CHICAGO — Buoyed by its best quarterly financial performance since 2013 and what it perceives as favorable market conditions, Titan International Inc. has revised upward its earnings and sales forecast for fiscal 2022.
In the quarter ended March 31, Titan's 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.
In light of the positive report, Titan management raised the outlook for sales and earnings for the full fiscal year to $2.1 billion and $200 million, up 5% and 14%, respectively, over the forecast from early March.
To support management's positive outlook, Titan President and CEO Paul Reitz noted that aftermarket demand in the agricultural sector "remains very robust, reflecting the need for replacement in the midst of shortages of new equipment," and said Titan's order books in the earthmoving and construction sectors are "solid … and should continue to remain positive as infrastructure spending increases globally."
"We were able to pick up right where we left off in 2021 with another stellar quarter to begin the year," Reitz said. "All of our business units across all geographies came together to deliver our strongest sales quarter in nearly nine years."
In addition, Reitz noted that elevated commodity prices, record-low inventories of used farm equipment and "robust" demand for new equipment also play into the firm's optimism for the current year and beyond.
"Earlier this year, we commented on the positive market dynamics creating a tidal wave for Titan to navigate in 2022 and beyond," he said. "We continue to firmly believe this remains the case."
The revised outlook for 2022 reflects more normalized demand and production levels in the second half, Reitz said, that are in line with typical seasonality trends for Titan's business areas.
Based on the increased profitability and strength in the business, Titan projects it can deliver between $55 million and $65 million in free cash flow for the full year.
Overall, Titan cited an improved price/mix component and higher sales volumes for the rise in revenue, with pricing having a greater impact due to rising raw material costs and other inflationary impacts in the markets, including freight.
Higher demand during the period resulted from rising commodity prices, improved farmer income, replacement of an aging large equipment fleet, and lower equipment inventory levels. The revenue increase was offset by unfavorable foreign currency translation of 4.4%, or $17.7 million.
For the quarter by business area, Titan reported:
- Agricultural business sales rose 48.3% to $309.6 million and gross profit in the segment jumped 60.7% to $47.9 million.
- Earthmoving/construction business revenue was up 22.1% to $201.3 million and gross profit rose 59.4% to $31.4 million.
- Consumer segment sales jumped 50.8% to $45.1 million, with gross profit up 99.2% to $7.43 million.
Titan also reported that the sale of its Australian wheel business to Australian tire, wheel and service provider OTR Tyres closed March 31, resulting in a gain of about $17.5 million.
