Industrials IPO Titan Machinery Competes With John Deere, Caterpillar, AGCO

Includes: AGCO, CAT, DE, TITN
by: Abbi Adest

Titan Machinery (NASDAQ:TITN) is expected to issue a public offering this week. The company owns and operates one of the largest networks of agricultural and construction equipment stores.

All quotations are from the company's most recent S-1 filing with links provided.


Business Overview (from prospectus)

We own and operate what we believe is one of the largest networks of full service agricultural and construction equipment stores in North America. Based upon information provided to us by CNH Global N.V. or its U.S. subsidiary CNH America LLC, collectively referred to in this prospectus as CNH, we are the world’s largest retail dealer of Case IH Agriculture equipment and a major retail dealer of New Holland Agriculture, Case Construction and New Holland Construction equipment in the U.S.

Offering: 5.3 million shares at $7.50 - $9.50 per share. Net proceeds of approximately $29 million will be used to to fund potential acquisitions of CNH agricultural and construction equipment dealerships; for general corporate purposes, including working capital needs; to pay accrued cash dividends upon the conversion of all outstanding preferred stock; to repay debt.

Lead Underwriters: Craig-Hallum Capital Group, Robert Baird

Financial Highlights:

Revenues for fiscal year 2007 were $292,598,000, a 28.1% increase over revenues in fiscal 2006, which were $228,470,000... Cost of revenues for fiscal 2007 were $243,987,000, a 25.9% increase over cost of revenues in fiscal 2006, which were $193,758,000... Gross profit margins were 16.7% in fiscal 2007, compared to 15.2% in fiscal 2006.


The agricultural and construction equipment sales and distribution industries are highly competitive and fragmented, with large numbers of companies operating on a regional or local scale. Our competitors range from multi-location, regional operators to single-location, local dealers and include dealers and distributors of competing equipment brands, including John Deere (NYSE:DE), Caterpillar (NYSE:CAT) and the AGCO (NYSE:AG) family of brands, as well as other dealers and distributors of the CNH (NYSE:CNH) family of brands. Competition among equipment dealers is primarily based on the price, value, reputation, quality and design of the products offered by the dealer, the customer service and repair and maintenance service provided by the dealer, the availability of equipment and parts and the accessibility of stores...

The number of agricultural and construction equipment dealers operating on a regional scale is limited and we are one of the principal regional-scale, agricultural and construction equipment dealers in the U.S. The primary regional-scale equipment dealers with whom we compete include RDO Equipment Co., Butler Machinery and Brandt Holdings Co.

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