Delivers Results Reflective of Industry Conditions, with strong Free Cash Flow of $42 Million and Adjusted EBITDA of $20 Million
Recent Interest Rate Decreases and Expected Clarity on Trade Policy Should Support Improving Conditions in 2025
WEST CHICAGO, Ill., Oct. 30, 2024 /PRNewswire/ — Titan International, Inc. (NYSE: TWI) (“Titan” or the “Company”), a leading global manufacturer of off-highway wheels, tires, assemblies, and undercarriage products, today reported financial results for the third quarter ended September 30, 2024.
Paul Reitz, President and Chief Executive Officer stated, “I have been spending a lot of time with customers in recent months, and it is clear that Titan’s position as a valued partner centers on the innovative nature of the products we have developed and continue to develop. The Low-Side Wall (“LSW”) wheel/tire assemblies continue to capture attention in the marketplace and I recently heard that directly from some very large farmers. They raved about the field performance, reduced soil compaction and highlighted fuel savings, according to their records, that far exceeds the 10 to 15% savings that Titan has stated. All of their major equipment on a 25,000 acre farm is using LSWs. This visit made it clear that we have proven that LSW provides improved economics and field performance for the farmer.”
Mr. Reitz continued, “We are also working on tooling up to add the deep drop wheel to our LSW tires, which will improve field performance even further. The bottom-line is that I see a big opportunity ahead of us to educate more end-users that LSW is not just for combines and the largest tractors – the technology also works better on almost every piece of equipment, including mid-size tractors. That market size is easily another 25,000 new tractors produced annually, so tapping into a fraction of that would move the needle in our sales and EBITDA. There is simply no reason to run duals and we will be increasing our efforts and resources to reach more end-users to create further awareness of the LSW benefits for all sizes of Ag equipment to capture those significant opportunities.”
Mr. Reitz added, “Across the entire business we are busy working to drive growth via product development from our flagship LSWs to growth via the Carlstar acquisition – all exemplifying that we are not simply sitting back and going with the flow of the market. We are excited to have recently launched our VPO™ Technology under the Carlstar brand, which offers a versatile solution as an alternative to tweel wheels and can operate machinery at various inflation pressures — even down to zero psi. We will soon be launching the first Titan branded high speed trailer tire. Beyond that we have extensive opportunities via the Carlstar acquisition to bring LSWs into their product mix, allowing us to grow into new geographies and underserved markets. I mentioned last quarter that we see a strong opportunity to gain back military sales that have diminished over the past 10 to 15 years. Our product innovations that perform well in Ag and Construction will also make military equipment perform better. We are expanding our outreach with some influential leaders in the military industry and will continue working to capture those sales.”
Mr. Reitz continued, “Beyond our focus on growth, we are managing costs and focusing on what we can control. Cashflow was a bright spot for the quarter, driven by our steadfast focus on working capital management. We reduced debt, while continuing to buy back shares, and, on the whole, delivered solid results within the context of our end market conditions. We have reduced expenses to align costs with lower production schedules, including an approximate 15% reduction in our headcount from the cycle peak in 2022 while still maintaining adequate manufacturing capabilities. The integration of Carlstar continues to move forward very well, and we have pushed hard on cross-selling opportunities and other top line synergies. Most importantly, we are basing our decisions on our ability to serve our customers when demand for equipment improves. When it does, it is critical that we are there to meet our customers’ needs.”
Mr. Reitz concluded, “The large Ag OEMs and dealers have been vocal in recent months about their actions to further reduce inventory levels by the end of 2024. This is an encouraging sign as it suggests no further de-stocking activity of any magnitude entering 2025. Potential interest rate declines represent an additional positive factor, and the trade policy risk tied to the election should also abate as we turn the page to 2025. I remain exceptionally proud of our team at Titan to take actions with conviction to deliver for our customers and believe it is an exciting time for Titan to capitalize on growth opportunities.”
