QUINCY, Ill., July
29, 2021 /PRNewswire/ -- Titan International, Inc. (NYSE:
TWI), a leading global manufacturer of off-highway wheels, tires,
assemblies, and undercarriage products, today reported financial
results for the second quarter ended June 30, 2021,
highlighted by the strongest quarterly operating performance since
2013.
Paul Reitz, President and Chief
Executive Officer commented "I am proud of how we continue to grow
stronger as a Company and this is highlighted by our tremendous
financial performance in the second quarter. Our sales
increased by over 53 percent from last year and more importantly
increased 9 percent from the first quarter this year as our
adjusted EBITDA improved by more than $11
million sequentially to over $37
million this quarter. Despite the continuing supply
chain and labor challenges, the Titan team persevered through the
noise, and delivered impressive results in the second
quarter. These results come after both strategic actions and
significant efforts to reposition and transform Titan to achieve
greater long-term success. Our end-markets currently are very
buoyant, with strong fundamentals present for a sustained runway
for elevated activity through this year and beyond.
"During the second quarter, both our Agriculture and
Earthmoving/Construction segments experienced strong sales volume
growth even beyond the first quarter higher levels. In Ag,
dealer inventories remain tight, used and new equipment pricing
continues to increase, and the overall large equipment fleet is
aged. From our viewpoint, Ag growth continues to build
momentum across the globe, with our customers starting to provide
us with indications of continued strength into 2022. We see
momentum in large Ag products where orders have increased
throughout the quarter and should keep moving in a further positive
direction as the large Ag equipment market is still roughly 25
percent below long-term averages. Farm commodity prices
remain at historically elevated levels, which should also support
sustained market activity for Titan for the foreseeable future. Our
earthmoving and construction end-markets continue to look promising
as our undercarriage business continues on a strong pace and early
2022 indications are healthy with increased infrastructure and
ramping construction activities being the primary driving
forces.
"We completed the refinancing of our $400
million bonds during the second quarter, extending the
maturity to 2028. This move, along with the actions we had
taken previously, position us well for the future by providing
stability to manage the business. With our strong second quarter
and first half results, Titan is set to deliver adjusted EBITDA
north of $120 million this year, with
opportunities for further growth next year. We have worked
tirelessly to position ourselves well with our customers to support
their increasing needs, and we believe we are in a unique situation
at this time to capitalize on our reinvigorated strength to drive
growth and increased financial results that our investors expect
and deserve."
Results of Operations
Net sales for the second quarter ended June 30, 2021, were
$438.6 million, compared to
$286.1 million in the comparable
quarter of 2020, an increase of 53.3 percent driven by sales
increases in the agricultural and earthmoving/construction
segments. Overall net sales volume and product price and mix
was up 33.2 percent and 17.2 percent, respectively, from the
comparable prior year quarter. The increase in net sales was
also favorably impacted by foreign currency translation, which
positively impacted net sales by 2.9 percent or $8.2 million. On a constant currency basis,
net sales for the second quarter 2021 would have been $430.5 million.
Net sales for the six months ended June 30, 2021 were
$842.2 million, compared to
$627.6 million in the comparable
period of 2020, an increase of 34.2 percent driven by sales
increases in the agricultural and earthmoving/construction
segments. Overall net sales volume and product price and mix
was up 23.3 percent and 10.5 percent, respectively, from the
comparable period of 2020. On a constant currency basis, net
sales for the first six months of 2021 would have been $839.7 million.
Overall net sales volume and product price and mix improved for
both the three and six months ended June 30,
2021 as compared to the prior year periods due to market
growth in the agricultural and earthmoving/construction
segments. Pricing increases have been implemented because of
rising raw material costs and other inflationary impacts in the
markets, including freight. The contributing factors to the
increase in demand were increased commodity prices, lower equipment
inventory levels and pent up demand following the economic impacts
of the COVID-19 pandemic during 2020. Lower sales volumes
during the first half of 2020 were primarily caused by continued
weakness in the commodity markets and the effect of the COVID-19
pandemic which caused significant uncertainty for customers in most
geographies, most notably OEM customers.
Gross profit for the second quarter ended June 30, 2021 was
$61.5 million, compared to
$29.9 million in the comparable prior
year period. Gross margin was 14.0 percent of net sales for
the quarter, compared to 10.4 percent of net sales in the
comparable prior year period. The increase in gross profit
and margin was driven by the impact of increases in sales volume,
as described previously, favorably impacting overhead
absorption. In addition, cost reduction initiatives have been
executed across global production facilities, in the last year,
somewhat reflecting COVID-19 pandemic responses.
