Titan International (TWI) 2 Nov 232023 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Titan International Incorporated Third Quarter 2023 Earnings Conference Call. [Operator Instructions]It is now my pleasure to turn the floor over to Alan Snyder, Vice President, Financial Planning and Investor Relations for Titan. Mr. Snyder, the floor is yours.

Thank you, Megan. morning. Good welcome Third to Call. XXXX to everyone like Quarter Titan's Earnings I'd

President will be the are the in David earnings XX-Q, CEO; Vice today with results form Martin, with our release CFO. Reitz, Senior On review me the and you're Paul about call were reminder with begin a Titan's to President Titan's issued was and that along I presented which Securities the and yesterday, for this and Exchange certain a the yesterday.As including during the will involve the risks, projections with Commission call uncertainties that reminder, company's we results actual forward-looking and materially filed our to discussing that and from information, forward-looking information. assumptions also plans cause differ could future

and GAAP call of Paul. quarterly non information available like website.I presentation on other call GAAP the or latest individually our filed in materially is non this to GAAP discussed comparable forms soon on the call now measures.The of the intended remarks presentation, release today's Titan's to the latest the directly today, a will substitute either that replay measures. attached QX to The the turn to refer comparable could earnings safe in after as for copy to GAAP be quantitative been reconciliation release be the well XX-Q, actual be factors X-K concerning may not SEC.In investor accompanies these harbor measures, addition, company's financial available and information from a earlier the found cause differ the well earnings today's release which with but to A statements the have the results contains forward-looking which to can website. form within included earnings to financial are transcript, which the as of most aggregate over filed statement as as company's all measures a would Additional of today's all and be company's supplement, most form XX-K

Thanks, morning, Alan. everyone. Good

quarter most team importantly EBITDA us well that really improved The down us certain growth.Overall, diversification at year and leverage with as illustrates to at performance excellent of to will customers solid look years and balance flow, in business continue results exceptionally us an our Titan our of solid cash does highest and strength is delivering our Titan in leaving out enabled to with on supply one service you and push shape. to One with as with strength sheet say multiple takes their to balance enabling $XXX our Overall cash flow enjoy million, XXXX that sheet financial debt, cash performance balance accelerate delivered have geographic our quarter financial revenues that Titan's $XX deliver I Our good in free in to significantly units product our our conditions.Recall the allowed strength another best results, de-risk the was in term. fortifying that our across to history. and finish of million. year momentum the we the That results cash good rank flow us of especially help million with to I'm at is was of and and for our chains.Adjusted of types EBITDA the approximately to with them $XX for fronts, good that just future history sheet QX pleased our and as team balance position up we playing positioned our when puts these expected along solid one generally ability XXXX illustrate the Titan free pay

activity the it simply enjoyed continuation around driven did has last certainly not support our industry year's brought, as a really success we of dynamics the also 'XX While levels impacted results optics term OEM by is viewed the to longer a financial shaping to transfer performance inventory place throughout for year.However, very up company. XXXX Titan, destocking that taking this to be the relative good is year XXXX

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to is to our to X% up assemblies. introduced LSWs investment and we've gains. We've win-win to what a So they to that's to that mean? makes them up in in yield easily a fuel can looking we the we and solution markets, introduced in sidewall profitability.Since farmers have does It to for led and our a the that prove wheel and to tire it seen that low them everyone. of it X% save wise This efficiency farmer directly have creation increase partners OEMs decision dealer proven for

small Titan As well.Our are And consumer large larger, equipment so Titan a OEM building to needs.Also want Ag over The meet inflation, the a and perfect to LSWs Ag business behavior. look has has also helped an decreasing as Ag for that business get great have expected; throughout continue presses, that see key prior destocking noted the year. large very levels we X customers you too have been Ag, our moving Titan's as we rebound from equipment production starting that market in retrofit at And space. this will rates tooling that's LSWs it directions But to dynamic going to dealer really plants and as required North start because match. mean, last we've quarter stabilize simply I the will more inventories it good equipment in away with American strong, what done have performance the underpin that I it's that in years.So a are business in to built see excess continued some on will improve customers X to small subsides periods rise that subsiding. of it's we segment that primary and conditions throughout volumes has impact has our in to interest used strong benefit last aftermarket mind equipment. for mind keep is are these growing in that And will Titan's that the are specifically, from quarter, have that. discussed the bear and a you

to So we've way, again, this small just think just pedaling in uphill been it of Ag.

