In today’s newscast we have details on Titan Machinery’s realignment, an update on Deere’s high-speed planter, Cervus Equipment and Rocky Mountain Equipment’s latest earnings reports and info on the Open Ag Data Alliance.
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Titan Machinery Announces Realignment
I’m managing editor Kim Schmidt, welcome to On the Record. Here’s a look at what’s currently impacting the ag equipment industry.
AFN: $57.22 +3.31
Realignment at Titan Machinery
Earlier this week, Titan Machinery, Case IH’s largest dealer group, issued the preliminary earnings results for its fiscal fourth quarter and full year ended January 31, 2015. The company also announced a realignment of it operations, which includes reducing its headcount by approximately 14%, and reductions at stores in each of its operating segments and its Shared Resource Center.
The realignment also includes the closing of three stores — two ag locations in Britton and Bowdle, South Dakota and one construction equipment store in Casper, Wyoming. In addition, the company is reducing discretionary spending levels across all parts of the business and restructuring certain employee compensation and benefit programs to better align pay for performance.
Titan also announced it has reduced its inventory level to about $879 million vs. nearly $1.1 billion a year ago.
David Meyer, Titan Machinery’s chairman and CEO, said, “Our Agriculture segment performance was impacted by continued industry headwinds in this segment. We reduced our equipment inventory by approximately $168 million in fiscal 2015, which enabled us to generate approximately $82 million of adjusted cashflow from operations. We believe we are well positioned to achieve further inventory reductions and strong adjusted cash flow from operations in fiscal 2016.”
The dealership group will release its final earnings report on April 15.
Deere’s High-Speed Planter
With yields so dependent on the narrow planting window determined by Mother Nature, the ability for farmers to better control their destiny is becoming even more critical. On The Record sat in on a session from Farm Industry News at the National Farm Machinery Show last month to get an update on John Deere’s 10 mph corn planting technology unveiled last year, which had its share of doubters a year ago.
The technology was provided for farmers’ use last year, with 36 planters seeding more than 75,000 acres. And with it commercially available for the first time this spring, Deere’s Kelby Krueger provided an update on the experience of farmers (averaging 8.8 mph) and data that he said shows spacing and emergence were not adversely affected by operating at higher speeds.
Here’s what Krueger had to say…
We look class versus rounds, no-till versus till, five mile an hour, 7.5, and ten. And so on a rule of thumb from agronomy, 0.33 COV or less after there is emerge, you’ll have maximum yield potential from the spacing standpoint. So, what I want you to take away from this graph is if you’re in the red after it’s emerged, that could be your limiting factor on your yield. So when you look at class versus rounds, no-till versus till, and the speeds; essentially flat line across each one of those individual ones. So what that shows is, as you go faster, the spacing is not affected with that increase in speed to deliver that maximum yield potential.
So the other important thing is emergence, right? And so you’ve got to get that seed in the bottom of that trench, get it closed up, and get them all coming up at the same time. So when they went out and measured those same exact plots, we had them count leaf collars on those. And so, looking through some different university studies, if you have a standard deviation on leaf collars of less than 0.5, you are going to get maximum yield potential from the emergence side. And so, here looking at it again, we have five miles an hour, 7.5, and 10, essentially in each bucket. And leaf collars there is on the left side of the graph. If you go above that 0.5, you’re going to be losing yield due to emergence. And you can see also, as we increase speed – these customers did – it did not affect the emergence. 41.05
So I’ll quickly go over this one because you basically hit on it pretty good but (delete) you’ve got an optimum planting window. When people choose to do the seed placement accuracy first, and they’ll sacrifice going faster because of what you will lose to get those acres in. So, what a high speed planter, when you think of what you need to do is you still need to get that seed placement accuracy and you need to be able to do it faster so you can get more done during that optimum planting window.
Deere is in full production right now with its ExactEmerge Planter technology, with 2 series of planters available now.
Dealers on the Move
Dealers on the Move news this week includes, Krone, Rocky Mountain Equipment, JayDee AgTech and Hoober Inc.
Krone North America is opening another dealership, this time in Platteville, Wis. With two other stores in Wisconsin and three in California, this will be the equipment manufacturer fifth company store.