Gross profit for the six months ended June 30, 2021 was
$114.7 million, or 13.6% of net
sales, an increase of $57.6 million
compared to $57.1 million, or 9.1% of
net sales, for the six months ended June 30, 2020. The
increase in gross profit and margin was driven by the impact of
increases in sales volume and cost reduction initiatives executed
across the business. Gross profit was negatively impacted by
$2.8 million, as a result of abnormal
natural gas price increases for our North American operations due
to unprecedented unfavorable weather conditions experienced during
a few weeks in February 2021 in large
portions of the Southwest and Midwest regions of the United States.
Selling, general, administrative, research and development
(SGARD) expenses for the second quarter of 2021 were $35.1 million, compared to $30.6 million for the comparable prior year
period. As a percentage of net sales, SGARD was 8.0 percent,
compared to 10.7 percent for the comparable prior year
period. The increase in SGARD was driven primarily by an
increase in other employee-related costs on improved operating
performance and growth in sales and unfavorable foreign currency
impacts primarily in Europe and
the United Kingdom.
SGARD for the six months ended June 30, 2021 were
$71.7 million, or 8.5 percent of net
sales, compared to $64.9 million, or
10.3 percent of net sales, for the six months ended June 30,
2020. The increase in SGARD was driven primarily by
investments to improve our supply chain and logistics processes, an
increase in other employee-related costs on improved operating
performance and growth in sales and unfavorable foreign currency
impacts primarily in Europe and
the United Kingdom.
Income from operations for the second quarter of 2021 was
$23.7 million, or 5.4 percent of net
sales, compared to a loss of $3.1
million, or 1.1 percent of net sales, for the second quarter
of 2020. Income from operations for the six months ended
June 30, 2021 was $38.0 million,
compared to loss from operations of $12.7
million for the six months ended June 30,
2020. The increase in income was primarily due to the higher
sales and improvements in gross profit margins.
The Company refinanced it senior secured notes during the second
quarter for 2021, and completed a call and redemption of all of its
outstanding $400 million principal
amount of Titan's 6.50 percent senior secured notes due 2023. As a
result, the call premium plus a write-off of previously unamortized
costs related to the senior secured notes of $16.0 million was recorded in the income
statement for the three and six months ended June 30,
2021.
Foreign exchange loss was $0.8
million for the three months ended June 30, 2021,
compared to income of $8.8 million
for the three months ended June 30, 2020. Foreign
exchange gain was $8.7 million for
the six months ended June 30, 2021, compared to a loss of
$8.4 million for the six months ended
June 30, 2020. The foreign exchange loss experienced
during the three months ended June 30, 2021 is the result of
the unfavorable movements in foreign currency exchange rates in
many of the geographies in which we conduct business as compared to
the same period in 2020. The foreign exchange gain
experienced during the six months ended June 30, 2021 was
related to realized foreign currency gains associated with an
ongoing initiative to rationalize Titan's legal entity structure
and ongoing management of the intercompany capital structure as
well as a favorable impact of the movement of foreign exchange
rates. The foreign exchange loss experienced for the six
months ended June 30, 2020 were the result of the translation
of intercompany loans at certain foreign subsidiaries, which are
denominated in local currencies rather than the reporting currency,
which is the United States
dollar. Since such loans are expected to be settled at some
point in the future, these loans are adjusted each reporting period
to reflect the current exchange rates. During the first quarter of
2020, we had settled a number of intercompany loans as part of a
loan restructuring initiative with a resulting foreign exchange
loss, which is reflected in the total foreign exchange loss
recognized for the first quarter of 2020.
The second quarter of 2021 net loss applicable to common
shareholders was a loss of $2.8
million, equal to a loss of $0.04 per basic and diluted share, compared to
loss of $5.0 million, equal to a loss
of $0.08 per basic and diluted share,
in the comparable prior year period. Net income
applicable to common shareholders for the six months ended
June 30, 2021, was $10.8 million, equal to income per basic share of
$0.18 and income per diluted share of
$0.17, compared to a loss of
$30.5 million, equal to a loss of
$0.50 per basic and diluted share, in
the comparable prior year period.
