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August 28, 2006 02:00 AM

Titan hot for more expansion in '07

Brad Dawson
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    Tire and wheel maker Titan International Inc., fresh off its acquisition of Continental Tire North America Inc.'s off-the-road tire facility, will expand its business even further in the next year.

    Titan plans to reorganize and integrate its subsidiary operations during the next 18 months. The Quincy-based firm will make changes at its Freeport, Ill., and Bryan, Ohio, facilities to gain maximum efficiency, the company said, without disclosing investment data.

    Titan acquired the Freeport farm tire plant from Goodyear in December and closed July 31 on the former Conti OTR factory in Bryan.

    Titan's farm tire facilities in Des Moines, Iowa, and Freeport will gain sales volume via the addition of the Bryan facility as the company expands its new OTR mining tire business, the firm said.

    The company plans, for example, to sell General-brand large mining tires paired with Titan-brand wheels and will ``mix up'' its production so tires are made most efficiently, according to Maurice ``Morry'' Taylor Jr., Titan chairman and CEO. General and Continental brands for OTR tires, licensed to Titan via an agreement with Continental Tire, could be manufactured in Freeport or Des Moines, he said.

    Titan also has excess capacity and has the capability to increase its output of OTR tires by at least 30 percent if necessary over the next 12 months, the company said. Inventory made up about $11.5 million of Titan's $53 million purchase price for the Bryan operation.

    The firm's estimated annual sales for the Freeport and Bryan facilities-$215 million and $125 million, respectively-will add a combined $340 million in yearly revenue to Titan, Mr. Taylor said. His objectives for 2006 include $720 million to $735 million in sales-tire- and wheel-related sales combined-and earnings before interest, taxes, depreciation and amortization of $75 million to $80 million.

    For 2007, the goals increase to $800 million to $825 million and an EBITDA range of $110 million to $115 million.

    Titan posted corporate sales of $470.1 million and net earnings of $11 million in 2005. For the first six months of 2006, the firm reported net sales of $357.8 million and net profits of $14.2 million.

    Though sales in Titan's agricultural segment rose substantially in the first half of 2006-thanks in part to the Goodyear deal-Mr. Taylor said the market has been down. But large farm tractor demand is expected to pick up again in 2007 based on the season's corn harvest not meeting the demand of new ethanol factories, he said.

    The company, which now operates three unionized tire facilities in the U.S., is expecting end users that previously relied on cheaper imported tires will realize the ``relationship of quality and cost.''

    ``Once original equipment manufacturers understand that they lose market share with no-name brand tires on their equipment, Titan will continue to pick up business,'' Mr. Taylor said. He added that the firm offers the largest dealer network in its markets in North America, with a combination of Titan, Goodyear, Continental and General name brands.

    Mr. Taylor also said at the time of the Conti deal that the company plans on adding equipment in the next year at its tire sites. The company's capital spending hasn't reached its budgeted ceiling yet, and it plans to place orders for about $8 million in new machinery for 2007 delivery.

    The firm plans on moving $10 million to $12 million in assets from idled facilities to the three tire factories and is pushing for the disposal of any remaining idled property.

    Titan owns two closed tire factories-one in Natchez, Miss., and one in Brownsville, Texas. Titan mothballed the Natchez facility in 2001 and shut it down permanently in 2004. There is a good chance the city of Natchez will take the factory off the company's hands, Mr. Taylor said.

    Titan has been handling offers for the Brownsville plant since it stopped production in 2003. In March 2004, Mr. Taylor said manufacturing operations could reopen as part of a joint venture with another tire maker, but no agreement was reached.

    Mr. Taylor said he's been waiting for the Freeport and Bryan acquisitions to go through before making any final decisions on the idled sites, but the company now will work to divest them.

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