Fourth Quarter 2024 Outlook
David Martin, Chief Financial Officer, added, “In the fourth quarter, we expect to see sales between $375 million and $425 million, and adjusted EBITDA at breakeven to $10 million. We continue to be focused on driving free cash flow and we expect to see it around breakeven, reflecting continued solid working capital management. Our profitability profile has been lifted significantly from where we have seen traditional cyclical lows. That ability to hold on to margins enabled us to drive a strong free cash flow of $42 million in the third quarter. We used that cash to continue reducing our debt, with net debt down to $291 million on September 30th, compared with $326 million as of June 30th, while also continuing our share repurchase program, under which we repurchased 1,050,000 shares of our common stock totaling $8.3 million during the three months ended September 30, 2024. Our financial condition is solid, and it allows for the flexibility to operate more efficiently, invest for the future and wisely allocate capital to deliver returns for the long-term.”
Results of Operations
Net sales for the three months ended September 30, 2024, were $448.0 million, compared to $401.8 million in the comparable period of 2023. This growth was primarily driven by higher volumes in the consumer segment, bolstered by the net sales contribution from the Carlstar acquisition completed on February 29, 2024. The sales increase was partially offset by reduced sales in the agricultural and earthmoving/construction segments, stemming from reduced global end customer demand. Furthermore, the net sales increase was impacted by negative price effects and an unfavorable currency translation impact of 3.3%.
Gross profit for the three months ending September 30, 2024 was $58.8 million, or 13.1% of net sales, compared to $66.1 million, or 16.4% of net sales, for the three months ended September 30, 2023. The changes in gross profit and margin were attributed to negative price/mix, reduced fixed cost leverage, a slight increase in material costs, and inventory revaluation step-up of $0.8 million related to the purchase price allocation for Carlstar. Excluding the inventory revaluation step-up, the adjusted gross margin for the three months ended September 30, 2024 would have been 13.3% of net sales.
Selling, general and administrative expenses (SG&A) for the three months ended September 30, 2024 were $49.5 million, or 11.1% of net sales, compared to $33.6 million, or 8.4% of net sales, for the three months ended September 30, 2023. This change was attributed to the ongoing SG&A associated with Carlstar operations.
Income from operations for the three months ended September 30, 2024 was $2.8 million, compared to income from operations of $27.0 million for the three months ended September 30, 2023. The change was primarily due to lower gross profit and the net result of the items previously discussed.
The Company recorded income tax expense of $12.9 million and $4.7 million for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, the Company recorded income tax expense of $38.1 million and $28.4 million, respectively. The Company’s effective income tax rate was (244.4)% and 19.4% for the three months ended September 30, 2024 and 2023, respectively, and 114.4% and 25.0% for the nine months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, the income tax expense differed in each period due to an overall decrease in pre-tax income. For the nine months ended September 30, 2024, the rate was negatively impacted by non-deductible interest expense in the United States, foreign branch income related to the Carlstar acquisition, and one-time impacts associated with transaction costs, which were also not fully deductible for income tax purposes. Additionally, the rate was impacted by the results of foreign income tax rate differential on the mix of earnings, non-deductible royalty expenses in certain jurisdictions, and certain foreign inclusion items on the domestic provision. Without these impacts, the income tax rate would have been about 36% of pre-tax income, a slightly elevated rate due to the majority of pre-tax income being derived from foreign jurisdictions. Income taxes paid (net of refunds received) on a year-to-date basis through September 30, 2024, were $16.4 million.