Non-GAAP Financial Measures
Adjusted net income applicable to common shareholders for the
second quarter of 2021 was income of $14.0
million, equal to income per basic share of $0.23 and income per diluted share of
$0.22, compared to a loss of
$10.5 million, equal to a loss of
$0.17 per basic and diluted share, in
the second quarter of 2020. Adjusted net income applicable to
common shareholders for the first six months of 2021 was
$18.1 million, equal to income of
$0.29 per basic and diluted share,
compared to loss of $21.1 million,
equal to a loss of $0.35 per basic
and diluted share, for the first six months of 2020. The
Company utilizes adjusted net income applicable to shareholders,
which is a non-GAAP financial measure, as a means to measure its
operating performance. A reconciliation of net income (loss)
applicable to common shareholders and adjusted net income (loss)
applicable to common shareholders can be found at the end of this
release.
Adjusted EBITDA was $37.4 million
for the second quarter of 2021, compared to $13.3 million in the comparable prior year
period. The Company utilizes EBITDA and adjusted EBITDA,
which are non-GAAP financial measures, as a means to measure its
operating performance. A reconciliation of net income (loss)
to EBITDA and adjusted EBITDA can be found at the end of this
release.
Segment Information
Agricultural Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
Net sales
|
$
|
231,504
|
|
|
$
|
147,267
|
|
|
57.2
|
%
|
|
$
|
440,263
|
|
|
$
|
320,206
|
|
|
37.5
|
%
|
Gross
profit
|
35,291
|
|
|
15,613
|
|
|
126.0
|
%
|
|
65,080
|
|
|
29,640
|
|
|
119.6
|
%
|
Profit
margin
|
15.2
|
%
|
|
10.6
|
%
|
|
43.4
|
%
|
|
14.8
|
%
|
|
9.3
|
%
|
|
59.1
|
%
|
Income from
operations
|
20,789
|
|
|
6,992
|
|
|
197.3
|
%
|
|
36,072
|
|
|
8,867
|
|
|
306.8
|
%
|
During the quarter ended June 30, 2021, net sales volume
and product price and mix was up 35.8 percent and 21.8
percent, respectively, from the comparable prior year quarter due
to demand in the market, reflective of improved farmer income, an
aging large equipment fleet and lower equipment inventory levels
within the equipment dealer channels. Pricing is primarily
reflective of increases in raw material and other inflationary cost
increases in the markets, including freight. The increase in gross
profit and margin is primarily attributable to the impact of
increases in sales volume as described previously and cost
reduction initiatives executed across global production facilities
following the COVID-19 pandemic.
During the six months ended June 30, 2021, net sales volume
and product price and mix was up 24.5 percent and 15.5 percent,
respectively, from the comparable prior year period due to
increased demand in the market, reflective of the same impacts
described for the second quarter of 2021 and 2020. Pricing is
primarily reflective of rising raw material costs and other
inflationary cost increases in the markets, including freight. The
overall increase in net sales was partially offset by unfavorable
currency translation, primarily in Latin
America and Russia of 2.6
percent. The increase in gross profit and margin is primarily
attributable to the favorable impact of increases in sales volume
as described previously and cost reduction initiatives executed
across global production facilities following the COVID-19
pandemic.
Earthmoving/Construction Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
Net sales
|
$
|
176,715
|
|
|
$
|
112,457
|
|
|
57.1
|
%
|
|
$
|
341,522
|
|
|
$
|
249,379
|
|
|
36.9
|
%
|
Gross
profit
|
22,328
|
|
|
11,614
|
|
|
92.3
|
%
|
|
42,070
|
|
|
22,368
|
|
|
88.1
|
%
|
Profit
margin
|
12.6
|
%
|
|
10.3
|
%
|
|
22.3
|
%
|
|
12.3
|
%
|
|
9.0
|
%
|
|
36.7
|
%
|
Income (loss)
from
operations
|
7,462
|
|
|
(1,902)
|
|
|
492.3
|
%
|
|
13,037
|
|
|
(5,817)
|
|
|
324.1
|
%
|
During the quarter ended June 30, 2021, the increase in
earthmoving/construction net sales was driven by increased volume
and product price and mix of 38.3 percent and 11.4% percent
respectively, which was primarily due to improvements of global
economic conditions and recovery in construction markets, including
the return to normalized supply and demand levels in light of the
COVID-19 pandemic. For the three months ended June 30, 2020, the direct impact of COVID-19
accounted for approximately $26
million of the sales decrease due to plant shutdowns and
market disruptions in Europe,
Asia and Latin America, which did not repeat during the
second quarter of 2021. Net sales was also favorably impacted
by foreign currency translation in Europe, which increased net sales by 7.5
percent. The increase in gross profit and margin was
primarily driven by the increased sales volume and continued
improved production efficiencies.
