TWI - Earnings call transcript Q1 2020 | Titan International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to this morning's presentation. I would now like to introduce Todd Shoot, Senior Vice President of Investor Relation and Treasurer at Titan International. Sir, please go ahead.

Todd Shoot

Thank you. Good morning, and welcome, everyone, to our first quarter 2020 earnings call.

me and have President David with CEO, President and call Reitz; Paul Martin, the today, Titan's I and CFO. On Senior Vice

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

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

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

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

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

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

Paul Reitz

families and years. XXXX people seen see positioned and believe morning, safe you what and hard those our past Todd. sales we've XX are internal Titan's over the company healthy since midst end in now proportions and earnings resolve but dealing was and Difficulty]. years relatively of to in The earnings our actions everyone. of we much call. X [Technical at say, of many we rebound, entering of our all XXXX the as the cycles markets challenging to a well I history, in hope Good the ourselves tremendous The as Needless in saw with you, we Titan good expected are months flat we and Thank worked the pandemic one your of last industry find levels. driven by changed on our has a in historic long

going operations with to COVID-XX discuss into first impact the our QX, and taking the is On we're with crisis. to the deal on Titan today's actions business impact quarter of the call, then along that during continuing the

was Titan China. undercarriage plant with on early impacted in Tianjin, our

the in period little monitored in over an We additional adapted Our Year few required. situation sales closely. dollars of lost that a after $XXX,XXX that shutdown We lost profit. as resulted facility experienced million New China and a gross

a total and a central has X plants wheel way, we rampantly of know as plant. now, from virus However, hit where the X Italy spread undercarriage and in major China Titan all

into moved Then casting operate a Spain, it where facility. and foundry also a we

virus the by earthmoving and costs. that segment virus of to -- from much within XX% the income that along additional fall segment, $XX.X the and negative lower especially So crisis from volumes due the and first saw quarter a in our volume with million we expanded, the that, as impact unabsorbed where mitigation our overhead, operating result decreased resulting construction

production. of spread necessary As manufacturing North in for to our early America government part infrastructure the agricultural the mid-March, virus into federal decreed the critical plants

have with in experience our this is to infrastructure. pales But that comparison in play pride period throughout we keep employees during global nation's our the plants a quickly keep and proud want of that plants U.S. day on meet consisting our that we multiple execute do did to our to that needs. employees union up adapted really I state our team, our our Since management, shutdown, have reps critical operating. Titan times without to creating these we operations to of role stepped a operations not missing production the a plans and circumstances COVID-XX to safe by

biggest was diligent weeks. with reach in I our team our margins. the until Absent stemming related developing businesses quarter primarily on our effect production closures do and tire our São down In shutdown the state period, saw new from we April, take union. currency agreement impact significantly were while QX the the the were plants, quarter the in pandemic. able up as result, was due to first improved nearly for buy-in location, in the their the well Brazil North and for hold procedures, a in government X the America, early weakness were at devaluation, for we reais. quite to the OEMs stay-at-home sales tire business wheel resume processes, attendance. Brazil XXX% really our slower side, Paulo aftermarket to want to got were gross first so operating with flat there in closing virus did And The the both decrees really didn't The during virus from result in that plant the to our operations which

Titan well. managed a successfully, first In really quite response to we've our operations adapted the quarter quite has to marketplace and the during changing business virus pandemic,

However, customers believe for remains will good make sales. overall visibility of chunk year half up have second quite as OEMs limited the of to schedules. a they adjust lost production demand continue the certain their do into stating We

of plants combined being to a that infrastructure will levels. with deemed critical in fluctuating keep in So locations this previously these of we number operational I adjusting noted, also light view, while demand our

demand However, that present to pent-up ensure we in the will capitalize employees themselves our upside that we fully opportunities able maintain Titan to it's certainly later crucial with understand skilled the year. these on is

current eliminating protect we as hours, operations also working with our demand and and balance, we're accomplish temp reducing our matching are of down shutting cost really staff, to to the the our needed ensure obviously of before, that react the to operations So It's cycles that but, juggling to we with Titan again, staffing many levels. able act quite has and working quickly our these levels. to fluctuations efficiencies a been are capital through constant

in levels only weaker in the caveat, With happens. you run as when we've this and call into mentioned prior the absorption call, that

global broader active. the While this a basis farmers time, they're into are low quite remains field, demand at jumping OEM on

to media, supply chains, food seen continue Our operate. must quite heavily on the as we've

sector both existing and in to believe demand levels meet good So looking will strengthen XXXX. we and to half reason do ag back have demand to build pent-up start that inventory also for some second the to

