CHICAGO — Titan International Inc.'s pre-tax operating income jumped nearly 75% in the quarter ended Sept. 30, a performance company management attributed to increased sales and improvements in gross-profit margins.
Adjusted EBITDA rose 74.3% to $61 million on 17.8% higher sales of $530.7 million, yielding an operating ratio of 11.5%, up four points from a year ago. Net earnings quadrupled to $42.7 million.
The positive results prompted management to project Titan will report record sales and earnings for the full fiscal year and perhaps beyond, according to Paul Reitz, president and CEO, who added: "We continue to believe the key elements are in place to drive continued positive momentum for the business."
In addition, management noted that Titan is on track to achieve its highest free cash flow in the company's history.
Reitz said all of Titan's businesses — agricultural, earthmoving and consumer — registered double-digit growth and solid earnings in a business climate he described as "swimming with noise."
In the ag sector, Titan's largest, Reitz noted that that farmers are in a good financial position and recent U.S. Department of Agricultural reports indicated that corn and soybean supply-demand will support good pricing into 2024, at a minimum.
"Farmers look at crop prices as one of the key indicators for purchasing new equipment," he said, adding that pent-up demand from supply chain and labor disruptions at OEMs and continuing low levels of available used equipment bode well for 2023 large ag equipment demand.
Business in the ag business unit jumped 18% and 34% in the quarter and nine-month period, respectively, to $289.3 million and $917.4 million. The operating profit margin improved to 16% and 17%, respectively.
In the earthmoving/construction sector, sales rose 19% in the quarter to $199.9 million and 20$ for the first nine months to $611.6 million, Titan said, with a 17% profit margin in both periods.
Reitz added that Titan generated $40 million in free cash in the quarter, allowing it to cut its debt by $35 million, thereby reducing the net debt leverage to 1.4 times adjusted EBITDA.
"Our strong financial performance over the past couple of years when combined with the improvements to our balance sheet and solid free cash flow generation, has meant that Titan has created tremendous shareholder value," he said.
For the nine months ended Sept. 30, Titan reported a five-fold-plus improvement in the income from operations, to $175.3 million, 28.4% higher sales of $1.66 billion. The net result increased more than six-fold t $136.2 million.