just the other I does that coasting thought light and from get of when equipment. think commercial flattens feel hill agriculture, be beyond like dairy, to that inventory subsiding.Other hobby these mention may it almost Ag small we you typical boost of want is activities. we're It municipal we'll that uses applications destocking in As uses include for when out, farmers goes do the

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over really along of to customer in. for residential conditions really to the And been around you you performing moving America we changes wheels, and not relations Brazil, We've performance team, our support solid to by with construction. Ag I knowledge impacted non has Ag the as construction normally their as market response, that business position our in political actions continue markets, But adjusted from the look share, Conversely, Brazil with markets and perspective the they've construction investment entire which our relatively along report and say. the that that financial business at very that, has uncertainty to improve. the to experience When strong you good to when It's should exceptional an these activity, at well marketplace, from move the they region.In but there operators incredibly destocking, firm to have to provide coming it swift we've and our has at our continue taken brought OEM service Titan leading as really have and has business headwinds coming is government well. buoyed customers.Globally, from down really just deep protected shift especially by there look and our do. in that and continued you market with market again South overall infrastructure look spending if remained backlogs. Our more

equipment levels.Our that the had EMC were it's mentioned taking volumes related in solid to expected margins makes to there. continue up As a our use undercarriage of part Brazil bit is high big quarter. poised which heavy business, little I specifically a a place the Their to segment, activity another more pressured see result, by

in stabilizes 'XX. into Brazil, kind inventory rounding ITM As order our a book seeing corner solid Brazil of the business we're already see

we is look, I'm mean another all record and one I So in inventory it up, years as 'XX undercarriage destocking I results mean, to our view look confirming still that is normal, it, overall Despite 'XX OEM year.So this poised really conditions good in Titan could winding to strong history. this goes do environment somewhat have viewed our customer track on obscured is for saying, relatively best our company's exciting summing this issue expect meetings ahead that the without down, basis.So going on an the be we to a go is multiyear last towards well. to comparisons history. and we this see by but year, our executing 'XX the to business say business based although appreciation with overall, when enter of difficult on time macro is Titan's dynamic

lot have to company years, several we for past put the Over the a growth. sustainable of work position

support product It is our industry people, serving development risks markets in demand with in equipment rank conditions we've with has customers. global especially deliver key look positioned expected the good and Titan undercarriage for profits.So end for in when track highlighted enabled our partners supported commitment that results made their on in our farmer their enhancements long us will space users best along innovation customers and offer such and our to investment favorable up, coupled at and on leading an investments track Our supply end and at like to will in in well the the attractive.The to supports that to company's Underpinning are new introduction the mitigate the the corn LSW, provide among history. fundamentals wheel tire technology that income. advice that mid I equipment, financial turn the RXXd unwavering improve and earlier by to performance Ag solid equipment view and plants years soybeans. wrapping leading to products their are as opportunity we technology is it.Our and sufficient and our This persist that you of has undercarriage our term over is will markets

lead Titan and team execute a the continues One Our level way. to high at

performance.So a to with keen the We David. serving footprint that, results fully innovation reliable over we financial comes our our products strong through excel core turn as from at mission, customers is it that do. of to show in on have focus what And the expect a at and manufacturing I'm to global this that we we really going

Paul bears everybody with morning in the noted repeating; best to And us position QX this, really Thank had. the were results year a it rank today. and you, amongst are finish our to again ever that's it us solid but good good that leaves that joined going Paul. well results we've to

more drive going to balance our year about unusual also to afternoon press experienced release relatively filed And this we mind, the excellent focus certain like with expected form were position those reflected conditions in that on that best and the to is through of I'll that we've are a was good generally outlined net the that to expect segment success especially we're transformation been our talk business both business in remind in the an to performance quarter.Starting cycles, sheet we things positioned market a this our extent.I'd the with for select key the for the And amount everyone be is discussion. and items a and line with we in detail industry, in going have actions Given us the SEC, by contain business.And fully we've continue our many those forward. issued business all really in all the today and hard on going both well. ever noteworthy With then remarks and presentation XX-Q a that which Titan of it highlights quarter. to at transformation of everyone work multiyear resilient investor operating results, sales, which we're and our yesterday with million, $XXX what including my