We've XXXX on uncertain The number and results ultimate will our X%. customers' the biggest are sentiment of on regarding sales duration the on the ag U.S. side, recorded operations dealers and a XXXX on recently demand. pandemic of drop based our only dealer be but impact record, virus the and index impact seen expectations of down factors the is on the the flip

the impact looking the of of quarter, lost We to some with gain more year to second pandemic. in seen significant the be the height back second during the sales half expect the the of pandemic

of relatively EBITDA the XXXX we're XXXX at result, in be to looking range levels a our performance what As was.

pandemic win and for and can supply that COVID-XX a and global partner Titan clearly customers challenges being uncertainty Now of strong our importance the with mitigating by a is risk reinforce businesses brought with most and the the having business That's term. on where health market that the the difficult long conditions the industries chain. clearly in said,

in regional to near has took risk an good It's Thus, operates to mitigate markets solution much to are clearer We have look an especially off, they constraint an way grow. be end many supply strong our our products basis many continue globalization now where We extensive lead a under been we've as we excellent customers' to in demand for network that global undervalued plants. brands continue risk. element seen the our is of on and that that that customers with innovation. build as

business grad and be in beta XX-plus ended no ago, or a what up risk a regular in we as some doing our school in the underestimate a I'll make biggest years on we all will I living never recall class basis matter mistake that him forget I where worked. professor to preaching careers had will we

is supply back, I Titan firmly an Looking to for our now believe the positioned risk certainly well solution in future. was they as seek to will he chains in excellent be right. customers reduce their

important solid, will demand. all people past as happen have increasingly all that importance due in distribution an our of in is chain still longer will the in the online. network. And our issues, in started over buying to risky demand things May slowdown months shutdowns noticed are industry. lives a major their we've in customer case industry. have and That's a pandemic The supply to extensive seen point chain behaviors, that on same: rely not We impacted buying or industry X issues supply well. changing We've less in the our that taking our But just a not a of companies other be trend

as tire right premium to and the a a risk supply is on costs. place do inventory OEMs are mitigate to beyond also their miles their network, right to tire operate where, business, Think distribution a with to at manufacturers capital that's that less to be tire you time. right through much putting some X,XXX as about away. get with I the earlier, Also, looking we again, And the our can harder that going think dealers operate they how that's to stated and chain

the we've customers processes. us we've available in That been production made right and inventory manage at calls, and and, the having on once made serve will to discussing has investments our process our As again, their to risk. better our mitigate inventory extensive prior XX/XX

end to are all it this builds I I'm said Let's the it on of noise, through our say again not one, customers. this going the that and day, Titan forget call good to last important at products the on

that far pandemic. simply the everyone are The trends the challenges and and beyond both our noted. near impacts there's crisis shaped that Now in It impact unprecedented. question personal be term, the societal will operational just in with financial I goes no this hits by of business COVID-XX

our I able impressed road a risen know, short adapt all personally to and changed to our protect employee essentially and you. really how resilience the all how In each are these to determination, people our most and a for to during and the and and, lot work the the operate when lives. the appreciation our team, in sincere can learn work midst we my of us adapt. would with people. I've comes Keeping times of we've importantly, incredible we rubber all how around this their every with extend great frame, safety operational say we've and challenges personal of their both As to responsibility hard. been they've impacted every has I changing that times Titan been pandemic challenges about Titan like time to our hits and global these for company in working you employee

and will of We of Again, workforce safety have maintaining to business ensure leadership while our our people am proud continually and continuity. our strive I the team.

of our as underperforming of with transactions sales that and ability comments. generate these capital noncore actions comments I couple in cash improvements dive sales. XXXX, his to more than to asset David In prior On $XX working that also beyond into resulted will we've our calls, noted our want potential our noncore protect million million. $XX of later generate a finish have asset discussed balance deeper the sheet and to liquidity, to in on additional million $XX from businesses noncore quick

the to our and on sheet, focused of We importance continuing keenly have that. the protecting pandemic been critical balance highlights do

gets let leave mobility of David a believe later. that it when path time on that know thorough will ag broader return there on to key commerce the a will update a economy. back I'll and be We come liquidity normalcy. part We do in and

actions world our again stating dealing to experienced the work close to and my with that with in crisis. to I'm through the thousands challenges our is and end this the and every want team around to products. to confident needed continue I take appreciation manufacture in One team working day Titan we'll our of markets, volatility Our employees

David. call to now over I'd turn to the like

David Martin

time morning. Today, I normal, items more quarter, will in current performance some actions first the and and I'll during unprecedented outlining important things, liquidity manage Thanks, Paul, while our good profitability the some from spend our of uncertainty. review this of period and as volatility to

that challenges to As by just the we brought quarter all COVID-XX. know, on the was have a first been prelude

was our quarter we are have second the to through actions results. much But where adequate will the said, more minimize be decisively responding to ensure Paul challenging more liquidity financial the on As impact -- quarter with we on possible also much second challenging the our it. manage and that

reported that have certainly some the said, anticipate we we XX When the operations get transpired our the That early acceleration virus let March, last me global the detail. days. impact and didn't in of into on during

were saw XXXX, the first with than in $XX in sales in million business, particularly quarter XX% what Net the more of we quarter seasonal for fourth upticks the aftermarket. or

business. a As quarter operations described impact category two our of in China. material started -- the progressed, exception of much operations as was for more the the the in the we the release, of impacts to activity on normal have months small first But COVID-XX in more the was in with

for revenues or the with The much America million impact Latin was nearly first year. negative impact a constant basis, currency currency down have or quarter million coming $XX been prior and of $XX On in XX% the would Australia. from the X%,