Canadian Case IH dealer group Rocky Mountain Equipment announced Tuesday it was acquiring Chabot Implements for $6.8 million. Chabot has 4 stores in Manitoba. The deal is expected to close April 1.
John Deere dealer JayDee AgTech opened a new facility in Swift Current, Saskatchewan, which includes a training theater.
Hoober Inc., a Case IH dealer with 9 locations in Pennsylvania, Delaware and Maryland, opened a new full-service facility in New Windsor, Md., which completes the transition from the dealership’s parts depot in Frederick, Md.
Cervus & Rocky Mountain 4Q Report
Dealership groups Rocky Mountain Equipment, Canada’s largest Case IH dealership, and Cervus Equipment, the largest John Deere dealership in Canada, both reported their latest earnings reports this week.
Rocky Mountain reported that in the quarter revenues were up by 1.2% to $294.1 million and gross profit increased to $39.5 million, a 18.7% improvement vs. the fourth quarter of 2015.
For the full year 2014, total revenues were $965.4 million, a 4.2% decline. Meanwhile, gross profit came in at $145.6 million, an increase of 3.7%.
Commenting on the quarter, Garrett Ganden, the new president and CEO of Rocky, remarked, “In anticipation of reduced demand for agriculture equipment, Rocky placed additional emphasis on its product support delivery, developing initiatives around marketing, resources, training and management as well as expanding our product offering … Demand for product support increases as fleets are maintained rather than replaced. “
Despite a softer ag market, Cervus Equipment’s revenues for the year increased by $118.5 million or 14% vs. 2013 and gross profits were up $23.4 million compared to last year. The agriculture division contributed $43.2 million to the dealership’s revenue growth for the year.
Fourth quarter revenue was up 28% vs. 2013, and the dealer group’s gross profit was up 30% for the quarter. For the ag segment, total equipment sales were up 6% in the fourth quarter compared to last year and total revenue was up 9%. In addition, gross profit was up an impressive 25%.
The acquisition of 13 Peterbilt dealerships in Ontario and 6 John Deere dealerships in Alberta added $125.5 million of incremental revenue for the year, says Cervus president and CEO Graham Drake.
Scaling a Data Management Solution
As we inch closer to spring, farmers will soon be in the field, with some basing their planting decisions on carefully crafted prescriptions to maximize yield potential on a per acre basis.
But for many, moving from the collection of field data to practical application is an endless headache. One of the major industry hurdles to simplifying precision data management is the need to evolve the traditional business model for technology, says Aaron Ault, project leader for the Open Ag Data Alliance.
The independent initiative, launched in March 2014, is developing an open source standard for secure exchange of farm data across a variety of ag supplier platforms. Ault says the industry model for developing precision hardware tools has worked well, but no OEM can manufacture equipment that can handle every piece of data collected on a farmer’s operation.
The goal of OADA is to simplify exchange of farm data to the point that farmers can use the information they collect, without having to think about it.
“For that to work, there is always going to have to be somebody fixing data problems. The IT department of the farm. Most farms, until you scale reasonably large, are not going to be able to afford those kinds of things internally. Even the large ones, you can’t scale that department. It’s best to share that among lots of farms, so there’s going to be a huge value add in the middle for dealers, agronomists in this space to monetize the trust they have with the people that their customers on a day to day basis.”
Once data collection is no longer manual and more automated, Ault says it will be affordable to scale the service to different sized farm operations. This will allow dealers to help farm customers get their data in the right place and proper format without spending hours of time on information collection.
Ag Equipment Archives…
In 1964, County Commercial Cars in Fleet, England, developed an amphibious tractor for publicity purposes. The County Sea Horse gained much of its flotation through its four over-sized tires, but also had sealed compartments on each wheel to provide additional air volume. Aside from large flotation tanks used to give the tractor stabilization in the water, very few modifications were necessary to take the tractor from land to sea. The Sea Horse never gained any commercial success, but it did gain a lot of attention.
As always we welcome your feedback. You can send comments to email@example.com. Thanks for watching; I’ll see you next time.