Titan International, Inc. Reports Second Quarter Financial Performance
Titan International (NYSE: TWI) reported strong Q2 2024 financial results despite industry challenges. The company posted free cash flow of $53 million, adjusted EBITDA of $49 million, and adjusted EPS of $0.10. Titan's net sales increased to $532.2 million from $481.2 million in Q2 2023, driven by the Carlstar acquisition. However, net income and gross profit were negatively impacted by higher material costs and reduced fixed cost leverage.
Net sales in the agricultural segment fell 19.6% YoY to $216.3 million, while the earthmoving/construction segment saw a 5.2% decline to $165.6 million. Conversely, the consumer segment surged 302.4% YoY to $150.3 million. Titan's net debt decreased by $43 million, and the company continued to repurchase shares. The Q3 2024 outlook projects revenues between $450 million and $500 million, with adjusted EBITDA ranging from $25 million to $30 million.
Titan International (NYSE: TWI) ha registrato forti risultati finanziari nel secondo trimestre del 2024, nonostante le sfide del settore. L'azienda ha registrato un free cash flow di 53 milioni di dollari, un EBITDA rettificato di 49 milioni di dollari e un EPS rettificato di 0,10 dollari. Le vendite nette di Titan sono aumentate a 532,2 milioni di dollari, rispetto ai 481,2 milioni di dollari nel secondo trimestre del 2023, grazie all'acquisizione di Carlstar. Tuttavia, il reddito netto e il profitto lordo sono stati negativamente influenzati dall'aumento dei costi dei materiali e dalla riduzione della leva sui costi fissi.
Le vendite nette nel settore agricolo sono scese del 19,6% rispetto all'anno precedente, a 216,3 milioni di dollari, mentre il settore movimento terra/costruzioni ha registrato un calo del 5,2%, scendendo a 165,6 milioni di dollari. Al contrario, il settore dei consumatori è aumentato del 302,4% rispetto all'anno precedente, raggiungendo i 150,3 milioni di dollari. Il debito netto di Titan è diminuito di 43 milioni di dollari e l'azienda ha continuato a riacquistare azioni. Le proiezioni per il terzo trimestre del 2024 prevedono ricavi compresi tra 450 milioni e 500 milioni di dollari, con un EBITDA rettificato compreso tra 25 milioni e 30 milioni di dollari.
Titan International (NYSE: TWI) reportó resultados financieros sólidos en el segundo trimestre de 2024, a pesar de los desafíos de la industria. La compañía publicó un flujo de caja libre de 53 millones de dólares, un EBITDA ajustado de 49 millones de dólares y un EPS ajustado de 0,10 dólares. Las ventas netas de Titan aumentaron a 532,2 millones de dólares desde los 481,2 millones de dólares en el segundo trimestre de 2023, impulsadas por la adquisición de Carlstar. Sin embargo, el ingreso neto y el beneficio bruto se vieron negativamente afectados por el aumento de los costos de materiales y la reducción del apalancamiento de costos fijos.
Las ventas netas en el sector agrícola cayeron un 19,6% interanual a 216,3 millones de dólares, mientras que el sector de movimiento de tierras/construcción vio una disminución del 5,2% a 165,6 millones de dólares. Por el contrario, el sector del consumidor se disparó un 302,4% interanual a 150,3 millones de dólares. La deuda neta de Titan se redujo en 43 millones de dólares y la compañía continuó recomprando acciones. Las perspectivas para el tercer trimestre de 2024 proyectan ingresos entre 450 millones y 500 millones de dólares, con un EBITDA ajustado que oscila entre 25 millones y 30 millones de dólares.
타이탄 인터내셔널 (NYSE: TWI)는 업계의 도전에도 불구하고 2024년 2분기에 강력한 재무 성과를 보고했습니다. 회사는 5천3백만 달러의 자유 현금 흐름, 4천9백만 달러의 조정 EBITDA, 그리고 0.10달러의 조정 EPS를 기록했습니다. 타이탄의 순매출은 2023년 2분기 4억 8천1백20만 달러에서 5억 3천2백20만 달러로 증가했으며, 이는 칼스타 인수에 힘입은 것입니다. 그러나 순이익과 총이익은 원자재 비용의 증가와 고정 비용 레버리지의 감소로 부정적인 영향을 받았습니다.
