QUINCY, Ill., Nov. 3, 2016 /PRNewswire/ -- Titan
International, Inc. (NYSE: TWI) announces third quarter 2016
results.
Third quarter highlights:
- Sales for the third quarter of 2016 were $306.2 million, down 0.9 percent, compared to
$308.8 million in the third quarter
of 2015.
- Gross profit for the third quarter of 2016 was $33.0 million, or 10.8 percent of net sales,
compared to $26.2 million, or 8.5
percent of net sales, for the third quarter of 2015.
- Loss from operations for the third quarter of 2016 was
$8.3 million, or 2.7 percent of net
sales, compared to loss of $14.5
million, or 4.7 percent of net sales, for the third quarter
of 2015.
- Net loss applicable to common shareholders for the third
quarter of 2016 was $11.3 million,
compared to net loss of $42.5 million
in the third quarter of 2015. Adjusted net loss for the third
quarter of 2016 was $10.0 million,
compared to net loss of $31.5 million
in the third quarter of 2015 (see Appendix attached).
- Basic and diluted earnings per share for the third quarter 2016
and 2015 were $(0.21) and
$(0.79), respectively. Adjusted basic
and diluted earnings per share for the third quarter of 2016 and
2015 were $(0.18) and $(0.59), respectively (see Appendix
attached).
Statement of Chief Executive Officer:
CEO and Chairman, Maurice Taylor,
comments, "The numbers are in and I believe they show our business
continues to bounce around the bottom of this four year down cycle.
The downturn in our Ag business has stabilized. The third quarter
sales were $306 million compared with
$309 million in 2015, so if you
factor in the decrease in pricing, they're very close. Large
Ag is still down while the lower horsepower tractors are up
slightly.
"The Titan team has done a good job managing gross margin; 10.8
percent in third quarter 2016 versus 8.5 percent in third quarter
2015. Our SG&A as a percentage of sales remains higher than we
would like. Management is focused on reducing expenses as well as
increasing sales moving forward. I also believe that recent
changes within our sales organization should improve this measure
along with our cost reduction initiatives. Our cash balance
increased during the quarter by more than $8
million. Our business in both Russia and Brazil has continued to strengthen. We believe
our markets are holding and there should be a slight increase going
forward.
"Discussions regarding the previously announced possible sale or
other transaction involving ITM are continuing. We are also looking
at the possible disposal of the Brownsville, Texas facility. The
appraised values at Brownsville
came in at the level we expected. We have received interest from
others, but the two current renters have the first options to
purchase this facility.
"Investment bankers visited the Titan Tire Reclamation Corp.
(TTRC) site in October and we are waiting for their presentations
concerning a potential sale of this operation. They were all
impressed with the pollution free process TTRC uses to reclaim
super giant tires. Each of these tires produce approximately 600
gallons of oil, 4,000 pounds of TVR carbon residue, and 2,000
pounds of steel.
"The really big news, we sent out in a recent press release
dated October 21, 2016. It explained
the test results from a Missouri
farm using Goodyear LSW Super Single tires. In short, the LSW tires
increased the yield on the corn tested in Missouri by approximately three percent per
acre and soybeans by a similar amount. These results are huge and
we believe this will drive further adoption of the LSW technology
as farmers prepare for the upcoming planting season. We are
continuing to move ahead with increased production capabilities of
our LSW product. We expect the sale of LSW assemblies to continue
to grow each year at an accelerated pace. To this point, the growth
has been steady, but hopefully we are getting ready for a bigger
jump after these test results in Missouri. I believe every farm with 1,000 or
more acres should change to LSW as fast as possible because there
is more money to be made.
"Titan is currently in negotiations with the United Steelworkers
Union with the current agreement set to expire November 16, 2016. The Union knows the last three
to four years have been rough in the farm/OTR tire business. Titan
President, Paul Reitz, is leading
the Titan bargaining group. I believe they will reach a fair
deal for both parties. I have stated to the Union representatives
that this would be my last bargaining contract.