During the six months ended June 30, 2021, the increase in
earthmoving/construction sales was driven by increased volume and
product price and mix of 27.8 percent and 4.1 percent,
respectively, which was primarily due to continued market recovery,
as previously discussed. For the six months ended
June 30, 2020, the direct impact of
COVID-19 accounted for approximately $40
million of the sales decrease due to plant shutdowns and
market disruptions in Europe,
Asia and Latin America, which did not repeat during the
first half of 2021. Net sales was also favorably impacted by
foreign currency translation in Europe, which increased net sales by 5.1
percent. The increase in gross profit and margin was
primarily driven by the increased sales volume and continued
improved production efficiencies.
Consumer Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
Net sales
|
$
|
30,420
|
|
|
$
|
26,409
|
|
|
15.2
|
%
|
|
$
|
60,372
|
|
|
$
|
58,048
|
|
|
4.0
|
%
|
Gross
profit
|
3,851
|
|
|
2,640
|
|
|
45.9
|
%
|
|
7,585
|
|
|
5,103
|
|
|
48.6
|
%
|
Profit
margin
|
12.7
|
%
|
|
10.0
|
%
|
|
27.0
|
%
|
|
12.6
|
%
|
|
8.8
|
%
|
|
43.2
|
%
|
Income (loss)
from
operations
|
1,881
|
|
|
1,425
|
|
|
32.0
|
%
|
|
3,548
|
|
|
1,000
|
|
|
254.8
|
%
|
During the quarter ended June 30, 2021, the increase in net
sales was driven by favorable product price and mix impact to net
sales of 17.1 percent. The increase was partially offset by
unfavorable volume impacts to net sales of 3.1 percent reflecting
lower sales volume mainly in Europe, as production has been allocated
toward the agriculture and construction markets, due to significant
increases in demand. The increase in gross profit and margin was
due primarily to increased product price and mix.
During the six months ended June 30, 2021, the increase in
net sales was driven by favorable product price and mix impact to
net sales of 10.0 percent. The increase was partially offset
by unfavorable foreign currency and volume impacts to net sales of
3.7 percent and 2.3 percent, respectively. The unfavorable
foreign currency impact was primarily due to devaluation of Latin
American currencies against the US Dollar. The increase in
gross profit and margin was due primarily to increased product
price and mix.
Financial Condition
The Company ended the second quarter of 2021 with total cash and
cash equivalents of $95.8 million,
compared to $117.4 million at
December 31, 2020. Long-term debt at June 30, 2021,
was $452.7 million, compared to
$433.6 million at December 31,
2020. Short-term debt was $34.3
million at June 30, 2021, compared to $31.1 million at December 31, 2020.
Net debt (total debt less cash and cash equivalents) was
$391.2 million at June 30, 2021,
compared to $347.3 million at
December 31, 2020. The increase in net debt during the
first six months of 2021 was primarily due to managed investments
in working capital to support the business growth as well as
approximately $19 million paid in
connection with the refinancing of the senior notes during the
second quarter and a $9.2 million
legal settlement paid in February.
Net cash used by operating activities for the first six months
of 2021 was $17.5 million, compared
to net cash provided by operations of $5.5
million for the comparable prior year period. Capital
expenditures were $14.6 million for
the first six months of 2021, compared to $8.4 million for the comparable prior year
period. Capital expenditures during the first six months of
2021 and 2020 represent equipment replacement and improvements,
along with new tools, dies and molds related to new product
development. The overall capital outlay for 2021 is expected
to increase as the Company seeks to enhance the Company's existing
facilities and manufacturing capabilities and drive productivity
gains following suppression of capital outlay in 2020 as a result
of the COVID-19 pandemic and reduction of business activity.
About Titan
Titan International, Inc. (NYSE: TWI) is a leading global
manufacturer of off-highway wheels, tires, assemblies, and
undercarriage products. Headquartered in Illinois, the Company globally produces a
broad range of products to meet the specifications of original
equipment manufacturers (OEMs) and aftermarket customers in the
agricultural, earthmoving/construction, and consumer markets. For
more information, visit www.titan-intl.com.
Teleconference and Webcast
Titan will be hosting a teleconference and webcast to discuss
the second quarter financial results on Thursday, July 29, 2021, at 9 a.m. Eastern Time.
The real-time, listen-only webcast can be accessed 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 in the U.S. should dial (888)
347-5307, participants in Canada
should dial (855) 669-9657, and other international callers should
dial (412) 902-4283.
