Titan International, Inc. Announces Record First Quarter Net Income and Earnings Per Share
QUINCY, Ill.--April 27, 2005--Titan International, Inc. achieved record first quarter net income at $11.2 million, up 111 percent from $5.3 million for first quarter 2004. Basic earnings per share were also a record at $.68 for the quarter, increasing 172 percent from $.25 for first quarter 2004.Titan reported net sales of $136.1 million for the first quarter ended March 31, 2005. Net sales for the first quarter of 2004 excluding Titan Europe sales were $117.5 million, while total 2004 first quarter net sales were $167.0 million. Titan's sales excluding Titan Europe were $18.6 million higher this quarter compared to the first quarter of last year.
With the strong first quarter sales, the company's accounts receivable balance increased $20.5 million from year-end 2004. Despite the accounts receivable use of funds, Titan achieved a $6.5 million reduction in total debt as of March 31, 2005.
"What an outstanding quarter! Titan's sales excluding Titan Europe were up nearly 16 percent compared to first quarter last year. The continued strength of the agricultural and construction equipment markets and the corresponding wheel and tire demand were largely responsible for the higher sales figures. If the U.S. dollar stays in its current range versus the Euro and the yen, we believe these markets will continue to grow," stated Maurice Taylor Jr., Titan president and CEO. "Should oil prices remain above $35 a barrel and the public realize that ethanol is only about $1.20 per gallon wholesale, politicians may be forced to legislate a 50 percent mixture of ethanol and gasoline. Brazil already relies heavily on ethanol. The increased crop production resulting from such legislation would improve demand for large four-wheel drive tractors and combines. In fact, the use of biodiesel fuel oil is very beneficial in reducing dependence on foreign oil."
Titan Europe Plc, publicly traded on London's AIM market, also excelled in first quarter. Titan International's ownership of 29.3 percent of Titan Europe Plc led to equity income of $1.2 million in first quarter 2005. Prior to the sale, Titan Europe was consolidated in Titan International's financial statements. The company's interest in this European investment is now accounted for as an equity investment subsequent to the April 2004 sale.
During the first quarter of 2005, Titan Tire Corporation, a subsidiary of Titan International, Inc., entered into a definitive agreement to purchase the assets of The Goodyear Tire & Rubber Company's North American farm tire business. The Hart-Scott-Rodino filings were made with the Federal Trade Commission and the mandatory waiting period has expired with no further requests for information and the parties are free to consummate the transaction. The completion of the acquisition is also subject to an agreement being reached with the United Steelworkers Union for the Goodyear facility in Freeport, Illinois, and those negotiations are ongoing. The transaction is anticipated to close during the second quarter of 2005.
Titan International, Inc., a holding company, owns subsidiaries that supply wheels, tires and assemblies for off-highway equipment used in agricultural, earthmoving/construction, and consumer (i.e. all terrain vehicles and trailers) applications.
Titan International, Inc.
Consolidated Statements of Operations (Unaudited)
For the three months ended March 31, 2005 and 2004
Amounts in thousands except earnings per share data.
Three Months Ended
March 31,
2005 2004
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Net sales $136,129 $166,976
Cost of sales 112,048 139,683
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Gross profit 24,081 27,293
Selling, general & administrative expenses 8,427 11,712
Research & development expenses 183 822
Idled assets marketed for sale depreciation 1,346 0
Goodwill impairment on Titan Europe 0 2,988
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Income from operations 14,125 11,771
Interest expense (2,589) (5,150)
Equity income from unconsolidated affiliate 1,192 0
Other (expense) income (282) 46
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Income before income taxes 12,446 6,667
Provision for income taxes 1,245 1,391
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Net income $11,201 $5,276
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Earnings per common share:
Basic $.68 $.25
Diluted .51 .25
Average common shares outstanding:
Basic 16,352 21,197
Diluted 25,071 21,197
Segment Information
Revenues from external customers (Unaudited)
Amounts in thousands
Three Months Ended
March 31,
2005 2004
---------------- --------------
Agricultural $89,459 $103,306
Earthmoving/Construction 39,141 53,389
Consumer 7,529 10,281
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Total $136,129 $166,976
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Consolidated Condensed Balance Sheets (Unaudited)
Amounts in thousands
March 31, Dec. 31,
2005 2004
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Assets
Current assets:
Cash & cash equivalents $1,245 $1,130
Accounts receivable 73,244 52,781
Inventories 84,507 84,658
Deferred income taxes 6,711 6,711
Other current assets 8,462 9,388
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Total current assets 174,169 154,668
Property, plant & equipment, net 77,736 80,644
Idled assets marketed for sale 29,833 31,245
Investment in unconsolidated affiliate 30,484 30,040
Restricted cash on deposit 24,500 24,500
Goodwill 11,702 11,702
Other noncurrent assets 20,578 21,367
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Total assets $369,002 $354,166
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Liabilities & stockholders' equity
Current liabilities:
Short-term debt (including current portion
of long-term debt) $199 $217
Accounts payable 34,182 26,733
Other current liabilities 16,537 12,820
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Total current liabilities 50,918 39,770
Long-term debt 163,247 169,688
Deferred income taxes 9,164 9,164
Other long-term liabilities 27,977 28,663
Stockholders' equity 117,696 106,881
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Total liabilities & stockholders' equity $369,002 $354,166
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