Latin and $XX While where the with ag The last sales in million in with tire board, sales sales drivers year-over-year experienced business $XX prior declined across of lines. year in Australia. quarter to America, were segment. declines biggest in million a The American truck the from earthmoving consumer sector biggest our construction, product EMC quarter, continued The decline reflecting coming the along year. impact million decline $XX sluggishness the in partially were XX%, impacts again sales the remaining in on utility with a the the of related North by this primarily and in the undercarriage deemphasized was U.K. by the segment lagged

sales $XX as in sales on suspended quarter by impact and, net the the impacts. these best extent, million were direct impacted areas COVID-XX or From mandates Europe our from were in biggest lesser felt either government to The China. from in estimates, were or demand operations for curtailed a

a Our wheel mix North million -- to on in extent, and sales volume. lesser down were changes $XX American and, XX% pricing

North Our down biggest OEM were with production customers American sales X%, tire levels. driver the as lowered sales also being

QX robust and our line Our expectations. with aftermarket sales in in were

this were year XX% coming currency American lower in QX in Volume down Our with our sales prior Latin levels. America all on and Latin translation from was XXXX, with line effects. expectations

unprofitable mining lower was this distribution have million the activity we in year-over-year, dealers slower. slightly. line of sale first deemphasized volume have volume quarter no some Russia year majority year-over-year activity, market But the Australian also sales was $X in were down last but the discussed, increase last Overall with we as of and since year, coming challenging are still also did in Russia on as with EMC volume significant of conditions replacement with tire including with economic tire branches. up. servicing

slight Price but change areas and an made of X.X%. products and impact overall been negative mix consolidated Our declined was between in slight pricing overall with OE sales last year. mixed in with the sales raw quarter was a of a geographies customers. There on down adjustments volume sold, from has mix have some where basis material businesses, XX.X% was in on

first operation The impairment was profit we reported the $XX in $XX we in to of quarter insurance the our Canada. recycling the quarter. TTRC, asset necessary for first charge gross concluded current claim value reflect first tire $X.X In first the related a versus the to after recorded damage and equipment our XXXX. This was during of property million charge equipment also quarter million quarter XXXX, million of the

XX% was X% a the X.X%, this gross last first million Our reported $XX decline of impairment Without year-over-year. year. margin the quarter gross XXXX profit profit of versus charge, margin was in

the Obviously, we continued the dynamic to a $XX costs very our to were with the the managing well. the fixed naturally the variable order drop as million to thereby, efficiency, across a of reduce volume dealing we take labor we're but to In due labor every declined million. and lack the Again, within manage environment, during focused margins the we high $XX needed margins. sales to necessary million, decreased a actions preserve our making year-over-year, are by the And quarter margins it and of by labor spending from our approximately plants, it of overhead and have to teams of level manage levels. $XX nice $X with would only as day. it to gross in our business did costs able ever-changing on in lower absorption in gross roughly decline and But keenly plants stranded impact caused million overhead hitting challenging of quarter margin. We leaving in and, job

segment Now I'll minutes on spend performance. a few

down year-over-year agricultural in Ag the customers this down impacted due we tire unfavorable production segment X.X%. Our X.X% levels pricing while X.X% America were basis. on X.X%, this net Currency of to sales keeping Volume in by were down down. OE sales X% and sales quarter. was segment only North a negatively had mix

sales North the lower alluded X.X%, our I up while sales sales on mix on were first As XX%. to in and were down primarily down our OE earlier, European OE sales. were in quarter, pricing America Ag Russia

down were Our lower year, the Ag on currencies. from Latin America X% sales entirely last

the lower related the decline gross were quarter sales, $XX from from in down mentioned no overhead across segment profit was and I earlier. There first $XX which the labor lower business, million, million in the Agricultural unusual to prior for impacts margin year. and absorption

was China, was price part by impact sales see down sales impacts as segment to OEMs Europe versus Keep contraction largest sales toward in and the COVID-XX would ago. the first sharp and of XX.X%, XX.X% in construction in and quarter year in middle undercarriage The in quarter in currency segment construction We by half decreased the demand. was have the of of year. saw industry accelerated of million while direct constant I've the started in this a ITM's net Europe in the quarter, impact business mix $XX.X for before. only and the basis, said favorable biggest as on primarily the their quarter. a again experienced construction was Volume decrease X.X%. mind, a Earthmoving decline the second XX.X%. On last China

still So, reflected sales XXXX market. decently QX construction healthy a

mining XX.X% market closed significant branches we as construction Our saw European continued a pivot finally, the North decline sales the due away our to business in $X.X compared sales. XXXX, X% quarter but some at to dropped America from EMC U.K. tire And QX the related also by wheel million to to wheel volumes distribution. decline more in were a and Australian there was OE in down sharper

asset earthmoving within profit million a was and $X.X includes quarter This $XX.X have million gross the charge. -- decline versus ago. represents been million. $XX.X $X Without a first for million a Gross impairment the construction year would profit this, from which segment

