TWI - Earnings call transcript Q2 2019 | Titan International, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Titan International, Inc.

Second Quarter 2019 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and we will open the floor for your questions and comments after the presentation. [Operator Instructions]

It's now my pleasure to turn the floor over to Todd Shoot, Senior Vice President, Investor Relations and Treasurer for Titan. Mr. yours. is floor the Shoot,

Todd Shoot

Thank you. second everyone our and Good XXXX earnings morning quarter welcome conference to Brandon. call.

Senior Paul On concerning on the have David and CEO, to Taylor Chairman Directors. questions of be am I and Titan's strategic Martin, Maurice ITM Reitz; Board Taylor, call with any our available update me President to the today, to Vice company's CFO; President evaluation. Mr. of pleased will and respond

are reminder morning, Exchange a filed review that Form with about begin we earnings this to Securities Commission presented results issued XX-Q, will along the in and I morning. with the also were the our this which release was with

and and will differ involve morning, reminder, As projections discussing assumptions a the plans we be risks, the cause from future, to that that results forward-looking our actual information, could uncertainties certain information. this forward-looking for materially including company's the

either cause forward-looking and been Form differ with in included concerning or the attached earnings XX-Q, factors information company's filed in can be could statements from that have earlier materially of well today's safe found Exchange in aggregate Commission. harbor forms Additional the the as our to which statement and to individually as those. results actual today Securities Form release the XX-K all These X-K filed

the comparable release and of the discussed section the earnings but The In addition, measures. a as be not reconciliation substitute non-GAAP financial the supplement, measures is which which company's GAAP today's as comparable Events. and Investor for within call The most News to well Relations GAAP measures. contains remarks may most quantitative be to intended website refer under measures, earnings today available to accompanies non-GAAP are other on information to the the directly today's financial release,

is available be recorded. A Please transcript our call note, on of today's made call today's copy website. being will

now like over to Paul. call would I the to turn

Paul Reitz

and our Unfortunately, was conditions our the and of more our this disappointing in a tough operating appreciate in experienced as the second morning, seen in specifically we continuation you everyone This decreases all battles call. Todd. farming listening the and Good from difficulties trade sector. a quarter quarter Thanks, from to income U.S. we've of was quarter the global poor businesses.

past ag we accelerated June. really we the of call. May I shocking had look bit throughout had in particularly downturn it's what improvements as time into there. the driving moderate into first our and that noted March and late in out The reverse a conditions got seen month hard the the This on fields definitely and over spent Midwest quarter like

to see In a even planted. wheat that attempted wasn't quarter mile, you'll be with field a

corn then Next to down that it, corn been not high. with by range. you'll a and It's already you'll mile is corn see followed road, field prices field is but knee above sulking into even $X current the brutal see driven demand, a has and soybean prices the quarter it $X

be demand well distant should released We And entered That's to higher market equipment. that to there, believing spot. not happen future. and the for our That pent-up higher sitting this the prices had this year ag too sweet that in bear waiting was horsepower year. these

crop was basis conditions. American off in half North we that business constant A revenues back in significant a weather a decrease Titan's stalled and the big in along a a on saw the volumes. X.X% demand business, X% QX, reason ag Looking as at driven in currency decrease was that that by drop experienced with deteriorating aftermarket demand our tire of really for

strong. with and aftermarket our remain believe share not losing do then customers we are position We the in our

positive tire sales of percentage last with steady note American held on North a Our margin year. a as

aftermarket our and a cost of decline job tire business. good did margins our managing that we So in against revenue

for Titan for The you our margin years. are American franchise came the has America aware, many in as of fully wheel in think and work able as decreased realize prices which quarter, many inventory been decline a our lower levels. we bellwether these margins of in steady we reduce weren't we quarter business, differential for significant experienced steel the held wheel costs to I Revenue but North elevated North to

levels. these two There were reasons really for inventory higher

not First, the And implementation. a America our do profile for margins first but a in want build due half in margin ERP business, permanent normalize it our which I to comments, up expected. we prior make of will growth the in year, to his represent highlight and expect David in our North course. degradation this to did wheel of expectations shift and occur doesn't margin second, as this this further clear do during

have Brazil that by and the Our production you weak the as delays currency government persist. we've America by improved reported broader the Latin combined Brazil supported from coming fairly conditions from that Argentina the we then but and in in steady macroeconomic about operating program, business I The but improvements Longer say China, the the also Brazilian Latin as market, was translate that at impacted term, through with in income made impacting grain been ag are local years. level. increased Titan should optimistic benefiting Argentina held America with sales, currency dollars. to sales and demand US from

would ag and market and general European have previously, the malaise with QX in conditions in resulted significant you a what Europe market combined impacted In our by the factors call noted wheel just volumes. decline probably Russia, I've

of a impact and As a to we lower taking are result, mitigate targeted to actions level demand. this adapt

Moving in mining will OEM but been a some out second in quarter. during did regions construction segment. the pushing volume, few customers lost highlight orders. quite over that certain row well earthmoving/construction points that of up David from have business later, We held and primarily some to our our

visibility said, weather-related and challenging tariff near-term industry. others ag ongoing made With of the the Titan being for concerns, has the the course, battle, in that Brexit within our uncertainty sector

significant lower ending are then inventories issues property-related prices and term lower farm for positive and a drains in and short production segment, for income, the commodity related forecast farm fairly as weather negative major in the crop the have moved manner. big in the sales the While

And it's for Titan a to future. global going the income positive coming be noted and as in earlier, farm I

however, for With with in need the the volatility volatility do quarter, market, the the revise -- particularly near outlook second the of our we end to XXXX.