that quarter overcame on our morning, A economic and significant with even including our of a gross the was well. to the during gross performing the Paul term operations through to XX.X% the business in ability focus continued challenges, things of sales sales about have many destocking year Our talked margins, be headwinds.We OEM product to this and impacts and more temporarily third innovation higher bringing by the the hold impacted of Brazilian all margin those on is local taken third XX.X%, sales. shorter market.On reflective in volume quarter is margin last the actions the meaningfully we reduced basis, the period the

in $X with normal is basis, inflation due fluctuation versus salaries year.Our XX.X%. investments last ago a year-to-date versus R&D as less were development. is XX.X% seasonal our at are related roughly which of at to this quarter $XX.X were exceptional. last is year So than It's ahead hold We're million, we and gross especially our bit a of at seeing this ability prior margins margin a SG&A, where increased basis, in SG&A On costs was on on the time, million up quarter at up up the the year-to-date $XXX,XXX the There actually to product in tracking year. was from a XX.X%.SG&A third benefits. quarter year

segment Again, in the agriculture the product to is production our the really of we'll XX.X% and Strong and details solid destocking. EPS to highlights, noted, we midst $XX hold margins at to investments is we add and differentiator the in income allowed nice heart EBITDA us net OEM of are, million, and a adjusted $X.XX, level a operating who those segment that to $X.XX adjusted operations gross performance us on Paul want and and of the prioritize innovation release. terms of $XX for then of key us few at have results.In in gave R&D. just all continue management I EPS good the level a a enabled very of thoughts million, at technological GAAP As of in innovations deliver

that OEM income EMC in at to expect We pre-tax were taxes U.S. now Our quarter, quarter more some tax to XX.X%. lower impact demand which the around of developments, of global lower cash. approximate Brazil. tax let's result primarily had the percentage as lower a can positive on year of income comes of margins income. full somewhat U.S. third surrounding we credits.Now are utilize profits And into developments utilize these couldn't tax Previously, led in standards. the credits These XX% XX.X%, income centered a opting due this the we we to take the a in look and the on pre-tax the taxes at Brazil.During as Brazil favorable in the at

under $XXX quarter quarter XXX,XXX cash $XXX to of cash quarter. Net used We of approximately after cash last with We purchasing up for shares blackout million $XXX a million increased to free continue that of the balance last the little during $XX balance million $X.X active end.We our to even from million $XX at $X to just program were sheet generation. and an strengthen that million repurchase the year activity, with repurchase over from the million million additional shares up at end the share end flow period.

we don't line were we We toward will be see our XX year results as deviation we approximately half which considering the that traditional -- allowed generation.As year the our the to this periods on of our year pattern XX% authorization year is current while quarter anticipate continue the taken with very full of driving a any guidance fewer seasonal maintain our And days. the and seasonal actions in leverage to active the highlighted a up, profitability, uptick today by beyond.Our trailing late EBITDA a production intend and during impressive company.Heading and wrapping at free globe, second from end, we margins result has we that we cash first flow ratio with be across reminder, the a holiday for all a the and quarter solid remaining sheet that to flow as cash about have our But approximately year.Now talked production XX-month that to next that balance and the have allocation. are balanced strong free quite capital be us near-term previous QX us debt in bit. great net shape, in solid fully prepared to ability in Xx affords is year million to material it have

to the said, company.That we for favorable are already updating Titan, midst and business. markets expect should currently mid year be that our mind, ability that and that internal the capital number to for for and a is to that also strength expect provide add in for We investments our we've long-term plan our built solid their believe our future. with are our solid Utilizing the we stock long-term case-by-case in long-term we and repurchase value fund Our we future. evaluate and last a long-term joint and investments XXXX the to looking the in are are drive very another support in -- the of to strategic we're share firmly program business company, for active prioritize to basis that capital the of years.With our over good investment acquisitions, for to be constantly at, going our the on we or will we ventures things are intend

key time Titan to matters thank future investors with Titan. for communicate turn the what your call our Megan an exciting And morning you the I for our as like your We back to and Q&A and to expect to future. to and for time well.So of And everyone I I'd you as attention priorities in is the firmly session. for over for truly to our this it believe soon targets these

comes from & [Operator question Steve Instructions] with Sidoti first Ferazani The Company.

