WEST CHICAGO, Ill., Nov.
3, 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 third quarter ended September 30, 2021,
highlighted by the strongest third quarter revenue and profit
performance since 2013.
"Paul Reitz, President and Chief
Executive Officer commented, "Our results this period exceeded
expectations as we posted our strongest third quarter for revenue
and profitability since 2013. Again this quarter our global
Titan team has worked hard to increase our production levels and we
continue to look to build our team further to increase our output
in coming periods. Our third quarter adjusted EBITDA of
$35.1 million has only been surpassed
a couple times since 2014 with one of those times occurring in the
second quarter of this year when we posted adjusted EBITDA of
$37 million and the other during the
first quarter of 2018 with $41.2
million. We now believe full year adjusted EBITDA to
be over $130 million. Our One
Titan team rose to the challenge and I want to thank all of Titan's
employees around the world for doing a great job.
"During the third quarter, each of our segments experienced
strong sales growth, with Agriculture leading the way with an
increase of over 59 percent year over year. Our order books
continue to strengthen, especially on the Agriculture side, where
commodity pricing remains at good levels with corn above
$5/bushel, soybeans above
$12/bushel and cotton at an all-time
high, thus ensuring strong farmer income levels for 2022.
Quite simply, farmers are doing really good again this year.
High farmer incomes combined with historically low dealer inventory
levels and aging equipment, creates a strong tailwind that we
believe will continue through 2022. Our earthmoving and
construction (EMC) growth in the third quarter was very strong at
36 percent year over year. The EMC end markets continue to
look increasingly promising and our undercarriage business is
building momentum as we head into next year with strong development
in orders as infrastructure investments are coming across most of
our geographies. It is without a doubt, one of the most
dynamic business environments all of us have faced and our Titan
team has been successful in managing through it. We are in a
good position at this time to capitalize on our reinvigorated
strength to drive growth and increased financial results for our
investors."
Results of Operations
Net sales for the third quarter ended September 30, 2021,
were $450.4 million, compared to
$304.8 million in the comparable
quarter of 2020, an increase of 47.8 percent driven by sales
increases across all segments. Overall net sales was
influenced heavily by increased volume from demand increases across
all segments of the business, most notably agriculture. The
contributing factors to the increase in demand were increased
commodity prices, lower equipment inventory levels and pent up
demand following the economic impacts during 2020.
Gross profit for the third quarter ended September 30, 2021
was $60.3 million, compared to
$31.3 million in the comparable prior
year period. Gross margin was 13.4 percent of net sales for
the quarter, compared to 10.3 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.
Selling, general, administrative, research and development
(SGARD) expenses for the third quarter of 2021 were $34.6 million, compared to $35.7 million for the comparable prior year
period. As a percentage of net sales, SGARD was 7.7 percent,
compared to 11.7 percent for the comparable prior year
period. The decrease in SGARD was driven primarily by a
$5.0 million accrual recorded for the
three months ended September 30, 2020 for the settlement of a
legal matter offset by an increase in variable costs associated
with improved operating performance and growth in sales.
Income from operations for the third quarter of 2021 was
$22.9 million, or 5.1 percent of net
sales, compared to a loss of $6.8
million, or 2.2 percent of net sales, for the third quarter
of 2020. The increase in income was primarily due to the
higher sales and improvements in gross profit margins.
Segment Information
Agricultural Segment
|
(Amounts in
thousands)
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
Net sales
|
$
|
244,373
|
|
|
$
|
153,067
|
|
|
59.7
|
%
|
|
$
|
684,636
|
|
|
$
|
473,272
|
|
|
44.7
|
%
|
Gross
profit
|
33,214
|
|
|
16,191
|
|
|
105.1
|
%
|
|
98,294
|
|
|
45,830
|
|
|
114.5
|
%
|
Profit
margin
|
13.6
|
%
|
|
10.6
|
%
|
|
28.3
|
%
|
|
14.4
|
%
|
|
9.7
|
%
|
|
48.5
|
%
|
Income from
operations
|
18,156
|
|
|
3,091
|
|
|
487.4
|
%
|
|
54,228
|
|
|
11,958
|
|
|
353.5
|
%
|
During the quarter ended September 30, 2021, net sales
increased 60 percent reflecting volume improvements due to demand
in the market, reflective of improved farmer income, replacement of
an aging large equipment fleet and replenishment of lower equipment
inventory levels within the equipment dealer channels. 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.
