WEST CHICAGO, Ill. — Titan International Inc. suffered double-digit drops in operating income and sales revenue for the quarter and nine months ended Sept. 30
Income from operations fell 46.6% in the quarter to $27 million and 22.4% for the January-September period to $128 million, while revenue dropped 24.3% in the quarter to $401.8 million and 13.7% for the nine months to $1.43 billion.
Titan blamed the revenue drops on lower sales volumes caused by elevated inventory levels at customers in the Americas, particularly OEM customers, lower levels of end customer demand in small agricultural equipment, and economic softness in Brazil.
The company cited the lower sales volume for the drops in earnings as well.
Despite the lackluster financial numbers, Titan President and CEO Paul Reitz was upbeat for the fiscal year and beyond, saying: "We are positioned well to finish the year with good momentum and financial results that will rank as one of the best years in Titan's history.
"The operating and strategic plans we have put into action over recent years are accomplishing exactly what they were designed to do: mute the cyclicality of certain aspects of our business and drive performance when market conditions are volatile," he said.
Reitz noted that Titan's sales were impacted by a "significant overstocking" of tires and wheels by the makers of agricultural equipment, but that management expects destocking to be "substantially complete" by year-end, which should help drive "solid financial performance" for the remainder of fiscal 2023 and in the coming year.
Reitz described the mid- and long-term demand outlook for Titan's products "remains healthy in our end markets. Coupled with a balance sheet that allows us the flexibility to invest in our business — both organically and through tactical M&A, should the right opportunity arise — we are highly confident in Titan's long-term prospects."
Sales in the agricultural segment —Titan's largest at 55% of overall revenue — fell 27.3% in the quarter to $213.0 million, a drop Titan attributed to actions taken by customers in North and South America to reduce elevated inventory levels, most notably OEM customers, and overall softness in demand for small agricultural equipment.
Business in the earthmoving/construction segment fell 25.1% in the quarter to $155.0 million on decreased volume in the Americas and the undercarriage business caused by elevated customer inventory levels and a slowdown with certain global construction OEM customers.
Titan is maintaining its previously communicated outlook for fiscal 2023 of revenues in the range $1.85 billion to $1.9 billion, down from $2.1 billion in 2022, and an adjusted pre-tax operating income of $200 million to $210 million, down from $253 million in 2022.