농업 부문의 순매출은 전년 대비 19.6% 감소하여 2억 1천6백30만 달러에 달했으며, 토목/건설 부문은 5.2% 감소하여 1억 6천5백60만 달러를 기록했습니다. 반대로 소비자 부문은 전년 대비 302.4% 증가하여 1억 5천3백만 달러에 이르렀습니다. 타이탄의 순부채는 4천3백만 달러 감소하였으며, 회사는 계속해서 자사주 매입을 진행했습니다. 2024년 3분기 전망은 수익이 4억 5천만 달러에서 5억 달러 사이일 것으로 예상하며, 조정 EBITDA는 2천5백만 달러에서 3천만 달러 사이로 추정됩니다.
Titan International (NYSE: TWI) a révélé de solides résultats financiers pour le deuxième trimestre 2024, malgré les défis du secteur. L'entreprise a enregistré un flux de trésorerie disponible de 53 millions de dollars, un EBITDA ajusté de 49 millions de dollars, et un résultat par action ajusté de 0,10 dollar. Les ventes nettes de Titan ont augmenté à 532,2 millions de dollars contre 481,2 millions de dollars au deuxième trimestre 2023, grâce à l'acquisition de Carlstar. Cependant, le revenu net et le bénéfice brut ont été négativement affectés par l'augmentation des coûts des matériaux et la réduction de l'effet de levier des coûts fixes.
Les ventes nettes dans le secteur agricole ont chuté de 19,6 % d'une année sur l'autre à 216,3 millions de dollars, tandis que le secteur du mouvement de terre/construction a enregistré une baisse de 5,2 % à 165,6 millions de dollars. En revanche, le secteur des consommateurs a bondi de 302,4 % d'une année sur l'autre à 150,3 millions de dollars. La dette nette de Titan a diminué de 43 millions de dollars, et l'entreprise a continué de racheter ses actions. Les perspectives pour le 3ème trimestre 2024 prévoient des revenus compris entre 450 millions et 500 millions de dollars, avec un EBITDA ajusté se situant entre 25 millions et 30 millions de dollars.
Titan International (NYSE: TWI) hat trotz der Herausforderungen in der Branche starke Finanzzahlen im 2. Quartal 2024 gemeldet. Das Unternehmen erzielte einen freien Cashflow von 53 Millionen US-Dollar, ein bereinigtes EBITDA von 49 Millionen US-Dollar und ein bereinigtes EPS von 0,10 US-Dollar. Der Nettoumsatz von Titan stieg im Vergleich zum 2. Quartal 2023 von 481,2 Millionen US-Dollar auf 532,2 Millionen US-Dollar, was durch die Akquisition von Carlstar begünstigt wurde. Allerdings wurden Nettogewinn und Bruttogewinn negativ von höheren Materialkosten und verringertem Fixkostenhebel beeinflusst.
Der Nettoumsatz im Landwirtschaftssegment fiel im Jahresvergleich um 19,6% auf 216,3 Millionen US-Dollar, während das Bau-/Erdbewegungssegment um 5,2% auf 165,6 Millionen US-Dollar zurückging. Im Gegensatz dazu stieg das Verbrauchersegment im Jahresvergleich um 302,4% auf 150,3 Millionen US-Dollar. Die Nettoverbindlichkeiten von Titan verringerten sich um 43 Millionen US-Dollar, und das Unternehmen kaufte weiterhin eigene Aktien zurück. Die Ausblicke für das 3. Quartal 2024 prognostizieren Umsätze zwischen 450 Millionen und 500 Millionen US-Dollar, wobei das bereinigte EBITDA zwischen 25 Millionen und 30 Millionen US-Dollar liegt.
- Free cash flow of $53 million.
- Adjusted EBITDA of $49 million.
- Adjusted EPS of $0.10.
- Net sales increased to $532.2 million from $481.2 million.
- Consumer segment net sales surged 302.4% to $150.3 million.
- Net debt reduced by $43 million.
- Continued share repurchases.
- Agricultural segment net sales fell 19.6% to $216.3 million.
- Earthmoving/construction segment net sales declined 5.2% to $165.6 million.
- Gross profit decreased to $80.4 million from $85.9 million.
- Income from operations dropped to $22.3 million from $45.9 million.
- Effective income tax rate increased to 81.9% from 22.8%.
Titan International's Q2 2024 results reflect resilience amid challenging industry conditions. The company reported
Key points to consider:
- Gross profit margin declined to
15.1% from17.9% , impacted by negative price/mix, reduced fixed cost leverage and inventory revaluation related to Carlstar. - Free cash flow remained strong at
$53 million , allowing for net debt reduction of$43 million from Q1 2024. - The company's net leverage ratio improved to 1.8x from 2.0x in Q1 2024, indicating a strengthening balance sheet.