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 Titan International, Inc.'s control. As a
result, any of these assumptions could prove to be inaccurate and
the forward-looking statements based on these assumptions could be
incorrect. The matters discussed in these forward-looking
statements are subject to risks, uncertainties, and other factors
that could cause actual results and trends to differ materially
from those made, projected, or implied in or by the forward-looking
statements depending on a variety of uncertainties or other factors
including, but not limited to, the effect of the COVID-19 pandemic
on our operations and financial performance; the effect of a
recession on the Company and its customers and suppliers; changes
in the Company's end-user markets into which the Company sells its
products as a result of domestic and world economic or regulatory
influences or otherwise; changes in the marketplace, including new
products and pricing changes by the Company's competitors; the
Company's ability to maintain satisfactory labor relations;
unfavorable outcomes of legal proceedings; the Company's ability to
comply with current or future regulations applicable to the
Company's business and the industry in which it competes or any
actions taken or orders issued by regulatory authorities;
availability and price of raw materials; levels of operating
efficiencies; the effects of the Company's indebtedness and its
compliance with the terms thereof; changes in the interest rate
environment and their effects on the Company's outstanding
indebtedness; unfavorable product liability and warranty claims;
actions of domestic and foreign governments, including the
imposition of additional tariffs; geopolitical and economic
uncertainties relating to the countries in which the Company
operates or does business; risks associated with acquisitions,
including difficulty in integrating operations and personnel,
disruption of ongoing business, and increased expenses; results of
investments; the effects of potential processes to explore various
strategic transactions, including potential dispositions;
fluctuations in currency translations; risks associated with
environmental laws and regulations; risks relating to our
manufacturing facilities, including that any of our material
facilities may become inoperable; risks relating to financial
reporting, internal controls, tax accounting, and information
systems; and the other risks and factors detailed in the Company's
periodic reports filed with the Securities and Exchange Commission,
including the disclosures under "Risk Factors" in those reports.
These forward-looking statements are made only as of the date
hereof. 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, whether as a
result of new information, changed circumstances or future events,
or for any other reason, except as required by law.
Titan
International, Inc.
|
Consolidated
Statements of Operations
|
Amounts in
thousands, except per share data
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
438,639
|
|
|
$
|
286,133
|
|
|
$
|
842,157
|
|
|
$
|
627,633
|
|
Cost of
sales
|
377,169
|
|
|
255,259
|
|
|
727,422
|
|
|
566,936
|
|
Asset
impairment
|
—
|
|
|
1,007
|
|
|
—
|
|
|
3,586
|
|
Gross
profit
|
61,470
|
|
|
29,867
|
|
|
114,735
|
|
|
57,111
|
|
Selling, general and
administrative expenses
|
32,566
|
|
|
28,441
|
|
|
66,594
|
|
|
60,398
|
|
Research and
development expenses
|
2,528
|
|
|
2,132
|
|
|
5,081
|
|
|
4,542
|
|
Royalty
expense
|
2,657
|
|
|
2,395
|
|
|
5,110
|
|
|
4,875
|
|
Income (loss) from
operations
|
23,719
|
|
|
(3,101)
|
|
|
37,950
|
|
|
(12,704)
|
|
Interest
expense
|
(8,598)
|
|
|
(7,906)
|
|
|
(16,121)
|
|
|
(15,826)
|
|
Loss on senior note
repurchase
|
(16,020)
|
|
|
—
|
|
|
(16,020)
|
|
|
—
|
|
Foreign exchange
(loss) gain
|
(768)
|
|
|
8,836
|
|
|
8,709
|
|
|
(8,406)
|
|
Other income
(expense)
|
1,232
|
|
|
(492)
|
|
|
864
|
|
|
6,829
|
|
(Loss) income before
income taxes
|
(435)
|
|
|
(2,663)
|
|
|
15,382
|
|
|
(30,107)
|
|
Provision for income
taxes
|
1,991
|
|
|
1,980
|
|
|
4,585
|
|
|
2,035
|
|
Net (loss)
income
|
(2,426)
|
|
|
(4,643)
|
|
|
10,797
|
|
|
(32,142)
|
|
Net income (loss)
attributable to noncontrolling interests
|
347
|
|
|
402
|
|
|
(4)
|
|
|
(1,611)
|
|
Net (loss) income
attributable to Titan and applicable to
common shareholders
|
(2,773)
|
|
|
(5,045)
|
|
|
10,801
|
|
|
(30,531)
|
|
|
|
|
|
|
|
|
|
(Loss) income
per common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(.04)
|
|
|
$
|
(.08)
|
|
|
$
|
.18
|
|
|
$
|
(.50)
|
|
Diluted
|
$
|
(.04)
|
|
|
$
|
(.08)
|
|
|
$
|
.17
|
|
|
$
|
(.50)
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
61,717
|
|
|
60,602
|
|
|
61,592
|
|
|
60,481
|
|
Diluted
|
61,717
|
|
|
60,602
|
|
|
62,480
|
|
|
60,481
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share:
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
.005
|
|
Titan
International, Inc.