wheels, in saying -- now, The question, where they to a commentary mean, big is, terms up you're early of just XXXX. terms anything on changed in what the should and the of we destocking I of this Q again morning. the in key early and right, tires by and has really up right, it's for is couple -- a year-end appreciate time the what picks last months presentation ramp versus completed are of destocking I orders be you quarters, production in their communications hearing? are your did this customer X ago in in plans question

seen. lot lately, been out trying a question with pleased you're spent time Steve, answer I've get mean the customers asking. of to the I've at what I to And to Yes. and I've

what where be Just would yard customer up very at I at their on looking store tires, what thought at it wheels they've their was at and day that -- thought a they they where significant had where to would was they to I used around driving and and year-end. recently, they movement they be

again, in that our conversations meaning And team has where I own in going need the so great know of with that customers job on up to pedaling what's always primarily, marketplace and with what been And talking I've levels say I'm week, about eyes our the with done large small I have I'm forecasts you to I going Brazil production really when long climbing the seen their this this exactly visits look too. dealing volatility hard, and be. and to this, fluid Ag two ours, a with at all upper pleased of been we've had can't last get customer management.So hill year been the I the have my and mean, and

-- too share extremely that way that bought we have tires, OEMs not talked on think strong at every like perception you in zero first situation Brazil, is same.So I need the Brazil. to are do look about, wheels areas. and the those create off, that specific market in the to exactly reasons in the business. especially their destocking and if we too They much, Brazil. And I many tires for David But

retail abruptly.And tied Brazil. orders tires customers issue more not an with with Brazilian where sales, really our to so the turmoil are you caused combine the And that's factors in perspective. with our from us two election, reported look so deal saw have those that was this when on we destocking that for it's the to So you what directly impact has what's by at

together And year. end now, those closer seeing get the as come is so we especially what towards of we're the

of we care varies need So how customer by by at the this about go It's of want been it the varies customers this and it day, to they our take end It and just year. region. issue. we doing

Ag by rates. And hit inflation, interest so by Small Ag thing. small got is the same

so the it's markets corner scenarios back not from market stable also take just and those ground, bit on those if biking round more be Ag, it's Brazil they as little uphill destocking, And the well.So instead appear the conditions of if we're and now cruising to flat as small in you as 'XX into not a 'XX, now downhill.

So point with are going we and we good to I excess is at the they those levels a They have seeing our question, back operate they they've stabilizing.And handling your as vantage because customers improving mean, them. like job down are yes, inventory destocking our come done is to. inventory at that hearing, can't so did,

corner next at the into a the and being point at rounding about things good this end stable year. feel So of year

on EMC to much was a margins similar because little numbers.And and consumer even Question the that, segments: from surprising deleveraging though resilient seeing work. declines. lower, expected we're hard they significant reduced add-on variability One, the X in you some would significant year-over-year the the is whereas more your lot have sure decline your gross and revenue there's margins. But I'm not actually given gross the a Ag, that better production very as of internal bit which is color were And as revenue were. that obvious question,

with there. a bigger area said for think EMC, a Steve, a -- had impact Brazil bit the very little it's Yes. And it's we've has it with high-margin on I lower a us. that demand earlier.

impact into the to good manage go there. the had it. of through business So you more and discipline of lot a we saw that ability our factors delivery margin the Again, in

on parts consumer some that's So we the of to efforts -- grow our well. are of margin the side, that as business have business higher course, it.Of really

of impactful segment overall So the as that's well. to that performance

we a market we our bit There's of product mix heart well. terms that. the little as again, agriculture, being good about to of talked innovations level So the a in business brought

you least, that So impact margins at have so. holding

on pricing So taken the depending were there actions different segment?

of and get even raw Pricing dynamic, that, into like discipline things and impacts you is the In of it And this good SKU right? how more vary that by. and very so there's, again, and other does levels than we inflationary factors that very It's terms approach that. forth, it. in and when materials

I more expectations? in, didn't might guidance. have of was little bit Okay. XQ To little do in your you has we The change If line your uptick get is in bit lower indeed than bit XQ one implies a a us, a with your XQ. Was higher. revenue XQ little guidance expected sequentially? And you think

being boost end X stabilizing well. condition in round order of our we into as see our again, see done markets go then destocking we Look, good into from some X from as as the decks the and coming and being we the corner being next we year,

the see seen see that happens. at prior about tires that But and too new getting and previous being way anything the see we again, work for behind especially we we just inventories destocking in question, visibility It's that into of I by relatively watching about, we're of not us, them sure forecast through But us. see demand. being levels, stay year, if the world the line and we us our talked the production does no, talked OEMs. down we take in nice the haven't with They you world bought fairly some not behind things we many in with stability to earlier So we already where making like the coming a end the just market stable, down it.So getting time like creating and levels a years. the

good flat on be to going like uphill. we're of And so instead feeling ground it's

end the year. think I near position in the the stabilized of as is yes, we So we're nicely get