- Adjusted EPS of
$0.10 was negatively impacted by higher tax expenses, particularly non-deductible interest in the U.S.
The outlook for Q3 2024 suggests continued headwinds, with projected revenues of
Titan's Q2 results highlight the cyclical nature of the agricultural equipment market. The company's agricultural segment saw a
Several factors are influencing this downturn:
- High interest rates are deterring farmers from making significant equipment purchases.
- Farmers are delaying purchases in anticipation of potential interest rate cuts.
- OEMs and aftermarket dealers are cautious about inventory levels due to working capital costs.
However, Titan's Low-Side Wall (LSW) technology presents a bright spot. The company reports growing adoption of LSW wheel/tire assemblies, which offer benefits such as
Looking ahead, while the current market is challenging, long-term structural demand drivers for agricultural equipment remain intact. As interest rates stabilize and new technologies improve ROI for farmers, we can expect a resurgence in equipment demand. Titan's focus on innovative products like LSW positions it well to capitalize on this eventual upturn.
Titan's Q2 results and outlook provide valuable insights into broader market trends across multiple sectors:
- Agricultural Sector: The
19.6% decline in agricultural segment sales indicates a significant slowdown in farm equipment purchases. This aligns with reports from major agricultural machinery manufacturers and suggests a cyclical downturn in the sector. - Construction/Earthmoving: The
5.2% decrease in this segment, despite higher volumes in undercarriage business, points to pricing pressures and potentially softening demand in construction markets. - Consumer Segment: The substantial
302.4% increase in consumer segment sales, largely due to the Carlstar acquisition, highlights the growing importance of diversification in Titan's business model.
The company's guidance for Q3 2024, with projected revenues of
Investors should monitor key indicators such as interest rates, agricultural commodity prices and construction activity for signs of a potential market turnaround. Titan's performance relative to these broader market trends will be important in assessing its competitive position and long-term growth prospects.
Delivers Strong Results Despite Challenging Industry Conditions, with Free Cash Flow of
Solid Balance Sheet Combined with Operational Diversity From Carlstar Acquisition Expected to Continue Yielding Positive Results
Paul Reitz, President and Chief Executive Officer, stated, "The work we have done to optimize our operations, build a strong team, reduce our debt and diversify our company, culminating with the acquisition of Carlstar in February, has enabled Titan to deliver solid financial results while our industry is working its way through a cyclical trough. Despite this, we are very pleased to report adjusted EBITDA of
Mr. Reitz continued, "Our results over the past few years speak for themselves. An integral piece of that success is our Low-Side Wall ("LSW") wheel/tire assemblies that were developed back in 1997 when my old boss had the crazy idea to increase the outside diameter of the wheel and reduce the inside diameter of the tire on farm tire/wheel assemblies. He worked hard to get the OEMs to bite on that concept, but didn't get any takers. Now that LSW design is on nearly every pickup truck and SUV around the world. When I became CEO in 2017, LSW was still seen by some inside Titan as concept that was not meant for Ag equipment. We have since proven to not just ourselves, but throughout the farming community the real benefits of LSW, especially its ability to make them more money by saving fuel and improving yields while tackling the most difficult conditions and enjoying a more comfortable ride in the field and on the road. We have proven this with thousands of farmers and have seen our LSW sales significantly grow since 2017. We believe that growth is nowhere near its pinnacle."
Mr. Reitz added, "In August, I was invited to visit a couple large farmers in central
Mr. Reitz continued, "Interest rates continue to weigh on the industries we serve. High horsepower agricultural equipment represents a significant purchase for farmers and thus they are highly attuned to the associated financing costs. With the possibility of interest rate cuts on the horizon, farmers are choosing to defer major purchases. Similarly, interest rates impact the cost of working capital for both OEMs and Aftermarket dealers who are being extremely cautious about the levels of inventory they are carrying in their factories and on their lots. We believe that the headwinds we are presently facing are transitory. Equipment currently in the field continues to be used and will ultimately need to be replaced. Additionally, as Ag OEMs continue to introduce new technologies into their products, the ROI that new equipment can produce, including the latest tire technology, will begin to outweigh the financing costs and help drive long term demand. Turning to our EMC segment, sales there held up relatively well. From a volume perspective, ITM, our steel undercarriage business saw an increase year over year in the quarter, while total sales in the segment were down, with lower prices driven by steel costs and softness on construction wheels and tires in the US. Resource industries like mining continue to be active as our technologically dependent society demands an ever-increasing supply of rare earth elements and we expect that to underpin solid demand over the mid to long term."