Earthmoving/Construction Segment
|
(Amounts in
thousands)
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
Net sales
|
$
|
168,408
|
|
|
$
|
123,227
|
|
|
36.7
|
%
|
|
$
|
509,930
|
|
|
$
|
372,606
|
|
|
36.9
|
%
|
Gross
profit
|
21,263
|
|
|
12,409
|
|
|
71.4
|
%
|
|
63,333
|
|
|
34,777
|
|
|
82.1
|
%
|
Profit
margin
|
12.6
|
%
|
|
10.1
|
%
|
|
24.8
|
%
|
|
12.4
|
%
|
|
9.3
|
%
|
|
33.3
|
%
|
Income (loss) from
operations
|
7,913
|
|
|
656
|
|
|
1,106.3
|
%
|
|
20,950
|
|
|
(5,161)
|
|
|
505.9
|
%
|
During the quarter ended September 30, 2021, the increase
in earthmoving/construction net sales was heavily driven by
increased volume which was primarily due to improvements in global
economic conditions and recovery in construction markets, including
the return to normalized supply and demand levels in the
market. The increase in gross profit and margin was primarily
driven by the increased sales volume and continued improved
production efficiencies stemming from the strong management actions
taken to improve profitability for the long-term.
Consumer Segment
|
(Amounts in
thousands)
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
|
2021
|
|
2020
|
|
%
Increase/(Decrease)
|
Net sales
|
$
|
37,601
|
|
|
$
|
28,478
|
|
|
32.0
|
%
|
|
$
|
97,973
|
|
|
$
|
86,527
|
|
|
13.2
|
%
|
Gross
profit
|
5,815
|
|
|
2,717
|
|
|
114.0
|
%
|
|
13,400
|
|
|
7,821
|
|
|
71.3
|
%
|
Profit
margin
|
15.5
|
%
|
|
9.5
|
%
|
|
63.2
|
%
|
|
13.7
|
%
|
|
9.0
|
%
|
|
52.2
|
%
|
Income (loss) from
operations
|
3,519
|
|
|
(88)
|
|
|
4,098.9
|
%
|
|
7,067
|
|
|
912
|
|
|
674.9
|
%
|
During the quarter ended September 30, 2021, the increase
in net sales was primarily driven by increases in volume related to
market improvements. The increase in gross profit and margin
was due primarily to increased volume and the positive impact on
plant efficiencies, and to a lesser extent, improved mix of
products sold.
Non-GAAP Financial Measures
Adjusted EBITDA was $35.1 million
for the third quarter of 2021, compared to $14.2 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.
Adjusted net income applicable to common shareholders for the
third quarter of 2021 was income of $10.8
million, equal to income of $0.17 per basic and diluted share, compared to a
loss of $6.3 million, equal to a loss
of $0.10 per basic and diluted share,
in the third quarter of 2020. The Company utilizes adjusted
net income applicable to common 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.
Financial Condition
The Company ended the third quarter of 2021 with total cash and
cash equivalents of $94.6 million,
compared to $117.4 million at
December 31, 2020. Long-term debt at September 30,
2021, was $451.0 million, compared to
$433.6 million at December 31,
2020. Short-term debt was $30.9
million at September 30, 2021, compared to $31.1 million at December 31, 2020.
Net debt (total debt less cash and cash equivalents) was
$387.2 million at September 30,
2021, compared to $347.3 million at
December 31, 2020. The increase in net debt during the
first nine 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 and
$9.2 million paid for a legal
settlement.
Net cash used by operating activities for the first nine months
of 2021 was $2.3 million, compared to
net cash provided by operations of $47.4
million for the comparable prior year period. Capital
expenditures were $24.3 million for
the first nine months of 2021, compared to $13.4 million for the comparable prior year
period. Capital expenditures during the first nine 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 has
increased 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.
