Adjusted EBITDA - $82 million
Earnings Per Share - $1.06/share (Adjusted EPS $0.79/share)
Other Quarter Highlights
- Net sales were $573 million, a
$134 million (30.6%) YoY
increase, the highest quarterly sales since Q2 2013
- Gross margin was 19%
- Free cash flow was $56 million
during the second quarter
CHICAGO, Aug. 1, 2022
/PRNewswire/ -- Titan International, Inc. (NYSE: TWI), a
leading global manufacturer of off-highway wheels, tires,
assemblies, and undercarriage products, today reported results for
the second quarter ended June 30,
2022.
"The positive momentum we have seen in our business kept on
rolling this quarter and when combined with the continuing strong
execution of our team, it resulted in excellent financial
performance. As indicated by the updated full year 2022
guidance we released in June, we feel good about our business and
our end-markets," stated Paul Reitz,
President and Chief Executive Officer. "We experienced sales
growth of 31% from the second quarter last year and sales grew
sequentially 3% from the first quarter to the second quarter.
More importantly, our margins were good, and we delivered adjusted
EBITDA of $82 million in the second
quarter. This performance was buoyed by strong financial
performance across all parts of the business as our Titan team
keeps running hard like a good, long-distance marathoner.
"Perhaps the most important aspect of our performance is that we
are generating significant cash flow and we have strengthened our
financial position considerably. We generated $56 million in free cash flow in Q2, and our debt
leverage fell below 2 times adjusted EBITDA, with expected further
improvements in the second half of the year. The strong
financial performance over the past couple years, combined with
significant improvements in our balance sheet and solid free cash
flow now coming through means we are driving increased shareholder
value.
"Nearly everywhere you turn these days you will get hit with
noise and our end-markets of Agriculture, Construction and Mining
are no exception. However, like everything, you need to spend
some time sifting through the noise to get a clear picture as a
quick look at the headlines likely does not tell the complete,
accurate story. We believe that the complete picture is
farmers are going to still make a high level of income in 2022 and
they are sitting on strong balance sheets as well. The large
Ag equipment fleet is aged with low levels of available used
equipment. Demand and order books are in a solid position in
Ag and should continue on that path well into the future as supply
chain and labor disruptions at OEM's have extended the duration of
retail demand, not destroyed it. The overall, bigger picture
view is that Ag fundamentals remain in a strong position and we
expect the future to remain bright in the sector. This view
is also true for our global construction and mining markets, where
we continue to see demand holding at a good level through 2022 that
should carry to 2023 as public infrastructure spending picks
up.
Outlook
"Our expectations for financial performance remain strong and
during the second half of the year we anticipate continued top-line
and bottom-line expansion relative to prior year performance.
Given our performance in Q2 and our current visibility in the
second half of the year, we now expect full year sales in 2022 to
be $2.2 billion, with an increased
adjusted EBITDA target between $240
million and $250
million. Based on this latest outlook, current cash
flow expectations have improved accordingly, and we now believe we
can deliver an increased level of free cash flow between
$90 million and $100 million for the full year. By almost
all standards, we expect this year to be the strongest in Titan's
history, and we continue to see positive signs for demand to remain
robust into 2023."
Results of Operations
Net sales for the second quarter ended June 30, 2022, were
$572.9 million, compared to
$438.6 million in the comparable
quarter of 2021, an increase of 30.6 percent. The net sales
increase was across all segments and driven by a variety of
factors, most notably healthier market conditions, while there was
an unfavorable impact from foreign currency translation of 2.7
percent or $11.9 million, primarily
due to the weakening euro currency.
Gross profit for the second quarter ended June 30, 2022 was
$109.7 million, compared to
$61.5 million in the comparable prior
year period. Gross margin was 19.1 percent of net sales for
the quarter, compared to 14.0 percent of net sales in the
comparable prior year period. The solid growth in gross
profit and margin during the second quarter as compared to the
prior year period was across all segments and was driven by the
impact of increases in net sales, as described previously, and
better overhead absorption in our production facilities. In
addition, cost reduction and productivity initiatives continue to
be executed across global production facilities.