The EM depressed impairment gross Considering and the number decline -- in a fixed in was to biggest an year. dramatic improvements The volume prior occurring as performed and in pricing margin on with in a absorption. driver countermeasure which the decline cost the X.X% of of impact sales. sales, the versus lower business facilities to related improved solidly charge segment the the efficiency XX.X% in without

impact lines with volume negative and XX%, where products along from the X%. The to was net demand X.X% first impact quarter. This utility currency deemphasizing such -- do quarter product negative XX.X% to America, in mostly decreased again the The were the at by first It lower segment, are mix on and America down price XXXX. little translation and we this of tires. pricing North Finally, Volume to the impact in compared mix. consumer sales quarter. segment's had was specialty ATV related Latin we as with are certain significant most is truck quarter

ago. in first quarter. million first segment's was margin million, a a which in the was light was which absorption in quarter reflective was volume in X.X%, down North impact on -- and and This fixed a the truck Latin the $X.X impact XX.X% Gross year utility gross of America, truck profit lower tire sales similar was This from America. sales again volume decline in from across $X.X sales cost

volume. expenses million, sales payroll quarter slightly for on commissions first SG&A the which Our than R&D $XX.X taxes quarter higher were the to higher and higher fourth and due slightly is sales

almost However, or ago than a was million lower year $X by this XX%.

completed We in of related in half ERP XXXX efforts late implementation stabilization our first to first XXXX. of substantially phases the the in

costs, organization even later, progress marketing current the and in this we sales and is anticipate light as reductions to our crisis, that more SG&A continue we it evaluate the but reduced imperative to costs a of the also on an our through make support demonstrable discuss I'll We and year. I we'll little progress

foreign was which a loss impact In P&L gain foreign quarter largest XXXX, was difference the a there $X.X single of $XX.X The creates million. quarter on the the million. exchange million, this of first exchange $XX of of year-over-year

currency discussed middle large Titan in or are euro the period. the in revaluation as this to that number intercompany we rates There capitalized P&L. has and quarter Australian operations compared XXXX, we We're implemented U.S. to to and of in first the dollar reporting notably end driving a the first dollar, legal some As either significant drove most of in impacts versus of in quarter, the subject a loans. international our every related place settled the and a was change Brazilian be the foreign currency to the of between rationalization project this reais the in to loans began in our relating loans restructuring that the impact the entities of past,

business. our eliminate the never volatility structure it to completely, We to but will do I with minimize appropriate hope manage this

quarter jurisdictions. $XX.X $X of quarter expense pretax in reflect loss recording have on to $XX,XXX a million. the million taxes cash in normalized the $X.X the per of been foreign we million Normally, We expense in to region pay recorded of tax first tax we

to the were than reserves that, approximately in Coupled course, contingent recorded with $XXX,XXX due level to of our anticipated Of lower seen expiration reverse limitations. impacts to jurisdictions able relating previously the these statute we is we've of to profitability related COVID-XX. of what of

cash move in the QX the impact that devaluation occurred start quarter the of ended when mostly the to began over million the of currency from spin million, million, quarter March $XX that with out world's The the of at let's Now year. fact down cash $X I'll markets and was flow. to $X end in control.

more generated efficiencies despite in we in of asset $X quarter of $XX.X quarter $XX drive operating the of a first the impact the approximately is quarter, and related in million working to cash of negative impact $X we XXXX. noncore cash Including We the flow the of the significant free This transactions million roughly versus of first million capital quarter million. management. sales negative in from XXXX in generated first as continue lower earnings

increased receivables from the year-end Our quarter. on from in million quarter in million $XX increase by the the first $XX the net sales fourth

volatility to second see held operations. the the our during we expect XX as is of over and at most collections DSOs solid this Our important quarter days, on period steady

ending inventory by declined Our from the March of at end December. million $XX of the end

a As not in reductions any million top into capital we working target $XX of a line changes. outlined this taking effect year, reminder,

to strong our with operating focus very manage inventory closely. have we teams Now

manage visibility As know, demand. is to with of there lack balance we a customer long-term

near term. meet can to remain capital ensure of occurs, in customer I will the that expect Nonetheless, we we cash that expectations. do recovery need a flow working As source