drive range be sales and the expect down the gross currency in for Assuming our XX.X% compared XX.X% to to margin now current them to rates, flat anticipate remains the improve to be our to a between This at range anticipate XXXX. expecting year American range of million half to we global to material $XX for are costs This full we $XX We leads X% of other improvements to for XXXX. adjusted XXXX that lower second the in throughout to in of in XXXX. expectations year relation reflects improvements then in North relative production will to businesses. EBITDA million costs to the and be

at lower then believing higher to sector. the started larger demand pent-up farm pent-up layer can demand that later now We combined and into expected unleash equipment. replacement our prices in there We ag that belief year look and XXXX the with market, commodity in ag are when was in you help XXXX tire this demand

We and off campaign had about year quickly a growth our has changing us started have particularly with rapidly the to this to and coming quarter year been for good XXXX tough a environment. and This optimism industry. adjust many in

a present company However, results drive through that Titan's not improvements the and attack our first better. our to acceptable is to going cycle. bottom to management the of deals that line multi-dimensional with is are get need effectively team plan

protect sheet Secondly, for the the future. for long-term and our third, balance builds

nobody were So our predicted with react have XX could changes have as handling used current massive the a most will to plus the the we dealing cycle company in weather-related certainly more are have than XXXX quarter sudden issues that. in -- second end the been and by and of the Titan let's first plenty sector, continue is doing markets. years with of start that clearly demand reducing market to publicly-traded in operating that in of we costs. and facet Again, we've but The cyclical experience to farm cycle. experienced current exactly experience events cycles

this to been that year to still growth and that prices. increased believe will had growth had handle training demand. come see commodity higher a workforce We We expected the from

costs the skilled future. our are labor layoffs. not managing the by working for is present to efficient through hours mass the manage We So effective and most we and labor force and believe this manner our

variable We spending level. corporate also and be reducing our the across at units will business

our the to next is The approach of sheet. balance facet protect

that Our million is operating-related no XXXX well until $XXX notes have don't financial Titan so covenants, from mature and perspective. protected primary

have we put However, and due the balance million the approximately $XXX debt Russian working lines, on of options sheet. global another other capital to

non-core protect of capital relentlessly and extraction our will We assets improve pursue working balance the sheet. to

non-core the excess plant opportunities that also sell and non-core million $XX have believe previous opportunities looking assets we range level to the calls and million We capacity we'll analysis to of will assets and in them. consolidation. have beyond mentioned on The pursue include $XX at the potential

the The last we our focusing be element and our cycle continue Titan future. innovation won't balance while in focus building to that lose industries. a of our on in on has leader sheet, the business the will for current approach and is

our nobody give We business industry portfolio have us else unique that in assets in our that has. capability

utilizing these users. develop has way assets model needs business Our end and will be new to to the to the lead our of continue and products exceeding

talked that and the [indiscernible]. make, another with about We not to continue but our development product we like have LSW, strides areas the product great just

they bottom just allow stop our the to company to we development -- that can't simply of continue are recent is these the grow, is heartbeat product So and beating. develop but line

business that businesses. part that investments with for we've believe that for years ITM of the for to and grow was our grow divestiture. mentioned the we previously benefit has to wheel Along strong had ITM tire would the these affirmed Titan also a many opportunities future why existing We that of been from reason considered and backbone further

improve. portfolio positioned world-class market and is already have grow have a that We is to and sales well product conditions

cycle to products approach effectively, and However, the current last as must by capital critical for the a grow through and goes sheet. grow build to already for we've businesses the the is foundation to what managing and balance our and built we beyond taking in we do healthy can invest protect facet while continue today into of that actions and future our as future. also first a our We succeed our company

announcements ownership no in $XX.X of in that million stake, shifting I paid Now Russian in Partners. to Titan put a couple We've final exercised the satisfaction million $XX XX% regarding payments release. recently now OEP shares. has at Equity RDIF OEP. OEP now put a prior as in agreement is full to the One our is together option disclosures option Titan which a with Titan's with has say, by you gears and should saw owning press cash, reached remaining with Voltyre-Prom OEP of the our

satisfied the that all been We're option to and a get long settled the us. road. has It noise put of behind

experienced in and Titan economy We've challenges certainly only the talked that that strong financial Our our before, significant good through these team the but we markets. a still believe operation challenges. domestic still about is Russia has and done job has and management there I

local had current our for there and enthusiasm the that dealer developing Titan products meeting and regarding we're recently business is We Russian strong our market.

a will having to within on a the strong CIS. We market share continue path

for will of to utilizing are other the assist global CIS. resources process make regions products regions. Russia, I that exported this product come to strength would again However, this that be into business them the outside phases from into in the testing We're creating with exact our want future for Titan development we in export point, and other

going want As we've which is now said, related comment on I'm last to to to today's the to make gears ITM. switch call, I

and earlier advisor out has this carrying stated evaluation. Titan's engaged evaluation releases to with board is we've prior a in business. undercarriage our global the alternatives authorized As of calls, assist financial ITM, year strategic which respect to that we in And

on shared specifically London been the also pursuing more a of We noted, AIM listing that potential ITM Market. we've

strategic investments and about last ITM. that good made that of years. information shared talked the has couple in Titan We've the over