Selling, general, administrative, research and development
(SGARD) expenses for the second quarter of 2022 were $36.9 million, compared to $35.1 million for the comparable prior year
period. As a percentage of net sales, SGARD was 6.4 percent,
compared to 8.0 percent for the comparable prior year period.
The increase in SG&A was driven primarily by an increase in
variable costs associated with improved operating performance and
growth in sales.
Income from operations for the second quarter of 2022 was
$69.7 million, or 12.2 percent of net
sales, compared to income of $23.7
million, or 5.4 percent of net sales, for the second quarter
of 2021. The increase in income from operations was primarily
due to the higher sales and improvements in gross profit
margins.
Brazilian Tax Credits
In June 2021, the Company's
Brazilian subsidiaries received a notice that they had prevailed on
an existing legal claim in regard to certain non-income (indirect)
taxes that had been previously charged and paid. The matter
specifically relates to companies' rights to exclude the state tax
on goods circulation (a value-added-tax or VAT equivalent, known in
Brazil as "ICMS") from the
calculation of certain additional indirect taxes (specifically the
program of social integration ("PIS") and contribution for
financing of social security ("COFINS")) levied by the Brazilian
States on the sale of goods.
During the second quarter of 2022, the Company submitted the
related supporting documentation and received the approval from the
Brazilian tax authorities for one of its Brazilian
subsidiaries. For the three months ended June 30, 2022,
the Company recorded $22.5 million
within other income in the condensed consolidated statements of
operations. The Company also recorded $7.8 million of income tax expense associated
with the recognition of these indirect tax credits. The
Company excluded the impacts from these tax credits within both
adjusted net income applicable to common shareholders and adjusted
EBITDA. A reconciliation of each of these measures can be
found at the end of this release. The Company expects to be able to
apply the tax credits received to settle the income tax liability
that was incurred as a result of the credit. The Company also
expects to utilize the majority of the credit against future
PIS/COFINS and income tax obligations over the next twelve
months.
During the third quarter of 2022, the Company plans to submit
the related supporting documentation to the Brazilian tax
authorities for its other Brazilian subsidiary. After review by the
Brazilian tax authorities, the Company could receive approximately
$10 million of additional indirect
tax credits to be applied as credits against future PIS/COFINS and
income tax obligations. The Company plans to recognize the full
benefit of the indirect tax credits, contingent upon successful
approval and verification from the Brazilian tax authorities.
Segment Information
Agricultural
Segment
|
|
|
|
|
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2022
|
|
2021
|
|
%
Increase
|
|
2022
|
|
2021
|
|
%
Increase
|
Net sales
|
$ 318,585
|
|
$ 231,504
|
|
38 %
|
|
$ 628,184
|
|
$ 440,263
|
|
43 %
|
Gross profit
|
61,921
|
|
35,291
|
|
75 %
|
|
109,845
|
|
65,080
|
|
69 %
|
Profit
margin
|
19 %
|
|
15 %
|
|
27 %
|
|
17 %
|
|
15 %
|
|
18 %
|
Income from
operations
|
44,884
|
|
20,789
|
|
116 %
|
|
75,001
|
|
36,072
|
|
108 %
|
During the quarter ended June 30, 2022, net sales increased
38 percent driven by increased market activity through all of our
global operations. Volume increased from healthy demand in
the global agricultural market, reflective of high farm commodity
prices and increased farmer income, the need for replacement of an
aging large equipment fleet and the need to replenish equipment
inventory levels within the equipment dealer channels.
The increase in gross profit and margin is primarily
attributable to the impact of increases in net sales as described
previously and cost reduction and productivity initiatives executed
across global production facilities. The Company balanced the
increases of related raw materials and other inflationary cost
impacts with corresponding price increases to protect
profitability.
Earthmoving/Construction
Segment
|
|
|
|
|
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2022
|
|
2021
|
|
%
Increase
|
|
2022
|
|
2021
|
|
%
Increase
|
Net sales
|
$ 210,370
|
|
$ 176,715
|
|
19 %
|
|
$ 411,629
|
|
$ 341,522
|
|
21 %
|
Gross profit
|
36,317
|
|
22,328
|
|
63 %
|
|
67,692
|
|
42,070
|
|
61 %
|
Profit
margin
|
17 %
|
|
13 %
|
|
31 %
|
|
16 %
|
|
12 %
|
|
33 %
|
Income from
operations
|
22,276
|
|
7,462
|
|
199 %
|
|
38,116
|
|
13,037
|
|
192 %
|
During the quarter ended June 30, 2022, the 19 percent
increase in earthmoving/construction net sales was driven by
increased demand across all aspects of the construction and mining
markets.