year. first $X.X the $X the were million quarter million versus in for expenditures Capital last

in for other would it been where these but in conditions, near cash maintain up original necessary has to million target of the our suspend is point, million, the exactly it full in year. $XX Given from for capital range challenging It at what light I the to is preserve of to expect determine than be million challenging term. to need this the to end $XX $XX necessary year, to production down spending this will our the flow of

quarter. Our debt level overall again declined this

totaling the Due As down the December the from did million property the claim on not completion at with quarter. full the was receipt the of another to our March the of down paid tranche capital of shares million our down Canada along to $XX sales XX, we for working ABL Wheels million outstanding our end during we of $XX of operations on extent TTRC needs of the the of pay line, toward domestic $XX India, end the of on March, receipts. line with

during late also liquidity normal initiatives debt to the portion quarter to primarily America of jurisdictions, maturities as Europe. in in response in to we related and paid declined according $XX loan loan decline by Short-term extending first A million of Russia foreign a down March. the Latin arrangements certain in

overall $X December. Our by net debt declined million from

key On March X, for XXXX. from for involved we for cost outlined our included and initiatives flat target improvements million $XX This a and business. impacts anticipated sales initial targets reductions on EBITDA profit across our

and days uncertain become more infinitely meantime. in XX has ago, this the just world was complicated, volatile While the

the our been we've customers, clear long-term entirely second and expectations. any updating continually our not To demand they're half least, week. forecast not giving So is us every say the with

XX% levels. forecast in current show sales most Our a of around from decline XXXX

this XXXX. do currently to anticipate as our and I'm again profitability that remain call flow. to also not all us but morning, outlined performance taking intact, have adjusted cost initiatives similar to reduction we've these go line will initiatives additional profit bottom sales, preserve a last of period lower steps we carry and been important be been and in cash we note this going be to EBITDA of and It's our that the through through With Our are improvement result. initiatives uncertainty. performance each necessary pressured to to

previously. $XXX to R&D costs. to We've SG&A One and R&D discussed our million outline to important and of I want target SG&A aspect relates that for reductions XXXX

million We $XXX given on and situation. should challenges we finish our the on anticipate and the the to are I front what are through now, and new be $XXX based target on between discussion face. million the R&D improving project will for I now doing year manage focusing with liquidity initiatives. costs current full on SG&A that we morning my this

nonessential government operations March spending, by payroll some reduced travel Act. are We portions April. the of and costs. advantage In certain we have as for as we In pension access eliminating payments we among or have along done to locations the suspended natural others, we workforce able obligations, the the U.S., of and things our in have to CARES been with during discretionary reimbursement furloughed have programs by taking payroll of tax provisions provided defer cases,

For banking partners international been are working we government-backed loan and protection payroll with for operations, and our have and facilities. our programs

but process, in we in to $X operations, secured prior to still loan at approximately additional Based of we May to year Europe of $XX manage additional give million additional terms Latin the of flow us confident cash expected programs be an between are our able and these of credit this Some credit that extended an $X are and needs access debt to same been for our million. mature to capability year execution that of will on going $XX November of million would operations agreement. the have relatively have million we're the

was various subject to maturities XXXX, portion significant annual March renewals international of of lines revolving credit to with of our relates banks. and long-term XX, $XX A million. current operations, debt As this in

approximately rolled was ABL the the continue at the over renewal only credit We our with be expect is of their total liabilities, million. of dates. paid lines to their various dates. and at domestic these million and current maturity be to specified Out the $XX accordance in that will renewed XXXX Headroom $X currently facility for quarter end on anticipated credit remainder of

months. base, debt will subject fluctuations capacity dependent is course, in vary Of in our to inventory, AR our and borrowing the which coming on

our years, the and able we've course cash X.X credit last with facilities. working liquidity capital, Over been balances manage of to the

work the to or well our continue to assets. profitability I on driving noncore positive changes the additional on as of as from case. on generating unprofitable to continues related last be disposal remain We track through in shedding and improvements for we asset businesses initiatives sustain transactions, that certain cash and sales that the mentioned call noncore

capacity at the $XX additional with million XX in and $XX XX That Our asset current expectation million is for partners to opportunities days. an banking sales. be should noncore our completed to credit We're other also additional next in institutions. to financial increase looking

our easy business, have through in The no But and dream only of the world manage about we our all teams this. been operating crisis up to has and proactively can the that. doubt over ways leadership stepped strongly not on

ahead. to to take road steps the We manage continue all

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

Operator

[Operator Instructions]

Joe Mondillo

Mondillo from is This Joe Sidoti & Company.

have could walk on you you just given of credit what have the did David, -- that just right -- now, well? at related So, the of off, through the do the buckets? Act, extended revolver how me that accessible? to was cash the did received quarter assume the your First liquidity you And much CARES were I as how some you not have -- much end

