Titan sets records as OTR demand remains strong

CHICAGO — Farmers didn't stop growing during the pandemic, neither did Titan International Inc. In the first quarter of 2022, Chicago-based Titan had its best quarterly performance since 2013, reporting pre-tax operating income (EBITDA) more than doubled to $56.9 million on 37.8% higher sales of $556 million.

Net income was $28.2 million, a sevenfold increase over the 2021 period.

Titan said the ag market continues to flourish, construction and earthmoving tire demand is "robust," and the mining sector is strong, according to Paul Hawkins, senior vice president, aftermarket sales, North America, Titan.

Tire Business ranks Titan the No. 27 largest tire company in the world, based on 2020 sales figures.

Titan looks to be having a very strong year. What would attribute to the success?

We've had a very strong year at Titan because of the consistent planning efforts of many of our teams and their ability to quickly adjust to market changes. We have done a great job gearing up for needed production and planning product supply across all our distribution channels. This has been in conjunction with long-term discussions with our customers to identify their needs. Our teams were able to increase production in our plants and help our sales teams sell more tires.

Overall, it has been a good year. We have seen significant increases year-over-year, which we attribute to having dependable production levels at our U.S.-based plants and working with our North American partners.

Did COVID-19 impact Titan?

COVID-19 has had little impact on demand for the last year. Farmers have continued their impressive efforts to keep the world moving, and Titan was deemed an essential manufacturer supporting the ag markets. These two things have provided us the opportunity to continue safely operating to meet the demand for our essential markets.

Throughout this time, the health and well-being of all our essential employees has remained a key focus for us. We have implemented temperature screenings in all our facilities and even held free vaccination clinics for our employees at various times throughout the pandemic. Overall, we've been able to operate safely and largely uninterrupted thanks to our hardworking essential employees. We have been and will continue to maintain increased production levels at our U.S.-based plants to meet the market demands and our customer needs.

What trends are you seeing in the ag sector?

We are seeing a heavier mix and strong demand for large rear ag tires in the ag sector. This is in part due to the success of our Low Sidewall Technology (LSW), Optitrac and AgraEDGE lines, which are really dominating our business. There is a sense of optimism from farmers as the world learns to live through the pandemic, and they're willing to make more significant input purchases, but new equipment availability has been a challenge, leading to more farmers upgrading their current equipment. This has created an amped up aftermarket demand for our tires.

How is demand in the construction and earthmoving tire market?

The demand in the construction and earthmoving tire market is robust. In fact, we're seeing a lot of strength in the mining market. Coal mining has really rebounded, and copper has also been strong due to electrification and increased activity around materials for battery power.

What are some of the pleasant surprises you are seeing in the industry?

Cash receipts in the ag economy were strong last year, and we expect it'll be strong again this year — which is good for all of us. When farmers do well, we do well. We appreciate all they do to keep the world moving as well as their appreciation for American-made products.

What sector offers the most growth potential?

As stated above, the radial rear ag market has been growing substantially and is showing the highest growth potential. One way we are addressing that is by looking at our mold and press capacity to increase production on those sizes.

Do you expect to roll out any additional products in 2022?

At Titan, we continue to focus on product development and innovation for our current product lines and new products to meet market demands. We continue to fill out our existing, most popular lines, such as the AgraEDGE and Optitorque, in the ag sector. We will also have some new technology to announce at the upcoming trade shows this summer.

We will also be expanding our OTR offering this year with tires specific to forestry, steel mill and port applications.

What technology will be a game-changer in the tire market?

We're preparing to debut an entirely new tire technology this summer that can create a universal solution for sprayer tire replacements. This technology can match the pressure of conventional, IF or VF tires — whatever meets the needs of the machine or customer. We will have more details to share in the coming weeks.

What are some ways Titan addresses sustainability?

Protecting the environment is a core value at Titan. As part of this commitment, Titan has Environmental Management Systems in place in many of our locations across the globe. These systems monitor and track energy consumption, waste management, pollution prevention, emissions control and overall environmental health throughout our footprint, which enables us to measure and continuously improve environmental performance.

Environmental and social gains can go beyond tire production as well. One example is our LSW tires, where the assembly features a smaller tire sidewall and larger wheel. LSW significantly reduces power hop, road lope and soil compaction, which improves safety and equipment performance.

LSW tires allow for the tractor to carry the same weight at 40% lower inflation pressures than a standard tire, significantly reducing soil compaction, which can potentially result in greater crop yields.

When there is less soil compaction, the end-user farmers become better stewards of the land because they can implement lessened deep tillage during field preparations which also reduces fuel and energy use.

In 2021, we released our AgraEDGE tire line, which reduced tire weight by 7% compared with previous models. This full-line tire offering was released to replace older dated tire lines, with Titan expecting to reduce materials used by 1.1 million pounds annually. The success has prompted additional product evaluation in other tire lines.

What is driving recent price increases in the tire industry?

The volatility of the supply chain and continued logistics challenges directly impacts costs which result in the need for price increases across the industry. However, we are seeing some raw materials and shipping costs starting to stabilize. We don't know of anything right now that would drive additional price increases, but we are always monitoring these closely.

What will be your major investments in the near future?

At Titan, we want to retain and attract the best people. We have new initiatives for hiring and retaining skilled labor to keep our lines moving. We're also looking at increasing mold and press capacity as well as working creatively to remove any production bottlenecks in our processes. Our teams are investing in continuous and innovative improvements in our production facilities. In terms of getting tires to customers, we are committed to working closely with OEMs and priority dealers to ensure the supply to them is strong.

Biggest challenges you foresee?

There are growing fears of a global food crisis, so we are continuing to do our part in supporting the ag industry. As the only farm tire and wheel company headquartered in the U.S., we support our farmers and look to produce American-made products made by thousands of employees right here in the U.S.

By focusing on production as well as retaining and hiring skilled labor, we can continue to support increased food production in the U.S.