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Titan International Inc. Reports Record Q3 Revenue & Adjusted Profit

Stocks in this article: TWI

Financial overview:

Sales: Titan recorded sales of $404.7 million for the third quarter of 2012, compared to third quarter 2011 sales of $398.8 million. Year-to-date sales 2012 were $1,327.0 million, compared to $1,084.1 million in 2011, an increase of 22.4 percent. Sales volume was approximately 4 percent higher as the result of strong market conditions in agricultural and earthmoving/construction segments. Sales increased approximately 10 percent from the inclusion of recently acquired entities and approximately 12 percent from price/mix improvements which resulted largely from increased raw material prices that were passed on to customers. The increase in net sales was partially offset by unfavorable foreign currency translation which decreased sales by approximately 4 percent.

Gross profit: For the third quarter of 2012, gross profit was $67.2 million, or 16.6 percent of net sales, compared to $53.0 million, or 13.3 percent of net sales for the third quarter of 2011. Year-to-date gross profit was $242.6 million, or 18.3 percent of net sales for 2012, as compared to $173.6 million or 16.0 percent of net sales for 2011. The increase in gross profit was due to productivity gains.

Selling, general and administrative expenses: SG&A expenses for the third quarter of 2012 were $25.5 million, or 6.3 percent of net sales, compared to $8.5 million or 2.1 percent in 2011. The lower SG&A expenses in the third quarter 2011 were primarily the result of a decrease of approximately $11 million in the accrual for the CEO special performance award. Year-to-date SG&A expenses were $79.7 million, or 6.0 percent of net sales, compared to $50.4 million, or 4.7 percent of net sales in 2011. The higher SG&A expenses in the current year are due to approximately $6 million in increased sales, marketing and information technology expenses, approximately $13 million to adjust the value of the CEO special performance award, approximately $3 million for incentive compensation and approximately $4 million for acquisition related costs.

Income from operations: For the third quarter of 2012, income from operations was $36.2 million, or 8.9 percent of net sales, compared to $41.4, or 10.4 percent of net sales in 2011. Year-to-date income from operations was $175.8 million or 13.2 percent of net sales in 2012, compared to $112.7 million, or 10.4 percent of net sales in 2011.

Interest expense: Interest expense was $6.2 million for the third quarter of 2012, compared to $6.6 million in 2011. Year-to-date interest expense was $18.7 million and $19.0 million for the nine months ended September 30, 2012 and 2011, respectively.

Earnings per share: Unadjusted basic and fully diluted earnings per common share for the current quarter were $0.46 and $0.39, as compared to basic and fully diluted earnings per share of $0.50 and $0.42 respectively, in the third quarter of 2011. Year to date unadjusted basic and fully diluted earnings per common share were $2.35 and $1.92, as compared to basic and fully diluted earnings per share of $1.05 and $0.89 respectively, in 2011. Adjusted earnings per share for the third quarter 2012 were $0.59 and $0.49, basic and fully diluted respectively, compared to $0.34 and $0.29 for 2011. Adjusted earnings per share year-to-date were $2.23 and $1.83, basic and fully diluted respectively, compared to $1.37 and $1.14 in 2011.

Capital expenditures: Titan’s capital expenditures were $17.3 million for the third quarter of 2012 and $7.7 million for third quarter 2011. Year-to-date expenditures were $36.3 million for 2012 and $17.9 million for 2011.

Debt balance: Total debt was $321.4 million at September 30, 2012, compared to the balance at December 31, 2011 of $329.6 million. The reduction in the debt balance represents the payoff of the term loan and the revolving line of credit in Brazil.

Equity balance: The Company’s equity was $522.2 million at September 30, 2012 compared to $396.9 million at December 31, 2011.

Acquisitions:

Goodyear’s Latin American Farm Tire Business- On April 1, 2011 Titan closed on the acquisition of The Goodyear Tire & Rubber Company’s (“Goodyear”) Latin American farm tire business for approximately $98.6 million U.S. dollars. The transaction includes Goodyear’s Sao Paulo, Brazil manufacturing plant, property, equipment; inventories; a licensing agreement that allows Titan to sell Goodyear-brand farm tires in Latin America for seven years; and extends the North American license agreement for seven years.

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