On October 28, 2021, the Company
amended and extended the credit and security agreement with respect
to the $100 million revolving credit
facility (credit facility) with agent BMO Harris Bank N.A. and
other financial institutions. The credit facility was
increased to $125 million with the
amount available under the credit facility determined based upon
eligible accounts receivable and inventory balances at certain of
its domestic subsidiaries. The amended credit facility has a
five-year term with the new maturity occurring on October 28, 2026. The amended credit facility can
be expanded by up to $50 million
through an accordion provision within the agreement. The
amended agreement has terms substantially similar to those
contained in the agreement prior to the amendment earlier this year
on February 25, 2021 and also
includes other enhancements to further improve the availability
within the borrowing base.
Teleconference and Webcast
Titan will be hosting a teleconference and webcast to discuss
the third quarter financial results on Thursday, November 4, 2021, at 9 a.m. Eastern Time.
The real-time, listen-only webcast can be accessed using the
following link https://events.q4inc.com/attendee/506281302 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:
United States Toll Free: 1 844 200
6205
United States: 1 646 904 5544
All other locations: +1 929 526 1599
International Toll Free: + 44 208
0682 558
Participants Access Code: 602849
About Titan
Titan International, Inc. (NYSE: TWI) is a leading global
manufacturer of off-highway wheels, tires, assemblies, and
undercarriage products. Headquartered in West Chicago, 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.
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,
including any risks associated with the disruption to the Company's
operations if the Company is unable to reach a mutually agreeable
domestic collective bargaining agreement (the current agreement
will expire on November 16, 2021);
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
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
450,382
|
|
|
$
|
304,772
|
|
|
$
|
1,292,539
|
|
|
$
|
932,405
|
|
Cost of
sales
|
390,090
|
|
|
273,455
|
|
|
1,117,512
|
|
|
840,391
|
|
Asset
impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
3,586
|
|
Gross
profit
|
60,292
|
|
|
31,317
|
|
|
175,027
|
|
|
88,428
|
|
Selling, general and
administrative expenses
|
32,217
|
|
|
33,451
|
|
|
98,811
|
|
|
93,849
|
|
Research and
development expenses
|
2,370
|
|
|
2,240
|
|
|
7,451
|
|
|
6,782
|
|
Royalty
expense
|
2,805
|
|
|
2,434
|
|
|
7,915
|
|
|
7,309
|
|
Income (loss) from
operations
|
22,900
|
|
|
(6,808)
|
|
|
60,850
|
|
|
(19,512)
|
|
Interest
expense
|
(7,818)
|
|
|
(7,251)
|
|
|
(23,939)
|
|
|
(23,076)
|
|
Loss on senior note
repurchase
|
—
|
|
|
—
|
|
|
(16,020)
|
|
|
—
|
|
Foreign exchange gain
(loss)
|
416
|
|
|
(1,336)
|
|
|
9,125
|
|
|
(9,742)
|
|
Other
income
|
648
|
|
|
2,283
|
|
|
1,512
|
|
|
9,111
|
|
Income (loss) before
income taxes
|
16,146
|
|
|
(13,112)
|
|
|
31,528
|
|
|
(43,219)
|
|
Provision for income
taxes
|
5,342
|
|
|
342
|
|
|
9,927
|
|
|
2,377
|
|
Net income
(loss)
|
10,804
|
|
|
(13,454)
|
|
|
21,601
|
|
|
(45,596)
|
|
Net loss attributable
to noncontrolling interests