Mr. Reitz concluded, "Identifying the cyclical bottom for our industries in advance is virtually impossible to do with any precision. Even so, as we continue to work through the current trough, we are confident that the long term, structural demand drivers for the industries we serve are very much intact. Our team also has extensive experience navigating through these cycles and we are confident in our strategy. Recognition of the cyclicality of our business was one of the reasons we worked hard to de-lever when buoyant market conditions afforded us the opportunity to do so the last few years. As a result, we entered this down part of the cycle with the ability to continue generating free cash flow, which, when compared to the first quarter of 2024, allowed us to reduce our net debt by
Third Quarter 2024 Outlook
The Company is introducing financial guidance for Q3 2024 as follows:
- Revenues of
$450 million $500 million - Adjusted EBITDA of
$25 million $30 million - Free cash flow of
$20 $30 million - Capital expenditures of
$10 $15 million
David Martin, Chief Financial Officer, added, "As Paul noted, Titan is in a strong financial position which enables the Company to navigate the current industry conditions and put us in position to expand sales and accelerate our profitability when conditions improve, as they ultimately will. Our integration of Carlstar continues to go well. Our pursuit of acquisition-related synergies have placed us well along the path to achieve our target bottom-line benefit of
Mr. Martin continued, "Our solid cash flow during the second quarter allowed us to continue reducing our net debt from
Mr. Martin concluded, "Our adjusted net income applicable to shareholders of
Results of Operations
Net sales for the three months ended June 30, 2024 were
Gross profit for the three months ended June 30, 2024 was
Selling, general and administrative expenses (SG&A) for the three months ended June 30, 2024 were
Income from operations for the three months ended June 30, 2024 was
The Company recorded income tax expense of
Segment Information
Agricultural Segment
(Amounts in thousands, except percentages) | Three months ended | Six months ended | |||||||||
June 30, | June 30, | ||||||||||
2024 | 2023 | % Decrease | 2024 | 2023 | % Decrease | ||||||
Net sales | $ 216,330 | $ 269,148 | (19.6) % | $ 456,003 | $ 575,006 | (20.7) % | |||||
Gross profit | 32,303 | 48,736 | (33.7) % | 72,922 | 97,986 | (25.6) % | |||||
Profit margin | 14.9 % | 18.1 % | (17.7) % | 16.0 % | 17.0 % | (5.9) % | |||||
Income from operations | 15,772 | 32,119 | (50.9) % | 39,782 | 64,688 | (38.5) % | |||||
Net sales in the agricultural segment were
Gross profit in the agricultural segment was
Earthmoving/Construction Segment
(Amounts in thousands, except percentages) | Three months ended | Six months ended | |||||||||
June 30, | June 30, | ||||||||||
2024 | 2023 | % Decrease | 2024 | 2023 | % Decrease | ||||||
Net sales | $ 165,564 | (5.2) % | $ 330,772 | $ 373,607 | (11.5) % | ||||||
Gross profit | 21,299 | 29,102 | (26.8) % | 44,276 | 66,326 | (33.2) % | |||||
Profit margin | 12.9 % | 16.7 % | (22.8) % | 13.4 % | 17.8 % | (24.7) % | |||||
Income from operations | 7,047 | 14,522 | (51.5) % | 15,881 | 38,060 | (58.3) % | |||||
The Company's earthmoving/construction segment net sales were
Gross profit in the earthmoving/construction segment was
Consumer Segment
(Amounts in thousands, except percentages) | Three months ended | Six months ended | |||||||||
June 30, | June 30, | ||||||||||
2024 | 2023 | % Increase (Decrease) | 2024 | 2023 | % Increase (Decrease) | ||||||
Net sales | $ 150,276 | $ 37,345 | 302.4 % | $ 227,604 | $ 81,207 | 180.3 % | |||||
Gross profit | 26,840 | 8,057 | 233.1 % | 40,614 | 17,140 | 137.0 % | |||||
Profit margin | 17.9 % | 21.6 % | (17.1) % | 17.8 % | 21.1 % | (15.6) % | |||||
Income from operations | 6,449 | 5,865 | 10.0 % | 11,562 | 12,657 | (8.7) % | |||||
Consumer segment net sales were
Gross profit from the consumer segment was
Non-GAAP Financial Measures
Adjusted EBITDA was
Adjusted net income applicable to common shareholders for the second quarter of 2024 was income of
Financial Condition
The Company ended the second quarter of 2024 with total cash and cash equivalents of
Net cash provided by operating activities for the first six months of 2024 was
Teleconference and Webcast
Titan will be hosting a teleconference and webcast to discuss the second quarter financial results on Thursday, August 1, 2024, at 9:00 a.m. Eastern Time.