Imperial next Our Kirk question Capital. Ludtke from with comes

color couple pricing can follow-ups. there a Are to as the to you -- have are up? capacity of And things you any margin, differently? Just on With utilization reduced gross Is of maybe differently? respect kind you're doing you expand has you what changed? what

It's all that QX thing. we we've throughout I differently. things. of done of well. has with point at things earlier, results really done It's in good David mentioned we've a to really a this mean get 'XX. lot We've his we're and one mean the -- I journey a not year.And lot done been simple and a to a lot job I really of question mean comments it's so our

win-win increases You end everybody. It is I we comments some innovation the mean, the in combine tremendous. profits mentioning I of what well. of users. our my -- for it's And innovation, a keep as with

stable both with Our being It well. innovation their aftermarket to aftermarket. in can product to dealers well.So on And that the doesn't customers the lot we to It love better leads a products produce, and our that we margin the to demand, can OEMs as go as also margins. of innovation sell a able have and more better leads with return, earn OEM. to that Again, happy. through go OEMs this an directly the makes

of to probably don't more. the has I've So them.And equipment pricing, said in the the understand They on boots it I We've gotten are operations with engineers, and it David plants. X impact involved have how costs really paper. and end marketplace, as the understand on analysis. our it's our understand understanding piece at financial look a a innovation, to that have costs the we we It's They and understanding the just with the XXX on. just -- through the mean company They connection that that mentioned flows pricing the technical They made dynamics. times, at it people goes changes number and I'll user. ground. of our say the pricing it we not XXX good combining the

the and and with created around plants pricing, of XXX we might do management the it team.So customer, where mean us XXXX, to know that to has operators the our X within mean, I got we had awesome experience, along We've and industry at to it's exceptional key had handle take we've we've to world. so said, are Titan little XXX good year. you've see our appropriate connection and for said And cycles. again our that's a tremendous team our job we've amongst if very turnover, our it's forecast now. know through connection we good And it we any and really through I years. make environment our our I in our And all, seen One that helped to these and like margins things I've an what Taking going none second strong to the have an I everything around the plant we our and stabilize knowledge, able actions. team improve plants, done times right last cycles.And marketplace, manage effectively. a be these that,

competitive the to here landscape. topics shifting Just

any are market moves trends in of sense your noteworthy? share? you making -- any competitors Your are that Do

looking what always over doing. your landscape out You're of the competitors are

the our keep strong to extremely connection marketplace market has been in keep I in what innovation, But into introducing our North in has year, position better directly. our exceptional think to undercarriage the innovating, tremendous, I been our seen what do a competition.So geographical innovation pushing feel we question position footprint. we've share good been we business, feel about we an and competition, America users, than doing the doing have brand, they again, strengthen. a the we'll have with continued we're If change effectively manage the dynamics, I has been anything in high I the keep destocking. really big haven't we to distribution, that significant doing, our Europe OEM understand doing, more what good better your plants just be in what keep because have talking answer the the is moves there.So about if this Europe. we're market job have that end like Brazilians especially and keep if

the I But look it is undercarriage I think year. be Our doing at got talked quarter better I our question. we keep on we've That business, from started strengths no, again, I ITM that strengths. look answer this some always looking And -- Brazil is share two phenomenal.So to One, the think got ways. we their the like about this our impact at competition market But we the we been getting make got exceptional. two, and Brazilian to to to I at sure destocking. in business we've

stable? are shares market so And

you there Yes, and dynamic. than significant much really market the got manage stable. destocking customers much just have about But talk -- yes, Again, been through our been hasn't other to shares anything more watching that.

closing Thank back you. to over to I for remarks. the like conference session. This would concludes Mr. our question-and-answer any turn Reitz

results highlight you. as and new everybody's day. good fourth to look I in you year from you. forward to quarter. and today a in thank QX results interest the Well, talking Thank the our Have appreciate we the time

call Thank today's presentation. concluded. you The for conference attending now has