Segment Information
Agricultural Segment
|
(Amounts in thousands, except percentages) |
Three months ended |
Nine months ended |
|||||||||
|
September 30, |
September 30, |
||||||||||
|
2024 |
2023 |
% |
2024 |
2023 |
% |
||||||
|
Net sales |
$ 175,439 |
$ 212,967 |
(17.6) % |
$ 631,442 |
$ 787,973 |
(19.9) % |
|||||
|
Gross profit |
16,720 |
37,026 |
(54.8) % |
89,642 |
135,012 |
(33.6) % |
|||||
|
Profit margin |
9.5 % |
17.4 % |
(45.4) % |
14.2 % |
17.1 % |
(17.0) % |
|||||
|
Income from operations |
1,910 |
21,383 |
(91.1) % |
41,692 |
86,071 |
(51.6) % |
|||||
Net sales in the agricultural segment were $175.4 million for the three months ended September 30, 2024, as compared to $213.0 million for the comparable period in 2023. The net sales change was primarily attributed to a significant reduction in global demand for agricultural equipment, particularly in North America and Europe. Additionally, an unfavorable foreign currency translation impact of 4.9% further contributed to the change in net sales, mainly due to the weakening Brazilian real and Argentine peso.
Gross profit in the agricultural segment was $16.7 million for the three months ended September 30, 2024, as compared to $37.0 million in the comparable period in 2023. The change in gross profit was attributed to the lower sales volume, reduced fixed cost leverage, adverse price/mix effects, and increased material costs. Excluding the impact of the Carlstar purchase price allocation, adjusted gross margins in the Agriculture segment were 9.6% and 14.5% for the three and nine months ended September 30, 2024, respectively.
Earthmoving/Construction Segment
|
(Amounts in thousands, except percentages) |
Three months ended |
Nine months ended |
|||||||||
|
September 30, |
September 30, |
||||||||||
|
2024 |
2023 |
% |
2024 |
2023 |
% |
||||||
|
Net sales |
$ 136,313 |
$ 155,045 |
(12.1) % |
$ 467,085 |
$ 528,652 |
(11.6) % |
|||||
|
Gross profit |
11,653 |
22,257 |
(47.6) % |
55,929 |
88,583 |
(36.9) % |
|||||
|
Profit margin |
8.5 % |
14.4 % |
(41.0) % |
12.0 % |
16.8 % |
(28.6) % |
|||||
|
(Loss) income from operations |
(1,911) |
8,501 |
(122.5) % |
13,970 |
46,561 |
(70.0) % |
|||||
The Company’s earthmoving/construction segment net sales were $136.3 million for the three months ended September 30, 2024, as compared to $155.0 million in the comparable period in 2023. The change in net sales was primarily attributed to reduced sales volume due to softer demand in North America and Europe, which was partially offset by positive contributions from the Carlstar acquisition. Additionally, adverse price/mix effects and a 1.1% unfavorable impact from foreign currency translation contributed to the overall change.
Gross profit in the earthmoving/construction segment was $11.7 million for the three months ended September 30, 2024, as compared to $22.3 million for the three months ended September 30, 2023. The change in gross profit was primarily attributed to lower sales volume in North America and Europe, and reduced fixed cost leverage.
Consumer Segment
|
(Amounts in thousands, except percentages) |
Three months ended |
Nine months ended |
|||||||||
|
September 30, |
September 30, |
||||||||||
|
2024 |
2023 |
% |
2024 |
2023 |
% |
||||||
|
Net sales |
$ 136,233 |
$ 33,769 |
303.4 % |
$ 363,837 |
$ 114,976 |
216.4 % |
|||||
|
Gross profit |
30,432 |
6,790 |
348.2 % |
71,046 |
23,930 |
196.9 % |
|||||
|
Profit margin |
22.3 % |
20.1 % |
10.9 % |
19.5 % |
20.8 % |
(6.3) % |
|||||
|
Income from operations |
11,282 |
4,526 |
149.3 % |
22,844 |
17,183 |
32.9 % |
|||||
Consumer segment net sales were $136.2 million for the three months ended September 30, 2024, as compared to $33.8 million for the three months ended September 30, 2023. This growth was primarily attributed to higher sales volumes following the Carlstar acquisition, although it was partially offset by reduced sales in the Americas due to challenging market conditions and a 3.2% negative impact from foreign currency translation, mainly due to the weakening Brazilian real.