|
(383)
|
|
|
(811)
|
|
|
(387)
|
|
|
(2,422)
|
|
Net income (loss)
attributable to Titan and applicable to
common shareholders
|
11,187
|
|
|
(12,643)
|
|
|
21,988
|
|
|
(43,174)
|
|
|
|
|
|
|
|
|
|
Income (loss)
per common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.18
|
|
|
$
|
(0.21)
|
|
|
$
|
0.36
|
|
|
$
|
(0.71)
|
|
Diluted
|
$
|
0.18
|
|
|
$
|
(0.21)
|
|
|
$
|
0.35
|
|
|
$
|
(0.71)
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
62,340
|
|
|
60,926
|
|
|
61,844
|
|
|
60,630
|
|
Diluted
|
62,601
|
|
|
60,926
|
|
|
62,523
|
|
|
60,630
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share:
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
.005
|
|
Titan
International, Inc. Consolidated Balance Sheets
Amounts in thousands, except share data
|
|
|
September 30,
2021
|
|
December 31,
2020
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
94,640
|
|
|
$
|
117,431
|
|
Accounts
receivable, net
|
261,447
|
|
|
193,014
|
|
Inventories
|
373,012
|
|
|
293,679
|
|
Prepaid and other
current assets
|
67,144
|
|
|
54,475
|
|
Total current
assets
|
796,243
|
|
|
658,599
|
|
Property, plant and
equipment, net
|
302,590
|
|
|
319,854
|
|
Operating lease
assets
|
20,709
|
|
|
24,356
|
|
Deferred income
taxes
|
2,502
|
|
|
2,591
|
|
Other
assets
|
22,215
|
|
|
26,484
|
|
Total
assets
|
$
|
1,144,259
|
|
|
$
|
1,031,884
|
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Short-term
debt
|
$
|
30,867
|
|
|
$
|
31,119
|
|
Accounts
payable
|
253,819
|
|
|
167,210
|
|
Other current
liabilities
|
152,226
|
|
|
131,382
|
|
Total current
liabilities
|
436,912
|
|
|
329,711
|
|
Long-term
debt
|
450,999
|
|
|
433,584
|
|
Deferred income
taxes
|
3,142
|
|
|
3,895
|
|
Other long-term
liabilities
|
53,612
|
|
|
63,429
|
|
Total
liabilities
|
944,665
|
|
|
830,619
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
25,000
|
|
|
25,000
|
|
|
|
|
|
Equity
|
|
|
|
Titan shareholders'
equity
|
|
|
|
Common
stock ($0.0001 par value, 120,000,000 shares authorized, 62,427,660
issued at
September 30, 2021 and 61,466,593 at December 31, 2020)
|
—
|
|
|
—
|
|
Additional paid-in
capital
|
535,702
|
|
|
532,742
|
|
Retained
deficit
|
(113,037)
|
|
|
(135,025)
|
|
Treasury stock (at
cost, 80,876 shares at September 30, 2021 and 89,612 shares at
December 31, 2020)
|
(1,121)
|
|
|
(1,199)
|
|
Accumulated other
comprehensive loss
|
(243,628)
|
|
|
(217,254)
|
|
Total Titan
shareholders' equity
|
177,916
|
|
|
179,264
|
|
Noncontrolling
interests
|
(3,322)
|
|
|
(2,999)
|
|
Total
equity
|
174,594
|
|
|
176,265
|
|
Total liabilities and
equity
|
$
|
1,144,259
|
|
|
$
|
1,031,884
|
|
Titan
International, Inc. Consolidated Statements of Cash
Flows
All amounts in thousands
|
|
Nine months ended
September 30,
|
Cash flows from
operating activities:
|
2021
|
|
2020
|
Net income
(loss)
|
$
|
21,601
|
|
|
$
|
(45,596)
|
|
Adjustments to
reconcile net income (loss) to net cash (used for) provided by
operating
activities:
|
|
|
|
Depreciation and
amortization
|
36,345
|
|
|
40,376
|
|
Asset
impairment
|
—
|
|
|
3,586
|
|
Deferred income tax
provision
|
(743)
|
|
|
(3,616)
|
|
(Gain) loss on fixed
asset and investment sale
|
(569)
|
|
|
703
|
|
Gain on property
insurance settlement
|
—
|
|
|
(4,936)
|
|
Loss on senior note