The increase in gross profit and margin was primarily driven by
better price and mix of products produced and continued improved
production efficiencies stemming from the strong management actions
taken to improve profitability for the long-term. The Company
balanced the increases related to raw materials and other
inflationary cost impacts with corresponding price increases to
maintain profitability.
Consumer
Segment
|
|
|
|
|
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2022
|
|
2021
|
|
%
Increase
|
|
2022
|
|
2021
|
|
%
Increase
|
Net sales
|
$
43,940
|
|
$
30,420
|
|
44 %
|
|
$
89,079
|
|
$
60,372
|
|
48 %
|
Gross profit
|
11,415
|
|
3,851
|
|
196 %
|
|
18,845
|
|
7,585
|
|
148 %
|
Profit
margin
|
26 %
|
|
13 %
|
|
100 %
|
|
21 %
|
|
13 %
|
|
62 %
|
Income from
operations
|
9,238
|
|
1,881
|
|
391 %
|
|
14,120
|
|
3,548
|
|
298 %
|
During the quarter ended June 30, 2022, the 44 percent
increase in net sales was driven by increased market activity,
similar to agriculture and construction markets, with growth coming
from product growth initiatives. A portion of the
increase in demand related to specialty products in the United States, primarily custom mixing of
rubber stock to third parties.
The increase in gross profit and margin was due primarily to
sales growth, increased price/product mix and the positive impact
of sales volume increase on overhead absorption. Margins
related to the growth initiatives in specialty products in
the United States are stronger
than the average margins for other products in the segment.
Non-GAAP Financial Measures
Adjusted EBITDA was $82.2 million
for the second quarter of 2022, compared to $37.4 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
second quarter of 2022 was income of $50.2
million, equal to income of $0.80 per basic share and $0.79 per diluted share, compared to income of
$14.0 million, equal to income of
$0.23 per basic and diluted share, in
the second quarter of 2021. 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 applicable to common
shareholders can be found at the end of this release.
Financial Condition
The Company ended the second quarter of 2022 with total cash and
cash equivalents of $116.7 million,
compared to $98.1 million at
December 31, 2021. Long-term debt at June 30, 2022,
was $441.1 million, compared to
$452.5 million at December 31,
2021. Short-term debt was $44.1
million at June 30, 2022, compared to $32.5 million at December 31, 2021.
Net debt (total debt less cash and cash equivalents) was
$368.5 million at June 30, 2022,
compared to $386.8 million at
December 31, 2021.
Net cash provided by operating activities for the first six
months of 2022 was $48.9 million,
compared to net cash used by operations of $17.5 million for the comparable prior year
period. Capital expenditures were $19.5
million for the first six months of 2022, compared to
$14.6 million for the comparable
prior year period. Capital expenditures during the first six
months of 2022 and 2021 represent equipment replacement and
improvements, along with new tools, dies and molds related to new
product development, as the Company seeks to enhance the Company's
manufacturing capabilities and drive productivity gains.
Teleconference and Webcast
Titan will be hosting a teleconference and webcast to discuss
the second quarter financial results on Tuesday, August 2, 2022, at 9:30 a.m. Eastern Time.
The real-time, listen-only webcast can be accessed using the
following link https://events.q4inc.com/attendee/382414202 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
Participants Access Code: 962862
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;
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.