Gross profit from the consumer segment was $30.4 million for the three months ended September 30, 2024, as compared to $6.8 million for the three months ended September 30, 2023. The increase in gross profit and profit margin was largely driven by the benefits derived from the Carlstar acquisition. Excluding the impact of the Carlstar purchase price allocation, adjusted gross margins in the Consumer segment were 22.9% and 22.1% for the three and nine months ended September 30, 2023, respectively.
Non-GAAP Financial Measures
Adjusted EBITDA was $20.5 million for the third quarter of 2024, compared to $40.5 million in the comparable prior year period. The Company utilizes EBITDA and adjusted EBITDA, which are non-GAAP financial measures, as a means to measure its operating performance. A reconciliation of net income to EBITDA and adjusted EBITDA can be found at the end of this release.
Adjusted net income applicable to common shareholders for the third quarter of 2024 was income of $(13.9) million, equal to income of $(0.19) per basic and diluted share, compared to adjusted net income of $18.4 million, equal to income of $0.29 per basic and diluted share, in the third quarter of 2023. The Company utilizes adjusted net income applicable to common shareholders, which is a non-GAAP financial measure, as a means to measure its operating performance. A reconciliation of net income applicable to common shareholders and adjusted net income applicable to common shareholders can be found at the end of this release.
Financial Condition
The Company ended the third quarter of 2024 with total cash and cash equivalents of $227.3 million, compared to $220.3 million at December 31, 2023. Long-term debt at September 30, 2024, was $503.4 million, compared to $409.2 million at December 31, 2023. Short-term debt was $15.0 million at September 30, 2024, compared to $16.9 million at December 31, 2023. Net debt (total debt less cash and cash equivalents) was $291.2 million at September 30, 2024, compared to $205.8 million at December 31, 2023.
Net cash provided by operating activities for the first nine months of 2024 was $132.8 million, compared to net cash provided by operating activities of $140.1 million for the comparable prior year period. Operating cash flows decreased by $7.4 million when comparing the first nine months of 2024 to the comparable period in 2023. This decline was primarily attributed to lower net income, partially offset by the positive impact of focused working capital management. Key factors contributing to this management included a $34.2 million increase in accounts payable, a $11.4 million improvement due to collections efforts on accounts receivable, and a $21.7 million improvement in inventory management. Capital expenditures were $52.3 million for the first nine months of 2024, compared to $41.5 million for the comparable prior year period. Capital expenditures during the first nine months of 2024 and 2023 represent scheduled equipment replacement and improvements, along with new tools, dies and molds related to new product development, as the Company seeks to enhance the Company’s manufacturing capabilities and drive productivity gains.
Teleconference and Webcast
Titan will be hosting a teleconference and webcast to discuss the third quarter financial results on Thursday, October 31, 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/566818353 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: 971353
About Titan
Titan International, Inc. (NYSE: TWI) is a leading global manufacturer of off-highway wheels, tires, assemblies, and undercarriage products. Headquartered in West Chicago, Illinois, the Company globally produces a broad range of products to meet the specifications of original equipment manufacturers (OEMs) and aftermarket customers in the agricultural, earthmoving/construction, and consumer markets. For more information, visit www.titan-intl.com.