With IPO that And years, has million. our in that over financial million. $XXX last the so advisors $XXX performed few expected XXXX reach Titan board well strong an very and to revenues valuation excess Titan's performance with of of nearly

of the markets our in in Taylor, Chairman conditions to Directors our Titan's As Brexit trade noted Board at concerns obtain financial of softer therefore, stated that postpone have ability recent the AIM ITM. due to determined impacted release to global great a the press suitable Maurice And listing our has Europe level. evaluation continued of

is ITM continued execute continue shareholders. believe plan ITM Morry and to made questions and a on our the that available a will regarding do as we Again, interest board future, have potential the Titan noted, We of was the that has decision Todd best to for AIM that in strong postpone growth listing. the

to I'd the turn call over David. So with now like that, to

David Martin

to Thanks, morning Paul good everyone call. on and the

go flow items issues quarter usual, of for and we're we're company. As over I'll half the that progressed key the performance, managing going some important of through some for future stability aggressively to discuss second the the particularly as of the year, most manage cash how I'll the second we

from $XX.X currency dramatic second a however, of currency discussion almost Net XXXX revenues Europe. in Historically sales million, X.X% of in basis, million quarter down On $XX related Paul the was particularly decline been million XXXX in in issues underscored $XXX were impact the second of have representing quarter or in a quarter would that of constant his this X%. the the US. to most X%. or agriculture, The the roughly

Our this with to due orders what quarter in demand. isolated while is surpluses regional ITM business push Asia continue again Europe, once to be OEMs undercarriage believed and see we tempered to out coupled and short-term well inventory performed

Our declined and the Paul of was the primarily of last it quarter, to month North in the XX% described. most from American tire was QX significant as aftermarket. This isolated sales the XXXX

Latin the sluggishness America, continued from well. up spot Our Europe, negative for in bright impacts in came before segment. always currency and ag is also challenges was ag market quarter and sales which -- X Russia with the as

American volume the lowered to Europe from headwinds Russia basis was consolidated North tire, year in due sales largest Our last and a the on by Ag. X.X% being market with declines in

slightly increased costs slight wheel quarter, overall move we've mix our lower which saw steel. Australia, North sales surcharges in decline experienced tire rest been declining and we pricing we a the to the the slower our from higher in material due where and This is principally of price Overall, ago. from business inventories, American efforts a rationalizing. resulting in year on The and moving business to raw mostly

quarter sluggish first our last challenges serious Much the Reported $XX we only in was $XX in like saw quarter, profit second versus quarter of performance million our in the not the decline million the a came but margin. sales, also of XXXX. gross from that And for the second our number gross XX% versus reduced those that There of XXXX larger and margin primary -- was for quarter the year. was are a we margin. significantly X.X% second XX.X% -- in things quarter impacts experienced in the

North our this significant margin quarter. challenges had business American wheel First,

few purchases push new As steel our live, previous ERP our higher. we've when after quarter We regarding the system. to going months prepared experienced we in we the prices material first raw first issues live on as quarters, we as were elevated described and go into

due market. to been also diminished somewhat We was more sluggish demand the XXXX, which elevated has for -- anticipated ag

as X,XXX these challenges push them production inventory elevated pushed and as The in a was increases. significant margin unit levels QX factors through the experienced these face, and normal them to efficient short-term as we combination not QX, business. caused pinch we down the we on of we cost Due in levels

profit sector have second million was We more this be the from business costs now. production approximately second quarter in gross normalized of half we The impact comparability of to the in in XXXX. as stabilized the terms expect in $X

which lower sales the created due profit volume. margin approximately we last large That from ag not in just million caused and only in in to and also first challenges but Secondly, $X the gross quarter was impacts. we like saw decline production gross with from had the decline inefficiencies impacted year the Russia this Europe profit, in market, these

the Thirdly, our side. lower challenging rest the had year ag been world, from like first operation the significantly several of the year-over-year half in us performance for Australia the on of factors, much has more

measures side sustain to taking our margin business, haven't tire distribution we've the been our the addition, on business. at to exposure levels adequate our In been the as reduce level for mining

high tires of had level as at to reduce was gross of $X.X the approximately our to of combined our in maintain to profit And it's on levels quarter from Australia footprint inventory us customer branches these reducing impact The lower the well inventory. We've satisfy our caused and our been million saw needs. very factors necessarily in XXXX. second

that to had to our American margins experienced to quarter. anomaly in decline The other in American remainder down the as were Notwithstanding the from Europe. of due Paul returned first in notably, profit we margins where market the a sluggishness sales on quarter, lower I an second portion most that of decline in gross the the from gross currencies, like would North business came sales business, in have the tire that along prior margins tire coming lower note primarily similar with areas we in said profit earlier North described the in year. in

on Now, a let's performance. minutes segment few spend

due agriculture million, XX% North X%, quarter. on impacted sales a largest the in of tire segment decline issues basis. have Currency that net sales mix the Our was this segment the in we XX% the down we price coming Ag for unfavorable in discussed, in sales and primarily X.X% with quarter sector the had Volume to were aftermarket by American were sale. down $XXX X.X% down year-over-year and

of diminish and is are at it here second Russia. there half dent dealer inventory news, incentives Russian this quarters Russia down remained is in sales make If in amount to continued able due high several the to sales for of have point. that appears good have expectation an been though XX% levels were the improvement across levels it to challenges. Dealer starting ag market there at no and the

mainly ag to and sales X.X%, due lagged prior the South were up mix. volume sales American ag about also year European XX%.

impacts the challenging. negative continued volume and of be combination has declines the market to With currency as

gross second portion across for North $XX million quarter in But North wheel to this America, that the the prior driver earlier. comparable American in $XX performance the decline relates again largest the Our segment related profit and sales lower discussed was of A agriculture margins to I was period. down from million, Russia. the decline Europe

largely XXX Again of behind segment. in margins of quarter half second the should second in we to declined experienced and historical basis were North by points X.X%. recent the gross that year in us in Year-over-year margins America a the see issues return the we've this

