Titan International Inc. today reported a 52% increase in net sales in the third quarter of 2006. Net sales were $156.1 million, compared
to $102.7 million in the third quarter of 2005.
The higher sales level was attributed to the expanded agricultural product offering of Goodyear farm tires and earthmoving/construction products resulting from the Continental OTR acquisition. (Titan Tire Corp. of Bryan, a subsidiary of Titan International Inc.,
purchased the OTR tire assets of Continental Tire North America Inc. in Bryan, Ohio, in July.)
The company also recorded a gross profit of $17.1 million, a 56% increase when compared to the $11 million of gross profit in third quarter 2005.
Year-to-date gross profit was $70.6 million for 2006, as compared to $57.6 million for 2005.
Titan’s income from operations increased 110% in the third quarter 2006 to $4.7 million, compared to $2.2 million in last year’s third quarter.
Year-to-date income from operations totaled $33.7 million in 2006, as compared to $29.3 million in 2005.
The company's income this quarter was reduced by a higher effective tax rate of 40%, or $0.3 million of tax expense, compared to a tax benefit of $0.8 million in the third quarter of 2005, the company said.
With the 40% tax rate in 2006, Titan recorded third quarter net income of $0.5 million, compared to last year’s third quarter net income of $1.2 million.
Using a 40% tax rate on last year’s pretax income, Titan’s third quarter 2005 net income would have been $0.2 million.
“In review of the third quarter, we are pleased to see how the Bryan OTR acquisition has offset the drop in farm revenue as discussed last quarter,” said Titan Chairman and CEO Maurice Taylor Jr.
“Operational profit will grow as the integration of Freeport (Illinois) and Bryan continue. It is our belief that we can increase our OTR production greater than the planned $150 million in sales, due to the fact that our Freeport facility can produce a number of bias OTR tires that were in short supply at Bryan.
“Since corn futures for December 2006 have gone above $3 per bushel, we believe the large farm equipment market will be better in 2007 than in 2006. With a farm market holding in 2007 and an increase in output of OTR tires, we are excited about next year.”
Interest expense was $4.6 million for the three months ended Sept. 30, 2006, compared to $1.8 million in 2005. Interest expense was $12 million for the nine months ended Sept. 30, 2006, compared to $6.7 million in 2005.
Higher interest rates accounted for approximately $1 million of the interest expense increase for third quarter 2006, and approximately $2 million for the nine months ended Sept. 30, 2006.
The company recorded income tax expense of $.3 million and $9.8 million for the three and nine months ended Sept. 30, 2006, as compared to an income tax benefit of $0.8 million and no income tax expense for the three and nine months ended Sept. 30, 2005.
Net income was $.5 million for the third quarter of 2006, compared to $1.2 million in third quarter 2005.
Year-to-date, net income was $14.7 million in 2006 and $16.6 million year-to-date in 2005.
