WEST CHICAGO, Ill. — Titan International Inc. suffered double-digit drops in earnings and sales for the fiscal year ended Dec. 31, reflecting the off-highway sector's destocking of surplus inventories built up during the supply-chain crisis of 2022-23.
Dragged down in part by a 49.4% drop in income from operations in the fourth quarter, Titan's fiscal-year operating income fell 27.7% to $148.7 million on 16% lower sales of $1.82 billion. That dropped the earnings ratio three points to 8.2%.
Despite the earnings and sales drops and the shifting market dynamics and their impact on sales, Titan President and CEO Paul Reitz was upbeat about his firm's results and outlook, especially in light of Titan's acquisition of Carlstar Group that was disclosed alongside the financial results.
"Our ability to deliver quality bottom-line and cash-flow results in the face of a robust destocking headwind is a significant achievement," Reitz said, "and I want to thank our entire Titan team for their hard work in making that happen.
"One of our primary long-term objectives has been to structure Titan to deliver consistent, strong, bottom-line results, while serving our customers throughout various market cycles," Reitz said, noting that 2022 was an excellent year for top-line sales as agricultural equipment dealers ramped up inventory.
"While Titan certainly enjoyed that environment," he continued, "as we moved into 2023 it also became clear that the aggressive inventory build in 2022 resulted in reduced demand in 2023 as OEMs worked down excess inventory."
In the fourth quarter, income from operations fell 49.4% to $20.7 million on 23.4% lower sales of $390.2 million, yielding an earnings ratio of 5.3%
Titan said the sales drop was felt across all operating segments and was driven primarily by volume decreases linked to elevated inventory levels at customers in the Americas, lower levels of end-customer demand in small agricultural equipment, and economic softness in Brazil.
By segment, Titan reported annual results of:
- Agricultural — Gross profit drop of 15.8% to $193.5 million on 17.8% lower sales revenue of $1.19 billion;
- Earthmoving/construction — Gross profit decline of 18.5% to $135.8 million on 14.8% lower revenue of $807.5 million; and
- Consumer — 2.5% increase in gross profit to $31.3 million on 9.6% lower sales of$169.8 million.
Net debt was trimmed by 28% to $205.8 at year-end due to an increase of $6.07 million in cash on hand and a decrease of short and long-term debt of $19.5 million.
Capital expenditures were up 29.4% to $60.8 million as Titan seeks to enhance its existing facilities and manufacturing capabilities and drive plant efficiency and labor productivity gains.
