FY 2023 Results Highlighted by Buoyant Margins
and Strong Free Cash Flow
Transformative Acquisition of Carlstar
Group LLC. ("Carlstar") Expected to Add Strategic Diversification
of Customer Base, Product Line, Manufacturing and
Distribution
WEST
CHICAGO, Ill., Feb. 29,
2024 /PRNewswire/ -- Titan International, Inc.
(NYSE: TWI) ("Titan" or the "Company"), a leading global
manufacturer of off-highway wheels, tires, assemblies, and
undercarriage products, today reported results for the fourth
quarter and year ended December 31,
2023.
"One of our primary long-term objectives has been to structure
Titan to deliver consistent, strong, bottom-line results, while
serving our customers throughout various market cycles. Recall that
2022 was an excellent year for top-line sales as agricultural
equipment dealers ramped up inventory in order to ensure they could
satisfy expected farmer demand. While Titan certainly enjoyed that
environment, as we moved into 2023 it also became clear that the
aggressive inventory build in 2022 resulted in reduced demand in
2023 as OEMs worked down excess inventory. Despite this dynamic and
its impact on our sales, we were able to report full year gross
margins that were up slightly from 2022. We were also able to
report record Free Cash Flow of $119
million, thanks to a firm focus on margins, along with
working capital management. Our ability to deliver quality
bottom-line and cash flow results in the face of a robust
destocking headwind is a significant achievement and I want to
thank our entire One Titan team for their hard work in making that
happen," stated Paul Reitz,
President and Chief Executive Officer.
Mr. Reitz added, "As we look back through the past years, we
were able to build long-term strength via product portfolio
optimization, addressing non-core businesses, and an enhanced focus
on new product development. In doing so, we have fortified our
balance sheet by eliminating debt, and building cash and, at the
same time, have been able to create value for shareholders by
repurchasing shares. Now we're excited to talk about the new growth
path ahead of us through the accretive acquisition of Carlstar
Group. As we highlighted in the press release we issued announcing
the transaction, Carlstar will further diversify our customer
base and product portfolio while also adding key manufacturing and
distribution assets around the world. We are really pleased that we
were able to complete this acquisition at a fair valuation of
approximately four times their 2023 adjusted EBITDA, using a
combination of cash and stock, which will not stress our balance
sheet. As noted in the acquisition announcement, Carlstar is a
well-run, profitable business which is complementary to our
existing business, creating avenues for incremental growth and
synergies.
Mr. Reitz continued, "Now moving to market conditions within our
segments, commentary from large, global agricultural equipment
companies through the first two months of 2024 is consistent with
what we are seeing in the field and hearing from our customers,
namely that demand is somewhat soft due to declining farmer
incomes. On the other hand, inventories appear to have normalized,
which is a positive allowing for a more direct connection between
commodity prices and equipment demand, including both new and
aftermarket, as we move through the year. Over the longer term, the
continued adoption of precision farming represents a positive
demand driver and farmers are also increasingly cognizant of the
ability of our tire technologies such as LSW to deliver meaningful
additions to their bottom lines. The construction and earthmoving
markets, particularly non-residential construction projects, have
the tailwind of infrastructure support and the transition to clean
energy is expected to support commodity prices of key inputs such
as rare earth elements, which will benefit the mining segment over
the long term."
Mr. Reitz continued, "Carlstar also brings us an expansive
offering in outdoor power equipment, high speed trailers, and power
sports within our Consumer segment. Those markets are
retail-centric, where demand and market activity are subject to
much different drivers than agriculture. We expect this to further
solidify the margin and cash flow success we enjoyed in 2023 while
also providing additional avenues for top line expansion. With the
addition of Carlstar, we will have increased manufacturing
flexibility and distribution channels, and the best-in-class wheel
and tire lineup."
Mr, Reitz concluded, "We are excited to get to work
incorporating Carlstar's operation with Titan's. Given the scope of
the integration work, along with the addition of new end markets,
we think it is prudent to refrain from providing financial guidance
at this time. As we progress through the integration, we will look
to provide financial guidance later in the year."
Financial Summary
Net sales for the fourth quarter ended December 31, 2023, were $390.2 million, compared to $509.8 million in the comparable quarter of 2022.