|
Consolidated Balance
Sheets
|
Amounts in
thousands, except share data
|
|
|
June 30,
2021
|
|
December 31,
2020
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
95,804
|
|
|
$
|
117,431
|
|
Accounts
receivable, net
|
265,729
|
|
|
193,014
|
|
Inventories
|
345,339
|
|
|
293,679
|
|
Prepaid and other
current assets
|
65,368
|
|
|
54,475
|
|
Total current
assets
|
772,240
|
|
|
658,599
|
|
Property, plant and
equipment, net
|
310,210
|
|
|
319,854
|
|
Operating lease
assets
|
19,393
|
|
|
24,356
|
|
Deferred income
taxes
|
2,780
|
|
|
2,591
|
|
Other
assets
|
22,815
|
|
|
26,484
|
|
Total
assets
|
$
|
1,127,438
|
|
|
$
|
1,031,884
|
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Short-term
debt
|
$
|
34,296
|
|
|
$
|
31,119
|
|
Accounts
payable
|
239,001
|
|
|
167,210
|
|
Other current
liabilities
|
140,316
|
|
|
131,382
|
|
Total current
liabilities
|
413,613
|
|
|
329,711
|
|
Long-term
debt
|
452,730
|
|
|
433,584
|
|
Deferred income
taxes
|
4,278
|
|
|
3,895
|
|
Other long-term
liabilities
|
53,640
|
|
|
63,429
|
|
Total
liabilities
|
924,261
|
|
|
830,619
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
25,000
|
|
|
25,000
|
|
|
|
|
|
Equity
|
|
|
|
Titan shareholders'
equity
|
|
|
|
Common
stock ($0.0001 par value, 120,000,000 shares authorized, 62,288,637
issued at
June 30, 2021 and 61,466,593 at December 31, 2020)
|
—
|
|
|
—
|
|
Additional paid-in
capital
|
534,697
|
|
|
532,742
|
|
Retained
deficit
|
(124,224)
|
|
|
(135,025)
|
|
Treasury stock (at
cost, 80,876 shares at June 30, 2021 and 89,612 shares at December
31,
2020)
|
(1,121)
|
|
|
(1,199)
|
|
Accumulated other
comprehensive loss
|
(227,802)
|
|
|
(217,254)
|
|
Total Titan
shareholders' equity
|
181,550
|
|
|
179,264
|
|
Noncontrolling
interests
|
(3,373)
|
|
|
(2,999)
|
|
Total
equity
|
178,177
|
|
|
176,265
|
|
Total liabilities and
equity
|
$
|
1,127,438
|
|
|
$
|
1,031,884
|
|
Titan
International, Inc.
|
Consolidated
Statements of Cash Flows
|
All amounts in
thousands
|
|
|
Six months ended
June 30,
|
Cash flows from
operating activities:
|
2021
|
|
2020
|
Net income
(loss)
|
$
|
10,797
|
|
|
$
|
(32,142)
|
|
Adjustments to
reconcile net income (loss) to net cash (used for) provided by
operating
activities:
|
|
|
|
Depreciation and
amortization
|
24,918
|
|
|
27,119
|
|
Asset
impairment
|
—
|
|
|
3,586
|
|
Deferred income tax
provision
|
198
|
|
|
(2,111)
|
|
(Gain) loss on fixed
asset and investment sale
|
(485)
|
|
|
703
|
|
Gain on property
insurance settlement
|
—
|
|
|
(4,936)
|
|
Loss on senior note
repurchase
|
16,020
|
|
|
—
|
|
Stock-based
compensation
|
1,380
|
|
|
1,071
|
|
Issuance of stock
under 401(k) plan
|
681
|
|
|
615
|
|
Foreign currency
translation (gain) loss
|
(9,665)
|
|
|
8,122
|
|
(Increase) decrease in
assets:
|
|
|
|
Accounts
receivable
|
(72,765)
|
|
|
(22,383)
|
|
Inventories
|
(53,080)
|
|
|
23,051
|
|
Prepaid and other
current assets
|
(10,350)
|
|
|
(2,491)
|
|
Other
assets
|
3,154
|
|
|
844
|
|
Increase (decrease) in
liabilities:
|
|
|
|
Accounts
payable
|
71,051
|
|
|
(11,568)
|
|
Other current
liabilities
|
7,993
|
|
|
19,180
|
|
Other
liabilities
|
(7,334)
|
|
|
(3,159)
|
|
Net cash (used for)
provided by operating activities
|
