Titan Reports 20% Increase in Second Quarter Sales
QUINCY, Ill.--Second quarter and year-to-date highlights:
- Sales for second quarter 2007 were $210.3 million, up 20 percent, as compared to $175.2 million in the second quarter of 2006.
- Year-to-date sales were an all-time record of $436.6 million, a 22 percent increase from $357.8 million for the six-month period in 2006.
- Gross profit was $27.3 million for the second quarter, a 22 percent increase from the $22.4 million in the second quarter of 2006.
- Titan’s quarter-ending cash balance of $61.5 million is an increase of 58 percent over the March 31, 2007, balance of $39.0 million.
- Titan’s stockholders’ equity surpassed the $300 million mark to end the second quarter at $300.7 million, an all-time record and a rise of $113.5 million, or 61 percent, from the 2006 year-end balance of $187.2 million.
Statement of Chief Executive Officer:
“The second quarter has been very exciting for Titan. Our sales are up, as they should be from last year’s acquisition,” said Chairman and CEO Maurice M. Taylor Jr. “We are expanding our OTR (off-the-road) business and adding new OTR products by expanding capacity in Freeport, Illinois. While this is happening in Freeport, certain farm tires are being transferred to our Des Moines facility. Titan’s Board of Directors also approved the capital expenditures to produce the super giant radial 57- and 63-inch mining tires. The unique thing about this is that only two companies, Michelin (France) and Bridgestone (Japan), produce 63-inch radial tires at this time.
“So, Titan has put together an engineering team headed by Ernest Rodia, chief operating officer (Rodia retired from Goodyear in December 2003 as vice president of global engineering and manufacturing technology), to not only develop the 63-inch tires, but also a new 73.5-inch 15 degree tire and wheel to improve wear and performance. I believe that by producing these tires, Titan will show our customer base that we are the best, and making the wheel with the tire is what sets Titan apart from everyone else. We plan to produce sample 63-inch tires in first quarter 2008. The 73.5-inch tire will follow. Wheels that large are a real bear to produce, but since our mascot is a grizzly we should have no problem with production,” said Taylor.
“As you can see, Titan has the cash on hand to fund all current projects, except for acquisitions; therefore, we anticipate not borrowing money for the above-mentioned capital projects. These are exciting times at Titan and we believe our best is ahead. And yes, large tire sales in the farm market have finally started to pick up, and we believe they will increase each month out this year.”
Financial overview:
Titan International, Inc.’s net sales of $210.3 million for the second quarter of 2007 were 20 percent higher than the second quarter 2006 sales of $175.2 million. Net sales for the first half of 2007 were $436.6 million, up from the $357.8 million recorded in the first half of 2006, a 22 percent increase.
Gross profit for the second quarter of 2007 was $27.3 million, as compared to $22.4 million in the second quarter of 2006. Year-to-date gross profit was $54.5 million for 2007, as compared to $53.6 million for 2006.
Income from operations for the second quarter of 2007 was $13.2 million, as compared to $11.7 million in the second quarter of 2006. Year-to-date income from operations was $27.5 million in 2007, compared to $28.9 million in 2006.
Income before taxes for the second quarter of 2007 was $10.5 million, as compared to $9.3 million in 2006. Year-to-date income before taxes totaled $5.5 million in 2007, as compared to $23.7 million in 2006. The year-to-date total for 2007 included a $13.4 million noncash convertible debt conversion charge.
Income taxes of $5.5 million were recorded for the second quarter of 2007, compared to $3.7 million in 2006. Year-to-date, income tax expense was $3.0 million for the six months ended June 30, 2007, compared to $9.5 million in 2006.
Net income was $5.0 million for the second quarter of 2007, compared to $5.6 million in second quarter 2006. Year-to-date, net income was $2.5 million in 2007 and $14.2 million year-to-date in 2006.
For second quarter 2007, basic earnings per share were $.18, compared to $.28 at June 30, 2006. Year-to-date basic earnings per share were $.10, compared to $.72 year-to-date 2006.
Diluted earnings per share were $.18 for the second quarter of 2007 compared to $.24 in 2006. Year-to-date diluted earnings per share were $.10 for 2007 and $.60 for 2006.
Titan’s quarter-end cash was $61.5 million at June 30, 2007, an increase of over $28 million from $33.4 million at year-end 2006. Long-term debt was $200 million, decreasing from $291.3 million at year-end 2006.
The company’s stockholders’ equity increased $113.5 million in the first half of 2007. Titan’s equity balance reached $300.7 million at June 30, 2007, a significant increase from the $187.2 million at December 31, 2006.