"If this next quarter ends up close to last year, then I believe
it shows we've made it through the cycle. I've talked to a
lot of dealers and farmers during this past quarter. I hear more
and more of them with a positive outlook which is what it will take
to move our business forward. I'm looking forward to Titan
being stronger than ever as we start our climb back up."
Financial summary:
Net Sales: Net sales for the quarter
ended September 30, 2016, were $306.2
million compared to $308.8
million in 2015, a decrease of 1 percent. The slight
decrease in sales was driven by changes in price/mix. Sales
volume was slightly higher in the earthmoving/construction segment
offset by lower volumes in both the agricultural and consumer
segments, with currency translation having virtually no effect.
Net sales for the nine months ended September 30, 2016,
were $958.2 million compared to
$1,087.0 million in 2015, a decrease
of 12 percent. Overall sales experienced reductions in volume
of 5 percent and price/mix of 4 percent as the agricultural and
consumer segments continue to see lower volume sales compared to
prior year. Unfavorable currency translation affected sales
by 3 percent.
Gross profit: Gross profit for the third quarter of
2016 was $33.0 million, or 10.8
percent of net sales, compared to $26.2
million, or 8.5 percent of net sales, for the third quarter
of 2015. Despite the continued economic stress on business,
gross profit margins increased as there is a continued focus on
improving production efficiency, rationalizing expenditures,
finding lower cost material, improving quality, and optimizing
prices.
Gross profit for the first nine months of 2016 was $109.9 million, or 11.5 percent of net sales,
compared to $120.0 million, or 11.0
percent of net sales, in 2015. Gross profit margins continue
to remain around 11 percent as there is a continued focus on
improving production efficiency, rationalizing expenditures,
finding lower cost material, improving quality, and optimizing
prices.
Selling, general and administrative expenses:
Selling, general and administrative (SG&A) expenses for the
third quarter of 2016 were $36.3
million, or 11.9 percent of net sales, compared to
$35.5 million, or 11.5 percent of net
sales, for 2015. SG&A expenses for the nine months ended
September 30, 2016, were $107.7
million, or 11.2 percent of net sales, compared to
$109.0 million, or 10.0 percent of
net sales, for 2015.
Loss from operations: Loss from
operations for the third quarter of 2016 was $8.3 million, or 2.7 percent of net sales,
compared to loss of $14.5 million, or
4.7 percent of net sales, in 2015. Loss from operations for the
nine months ended September 30, 2016, was $12.3 million, or 1.3 percent of net sales,
compared to loss from operations of $6.1
million, or 0.6 percent of net sales, in 2015.
Interest expense: Interest expense was
$8.7 million and $8.3 million for the quarters ended
September 30, 2016, and 2015, respectively. Interest expense
was $25.2 million and $25.7 million for the nine months ended
September 30, 2016, and 2015, respectively.
Earnings per share: For the quarters ended
September 30, 2016 and 2015, basic and diluted earnings per
share were $(0.21) and $(0.79), respectively. For the nine months
ended September 30, 2016 and 2015, basic and diluted earnings
per share were $(0.55) and
$(0.67), respectively.
On an adjusted basis (see Appendix attached), basic and diluted
earnings per share for the quarters ended September 30, 2016
and 2015 were $(0.18) and
$(0.59), respectively. For the nine
months ended September 30, 2016 and 2015, basic and diluted
earnings per share were $(0.39) and
$(0.50), respectively.
Capital expenditures: Titan's capital expenditures were
$12.8 million for the third quarter
of 2016 and $12.7 million for the
third quarter of 2015. Year-to-date expenditures were
$30.8 million for 2016 compared to
$35.2 million for 2015.
Debt balance: Total long-term debt balance was
$410.1 million at September 30,
2016, compared to $475.4 million at
December 31, 2015. Short-term debt balance was
$91.0 million at September 30,
2016, and $31.2 million at
December 31, 2015. Net debt (debt less cash and
cash equivalents) was $285.6 million
at September 30, 2016, compared to $306.5 million at December 31, 2015.