David Martin

funds fairly from payroll are but significant a payments will remainder cash several the believe, going so able CARES a pension have able year the accessed obligations will tax it's range, and be Act, Well, on on for all it's, of the our positive taxes the be XXXX. on But any we be of that on deferred payments impact don't to the for U.S. million to impact things. have we I dollar direct not -- -- then defer to to in be number flow. obligations. Pension obviously, side payroll, versus I of

So it's that.

the process obviously our piece over one in through, that. in come about government-backed to X that had go we've Italy Europe, So -- operations things. particular through your have mostly it's lines The they're this credit primarily through obviously, always available, revolving back have question, banks original we two to -- there. and lending operation but of facilities. to going but Go you a or working with government-backed to -- to talking is liquidity get And back and

probably do for $XX maturity expect million couple-year several years. $XX I the on liquidity of kind available will additional the to million for of committed in us be access to to There'll be those. able So of form facilities next

well. accessed of debt, In Latin $X America, debt we of we million $X additional as and million on the extended terms existing

have to it's million to at year, could executed then in least provide March. to pay not going that actually -- and that and have -- additional going $X that's So we in capability we're this

$XX million roughly the end $XX on We the as I of briefly just March. as the of million that In credit of had borrowed U.S., have facility. headroom we said

this any don't additional -- significant have have at have borrowing this changed As but far the now, funds hasn't I at but in headroom. we I where have borrowed we as point, for are April dramatically we don't April, base still It point.

So than business. I that more to believe adequate headroom guess to decreased manage the have over do biggest what's going still will be somewhat, but be question the I is the several we next it months?

Joe Mondillo

Okay.

So was on have the million you ABL end March? as of what available of your $XX

David Martin

correct. That's

Joe Mondillo

original. any And thought Or more than would inventory liquid -- expect to I than management, you're the million. way more expecting $XX you quantify that? have

David Martin

I down think sales levels will obviously, year, the with for more that that. the come than decreased expectations inventory

working capital is think I balance. a

that inventory, manage inventory. got and levels be is recovery. the go to down. receivables at right and And it. to really for primary is obviously, payables have well, and liquidity you times right you we as have those on But able about working to the if capital just manage really up source of think manage to than the We inventories more The

And more think confident manage why that be still I well. think it will I than to to able be going it That's that. I'm so we're pretty

Joe Mondillo

sales still? that said you million of anticipating Is $XX And million you're $XX to correct? Okay. asset

David Martin

I No, $XX between that actually, I'm and said of sales. million million expecting $XX additional

Joe Mondillo

months? you are to that... confident -- thoughts over environment. XX you color going be this you XX -- do And think you this little a are Is could more what -- confident next the on provide given just the there to how Or

David Martin

that I to things these those. are XX-day process, going and that transactions am are that in XX- to fully be fairly we're -- the that And confident range. these I be expect realize to to are and numbers, I able expect the in

Joe Mondillo

last of regarding Okay. flow. and And then cash just liquidity sort question,

with the cash year CapEx have outlook? flow for you expectations expecting positive do your free stated, a to cash Given flow inventory any think you Or be you'll on you the basis? and be, where what do you're

David Martin

everything it But parity. opportunity we bank. down at together, between -- can be would balance at versus expect have the will with that and a believe much I all how I pay that cash much weighed least we we're how we debt

Joe Mondillo

R&D stated for correct? that to comments, about million SG&A, $XXX is that you're you million, your On looking Okay. $XXX

David Martin

on Yes, current our types based things, we're saving I reductions. what and expect We're natural on money the of reductions. looking that's spending levels we're some other as those things. also of be on discretionary the structured at hard Certainly, driving But we've these to cost expectations. cut out

Joe Mondillo

have thing guess someone chance. And for questions, a me, have a but I'll more I and I few let else Okay. last

chain. where COVID operations plant down of you Could a Paul, effects your May a customers But I impact, affecting April? of of and lot your how with some were? your happened talked of you're through commentary really, walk in doing terms know time there's us maybe anything in terms where to they lot, could just But just was have and the so, the your what it's are actual your details. terms the you. help just plant period on prepared you supply date of month missed the March, us Could in of operations, the explain more sort to In April, of on and may what's you operations? I

Paul Reitz

is we've the look Yes. I it X The seen waves really impact. of COVID-XX way at

the was one closings. first The government-mandated

saw have most would X quarter, be in in X We've significantly an we mainly wheel. be so this And Spain, Italy, then that where we got where undercarriage. would March, operate And we where in foundry. and undercarriage for undercarriage

saw saw, now at plants from government-driven, virus locations in decree That X the the into restrictions the to another All in And are where a operational. really down around took government we had the place period close moved April. down you then We for weeks. Brazil impact and/or March back first as on them. of to sanitize March. operations time was for just closing The

of So the our which impacting seeing kind and in what that started second fluctuating their customers us be wave demand. April, is you're would

