QUINCY, Ill.—Titan International Inc. reported lower operating and net income for the quarter ended March 31 despite 24.9-percent higher sales.
The company also disclosed it has reached a preliminary insurance settlement to cover damages that a plant in Italy suffered from an earthquake.
Titan attributed the lower earnings to higher selling, general and administrative costs, which reflected costs associated with the acquisitions last year of Titan Europe P.L.C. and Planet Group.
Income from operations fell 18.4 percent to $47.9 million, while net earnings were off 42.5 percent to $23.3 million. Sales rose to $578.4 million.
Titan attributed the bulk of its growth to sales from recent acquisitions, including $148.7 million at Titan Europe, as well as increased demand in the company's agricultural segment. Sales volume was consistent with the prior year.
Maurice Taylor Jr., Titan chairman and CEO, said that despite the higher costs, the percentage these SG&A costs represent of Titan's sales was 7 percent, or well within Titan's targeted range.
In addition, he said the firm's gross margin improved over the fourth quarter—a trend Titan expects to continue—Titan Europe is on track with its first quarter budgeted revenue numbers, and material costs have stabilized.
Taylor also said costs increased due to new labor contracts signed during the quarter with United Steelworkers union locals at its three U.S. plants, but that the company expects productivity increases to offset these costs.
Titan also announced it has reached a preliminary agreement, still subject to final approval, with its insurance companies in Europe to settle a claim for approximately $45 million net of deductible and other fees to cover damages Titan Europe's wheel plant in Finale Emilia, Italy, suffered during an earthquake in May 2012.
That plant was closed during initial remedial work, Titan said, which resulted in the limited transfer of production to other facilities within Titan Europe as well as sourcing product from facilities in the U.S. owned by Titan and competitors.
Titan said it expects the full restoration of the facility to continue through 2014.