Net sales change was across all segments and primarily driven by
sales volume decrease caused by elevated inventory levels at our
customers in the Americas, particularly OEM customers, lower levels
of end customer demand in small agricultural equipment, and
economic softness in Brazil. Net
sales change was also impacted by negative price, primarily due to
lower raw material and other input costs, most notably steel, and
unfavorable foreign currency translation of -2%.
Gross profit for the fourth quarter ended December 31, 2023, was $58.3 million, compared to $76.7 million in the comparable prior year
period. Gross margin was 14.9 percent of net sales for the quarter,
consistent with 15.0 percent of net sales in the comparable prior
year period. Margins were maintained as a result of lower
production input costs and continued productivity initiatives
across global production facilities, despite headwinds from the
unfavorable impact of fixed cost absorption on lower revenue.
Selling, general, administrative, research and development
(SGARD) expenses for the fourth quarter of 2023 were $35.2 million, compared to $33.3 million for the comparable prior year
period. For the year ended December 31,
2023, SGARD expenses of $147.5
million were up a modest 3.0% from $143.2 million the prior year due to normal
inflation within the business.
Income from operations for the fourth quarter of 2023 was
$20.7 million, or 5.3 percent of net
sales, compared to $40.9 million, or
8.0 percent of net sales, for the fourth quarter of 2022. The
change in income was primarily due to lower net sales and the net
result of the items previously discussed.
Segment Information
Agricultural Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
%
Increase/
(Decrease)
|
|
2023
|
|
2022
|
|
%
Increase/
(Decrease)
|
Net sales
|
$
192,564
|
|
$
274,796
|
|
(29.9) %
|
|
$
980,537
|
|
$
1,192,239
|
|
(17.8) %
|
Gross profit
|
$ 28,014
|
|
$ 37,791
|
|
(25.9) %
|
|
$
163,026
|
|
$
193,585
|
|
(15.8) %
|
Profit
margin
|
14.5 %
|
|
13.8 %
|
|
5.1 %
|
|
16.6 %
|
|
16.2 %
|
|
2.5 %
|
Income from
operations
|
$ 14,571
|
|
$ 24,348
|
|
(40.2) %
|
|
$
100,642
|
|
$
130,474
|
|
(22.9) %
|
Net sales in the agricultural segment were $192.6 million for the three months ended
December 31, 2023, as compared to
$274.8 million for the comparable
period in 2022. The net sales change was primarily due to lower
sales volumes in North and South
America, which was caused by actions taken by customers
primarily within the OEM channel to reduce elevated inventory
levels. Additional drivers included softness in demand for small
agricultural equipment and a decline in Brazilian economic
activity. The change in net sales was also impacted by negative
price associated with lower steel prices, and an unfavorable impact
of foreign currency translation of 5.1%.
Earthmoving/Construction Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
%
Increase/
(Decrease)
|
|
2023
|
|
2022
|
|
%
Increase/
(Decrease)
|
Net sales
|
$
159,106
|
|
$
195,806
|
|
(18.7) %
|
|
$
687,758
|
|
$
807,356
|
|
(14.8) %
|
Gross profit
|
$ 22,107
|
|
$ 33,137
|
|
(33.3) %
|
|
$
110,690
|
|
$
135,788
|
|
(18.5) %
|
Profit
margin
|
13.9 %
|
|
16.9 %
|
|
(17.8) %
|
|
16.1 %
|
|
16.8 %
|
|
(4.2) %
|
Income from
operations
|
$
8,561
|
|
$ 19,858
|
|
(56.9) %
|
|
$ 55,122
|
|
$ 79,810
|
|
(30.9) %
|
Net sales in the earthmoving / construction segment were
$159.1 million for the three months
ended December 31, 2023, as compared
to $195.8 million for the comparable
period in 2022. The change in earthmoving/construction sales
was primarily due to decreased volume in the Americas and the
undercarriage business which was caused by elevated customer
inventory levels and a slowdown at construction OEM customers. In
addition, the net sales change was impacted by negative price from
lower raw material and other input costs. The change in net sales
was partially offset by favorable impact of foreign currency
translation of 1.9%.
