QUINCY, Ill., Aug. 6, 2020
/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, 2020.
Net sales for the second quarter of 2020 were $286.1 million, compared to net sales of
$390.6 million for the second quarter
of 2019, representing a $104.5
million, or 26.7 percent, decrease. On a constant
currency basis, net sales for the second quarter 2020 would have
been $305.9 million. Net loss
applicable to common shareholders for the second quarter of 2020
was $5.0 million, equal to a loss of
$0.08 per basic and diluted share,
compared to loss of $7.1 million,
equal to a loss of $0.12 per basic
and diluted share, in the second quarter of 2019.
Net sales for the first six months of 2020 were $627.6 million, compared to net sales of
$801.0 million for the first six
months of 2019, representing a $173.3
million, or 21.6 percent, decrease. On a constant
currency basis, net sales for the first six months of 2020 would
have been $660.1 million. Net
loss applicable to common shareholders for the first six months of
2020 was $30.5 million, equal to a
loss of $0.50 per basic and diluted
share, compared to loss of $5.9
million, equal to a loss of $0.10 per basic and diluted share, for the first
six months of 2019.
"Our strong focus on protecting the balance sheet, via cash
preservation, accessing additional liquidity and improving our
working capital position are each positive takeaways from the
second quarter," stated Paul Reitz,
President and Chief Executive Officer. "We were able to
increase our cash balance nearly $20
million during the quarter while maintaining a similar net
debt position. This improved position will aid Titan as we
continue to navigate the effects of the COVID-19 pandemic. The One
Titan global team remains focused on the safety of our people while
proudly serving our customers, and I want to again thank the team
for their tremendous commitment and diligent efforts throughout
this pandemic. In early May, during our most recent earnings
announcement, we outlined several key actions we had implemented in
response to the COVID-19 pandemic and in the midst of tremendous
uncertainty. I am very pleased to report that our actions and
efforts have been effective.
"As expected, Titan had significant disruptions with plant
shutdowns due to dislocation in demand primarily from OEM
customers, along with some government restrictions during
April. During the remainder of the quarter production levels
improved; however, we continued to experience disruptions due to
lower demand from our customers. Our ITM undercarriage business saw
the deepest impact from lower customer demand across most
geographies, particularly within the construction market.
"We entered the second quarter expecting this period to be the
most challenging of the year and perhaps in Titan's long
history. Our results demonstrate that we've navigated the
challenges quite well, but like many companies we remain in an
environment with limited demand visibility from our customers and
also where the information we are receiving is often conflicting
and changing rapidly. We continue to see an unusually high
level of drop-in orders and we must remain nimble and flexible to
quickly respond to meet those customer demands. Typically, we
experience a sales slowdown in the third quarter due to the normal
summer maintenance shutdowns and employee holidays, which we
anticipate will be further exacerbated by the effects of the
continuing COVID-19 pandemic. Therefore, we'll continue to
remain diligently focused on making timely decisions and taking
quick actions to adjust to demand fluctuations. Also, the
liquidity actions we have taken have better positioned us to handle
this crisis and we remain hopeful for some potential rebound in
demand later in the year leading into 2021."
Liquidity position
David Martin, Senior Vice
President and Chief Financial Officer commented, "We have
previously discussed targeted reductions of selling, general,
administrative, research and development (SGARD) expenses.
These measures have been further accelerated resulting in current
anticipated full year SGARD in the range of $130 million to $135
million. The results in the second quarter reflect the
progress achieved from company-wide initiatives to lower costs with
SGARD expenses totaling under $31
million. The decrease in SGARD was the result of reduced
information technology spending, lower payroll and related costs
across the board, reduced marketing costs and reduced travel
expenses.
"We are continuing to limit capital spending to include
primarily health, safety, environmental, and other critical items.
As communicated during our last earnings call, this is in direct
response to cash preservation measures as a result of the impact of
the COVID-19 pandemic on the business. We were also able to
complete agreements to secure additional credit capacity in
Europe through both private and
government backed programs that provide approximately $20 million of added liquidity.
"During June, we also completed the sale of our remaining
ownership interest in Wheels India Limited, generating more than
$24 million in net proceeds. We
previously announced our expectations for an additional
$20 million to $50 million in non-core asset sales; the Wheels
India sale puts us within that range, with an additional
$20 million on track to be completed
during the remainder of this year. The sale of non-core
assets, including Wheels India, has resulted in over $37 million of added liquidity during 2020, with
the cash received used to reduce debt levels."
