Titan International Inc. has broken an 18-quarter streak of successive drops in net sales. For the first quarter of 2017, the company recorded sales of $357.5 million, up 11% from $321.8 million a year ago.
The company recorded a loss of $10.5 million for the period, an improvement from the $18 million loss recorded after the first three months of 2016.
Paul Reitz, CEO and president, said, "After 18 consecutive quarters with year-over-year decreases in net sales, adjusted for acquisitions, it's great to report a solid performance in the first quarter by delivering 11% top line growth over the same period last year. On a sequential quarter-over-quarter basis, we grew net sales over 16%. We are encouraged by these early signs of growth and cautiously optimistic about the future quarters of this fiscal year.
“While we experienced top line growth in net sales, we also improved our year-over-year gross profit and gross margin. Our gross margin increased 230 basis points to 11.1% of net sales thanks to our business improvement framework.
“Extended downturns always present numerous challenges and the Titan team has done a good job weathering the storm. Through our consistent efforts, we were able to accomplish the noted increases this quarter.
Reitz said the increase was good “especially considering some notable events that adversely impacted our recent performance.
Raw material prices: "In recent months both natural and synthetic rubber prices have increased by more than 40%, while these increases over the past year have been as high as 50% to 60%.
“We follow a disciplined approach to our raw material supply chain that includes the use of forward contracts, volume commitments, and spot buys. In North America, we have contracts with OEMs that typically re-price twice a year based on fluctuations in raw material costs. The bottom line is we are negatively impacted when raw material costs increase as fast as they did recently.
“During the first quarter, the impact to our gross profit from escalating raw material costs was approximately $9 million. The good news is that prices of raw materials are now starting to stabilize at lower levels.
Legal fees: "Another notable item that adversely impacted our performance was that our selling, general and administrative (SG&A) expenses were up $6.3 million over the same period last year, primarily due to one-time legal and professional fees.”
During the company's earnings call, Titan also announced it has reached tentative labor agreements with the USW unions representing three of its U.S. plants. Read about that here.