Consumer Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
%
Increase/
(Decrease)
|
|
2023
|
|
2022
|
|
%
Increase/
(Decrease)
|
Net sales
|
$ 38,529
|
|
$ 39,164
|
|
(1.6) %
|
|
$
153,505
|
|
$
169,785
|
|
(9.6) %
|
Gross profit
|
$
8,203
|
|
$
5,767
|
|
42.2 %
|
|
$ 32,133
|
|
$ 31,337
|
|
2.5 %
|
Profit
margin
|
21.3 %
|
|
14.7 %
|
|
44.9 %
|
|
20.9 %
|
|
18.5 %
|
|
13.0 %
|
Income from
operations
|
$
5,197
|
|
$
3,867
|
|
34.4 %
|
|
$ 22,380
|
|
$ 22,843
|
|
(2.0) %
|
Net sales in the consumer segment were $38.5 million for the three months ended
December 31, 2023, as compared to
$39.2 million for the comparable
period in 2022. The change was due to lower sales volumes, mainly
in Latin America for light utility
truck tires related to softer economic conditions in the
region. In addition, net sales were unfavorably impacted by
negative price from lower raw material and other input costs, and
foreign currency translation of 1.8%.
Non-GAAP Financial Measures
Adjusted EBITDA was $38.1 million
for the fourth quarter of 2023, compared to $52.8 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 to EBITDA and adjusted
EBITDA can be found at the end of this release.
Adjusted net income applicable to common shareholders for the
fourth quarter of 2023 was $21.0
million, equal to income of $0.34 per basic and diluted share, compared to
$27.7 million, equal to income of
$0.44 per basic and diluted share, in
the fourth quarter of 2022. 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 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 2023 with total cash and cash equivalents of
$220.3 million, compared to
$159.6 million at December 31, 2022. Long-term debt at December 31, 2023, was $409.2 million, compared to $414.8 million at December
31, 2022. Short-term debt was $16.9
million at December 31, 2023,
compared to $30.9 million at
December 31, 2022. Net debt (total
debt less cash and cash equivalents) was $205.8 million at December
31, 2023, compared to $286.0
million at December 31, 2022.
The decrease in net debt during 2023 was due to the increase in
cash of $60.7 million and the
decrease of short and long-term debt of $19.5 million.
Cash provided by operating activities increased by $18.7 million when comparing the year ended
December 31, 2023 to 2022. This
increase was primarily due to focused working capital management
centered on collections of accounts receivable and inventory
management, resulting in improvements of $70.1 million and $51.2
million, respectively. The increase was partially offset by
the changes in accounts payable and other current liabilities by
$55.0 million and $18.0 million, respectively.
Capital expenditures were $60.8
million for the year ended December
31, 2023, compared to $47.0
million for 2022. Capital expenditures represent plant
equipment replacement and improvements, along with new tools, dies
and molds related to new product development. The overall capital
outlay for 2023 increased as the Company seeks to enhance the
Company's existing facilities and manufacturing capabilities and
drive plant efficiency and labor productivity gains.
Teleconference and Webcast
Titan will be hosting a teleconference and webcast to discuss
the fourth quarter financial results on Thursday, February 29, 2024, at 9 a.m. Eastern Time.
The real-time, listen-only webcast can be accessed using the
following link release https://events.q4inc.com/attendee/889510132
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:
U.S. Toll
Free: 1 833 470 1428
All Other
Locations:
https://www.netroadshow.com/conferencing/global-numbers?confId=56511
Participants Access Code: 133146
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 geopolitical
instability; 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 realization of projected synergies; 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.
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.
Titan International,
Inc.
