After six years of tough financial times brought on by an unforgiving economy and bitter labor disputes, Titan International Inc. has reached its goals of profitability and a rising stock price.
The Quincy-based tire and wheel maker reported net profits of $5.3 million, or 25 cents per share, in the first quarter, and posted its highest quarterly operating income since 1998, the company announced April 29.
On May 5, Titan's common stock price hit a peak of $8.85 per share, its highest level since Oct. 20, 1999. The stock closed May 6 at $8.75.
The stock hasn't been in double digits since Oct. 6, 1999.
Titan's first-quarter earnings figure compare with a net loss of $5.9 million posted in the like period of 2003. The firm's operating income reached $11.8 million, up from a $1.7 million loss last year, and the most reported by Titan since the second quarter of 1998.
The company had net sales of $167 million for the quarter, a 29.4-percent surge over the 2003 period. Titan hasn't reported an annual profit since 2000, when it posted net earnings of $4.5 million.
Beginning in the second quarter, the operating results of Titan Europe P.L.C. won't be consolidated with those of Titan International. Titan Europe-still 30-percent owned by Titan International-was admitted to trading as a separate public company on London's AIM market on April 7.
The Titan Europe sale brought Titan International about $61.8 million, the company said. Titan used $26.4 million of the funds to pay down senior bank debt and $15 million to repurchase about 4.9 million shares of its stock owned by Citicorp Venture Capital Ltd.
Manufacturing efficiencies resulting from facility consolidations in 2003, the strengthening of the agricultural and light construction markets, and the weak U.S. dollar compared with currencies in the United Kingdom, Europe and Japan contributed to the improved financial performance, Titan said.
"We expect demand to continue near this level through the second quarter, followed by third- and fourth-quarter sales much stronger than is seasonally customary in the agricultural, construction and consumer markets," said Maurice Taylor Jr., Titan CEO and president. "The efficiencies implemented by Titan during the past few years have better positioned the company to maximize returns from operations in the future."
Titan is doing all its in-house production at its Des Moines, Iowa, facility. It permanently closed its Natchez, Miss., site and its Brownsville, Texas, plant was mothballed in May 2003.
Despite the favorable economic conditions and successful consolidations, Taylor gave the bulk of the credit for Titan's first-quarter resurgence to the company's salaried and hourly employees.
"We've been in the sewer a long time, but we popped out of it in big fashion," he said. "No question it's due to the effort of the people here. We have a super working force."
Taylor's attitude has changed since 1998, when the unionized work forces in Des Moines and Natchez went on strike and stayed out for more than three years. The labor disputes, the early 2000s recession and horrible conditions in the agricultural and construction equipment markets hurt Titan, as the company posted losses of $30 million-plus in 2001-03.
But Taylor expects the farm and construction markets to strengthen through 2005, and the union work force in Des Moines is under contract into 2006. Titan's $240 million racketeering lawsuit against the United Steelworkers of America, which stems from alleged activities against the company during the strikes, is still pending, with a 2005 court date looming.
Titan's stock has made a solid turnaround in the past year as well. Last March, the New York Stock Exchange notified the company it had six months to stabilize its common stock price because it had fallen below $1 per share.
The price climbed slowly and reached the $1-per-share level for good on June 10, 2003. After the cure period ended in September, the stock continued to grow, reaching $3 in December and $5 in February. The price jumped in April, rising from the mid-$5 range into the high $6 range, then gaining more than $1 in one day to $7.95 per share on April 29, the date of the first-quarter earnings announcement.