Titan Posts Fourth Quarter Results

March 8, 2024

Titan International Inc.’s fourth quarter sales totaled $390.2 million, down from $509.8 million during the same period in 2022. 

The ag and OTR tire manufacturer’s income from operations during the fourth quarter of 2023 totaled $20.7 million versus $40.0 million during 4Q 2022. 

Titan officials say the net sales change was spread “across all segments and primarily driven by sales volume decrease caused by elevated inventory levels at our customers in the Americas, particularly OEM customers; lower levels of end customer demand in small agricultural equipment; and economic softness in Brazil. 

Sales by segment 

In the ag tire segment, Titan posted net sales of $192.6 million during 4Q 2023 versus $274.8 million during the same period in 2022. 

The sales decline was “primarily due to lower sales volumes in North and South America, which was caused by actions taken by customers primarily within the OEM channel to reduce elevated inventory levels,” according to Titan officials. 

“Additional drivers included softness in demand for small agricultural equipment and a decline in Brazilian economic activity.” 

Titan’s earthmoving/construction tire segment yielded sales of $159.1 million during the fourth quarter of 2023 versus $195.8 million during 4Q 2022. 

The decline was driven by decreased volume in the Americas, among other factors. 

CEO perspective 

"One of our primary long-term objectives has been to structure Titan to deliver consistent, strong, bottom-line results, while serving our customers throughout various market cycles,” says Titan President and CEO Paul Reitz. 

“Recall that 2022 was an excellent year for top-line sales as agricultural equipment dealers ramped up inventory in order to ensure they could satisfy expected farmer demand. While Titan certainly enjoyed that environment, as we moved into 2023 it also became clear that the aggressive inventory build in 2022 resulted in reduced demand in 2023 as OEMs worked down excess inventory.  

“Despite this dynamic and its impact on our sales, we were able to report full year gross margins that were up slightly from 2022. We were also able to report record cree Cash Flow of $119 million, thanks to a firm focus on margins, along with working capital management.  

“Our ability to deliver quality bottom-line and cash flow results in the face of a robust destocking headwind is a significant achievement,” adds Reitz. 

“Now we're excited to talk about the new growth path ahead of us through the accretive acquisition of Carlstar Group,” which was announced in late-February. 

“As we highlighted in the press release we issued announcing the transaction, Carlstar will further diversify our customer base and product portfolio while also adding key manufacturing and distribution assets around the world. We are really pleased that we were able to complete this acquisition at a fair valuation of approximately four times their 2023 adjusted EBITDA, using a combination of cash and stock, which will not stress our balance sheet.  

“As noted in the acquisition announcement, Carlstar is a well-run, profitable business which is complementary to our existing business, creating avenues for incremental growth and synergies.” 

Core business outlook 

"Now moving to market conditions within our segments, commentary from large, global agricultural equipment companies through the first two months of 2024 is consistent with what we are seeing in the field and hearing from our customers - namely that demand is somewhat soft due to declining farmer incomes,” says Reitz. 

“On the other hand, inventories appear to have normalized, which is a positive allowing for a more direct connection between commodity prices and equipment demand, including both new and aftermarket, as we move through the year.  

Over the longer term, the continued adoption of precision farming represents a positive demand driver and farmers are also increasingly cognizant of the ability of our tire technologies such as LSW to deliver meaningful additions to their bottom lines.  

“The construction and earthmoving markets, particularly non-residential construction projects, have the tailwind of infrastructure support and the transition to clean energy is expected to support commodity prices of key inputs such as rare earth elements, which will benefit the mining segment over the long term.”