Giant OTR mining tires expansion:
In May 2007, Titan’s Board of Directors approved funding for the company to increase giant OTR (off-the-road) mining tire production capacity to include 57- and 63-inch giant radial tires. This funding should allow Titan to produce up to an estimated 6,000 giant radial tires a year. Titan estimates this may increase sales as much as $240 million. Titan currently plans to be in start-up production of these giant mining tires by the end of the second quarter 2008.
Form 10-Q:
For additional information and Management’s Discussion and Analysis of Financial Condition and Results of Operations, see the company’s Form 10-Q to be filed with the Securities and Exchange Commission on July 30, 2007.
Safe harbor statement:
This press release includes forward-looking statements that involve risks and uncertainties, including risks as detailed in Titan International, Inc.’s periodic filings with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2006. The company cautions that any forward-looking statements included in this press release are subject to a number of risks and uncertainties and the company undertakes no obligation to publicly update or revise any forward-looking statements.
Company description:
QUINCY, Ill.—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 (including all terrain vehicles and trailers) applications.
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Titan International, Inc. Consolidated Condensed Statements of Operations (Unaudited) For the three and six months ended June 30, 2007 and 2006 |
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| Amounts in thousands, except earnings per share data. | Three Months Ended | Six Months Ended | |||||
| June 30, | June 30, | ||||||
| 2007 | 2006 | 2007 | 2006 | ||||
| Net sales | $210,333 | $175,194 | $436,611 | $357,771 | |||
| Cost of sales | 183,022 | 152,752 | 382,109 | 304,215 | |||
| Gross profit | 27,311 | 22,442 | 54,502 | 53,556 | |||
| Selling, general & administrative expenses | 12,683 | 9,493 | 23,967 | 21,774 | |||
| Royalty expense | 1,452 | 1,214 | 3,016 | 2,839 | |||
| Income from operations | 13,176 | 11,735 | 27,519 | 28,943 | |||
| Interest expense | (4,430) | (3,709) | (10,179) | (7,432) | |||
| Noncash convertible debt conversion charge | 0 | 0 | (13,376) | 0 | |||
| Other income | 1,731 | 1,313 | 1,546 | 2,149 | |||
| Income before income taxes | 10,477 | 9,339 | 5,510 | 23,660 | |||
| Provision for income taxes | 5,515 | 3,736 | 3,031 | 9,464 | |||
| Net income | $4,962 | $5,603 | $2,479 | $14,196 | |||
| Earnings per common share: | |||||||
| Basic | $.18 | $.28 | $.10 | $.72 | |||
| Diluted | .18 | .24 | .10 | .60 | |||
| Average common shares outstanding: | |||||||
| Basic | 27,213 | 19,695 | 24,031 | 19,639 | |||
| Diluted | 27,749 | 26,081 | 24,499 | 26,003 | |||
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Segment Information Revenues from external customers (Unaudited) |
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| Amounts in thousands | Three Months Ended | Six Months Ended | |||||
| June 30, | June 30, | ||||||
| 2007 | 2006 | 2007 | 2006 | ||||
| Agricultural | $124,104 | $116,267 | $259,400 | $240,694 | |||
| Earthmoving/Construction | 72,342 | 29,005 | 147,460 | 60,806 | |||
| Consumer | 13,887 | 29,922 | 29,751 | 56,271 | |||
| Total | $210,333 | $175,194 | $436,611 | $357,771 | |||
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Titan International, Inc. Consolidated Condensed Balance Sheets (Unaudited) |
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| Amounts in thousands | |||
| June 30, | December 31, | ||
| Assets | 2007 | 2006 | |
| Current assets: | |||
| Cash and cash equivalents | $61,524 | $33,412 | |
| Accounts receivable | 117,595 | 73,882 | |
| Inventories | 135,454 | 154,604 | |
| Deferred income taxes | 27,705 | 29,234 | |
| Prepaid and other current assets | 17,531 | 18,801 | |
| Total current assets | 359,809 | 309,933 | |
| Property, plant and equipment, net | 182,678 | 184,616 | |
| Investment in Titan Europe Plc | 62,663 | 65,881 | |
| Goodwill | 11,702 | 11,702 | |
| Other assets | 16,945 | 12,994 | |
| Total assets | $633,797 | $585,126 | |
| Liabilities & stockholders’ equity | |||
| Current liabilities: | |||
| Short-term debt | $0 | $98 | |
| Accounts payable | 43,543 | 25,884 | |
| Other current liabilities | 50,680 | 36,942 | |
| Total current liabilities | 94,223 | 62,924 | |
| Long-term debt | 200,000 | 291,266 | |
| Deferred income taxes | 26,798 | 27,924 | |
| Other long-term liabilities | 12,104 | 15,835 | |
| Stockholders’ equity | 300,672 | 187,177 | |
| Total liabilities & stockholders’ equity | $633,797 | $585,126 | |
Visit www.titan-intl.com for conference call information.