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Founder of EquitiesResearch.com Tom Renna began his professional career on Wall Street 25 years ago after graduating Rutgers University. In 2005 Tom founded Equities Research LLC, a small boutique investment research firm where he provides market research analysis and consulting services to both... More
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  • Notes On Titan Machinery Q3

    The business model of Titan Machinery can't really be compared to DE, CNH or CAT.
    DE,CNH and Cat are manufacturers with their own financing arms, while TITN is nothing more than a reseller. The space is under pressure and competition is fierce which is squeezing margins, more so on a reseller who has is at a major disadvantage against behemoth manufacturers.

    Titan's bigger problem is that their management has signed ridiculously high lease contracts with outside entities that they personally have interest in (over $100million). Just in the past 12 months alone they increased these contracts from $50 million to over $100million.) top execs make money with these outside entities make money even if titan doesn't do well.)

    The top two execs have also increased their annual salaries by 48% each this year.

    all the new construction TITN has been spending money on is bleeding the company and is really only profiting the top exec's brother-in-law who owns the construction company doing the building.

    the high debt is another obstacle. Its hard enough to earn a profit, paying nearly $6 million annually just on the Convertible Note alone is a major drain on the stockholders (profits).

    If you read the new Q3 10Q you'll see some last minute (desperate type) debt restructuring (extensions) they created.
    check out:
    NOTE 9.
    Item 2.
    Item 5.
    Exhibit 10.1
    Exhibit 10.2

    On the inventory front, the tractors building up in inventory are depreciating assets (and with the new technologies, GPS, Fuel friendly machines etc ) and favorable terms being offered by manufacturers to buy new equipment, the used equipment is becoming obsolete.

    Just look at the statement of cash flow and you'll see the results of a poor business model.

    Dec 11 10:53 AM | Link | Comment!
  • NEW REPORT: Markowski: Titan's Days Are Numbered

    Tractor Pull for Titan Machinery May be Over by Tomorrow
    Titan Machinery's (Nasdaq:TITN)

    Tractor pull is getting closer to ending as most of the company's tangible book value is comprised of its tractor inventory. The company is reporting its financials for its 9 months ended October 31, 2013, tomorrow morning. Based on its chronic negative operating and free cash flow and flawed business model I predict that the company will be bankrupt by end of 2014 at the latest due to the following reasons:

    • Titan only has $102 million in cash. Based on its consistent generation of negative operating cash flow the amount will not be sufficient for it to survive even four quarters.
    • Titan has exhausted its ability to obtain additional debt financing. According to its recently filed 10Q it currently is using $970 million of its $1.1 billion credit facility.
    • The debt securities of CNH Global NV (NYSE:CNH), the provider of most of its credit facility were downgraded by Moody's on September 4, 2013.
    • Titan has long term debt of $264 million compared to its tangible book value of $358 million.
    • Titan missed on its earning forecasts for the last three quarters. Its not likely that the 150 institutional shareholders who hold 90% of Titan's outstanding shares will want to participate in a secondary offering.
    • Titan's shares which were recently at $16.31 and have been under pressure. Its market cap is not large enough to support a raise of at least $100 million. It's the amount that Titan will need to make it to calendar 2015.

    Since 2010, StockDiagnostics.com has been issuing EPS Syndrome warnings on Titan and there has been no doubt in my mind that Titan would eventually have to file for bankruptcy. Titan has never had a business model that could sustain itself. Its only been able to generate positive operating cash flow in four of its last 20 quarters. To remain in business Titan has been reliant on the timely raising of capital. Titan is a "poster child" representing those companies who do not have viable business models and are instead only kept alive via debt and equity financings that are provided by Commercial and Investment banks. Previous notable poster children were specialty food manufacturer Suprema Specialties. It un-expectantly filed for bankruptcy in 2001 within six weeks after it raised $60 million in a secondary offering. Solar energy manufacturer AstroPower surprised Wall Street when it filed for bankruptcy in 2004. StockDiagnostics.com had also issued numerous EPS Syndrome warnings on it dating back to 2002 when its shares were trading above $20. The shares of both companies were heavily recommended by Wall Street analysts and owned by Institutional investors at the time of their filings. A three minute video which explains the shared common denominators of the three poster children and others is available at www.screencast.com/t/eFjn4VCj Contributed by Michael Markowski, Founder of StockDiagnostics.com

    Dec 04 3:43 PM | Link | Comment!
  • Warning: Titan Machinery Reports Thursday PreMarket

    Equities Research

    Tuesday, December 3, 2013 Warning: Titan Machinery Reports Thursday Pre-Market

    On Thursday morning Titan Machinery (NASDAQ: TITN) will report 3rd quarter financials for the period ending October 31,2013. Equities Research continues to remain bearish on Titan Machinery and believes share are headed to single digits.

    Shares of Titan today are trading @ $16.65 down nearly 5% on the day.

    Titan was the top short pick in the Equities Research February 2013 Newsletter when it was trading above $32. YTD chart below from bigcharts.com Russell 2000 index vs.TITN

    (click to enlarge)

    Equities Research Archives on Titan Machinery

    Dec 03 3:11 PM | Link | Comment!
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