quarter of fiscal 2013 were $0.66 compared to $0.61 per diluted share in the third quarter last year.
For the nine months ended October 31, 2012, revenue increased 34.4% to $1.41 billion from $1.05 billion for the same period last year. Gross margin for the first nine months of fiscal 2013 was 16.6%, compared to 17.4% in the same period last year. Pre-tax income for the first nine months of fiscal 2013 was $44.9 million for a pre-tax margin of 3.2%, compared to $43.9 million, or a pre-tax margin of 4.2%, for the same period last year. Net income attributable to common stockholders for the first nine months of fiscal 2013 was $26.6 million, or $1.27 per diluted share, compared to $26.1 million, or $1.31 per diluted share, for the same period last year. The nine-month weighted average diluted common shares outstanding for the first nine months of fiscal 2013 was 21.0 million, compared to 19.9 million weighted average diluted common shares outstanding in the same period last year.
The Company ended the third quarter of fiscal 2013 with cash and cash equivalents of $115.7 million. The Company’s inventory level was $1.05 billion as of October 31, 2012, compared to $748.0 million at the end of fiscal 2012. This inventory level primarily reflected an increase in new equipment, which increased to $726.9 million at October 31, 2012 from $445.5 million at January 31, 2012, while used equipment decreased slightly to $218.4 million at October 31, 2012 from $219.8 million at January 31, 2012. The Company expects its new equipment inventory will decrease, excluding acquisitions, during the fourth quarter of fiscal 2013. The Company will continue to manage used equipment levels and valuations regularly but due to seasonally higher new equipment demand in the fourth quarter of the year, the Company anticipates the used equipment inventory level to increase by the end of fiscal 2013. The Company had available $188.9 million of its $925.0 million total discretionary floorplan lines of credit as of October 31, 2012.
In fiscal 2013 to date, the Company completed seven acquisitions, consisting of six agriculture equipment dealership locations in the United States, five construction equipment dealership locations in the United States, one independent rental yard location in the United States, and seven agriculture equipment dealership locations in Europe. The Company also opened a new construction dealership in Windsor, Colorado and three new agriculture dealership locations in Romania. In addition, the Company contracted with CNH to distribute Case Construction equipment in Romania and Bulgaria and to distribute CaseIH Agricultural products in Ukraine.
David Meyer, Titan Machinery’s Chairman and Chief Executive Officer, stated, “In the third quarter, we generated solid top and bottom line growth and ended the quarter with a strong balance sheet. Our Agriculture segment continued to maintain strong sales activity, despite the impact of drought conditions on customer sentiment, and we also successfully managed our margins, leveraged expenses and improved our Agriculture pre-tax income by 30% compared to the prior year quarter. Our Construction business also experienced solid top line growth, but increased equipment inventory levels across this industry as well as our recent strategic acquisitions in large metro areas have pressured the bottom line results of this segment. Based on our year-to-date results and outlook for the final quarter of the year, we are raising our annual revenue range and reiterating our earnings per share outlook.”
Mr. Meyer continued, “As we enter the fourth quarter we expect our inventory management strategy will reduce new equipment inventory levels by the end of fiscal 2013. In addition, we expect to improve the construction segment of our business which will enable us to generate stronger operating results in the fourth quarter. We have executed on our organic and acquired growth strategy with strategic acquisitions, both in the United States and internationally. We recently expanded our domestic footprint into Arizona with the acquisition of Falcon Power. We are excited about our growing dealership network and are confident that our new locations will contribute to our future top and bottom line growth.”
The Company evaluates its financial performance based on its customers’ annual production cycles as opposed to a quarterly basis, due to weather fluctuations and the seasonal nature of each customer’s business. The Company is raising its previous revenue guidance and expects its revenue for the full year ending January 31, 2013 to be in the range of $2.0 billion to $2.15 billion from the previous range of $1.95 billion to $2.1 billion. Net income attributable to common stockholders is expected to be in the range of $44.1 million to $48.3 million. Earnings per diluted share is expected to be in the range of $2.10 to $2.30 based on estimated weighted average diluted common shares outstanding of 21.0 million. For comparative purposes, the Company generated revenue of $1.66 billion in fiscal year 2012 and net income attributable to common stockholders for fiscal 2012 was $43.8 million, or $2.18 per diluted share, based on weighted average diluted common shares outstanding of 20.1 million.
Investors interested in participating in the live call can dial (888) 417-8516 from the U.S. International callers can dial (719) 325-2484. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, December 20, 2012, by dialing (877) 870-5176 from the U.S., or (858) 384-5517 from international locations, and entering confirmation code 7983584.
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 new and used equipment inventory levels, additional growth and domestic and international acquisition opportunities and the Company’s ability to capitalize on such opportunities, growth and profitability expectations, and the expected results of operations for the fiscal year ending January 31, 2013 and the components of such expected results of operations, involve known and unknown risks and uncertainties that may cause Titan Machinery’s actual results in current or future periods to differ materially from forecasted results. The Company’s risks and uncertainties include, among other things, a substantial dependence on a single distributor, the continued availability of organic growth and acquisition opportunities, potential difficulties integrating acquired stores, industry supply levels, fluctuating agriculture and construction industry economic conditions, the success of recently implemented initiatives within the Company’s Construction segment, the uncertainty and fluctuating conditions in the capital and credit markets, difficulties in conducting international operations, governmental agriculture policies, seasonal fluctuations, climate conditions, disruption in receiving ample inventory financing, and increased competition in the geographic areas served. These and other risks are more fully described in Titan Machinery’s filings with the Securities and Exchange Commission, including the Company’s most recently filed Annual Report on Form 10-K. 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.