Equity balance: The Company's equity was
$320.5 million at September 30,
2016, compared to $344.7 million at
December 31, 2015.
Conference call:
Titan will be hosting a conference call and webcast for the
third quarter earnings announcement at 9
a.m. Eastern Time on Thursday,
November 3, 2016. To participate in the conference
call, dial (888) 347-5307 five minutes prior to the
scheduled time. International callers dial (412) 902-4283;
Canada (855) 669-9657.
The call will be webcast and can be accessed at
www.titan-intl.com within the "Investor Relations" page
under the "Webcasts & Events" section.
For those unable to participate in the call in real-time, the
replay and transcript will be available within the "Investor
Relations" page under the "Webcast & Events" section.
Safe harbor statement:
Certain statements and information in this press release may
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The words
"believe," "expect," "anticipate," "plan," "would," "could,"
"outlook," "potential," "may," "will" and other similar expressions
are intended to identify forward-looking statements, which are
generally not historical in nature. These forward-looking
statements are based on our current expectations and beliefs
concerning future developments and their potential effect on
us. Although we believe the assumptions upon which these
forward-looking statements are based are reasonable, any of these
assumptions could prove to be inaccurate and the forward-looking
statements based on these assumptions could be incorrect. The
matters discussed in these forward-looking statements are subject
to risks, uncertainties and other factors that could cause actual
results and trends to differ materially from those made, projected,
or implied in or by the forward-looking statements depending on a
variety of uncertainties or other factors including, but not
limited to, risk factors as detailed in Titan International, Inc.'s
periodic filings with the Securities and Exchange Commission,
including the annual report on Form 10-K for the year ended
December 31, 2015. The company
cautions that any forward-looking statements included in this press
release are subject to a number of risks and uncertainties and the
company undertakes no obligation to publicly update or revise any
forward-looking statements.
Company description:
Titan International Inc. (NYSE: TWI), a holding company, owns
subsidiaries that supply wheels, tires, assemblies and
undercarriage product for off-highway equipment used in
agricultural, earthmoving/construction and consumer
applications.
Titan
International, Inc.
Consolidated
Condensed Statements of Operations (Unaudited)
Amounts in
thousands, except earnings per share data
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
306,195
|
|
|
$
|
308,836
|
|
|
$
|
958,203
|
|
|
$
|
1,086,962
|
|
Cost of
sales
|
273,219
|
|
|
282,683
|
|
|
848,264
|
|
|
966,962
|
|
Gross
profit
|
32,976
|
|
|
26,153
|
|
|
109,939
|
|
|
120,000
|
|
Selling, general and
administrative expenses
|
36,348
|
|
|
35,512
|
|
|
107,712
|
|
|
109,034
|
|
Research and
development expenses
|
2,597
|
|
|
2,982
|
|
|
7,790
|
|
|
8,847
|
|
Royalty
expense
|
2,285
|
|
|
2,121
|
|
|
6,688
|
|
|
8,241
|
|
Loss from
operations
|
(8,254)
|
|
|
(14,462)
|
|
|
(12,251)
|
|
|
(6,122)
|
|
Interest
expense
|
(8,714)
|
|
|
(8,289)
|
|
|
(25,208)
|
|
|
(25,687)
|
|
Foreign exchange gain
(loss)
|
398
|
|
|
(15,333)
|
|
|
7,403
|
|
|
(5,720)
|
|
Other
income
|
3,578
|
|