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 |
Nine months ended |
||||||
|
September 30, |
September 30, |
||||||
|
2024 |
2023 |
2024 |
2023 |
||||
|
Net sales |
$ 447,985 |
$ 401,781 |
$ 1,462,364 |
$ 1,431,601 |
|||
|
Cost of sales |
389,180 |
335,708 |
1,245,747 |
1,184,076 |
|||
|
Gross profit |
58,805 |
66,073 |
216,617 |
247,525 |
|||
|
Selling, general and administrative expenses |
49,533 |
33,587 |
140,536 |
102,917 |
|||
|
Acquisition related expenses |
— |
— |
6,196 |
— |
|||
|
Research and development expenses |
4,199 |
3,167 |
12,071 |
9,399 |
|||
|
Royalty expense |
2,266 |
2,344 |
7,613 |
7,200 |
|||
|
Income from operations |
2,807 |
26,975 |
50,201 |
128,009 |
|||
|
Interest expense |
(9,005) |
(7,229) |
(27,103) |
(22,446) |
|||
|
Interest income |
3,064 |
3,298 |
8,483 |
6,261 |
|||
|
Foreign exchange (loss) gain |
(2,525) |
876 |
(2,338) |
(882) |
|||
|
Other income |
375 |
461 |
4,057 |
2,409 |
|||
|
(Loss) income before income taxes |
(5,284) |
24,381 |
33,300 |
113,351 |
|||
|
Provision for income taxes |
12,915 |
4,718 |
38,103 |
28,363 |
|||
|
Net (loss) income |
(18,199) |
19,663 |
(4,803) |
84,988 |
|||
|
Net income attributable to noncontrolling interests |
50 |
383 |
2,096 |
3,663 |
|||
|
Net (loss) income attributable to Titan and applicable to |
$ (18,249) |
$ 19,280 |
$ (6,899) |
$ 81,325 |
|||
|
(Loss) earnings per common share: |
|||||||
|
Basic |
$ (0.25) |
$ 0.31 |
$ (0.10) |
$ 1.29 |
|||
|
Diluted |
$ (0.25) |
$ 0.31 |
$ (0.10) |
$ 1.29 |
|||
|
Average common shares and equivalents outstanding: |
|||||||
|
Basic |
72,013 |
62,598 |
69,900 |
62,810 |
|||
|
Diluted |
72,013 |
63,095 |
69,900 |
63,271 |
|||
|
Titan International, Inc. |
|||
|
Condensed Consolidated Balance Sheets |
|||
|
Amounts in thousands, except share data |
|||
|
September 30, |
December 31, |
||
|
Assets |
(unaudited) |
||
|
Current assets |
|||
|
Cash and cash equivalents |
$ 227,293 |
$ 220,251 |
|
|
Accounts receivable, net of allowance of $4,117 and $5,340 |
272,837 |
219,145 |
|
|
Inventories |
453,632 |
365,156 |
|
|
Prepaid and other current assets |
71,977 |
72,229 |
|
|
Total current assets |
1,025,739 |
876,781 |
|
|
Property, plant and equipment, net |
440,298 |
321,694 |
|
|
Operating lease assets |
120,330 |
11,955 |
|
|
Goodwill |
35,810 |
— |
|
|
Intangible assets, net |
13,036 |
1,431 |
|
|
Deferred income taxes |
8,106 |
38,033 |
|
|
Other long-term assets |
43,405 |
39,351 |
|
|
Total assets |
$ 1,686,724 |
$ 1,289,245 |
|
|
Liabilities |
|||
|
Current liabilities |
|||
|
Short-term debt |
$ 15,025 |
$ 16,913 |
|
|
Accounts payable |
234,302 |
201,201 |
|
|
Operating leases |
13,077 |
5,021 |
|
|
Other current liabilities |
168,897 |
139,378 |
|
|
Total current liabilities |
431,301 |
362,513 |
|
|
Long-term debt |
503,429 |
409,178 |
|
|
Deferred income taxes |
2,524 |
2,234 |
|
|
Operating leases |
109,187 |
6,153 |
|
|
Other long-term liabilities |
42,229 |
41,752 |
|
|
Total liabilities |
1,088,670 |
821,830 |
|
|
Commitments and Contingencies |
|||
|
Equity |
|||
|
Titan shareholders’ equity |
|||
|
Common stock ($0.0001 par value, 120,000,000 shares authorized, 78,447,035 issued |
— |
— |
|
|
Additional paid-in capital |
738,420 |
569,065 |
|
|
Retained earnings |
162,724 |
169,623 |
|
|
