QUINCY, Ill. — Titan International Inc. announced third quarter 2016 results on Nov. 3.
Third quarter highlights:
- Sales for the third quarter of 2016 were $306.2 million, down 0.9%, compared to $308.8 million in the third quarter of 2015.
- Gross profit for the third quarter of 2016 was $33.0 million, or 10.8% of net sales, compared to $26.2 million, or 8.5% of net sales, for the third quarter of 2015.
- Loss from operations for the third quarter of 2016 was $8.3 million, or 2.7% of net sales, compared to loss of $14.5 million, or 4.7% of net sales, for the third quarter of 2015.
- Net loss applicable to common shareholders for the third quarter of 2016 was $11.3 million, compared to net loss of $42.5 million in the third quarter of 2015. Adjusted net loss for the third quarter of 2016 was $10.0 million, compared to net loss of $31.5 million in the third quarter of 2015.
- Basic and diluted earnings per share for the third quarter 2016 and 2015 were $(0.21) and $(0.79), respectively. Adjusted basic and diluted earnings per share for the third quarter of 2016 and 2015 were $(0.18) and $(0.59), respectively.
Statement of Chief Executive Officer:
CEO and Chairman, Maurice Taylor, comments, “The numbers are in and I believe they show our business continues to bounce around the bottom of this four year down cycle. The downturn in our Ag business has stabilized. The third quarter sales were $306 million compared with $309 million in 2015, so if you factor in the decrease in pricing, they're very close. Large Ag is still down while the lower horsepower tractors are up slightly.
“The Titan team has done a good job managing gross margin; 10.8% in third quarter 2016 vs. 8.5% in third quarter 2015. Our SG&A as a percentage of sales remains higher than we would like. Management is focused on reducing expenses as well as increasing sales moving forward. I also believe that recent changes within our sales organization should improve this measure along with our cost reduction initiatives. Our cash balance increased during the quarter by more than $8 million. Our business in both Russia and Brazil has continued to strengthen. We believe our markets are holding and there should be a slight increase going forward.
“Discussions regarding the previously announced possible sale or other transaction involving ITM are continuing. We are also looking at the possible disposal of the Brownsville, Texas, facility. The appraised values at Brownsville came in at the level we expected. We have received interest from others, but the two current renters have the first options to purchase this facility.
“Investment bankers visited the Titan Tire Reclamation Corp. (TTRC) site in October and we are waiting for their presentations concerning a potential sale of this operation. They were all impressed with the pollution free process TTRC uses to reclaim super giant tires. Each of these tires produce approximately 600 gallons of oil, 4,000 pounds of TVR carbon residue, and 2,000 pounds of steel.
“The really big news, we sent out in a recent press release dated Oct. 21, 2016. It explained the test results from a Missouri farm using Goodyear LSW Super Single tires. In short, the LSW tires increased the yield on the corn tested in Missouri by approximately 3% per acre and soybeans by a similar amount. These results are huge and we believe this will drive further adoption of the LSW technology as farmers prepare for the upcoming planting season. We are continuing to move ahead with increased production capabilities of our LSW product. We expect the sale of LSW assemblies to continue to grow each year at an accelerated pace. To this point, the growth has been steady, but hopefully we are getting ready for a bigger jump after these test results in Missouri. I believe every farm with 1,000 or more acres should change to LSW as fast as possible because there is more money to be made.
“Titan is currently in negotiations with the United Steelworkers Union with the current agreement set to expire Nov. 16, 2016. The union knows the last three to four years have been rough in the farm/OTR tire business. Titan President, Paul Reitz, is leading the Titan bargaining group. I believe they will reach a fair deal for both parties. I have stated to the union representatives that this would be my last bargaining contract.
“If this next quarter ends up close to last year, then I believe it shows we’ve made it through the cycle. I’ve talked to a lot of dealers and farmers during this past quarter. I hear more and more of them with a positive outlook, which is what it will take to move our business forward. I’m looking forward to Titan being stronger than ever as we start our climb back up.”