Continuing on to earthmoving/construction.

sales from $XXX X% a currency by but earthmoving/construction X.X%. segment have would Our decreased sales a actually year to sequentially decreased the first quarter by net constant improved basis, On million. ago, a X% sales from

the Volume in the while was was which decline most and schedules segment experienced shifts the positive given notably mix demand is down quarter, and volume to X%, changes delivery in the and year-over-year a certain again, markets, OEM in At short-term price Europe during end, in by negligible. continued attributable China.

component in gains was $X.X earthmoving/construction remained volume of second profit markets on and this ago. slight in business, as ITM's which those the million currency decline in for is decline largest of $XX volume. quarter year within which impacts Europe America The driver close million, related biggest to saw steady. year this volume from a to -- the segment, wheel segment. South We a and the The Gross lower represents

centers certain I branch service inventory. Australia of restructuring as driven described reduced has we've business aggressive more and exited the as in which undertaken have we addition, In earlier, the pricing

from to somewhat $XX X% On price first to were we overall, in wrap volume X.X% more consumer. up similar down X.X%. performance. with to volume the margin is with as America, favorable roughly had some gains misleading constant decreased volume segment segment, mix by second quarter sales in currency XX% slightly, offsetting. Now mostly gained and been meaningful of net change net around The year. have sales and the our we where quarter a last business saw would by when we on markets, quarter This second Latin Consumer basis, other it in and comes year-over-year dropped sales up million,

second Latin in sales truck on second which over that gross points same last quarter, volume ago. million America, quarter cost year, With a was light Gross the in lower was XX.X%, utility period tire consumer reflected and fixed in margins a $X.X from absorption was a is the particularly XXX profit sales impact basis the which in which volume. $X.X down said, were million decline year of

around in While other the see we our lower this of what had America gains sales margins much than areas, in we are in area Latin business.

SG&A from quarter, quarter slightly operating is but to first in of over X.X% in the increase level last million, than This a second expenses, R&D the higher year $X.X lower than the were expenses year. Turning $XX and million ago. an

and As last year. of sales, net SG&A to X.X% a percentage R&D compared was X.X%

expenses, to primarily The related increase -- information other in in to this -- spending related investments upgrades and technology in increased operating ERP spending underway.

our of of that implementation the the phase most stabilization first XXXX. to expense fourth As after related efforts, place of quarter in took

including saw the in international our alternatives strategic potential matters, for legal an spending due increase of ITM. also in mainly ago, quarter review a We business versus to year

I second year, first spending of level the We're to expect see spending $XXX at in for largely the by guidance moderation also our performance. saw the to full million we million targeting near half. the I R&D benefit level the $X believe, from Therefore, which a second half areas of trim and original $X in will SG&A of be million. expenses During to term, that the year half

pre-tax a during benefit the losses on of quarter, $X.X of tax recorded During quarter. $X.X million the we million

quarter, resolved the we During certain tax to realize benefits were matters. able tax

item of the $X.X adjustment quarter in level note our second which value million, relates redemption $X.X of the million. decreased from of performance prior The discussion year final to

impact the interest. OEP and current of accrued All of period continuation principally the production the of adjustment to this related

have obligation remainder quarter fully and was portion As second discussed, paid This the now of we has yesterday. obligation paid the a extinguished. the we in been

with cash were Russian ongoing non-controlling in balances. redeemable operation been there's line payments or funded related The the impact OEP of these the from satisfied production drawing no the has ABL to RDIF interest after of Both down RDIF and and expanded July. our by P&L on portion our

million restricted completing We anticipate the relating regulatory hurdles. $XX RDIF near in issuing to of stock term, after

ownership is As in the XX% XX% Voltyre-Prom with of our with remaining RDIF. today,

move to items. and capital liquidity highlight a few financial condition our balance on Let's and sheet,

fairly reverse of We trend we inventory started were Our levels. this second working trend and to the be growth receivables cash that steady as the held continuing capital this able balances. course we to half as to the on managing over focus continue quarter inventory reduce I anticipate we'll this and of quarter

Our receivables declined by $XX $XX million from the first elevated quarter this normal year, year-end versus seasonality. while from it is by still million

pockets I sales two days up customers payments some and make ticked certain the outstanding customers expect closely days to due headway since that challenging Our time. second half. we'll reflecting with year-end, We're our in for extended more working

Our and million $XX XXXX $XX the of March, has by from below inventory end June declined million levels. at

reduction throughout with have programs company inventory the turnover to and business. inventory is the high We focus in our managers active increase our operating sustainably

a basis our in negative decrease QX. in operating and scorecards and working North which the American impact obviously had plans are It's managed during this largest enhanced has monthly in targets during in inventory programs incentive margins year. wheel notable operation, our which on the that action including capital now, manager vigorously are We on quarter the was been

on to more terms historical of back we're So stock hand. in days levels

versus million $XX.X at implementation, ERP experienced time. first year in we the ago that a $XX we're more the million there. operations to period our XXXX with back normalized challenging the half was CapEx this After of

larger we this begun line while capital to conditions have with some be performance. spent We of programs expectations due to spending for year, are curtail to market current our and in

I now anticipate For spending or $XX at the capital be year, to million. below

for of to carefully there the to million million $XX range to year. was during a reviewing operating progress and that in the expectation order spend efficiently are necessary we are is ensure our areas in be as plants original to Our $XX us and those

satisfaction Now cash debt levels debt elevated debt and manage in to discussion should put has XXXX no what profitability XXXX. remainder our doing weather and the been believe and we're the have the and term. first into in after levels is with the that near doubt that I'll the profitability a we of and There wrap option market of on improve reduced we We of course the half. levels over conditions short-term our will

our XXXX.A for portion to As considered facilities, reporting which expected $XXX a working reminder, use of our purposes, during matures but overdrafts over demand senior maturities of and consists roll which million to significant are are local generally without notes, primarily relates of the debt on the in current cash capital year.