Results of Operations
Net sales for the second quarter ended June 30, 2020, were
$286.1 million, compared to
$390.6 million in the comparable
quarter of 2019, a decrease of 26.7 percent driven by sales
decreases in all segments. Overall net sales volume was down
24.0 percent from the comparable prior year quarter, due primarily
to challenges in the earthmoving/construction market as a result of
a slowdown of the global construction market, particularly in
Europe. Approximately $31
million in reduced sales, in comparison to the same period
of 2019, was attributable to plant closures and disruptive markets
in Europe, Asia and Latin
America resulting from the COVID-19 pandemic. Global
trade issues, as well as the impact of the COVID-19 pandemic, were
contributing factors in the sales decrease in the Agriculture
market, which resulted in lower volume from OEM customers.
Unfavorable currency translation negatively impacted net sales by
5.1 percent. Favorable price/mix partially offset these declines
and contributed to a 2.4 percent increase in net sales.
Net sales for the six months ended June 30, 2020,
were $627.6 million, compared to $801.0 million in
the comparable six-month period of 2019, a decrease of 21.6
percent driven by sales decreases in all segments. Overall
net sales volume was down 18.1 percent from the comparable period
in the prior year, due primarily to the aforementioned economic
factors. The overall net sales volume was also impacted by
approximately $45 million in reduced
sales in comparison to the same period of 2019 due to COVID-19
related plant closures in Europe,
Asia and Latin America. Unfavorable currency
translation negatively impacted net sales by 4.1 percent. Favorable
price/mix partially offset these declines and contributed to a 0.6
percent increase in net sales.
Gross profit for the second quarter ended June 30, 2020 was
$29.9 million, compared to
$38.3 million in the comparable prior
year period. Gross margin was 10.4 percent of net sales for
the quarter, compared to 9.8 percent of net sales in the comparable
prior year period. The decrease in gross profit was driven by
the impact of lower sales volume across most geographic regions.
The decrease in gross profit was also impacted by a $1.0 million reserve for impairment of inventory
for the closure of our Saltville,
Virginia wheel operations. The unfavorable gross profit
impact from the COVID-19 pandemic mentioned above was approximately
$7 million. The increase in
gross profit as a percentage of sales for the quarter ended
June 30, 2020, as compared to the comparable period in 2019,
was primarily due to strong initiatives to reduce labor and
overhead costs across global production facilities. In
addition, raw material prices were down relative to the prior
year.
Gross profit for the first six months of 2020 was $57.1
million, compared to $83.6 million in the comparable
prior year period. Gross margin was 9.1 percent of net
sales for the first six months of 2020, compared to 10.4
percent of net sales in the comparable prior year
period. The decrease in gross profit was driven by the impact
of lower sales volume across most geographic regions. The decrease
in gross profit was also impacted by the aforementioned factors
experienced in the second quarter. The unfavorable gross margin
impact from the COVID-19 pandemic mentioned above was approximately
$11 million.
Selling, general, administrative, research and development
(SGARD) expenses for the second quarter of 2020 were $30.6 million, compared to $38.3 million for the comparable prior year
period. As a percentage of net sales, SGARD was 10.7 percent,
compared to 9.8 percent for the comparable prior year period.
The decrease in SGARD was driven primarily by lower professional
fees related to investments in information technology for ongoing
stabilization of an enterprise resource planning (ERP) software
implementation within North
America during 2019, lower payroll related costs, lower
marketing costs and reduced travel expenses, resulting from
company-wide initiatives to lower costs.
SGARD expenses for the first six months of
2020 were $64.9 million, compared to $76.8
million for the comparable prior year period. As a percentage
of net sales, SGARD expenses were 10.3 percent, compared to 9.6
percent for the comparable prior year period. The
decrease in SGARD was also primarily due to lower professional fees
related to investments in information technology related to ongoing
stabilization of an ERP software implementation within North America during 2019, as well as, lower
payroll related costs, lower marketing costs, and reduced travel
expenses, again, resulting from company-wide initiatives to lower
costs.
Loss from operations for the second quarter of 2020 was
$3.1 million, or 1.1 percent of net
sales, compared to loss of $2.4
million, or 0.6 percent of net sales, for the second quarter
of 2019. Loss from operations for the first six
months of 2020 was $12.7 million, or 2.0
percent of net sales, compared to income of $1.7 million, or 0.2 percent of net sales,
for the first six months of 2019. The decrease in
income from operations for each of these periods was primarily
driven by lower net sales and the net result of the items
previously discussed.