The real-time, listen-only webcast can be accessed using the following link https://events.q4inc.com/attendee/651060873 or on our website at www.titan-intl.com within the "Investor Relations" page under the "News & Events" menu (https://ir.titan-intl.com/news-and-events/events/default.aspx). Listeners should access the website at least 10 minutes prior to the live event to download and install any necessary audio software.
A webcast replay of the teleconference will be available on our website (https://ir.titan-intl.com/news-and-events/events/default.aspx) soon after the live event.
In order to participate in the real-time teleconference, with live audio Q&A, participants should use one of the following dial in numbers:
United States Toll Free: 1 833 470 1428
All other locations: https://www.netroadshow.com/conferencing/global-numbers?confId=56511
Participants Access Code: 548553
About Titan
Titan International, Inc. (NYSE: TWI) is a leading global manufacturer of off-highway wheels, tires, assemblies, and undercarriage products. Headquartered in
Safe Harbor Statement
This press release contains forward-looking statements. These forward-looking statements are covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "plan," "would," "could," "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, these assumptions are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond Titan International, Inc.'s control. As a result, 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, the effect of the COVID-19 pandemic on our operations and financial performance; the effect of a recession on the Company and its customers and suppliers; changes in the Company's end-user markets into which the Company sells its products as a result of domestic and world economic or regulatory influences or otherwise; changes in the marketplace, including new products and pricing changes by the Company's competitors; the Company's ability to maintain satisfactory labor relations; unfavorable outcomes of legal proceedings; the Company's ability to comply with current or future regulations applicable to the Company's business and the industry in which it competes or any actions taken or orders issued by regulatory authorities; availability and price of raw materials; levels of operating efficiencies; the effects of the Company's indebtedness and its compliance with the terms thereof; changes in the interest rate environment and their effects on the Company's outstanding indebtedness; unfavorable product liability and warranty claims; actions of domestic and foreign governments, including the imposition of additional tariffs; geopolitical and economic uncertainties relating to the countries in which the Company operates or does business; risks associated with acquisitions, including difficulty in integrating operations and personnel, disruption of ongoing business, and increased expenses; results of investments; the effects of potential processes to explore various strategic transactions, including potential dispositions; fluctuations in currency translations; risks associated with environmental laws and regulations; risks relating to our manufacturing facilities, including that any of our material facilities may become inoperable; risks relating to financial reporting, internal controls, tax accounting, and information systems; and the other risks and factors detailed in the Company's periodic reports filed with the Securities and Exchange Commission, including the disclosures under "Risk Factors" in those reports. These forward-looking statements are made only as of the date hereof. 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, whether as a result of new information, changed circumstances or future events, or for any other reason, except as required by law.
Titan International, Inc. Condensed Consolidated Statements of Operations (Unaudited) Amounts in thousands, except per share data | |||||||
Three months ended | Six months ended | ||||||
June 30, | June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net sales | $ 532,170 | $ 481,176 | $ 1,014,379 | $ 1,029,820 | |||
Cost of sales | 451,728 | 395,281 | 856,567 | 848,368 | |||
Gross profit | 80,442 | 85,895 | 157,812 | 181,452 | |||
Selling, general and administrative expenses | 51,583 | 34,858 | 91,003 | 69,330 | |||
Acquisition related expenses | — | — | 6,196 | — | |||
Research and development expenses | 4,218 | 3,218 | 7,872 | 6,232 | |||
Royalty expense | 2,319 | 1,921 | 5,347 | 4,856 | |||
Income from operations | 22,322 | 45,898 | 47,394 | 101,034 | |||
Interest expense, net | (7,187) | (5,762) | (12,679) | (12,254) | |||
Foreign exchange gain (loss) | 462 | 2 | 187 | (1,758) | |||
Other income | 3,277 | 1,186 | 3,682 | 1,948 | |||
Income before income taxes | 18,874 | 41,324 | 38,584 | 88,970 | |||
Provision for income taxes | 15,452 | 9,429 | 25,188 | 23,645 | |||
Net income | 3,422 | 31,895 | 13,396 | 65,325 | |||
Net income attributable to noncontrolling interests | 1,273 | 1,688 | 2,046 | 3,280 | |||
Net income attributable to Titan and applicable to common shareholders | $ 2,149 | $ 30,207 | $ 11,350 | $ 62,045 | |||
Earnings per common share: | |||||||
Basic | $ 0.03 | $ 0.48 | $ 0.16 | $ 0.99 | |||
Diluted | $ 0.03 | $ 0.48 | $ 0.16 | $ 0.98 | |||