repurchase
|
16,020
|
|
|
—
|
|
Stock-based
compensation
|
2,029
|
|
|
1,931
|
|
Issuance of stock
under 401(k) plan
|
1,036
|
|
|
925
|
|
Foreign currency
translation (gain) loss
|
(12,042)
|
|
|
9,812
|
|
(Increase) decrease in
assets:
|
|
|
|
Accounts
receivable
|
(75,456)
|
|
|
(22,909)
|
|
Inventories
|
(89,496)
|
|
|
36,664
|
|
Prepaid and other
current assets
|
(14,249)
|
|
|
(1,133)
|
|
Other
assets
|
3,175
|
|
|
1,198
|
|
Increase (decrease) in
liabilities:
|
|
|
|
Accounts
payable
|
92,384
|
|
|
2,351
|
|
Other current
liabilities
|
24,207
|
|
|
28,753
|
|
Other
liabilities
|
(6,532)
|
|
|
(678)
|
|
Net cash (used for)
provided by operating activities
|
(2,290)
|
|
|
47,431
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(24,250)
|
|
|
(13,350)
|
|
Sale of Wheels India
Limited shares
|
—
|
|
|
32,852
|
|
Proceeds from property
insurance settlement
|
—
|
|
|
4,936
|
|
Proceeds from sale of
fixed assets
|
1,139
|
|
|
(558)
|
|
Other
|
—
|
|
|
1,484
|
|
Net cash (used for)
provided by investing activities
|
(23,111)
|
|
|
25,364
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
482,293
|
|
|
85,991
|
|
Repurchase of senior
secured notes
|
(413,000)
|
|
|
—
|
|
Payment on
debt
|
(59,949)
|
|
|
(116,601)
|
|
Dividends
paid
|
—
|
|
|
(603)
|
|
Other financing
activities
|
(2,069)
|
|
|
(2,723)
|
|
Net cash provided
by (used for) financing activities
|
7,275
|
|
|
(33,936)
|
|
Effect of exchange
rate changes on cash
|
(4,665)
|
|
|
(6,886)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(22,791)
|
|
|
31,973
|
|
Cash and cash
equivalents, beginning of period
|
117,431
|
|
|
66,799
|
|
Cash and cash
equivalents, end of period
|
$
|
94,640
|
|
|
$
|
98,772
|
|
Supplemental
information:
|
|
|
|
Interest
paid
|
$
|
24,985
|
|
|
$
|
16,070
|
|
Income taxes paid, net
of refunds received
|
$
|
10,766
|
|
|
$
|
6,861
|
|
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 nine month periods ended
September 30, 2021 and 2020.
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Net income (loss)
applicable to common shareholders
|
$
|
11,187
|
|
|
$
|
(12,643)
|
|
|
$
|
21,988
|
|
|
$
|
(43,174)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Insurance
reimbursement
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,936)
|
|
Foreign
exchange loss (gain)
|
(416)
|
|
|
1,336
|
|
|
(9,125)
|
|
|
9,742
|
|
Loss on senior
note repurchase
|
—
|
|
|
—
|
|
|
16,020
|
|
|
—
|
|
Settlement of legal
matter
|
|
|
5,000
|
|
|
|
|
5,000
|
|
Asset
impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
3,586
|
|
Loss on sale
of Wheels India Limited shares
|
—
|
|
|
—
|
|
|
—
|
|
|
2,005
|
|
Restructuring
charge
|
—
|
|
|
—
|
|
|
—
|
|
|
399
|
|
Adjusted net income
(loss) attributable to Titan
|
$
|
10,771
|
|
|
$
|
(6,307)
|
|
|
$
|
28,883
|
|
|
$
|
(27,378)
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.17
|
|
|
$
|
(0.10)
|
|
|
$
|
0.47
|
|
|
$
|
(0.45)
|
|
Diluted
|
0.17
|
|
|
(0.10)
|
|
|
0.46
|
|
|
(0.45)
|
|
|
|
|
|
|
|
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
62,340
|
|
|
60,926
|
|
|
61,844
|
|
|
60,630
|
|
Diluted
|
62,601
|
|
|
60,926
|
|
|
62,523
|
|
|
60,630
|
|
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 nine month periods ended September 30, 2021 and 2020.