(17,487)
|
|
|
5,501
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(14,637)
|
|
|
(8,402)
|
|
Sale of Wheels India
Limited shares
|
—
|
|
|
15,722
|
|
Proceeds from property
insurance settlement
|
—
|
|
|
4,936
|
|
Proceeds from sale of
fixed assets
|
749
|
|
|
200
|
|
Other
|
—
|
|
|
(558)
|
|
Net cash (used for)
provided by investing activities
|
(13,888)
|
|
|
11,898
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
459,929
|
|
|
76,798
|
|
Repurchase of senior
secured notes
|
(413,000)
|
|
|
—
|
|
Payment on
debt
|
(34,040)
|
|
|
(74,011)
|
|
Dividends
paid
|
—
|
|
|
(603)
|
|
Other financing
activities
|
(2,040)
|
|
|
608
|
|
Net cash provided
by financing activities
|
10,849
|
|
|
2,792
|
|
Effect of exchange
rate changes on cash
|
(1,101)
|
|
|
(6,830)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(21,627)
|
|
|
13,361
|
|
Cash and cash
equivalents, beginning of period
|
117,431
|
|
|
66,799
|
|
Cash and cash
equivalents, end of period
|
$
|
95,804
|
|
|
$
|
80,160
|
|
|
|
|
|
Supplemental
information:
|
|
|
|
Interest
paid
|
$
|
16,422
|
|
|
$
|
15,188
|
|
Income taxes paid, net
of refunds received
|
$
|
7,101
|
|
|
$
|
4,732
|
|
Titan International,
Inc.
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 the United States (GAAP). These supplemental
schedules provide a quantitative reconciliation between each of
adjusted net income (loss) attributable to Titan, EBITDA, adjusted
EBITDA, net sales on a constant currency basis, and net debt, each
of which is a non-GAAP financial measure and the most directly
comparable financial measures calculated and reported in accordance
with GAAP.
We present adjusted net income (loss) 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 (loss) 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
(loss) attributable to Titan to net income (loss) applicable to
common shareholders, the most directly comparable GAAP financial
measure, for each of the three and six month periods ended
June 30, 2021 and 2020.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Net (loss) income
applicable to common shareholders
|
$
|
(2,773)
|
|
|
$
|
(5,045)
|
|
|
$
|
10,801
|
|
|
$
|
(30,531)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Insurance
reimbursement
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,936)
|
|
Foreign
exchange loss (gain)
|
768
|
|
|
(8,836)
|
|
|
(8,709)
|
|
|
8,406
|
|
Loss on senior
note repurchase
|
16,020
|
|
|
—
|
|
|
16,020
|
|
|
—
|
|
Asset
impairment
|
—
|
|
|
1,007
|
|
|
—
|
|
|
3,586
|
|
Loss on sale
of Wheels India Limited shares
|
—
|
|
|
2,005
|
|
|
—
|
|
|
2,005
|
|
Restructuring
charge
|
—
|
|
|
399
|
|
|
—
|
|
|
399
|
|
|
|
|
|
|
|
|
|
Adjusted net income
(loss) attributable to Titan
|
$
|
14,015
|
|
|
$
|
(10,470)
|
|
|
$
|
18,112
|
|
|
$
|
(21,071)
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.23
|
|
|
$
|
(0.17)
|
|
|
$
|
0.29
|
|
|
$
|
(0.35)
|
|
Diluted
|
0.22
|
|
|
(0.17)
|
|
|
0.29
|
|
|
(0.35)
|
|
|
|
|
|
|
|
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
61,717
|
|
|
60,602
|
|
|
61,592
|
|
|
60,481
|
|
Diluted
|
62,568
|
|
|
60,602
|
|
|
62,480
|
|
|
60,481
|
|
The table below provides a reconciliation of net income (loss)