Condensed Consolidated
Statements of Operations (Unaudited)
Amounts in
thousands, except per share data
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Net sales
|
$
572,895
|
|
$
438,639
|
|
$ 1,128,892
|
|
$
842,157
|
Cost of
sales
|
463,242
|
|
377,169
|
|
932,510
|
|
727,422
|
Gross profit
|
109,653
|
|
61,470
|
|
196,382
|
|
114,735
|
Selling, general and
administrative expenses
|
34,669
|
|
32,566
|
|
70,896
|
|
66,594
|
Research and
development expenses
|
2,238
|
|
2,528
|
|
5,158
|
|
5,081
|
Royalty
expense
|
3,045
|
|
2,657
|
|
5,919
|
|
5,110
|
Income from
operations
|
69,701
|
|
23,719
|
|
114,409
|
|
37,950
|
Interest
expense
|
(7,707)
|
|
(8,598)
|
|
(15,614)
|
|
(16,121)
|
Loss on senior note
repurchase
|
—
|
|
(16,020)
|
|
—
|
|
(16,020)
|
Foreign exchange gain
(loss)
|
2,234
|
|
(768)
|
|
7,551
|
|
8,709
|
Other income
|
23,694
|
|
1,232
|
|
14,835
|
|
864
|
Income (loss) before
income taxes
|
87,922
|
|
(435)
|
|
121,181
|
|
15,382
|
Provision for income
taxes
|
19,001
|
|
1,991
|
|
27,682
|
|
4,585
|
Net income
(loss)
|
68,921
|
|
(2,426)
|
|
93,499
|
|
10,797
|
Net income (loss)
attributable to noncontrolling interests
|
1,750
|
|
347
|
|
2,406
|
|
(4)
|
Net income (loss)
attributable to Titan and applicable to common
shareholders
|
$
67,171
|
|
$
(2,773)
|
|
$
91,093
|
|
$
10,801
|
|
|
|
|
|
|
|
|
Income (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
1.07
|
|
$
(0.04)
|
|
$
1.44
|
|
$
0.18
|
Diluted
|
$
1.06
|
|
$
(0.04)
|
|
$
1.43
|
|
$
0.17
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
62,671
|
|
61,717
|
|
63,262
|
|
61,592
|
Diluted
|
63,221
|
|
61,717
|
|
63,773
|
|
62,480
|
Titan International,
Inc.
Condensed Consolidated
Balance Sheets
Amounts in
thousands, except share data
|
|
June 30,
2022
|
|
December 31,
2021
|
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
116,703
|
|
$
98,108
|
Accounts
receivable, net
|
299,070
|
|
255,180
|
Inventories
|
422,764
|
|
392,615
|
Prepaid and other
current assets
|
90,844
|
|
67,401
|
Total current
assets
|
929,381
|
|
813,304
|
Property, plant and
equipment, net
|
296,832
|
|
301,109
|
Operating lease
assets
|
11,845
|
|
20,945
|
Deferred income
taxes
|
16,395
|
|
16,831
|
Other long-term
assets
|
34,731
|
|
30,496
|
Total assets
|
$
1,289,184
|
|
$ 1,182,685
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Short-term
debt
|
$
44,059
|
|
$
32,500
|
Accounts
payable
|
284,802
|
|
278,099
|
Other current
liabilities
|
168,398
|
|
140,214
|
Total current
liabilities
|
497,259
|
|
450,813
|
Long-term
debt
|
441,121
|
|
452,451
|
Deferred income
taxes
|
4,892
|
|
3,978
|
Other long-term
liabilities
|
40,242
|
|
48,271
|
Total
liabilities
|
983,514
|
|
955,513
|
|
|
|
|
Equity
|
|
|
|
Titan shareholders'
equity
|
|
|
|
Common
stock ($0.0001 par value, 120,000,000 shares authorized, 66,525,269
issued at June 30, 2022 and 66,492,660 at December 31,
2021)
|
—
|
|
—
|
Additional paid-in
capital
|
562,774
|
|
562,340
|
Retained earnings
(deficit)
|
5,654
|
|
(85,439)
|
Treasury stock (at
cost, 3,750,492 shares at June 30, 2022 and 80,876 shares at
December 31, 2021)
|
(23,848)
|
|
(1,121)
|
Accumulated other
comprehensive loss
|
(245,235)
|
|
(246,480)
|
Total Titan
shareholders' equity
|
299,345
|
|
229,300
|
Noncontrolling
interests
|
6,325
|
|
(2,128)
|
Total equity
|
305,670
|
|
227,172
|
Total liabilities and
equity
|
$
1,289,184
|
|
$ 1,182,685
|
Titan International,
Inc.