Average common shares and equivalents outstanding: | |||||||
Basic | 72,737 | 62,931 | 68,833 | 62,918 | |||
Diluted | 73,078 | 63,234 | 69,361 | 63,404 | |||
Titan International, Inc. Condensed Consolidated Balance Sheets Amounts in thousands, except share data | |||
June 30, 2024 | December 31, 2023 | ||
(unaudited) | |||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ 224,100 | $ 220,251 | |
Accounts receivable, net | 316,639 | 219,145 | |
Inventories | 464,650 | 365,156 | |
Prepaid and other current assets | 87,095 | 72,229 | |
Total current assets | 1,092,484 | 876,781 | |
Property, plant and equipment, net | 447,729 | 321,694 | |
Operating lease assets | 105,117 | 11,955 | |
Goodwill | 12,867 | — | |
Intangible assets, net | 16,510 | 1,431 | |
Deferred income taxes | 16,377 | 38,033 | |
Other long-term assets | 42,983 | 39,351 | |
Total assets | $ 1,734,067 | $ 1,289,245 | |
Liabilities | |||
Current liabilities | |||
Short-term debt | $ 14,588 | $ 16,913 | |
Accounts payable | 257,271 | 201,201 | |
Operating leases | 11,008 | 5,021 | |
Other current liabilities | 171,415 | 149,240 | |
Total current liabilities | 454,282 | 372,375 | |
Long-term debt | 535,907 | 409,178 | |
Deferred income taxes | 4,563 | 2,234 | |
Operating leases | 93,694 | 6,153 | |
Other long-term liabilities | 32,002 | 31,890 | |
Total liabilities | 1,120,448 | 821,830 | |
Equity | |||
Titan shareholders' equity | |||
Common stock ( and 72,174,244 outstanding at June 30, 2024; 66,525,269 issued and 60,715,855 outstanding at December 31, 2023) | — | — | |
Additional paid-in capital | 736,720 | 569,065 | |
Retained earnings | 180,973 | 169,623 | |
Treasury stock (at cost, 6,272,791 shares at June 30, 2024 and 5,809,414 shares at December 31, 2023) | (56,616) | (52,585) | |
Accumulated other comprehensive loss | (251,736) | (219,043) | |
Total Titan shareholders' equity | 609,341 | 467,060 | |
Noncontrolling interests | 4,278 | 355 | |
Total equity | 613,619 | 467,415 | |
Total liabilities and equity | $ 1,734,067 | $ 1,289,245 | |
Titan International, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited); all amounts in thousands | |||
Six months ended June 30, | |||
Cash flows from operating activities: | 2024 | 2023 | |
Net income | $ 13,396 | $ 65,325 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 27,423 | 21,565 | |
Deferred income tax provision | 12,978 | 12,349 | |
Income on indirect taxes | — | (3,096) | |
Gain on fixed asset and investment sale | (388) | (71) | |
Stock-based compensation | 1,801 | 2,215 | |
Issuance of stock under 401(k) plan | 892 | 878 | |
Proceeds from property insurance settlement | (3,537) | — | |
Foreign currency gain | (1,063) | (2,130) | |
(Increase) decrease in assets, net of acquisitions: | |||
Accounts receivable | (8,437) | (16,322) | |
Inventories | 34,764 | 24,096 | |
Prepaid and other current assets | (3,789) | 12,512 | |
Other assets | (1,468) | 1,285 | |
Increase (decrease) in liabilities, net of acquisitions: | |||
Accounts payable | (2,930) | (32,005) | |
Other current liabilities | 1,773 | 781 | |
Other liabilities | 1,431 | 1,508 | |
Net cash provided by operating activities | 72,846 | 88,890 | |
Cash flows from investing activities: | |||
Capital expenditures | (34,199) | (27,567) | |
Business acquisition, net of cash acquired | (142,207) | — | |
Proceeds from property insurance settlement | 3,537 | — | |
Proceeds from sale of fixed assets | 1,597 | 289 | |
Net cash used for investing activities | (171,272) | (27,278) | |
Cash flows from financing activities: | |||
Proceeds from borrowings | 159,539 | 4,373 | |
Repayments of debt | (34,095) | (21,030) | |
Payment of debt issuance costs | (3,115) | — | |
Repurchase of common stock | (7,762) | (6,390) | |
Other financing activities | (692) | (2,748) | |
Net cash provided by (used for) financing activities | 113,875 | (25,795) | |
Effect of exchange rate changes on cash | (11,600) | 1,058 | |
Net increase in cash and cash equivalents | 3,849 | 36,875 | |
Cash and cash equivalents, beginning of period | 220,251 | 159,577 | |
Cash and cash equivalents, end of period | $ 224,100 | $ 196,452 | |
Supplemental information: | |||
Interest paid | $ 17,956 | $ 15,485 | |
Income taxes paid, net of refunds received | $ 11,815 | $ 12,684 | |
Non cash financing activity: | |||
Issuance of common stock in connection with business acquisition | $ 168,693 | $ — | |
Titan International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
Amounts in thousands, except earnings per share data and percentages
The Company reports its financial results in accordance with generally accepted accounting principles in
We present adjusted gross profit, adjusted net income attributable to Titan, adjusted earnings per common share, EBITDA, adjusted EBITDA, net sales on a constant currency basis, net debt and net cash provided by operating activities to free cash flow, as we believe that they assist investors with analyzing our business results. In addition, management reviews these non-GAAP financial measures in order to evaluate the financial performance of each of our segments, as well as the Company's performance as a whole. We believe that the presentation of these non‑GAAP financial measures will permit investors to assess the performance of the Company on the same basis as management.
