TITAN INTERNATIONAL, INC. REPORTS FOURTH QUARTER AND FISCAL YEAR 2023 FINANCIAL PERFORMANCE
FY 2023 Results Highlighted by Buoyant Margins and Strong Free Cash Flow
Transformative Acquisition of Carlstar Group LLC. ("Carlstar") Expected to Add Strategic Diversification of Customer Base, Product Line, Manufacturing and Distribution
"One of our primary long-term objectives has been to structure Titan to deliver consistent, strong, bottom-line results, while serving our customers throughout various market cycles. Recall that 2022 was an excellent year for top-line sales as agricultural equipment dealers ramped up inventory in order to ensure they could satisfy expected farmer demand. While Titan certainly enjoyed that environment, as we moved into 2023 it also became clear that the aggressive inventory build in 2022 resulted in reduced demand in 2023 as OEMs worked down excess inventory. Despite this dynamic and its impact on our sales, we were able to report full year gross margins that were up slightly from 2022. We were also able to report record Free Cash Flow of
Mr, Reitz concluded, "We are excited to get to work incorporating Carlstar's operation with Titan's. Given the scope of the integration work, along with the addition of new end markets, we think it is prudent to refrain from providing financial guidance at this time. As we progress through the integration, we will look to provide financial guidance later in the year."
Financial Summary
Net sales for the fourth quarter ended
Gross profit for the fourth quarter ended
Selling, general, administrative, research and development (SGARD) expenses for the fourth quarter of 2023 were
Income from operations for the fourth quarter of 2023 was
Segment Information
Agricultural Segment
(Amounts in thousands) |
Three months ended |
|
Twelve months ended |
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|
|
|
|
||||||||
|
2023 |
|
2022 |
|
% |
|
2023 |
|
2022 |
|
% |
Net sales |
$ 192,564 |
|
$ 274,796 |
|
(29.9) % |
|
$ 980,537 |
|
$ 1,192,239 |
|
(17.8) % |
Gross profit |
$ 28,014 |
|
$ 37,791 |
|
(25.9) % |
|
$ 163,026 |
|
$ 193,585 |
|
(15.8) % |
Profit margin |
14.5 % |
|
13.8 % |
|
5.1 % |
|
16.6 % |
|
16.2 % |
|
2.5 % |
Income from operations |
$ 14,571 |
|
$ 24,348 |
|
(40.2) % |
|
$ 100,642 |
|
$ 130,474 |
|
(22.9) % |
Net sales in the agricultural segment were
Earthmoving/Construction Segment
(Amounts in thousands) |
Three months ended |
|
Twelve months ended |
||||||||
|
|
|
|
||||||||
|
2023 |
|
2022 |
|
% |
|
2023 |
|
2022 |
|
% |
Net sales |
$ 159,106 |
|
$ 195,806 |
|
(18.7) % |
|
$ 687,758 |
|
$ 807,356 |
|
(14.8) % |
Gross profit |
$ 22,107 |
|
$ 33,137 |
|
(33.3) % |
|
$ 110,690 |
|
$ 135,788 |
|
(18.5) % |
Profit margin |
13.9 % |
|
16.9 % |
|
(17.8) % |
|
16.1 % |
|
16.8 % |
|
(4.2) % |
Income from operations |
$ 8,561 |
|
$ 19,858 |
|
(56.9) % |
|
$ 55,122 |
|
$ 79,810 |
|
(30.9) % |
Net sales in the earthmoving / construction segment were
Consumer Segment
(Amounts in thousands) |
Three months ended |
|
Twelve months ended |
||||||||
|
|
|
|
||||||||
|
2023 |
|
2022 |
|
% |
|
2023 |
|
2022 |
|
% |
Net sales |
$ 38,529 |
|
$ 39,164 |
|
(1.6) % |
|
$ 153,505 |
|
$ 169,785 |
|
(9.6) % |
Gross profit |
$ 8,203 |
|
$ 5,767 |
|
42.2 % |
|
$ 32,133 |
|
$ 31,337 |
|
2.5 % |
Profit margin |
21.3 % |
|
14.7 % |
|
44.9 % |
|
20.9 % |
|
18.5 % |
|
13.0 % |
Income from operations |
$ 5,197 |
|
$ 3,867 |
|
34.4 % |
|
$ 22,380 |
|
$ 22,843 |
|
(2.0) % |
Net sales in the consumer segment were
Non-GAAP Financial Measures
Adjusted EBITDA was
Adjusted net income applicable to common shareholders for the fourth quarter of 2023 was
Financial Condition
The Company ended 2023 with total cash and cash equivalents of
Cash provided by operating activities increased by
Capital expenditures were
Teleconference and Webcast
Titan will be hosting a teleconference and webcast to discuss the fourth quarter financial results on
The real-time, listen-only webcast can be accessed using the following link release https://events.q4inc.com/attendee/889510132 or on our website at www.titan-intl.com within the "Investor Relations" page under the "News & Events" menu (https://ir.titan-intl.com/news-and-events/events/default.aspx). Listeners should access the website at least 15 minutes prior to the live event to download and install any necessary audio software.
