Titan International, Inc. (TWI)

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Titan International (TWI)

Q3 2010 Earnings Call

October 28, 2010 09:00 am ET


Morry Taylor - Chairman and CEO

Paul Reitz - CFO


Ian Zaffino - Oppenheimer

James Kitchell - Goldman Sachs

Philip Volpicelli - Deutsche Bank

Larry De Maria - Sterne Agee

Charlie Rentschler - Boenning & Scattergood

Chris Doherty - Oppenheimer

Bennett Lim - Jefferies & Company



Ladies and gentlemen, welcome to the Titan International Incorporated Third Quarter Earnings Call. During the session all lines will be muted until the question-and-answer portion of the call. (Operator Instructions)

Any statements made in the course of this conference call that states the company’s or management’s intentions, hopes, beliefs, expectations or predictions for the future are considered forward-looking statements.

Please note that the Safe Harbor statements contained in the company’s latest Form 10-K and Form 10-Q filed with the Securities and Exchange Commission extend to this conference call and any forward-looking statements involve risks and uncertainties as detailed therein.

At this time, I would like to introduce Titan Chairman and CEO, Morry Taylor. Please go ahead sir.

Morry Taylor

Thank you, Stacey, and good morning everyone. Good morning actually from Calgary, headed for the oil sands. Most of you have probably seen the press release. We had actually a very outstanding third quarter and as I said in the statement kind of little bit better than what I even expected.

The situation is that you can see the agricultural side is moving steady, going up just as we thought it would be. Last year, when we were comparing it to last year, what happened was they turned the light switches off. So, that’s good.

Then the one that’s really is interesting is earthmover construction, which our mining falls into that. That is getting stronger and stronger and the reason being is that the success of our new generation II tires that we have come out with is going good, the market’s is good. It’s kind of interesting. You have a little problem, everybody in the world that gets slapped the other way, and then what happens is when it comes back and people are starting to say, Jesus, these guys aren’t a bunch of dummies, they’re really, they’re really doing some good stuff, so it comes back to help you.

The only thing of our three segments that we call out our construct, our consumer side. And that’s pretty well situated. It putzy and dutzy’s along, but that’s our brakes and actuators. And most of that is used in the commercial side, referenced the bulk trailers et cetera. And that business, as everyone knows is hanging on. But it doesn’t really affect us that much, it’s a good business. And we actually expect that business to start showing some life, especially since we have RV sales coming up. So, overall for this past quarter, I think everybody can be pretty pleased that we are on the right track and we are going. The big item that we spent a little bit of time on during the third quarter, which actually closed on October the 1st, was our financing; financing so we can get things moving.

So we can have a very interesting 2011. And that’s just what I think is going to happen. I know, you know you can look at the past numbers and everything, so they’re booking to the record book. Now, moving forward, what we see is we see the continuation of all of our markets on the upswing. We believe that we’re going to be able to move ahead very strongly in the next year, the next quarter to come. We have a lot on our plate. We have the people that can handle it. We’ve put some of our management changes in, and brought some people on. Other people have stepped over to take on some new, let’s say, positions of authority as we go on into the future to grow this company.

And with that I am going to turn it over to Paul, who will just quickly run through the numbers, and then we can turn over to question and answer.

Paul Reitz

Great. Thank you, Morry. The third quarter was an excellent quarter for Titan on multiple levels that Morry just mentioned. Titan posted strong operational results on a year-over-year and quarter-over-quarter basis. And we made significant improvements to our capital structure. I am going to take a few minutes to go through these items and then we will turn it over to your questions.

First, operations for Titan, what a difference a year makes. At this time last year we saw the wheels fall off on our sales in the third quarter and our visibility for future demand had become quite murky. Now we’re simply making more and selling more wheels and tires than we were last year with much better visibility to our future demand levels.

Our third quarter 2010 net sales were up 57% to 223 million, from 142 million in Q3 of 2009. Large Ag demand continues to run hot and help propelled our sales up in the Ag segment by 65 million, or 62%. The increase in large Ag sales is a fairly even split between volume and price mix improvements. Our earthmoving and construction segment had an impressive quarter as well, with revenue increasing 56% to 48 million.

Our construction related products experienced a solid gain this quarter, however, that gain is coming after a drop in 2009 of over 80% from levels attained a couple of years ago. So on a dollar basis, the increase is not nearly as significant to our overall revenue performance.

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