Consolidated Statements
of Operations
Amounts in
thousands, except per share data
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
390,199
|
|
$
509,766
|
|
$ 1,821,800
|
|
$ 2,169,380
|
Cost of
sales
|
331,875
|
|
433,071
|
|
1,515,951
|
|
1,808,670
|
Gross profit
|
58,324
|
|
76,695
|
|
305,849
|
|
360,710
|
Selling, general and
administrative expenses
|
32,021
|
|
30,486
|
|
134,938
|
|
132,792
|
Research and
development expenses
|
3,140
|
|
2,812
|
|
12,539
|
|
10,404
|
Royalty
expense
|
2,445
|
|
2,495
|
|
9,645
|
|
11,712
|
Income from
operations
|
20,718
|
|
40,902
|
|
148,727
|
|
205,802
|
Interest expense,
net
|
(2,600)
|
|
(6,961)
|
|
(18,785)
|
|
(29,796)
|
Foreign exchange (loss)
gain
|
(21,940)
|
|
(7,822)
|
|
(22,822)
|
|
927
|
Other income
|
219
|
|
894
|
|
2,628
|
|
25,420
|
Income before income
taxes
|
(3,603)
|
|
27,013
|
|
109,748
|
|
202,353
|
(Benefit) provision for
income taxes
|
(2,321)
|
|
(15,961)
|
|
26,042
|
|
23,167
|
Net income
|
(1,282)
|
|
42,974
|
|
83,706
|
|
179,186
|
Net income attributable
to noncontrolling interests
|
1,283
|
|
934
|
|
4,946
|
|
2,884
|
Net income attributable
to Titan and applicable to
common shareholders
|
$
(2,565)
|
|
$
42,040
|
|
$
78,760
|
|
$
176,302
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
(.04)
|
|
$
.67
|
|
$
1.26
|
|
$
2.80
|
Diluted
|
$
(.04)
|
|
$
.66
|
|
$
1.25
|
|
$
2.77
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
61,389
|
|
62,842
|
|
62,452
|
|
63,040
|
Diluted
|
62,088
|
|
63,521
|
|
62,961
|
|
63,691
|
Titan International,
Inc.
Consolidated Balance
Sheets
Amounts in
thousands, except share data
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
220,251
|
|
$
159,577
|
Accounts receivable,
net
|
219,145
|
|
266,758
|
Inventories
|
365,156
|
|
397,223
|
Prepaid and other
current assets
|
72,229
|
|
86,070
|
Total current
assets
|
876,781
|
|
909,628
|
Property, plant and
equipment, net
|
321,694
|
|
296,605
|
Operating lease
assets
|
11,955
|
|
8,932
|
Deferred income
taxes
|
38,033
|
|
38,736
|
Other long-term
assets
|
40,782
|
|
30,729
|
Total assets
|
$ 1,289,245
|
|
$ 1,284,630
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Short-term
debt
|
$
16,913
|
|
$
30,857
|
Accounts
payable
|
201,201
|
|
263,376
|
Other current
liabilities
|
154,261
|
|
151,928
|
Total current
liabilities
|
372,375
|
|
446,161
|
Long-term
debt
|
409,178
|
|
414,761
|
Deferred income
taxes
|
2,234
|
|
3,425
|
Other long-term
liabilities
|
38,043
|
|
37,145
|
Total
liabilities
|
821,830
|
|
901,492
|
|
|
|
|
Equity
|
|
|
|
Titan stockholders'
equity
|
|
|
|
Common stock ($0.0001
par, 120,000,000 shares authorized, 66,525,269 issued at
December 2023 and 66,525,269 at December 2022)
|
—
|
|
—
|
Additional paid-in
capital
|
569,065
|
|
565,546
|
Retained
earnings
|
169,623
|
|
90,863
|
Treasury stock (at
cost, 5,809,414 shares at December 2023 and 3,681,308 shares at
December 2022)
|
(52,585)
|
|
(23,418)
|
Accumulated other
comprehensive loss
|
(219,043)
|
|
(251,755)
|
Total Titan
stockholders' equity
|
467,060
|
|
381,236
|
Noncontrolling
interests
|
355
|
|
1,902
|
Total equity
|
467,415
|
|
383,138
|
Total liabilities and
equity
|
$ 1,289,245
|
|
$ 1,284,630
|
Titan International,
Inc.
