QUINCY, Ill.—Titan International Inc. bounced back into the black on an operating and net earnings scale in fiscal 2018 on 9.1-percent higher sales.
The fiscal 2018 earnings and sales gains prompted Titan President and CEO Paul Reitz to say management believes Titan is positioned for improved gross earnings margin growth (to about 12.8 to 13.2 percent of sales) and continued sales growth of 6 to 7.5 percent.
Operating income for the year improved to $42.2 million, Titan said, versus an operating loss of $11.2 million a year ago. Sales were up to $1.6 billion. Net income was $16.1 million, versus a net loss of $60 million in fiscal 2017.
Titan attributed the increase in gross profit to increased sales volume and production efficiencies, partially offset by higher material costs.
"We have said it before, but it's worth repeating," Reitz said, "the operational improvements and strategic investments in our existing business during this period and prior, are reflected in these improved financial results."
Reitz went on to say Titan achieved its turnaround amid an "often volatile operating environment" that included the "much-discussed" tariffs standoff, steel prices that reached the highest level in more than a decade and sluggish commodity prices impacting farmers.
Titan pointed in particular to its earthmoving/construction segment, particularly the Italtractor ITM S.p.A. undercarriage business, for its performance throughout 2018, with revenue growth of 22 percent and strong growth in margins.
At the same time, however, Titan affirmed reports that it is evaluating "strategic alternatives" regarding its Italtractor subsidiary, including a possible sale or separate public offering of the business that designs and makes steel track and undercarriages for the construction, mining and agricultural markets.
The Bologna, Italy-based business operates three production plants in that country, according to its website.
As for the 2018 results, Titan was disappointed it didn't achieve positive cash flow despite the strong earnings growth, according to David Martin, senior vice president and chief financial officer.
"Earnings must be translated into cash flow in the business to continue to invest for profitable growth," he said, "and what we experienced in 2018 in working capital increases will not be the expectation moving forward."
For fiscal 2019, Titan is focusing on strategies to manage working capital in a stronger way, Martin said, especially in a number of areas of the business that should yield improved cash flow.
In 2018, Titan's earthmoving/construction segment reported 21.8 percent higher sales of $741.7 million, while the agricultural segment's sales were up just 0.6 percent to $694.3 million and consumer-relates sales fell nearly 2 percent to $166.4 million.