Adjusted gross profit, adjusted net income attributable to Titan, adjusted earnings per common share, EBITDA, adjusted EBITDA, net sales on a constant currency basis, net debt, and free cash flow should be considered supplemental to, not a substitute for, the financial measures calculated in accordance with GAAP. One should not consider these measures in isolation or as a substitute for our results reported under GAAP. These measures have limitations in that they do not reflect all of the costs associated with the operations of our businesses as determined in accordance with GAAP. In addition, these measures may be calculated differently than non-GAAP financial measures reported by other companies, limiting their usefulness as comparative measures. We attempt to 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 adjusted gross profit to gross profit, the most directly comparable GAAP financial measure, for the three and six-month periods ended June 30, 2024 and 2023 (in thousands, except percentages).
Three months ended | Three months ended | |||||
June 30, 2024 | June 30, 2023 | |||||
Agricultural | Earthmoving/ Construction | Consumer | Total | Total | ||
Gross profit, as reported | $ 32,303 | $ 21,299 | $ 26,840 | $ 80,442 | $ 85,895 | |
Gross Margin | 14.9 % | 12.9 % | 17.9 % | 15.1 % | 17.9 % | |
Adjustments: | ||||||
Carlstar inventory fair value step-up | 1,157 | 198 | 5,969 | 7,324 | — | |
Gross profit, as adjusted | $ 33,460 | $ 21,497 | $ 32,809 | $ 87,766 | $ 85,895 | |
Adjusted Gross Margin | 15.5 % | 13.0 % | 21.8 % | 16.5 % | 17.9 % | |
Six months ended | Six months ended | |||||
June 30, 2024 | June 30, 2023 | |||||
Agricultural | Earthmoving/ Construction | Consumer | Total | Total | ||
Gross profit, as reported | $ 72,922 | $ 44,276 | $ 40,614 | $ 157,812 | $ 181,452 | |
Gross Margin | 16.0 % | 13.4 % | 17.8 % | 15.6 % | 17.6 % | |
Adjustments: | ||||||
Carlstar inventory fair value step-up | 1,771 | 292 | 8,637 | 10,700 | — | |
Gross profit, as adjusted | $ 74,693 | $ 44,568 | $ 49,251 | $ 168,512 | $ 181,452 | |
Adjusted Gross Margin | 16.4 % | 13.5 % | 21.6 % | 16.6 % | 17.6 % | |
The table below provides a reconciliation of adjusted net income attributable to Titan to net income applicable to common shareholders, the most directly comparable GAAP financial measure, for the three and six-month periods ended June 30, 2024 and 2023 (in thousands, except earnings per share).
Three months ended | Six months ended | ||||||
June 30, | June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net income attributable to Titan and applicable to common shareholders | $ 2,149 | $ 30,207 | $ 11,350 | $ 62,045 | |||
Adjustments: | |||||||
Foreign exchange (gain) loss | (462) | (2) | (187) | 1,758 | |||
Carlstar transaction costs | — | — | 6,196 | — | |||
Carlstar inventory fair value step-up | 7,324 | — | 10,700 | — | |||
Gain on property insurance settlement | (1,913) | — | (1,913) | — | |||
Income on Brazilian indirect tax credits, net | — | (3,096) | — | (3,096) | |||
Adjusted net income attributable to Titan and applicable to common shareholders | $ 7,098 | $ 27,109 | $ 26,146 | $ 60,707 | |||
Adjusted earnings per common share: | |||||||
Basic | $ 0.10 | $ 0.43 | $ 0.38 | $ 0.96 | |||
Diluted | $ 0.10 | $ 0.43 | $ 0.38 | $ 0.96 | |||
Average common shares and equivalents outstanding: | |||||||
Basic | 72,737 | 62,931 | 68,833 | 62,918 | |||
Diluted | 73,078 | 63,234 | 69,361 | 63,404 | |||
The table below provides a reconciliation of net income to EBITDA and adjusted EBITDA, which are non-GAAP financial measures, for the three and six-month periods ended June 30, 2024 and 2023 (in thousands).