Foreign exchange gain was $8.8
million for the three months ended June 30, 2020,
compared to a loss of $1.2 million
for the three months ended June 30, 2019. Foreign
exchange loss was $8.4 million for
the first six months of 2020, compared to a gain of
$4.5 million for the first six
months of 2019. Foreign currency exchange gain or loss
is the result of the significant movements in foreign currency
exchange rates in many of the geographies in which we conduct
business and translation of intercompany loans at certain foreign
subsidiaries, which are denominated in local currencies rather than
the reporting currency, which is the
United States dollar. Since such loans are expected to
be settled at some point in the future, these loans are adjusted
each reporting period to reflect the current exchange rates.
During the first quarter of 2020, we settled a number of
intercompany loans as part of an ongoing loan restructuring
initiative with a resulting foreign exchange loss, which is
reflected in the total foreign exchange loss recognized for the
first six months of 2020.
The second quarter of 2020 net loss applicable to common
shareholders was $5.0 million, equal
to a loss of $0.08 per basic and
diluted share, compared to loss of $7.1
million, equal to a loss of $0.12 per basic and diluted share, in the
comparable prior year period.
Net loss applicable to common shareholders for the six
months ended June 30, 2020, was $30.5 million,
equal to a loss of $0.50 per basic and diluted share, compared
to a loss of $5.9 million, equal to a loss
of $0.10 per basic and diluted share, in the comparable
prior year period.
Adjusted EBITDA was $13.3 million
for the second quarter of 2020, compared to $12.8 million in the comparable prior year
period. Adjusted EBITDA was $22.5
million for the first six months of 2020, compared to
$32.6 million in the comparable prior
year period. The Company utilizes EBITDA and adjusted EBITDA,
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.
Segment Information
Agricultural Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
2019
|
Net sales
|
$
|
147,267
|
|
|
$
|
164,284
|
|
|
$
|
320,206
|
|
$
|
356,014
|
|
Gross
profit
|
15,613
|
|
|
14,247
|
|
|
29,640
|
|
36,372
|
|
Income from
operations
|
6,992
|
|
|
4,365
|
|
|
2,298
|
|
18,293
|
|
During the quarter, lower sales volume in North America, Europe and Latin
America contributed 8.4 percent of this decrease in net
sales while unfavorable currency translation, primarily in
Latin America, Europe and Russia, decreased net sales by 6.8
percent. Favorable price/mix increased net sales by 4.9
percent. Lower sales volumes were primarily caused by
continued weakness in the commodity markets and the effect of the
COVID-19 pandemic which continues to cause significant uncertainty
for customers in most geographies, most notably OEM
customers. The increase in gross profit is primarily
attributable to production efficiencies from company-wide cost
reduction initiatives and lower raw material costs.
During the six months ended June 30, 2020, lower sales
volume in North America,
Europe and Latin America contributed 4.8 percent of this
decrease while unfavorable currency translation, primarily in
Latin America, Europe and Russia, decreased net sales by 4.9
percent. Unfavorable price/mix further decreased net sales by
0.3 percent. Lower sales volumes were primarily caused by
continued weakness in the commodity markets and the effect of the
COVID-19 pandemic which continues to cause significant uncertainty
for customers in most geographies, most notably OEM
customers. The decrease in gross profit is primarily
attributable to the impact of lower sales volume and unfavorable
foreign currency translation.
Earthmoving/Construction Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
112,457
|
|
|
$
|
184,782
|
|
|
$
|
249,379
|
|
|
$
|
361,527
|
|
Gross
profit
|
11,614
|
|
|
19,701
|
|
|
22,368
|
|
|
37,871
|
|
(Loss) income from
operations
|
(1,902)
|
|
|
5,697
|
|
|
(8,897)
|
|
|
11,225
|
|
During the quarter, the decrease in earthmoving/construction
sales was driven by decreased volume, which negatively impacted net
sales by 37.5 percent. This decrease was primarily due to a
tightening within the construction market in our undercarriage
business in all geographies. The direct impact of the COVID-19
pandemic accounted for approximately $26
million of the sales decrease due to plant shutdowns and
market disruptions in Europe,
Asia and Latin America. Unfavorable currency
translation across most non-US geographies decreased net sales by
3.1 percent, but was partially offset by favorable price mix, which
increased net sales by 1.5 percent. The decrease in gross
profit was primarily driven by the lower sales volume, which
created certain production inefficiencies, the impact of the
COVID-19 pandemic and unfavorable foreign currency translation.