Consolidated Statements
of Cash Flows
All amounts in
thousands
|
|
|
Twelve months
ended
|
|
December
31,
|
Cash flows from
operating activities:
|
2023
|
|
2022
|
Net income
|
$
83,706
|
|
$
179,186
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
42,434
|
|
42,747
|
Loss on sale of the
Australian wheel business
|
—
|
|
10,890
|
Deferred income tax
provision (benefit)
|
(2,081)
|
|
(23,385)
|
Income on indirect
taxes
|
(3,096)
|
|
(32,043)
|
Gain on fixed asset
and investment sale
|
(644)
|
|
(216)
|
Stock-based
compensation
|
5,235
|
|
4,282
|
Issuance of stock
under 401(k) plan
|
1,776
|
|
1,627
|
Foreign currency loss
(gain)
|
19,734
|
|
2,661
|
(Increase) decrease in
assets:
|
|
|
|
Accounts
receivable
|
42,871
|
|
(27,201)
|
Inventories
|
31,635
|
|
(19,598)
|
Prepaid and other
current assets
|
17,596
|
|
11,366
|
Other
assets
|
(2)
|
|
(1,288)
|
Increase (decrease) in
liabilities:
|
|
|
|
Accounts
payable
|
(62,725)
|
|
(7,754)
|
Other current
liabilities
|
872
|
|
18,888
|
Other
liabilities
|
2,039
|
|
516
|
Net cash provided
by operating activities
|
179,350
|
|
160,678
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(60,799)
|
|
(46,974)
|
Proceeds from sale of
investments
|
2,085
|
|
9,293
|
Other investing
activities
|
1,791
|
|
930
|
Net cash used for
investing activities
|
(56,923)
|
|
(36,751)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
6,666
|
|
88,940
|
Payment on
debt
|
(27,608)
|
|
(124,739)
|
Repurchase of common
stock
|
(32,579)
|
|
(25,000)
|
Other financing
activities
|
(2,495)
|
|
(511)
|
Net cash used for
financing activities
|
(56,016)
|
|
(61,310)
|
Effect of exchange rate
changes on cash
|
(5,737)
|
|
(1,148)
|
Net increase in cash
and cash equivalents
|
60,674
|
|
61,469
|
Cash and cash
equivalents, beginning of year
|
159,577
|
|
98,108
|
Cash and cash
equivalents, end of year
|
$
220,251
|
|
$
159,577
|
|
|
|
|
Supplemental
information:
|
|
|
|
Interest
paid
|
$
30,269
|
|
$
31,604
|
Income taxes paid, net
of refunds received
|
$
21,801
|
|
$
24,105
|
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 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 applicable to common
shareholders, the most directly comparable GAAP financial measure,
for each of the three and twelve month periods ended
December 31, 2023 and 2022.
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Net income attributable
to Titan and applicable to
common shareholders
|
$
(2,565)
|
|
$
42,040
|
|
$
78,760
|
|
$
176,302
|
Adjustments:
|
|
|
|
|
|
|
|
Foreign exchange
loss (gain)
|
21,940
|
|
7,823
|
|
22,822
|
|
(927)
|
Loss on sale of
Australian wheel business
|
—
|
|
—
|
|
—
|
|
10,890
|
Proceeds from
government grant
|
—
|
|
—
|
|
—
|
|
(1,324)
|
Income on
Brazilian indirect tax credits, net of taxes
(a)
|
—
|
|
6,720
|
|
(3,096)
|
|
(15,874)
|
Net deferred
income tax benefit (b)
|
—
|
|
(28,882)
|
|
—
|
|
(28,882)
|
Restructuring
charges
|
1,637
|
|
—
|
|
1,637
|
|
—
|
|
|
|
|
|
|
|
|
Adjusted Net income
attributable to Titan and applicable
to common shareholders
|
$
21,012
|
|
$
27,701
|
|
$
100,123
|
|
$
140,185
|
|
|
|
|
|
|
|
|
Adjusted income per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
0.34
|
|
$
0.44
|
|
$
1.60
|
|
$
2.22
|
Diluted
|
$
0.34
|
|
$
0.44
|
|
$
1.59
|
|
$
2.20
|
|
|
|
|
|
|
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
61,389
|
|
62,842
|
|
62,452
|
|
63,040
|
Diluted
|
62,088
|
|
63,521
|
|
62,961
|
|
63,691
|
(a) The Company incurred global intangible
low-taxed income (GILTI) tax during the fourth quarter associated
with the income on the Brazilian indirect tax credits.
(b) During the fourth quarter of 2022, the
income tax benefit was primarily driven by a $53.3 million domestic valuation allowance
release offset by $25.3 million of
net NOLs used in the current year.
The table below provides a reconciliation of net income to
EBITDA and adjusted EBITDA, non-GAAP financial measures, for the
three and twelve-month periods ended December 31, 2023 and 2022.