capacity our credit We quarter $XXX call. to on increased our $XX we our ABL from line million during as on second the last million discussed domestic

cash due on of utilized today, our payments from fund we of have to the option. million put outstanding loan, $XX from were was able As which We fund to entirely to portion obligations in OEC Russian balances the the a July.

vantage focused point. level very are We several from on reducing our debt in the term near

showed quarter, the our as and quarter manage this across I in actively to we of third we reduce we'll manage business. the earlier, working capital we the inventories First, to expect as programs have last levels continue active receivables said level to

There been This sales we the final on sales. transaction. settlement million these and represents these asset should the that is collections of the property, will than and still are I complete certain no of deliver in slower contemplated. of confident I'm stages cash. doubt, Second, we continue opportunities But to other assets originally pursue to conclusion in between claims $XX million have sales $XX insurance non-core that reach that

and cash important the base. utilization cash these standpoint also debt of levels, costs then have and Any capacity flow from than very the opportunities be plant will future in to secured managing to from been within were lower at the manage excess levels. invested other structural applied We're that fixed business looking capital our first historical to opportunities which replenish and our

manage our in capacity our liquidity global we're very a tightened position have business a getting to on basis, but the focused future. way, levels credit a to cash Given we healthy on the and stronger adequate for

decisions overhang to The this completed been as payments behind that now have us, but possible. we'll is situation challenging improve appropriate quickly put option for more swift and make us, created the position as our the

I'll that, over call have. back the the you questions operator any for With to turn

Operator

with Our from first question Instructions] [Operator Patel Chirag comes Jefferies.

Chirag Patel

I topline implies of to there, on the on you you're the kind a you're for is of kind if XX% just segment of this being the looking revenue low and well, back-end end. the opportunity? through want that flat up seeing by end either little where to could, the or get that the get guide down the of growth guidance of to guide into and seeing at for The just that X% walk bit Can way the sense just I of you idea by was about better where me that high cadence the a X%. as of

David Martin

Yes.

we first at the think does saw of saw comparability -- what of year. to had we an in than on that I as getting see sales volume sales end, expect the little a similar a out. to got saw And uptick last pretty QX, things pushed bit we QX from volume That So terms as year, last volume but kept particularly we we low -- a what half levels the represent the in high year. to bit of

QX we that we a through see be earthmoving/construction bit first AG what particularly the volume half in to I terms overall, fairly do well. expecting should little to go construction would in of as and as say that, in close improvement saw we're of -- we --

on to very ag the far we as guidance, careful -- be of side. as but range the So want

And downside construction. built we to really our so forecast and that relates that any not have into levels

Chirag Patel

Okay. then… And

David Martin

big part still it. small, doesn't really it Consumers in play are a

Chirag Patel

the of Right, of price down baked flat pie? into How for to right. of that X%? What kind piece that guide was that the much mix

David Martin

get stable. be -- of impact better all good impact expect say a can that, margin, of when price a our pretty bit mix, we right. and Mix I pricing a has we fairly that the do Well, and to on expect

in So I behind will the in anomalies because of or dramatically production we think us. the first the margins better be the one-off are largely half saw that

margins. our pricing improved no we steady So production raw and and material with with our to expect cost, changes see prices in material

Chirag Patel

and quarter being quarter, think then So standpoint, from of that roughly the at maybe about you gross it about am into incorrectly? the little uptick flattish for a I are or looking bit an looking next fourth at the as you're margin

David Martin

I think saw we experienced we're improved margins, this amount XX% not certainly it's against year. more I be to around point. fairly the at in margins anticipate but in year fourth quarters, going I year significant dropped terms last last dropping to noticeable both expect would And seeing this We of any margins what -- it be quarter. don't

Chirag Patel

raw pricing Just going given forward? the where coming is material

David Martin

rolling through at improvement, big part this the it time point steel because had you at last price a that's year, if year. we everything still look last And in of elevated as

Operator

with next comes William Larry from Our Maria question Blair. De

Larry De Maria

A but plus few questions, as understand but some build to the XX% growth. just which, the I wheel of build, related of with peak OEM, I curious first was understand the on far as of sick -- the implementation, ERP inventory maybe you're

why just couldn't that So have the did you from guys Because building? build anticipating happened? inventory trying understand should growth? and what spec to you on So visibility be you OEMs exactly

Paul Reitz

business, to the build components What We spec, there. have for wheel start there that lead you the a order in various we deals in were raw time the is building in on for that the requires to bringing the specific materials that you required happened are Larry.

expectations to and be we with started do as year going favorable any others we industry have then didn't this it the believed the So spec, to to combined that pretty with had in and you it it. we're many do

are that steel with through prices. to noted ERP of the married weren't kind carrying and up where as we to our we just that is we make our itself way the changes As going the in with there extra sure some orders implementation any worked cushion, navigate implementation, we miss that

together perfect was of various a a been up events of always storm impacted what has very and that through came it for many kind business years. So stable us

Larry De Maria

there's Therefore a through going would the affected negative, on quarter and lot guys in which orders are positive right. I for changes the obviously that builds, year? builds assume changing the that, in and later given how And there, are upside stable half the OEM that market second potential production you is they

Paul Reitz

say, many back into half would we that and we looking while come what others very market favorable right the prices. potential to And are again believe conditions now kind as I'd some year, move see to looking stable. of -- the carefully from commodity Right. believe it's at of some the the higher