As that. they temp headcount, facilities, of basically to in done that reducing their some We've relation furloughs, reducing door. output shutdowns, taking to had overtime, levels the we was in shutting some the started down demand coming adapt some that reducing extending to your controlling by labor,

chain call of of now tail of the some the the April And wave May our at the you're I what issues seeing kind virus would of which customers. of is kind impact, X end into is supply

So America kind different what you're it the period of your you're really wave Europe. that all time on took what times North looking at or to the and our operations, does of waves vary -- South answer crisis at, talking of whether America, question, place

and that it to as do we highlighted as takes Europe work undercarriage it, keeping point, to in as look them second this we're the the biggest adjusting well, quarter we're we'll aligned. David us our schedules. the output, really, whatever that facilities. third first significantly continue into most at our sure wave impact So in hit period, to adjusting labor earthmoving/construction, results, make this Italian We're was so in you And saw at But our at our and continue to where Joe.

Joe Mondillo

makes follow-up And ITM a large of of Spain and that up down Is Italy? that of business? Italy a that us give long much percentage you that. just the an most was how business regarding facility And Could idea in that for of how -- ITM is April?

David Martin

Yes.

weeks, the Italian you So, of weeks, XXX%, varying to business, couple we basically at other then if -- at if a we for levels for will. were were you But we down of want production.

it's have the For dollars -- number is undercarriage but like and from interesting. a supply the for as Spain. specific the and I and to the for things feeder global operations, don't it chain undercarriage cents Italy that,

other business demand. we that the that of April. of And an -- of of as of if aspect couple XXX% have think various for again, And aspect aspects supply that other levels, productive markets so business. will, down for to in it that undercarriage you running XX% was month of that was weeks but just different Spain, operation of it's levels business, a well. high call primary In but important of But example, about, the parts due

Operator

next line comes of Imperial Your Capital. Kirk question of Ludtke the from

Kirk Ludtke

is to for disconnected a there. it. I think And glad while, Sorry, control to but I most the appears I'm by I've -- be was under well of hear way, gotten everything

a -- that's job I to outlined, With safe. you've doing keeping measures are -- liquidity. additional the banking guys this up mean, to of counting your one. $XX it's availability $XX adds are about respect talking not but liquidity I'm banking of these that just employees quite double I transactions. to well, bit additional sure through make million want anything, million to you're You

David Martin

Yes.

Kirk Ludtke

$XX to $XX sales. noncore of Another million asset million

David Martin

Yes.

Kirk Ludtke

net Additional capital working reduction.

David Martin

Through of year, course yes. Yes. the the

Kirk Ludtke

to out? able you Were you capital quantify? working you can much Or to how in you position take a think quantify were

David Martin

$XX that sales million, was target on initial year-over-year. based Our was and stable

really absolutely achievable given target So see believe half that's second nice the idea could to be if we that. needs. because more no which I as quickly certainly about in levels occurs again, number as careful where we And being certainly, this -- able I'm a we and our to recovery meet inventories I a be that than start -- we to but are, customers' we have how to recovery, and the then manage to happens, have demand it

still believe more we predict $XX can at So for I'm going million about But be much achievable. how to would least careful be I it. that

Kirk Ludtke

Okay. And then expand I you and could that. operational believe on was you maybe I levers, hoping mentioned

David Martin

you mean? liquidity, for levels Operational

Kirk Ludtke

didn't improve other means. maybe but I what that's... liquidity through I meant, that operational ways know that of levers mean can you

David Martin

obviously, a million payroll million. with and original back cash And I for the we're million going but to I to to $XX cutting to it $XX target payments, little profitability alluded We bit need obviously tax deferring preserve earlier, flow, to lowering that $XX capital Well, expectations. be think had lower year. of

And dollars extension the several again, obligations, that's then well. of as million pension

attach this we're able where So facilities, that's as or just -- and And keep reimbursement payroll certain and together. a can little say direct more and U.K. in Italy workforce Europe, the are keep all to aren't loan reimbursement these particularly our the in And protection. then I'd things our we're case we in government that in to. also And to get for operations ourselves the is globally well. bit payroll these

Kirk Ludtke

million think Okay. Great. revolving you've the you since borrowed And another $XX end. then mentioned I quarter that under credit

David Martin

quarter. that's We significantly. since end of but outstanding million the more not at bit We No, $XX borrowed little case. the No. had then, the a not

and range in the that at outstanding around dropped to million so And had million it we of -- of that $XX actually at the the end now. year, quarter, end and it's was first $XX the of the

Operator

And line next Joe Mondillo Company. the of question your & of Sidoti from comes

Joe Mondillo

just you few a if Guys, follow-up will. questions,

quarter fair first clarify, I that to Is it's would going softer just second to assume that say the expectation? quarter. your be the is than So to