The decrease in earthmoving/construction sales for the six
months ended June 30, 2020 was driven by decreased volume,
which negatively impacted net sales by 30.4 percent. This decrease
was primarily due to a tightening within the construction market in
all geographies, especially in our undercarriage business. The
direct impact of the COVID-19 pandemic accounted for approximately
$40 million of the sales decrease due
to plant shutdowns and market disruptions in Europe, Asia
and Latin America. Unfavorable
currency translation across most non-US geographies decreased net
sales by 2.7 percent but was partially offset by favorable price
mix, which increased net sales by 2.1 percent. The decrease
in gross profit was primarily driven by the lower sales volume,
which created certain production inefficiencies, the impact of the
COVID-19 pandemic and unfavorable foreign currency translation.
Consumer Segment
(Amounts in
thousands)
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
26,409
|
|
|
$
|
41,531
|
|
|
$
|
58,048
|
|
|
$
|
83,430
|
|
Gross
profit
|
2,640
|
|
|
4,360
|
|
|
5,103
|
|
|
9,329
|
|
Income from
operations
|
1,425
|
|
|
1,228
|
|
|
1,131
|
|
|
3,349
|
|
During the quarter, the decrease in net sales was driven by
lower sales volume, especially in North
America, Latin America and
Australia, which negatively
impacted net sales by 25.7 percent, and unfavorable currency
translation, primarily in Latin
America, and unfavorable price mix, which decreased net
sales by 6.9 percent and 3.8 percent respectively. The
decline in Latin America continued
to be driven by lower demand for light utility truck tires and the
impact of the COVID-19 pandemic. The decrease in gross profit
was due primarily to lower sales in the light utility truck
markets.
The decrease in consumer segment net sales for the six months
ended June 30, 2020 was driven by lower sales volume,
especially in North America,
Latin America and Australia, which negatively impacted net sales
by 21.9 percent, and unfavorable currency translation, primarily in
Latin America, and unfavorable
price mix, which decreased net sales by 6.1 percent and 2.4
percent, respectively. The decline in Latin America continued to be driven by lower
demand for light utility truck tires and the impact of the COVID-19
pandemic, while declines in other geographies related to a shift in
focus to agriculture and earthmoving/construction products.
The decrease in gross profit was due primarily to lower sales in
the light utility truck markets.
Financial Condition
The Company ended the second quarter of 2020 with total cash and
cash equivalents of $80.2 million,
compared to $66.8 million at
December 31, 2019. Long-term debt at June 30, 2020,
was $462.2 million, compared to
$443.3 million at December 31,
2019. Short-term debt was $40.8
million at June 30, 2020, compared to $61.3 million at December 31, 2019.
Net debt (total debt less cash and cash equivalents) was
$422.9 million at June 30, 2020,
compared to $437.8 million at
December 31, 2019.
Net cash provided by operating activities for the first six
months of 2020 was $5.5 million,
compared to net cash used for operations of $10.0 million for the comparable prior year
period. Capital expenditures were $8.4
million for the first six months of 2020, compared to
$16.7 million for the comparable
prior year period. Capital expenditures during the first six
months of 2020 and 2019 represent critical equipment replacement
and improvements, along with new tools, dies and molds related to
new product development. The overall capital outlay for 2020
is being suppressed as a direct response to cash preservation
activities as a result of the impact of the COVID-19 pandemic on
the business.
Teleconference and Webcast
Titan will be hosting a teleconference and webcast to discuss
the second quarter financial results on Thursday, August 6, 2020, at 9 a.m. Eastern Time.
The real-time, listen-only webcast can be accessed 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 teleconference, which includes
live audio for the Q&A portion, participants will need to
register for this teleconference in advance using this link
http://www.directeventreg.com/registration/event/9642949. After
registering, the dial in details and unique conference codes needed
for entry to the call will be available immediately via web browser
and a confirmation email will be sent which includes this
information. Registration is now open for the live call. To
ensure you are connected timely, we suggest registering a day in
advance or at minimum 15 minutes prior to the start of the
call.
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.
