Titan Machinery Inc., an operator of farm and construction equipment dealerships in the Midwest and Northern Plains, said quarterly profit more than tripled, reflecting soaring grain and livestock prices that are fueling an agricultural economy boom.
Stronger than expected profit Titan reported in an April 18 statement sent the company’s shares up more than 17 percent to the highest level in nearly three years. David Meyer, Titan’s chief executive officer, said he expects sales to increase by at least another 17 percent this year and earnings to climb at least 23 percent.
West Fargo, N.D.-based Titan sells new and used Case IH and New Holland equipment at about 80 locations.
“We are encouraged by the position of our business,” Meyer said in the statement, which announced Titan’s quarterly results. “The economy in the Upper Midwest remains robust, due to projected increases in farm cash receipts and activity around the various oil, gas and coal formations, among other factors.”
Titan is among businesses reaping a windfall as high commodity prices boost farmers’ incomes, spurring planting of more cropland and raising demand for tractors and other equipment. Corn prices have more than doubled over the past year, and cattle and hog prices notched all-time highs in recent months.
“Farm implement producers and dealers are experiencing a banner year as farmers spend their higher incomes,” Creighton University economist Ernie Goss said in a recent report.
University of Missouri economists Scott Brown and Pat Westhoff, in a report released last month, projected 2011 net U.S. farm income at $96.85 billion, up 24 percent from 2010 and the second-highest inflation-adjusted figure on record.
Large equipment manufacturers such as Deere & Co. have also benefitted from the farm income upswing. Analysts estimate Deere’s global revenue this year will top $29 billion, up about 23 percent from last year. Deere shares are up nearly 10 percent this year and in early April hit a record closing high at $99.24.
Titan has expanded as its revenue surged, completing three acquisitions in the previous quarter that added two agriculture dealerships and four rental equipment locations. Equipment sales accounted for about 78 percent of Ttan’s $1.09 billion in total revenue last year.
Newer-model tractors Titan sells range from $35,000 to almost $300,000, according to the company’s Website. A 2010 four-wheel drive Case IH STX535 at a dealership in Elbow Lake, Minn., for example, is currently listed at $229,000.
In the three months ended Jan. 31, Titan’s fiscal 2011 fourth quarter, the company posted net income of $10.4 million, up from $3.36 million during the same period a year earlier, according to the April 18 statement. Revenue in the quarter rose 46 percent to $368 million.
Titan projects full-year fiscal 2012 revenue at $1.275 billion to $1.35 billion and net income at $27.5 million to $29.4 million.
In afternoon trading April 18, Titan shares rose $4.60, or 17 percent, to $31.54, up about 62 percent this year.