Titan Tire reports despite slow or little growth in some segments, the first quarter results for 2010 are positive for the company.
“The first quarter started slow, but has improved each month. Leading the way has been the big farm segment, which should continue to be strong through the second quarter, slowing down as normal in the third quarter and picking up in the fourth quarter,” says Chairman and CEO Maurice M. Taylor Jr. “Mid and small farm product demand is still slow, and we do not see any growth in that segment until 2012. Our construction business is up slightly, because it had nowhere to go but up, though it is still off nearly 50 percent from 2007 highs.”
Titan recorded sales of $196.4 million for the first quarter of 2010, compared to first quarter 2009 sales of $232.6 million. The lower sales level was primarily the result of reduced demand in the company’s agricultural market, which was down by approximately 19 percent when compared to last year’s first quarter.
The company adds that for the first quarter of 2010, gross profit was $26.1 million or 13.3 percent of net sales, compared to $30.1 million or 12.9 percent of net sales for the first quarter of 2009. Gross profit margin showed a slight improvement despite the reduction in sales primarily due to improved manufacturing efficiencies, including reduced headcount, in the agricultural segment.
There are plans for the coming year to continue growth around the company. One such area, according to Taylor, is Titan’s plan to open a facility in Fort MacMurray, Alberta, Canada, by the end of third quarter to service the company’s new mining customers. Titan also plans on embarking on a joint venture in Mexico this year for the distribution of all Titan products.
“Titan is also developing new wheel and tire combinations for large farming applications. In 2009, Titan’s engineers worked directly with farmers, developing new tires and wheels and will be testing these new 800R46 tire and wheel combinations on large row crop and four-wheel drive tractors,” Taylor states. “These assemblies will give the farmer lower soil compaction and greater fuel efficiency. We will also be releasing new special grain cart tires and wheels that will not only carry greater loads with less soil compaction, but also less rolling resistance. We are doing the same for combines. To put it simply, we are moving.”
In other areas of the financial report, selling, general and administrative expenses for the first quarter of 2010 were $11.8 million or 6 percent of net sales, compared to $12.5 million or 5.4 percent of net sales in 2009, a reduction of approximately $0.7 million.
Also, for the first quarter of 2010, income from operations was $10.1 million, compared to $14.1 million in 2009.
Interest expense was $7.1 million for the first quarter of 2010, compared to $3.9 million in 2009. The company’s interest expense for the first quarter of 2010 increased from the previous year primarily as a result of interest expense related to the convertible senior subordinated 5.625 percent notes that were issued in December 2009.
Titan reports its other income was $0.3 million for the first quarter of 2010, as compared to $1.4 million in 2009. A gain on senior note repurchases of $1.4 million was included in other income for the first quarter of 2009.
Net income for the first quarter ended March 31, 2010, was $2.1 million, compared to $7.0 million in 2009.
For the first quarter of 2010, basic and diluted earnings per share were $.06, compared to $.20 in 2009.
Titan’s capital expenditures for the first quarter of 2010 were $3.5 million, compared to $19.9 million in the first quarter of 2009. Of the $19.9 million of capital expenditures in the first quarter of 2009, approximately $12 million related to the company’s giant OTR mining project, which was substantially completed at the end of 2009.
Total debt was $366.3 million at March 31, 2010, unchanged from Dec. 31, 2009. Short-term debt was zero at both March 31, 2010, and Dec. 31, 2009. The company’s stockholders’ equity was $263.6 million at March 31, 2010, an increase of $1.6 million from $262.0 million at Dec. 31, 2009.
For more information, visit www.titan-intl.com.
