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Titan International, Inc. (TWI)
Q3 2012 Earnings Call
October 25, 2012 9:00 AM ET
Maurice Taylor – Chairman and CEO
Paul Reitz – CFO
Stephen Volkman – Jefferies
Ian Zaffino – Oppenheimer
C. Schon Williams – BB&T Capital Markets
Ryan Connors – Janney Montgomery Scott
Paul Curtner – Canaccord
Larry DeMaria – William Blair
Previous Statements by TWI
» Titan International's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Titan International CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Titan International Inc. Q2 2010 Earnings Call Transcript
» Titan International, Inc. Q1 2010 Earnings Call Transcript
And as a reminder, today’s conference is being recorded. I would now like to turn the conference over to your host, Mr. Maurice Taylor, Chairman and CEO, please go ahead sir.
Good morning everybody in the U.S. and I happen to be in Europe so it’s the first time I’ve ever done this in 20 years and now we’re here. And for you from Europe that are on, good afternoon. I’ll do – have seen the numbers and my comments. I want to cover a couple of things in the third quarter that probably have the most pertaining information of what’s going on. We had a good third quarter reference from what was going on at our factories. The problem, we had a hiccup and the hiccup happened to be in our Bryan, Ohio plant which turned around and did not ship amount of orders they should have and not because they didn’t have the orders, because we failed to execute. And the failure I guess I’ve heard every excuse, we put in this LX computer program and what happens is they had been doing the scheduling of that plant manually the same way since the 1970s, and the LX is total computer and I got lot of consultants running around but the problem we have is that on the LX system it tells you to build x parts for part number and you have to build x parts, you have to transfer x parts and what happens is someone didn’t built that same amount and then you have a train wreck all the way down to the end.
So we’re working on it, Mr. Briggs is spending a lot more time, got a new plant manager there, who came out of Freeport. He is a smart good boy but this is the first time a LX program has been put into any of our facilities in the tire side. We have been running that way for years in our wheel business and it made a tremendous improvement in efficiencies and margins. And when I am talking about margins you will notice that the revenue line was down but the margin line increased. Now that’s a contradictory in itself because you’ll see we have so many people your efficiencies for where we should have been but our margins.
Now if it would have been that we would have produced what we should have, I hate to think about what the margins could have been and they will get there. So for those who doubted whether we would get there, that’s – we should have pretty well taken care of your doubt. Now what’s happening in the market? Well construction as you know our friends projects from Caterpillar, same thing is true with Deere, same thing is true with anybody in that, what I call the light construction side, their business is off. Their dealers, they got inventory, they’re backing down. The same is true when you come to small a, which is you’re basically under your 100 horsepower tractors, that should compacts, that’s a lot of it that I mentioned in earlier calls, you don’t have the municipalities, you don’t have the counties out there buying what they normally buy because of money.
The good thing about that is that you really don’t make much profit on that stuff anyhow. And when you get into the Big Iron, the Big Iron is still going very, very good and our mining is going very, very good. And when you see our friends from Cat and others who’re rolling back what they think what they’re doing is they had all booked in this great mining boom of new mines and everything else which takes a few years to get into the volume and it also takes Cat a few years to increase that volume.
Right at this moment, with the mines going, it is actually staying very strong. When we were at the Mining Show in Las Vegas, I must have met at least two dozen mines, in fact I’ll be in Russia Monday morning with the largest mining group in Russia and all I did was get beat up about deliveries and I did say to all of the mines that, I explained what we were doing, explained why. It’s a case of something that we can solve because it’s a management situation. And that I’d be more than happy to wipe out their backlog and wipe out the contract and there was not one mining company that turned around and wanted to do, in fact it was just the opposite.
They actually wanted to get caught up and then they want to increase. Well we know we can only do so many and so it’s kind of like the big break spot in this business. I have also – so our mining side, mining sector is going good, we just got to produce more which I do believe as I stated in the release, we had a heart to heart meeting so to speak on production in the Bryan facility and 20% increase October over September. I believe they are going to hit that, then November will be 20% greater than October and then the big magic number [ph] will be if they can do the same 20% increase in December, and then we’re going to have a meeting to decide whether or not the people that are in-charge have what it takes, so the old peers done, we’ve overshot it.