Condensed Consolidated
Statements of Cash Flows (Unaudited)
All amounts in
thousands
|
|
|
|
Six months ended
June 30,
|
Cash flows from
operating activities:
|
2022
|
|
2021
|
Net income
|
$
93,499
|
|
$
10,797
|
Adjustments to
reconcile net income to net cash provided by (used for) operating
activities:
|
|
|
|
Depreciation and
amortization
|
22,245
|
|
24,918
|
Loss on sale of
Australian wheel business
|
10,890
|
|
—
|
Deferred income tax
(benefit) provision
|
(292)
|
|
198
|
Income on Brazilian
indirect tax credits
|
(22,450)
|
|
—
|
Gain on fixed asset
and investment sale
|
(182)
|
|
(485)
|
Loss on senior note
repurchase
|
—
|
|
16,020
|
Stock-based
compensation
|
1,944
|
|
1,380
|
Issuance of stock
under 401(k) plan
|
763
|
|
681
|
Foreign currency
gain
|
(4,314)
|
|
(9,665)
|
(Increase) decrease in
assets:
|
|
|
|
Accounts
receivable
|
(49,527)
|
|
(72,765)
|
Inventories
|
(38,884)
|
|
(53,080)
|
Prepaid and other
current assets
|
(1,817)
|
|
(10,350)
|
Other
assets
|
(5,044)
|
|
3,154
|
Increase (decrease) in
liabilities:
|
|
|
|
Accounts
payable
|
7,480
|
|
71,051
|
Other current
liabilities
|
32,162
|
|
7,993
|
Other
liabilities
|
2,445
|
|
(7,334)
|
Net cash provided
by (used for) operating activities
|
48,918
|
|
(17,487)
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(19,464)
|
|
(14,637)
|
Proceeds from the sale
of the Australian wheel business
|
9,293
|
|
—
|
Proceeds from sale of
fixed assets
|
297
|
|
749
|
Net cash used for
investing activities
|
(9,874)
|
|
(13,888)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
89,015
|
|
459,929
|
Repurchase of senior
secured notes
|
—
|
|
(413,000)
|
Payment on
debt
|
(86,004)
|
|
(34,040)
|
Repurchase of common
stock
|
(25,000)
|
|
—
|
Other financing
activities
|
(628)
|
|
(2,040)
|
Net cash (used for)
provided by financing activities
|
(22,617)
|
|
10,849
|
Effect of exchange rate
changes on cash
|
2,168
|
|
(1,101)
|
Net increase (decrease)
in cash and cash equivalents
|
18,595
|
|
(21,627)
|
Cash and cash
equivalents, beginning of period
|
98,108
|
|
117,431
|
Cash and cash
equivalents, end of period
|
$
116,703
|
|
$
95,804
|
Supplemental
information:
|
|
|
|
Interest
paid
|
$
16,027
|
|
$
16,422
|
Income taxes paid, net
of refunds received
|
$
8,813
|
|
$
7,101
|
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 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 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
attributable to Titan to net income (loss) applicable to common
shareholders, the most directly comparable GAAP financial measure,
for the three and six-month periods ended June 30, 2022 and 2021.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Titan and applicable to common
shareholders
|
$
67,171
|
|
$
(2,773)
|
|
$
91,093
|
|
$
10,801
|
Adjustments:
|
|
|
|
|
|
|
|
Foreign exchange
(gain) loss
|
(2,234)
|
|
768
|
|
(7,551)
|
|
(8,709)
|
Loss on sale of
Australian wheel business
|
—
|
|
—
|
|
10,890
|
|
—
|
Proceeds from
government grant
|
—
|
|
—
|
|
(1,324)
|
|
—
|
Loss on senior note
repurchase
|
—
|
|
16,020
|
|
—
|
|
16,020
|
Income on Brazilian
indirect tax credits, net
|
(14,713)
|
|
—
|
|
(14,713)
|
|
—
|
Adjusted net income
attributable to Titan and applicable to common
