It’s all good: Titan reports a record start to 2012
Titan International is very pleased with its first quarter 2012 results. The company recorded sales of US$463.1 million for the three-month period, compared to first quarter 2011 sales of $280.8 million; these higher sales levels are attributed to the April 2011 acquisition of Goodyear’s Latin American agricultural tyre business, which recorded sales of $90.3 million for the first quarter 2012 and continued to benefit from strong demand in the agriculture and earthmoving/construction segment, combined with price/mix improvements.
Gross profit came to $93.4 million, or 20.2 per cent of Titan International’s net sales in the first quarter. This compares with $56.3 million or 20.0 per cent of net sales for the first quarter of 2011. Gross profit excluding the Latin American business was $84.9 million or 22.8 per cent of net sales for the first quarter 2012. The increase in gross margin was due to an increase in sales as well as gains from improved plant utilisations. Income from operations during the quarter was $58.7 million, or 12.7 per cent of net sales, compared to $26.9 million, or 9.6 per cent of net sales, in 2011. Adjusted net income for the first quarter ended March 31, 2012 was $40.5 million, compared to $18.7 million in 2011.
“The first quarter 2012 was another record quarter in sales, net profit, EBITDA, etc.,” commented Titan chairman and CEO Maurice “the grizz” Taylor. “The order book is filled for the year and we must keep increasing our output. Farming, construction and earthmoving and mining are all very strong and we expect 2012 to be another year of growth. The dynamics in agriculture are changing around the world and are positively impacting the demand for machinery in the industry. Prices for metals, oil and gas prices in the Earthmoving and Mining markets are expected to remain at attractive levels to support strong demand.”
“In this past quarter there were some bloggers who were concerned over inventory and the auto supply industry,” Taylor continued. “Titan International is not in the auto supply business, but we are in the OTR tyre and wheel business. Titan builds to order. We do not estimate or forecast future business. If the orders were cancelled, we would have extra raw materials, but most raw materials would be processed in 30 days.
“Titan’s mining service business is a hot market,” the chairman and CEO added. “We have just opened a facility in the oil sands in Canada and already are receiving the demand to double the facility. Our partner in the oils sands is Saskatoon Wholesale Tire and they have never seen anything like this. In order to meet demand, all of Titan’s factories will be hiring and expanding operations. Titan has also ventured in to some new areas with the Union City, Tennessee factory. This large facility used to produce 48,000 passenger car tyres per day. Since Titan doesn’t produce auto or truck tyres, we will be contracting to various firms where we will supply the equipment and they will operate the business of mixing, calendaring and fabricating. Titan will still operate warehousing, equipment repair and new material inventory received. There is no question, with 2.2 million square feet under roof, we have plenty of room to expand or lease the space at this facility. To better visualize the size of this building, translate 2.2 million square feet into approximately 53 acres under roof.
“As we enter a new year, Steve Briggs took over as president of our North American tyre plants. We also have David Salen, president of the wheel group; Paul Reitz, CFO Titan International; and Mike Troyanovich, assistant general counsel. The above team will be running this company’s operations in the future. The senior team (myself included) will be focusing on the new opportunities we believe will grow this business. As I’ve outlined before, our vision is to be between a run rate of $3 to $4 billion in revenue by the end of 2013,” concluded Taylor.