to EBITDA and adjusted EBITDA, which are non-GAAP financial
measures, for the three and six month periods ended June 30, 2021 and 2020.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(2,426)
|
|
|
$
|
(4,643)
|
|
|
$
|
10,797
|
|
|
$
|
(32,142)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Provision for income
taxes
|
1,991
|
|
|
1,980
|
|
|
4,585
|
|
|
2,035
|
|
Interest expense,
excluding interest income
|
8,701
|
|
|
8,008
|
|
|
16,110
|
|
|
16,043
|
|
Depreciation and
amortization
|
12,358
|
|
|
13,334
|
|
|
24,918
|
|
|
27,119
|
|
EBITDA
|
$
|
20,624
|
|
|
$
|
18,679
|
|
|
$
|
56,410
|
|
|
$
|
13,055
|
|
Adjustments:
|
|
|
|
|
|
|
|
Insurance
reimbursement
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,936)
|
|
Foreign
exchange loss (gain)
|
768
|
|
|
(8,836)
|
|
|
(8,709)
|
|
|
8,406
|
|
Loss on senior
note repurchase
|
16,020
|
|
|
—
|
|
|
16,020
|
|
|
—
|
|
Asset
impairment
|
—
|
|
|
1,007
|
|
|
—
|
|
|
3,586
|
|
Loss on sale
of Wheels India Limited shares
|
—
|
|
|
2,005
|
|
|
—
|
|
|
2,005
|
|
Restructuring
charge
|
—
|
|
|
399
|
|
|
—
|
|
|
399
|
|
Adjusted
EBITDA
|
$
|
37,412
|
|
|
$
|
13,254
|
|
|
$
|
63,721
|
|
|
$
|
22,515
|
|
The table below sets forth, for the three and six month period
ended June 30, 2021, the impact to
net sales of currency translation (constant currency) by geography
(in thousands, except percentages):
|
Three Months Ended
June 30,
|
|
Change due to
currency
translation
|
|
Three Months
Ended
June 30, 2021
|
|
2021
|
|
2020
|
|
% Change
from 2020
|
|
$
|
|
%
|
|
Constant
Currency
|
United
States
|
$
|
199,205
|
|
|
$
|
140,662
|
|
|
41.6%
|
|
—
|
|
|
—
|
%
|
|
$
|
199,205
|
|
Europe /
CIS
|
121,346
|
|
|
80,271
|
|
|
51.2%
|
|
7,562
|
|
|
9.4
|
%
|
|
113,784
|
|
Latin
America
|
78,928
|
|
|
41,498
|
|
|
90.2%
|
|
(1,331)
|
|
|
(3.2)
|
%
|
|
80,259
|
|
Other
International
|
39,160
|
|
|
23,702
|
|
|
65.2%
|
|
1,945
|
|
|
8.2
|
%
|
|
37,215
|
|
|
438,639
|
|
|
286,133
|
|
|
53.3%
|
|
8,176
|
|
|
2.9
|
%
|
|
430,463
|
|
|
Six Months Ended
June 30,
|
|
Change due to
currency
translation
|
|
Six Months
Ended
June 30, 2021
|
|
2021
|
|
2020
|
|
% Change
from 2020
|
|
$
|
|
%
|
|
Constant
Currency
|
United
States
|
$
|
385,610
|
|
|
$
|
317,759
|
|
|
21.4%
|
|
—
|
|
|
—
|
%
|
|
$
|
385,610
|
|
Europe /
CIS
|
233,508
|
|
|
164,691
|
|
|
41.8%
|
|
13,012
|
|
|
7.9
|
%
|
|
220,496
|
|
Latin
America
|
145,071
|
|
|
96,239
|
|
|
50.7%
|
|
(15,239)
|
|
|
(15.8)
|
%
|
|
160,310
|
|
Other
International
|
77,968
|
|
|
48,944
|
|
|
59.3%
|
|
4,666
|
|
|
9.5
|
%
|
|
73,302
|
|
|
842,157
|
|
|
627,633
|
|
|
34.2%
|
|
2,439
|
|
|
0.4
|
%
|
|
839,718
|
|
The table below provides a reconciliation of net debt, which is
a non-GAAP financial measure:
|
June 30,
2021
|
|
December 31,
2020
|
|
June 30,
2020
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
$
|
452,730
|
|
|
$
|
433,584
|
|
|
$
|
462,240
|
|
Short-term
debt
|
34,296
|
|
|
31,119
|
|
|
40,784
|
|
Total
debt
|
$
|
487,026
|
|
|
$
|
464,703
|
|
|
$
|
503,024
|
|
Cash and cash
equivalents
|
95,804
|
|
|
117,431
|
|
|
80,160
|
|
Net debt
|
$
|
391,222
|
|
|
$
|
347,272
|
|
|
$
|
422,864
|
|
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SOURCE Titan International, Inc.