A webcast replay of the teleconference will be available on our website (https://ir.titan-intl.com/news-and-events/events/default.aspx) soon after the live event.
In order to participate in the real-time teleconference, with live audio Q&A, participants should use one of the following dial in numbers:
All Other Locations:
https://www.netroadshow.com/conferencing/global-numbers?confId=56511
Participants Access Code: 133146
Safe Harbor Statement
This press release contains forward-looking statements. These forward-looking statements are covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "plan," "would," "could," "potential," "may," "will," and other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, these assumptions are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond
About Titan
Consolidated Statements of Operations Amounts in thousands, except per share data |
||||||||
|
|
|
|
|||||
|
Three months ended |
|
Twelve months ended |
|||||
|
|
|
|
|||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ 390,199 |
|
$ 509,766 |
|
$ 1,821,800 |
|
$ 2,169,380 |
|
Cost of sales |
331,875 |
|
433,071 |
|
1,515,951 |
|
1,808,670 |
|
Gross profit |
58,324 |
|
76,695 |
|
305,849 |
|
360,710 |
|
Selling, general and administrative expenses |
32,021 |
|
30,486 |
|
134,938 |
|
132,792 |
|
Research and development expenses |
3,140 |
|
2,812 |
|
12,539 |
|
10,404 |
|
Royalty expense |
2,445 |
|
2,495 |
|
9,645 |
|
11,712 |
|
Income from operations |
20,718 |
|
40,902 |
|
148,727 |
|
205,802 |
|
Interest expense, net |
(2,600) |
|
(6,961) |
|
(18,785) |
|
(29,796) |
|
Foreign exchange (loss) gain |
(21,940) |
|
(7,822) |
|
(22,822) |
|
927 |
|
Other income |
219 |
|
894 |
|
2,628 |
|
25,420 |
|
Income before income taxes |
(3,603) |
|
27,013 |
|
109,748 |
|
202,353 |
|
(Benefit) provision for income taxes |
(2,321) |
|
(15,961) |
|
26,042 |
|
23,167 |
|
Net income |
(1,282) |
|
42,974 |
|
83,706 |
|
179,186 |
|
Net income attributable to noncontrolling interests |
1,283 |
|
934 |
|
4,946 |
|
2,884 |
|
Net income attributable to Titan and applicable to |
$ (2,565) |
|
$ 42,040 |
|
$ 78,760 |
|
$ 176,302 |
|
|
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
|
Basic |
$ (.04) |
|
$ .67 |
|
$ 1.26 |
|
$ 2.80 |
|
Diluted |
$ (.04) |
|
$ .66 |
|
$ 1.25 |
|
$ 2.77 |
|
Average common shares and equivalents outstanding: |
|
|
|
|
|
|
|
|
Basic |
61,389 |
|
62,842 |
|
62,452 |
|
63,040 |
|
Diluted |
62,088 |
|
63,521 |
|
62,961 |
|
63,691 |
Consolidated Balance Sheets Amounts in thousands, except share data |
|||
|
|||
|
|
|
|
|
|
||
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ 220,251 |
|
$ 159,577 |
Accounts receivable, net |
219,145 |
|
266,758 |
Inventories |
365,156 |
|
397,223 |
Prepaid and other current assets |
72,229 |
|
86,070 |
Total current assets |
876,781 |
|
909,628 |
Property, plant and equipment, net |
321,694 |
|
296,605 |
Operating lease assets |
11,955 |
|
8,932 |
Deferred income taxes |
38,033 |
|
38,736 |
Other long-term assets |
40,782 |
|
30,729 |
Total assets |
$ 1,289,245 |
|
$ 1,284,630 |
|
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Short-term debt |
$ 16,913 |
|
$ 30,857 |
Accounts payable |
201,201 |
|
263,376 |
Other current liabilities |
154,261 |
|
151,928 |
Total current liabilities |
372,375 |
|
446,161 |
Long-term debt |
409,178 |
|
414,761 |
Deferred income taxes |
2,234 |
|
3,425 |
Other long-term liabilities |