Larry De Maria

And uncertainty for markets, to changed window given now. in business, closed, We're the how maybe potential especially they it cyclical relates as but hold exception Brexit et the into ITM haven't kind end been of I in guess? Okay. peak cetera. a the kind also -- their anything Europe of that's of the OEMs mining, and with on yet, moving even US of here some probably therefore the

now. timing time, guys That how for monetize medium to keep for near you going a of and to think in the future? the we period window while we ITM monetizing maybe of long this definitely relative Are to a this prepared are really do term about closed or

Paul Reitz

board, and how mean as through on part we're talk over talk I of a turn I'll [indiscernible] years, continue to the it a I'll good tight, has behalf pleased or the to what will I'll in path. now on Yeah, say, Morry of of business, turn believe it behalf to as and over with say postponement. to floor on the fully performed tightened very board Morry the the we I'll

Maurice Taylor

of if do the should resolve with they was couple this you're way you one their I the liquidity were you we and you, back of this, situation they that there referenced came new Larry. And you that Paul. recommendation your the and hold that bond out in Thanks, was what off report the better the was happened bonds and the into and OE to for was, was remembers 'XX of Board concern the were back because out the that just Goldman time, then. what everybody basically sales. and it years was orders ITM end go at coming putting a gave And with that big that with at down back sale to -- real a handling remember time. 'XX

those to mines had not various crawlers else and as attempted were they really aftermarket around Your product XXXX the the approved go strong, everything the shovels they larger then and outstanding. and was so world, at what happened

increased that's their the the looks increased a Board where they've looked at XXX to was met have and so the because a they good, up. and they go minimum when Board putting their sales, back-out and around the is, we range so -- and the have the happened future EBITDA, range what's was went it the situation decided So given was

than on it that is of up going well fast as American what what ITM AIM, going rules we else X, and switch stand-alone by that that done we were everything to the delay, of all delay in were what's there setting which is markets, the to trying June half end make kind in we go and the happened before getting then on a and -- off the which year, was this. all XX-day a different was so get off Now the and of was gotten could like, transpired we've that the June

that, And everything of of [indiscernible] the started with like the kind trade, market slow. to because

think should report but the future we the you've being, move better give aftermarket better in role those so them to it the not think good the is ease, first know, got go negative mean into very, long-term than we them to as and light. that very but allowed think and ease, smart we still is I more grow, to also a thing and So which the should let shining it's real we than, away, they think and the acceptance I we off other and the as so -- you because we that to entire don't money everything really do reason started big used before, they that's don't a is -- so

looked to and They point, one in the the other whether -- it. at there's we're to do another to move October. it's try at to companies end interest, going that's going one if know negotiated we're so-called forward deal it's at board a hard the and looking what going some way or So last or

be that at And nice event. really a point, could it

And at So us almost to XXX now. they're -- to a stuff it numbers run the We think was it, pretty other if decent. year, their look because all postponement. and the to you turnaround the is better situation that's do for with have to happen even and all then this going aftermarket up smart way those

we're So that's the big items into looking at and it. where

do in board pretty the So, what there. unanimous to is

mentioned items. that and that's situation things David what you and So and the they're there Paul doing other is other

going don't put the pieces future. over they good XX very of So be all the years a think and fall to they're we pieces -- job together rosy last doing [indiscernible] some it's a there's and I a lot

of the that's why most the members So board and gone. other they are

Larry De Maria

often to not put kind this it's get just have we So of now. periods definitely, through

think get company all I such given of going. point and the while Okay, this But more the considering stock fault, the in your Morry, I great. understand. board it to as company, Is that off their then been I considering turn things, performance hasn't representing the have obviously I'll and kind obviously prices selling hasn't great. been help the there you come I actions at has any jump market Board. the hiring know somebody more because and Not where around board drastic drastic the other don't is

Maurice Taylor

it the time situation years, all business. history, over over team the you if older at and been investments -- business, if cyclical the with since the is, and a who look it's the over with what a every there look taking someone come are Well, but we Paul the I've basically different in and history, is bought public

no So they there at come, that someone it. is probably question look if will

'XX. get you our he's he happen have people enough industry out we the forget it fact if to was watch in and it what president, your enough so, the kicked taken basically true look you and life, of American trade back watched Larry, of most said, the is current it, hell In was and

that the were sued someone both including we won to here XX% Chinese, XXX%. dumping up stepped and had they and Titan in some tires

Europe new they So fact over factories for and present of it only attention, got X mean there, that that US as a some enough they is went soon the was players the along brand ago the these but year and everybody's little as into -- that that Indians opened the XX% though. but

of XX% And can't to that, ship so or Indians the where more. you nothing strategy their

the think I large So and bit. OPI that still, facilities is the farm only everybody that already and business is, what's that's manufacturing basically down. in but is large everybody US in else created, this two Democrats president's [indiscernible] I think future, more, little let so happened the make farm and Republicans notified players There a there's

states our the rest we world situation. board of players the -- what a to this are are in if going unique is So, play all market, very

to to, stage, Paul's happen. think there it for Then as fair the was want will too think joint that about much do we we when at talk all Someone is it But shareholders, you right team Titan in I the then that attractive well rest. make becomes already negotiations ventures it. people this now, can't

and how board when to opinions board, our like look board you at not strong to of anything relatives do of on is that. So or Lot our board. do a what Pretty it.

by good. you but world stocks. to if bad public, it be members, try looks the really we everybody a the pretty future's you. of at I well, but So, the the lot they couldn't $X.XX, in think suing And would when do future board was like thought Everybody there one time were go

