Titan International announces its 2013 year-end financial results, which show a sales increase of 19%.
Fourth quarter highlights:
- Sales for fourth quarter 2013 were $494.4 million compared to $493.6 million in the fourth quarter of 2012.
- Gross profit for the fourth quarter 2013 was $49.3 million, or 10.0% of net sales, compared to $51.5 million in fourth quarter 2012, or 10.4% of net sales.
- Fourth quarter income from operations was $0.6 million compared to $(1.1) million last year.
- Earnings per share for the fourth quarter 2013 are $(0.29) and $(0.29) for basic and fully diluted, respectively, compared to $0.17 and $0.16 for 2012, basic and fully diluted, respectively. Adjusted earnings per share for the fourth quarter 2013 are $(0.03) and $(0.03) for basic and fully diluted, respectively, compared to $0.09 and $0.09 for 2012, basic and fully diluted, respectively.
Full year summary:
- Sales for the full year 2013 were $2,163.6 million up 18.8%, compared to $1,820.7 million in 2012.
- Gross profit was $295.2 million, or 13.6% of net sales for the year ending December 31, 2013 compared to $294.1 million, or 16.2% at December 31, 2012.
- Income from operations was $102.4 million, or 4.7% of net sales for fiscal year 2013 compared to $174.7 million, or 9.6% of net sales for 2012.
- Earnings per share for the full year 2013 are $0.66 and $0.64 for basic and fully diluted, respectively, compared to $2.47 and $2.05 for 2012, basic and fully diluted, respectively. Adjusted earnings per share for the full year 2013 are $0.82 and $0.78 for basic and fully diluted, respectively, compared to $2.33 and$1.93 for 2012, basic and fully diluted, respectively.
Statement of Chief Executive Officer:
Maurice Taylor, CEO and Chairman comments, "We entered 2013 very hopeful but were challenged by the market conditions and internal missteps. The union negotiations at our three tire plants were not completed until the end of first quarter which we had hopes of finalizing in 2012. The wheel and tire farm business was strong in 2013 but due to the building of farm tire inventory at the OE level in 2012, there was a significant amount of de-stocking that occurred in 2013. Similar conditions were experienced in the construction market as this sector showed minimal signs of recovery in 2013 yet forecast were too optimistic resulting in an inventory surplus. Due to falling rubber prices, the business experienced a material financial hit in 2013 as price reductions had to be passed on to our customers and margins were therefore sacrificed. The mining business was also hit hard in 2013. The tire inventory levels at the mines were higher than expected. Tires are being replaced at a 30% discount given the lower rubber prices, therefore companies are reducing inventory to the lowest levels to replace with cheaper tires.
"I believe my 2014 goals that were released in December of 2013 are still reasonable. Revenue is set for $2.4 to $2.7 billion and EBITDA expectations are $240 to $270 million. The overall farm economy will remain strong and the construction sector will begin to rebound but the mining business will remain challenged at least through the first half of 2014. ITM, Titan's steel undercarriage frame manufacturer, expects an improvement in the business this year compared to 2013 and I am confident in her forecast.
"Titan has worked hard to grow the business and invested capital towards maximizing our potential. We remain optimistic we can streamline the enterprise and improve our performance going forward. We have added to our Board of Directors and executive management in recent months. We look forward to the younger management setting a new pace for Titan. These younger guns will have the opportunity to run more of the business."
Financial Summary:
Sales: Titan recorded sales of $494.4 million for the fourth quarter of 2013, compared to fourth quarter 2012 sales of $493.6 million. For the year, net sales for 2013 were $2,163.6 million, compared to $1,820.7 million in 2012, an increase of 18.8%. Year-to-date sales increased approximately 30% due to recent acquisitions of which $484.3 million is attributed to revenue from Titan Europe. The increase in net sales was partially offset by a price/mix reduction which resulted largely from decreased raw material prices that were passed on to customers and decreased sales approximately 9% and unfavorable currency translation which decreased sales by approximately 2%.
Gross profit: Gross profit for the fourth quarter of 2013 was $49.3 million, or 10.0% of net sales, compared to $51.5 million, or 10.4% of net sales for the fourth quarter of 2012. Gross profit for the year ended December 31, 2013, was $295.2 million, or 13.6% of net sales, compared to $294.1 million, or 16.2% of net sales in 2012. Gross profit, as a percentage of net sales, decreased as a result of the Titan Europe acquisition and lower raw material costs that were passed on to customers before being fully realized by the company. Increased warranty provisions relating to earthmoving tires also contributed to the decreased gross profit. Titan Europe provided gross profit of $65.3 million, or 11.4% of net sales. Titan Europe margins were negatively affected by decreased earthmoving/construction demand in Europe.
Read the full press release for a full breakdown of Titan International's financial results for 2013.