38,043 |
|
37,145 |
Total liabilities |
821,830 |
|
901,492 |
|
|
|
|
Equity |
|
|
|
Titan stockholders' equity |
|
|
|
Common stock ( |
— |
|
— |
Additional paid-in capital |
569,065 |
|
565,546 |
Retained earnings |
169,623 |
|
90,863 |
|
(52,585) |
|
(23,418) |
Accumulated other comprehensive loss |
(219,043) |
|
(251,755) |
Total Titan stockholders' equity |
467,060 |
|
381,236 |
Noncontrolling interests |
355 |
|
1,902 |
Total equity |
467,415 |
|
383,138 |
Total liabilities and equity |
$ 1,289,245 |
|
$ 1,284,630 |
Consolidated Statements of Cash Flows All amounts in thousands |
|||
|
|||
|
Twelve months ended |
||
|
|
||
Cash flows from operating activities: |
2023 |
|
2022 |
Net income |
$ 83,706 |
|
$ 179,186 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
42,434 |
|
42,747 |
Loss on sale of the Australian wheel business |
— |
|
10,890 |
Deferred income tax provision (benefit) |
(2,081) |
|
(23,385) |
Income on indirect taxes |
(3,096) |
|
(32,043) |
Gain on fixed asset and investment sale |
(644) |
|
(216) |
Stock-based compensation |
5,235 |
|
4,282 |
Issuance of stock under 401(k) plan |
1,776 |
|
1,627 |
Foreign currency loss (gain) |
19,734 |
|
2,661 |
(Increase) decrease in assets: |
|
|
|
Accounts receivable |
42,871 |
|
(27,201) |
Inventories |
31,635 |
|
(19,598) |
Prepaid and other current assets |
17,596 |
|
11,366 |
Other assets |
(2) |
|
(1,288) |
Increase (decrease) in liabilities: |
|
|
|
Accounts payable |
(62,725) |
|
(7,754) |
Other current liabilities |
872 |
|
18,888 |
Other liabilities |
2,039 |
|
516 |
Net cash provided by operating activities |
179,350 |
|
160,678 |
Cash flows from investing activities: |
|
|
|
Capital expenditures |
(60,799) |
|
(46,974) |
Proceeds from sale of investments |
2,085 |
|
9,293 |
Other investing activities |
1,791 |
|
930 |
Net cash used for investing activities |
(56,923) |
|
(36,751) |
Cash flows from financing activities: |
|
|
|
Proceeds from borrowings |
6,666 |
|
88,940 |
Payment on debt |
(27,608) |
|
(124,739) |
Repurchase of common stock |
(32,579) |
|
(25,000) |
Other financing activities |
(2,495) |
|
(511) |
Net cash used for financing activities |
(56,016) |
|
(61,310) |
Effect of exchange rate changes on cash |
(5,737) |
|
(1,148) |
Net increase in cash and cash equivalents |
60,674 |
|
61,469 |
Cash and cash equivalents, beginning of year |
159,577 |
|
98,108 |
Cash and cash equivalents, end of year |
$ 220,251 |
|
$ 159,577 |
|
|
|
|
Supplemental information: |
|
|
|
Interest paid |
$ 30,269 |
|
$ 31,604 |
Income taxes paid, net of refunds received |
$ 21,801 |
|
$ 24,105 |
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
Amounts in thousands, except earnings per share data
The Company reports its financial results in accordance with generally accepted accounting principles in
We present adjusted net income attributable to Titan, adjusted earnings per common share, EBITDA, adjusted EBITDA, net sales on a constant currency basis, and net debt, as we believe that they assist investors with analyzing our business results. In addition, management reviews each of these non-GAAP financial measures in order to evaluate the financial performance of each of our segments, as well as the Company's performance as a whole. We believe that the presentation of these non‑GAAP financial measures will permit investors to assess the performance of the Company on the same basis as management.
