QUINCY, Ill. — Titan International Inc. posted operating and net losses for the quarter and six months ended June 30, as sales dropped 26.7% during the quarter and 21.6% for the six months.
This marks the fifth quarter in a row that Titan has posted operating and net losses, and management is bracing for more challenges entering the third quarter, which "typically experiences" slower sales due to seasonal demand shifts.
Titan attributed the losses primarily to the negative impact of lower sales volume across most geographic regions, driven by most countries' efforts to deal with the COVID-19 pandemic.
Titan's loss from operations was $3.1 million in the quarter and $12.7 million for the six months. Sales fell to $286.1 million in the quarter and to $627.6 million for the first and second quarters.
The net loss was $5 million in the quarter and $30.5 million for the half-year, Titan said.
"As expected, Titan had significant disruptions with plant shutdowns due to dislocation in demand primarily from OEM customers, along with some government restrictions during April," President and CEO Paul Reitz said.
"During the remainder of the quarter production levels improved; however, we continued to experience disruptions due to lower demand from our customers."
Mr. Reitz noted that during the quarter, Titan focused on protecting its balance sheet, via cash preservation, accessing additional liquidity and improving its working capital position.
"We were able to increase our cash balance nearly $20 million during the quarter while maintaining a similar net debt position. This improved position will aid Titan as we continue to navigate the effects of the COVID-19 pandemic."
Mr. Reitz said Titan entered the second quarter "expecting this period to be the most challenging of the year and perhaps in Titan's long history.
"Our results demonstrate that we've navigated the challenges quite well, but like many companies we remain in an environment with limited demand visibility from our customers and also where the information we are receiving is often conflicting and changing rapidly.
"We continue to see an unusually high level of drop-in orders and we must remain nimble and flexible to quickly respond to meet those customer demands," he added, noting that Titan typically experiences a sales slowdown in the third quarter due to summer maintenance shutdowns and employee holidays. This year that slowdown like will be "further exacerbated" by the effects of the continuing COVID-19 pandemic.
"Therefore, we'll continue to remain diligently focused on making timely decisions and taking quick actions to adjust to demand fluctuations," he said. "Also, the liquidity actions we have taken have better positioned us to handle this crisis and we remain hopeful for some potential rebound in demand later in the year leading into 2021."
By segment, Titan reported:
- Agricultural: Sales declined 10.3% and 10.1% during the quarter and six months to $147.3 million and $320.2 million, respectively, due to reduced sales volumes in North America, Europe and Latin America — caused by continued weakness in the commodity markets and the effect of the COVID-19 pandemic — and unfavorable currency translation, primarily in Latin America, Europe and Russia.
- Earthmoving/construction: Sales dropped 37.5% during the quarter to $112.5 million and 30.4% in the half-year to $249.4 million, primarily due to a tightening within the construction market that impacted Titan's undercarriage business in all geographies. Titan cited the direct impact of the COVID-19 pandemic for approximately $26 million of the sales decrease in the quarter and $40 million in the half-year due to plant shutdowns and market disruptions in Europe, Asia and Latin America.
- Consumer: Sales declined 25.7% and 21.9% in the quarter and half-year to $26.9 million and $53.1 million, respectively, driven by lower sales volume, especially in North America, Latin America and Australia.