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Titan is WAY up in 2Q income and sales

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Titan International Inc. posted net income of $25.3 million on record net sales of $404.4 million for the second quarter ended June 30, 2011. That compares to income of $4.6 million on sales of $229.7 million for the same period last year.

The company's operating income improved 152%, from $17.4 million to $44 million.

“I told everyone last quarter that everything was going well, but I didn’t think the Titan team would be moving this quickly,” says Maurice "Morry" Taylor Jr., Titan's chairman and CEO. “The forecast I made in May is too low for sales and EBITDA."

According to Taylor, Titan is building all of its wheels and tires to order -- "and the order deck has never been this large." He lists a number of factors that will help the company in the future, and offset the rising costs of natural and synthetic rubber.

1. "Farm, earthmover and construction are all going up."

2. "Our Goodyear South American purchase is doing better than we thought it would. When you look at their numbers, remember two thirds of the revenue is at cost. The equipment we will be shipping to them will increase their sales and profit. Titan expects real growth and profit from South America in 2012.”

3. “The Goodyear Europe acquisition has a drop dead timeline of Nov. 3, 2011. If Goodyear and the trade unions agree, then I believe Titan has the opportunity to add approximately $400 million in revenue in 2012 out of this facility."

4. “Titan’s testing and improvements of our new generation III and IV tires in the super giant class continue to enhance our product performance. We expect shipment of tires in this class to increase during the second half of
2011."

Price increases also helped offset raw material costs. Titan announced increases of 6% to 8% in January and another 8% in April, "and it all appears to have stuck," according to C. Schon Williams, vice president of equity research for BB&T Capital Markets. Another 8% increase is scheduled for August, "so expect further incremental gains in the second half of 2011."

Taylor predicts Titan will have a strong second half.

"The numbers for the last two quarters have proven if there is strong demand, we will grow and perform," he says. I know we surprised a few people but we have a lot going now and we have proven without a doubt that we are moving like a rocket. The goal is to stay in orbit and not come back down.”

For the first half of its fiscal 2011, Titan recorded net income of $22.2 million on net sales of $685.2 million. Compared to 2010, six month income and sales were up 234% and 61%, respectively.

BB&T rates Titan's stock Buy(1). BB&T Capital Markets is a division of Scott & Stringfellow Inc., a registered broker/dealer subsidiary of BB&T Corp.

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