shareholders
|
$
50,224
|
|
$
14,015
|
|
$
78,395
|
|
$
18,112
|
|
|
|
|
|
|
|
|
Adjusted earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
0.80
|
|
$
0.23
|
|
$
1.24
|
|
$
0.29
|
Diluted
|
$
0.79
|
|
$
0.22
|
|
$
1.23
|
|
$
0.29
|
|
|
|
|
|
|
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
62,671
|
|
61,717
|
|
63,262
|
|
61,592
|
Diluted
|
63,221
|
|
62,568
|
|
63,773
|
|
62,480
|
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, 2022 and 2021.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
68,921
|
|
$
(2,426)
|
|
$
93,499
|
|
$
10,797
|
Adjustments:
|
|
|
|
|
|
|
|
Provision for income
taxes
|
19,001
|
|
1,991
|
|
27,682
|
|
4,585
|
Interest expense,
excluding interest income
|
8,016
|
|
8,701
|
|
15,964
|
|
16,110
|
Depreciation and
amortization
|
10,897
|
|
12,358
|
|
22,245
|
|
24,918
|
EBITDA
|
$
106,835
|
|
$
20,624
|
|
$
159,390
|
|
$
56,410
|
Adjustments:
|
|
|
|
|
|
|
|
Foreign exchange
(gain) loss
|
(2,234)
|
|
768
|
|
(7,551)
|
|
(8,709)
|
Loss on sale of
Australian wheel business
|
—
|
|
—
|
|
10,890
|
|
—
|
Proceeds from
government grant
|
—
|
|
—
|
|
(1,324)
|
|
—
|
Loss on senior note
repurchase
|
—
|
|
16,020
|
|
—
|
|
16,020
|
Income on Brazilian
indirect tax credits
|
(22,450)
|
|
—
|
|
(22,450)
|
|
—
|
Adjusted
EBITDA
|
$
82,151
|
|
$
37,412
|
|
$
138,955
|
|
$
63,721
|
The table below sets forth, for the three and six-month period
ended June 30, 2022, 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, 2022
|
|
2022
|
|
2021
|
|
% Change
from 2021
|
|
$
|
|
%
|
|
Constant
Currency
|
United
States
|
$
292,878
|
|
$
199,205
|
|
47.0 %
|
|
$
—
|
|
— %
|
|
$
292,878
|
Europe / CIS
|
148,827
|
|
121,346
|
|
22.6 %
|
|
(11,462)
|
|
(9.4) %
|
|
160,289
|
Latin
America
|
112,732
|
|
78,928
|
|
42.8 %
|
|
5,983
|
|
7.6 %
|
|
106,749
|
Other
International
|
18,458
|
|
39,160
|
|
(52.9) %
|
|
(6,372)
|
|
(16.3) %
|
|
24,830
|
|
$
572,895
|
|
$
438,639
|
|
30.6 %
|
|
$
(11,851)
|
|
(2.7) %
|
|
$
584,746
|
|
|
Six Months Ended
June 30,
|
|
Change due to
currency
translation
|
|
Six Months Ended
June 30, 2022
|
|
2022
|
|
2021
|
|
% Change
from 2021
|
|
$
|
|
%
|
|
Constant
Currency
|
United
States
|
$
569,933
|
|
$
385,610
|
|
47.8 %
|
|
$
—
|
|
— %
|
|
$
569,933
|
Europe / CIS
|
293,996
|
|
233,508
|
|
25.9 %
|
|
(24,169)
|
|
(10.4) %
|
|
318,165
|
Latin
America
|
211,730
|
|
145,071
|
|
45.9 %
|
|
9,118
|
|
6.3 %
|
|
202,612
|
Other
International
|
53,233
|
|
77,968
|
|
(31.7) %
|
|
(14,451)
|
|
(18.5) %
|
|
67,684
|
|
$
1,128,892
|
|
$
842,157
|
|
34.0 %
|
|
$
(29,502)
|
|
(3.5) %
|
|
$
1,158,394
|
The table below provides a reconciliation of net debt, which is
a non-GAAP financial measure:
|
June 30,
2022
|
|
December 31,
2021
|
|
June 30,
2021
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
$
441,121
|
|
$
452,451
|
|
$
452,730
|
Short-term
debt
|
44,059
|
|
32,500
|
|
34,296
|
Total
debt
|
$
485,180
|
|
$
484,951
|
|
$
487,026
|
Cash and cash
equivalents
|
116,703
|
|
98,108
|
|
95,804
|
Net debt
|
$
368,477
|
|
$
386,843
|
|
$
391,222
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/titan-international-inc-reports-strong-quarterly-financial-performance-301597213.html
SOURCE Titan International, Inc.