About Titan
Titan International, Inc. (NYSE: TWI) is a leading global
manufacturer of off-highway wheels, tires, assemblies, and
undercarriage products. Headquartered in Quincy, 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
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
286,133
|
|
|
$
|
390,597
|
|
|
$
|
627,633
|
|
|
$
|
800,971
|
|
Cost of
sales
|
255,259
|
|
|
352,289
|
|
|
566,936
|
|
|
717,399
|
|
Asset
impairment
|
1,007
|
|
|
—
|
|
|
3,586
|
|
|
—
|
|
Gross
profit
|
29,867
|
|
|
38,308
|
|
|
57,111
|
|
|
83,572
|
|
Selling, general and
administrative expenses
|
28,441
|
|
|
35,746
|
|
|
60,398
|
|
|
71,651
|
|
Research and
development expenses
|
2,132
|
|
|
2,544
|
|
|
4,542
|
|
|
5,161
|
|
Royalty
expense
|
2,395
|
|
|
2,448
|
|
|
4,875
|
|
|
5,054
|
|
(Loss) income from
operations
|
(3,101)
|
|
|
(2,430)
|
|
|
(12,704)
|
|
|
1,706
|
|
Interest
expense
|
(8,008)
|
|
|
(8,295)
|
|
|
(16,043)
|
|
|
(16,228)
|
|
Foreign exchange gain
(loss)
|
8,836
|
|
|
(1,239)
|
|
|
(8,406)
|
|
|
4,484
|
|
Other (loss)
income
|
(390)
|
|
|
2,069
|
|
|
7,046
|
|
|
3,065
|
|
Loss before income
taxes
|
(2,663)
|
|
|
(9,895)
|
|
|
(30,107)
|
|
|
(6,973)
|
|
Provision (benefit)
for income taxes
|
1,980
|
|
|
(3,218)
|
|
|
2,035
|
|
|
(1,303)
|
|
Net loss
|
(4,643)
|
|
|
(6,677)
|
|
|
(32,142)
|
|
|
(5,670)
|
|
Net income (loss)
attributable to noncontrolling interests
|
402
|
|
|
(253)
|
|
|
(1,611)
|
|
|
(1,224)
|
|
Net loss attributable
to Titan
|
(5,045)
|
|
|
(6,424)
|
|
|
(30,531)
|
|
|
(4,446)
|
|
Redemption value adjustment
|
—
|
|
|
(661)
|
|
|
—
|
|
|
(1,437)
|
|
Net loss applicable
to common shareholders
|
$
|
(5,045)
|
|
|
$
|
(7,085)
|
|
|
$
|
(30,531)
|
|
|
$
|
(5,883)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(.08)
|
|
|
$
|
(.12)
|
|
|
$
|
(.50)
|
|
|
$
|
(.10)
|
|
Diluted
|
$
|
(.08)
|
|
|
$
|
(.12)
|
|
|
$
|
(.50)
|
|
|
$
|
(.10)
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
60,602
|
|
|
60,000
|
|
|
60,481
|
|
|
59,973
|
|
Diluted
|
60,602
|
|
|
60,000
|
|
|
60,481
|
|
|
59,973
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share:
|
$
|
—
|
|
|
$
|
.005
|
|
|
$
|
.005
|
|
|
$
|
.01
|
|
Titan
International, Inc.