Treasury stock (at cost, 7,263,007 shares at September 30, 2024 and 5,809,414 shares |
(64,424) |
(52,585) |
|
|
Accumulated other comprehensive loss |
(238,953) |
(219,043) |
|
|
Total Titan shareholders’ equity |
597,767 |
467,060 |
|
|
Noncontrolling interests |
287 |
355 |
|
|
Total equity |
598,054 |
467,415 |
|
|
Total liabilities and equity |
$ 1,686,724 |
$ 1,289,245 |
|
|
Titan International, Inc. |
|||
|
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||
|
All amounts in thousands |
|||
|
Nine months ended |
|||
|
Cash flows from operating activities: |
2024 |
2023 |
|
|
Net (loss) income |
$ (4,803) |
$ 84,988 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||
|
Depreciation and amortization |
40,059 |
31,598 |
|
|
Deferred income tax provision |
21,646 |
5,868 |
|
|
Income on indirect taxes |
— |
(3,096) |
|
|
Loss (gain) on fixed asset and investment sale |
625 |
(409) |
|
|
Stock-based compensation |
3,601 |
3,700 |
|
|
Issuance of stock under 401(k) plan |
1,328 |
1,329 |
|
|
Proceeds from property insurance settlement |
(3,537) |
— |
|
|
Foreign currency loss (gain) |
1,375 |
(2,348) |
|
|
(Increase) decrease in assets, net of acquisitions: |
|||
|
Accounts receivable |
28,886 |
17,503 |
|
|
Inventories |
53,914 |
32,197 |
|
|
Prepaid and other current assets |
10,856 |
18,386 |
|
|
Other assets |
(2,431) |
(410) |
|
|
Increase (decrease) in liabilities, net of acquisitions: |
|||
|
Accounts payable |
(28,502) |
(62,751) |
|
|
Other current liabilities |
8,317 |
12,241 |
|
|
Other liabilities |
1,417 |
1,310 |
|
|
Net cash provided by operating activities |
132,751 |
140,106 |
|
|
Cash flows from investing activities: |
|||
|
Capital expenditures |
(52,318) |
(41,480) |
|
|
Business acquisition, net of cash acquired |
(143,643) |
— |
|
|
Proceeds from sale of investment |
1,791 |
— |
|
|
Proceeds from property insurance settlement |
3,537 |
— |
|
|
Proceeds from sale of fixed assets |
1,603 |
1,795 |
|
|
Net cash used for investing activities |
(189,030) |
(39,685) |
|
|
Cash flows from financing activities: |
|||
|
Proceeds from borrowings |
159,614 |
6,628 |
|
|
Repayments of debt |
(66,601) |
(25,017) |
|
|
Payment of debt issuance costs |
(3,115) |
— |
|
|
Repurchase of common stock |
(16,106) |
(19,064) |
|
|
Other financing activities |
(738) |
(2,540) |
|
|
Net cash provided by (used for) financing activities |
73,054 |
(39,993) |
|
|
Effect of exchange rate changes on cash |
(9,733) |
(8,103) |
|
|
Net increase in cash and cash equivalents |
7,042 |
52,325 |
|
|
Cash and cash equivalents, beginning of period |
220,251 |
159,577 |
|
|
Cash and cash equivalents, end of period |
$ 227,293 |
$ 211,902 |
|
|
Supplemental information: |
|||
|
Interest paid |
$ 20,500 |
$ 15,971 |
|
|
Income taxes paid, net of refunds received |
$ 16,422 |
$ 17,581 |
|
|
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 the United States (GAAP). These supplemental schedules provide a quantitative reconciliation between each of adjusted gross profit, adjusted net income attributable to Titan, EBITDA, adjusted EBITDA, net sales on a constant currency basis, net debt, and net cash provided by operating activities to free cash flow, each of which is a non-GAAP financial measure and the most directly comparable financial measures calculated and reported in accordance with GAAP.