So there way. of stock, a everybody's looking a is lot there's which of that lot in

give let's for sail, someone $X price. that's on and a winner up XXX% a it just the You're -- buy

stock. We're So but year summer, at it, we think don't out. price the the And still of so control what's we look -- $X.X I I can't. don't X

what's a couple gel. a I and at we a they of look we do, just market in and a you what If a hell downward years within X-year think of did through went

I all it. that's on So say can

Operator

with Company. Our & Sidoti Joseph question comes next Mondillo from

Joseph Mondillo

major lag sort this that inventory how of think, to year how curious spot cost and I'm issues not were to the second the understand lower just higher you sold on already the I that inventory quarter in is compared buying wheel steel to up realize you quarter know which My prices surprised today the related wheels in goods the revenue that early prices, sold be you you inventory the in up build the the of the I then and when one guys are you was how this, in question quarter? in works? quarter. don't month in I into the is of the just the going to follow wanted did of that or a issue you're an current we and to would much when are how the May

Paul Reitz

I all Well, looked is the levels, and I and think I came at kind will It's had in it way look to -- in of I quarter. guess we we it, additional be spread elevated June X we had really we knew this kind we of out consider at, sales time. that have roost over

there be old if also would We -- of versus in a thought production. with current better blending, you production will, terms

going really for potential to but wasn't [indiscernible] hang, one? get all necessarily it So

Joseph Mondillo

especially that weakness, so in wheels? ag then, missed levels and segment the segment Is price/mix, the to that that estimates. related the right, my All price/mix is on

David Martin

prices a we took prices hit of because steel Because down, surcharges down. of being our being because also

Joseph Mondillo

or way All reset, last the is fourth steel with in your up steel but year, prices quarter get falling, pricing make about half -- I brings to continue that the right. pricing. maybe prices margins talking gross If back you're are then, be so you to that better the your business higher doesn't in to, guess going the prices me And how don't steel so from really positioned.

with pricing your the reset OEs. to have You

so, prices, that? line won't lower when recognize pricing so And steel be you with the your in

David Martin

saw extent, yes. a at in we a that the same we closer But our ago. year projections, certain not projecting are It's level margins to

Joseph Mondillo

Okay, All right.

Okay.

in ask wise? first I ag then the percentage half to how the aftermarket was year, wanted of your down much and So,

David Martin

I have don't that exactly.

I the to that I say would have -- We I down but think half. digits some first business, don't I have quarter. want second in

Joseph Mondillo

Okay.

David Martin

quarter. first pretty par I was on think aftermarket in the

this time anyway. So actually this quarter

Joseph Mondillo

now do you All about where was there that, a some year, up there right. thinking back you of half I up, bit that on anticipate of in maybe all locations spring then you prevented so do you of of flooding because caused drying farmers, you'll year? back up the what to out mean lost wouldn't spring until but expect aftermarket of and of I make that that more of sort that and how usage equipment the top of a the late now there are think, late certain the water farmers the terms there make aftermarket get And, the little the was half in sort you

Paul Reitz

know we dealer We been do We've certainly will is very happen. with strongest Joe. network, Yes, our the the industry. in closely working believe that which

dealers. lost with And our position so we haven't

get the and working what kind just harvest what so so pinpoint to see seeing hearing comments, now I scenarios, the right outlook, get what timing, be their a into means window when that figure all up have you tough drive We all farmers think fields, you looking out when with is exactly of dried business that close we're many the cycle, to in now. of harvest noted around trying to going done just my it's after concerns out and they're we're through different still question certainly like they the is there home right I you it's really to exactly kept

insurance a their programs, will that to of the of have with combine You then course assist the talk and the farmers, government different on in. they'll that kick form

their So in pent-up is what we become filled believe users, that the has to aftermarket. end start the get scenarios to demand to those clearer

still been it's show, the business mid-teen it's care happening were back aftermarket, said, to they the of take As just of QX that has for and will dramatically. David not in down got half it happen, range in

Joseph Mondillo

looking weather in on I very a of and comp. to should say, first aftermarket I year of half maybe on certainly going that? not Would imagine, with if or even would the to XXXX, know terms normal the the the even you but you a business, side aftermarket guidance the of OE, have even agree probably that easy we you're but anything, to close And of sort put imagine I Okay. would at out safe it's are

Paul Reitz

Yes, definitely.

Joseph Mondillo

business what And of in fuel I in rubber, and terms just is terms which of but up going you wheels natural back then to materials your and not All prices, are sort what synthetic main or within pricing. raw pricing right. of you're go seeing of much lost make for sort you understand tires? to

Paul Reitz

at Both primarily and last on oil to were prices this actually of obviously quarter. first sold those and we based at are down is where time down year from a fluctuate the down is most relative the of more, well black. say are is materials down as of I little rubber steel would exception well. carbon down, with Synthetic raw bit natural our as but

Joseph Mondillo

Okay.

that any rubber? sort us you sort sort down, understand of and of degree And can much of help synthetic How are roughly? natural they

Paul Reitz

I get can have don't you. that my top head, off it I but the to

Joseph Mondillo

Okay.