|
Consolidated Balance
Sheets
|
Amounts in
thousands, except share data
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
80,160
|
|
|
$
|
66,799
|
|
Accounts
receivable, net
|
192,410
|
|
|
185,238
|
|
Inventories
|
294,537
|
|
|
333,356
|
|
Prepaid and
other current assets
|
74,094
|
|
|
58,869
|
|
Total current
assets
|
641,201
|
|
|
644,262
|
|
Property, plant and
equipment, net
|
337,646
|
|
|
374,798
|
|
Operating lease
assets
|
21,480
|
|
|
23,914
|
|
Deferred income
taxes
|
605
|
|
|
2,331
|
|
Other
assets
|
30,362
|
|
|
69,002
|
|
Total
assets
|
$
|
1,031,294
|
|
|
$
|
1,114,307
|
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Short-term
debt
|
$
|
40,784
|
|
|
$
|
61,253
|
|
Accounts
payable
|
136,802
|
|
|
158,647
|
|
Other current
liabilities
|
120,985
|
|
|
107,253
|
|
Total current
liabilities
|
298,571
|
|
|
327,153
|
|
Long-term
debt
|
462,240
|
|
|
443,349
|
|
Deferred income
taxes
|
2,820
|
|
|
6,672
|
|
Other long-term
liabilities
|
66,006
|
|
|
73,145
|
|
Total
liabilities
|
829,637
|
|
|
850,319
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
25,000
|
|
|
25,000
|
|
|
|
|
|
Equity
|
|
|
|
Titan shareholders'
equity
|
|
|
|
Common
stock ($0.0001 par value, 120,000,000 shares authorized,
60,787,263
issued at June 30, 2020 and 60,710,983 at December 31,
2019)
|
—
|
|
|
—
|
|
Additional paid-in
capital
|
531,577
|
|
|
532,070
|
|
Retained
deficit
|
(105,167)
|
|
|
(74,334)
|
|
Treasury stock (at
cost, 184,969 and 427,771 shares, respectively)
|
(2,055)
|
|
|
(4,234)
|
|
Accumulated other
comprehensive loss
|
(248,982)
|
|
|
(218,651)
|
|
Total Titan
shareholders' equity
|
175,373
|
|
|
234,851
|
|
Noncontrolling
interests
|
1,284
|
|
|
4,137
|
|
Total
equity
|
176,657
|
|
|
238,988
|
|
Total liabilities and
equity
|
$
|
1,031,294
|
|
|
$
|
1,114,307
|
|
Titan
International, Inc.
|
Consolidated
Statements of Cash Flows
|
All amounts in
thousands
|
|
|
Six months
ended
|
|
June
30,
|
Cash flows from
operating activities:
|
2020
|
|
2019
|
Net loss
|
$
|
(32,142)
|
|
|
$
|
(5,670)
|
|
Adjustments to
reconcile net loss to net cash provided by (used for) operating
activities:
|
|
|
|
Depreciation and
amortization
|
27,119
|
|
|
27,809
|
|
Asset
impairment
|
3,586
|
|
|
—
|
|
Deferred income tax
provision
|
(2,111)
|
|
|
156
|
|
Loss on sale of
Wheels India Limited shares
|
703
|
|
|
—
|
|
Gain on property
insurance settlement
|
(4,936)
|
|
|
—
|
|
Stock-based
compensation
|
1,071
|
|
|
555
|
|
Issuance of treasury
stock under 401(k) plan
|
615
|
|
|
459
|
|
Foreign currency
translation (gain) loss
|
8,122
|
|
|
(1,789)
|
|
(Increase) decrease
in assets:
|
|
|
|
Accounts
receivable
|
(22,383)
|
|
|
(27,193)
|
|
Inventories
|
23,051
|
|
|
14,258
|
|
Prepaid and other
current assets
|
(2,491)
|
|
|
(1,763)
|
|
Other long-term
assets
|
844
|
|
|
1,305
|
|
Increase (decrease)
in liabilities:
|
|
|
|
Accounts
payable
|
(11,568)
|
|
|
(3,863)
|
|
Other current
liabilities
|
19,180
|
|
|
(6,949)
|
|
Other
liabilities
|
(3,159)
|
|
|
(7,316)
|
|
Net cash
provided by (used for) operating activities
|
5,501
|
|
|
(10,001)
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(8,402)
|
|
|
(16,725)
|
|
Payments related to
redeemable noncontrolling interest
|
—
|
|
|
(41,000)
|
|
Sale of Wheels India
Limited shares
|
15,722
|
|
|
—
|
|
Proceeds from
property insurance settlement
|
4,936
|
|
|
—
|
|
Other
|
(358)
|
|
|
1,235
|
|
Net cash provided
by (used for) investing activities
|
11,898
|
|
|
(56,490)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
76,798
|
|
|
92,723
|
|
Payment on
debt
|
(74,011)
|
|
|
(42,083)
|
|
Dividends
paid
|
(603)
|
|
|
(599)
|
|
Other financing
activities
|
608
|
|
|
—
|
|
Net cash provided
by financing activities
|
2,792
|
|
|
50,041
|
|
Effect of exchange