David Martin

that's Yes, case. the

Joe Mondillo

in sort what And And year the press for expand of rebound? sort I so I guess, I thinking was release you wondering a comments on back guess, the so of you're the half in context more could terms of if that you regarding of of flat the year-over-year in made your EBITDA.

to Just the curious sort half back weak for in first about thinking on rebound the how half? make the of you're up

Paul Reitz

tough Yes. the I here sit say the to of it's mean, and year. back today have we half visibility into

XXXX significant at we we internal compared comments our believe looking keep around XXXX. flat EBITDA can to actions impact so were that a have will that our And

that the What we we the We here Ag, a farmers see know in fact year aftermarket that that We have aftermarket a have to business, place last. thing seeing the North year is be back already where where We're ahead more we they're very this of related a the where exposure. trends are at half take well. active. in primarily significant know for for to Brazil, level compared to as of broader same America, will going

related the mix such to from chain agriculture and ag fact aftermarket-driven, the with food. to of is supply protect the of part combined Governments So more big the agriculture our we broader with more products their a economy. being comfortable that feel perspective of have

further risk the fairly mitigated South North planting they assuming of America and America downside cycle good of because ag, in have Europe to so Russia, is that. a And and

back first have demand don't the going we into released all a there's there sales will we of can in confident pent-up the seeing we so And what And in half. second be necessarily year, the the think exposure think to But now. feel I pretty be the half agricultural I get the lost that half the that space. recovered portion into right that they're the will OEMs, say some of be will

of extent it, that's type clearly the this the of we point. of ag visibility it. side that it, Now don't of at have But the to timing

-- you construction some can't comments I tough more here of saw significant quarter, part our being business made today the The in David in where business, a a there. already visibility the Australia about mining weaker. is first sit decline little

part the less year what construction. there's to visibility we've will first to business and like, of earthmoving the think pertaining impact stronger our seen exactly look that I already a on but in

really in back sit think sales keep But the half measures, internal per what able we our And relatively beyond as the so I already we see quarter. with to we of commented look forecast what the EBITDA can where the and second give on we're a to points us stable. believe here se year, it we've not direction on again, we

David Martin

forecast know. Joe, comparison let half current to of second obviously, in first terms on the outlined that of that, there quarter my and second that of But me us quarter a down be is I just year, it in would already we add in And levels have comments decline will the range being the of higher XX%. year-over-year.

see to started impacts quarter. levels in the second go we of to the the our construction half very to you and low year, of performance fairly markets fourth back last it We weak. If the particularly, was volume in went in

we did averages to with full we're year. in obviously coming what So that more last year that suggest would that what line year-over-year be. forecast out would the performance And much

how premise again, and can will the this the EBITDA. the that caution, the visibility sales at is fact, develop and for this best in we is really time. that's But forecast I and around expectations we the So limited, estimate

Joe Mondillo

third actually were visibility earthmoving. was quarter, the easier and fourth your especially even still all. not of understand quarter good I though that comp is sort fourth that's Yes. I curious an with the the on at thoughts what on

David Martin

there effort Again, fourth year. is. in last destocking the quarter was severe It a

high inventory feel So at like that -- are levels we I levels right think don't now.

way. is So in the see that kind can we maybe expectation of flatness a comparative

Joe Mondillo

how a little the bit time sold gross and margin here, me, Okay. cost for And understand question support to your actions margins. your we're on was regarding to hoping and cost getting on of but goods more just I you're last trying gross extended

David Martin

Yes. getting cases, government out excess And in overseas. Again, -- some it's of of plants across our we're we've as measures globe. Paul the labor the all taking any furloughs taken out of outlined, reimbursement for all

So that's a impact. nice

So, have we don't costs. impact the to have of those

all better working We where things created year. took can continue have XX/XX that better we American a have I across plants on some actually -- expect efficiency, that our in took in we we you for and the time, some that the that performance saw and already, been had actually -- we North to we measures year-over-year the that that tire through of coming actually margins, QX, have

longer it's that That's, -- some there. last year, out through had impact of if if we inventory -- North operations. high remember, that again, not had a believe is you cost We went the significant and way, wheel year-over-year our you at pretty American very we think

operation should things be we these improvement And in in just that significant So that and out have taken -- efficiencies. about can we're -- we and across single on globe, fact every all that better a profitability. going costs created notwithstanding we the the have

profitability place it us measure to That is inventories lot Our a over And as the than SG&A business We've final course of tire a had improve in our then the well. the better XXXX. being Australian a help ago. really was should year reductions. of destock

Operator

the would any turn This Mr. to conference now back for to closing concludes session. Reitz over like question-and-answer our I remarks.

Paul Reitz

call again Thank to the talk quarter. of safe, stay you joining everybody Well, I end appreciate Stay today. the you. healthy, at and we'll second

Titan International (TWI) 9 May 202020 Q1 Earnings call transcript