Titan International Inc. posted net sales of $401.8 million for the third quarter of 2023 versus $530.7 million during the third quarter of 2022.
The company’s operating income during 3Q 2023 totaled $27 million, down from $50.5 million during the same period last year.
According to Titan officials, the net sales change “was primarily due to sales volume decrease caused by elevated inventory levels at our customers in the Americas, particularly OEM customers; lower levels of end customer demand in small agricultural equipment; and economic softness in Brazil.
“The net sales change was also impacted by negative price/mix from lower raw material costs and unfavorable currency translation of 1.1%.”
Ag sales
In the agricultural segment, Titan’s net sales totaled $213 million during the third quarter of 2023 versus $289.3 million during the same period in 2022.
Titan’s gross profit in the agricultural segment was $37 million, “as compared to $45.9 million in the comparable period in 2022. The change in gross profit was due to lower sales volume, which also resulted in lower fixed cost leverage.”
OTR tire sales
Titan’s net sales in the earthmoving/construction tire segment were $155 million versus $199.9 million in the comparable period in 2022.
“The change in earthmoving/construction sales was primarily due to decreased volume in the Americas and the undercarriage business which were caused by elevated customer inventory levels and a slowdown with certain global construction OEM customers. In addition, the net sales change was impacted by negative price/product mix from decreased raw material and other input costs. Net sales were favorably impacted by foreign currency translation of 2.5%.”
Titan’s gross profit in the earthmoving/construction tire segment was $22.3 million versus $35 million during the same period in 2022. “The changes in gross profit and margin were primarily due to the lower sales volume, which also resulted in lower fixed cost leverage, primarily in the Americas,” say Titan officials.
Looking ahead
Titan officials say the company “is maintaining its previously communicated outlook” for full-year 2023.
Revenues are expected to range between $1.85 billion to $1.9 billion; with adjusted EBITDA of $200 million to $210 million. Free cash flow is projected to range between $110 million to $120 million. Capital expenditures are expected to range between $55 million and $60 million.
According to David Martin, Titan’s chief financial officer, “our third quarter results have us on track for one of the best years in the history of the company. In particular, our margins continue to be a bright spot, helping drive solid profitability and sustainable free cash flow generation.
“That strong free cash flow has allowed us to continue fortifying our balance sheet, while also returning capital to shareholders via our share repurchase program. During the third quarter, we generated $37 million of free cash flow, which allowed us to pay down $4 million of debt.”
CEO comments
"We are positioned well to finish the year with good momentum and financial results that will rank as one of the best years in Titan's history,” says Titan President and CEO Paul Reitz. “The operating and strategic plans we have put into action over recent years are accomplishing exactly what they were designed to do: mute the cyclicality of certain aspects of our business and drive performance when market conditions are volatile.
“It's well-known that OEMs in the ag sector significantly overstocked on wheels and tires and I am especially satisfied in our ability to work through the industry destocking, which we expect will be substantially complete by year-end - based on where customer order books currently stand - to drive solid financial performance.
“We are confident in our ability to finish 2023 with momentum to set the stage for continuing healthy financial results into the future. The mid and long-term demand picture for our products remains healthy in our end markets. Coupled with a balance sheet that allows us the flexibility to invest in our business, both organically and through tactical M&A, should the right opportunity arise, we are highly confident in Titan's long-term prospects."