rate changes on cash
|
(6,830)
|
|
|
1,131
|
|
Net increase
(decrease) in cash and cash equivalents
|
13,361
|
|
|
(15,319)
|
|
Cash and cash
equivalents, beginning of year
|
66,799
|
|
|
81,685
|
|
Cash and cash
equivalents, end of year
|
$
|
80,160
|
|
|
$
|
66,366
|
|
|
|
|
|
Supplemental
information:
|
|
|
|
Interest
paid
|
$
|
15,188
|
|
|
$
|
16,416
|
|
Income taxes paid,
net of refunds received
|
$
|
4,732
|
|
|
$
|
4,203
|
|
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, 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 (loss) attributable to Titan,
adjusted earnings per common share, EBITDA, adjusted EBITDA, 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 (loss) attributable to Titan, adjusted
earnings per common share, EBITDA, adjusted EBITDA, 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
(loss) attributable to Titan to net (loss) income applicable to
common shareholders, the most directly comparable GAAP financial
measure, for each of the three and six month periods ended
June 30, 2020 and 2019.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Net loss applicable
to common shareholders
|
$
|
(5,045)
|
|
|
$
|
(7,085)
|
|
|
$
|
(30,531)
|
|
|
$
|
(5,883)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Remove
redemption value adjustment
|
—
|
|
|
661
|
|
|
—
|
|
|
1,437
|
|
Insurance
Reimbursement
|
—
|
|
|
—
|
|
|
(4,936)
|
|
|
—
|
|
Foreign
exchange (gain) loss
|
(8,836)
|
|
|
1,239
|
|
|
8,406
|
|
|
(4,484)
|
|
Asset
impairment
|
1,007
|
|
|
—
|
|
|
3,586
|
|
|
—
|
|
Loss on sale
of Wheels India Limited shares
|
2,005
|
|
|
—
|
|
|
2,005
|
|
|
—
|
|
Restructuring
charge
|
399
|
|
|
—
|
|
|
399
|
|
|
—
|
|
Adjusted net loss
attributable to Titan
|
$
|
(10,470)
|
|
|
$
|
(5,185)
|
|
|
$
|
(21,071)
|
|
|
$
|
(8,930)
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.17)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.35)
|
|
|
$
|
(0.15)
|
|
Diluted
|
(0.17)
|
|
|
(0.09)
|
|
|
(0.35)
|
|
|
(0.15)
|
|
|
|
|
|
|
|
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
60,602
|
|
|
60,000
|
|
|
60,481
|
|
|
59,973
|
|
Diluted
|
60,602
|
|
|
60,000
|
|
|
60,481
|
|
|
59,973
|
|
The table below provides a reconciliation of net income (loss)
to EBITDA and adjusted EBITDA, non-GAAP financial measures, for the
three and six-month periods ended June 30,
2020 and 2019.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(4,643)
|
|
|
$
|
(6,677)
|
|
|
$
|
(32,142)
|
|
|
$
|
(5,670)
|
|
Adjustments:
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
1,980
|
|
|
(3,218)
|
|
|
2,035
|
|
|
(1,303)
|
|
Interest
expense
|
8,008
|
|
|
8,295
|
|
|
16,043
|
|
|
16,228
|
|
Depreciation and
amortization
|
13,334
|
|
|
13,136
|
|
|
27,119
|
|
|
27,809
|
|
EBITDA
|
$
|
18,679
|
|
|
$
|
11,536
|
|
|
$
|
13,055
|
|
|
$
|
37,064
|
|
Adjustments:
|
|
|
|
|
|
|
|
Insurance
reimbursement
|
—
|
|
|
—
|
|
|
(4,936)
|
|
|
—
|
|
Foreign
exchange (gain) loss
|
(8,836)
|
|
|
1,239
|
|
|
8,406
|
|
|
(4,484)
|
|
Asset
impairment
|
1,007
|
|
|
—
|
|
|
3,586
|
|
|
—
|
|
Loss on sale
of Wheels India Limited shares
|
2,005
|
|
|
—
|
|
|
2,005
|
|
|
—
|
|
Restructuring
charge
|
399
|
|
|
—
|
|
|
399
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
13,254
|
|
|
$
|
12,775
|
|
|
$
|
22,515
|
|
|
$
|
32,580
|
|
The table below provides a reconciliation of net debt, a
non-GAAP financial measure, as of June 30,
2020 and December 31,
2019.
|
June 30,
2020
|
|
December 31,
2019
|
|
|
|
|
|
|
Long-term
debt
|
$
|
462,240
|
|
|
$
|
443,349
|
|
Short-term
debt
|
40,784
|
|
|
61,253
|
|
Total
debt
|
$
|
503,024
|
|
|
$
|
504,602
|
|
Cash and cash
equivalents
|
80,160
|
|
|
66,799
|
|
Net debt
|
$
|
422,864
|
|
|
$
|
437,803
|
|
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SOURCE Titan International, Inc.