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
10,804
|
|
|
$
|
(13,454)
|
|
|
$
|
21,601
|
|
|
$
|
(45,596)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Provision for income
taxes
|
5,342
|
|
|
342
|
|
|
9,927
|
|
|
2,377
|
|
Interest expense,
excluding interest income
|
7,972
|
|
|
7,729
|
|
|
24,081
|
|
|
23,772
|
|
Depreciation and
amortization
|
11,427
|
|
|
13,257
|
|
|
36,345
|
|
|
40,376
|
|
EBITDA
|
$
|
35,545
|
|
|
$
|
7,874
|
|
|
$
|
91,954
|
|
|
$
|
20,929
|
|
Adjustments:
|
|
|
|
|
|
|
|
Insurance
reimbursement
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,936)
|
|
Foreign
exchange loss (gain)
|
(416)
|
|
|
1,336
|
|
|
(9,125)
|
|
|
9,742
|
|
Loss on senior
note repurchase
|
—
|
|
|
—
|
|
|
16,020
|
|
|
—
|
|
Settlement of legal
matter
|
|
|
5,000
|
|
|
|
|
5,000
|
|
Asset
impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
3,586
|
|
Loss on sale
of Wheels India Limited shares
|
—
|
|
|
—
|
|
|
—
|
|
|
2,005
|
|
Restructuring
charge
|
—
|
|
|
—
|
|
|
—
|
|
|
399
|
|
Adjusted
EBITDA
|
$
|
35,129
|
|
|
$
|
14,210
|
|
|
$
|
98,849
|
|
|
$
|
36,725
|
|
The table below sets forth, for the three and nine month period
ended September 30, 2021, the impact
to net sales of currency translation (constant currency) by
geography (in thousands, except percentages):
|
Three Months Ended
September 30,
|
|
Change due to
currency
translation
|
|
Three Months
Ended
September 30, 2021
|
|
2021
|
|
2020
|
|
% Change
from 2020
|
|
$
|
|
%
|
|
Constant
Currency
|
United
States
|
$
|
218,185
|
|
|
$
|
122,450
|
|
|
78.2%
|
|
—
|
|
|
—
|
%
|
|
$
|
218,185
|
|
Europe /
CIS
|
110,279
|
|
|
123,851
|
|
|
(11.0)%
|
|
1,933
|
|
|
1.6
|
%
|
|
108,346
|
|
Latin
America
|
89,679
|
|
|
44,547
|
|
|
101.3%
|
|
2,023
|
|
|
4.5
|
%
|
|
87,656
|
|
Other
International
|
32,239
|
|
|
13,924
|
|
|
131.5%
|
|
(239)
|
|
|
(1.7)
|
%
|
|
32,478
|
|
|
450,382
|
|
|
304,772
|
|
|
47.8%
|
|
3,717
|
|
|
1.2
|
%
|
|
446,665
|
|
|
Nine Months Ended
September 30,
|
|
Change due to
currency
translation
|
|
Nine Months
Ended
September 30, 2021
|
|
2021
|
|
2020
|
|
% Change
from 2020
|
|
$
|
|
%
|
|
Constant
Currency
|
United
States
|
$
|
603,795
|
|
|
$
|
413,263
|
|
|
46.1%
|
|
—
|
|
|
—
|
%
|
|
$
|
603,795
|
|
Europe /
CIS
|
343,787
|
|
|
364,833
|
|
|
(5.8)%
|
|
14,850
|
|
|
4.1
|
%
|
|
328,937
|
|
Latin
America
|
234,750
|
|
|
113,344
|
|
|
107.1%
|
|
(12,950)
|
|
|
(11.4)
|
%
|
|
247,700
|
|
Other
International
|
110,207
|
|
|
40,965
|
|
|
169.0%
|
|
4,256
|
|
|
10.4
|
%
|
|
105,951
|
|
|
1,292,539
|
|
|
932,405
|
|
|
38.6%
|
|
6,156
|
|
|
0.7
|
%
|
|
1,286,383
|
|
The table below provides a reconciliation of net debt, which is
a non-GAAP financial measure:
|
September 30,
2021
|
|
December 31,
2020
|
|
September 30,
2020
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
$
|
450,999
|
|
|
$
|
433,584
|
|
|
$
|
431,789
|
|
Short-term
debt
|
30,867
|
|
|
31,119
|
|
|
32,641
|
|
Total
debt
|
$
|
481,866
|
|
|
$
|
464,703
|
|
|
$
|
464,430
|
|
Cash and cash
equivalents
|
94,640
|
|
|
117,431
|
|
|
98,772
|
|
Net debt
|
$
|
387,226
|
|
|
$
|
347,272
|
|
|
$
|
365,658
|
|
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SOURCE Titan International, Inc.