|
755
|
|
|
10,532
|
|
|
6,331
|
|
Loss before income
taxes
|
(12,992)
|
|
|
(37,329)
|
|
|
(19,524)
|
|
|
(31,198)
|
|
Provision (benefit)
for income taxes
|
(2,074)
|
|
|
283
|
|
|
2,578
|
|
|
3,194
|
|
Net loss
|
(10,918)
|
|
|
(37,612)
|
|
|
(22,102)
|
|
|
(34,392)
|
|
Net loss attributable
to noncontrolling interests
|
(966)
|
|
|
(6,136)
|
|
|
(1,099)
|
|
|
(9,919)
|
|
Net loss attributable
to Titan
|
(9,952)
|
|
|
(31,476)
|
|
|
(21,003)
|
|
|
(24,473)
|
|
Redemption value adjustment
|
(1,367)
|
|
|
(11,051)
|
|
|
(8,475)
|
|
|
(11,401)
|
|
Net loss applicable
to common shareholders
|
$
|
(11,319)
|
|
|
$
|
(42,527)
|
|
|
$
|
(29,478)
|
|
|
$
|
(35,874)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(.21)
|
|
|
$
|
(.79)
|
|
|
$
|
(.55)
|
|
|
$
|
(.67)
|
|
Diluted
|
$
|
(.21)
|
|
|
$
|
(.79)
|
|
|
$
|
(.55)
|
|
|
$
|
(.67)
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
53,946
|
|
|
53,707
|
|
|
53,895
|
|
|
53,685
|
|
Diluted
|
53,946
|
|
|
53,707
|
|
|
53,895
|
|
|
53,685
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share:
|
$
|
.005
|
|
|
$
|
.005
|
|
|
$
|
.015
|
|
|
$
|
.015
|
|
Segment
Information (Unaudited)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues from
external customers
|
|
|
|
|
|
|
|
Agricultural
|
$
|
138,568
|
|
|
$
|
140,318
|
|
|
$
|
438,108
|
|
|
$
|
509,197
|
|
Earthmoving/construction
|
128,917
|
|
|
125,754
|
|
|
401,649
|
|
|
437,557
|
|
Consumer
|
38,710
|
|
|
42,764
|
|
|
118,446
|
|
|
140,208
|
|
|
$
|
306,195
|
|
|
$
|
308,836
|
|
|
$
|
958,203
|
|
|
$
|
1,086,962
|
|
Titan
International, Inc.
Consolidated
Condensed Balance Sheets
Amounts in
thousands
|
|
|
September
30,
|
|
December
31,
|
|
2016
|
|
2015
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
215,509
|
|
|
$
|
200,188
|
|
Accounts
receivable, net
|
184,352
|
|
|
177,389
|
|
Inventories
|
278,083
|
|
|
269,791
|
|
Prepaid and other
current assets
|
76,972
|
|
|
62,633
|
|
Total current
assets
|
754,916
|
|
|
710,001
|
|
Property, plant and
equipment, net
|
447,082
|
|
|
450,020
|
|
Deferred income
taxes
|
7,424
|
|
|
5,967
|
|
Other
assets
|
98,634
|
|
|
104,242
|
|
Total
assets
|
$
|
1,308,056
|
|
|
$
|
1,270,230
|
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Short-term
debt
|
$
|
91,030
|
|
|
$
|
31,222
|
|
Accounts
payable
|
152,387
|
|
|
123,154
|
|
Other current
liabilities
|
130,238
|
|
|
115,721
|
|
Total current
liabilities
|
373,655
|
|
|
270,097
|
|
Long-term
debt
|
410,089
|
|
|
475,443
|
|
Deferred income
taxes
|
16,627
|
|
|
14,509
|
|
Other long-term
liabilities
|
84,409
|
|
|
88,324
|
|
Total
liabilities
|
884,780
|
|
|
848,373
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
102,793
|
|
|
77,174
|
|
|
|
|
|
Equity
|
|
|
|
Titan shareholders'
equity
|
|
|
|
Common stock ($0.0001
par value, 120,000,000 shares authorized, 55,253,092 issued,
54,046,512 outstanding)
|
—
|
|
|
—
|
|
Additional paid-in
capital
|
480,377
|
|
|
497,008
|
|
Retained
earnings
|
27,524
|
|
|
49,297
|
|
Treasury stock (at
cost, 1,206,580 and 1,339,583 shares, respectively)
|
(11,226)
|
|
|
(12,420)
|
|
Treasury stock
reserved for deferred compensation
|
(1,075)
|
|
|
(1,075)
|
|
Accumulated other
comprehensive loss
|
(171,532)
|
|
|
(187,751)
|
|
Total Titan
shareholders' equity
|
324,068
|
|
|
345,059
|
|
Noncontrolling
interests
|
(3,585)
|
|
|
(376)
|
|
Total
equity
|
320,483
|
|
|
344,683
|
|
Total liabilities and
equity
|
$
|
1,308,056
|
|
|
$
|
1,270,230
|
|
Appendix
Titan International,
Inc.
