Titan 3Q Sales 52 per cent Higher, Profits Hit By Taxes
Titan achieved a 52 per cent increase in net sales in third quarter 2006. Net sales were $156.1 million, compared to $102.7 million the year before. Titan recorded gross profit of $17.1 million, a 56 per cent increase when compared to the $11 million of gross profit in third quarter 2005. However, a 40 per cent tax rate in 2006 meant Titan recorded third quarter net income of $0.5 million, compared to last year’s third quarter net income of $1.2 million. Using a 40 per cent tax rate on last year’s pre-tax income, Titan’s third quarter 2005 net income would have been $0.2 million.
Titan’s quarterly results also included useful information about the company’s recent acquisitions of CTNA’s Bryan tyre factory. On 31 July 2006, Titan Tire Corporation of Bryan, a subsidiary of Titan International, Inc., acquired the off-the-road (OTR) tyre assets of Continental Tire North America, Inc. (Continental) in Bryan, Ohio. Titan purchased the assets of Continental’s OTR tyre facility for approximately $53 million in cash proceeds. The purchase brakes down as: property and equipment located in Bryan, Ohio, for approximately $41 million, inventory for approximately $11 million and other current assets for approximately $1 million.
This acquisition expanded Titan’s product offering into larger earthmoving, construction and mining tyres, in addition to the added manufacturing capacity of the Bryan, Ohio, facility.
“In review of the third quarter, we are pleased to see how the Bryan OTR acquisition has offset the drop in farm revenue as discussed last quarter,” stated Titan Chairman and CEO Maurice Taylor Jr. “Operational profit will grow as the integration of Freeport and Bryan continue. It is our belief that we can increase our OTR production greater than the planned $150 million in sales, due to the fact that our Freeport facility can produce a number of bias OTR tyres that were in short supply at Bryan.
“Since corn futures for December 2006 have gone above $3 per bushel, we believe the large farm equipment market will be better in 2007 than in 2006. With a farm market holding in 2007 and an increase in output of OTR tyres, we are excited about next year.”