And margin sort get certainly should improve, being volume to the of spread cost aftermarket of you and the so a that with of the benefit should good terms spread tires situation the aftermarket year? in gross does, and nice, if on revenue starts half be price a in back that

Paul Reitz

in then the market of pricing for Yeah, the and year in and half the that's correct is and again. that the improvements that's of costs into our there we've what built second the relation a combination outlook to

back So, you higher pass-throughs, costs mix there production our include relationship when cost, about that raw costs correctly about pricing. that had get we're but and say I as highlighted a will is to talking normal materials a direct I production normal production and well. obviously between we'll as a in it we normalize And than

stated. with agree you've I what So,

Joseph Mondillo

to update of were sort can in I maybe construction the related see I actually but quarter first like was curious -- business, wanted in the really made you earthmoving/construction third business. I of I'm want continuing, also, just delay? issues on is the I back the we'll but of then there quarter, of half the to of up you you is that think I the an follow-up the issues what those indefinite delays do potentially thought are on just And then year the it is, clear in mean or mining Okay. it your guess thought and the side sort them sort seem it regardless, on

Paul Reitz

to it, we of and and shortfalls, it's in mean of specific David again know in in certain X mentioned part grown we relation it's his shortfall. yes, see not aftermarket construction grow, part construction the comments did brought and that shortfalls. a regions business mining segment, did cause bifurcate to customers, that the as Mining it Right. it's I to first continues in those but it into widespread part was the business Well, in the you was issue, them that we X especially of but combine and has it's that you as and our when so categories, on

this the delay orders. about uncertainty of approached into of we're talking orders as The much still really estimates XXXX too in for year looking this way those that, been We've our and year. to outlook is back that pushing we've our at kind for include XXXX

So for we, again now the I think talked last about quarters. X we've that

QX, back there We that question. your in we say see to in to don't answer visibility those or have enough coming QX

outlook at basically looks into pushing a So is that our XXXX.

Joseph Mondillo

sort wanted for of business. to the you however I the of me, an or use terminology on update of from of reorganization, improving efficiency you the question Last in just sort sort restructuring Okay. the whatever

within strategy mentioned a growth set strategy It footage. You of living, it's certain, provide the thing sort an update like reconciling the don't company of and of types includes in prepared just maybe of not strategy? overall company? your I'm sort you on strategy seems are necessarily breathing, square been an where you Where really have of but -- overall footprint commentary could that the or you this we the do. ongoing

Paul Reitz

this and branches We've in Australia for in closed X while. We've because rightsizing been locations at of been a Australia. facility a for part major it's footprint closed looking We've Italy. breathing a while, living in been We that Well, our already. off it's year strategy. sold

reason about the is why because doing So talking it. we're been we've it

made is addressed. I would today, hanging fruit more specifically we've beyond say lower we're that that I comment the just already what to relation looking In going at

significant the so we on say that those look you are making by about having would ongoing we're rolling with talking the with call the involve board. board. the update changes strategy to part stand today clearly I that our where out how business and it of involve so may And we we discussions and means at discussions that They to on

right direction. Morry as will the gear strong that in said, board we And have certainly a us

to best collectively, we I the facts all means to when So make that all information the will the it and they're say, for board, goes and look the going shareholders. at the decision

and we've been so, of talking doing we're we've And we've understand that. it, taking the proper But action. going you been level I make yes, sure to I about, that consideration want and mean that's to been so now not next impossible.

Joseph Mondillo

Okay.

just -- we're agree over topline, what the real SG&A the quick Over been -- this for sort the it's some last see -- Is this should and reflected this a handling a half directing maybe of the necessarily that the many see last do to I follow-up certainly basis potential you're and and sort could at going you expect Street? how we down that Is that possibility looking to year just it the to relative you'll been totally, SG&A to is we and in kind time what continue of Or a you've to this, quantify us? are there and of be coming quarter-to-quarter doing numbers? any the companies any hear point restructuring where on in plan and quantified won't that Just say, and doing. line a savings. we improve out wondering

Paul Reitz

answer. reviews ongoing Morry few off, his of having strategic I did referenced so. And of with address comments probably think where the board in the a the the there that and part that Well, first we're he is parts first that are

respond, I you out the putting in and announcement, is, a look companies As outsize bringing far Morry of his in which noted kind comments. as addressed if that think public

any won't on than our different products. is us, plants comment many that other companies different I further, make for that So of but distinctive

the decisions facility the elsewhere that's you just consolidation what and and So manufacture the not to can plants the close close plant we've already are past. tackled in or everything

to us involves making So it now, strategy. our making changes to footprint, about we our changes talk potentially when

than we location X elsewhere and nothing the manufacture on Close it and happens. facility Just can companies so nothing in the road, aspect and in other And it's different do. down we're so that going like keep

that. discussion why board higher really and So that's it address does a involve level to the

really non-core as about of board, And it get is I represents. than selling what could that will. the think Dave that I believe as there and value both put far quantified out As we add as and in the we the more soon what can again of range the we market through we don't much said, we've assets commented

place actively same work at I and we'll investment position. the balance sure facets, to sheet but on many diligently we're the product did take right the pursuing different for there the the can the think building current which make protect portfolio I a cycle, level proper a we'll and that taking we our want leadership time, that very making both I know future also will we and at mention basis, of care we and go that beyond all we those is do, avenues [indiscernible] of discussion are global

quickly we're angles, is and think information as from out good we'll I to of there, today put a it. but can the we it as So I all addressing think continue job

Operator

I'm ahead, sorry. Go sir.

Paul Reitz

just same was I it. close to say going the to know thing. you let I No.

Operator

concludes this to like I session. any turn Well question-and-answer for back Mr. it over Reitz right. would And All to closing our remarks.

Paul Reitz

to end participation third quarter. again call, at you I time and will talk we you. Thank certainly today's everybody's and of in the the appreciate

Operator

be webcast that replay has available will of soon note within Relations presentation conference for our concluded. section you Investor The now the a call website Please attending on & this presentation. Thank News Events. today's under

Titan International (TWI) 2 Aug 192019 Q2 Earnings call transcript