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 nine-month periods ended September 30, 2024 and 2023 (in thousands, except percentages).
|
Three months ended |
Three months ended |
|||||
|
September 30, 2024 |
September 30, 2023 |
|||||
|
Agricultural |
Earthmoving/ |
Consumer |
Total |
Total |
||
|
Gross profit, as reported |
$ 16,720 |
$ 11,653 |
$ 30,432 |
$ 58,805 |
$ 66,073 |
|
|
Gross Margin |
9.5 % |
8.5 % |
22.3 % |
13.1 % |
16.4 % |
|
|
Adjustments: |
||||||
|
Carlstar inventory fair value |
38 |
26 |
736 |
800 |
— |
|
|
Gross profit, as adjusted |
$ 16,758 |
$ 11,679 |
$ 31,168 |
$ 59,605 |
$ 66,073 |
|
|
Adjusted Gross Margin |
9.6 % |
8.6 % |
22.9 % |
13.3 % |
16.4 % |
|
|
Nine months ended |
Nine months ended |
|||||
|
September 30, 2024 |
September 30, 2023 |
|||||
|
Agricultural |
Earthmoving/ |
Consumer |
Total |
Total |
||
|
Gross profit, as reported |
$ 89,642 |
$ 55,929 |
$ 71,046 |
$ 216,617 |
$ 247,525 |
|
|
Gross Margin |
14.2 % |
12.0 % |
19.5 % |
14.8 % |
17.3 % |
|
|
Adjustments: |
||||||
|
Carlstar inventory fair value |
1,809 |
318 |
9,373 |
11,500 |
— |
|
|
Gross profit, as adjusted |
$ 91,451 |
$ 56,247 |
$ 80,419 |
$ 228,117 |
$ 247,525 |
|
|
Adjusted Gross Margin |
14.5 % |
12.0 % |
22.1 % |
15.6 % |
17.3 % |
|
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 nine-month periods ended September 30, 2024 and 2023 (in thousands, except earnings per share).
|
Three months ended |
Nine months ended |
||||||
|
September 30, |
September 30, |
||||||
|
2024 |
2023 |
2024 |
2023 |
||||
|
Net (loss) income attributable to Titan and applicable to |
$ (18,249) |
$ 19,280 |
$ (6,899) |
$ 81,325 |
|||
|
Adjustments: |
|||||||
|
Foreign exchange loss (gain) |
2,525 |
(876) |
2,338 |
882 |
|||
|
Carlstar transaction costs |
— |
— |
6,196 |
— |
|||
|
Carlstar inventory fair value step-up |
800 |
— |
11,500 |
— |
|||
|
Loss on sale of investment |
1,032 |
— |
1,032 |
— |
|||
|
Gain on property insurance settlement |
— |
— |
(1,913) |
— |
|||
|
Income on Brazilian indirect tax credits, net |
— |
— |
— |
(3,096) |
|||
|
Adjusted net (loss) income attributable to Titan and |
$ (13,892) |
$ 18,404 |
$ 12,254 |
$ 79,111 |
|||
|
Adjusted (loss) earnings per common share: |
|||||||
|
Basic |
$ (0.19) |
$ 0.29 |
$ 0.18 |
$ 1.26 |
|||
|
Diluted |
$ (0.19) |
$ 0.29 |
$ 0.17 |
$ 1.25 |
|||
|
Average common shares and equivalents outstanding: |
|||||||
|
Basic |
72,013 |
62,598 |
69,900 |
62,810 |
|||
|
Diluted |
72,404 |
63,095 |
70,358 |
63,271 |
|||
The table below provides a reconciliation of net income to EBITDA and adjusted EBITDA, which are non-GAAP financial measures, for the three and nine-month periods ended September 30, 2024 and 2023 (in thousands).