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Net Income
|
$
(1,282)
|
|
$
42,974
|
|
$
83,706
|
|
$
179,186
|
Adjustments:
|
|
|
|
|
|
|
|
Provision for income
taxes
|
(2,321)
|
|
(15,961)
|
|
26,042
|
|
23,167
|
Interest expense,
excluding interest income
|
7,274
|
|
7,517
|
|
29,063
|
|
31,273
|
Depreciation and
amortization
|
10,836
|
|
10,464
|
|
42,434
|
|
42,747
|
EBITDA
|
$
14,507
|
|
$
44,994
|
|
$
181,245
|
|
$
276,373
|
Adjustments:
|
|
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
21,940
|
|
7,823
|
|
22,822
|
|
(927)
|
Loss on sale of
Australian wheel business
|
—
|
|
—
|
|
—
|
|
10,890
|
Proceeds from
government grant
|
—
|
|
—
|
|
—
|
|
(1,324)
|
Income on Brazilian
indirect tax credits, gross
|
—
|
|
—
|
|
(475)
|
|
(32,043)
|
Restructuring
charges
|
1,637
|
|
—
|
|
1,637
|
|
—
|
Adjusted
EBITDA
|
$
38,084
|
|
$
52,817
|
|
$
205,229
|
|
$
252,969
|
The table below sets forth, for the three and twelve-month
periods ended December 31, 2023, the
impact to net sales of currency translation (constant currency) by
geography (in thousands, except percentages):
|
Three Months Ended
December 31,
|
|
Change due to
currency
translation
|
|
Three Months
Ended
December 31, 2023
|
|
2023
|
|
2022
|
|
% Change
from 2022
|
|
$
|
|
%
|
|
Constant
Currency
|
United
States
|
$
160,352
|
|
$
237,967
|
|
(32.6) %
|
|
$
—
|
|
— %
|
|
$
160,352
|
Europe / CIS
|
134,265
|
|
151,901
|
|
(11.6) %
|
|
(6,869)
|
|
(4.5) %
|
|
141,134
|
Latin
America
|
71,847
|
|
98,290
|
|
(26.9) %
|
|
780
|
|
0.8 %
|
|
71,067
|
Other
International
|
23,735
|
|
21,608
|
|
9.8 %
|
|
(4,815)
|
|
(22.3) %
|
|
28,550
|
|
$
390,199
|
|
$
509,766
|
|
(23.5) %
|
|
$
(10,904)
|
|
(2.1) %
|
|
$
401,103
|
|
Twelve Months Ended
December 31,
|
|
Change due to
currency
translation
|
|
Twelve Months
Ended
December 31, 2023
|
|
2023
|
|
2022
|
|
% Change
from 2022
|
|
$
|
|
%
|
|
Constant
Currency
|
United
States
|
$
814,676
|
|
$
1,074,715
|
|
(24.2) %
|
|
$
—
|
|
— %
|
|
$
814,676
|
Europe / CIS
|
558,677
|
|
577,877
|
|
(3.3) %
|
|
(17,776)
|
|
(3.1) %
|
|
576,453
|
Latin
America
|
354,979
|
|
422,439
|
|
(16.0) %
|
|
(2,665)
|
|
(0.6) %
|
|
357,644
|
Other
International
|
93,468
|
|
94,349
|
|
(0.9) %
|
|
(17,333)
|
|
(18.4) %
|
|
110,801
|
|
$
1,821,800
|
|
$
2,169,380
|
|
(16.0) %
|
|
$
(37,774)
|
|
(1.7) %
|
|
$
1,859,574
|
The table below provides a reconciliation of net debt, which is
a non-GAAP financial measure:
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
$
409,178
|
|
$
409,747
|
|
$
414,761
|
|
Short-term
debt
|
16,913
|
|
17,556
|
|
30,857
|
|
Total
debt
|
$
426,091
|
|
$
427,303
|
|
$
445,618
|
|
Cash and cash
equivalents
|
220,251
|
|
211,902
|
|
159,577
|
|
Net debt
|
$
205,840
|
|
$
215,401
|
|
$
286,041
|
|
The table below provides a reconciliation of net cash provided
by operating activities to free cash flow, which is a non-GAAP
financial measure:
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
39,244
|
|
$
58,438
|
|
$
179,350
|
|
$
160,678
|
Capital
expenditures
|
(19,319)
|
|
(14,219)
|
|
(60,799)
|
|
(46,974)
|
Free cash
flow
|
$
19,925
|
|
$
44,219
|
|
$
118,551
|
|
$
113,704
|
|
|
|
|
|
|
|
|
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SOURCE Titan International, Inc.