What’s On Earth Is Happening With Titan International Inc. (NYSE: TWI)?


Titan International Inc. (NYSE: TWI)’s 2Q2016 showed that the struggle continues as sales slid and SG&A costs rose. But the quarter also offered a highlight that the company is gradually getting into a position that would allow it to make massive gains once strength returns to the agriculture market as anticipated.

Titan International Inc. (NYSE: TWI)’s CEO Maurice Taylor offered an honest assessment of the performance in 2Q. He said that the quarterly report contains some good news and news that is not so good. But he went ahead to say that the quarter also offered some great reasons to be optimistic about the future of Titan.

Among other things, CEO Taylor said that conversations with equipment dealers have made the management hopeful that the agriculture market that has been a source of bad news in the recent times is nearing the bottom. It is widely expected that a rebound in the agriculture market could start showing in late 2016 and in 2017.

In the meantime, Titan International Inc. (NYSE: TWI) is only trying to mitigate costs with the hope of protecting its bottom-line from further deterioration.

What transpired in 2Q for Titan International Inc. (NYSE: TWI)?

Revenue for 2Q2016 dipped 12.2% YoY to $330.2 million. Adjusted earnings per share sank to a loss of $0.04 from positive earnings per share of $0.02 in the year-ago quarter.

Lower prices contributed an 8% hit to the revenue in the latest quarter as unfavorable forex movements wiped 4% from the topline. However, volumes remained unchanged between the latest quarter and the year-ago quarter.

Continued cost curtailment saw Titan International Inc. (NYSE: TWI)’s gross margin lift slightly to 13.7% from 13.6% a year ago. However, higher operating costs offset the gains as SG&A costs rose to 11% of sales compared to 10.1% of sales in the same quarter last year.

Titan International Inc. (NYSE: TWI) also managed to reduce the leverage on its balance sheet as debt declined to $414.6 million from $475.4 million. The company is the process of monetizing its Italtractor ITM S.p.A. business as part of the efforts to strengthen the balance sheet.


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