“As you can see by the third quarter results, the goal of $1.4 billion
revenue should be met and we will be well within the range of our
revised goal of $175 to $200 million EBITDA for 2011.
“Titan’s growth this year will be over 50% from last year and we will
have an opportunity to match that growth next year. I appreciate that
there are people who may not have as positive a view as I do, but when
you review the yearly OEM forecast and talk with the end users of tires
and wheels, whether its farmers, dealers, mining operators or
construction companies, they are all positive. I have been to Europe,
South America, Canada, and many places in the United States. It’s the
same story. Titan has had more visitors from Africa, Indonesia, Russia
and Australia this summer than any time ever before. Titan has and will
be expanding every factory we own today over the next eight months.
“I can assure you we would not be doing this if we thought there would
be a pause in the business. Another unique item about the Titan group is
while all this is going on we have developed ten new wheels and tires
this past quarter and we will do another half dozen by year’s end.
“That, my shareholders, is really impressive when you look at our
September 2011 year-to-date sales were $1,084.1 million, compared to
$648.9 million in 2010.
September 2011 year-to-date gross profit was $173.6 million, compared
to $87.9 million in 2010.
Income from operations more than doubled for the first nine months of
2011 to $112.7 million, compared to $40.1 million in 2010.
A noncash convertible debt charge of $16.1 million was recognized in
conjunction with the first quarter exchange of $59.6 million in
convertible notes for 6.6 million shares of Company stock.
Earnings per common basic share year to date 2011 were $1.05, compared
to $0.31 in 2010. Fully diluted earnings per share year to date 2011
were $0.89, compared to $0.30 in prior year. On an adjusted basis,
earnings per common basic share for the nine months ended September
30, 2011 were $1.37 per share, compared to $0.36 for the same period
last year. Adjusted fully diluted earnings per share year to date 2011
were $1.14, compared to $0.34 in 2010.
: Titan recorded sales of $398.8 million for the third
quarter of 2011, compared to third quarter 2010 sales of $222.8 million.
The increase of 79 percent in revenue was primarily the result of the
April acquisition of the Goodyear Latin American farm tire business,
including the Sao Paulo, Brazil manufacturing facility which recorded
sales of $93.6 million for the third quarter of 2011, and the increase
in demand and pricing/mix improvements. Net sales for the first nine
months of 2011 were $1,084.1 million, compared to $648.9 million in the
same period last year.
For the third quarter of 2011, gross profit was
$53.0 million, or 13.3 percent of net sales, compared to $27.9 million,
or 12.5 percent of net sales for the third quarter of 2010. Year-to-date
gross profit was $173.6 million, or 16.0 percent of sales for 2011, as
compared to $87.9 million or 13.6 percent of sales for 2010. The
increase in gross profit and income from operations was primarily
related to increased sales levels which were driven by the acquisition
of the Goodyear Latin American farm tire business as well as gains from
improved plant utilization resulting from higher sales levels.
Selling, general and administrative expenses:
SG&A expenses for
the third quarter of 2011 were $8.5 million or 2.1 percent of net sales,
compared to $12.0 million or 5.4 percent in 2010. The lower SG&A
expenses as a percent of sales for the quarter were primarily the result
of a decrease of approximately $11 million in the accrual for the CEO
special performance award due to the drop in the Company’s stock price
for the quarter offset by an increase in selling and marketing expenses
at recently acquired facilities. Expenses for SG&A for the nine months
ended September 30, 2011, were $50.4 million or 4.7% of net sales,
compared to $36.0 million or 5.5% in 2010.
Income from operations
: For the third quarter of 2011, income
from operations was $41.4 million, or 10.4 percent of net sales,
compared to $12.5 million, or 5.6 percent of net sales in 2010.
Year-to-date income from operations was $112.7 million, or 10.4 percent
of net sales in 2011, compared to $40.1 million, or 6.2 percent of net
sales in 2010.
Interest expense was $6.6 million for the third
quarter of 2011, compared to $5.9 million in 2010. Year-to-date interest
expense was $19.0 million and $19.7 million for the nine months ended
September 30, 2011 and 2010, respectively. The company’s interest
expense year-to-date 2011 decreased from the previous year primarily as
a result of the exchange agreement for $59.6 million of 5.625 percent
convertible senior subordinated notes completed in the first quarter of
Noncash convertible debt conversion charge:
The Company closed an
exchange agreement converting approximately $59.6 million of the 5.625
percent convertible notes into approximately 6.6 million shares of the
Company’s common stock. In connection with the exchanges, the company
recognized a noncash charge of $16.1 million.
Earnings per share
: Unadjusted basic earnings per common share
were $0.50 and fully diluted were $0.42, as compared to basic and fully
diluted earnings per share of $.12 and $.11 in 2010 respectively.
Earnings per share for the third quarter, on an adjusted basis, were
$0.34 and $0.29, basic and fully diluted respectively and earnings per
share year-to-date, on an adjusted basis, were $1.37 and $1.14, basic
and fully diluted respectively. Year to date 2010 adjusted earnings per
share were $0.36 for basic and $0.34 for fully diluted.
Titan’s capital expenditures were $7.7
million for the third quarter of 2011 and $8.3 million for 2010.
Year-to-date expenditures were $17.9 million for 2011 and $20.1 million
Total debt was $317.9 million at September 30,
2011, compared to the balance at December 31, 2010 of $373.6 million.
The reduction in debt is related to the exchange agreement in the first
quarter 2011 to convert approximately $59.6 million of 5.625 percent
convertible notes into approximately 6.6 million shares of the Company’s
The Company’s stockholders’ equity was $392.4
million at September 30, 2011 compared to $272.0 million at December 31,
Form 8-K Restatement for Reserve on Generation
1 Super Giant Tires:
As mentioned in a Form 8-K we filed today, the Company was notified on
October 25, 2011 by its independent registered accountants that the
estimated inventory reserves for the Generation 1 super giant (“Gen 1”)
needed to be restated. The Company’s management and Audit Committee
discussed the matter, even though the Company felt that the Gen 1 tires
have a potential market to be sold in the future, it was concluded that
the estimated reserve for Gen 1 tires would be increased by an estimated
$9.8 million in the fourth quarter for 2010. The estimated $9.8 million
will be restated as of December 31, 2010 in the 2010 Form 10-K and the
Form 10-Qs’ for March 31, 2011 and June 30, 2011. The additional reserve
reduces the net inventory value on Gen 1 tires to a non-material amount
of approximately $0.7 million. The company expects to file by November
9, 2011, or as soon as practicable thereafter the above referenced
restated consolidated financial statements.