Supplemental Consolidated Statement of Income
Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
Amounts in thousands, except earnings per
share data
The company reports its financial results in accordance with
generally accepted accounting principles in the United States (GAAP). This
supplemental schedule provides adjusted non-GAAP financial
information and a quantitative reconciliation of the difference
between non-GAAP financial measure and the financial measure
calculated and reported in accordance with GAAP.
The SEC's Regulation G applies to any public disclosure or
release of material information that includes a non-GAAP financial
measure. The non-GAAP financial measure should be considered
supplemental to, not a substitute for, the financial measures
calculated in accordance with GAAP. It has limitations in
that it does not reflect all of the costs associated with the
operations of our businesses as determined in accordance with
GAAP. In addition, this measure may not be comparable to
non-GAAP financial measures reported by other companies.
The non-GAAP financial measure of adjusted net income assists
investors with analyzing our business results as well as with
predicting future performance. In addition, this non-GAAP
financial measure is reviewed by management in order to evaluate
the financial performance of each segment as well as the company as
a whole. We believe that the presentation of this non-GAAP
financial measure will permit investors to assess the performance
of the company on the same basis as management.
As a result, one should not consider this measure in isolation
or as a substitute for our results reported under GAAP. We
compensate for these limitations by analyzing results on a GAAP
basis as well as a non-GAAP basis, prominently disclosing GAAP
results and providing reconciliations from GAAP results to non-GAAP
results.
The table below provides a reconciliation of the non-GAAP
financial measures with the most directly comparable GAAP financial
measures for September 30, 2016.
|
Three months
ended
|
Nine months
ended
|
|
September
30,
|
September
30,
|
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
|
|
Net loss applicable
to common shareholders
|
$
|
(11,319)
|
|
$
|
(42,527)
|
|
|
$
|
(29,478)
|
|
$
|
(35,874)
|
|
Remove redemption
value adjustment
|
(1,367)
|
|
(11,051)
|
|
|
(8,475)
|
|
(11,401)
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Subsidiary
currency correction
|
—
|
|
—
|
|
|
—
|
|
(3,058)
|
|
Italy
restructuring
|
—
|
|
—
|
|
|
—
|
|
499
|
|
|
|
|
|
|
|
Adjusted net loss
attributable to Titan
|
$
|
(9,952)
|
|
$
|
(31,476)
|
|
|
$
|
(21,003)
|
|
$
|
(27,032)
|
|
|
|
|
|
|
|
Adjusted earnings per
share - Basic
|
$
|
(0.18)
|
|
$
|
(0.59)
|
|
|
$
|
(0.39)
|
|
$
|
(0.50)
|
|
Average shares
outstanding - Basic
|
53,946
|
|
53,707
|
|
|
53,895
|
|
53,685
|
|
|
|
|
|
|
|
Adjusted earnings per
share - Diluted
|
$
|
(0.18)
|
|
$
|
(0.59)
|
|
|
$
|
(0.39)
|
|
$
|
(0.50)
|
|
Average shares
outstanding - Diluted
|
53,946
|
|
53,707
|
|
|
53,895
|
|
53,685
|
|
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SOURCE Titan International, Inc.