Adjusted net income attributable to Titan, adjusted earnings per common share, EBITDA, adjusted EBITDA, net sales on a constant currency basis, and net debt should be considered supplemental to, not a substitute for, the financial measures calculated in accordance with GAAP. One should not consider these measures in isolation or as a substitute for our results reported under GAAP. These measures have limitations in that they do not reflect all of the costs associated with the operations of our businesses as determined in accordance with GAAP. In addition, these measures may be calculated differently than non-GAAP financial measures reported by other companies, limiting their usefulness as comparative measures. We attempt to compensate for these limitations by analyzing results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP results and providing reconciliations from GAAP results to non-GAAP results.
The table below provides a reconciliation of adjusted net income attributable to Titan to net income applicable to common shareholders, the most directly comparable GAAP financial measure, for each of the three and twelve month periods ended
|
Three months ended |
|
Twelve months ended |
||||
|
|
|
|
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Net income attributable to Titan and applicable to |
$ (2,565) |
|
$ 42,040 |
|
$ 78,760 |
|
$ 176,302 |
Adjustments: |
|
|
|
|
|
|
|
Foreign exchange loss (gain) |
21,940 |
|
7,823 |
|
22,822 |
|
(927) |
Loss on sale of Australian wheel business |
— |
|
— |
|
— |
|
10,890 |
Proceeds from government grant |
— |
|
— |
|
— |
|
(1,324) |
Income on Brazilian indirect tax credits, net of taxes (a) |
— |
|
6,720 |
|
(3,096) |
|
(15,874) |
Net deferred income tax benefit (b) |
— |
|
(28,882) |
|
— |
|
(28,882) |
Restructuring charges |
1,637 |
|
— |
|
1,637 |
|
— |
|
|
|
|
|
|
|
|
Adjusted Net income attributable to Titan and applicable |
$ 21,012 |
|
$ 27,701 |
|
$ 100,123 |
|
$ 140,185 |
|
|
|
|
|
|
|
|
Adjusted income per common share: |
|
|
|
|
|
|
|
Basic |
$ 0.34 |
|
$ 0.44 |
|
$ 1.60 |
|
$ 2.22 |
Diluted |
$ 0.34 |
|
$ 0.44 |
|
$ 1.59 |
|
$ 2.20 |
|
|
|
|
|
|
|
|
Average common shares and equivalents outstanding: |
|
|
|
|
|
|
|
Basic |
61,389 |
|
62,842 |
|
62,452 |
|
63,040 |
Diluted |
62,088 |
|
63,521 |
|
62,961 |
|
63,691 |
(a) The Company incurred global intangible low-taxed income (GILTI) tax during the fourth quarter associated with the income on the Brazilian indirect tax credits.