Three months ended | Six months ended | ||||||
June 30, | June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net income | $ 3,422 | $ 31,895 | $ 13,396 | $ 65,325 | |||
Adjustments: | |||||||
Provision for income taxes | 15,452 | 9,429 | 25,188 | 23,645 | |||
Interest expense, excluding interest income | 9,513 | 7,389 | 17,660 | 14,780 | |||
Depreciation and amortization | 15,422 | 10,735 | 27,423 | 21,565 | |||
EBITDA | $ 43,809 | $ 59,448 | $ 83,667 | $ 125,315 | |||
Adjustments: | |||||||
Foreign exchange (gain) loss | (462) | (2) | (187) | 1,758 | |||
Carlstar transaction costs | — | — | 6,196 | — | |||
Carlstar inventory fair value step-up | 7,324 | — | 10,700 | — | |||
Gain on property insurance settlement | (1,913) | — | (1,913) | — | |||
Income on Brazilian indirect tax credits | — | (475) | — | (475) | |||
Adjusted EBITDA | $ 48,758 | $ 58,971 | $ 98,463 | $ 126,598 | |||
The table below sets forth, for the three and six-month periods ended June 30, 2024, the impact to net sales of currency translation (constant currency) by geography (in thousands, except percentages):
Three months ended June 30, | Change due to currency translation | Three months ended June 30, | |||||||||
2024 | 2023 | % Change from 2023 | $ | % | Constant Currency | ||||||
United States | $ 304,836 | $ 212,991 | 43.1 % | $ — | — % | $ 304,836 | |||||
128,888 | 151,169 | (14.7) % | (3,662) | (2.4) % | 132,550 | ||||||
77,026 | 91,353 | (15.7) % | (9,720) | (10.6) % | 86,746 | ||||||
Other International | 21,420 | 25,663 | (16.5) % | (4,521) | (17.6) % | 25,941 | |||||
$ 532,170 | $ 481,176 | 10.6 % | $ (17,903) | (3.7) % | $ 550,073 | ||||||
Six months ended June 30, | Change due to currency translation | Six months ended June 30, | |||||||||
2024 | 2023 | % Change from 2023 | $ | % | Constant Currency | ||||||
United States | $ 563,200 | $ 481,023 | 17.1 % | $ — | — % | $ 563,200 | |||||
255,678 | 304,664 | (16.1) % | (7,340) | (2.4) % | 263,018 | ||||||
149,506 | 193,874 | (22.9) % | (12,188) | (6.3) % | 161,694 | ||||||
Other International | 45,995 | 50,259 | (8.5) % | (11,113) | (22.1) % | 57,108 | |||||
$ 1,014,379 | $ 1,029,820 | (1.5) % | $ (30,641) | (3.0) % | $ 1,045,020 | ||||||
The table below provides a reconciliation of net debt, which is a non-GAAP financial measure (in thousands):
June 30, 2024 | December 31, 2023 | June 30, 2023 | |||
Long-term debt | $ 535,907 | $ 409,178 | $ 411,671 | ||
Short-term debt | 14,588 | 16,913 | 18,536 | ||
Total debt | $ 550,495 | $ 426,091 | $ 430,207 | ||
Cash and cash equivalents | 224,100 | 220,251 | 196,452 | ||
Net debt | $ 326,395 | $ 205,840 | $ 233,755 |
The table below provides a reconciliation of net cash provided by operating activities to free cash flow, which is a non-GAAP financial measure (in thousands):
Three months ended | Six months ended | ||||||
June 30, | June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net cash provided by operating activities | $ 70,841 | $ 64,804 | $ 72,846 | $ 88,890 | |||
Capital expenditures | (17,592) | (15,869) | (34,199) | (27,567) | |||
Free cash flow | $ 53,249 | $ 48,935 | $ 38,647 | $ 61,323 | |||
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SOURCE Titan International, Inc.
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