|
Three months ended |
Nine months ended |
||||||
|
September 30, |
September 30, |
||||||
|
2024 |
2023 |
2024 |
2023 |
||||
|
Net (loss) income |
$ (18,199) |
$ 19,663 |
$ (4,803) |
$ 84,988 |
|||
|
Adjustments: |
|||||||
|
Provision for income taxes |
12,915 |
4,718 |
38,103 |
28,363 |
|||
|
Interest expense, excluding financing fees amortization |
8,786 |
7,009 |
26,446 |
21,789 |
|||
|
Depreciation and amortization |
12,636 |
10,033 |
40,059 |
31,598 |
|||
|
EBITDA |
$ 16,138 |
$ 41,423 |
$ 99,805 |
$ 166,738 |
|||
|
Adjustments: |
|||||||
|
Foreign exchange loss (gain) |
2,525 |
(876) |
2,338 |
882 |
|||
|
Carlstar transaction costs |
— |
— |
6,196 |
— |
|||
|
Carlstar inventory fair value step-up |
800 |
— |
11,500 |
— |
|||
|
Loss on sale of investment |
1,032 |
— |
1,032 |
— |
|||
|
Gain on property insurance settlement |
— |
— |
(1,913) |
— |
|||
|
Income on Brazilian indirect tax credits |
— |
— |
— |
(475) |
|||
|
Adjusted EBITDA |
$ 20,495 |
$ 40,547 |
$ 118,958 |
$ 167,145 |
|||
The table below sets forth, for the three and nine-month periods ended September 30, 2024, the impact to net sales of currency translation (constant currency) by geography (in thousands, except percentages):
|
Three months ended September 30, |
Change due to currency |
Three months ended |
|||||||||
|
2024 |
2023 |
% Change |
$ |
% |
Constant Currency |
||||||
|
United States |
$ 250,567 |
$ 173,300 |
44.6 % |
$ — |
— % |
$ 250,567 |
|||||
|
Europe / CIS |
97,053 |
119,749 |
(19.0) % |
2,121 |
1.8 % |
94,932 |
|||||
|
Latin America |
76,023 |
89,258 |
(14.8) % |
(14,014) |
(15.7) % |
90,037 |
|||||
|
Other International |
24,342 |
19,474 |
25.0 % |
(1,437) |
(7.4) % |
25,779 |
|||||
|
$ 447,985 |
$ 401,781 |
11.5 % |
$ (13,330) |
(3.3) % |
$ 461,315 |
||||||
|
Nine months ended September 30, |
Change due to currency |
Nine months ended |
|||||||||
|
2024 |
2023 |
% Change |
$ |
% |
Constant Currency |
||||||
|
United States |
$ 813,767 |
$ 654,324 |
24.4 % |
$ — |
— % |
$ 813,767 |
|||||
|
Europe / CIS |
352,731 |
424,412 |
(16.9) % |
(5,219) |
(1.2) % |
357,950 |
|||||
|
Latin America |
225,529 |
283,132 |
(20.3) % |
(26,202) |
(9.3) % |
251,731 |
|||||
|
Other International |
70,337 |
69,733 |
0.9 % |
(12,550) |
(18.0) % |
82,887 |
|||||
|
$ 1,462,364 |
$ 1,431,601 |
2.1 % |
$ (43,971) |
(3.1) % |
$ 1,506,335 |
||||||
The table below provides a reconciliation of net debt, which is a non-GAAP financial measure (in thousands):
|
September 30, |
December 31, |
September 30, |
|||
|
Long-term debt |
$ 503,429 |
$ 409,178 |
$ 409,747 |
||
|
Short-term debt |
15,025 |
16,913 |
17,556 |
||
|
Total debt |
$ 518,454 |
$ 426,091 |
$ 427,303 |
||
|
Cash and cash equivalents |
227,293 |
220,251 |
211,902 |
||
|
Net debt |
$ 291,161 |
$ 205,840 |
$ 215,401 |
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 |
Nine months ended |
||||||
|
September 30, |
September 30, |
||||||
|
2024 |
2023 |
2024 |
2023 |
||||
|
Net cash provided by operating activities |
$ 59,905 |
$ 51,216 |
$ 132,751 |
$ 140,106 |
|||
|
Capital expenditures |
(18,119) |
(13,913) |
(52,318) |
(41,480) |
|||
|
Free cash flow |
$ 41,786 |
$ 37,303 |
$ 80,433 |
$ 98,626 |
|||
SOURCE Titan International, Inc.
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