QUINCY, Ill.—Titan International Inc. suffered double-digit drops in sales and earnings for the quarter that ended March 31, but Chairman and CEO Maurice Taylor expects to see improvements as the year progresses based on the anticipated success of new products Titan is rolling out.
Titan's gross profit fell 21.6 percent to $42.8 million as a cyclical downturn in demand for higher horsepower agricultural equipment led to lower sales of high-margin tires for this sector. Sales fell 25.4 percent to $402.1 million, although Titan attributed half of the decline to the negative effects of currency translation swings with the euro, Russian rouble and Australian dollar.
Income from operations for the first quarter was more than double that of a year ago, $800,000 against $300,000. The net result was a loss of $1.06 million, an improvement over the loss of $5.13 million a year ago.
“The first quarter demonstrates that the initiatives undertaken by Titan last year were the appropriate actions and should pay dividends as we go forward,” Taylor said.
“North America large agriculture is down approximately 35 percent, and we believe it will remain that way for the balance of 2015. We also believe our market share will continue to grow as Titan's recently introduced products gain further momentum.”
Taylor said Titan's pretax EBITDA operating income of $27.6 million exceeded the firm's internal plan expectation.
Titan is extending its LSW (low sidewall) technology into tires for the construction and mining sectors, where Taylor anticipates market acceptance to match that in the agricultural field.
Titan also is expanding its Grizz Squad initiative—field sales teams tasked with promoting the benefits of the LSW (low-sidewall) product—he said, into South America, Europe and Russia. Besides the Grizz Squad expansion, Titan expects growth in its ATV and special markets as well with the run-flat tires produced under the Goodyear brand.
“We believe that construction market will also remain steady, and we expect to grow sales within our LSW tires and wheels,” Taylor said.
Titan said it expects its ITM business—undercarriages for earthmoving, construction, mining and agricultural machinery, tracks and braking systems—to start contributing a larger share of overall sales. The ITM business is headquartered in Italy but has production in China and Japan.
“The mining business has stabilized and our underground tire and wheel business is starting to expand. We expect our track and brake business produced by ITM will grow throughout 2015. ITM has made a strong effort to grow aftermarket replacement business within track components.”
Capital expenditures fell 32.1 percent in the quarter to $11.4 million.
“Titan has reduced its fixed cost structure and improved productivity at our manufacturing facilities to mitigate the negative impact of existing and future market downturns,” Taylor said.
“We will proactively monitor for changes in our business and adapt appropriately. The management team is focused on enhancing business performance and building our brand through meeting our customers' needs. Titan's LSW technology enhances both the productivity and performance of every tractor, combine, sprayer, loader and articulated dump truck.”