(b) During the fourth quarter of 2022, the income tax benefit was primarily driven by a
The table below provides a reconciliation of net income to EBITDA and adjusted EBITDA, non-GAAP financial measures, for the three and twelve-month periods ended
|
Three months ended |
|
Twelve months ended |
||||
|
|
|
|
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Net Income |
$ (1,282) |
|
$ 42,974 |
|
$ 83,706 |
|
$ 179,186 |
Adjustments: |
|
|
|
|
|
|
|
Provision for income taxes |
(2,321) |
|
(15,961) |
|
26,042 |
|
23,167 |
Interest expense, excluding interest income |
7,274 |
|
7,517 |
|
29,063 |
|
31,273 |
Depreciation and amortization |
10,836 |
|
10,464 |
|
42,434 |
|
42,747 |
EBITDA |
$ 14,507 |
|
$ 44,994 |
|
$ 181,245 |
|
$ 276,373 |
Adjustments: |
|
|
|
|
|
|
|
Foreign exchange loss (gain) |
21,940 |
|
7,823 |
|
22,822 |
|
(927) |
Loss on sale of Australian wheel business |
— |
|
— |
|
— |
|
10,890 |
Proceeds from government grant |
— |
|
— |
|
— |
|
(1,324) |
Income on Brazilian indirect tax credits, gross |
— |
|
— |
|
(475) |
|
(32,043) |
Restructuring charges |
1,637 |
|
— |
|
1,637 |
|
— |
Adjusted EBITDA |
$ 38,084 |
|
$ 52,817 |
|
$ 205,229 |
|
$ 252,969 |
The table below sets forth, for the three and twelve-month periods ended
|
Three Months Ended |
|
Change due to currency |
|
Three Months Ended |
||||||
|
2023 |
|
2022 |
|
% Change |
|
$ |
|
% |
|
Constant Currency |
United States |
$ 160,352 |
|
$ 237,967 |
|
(32.6) % |
|
$ — |
|
— % |
|
$ 160,352 |
|
134,265 |
|
151,901 |
|
(11.6) % |
|
(6,869) |
|
(4.5) % |
|
141,134 |
|
71,847 |
|
98,290 |
|
(26.9) % |
|
780 |
|
0.8 % |
|
71,067 |
Other International |
23,735 |
|
21,608 |
|
9.8 % |
|
(4,815) |
|
(22.3) % |
|
28,550 |
|
$ 390,199 |
|
$ 509,766 |
|
(23.5) % |
|
$ (10,904) |
|
(2.1) % |
|
$ 401,103 |
|
Twelve Months Ended |
|
Change due to currency |
|
Twelve Months Ended |
||||||
|
2023 |
|
2022 |
|
% Change |
|
$ |
|
% |
|
Constant Currency |
United States |
$ 814,676 |
|
$ 1,074,715 |
|
(24.2) % |
|
$ — |
|
— % |
|
$ 814,676 |
|
558,677 |
|
577,877 |
|
(3.3) % |
|
(17,776) |
|
(3.1) % |
|
576,453 |
|
354,979 |
|
422,439 |
|
(16.0) % |
|
(2,665) |
|
(0.6) % |
|
357,644 |
Other International |
93,468 |
|
94,349 |
|
(0.9) % |
|
(17,333) |
|
(18.4) % |
|
110,801 |
|
$ 1,821,800 |
|
$ 2,169,380 |
|
(16.0) % |
|
$ (37,774) |
|
(1.7) % |
|
$ 1,859,574 |
The table below provides a reconciliation of net debt, which is a non-GAAP financial measure:
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
Long-term debt |
$ 409,178 |
|
$ 409,747 |
|
$ 414,761 |
|
Short-term debt |
16,913 |
|
17,556 |
|
30,857 |
|
Total debt |
$ 426,091 |
|
$ 427,303 |
|
$ 445,618 |
|
Cash and cash equivalents |
220,251 |
|
211,902 |
|
159,577 |
|
Net debt |
$ 205,840 |
|
$ 215,401 |
|
$ 286,041 |
|
The table below provides a reconciliation of net cash provided by operating activities to free cash flow, which is a non-GAAP financial measure:
|
Three months ended |
|
Twelve months ended |
||||
|
|
|
|
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ 39,244 |
|
$ 58,438 |
|
$ 179,350 |
|
$ 160,678 |
Capital expenditures |
(19,319) |
|
(14,219) |
|
(60,799) |
|
(46,974) |
Free cash flow |
$ 19,925 |
|
$ 44,219 |
|
$ 118,551 |
|
$ 113,704 |
|
|
|
|
|
|
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