TWI - Earnings call transcript Q4 2021 | Titan International, Inc.

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Operator

Good morning, ladies and gentlemen. And welcome to the Titan International, Inc. Fourth Quarter 2021 Earnings Conference Call. At this time, all participants have been placed ona listen-only mode and we will open the floor for your questions-and-comments after presentation. [Operator Instructions] It is 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, fourth everyone our And Good XXXX earnings morning. quarter welcome call. to Victoria.

Securities On filed the were with and which call CEO, today, are yesterday a we also have along results the the with and I begin this also morning. and we Senior has earnings reminder Martin. issued that Paul to Exchange Titan’s XX-K, Titan’s Vice in Commission David our President review the Form CFO, about will been with presented Reitz; President and release

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

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

addition, non-GAAP which intended a accompanies to of discussed today’s financial reconciliation the supplement, and quantitative comparable refer may financial are other GAAP be today’s GAAP today, most information the The the most substitute presentation be be the QX call Relations but the earnings on measures, call not transcript replay today’s and directly non-GAAP be call available the available under measures. website. the within available release, as which Events. note, Relations of A remarks to release soon is company’s the our Investor today’s will for on this as comparable after In The to measures measures. is copy to Investor News call website well A also on company’s Investor recorded. will of being section made website. section earnings Please the within Relations contains

our turn latest investor is quarterly available like website. presentation call to on to the addition, Paul. our now In over I would

Paul Reitz

Good have us accomplished the position this that I over morning, by to be already add and finish a share as great The the want efforts put here am past really from aspects for and what to our good I XXXX sitting up XXXX. go I’d in the we Today as on our Todd. March to those with highlights Thanks, had we that angles. team we a and to tremendous are head from before see into business very year some course everyone. But though XXXXfor couple for fourth really all year. and lining pleased dive and I into days of expectations financials with to positive fast has beyond of Titan years us. thoughts quarter markets want our in financial to over deeper numerous will that that a and comment David cover XXXX our well want quickly go do Titan to few that. like

we sequential X.X solid percentage led that gross But the income I look with our XXX-basis-point at that to million, we $XXX had adjusted to our that year. $XXX over this grew margin a in which what XXXX exactly David what past later. I But year, what’s as operating in over very gains, of So throughout information other as fourth is time happened I is only pleased Titan more the want over XX% will that with XXXX. to of important aligning the year, EBITDA cycle. sales into sales average we flowing that quarter growth one but XXXX world QX well am into phenomenal was each higher million. quarter momentum breadbasket feel wave driving or history note share In It’s well $XXX we going have a to strong XXXX growing is also that said, positioned create has there. of we that are million riding our keep financial times multiyear our XX occurred out the that’s than tidal to years. more that accomplished comprising our demand the type forces sales, XX% believe agriculture, market our

looking let been sheets been used around very approximately the XX% below continuing equipment. historical Also a new Some lows. volume cycle had from a note, from there crop that or income has demand North there, Ag dealer support to lagged throw time that near is at America farmer even as remains growth. all prices, will momentum programs still the government’s these forces pull a items in large to have strong recent accommodating Inventories after replacement are are commodity through continue average higher good the balance with wheels fact and world strong, prior more along

You conditions in light pleasing higher start of where Its prices increased number positive Ag reserves start the being, to at year. sector. crop of looking are clearly a prices. good weather levels. South to our are there demand America The keep at all forces are this, helping The the future grains point in U.S.

our was see I Show the heard forecast comments example, weeks in management just future customers at demand Ag National really current a particular nothing but Farm team couple and positive. where ago, small For the from of they

this and today sitting increases books demand. our strong Titan’s our and are to continuing order here So to head count pursue are to Ag we capacity meet

that road, the the to low So much inventories. in going levels dent appear a inventories deal doesn’t production low -- looking down of put further XXXX are it OEM

appear a are does are that It going XXXX So carry forward going is you as that’s cycle. that place. will that if replenishment see of at to flowing I really you start positive top demand looking unmet before getting inventory XXXX on multiyear Plus XXXX meaningful start going you retail taking weight Ag keep could into think to well. to

to undercarriage over farm where Construction player. our from moving is and Earthmoving major business a global So

innovation continues going but still remind best everybody stated global infrastructure of year. that add see in our tire able kicking undercarriage and -- you to to support in and see. More was the for a levels this believe kicking is to want are into EMC We are XXXX. well, that really really -- off-road output continue production increased see with customer promising in along investments have further just see continue in I into and largest believe industry. global I beyond. that expected likely our quarter into levels. capabilities base our be drive to the it current next XXXX footprint, and that demand We prepared you than to our orders to more customers strong this our our segment quality marketplace to continue the we On flow we demand with basis production will to as not, there yield that well the gear we serve good that global our look had that we with last products the year as to that Titan We the are

We in global material logistics prices events suited customers’ uncertainty risk recent world, companies are today’s at labor surrounding chains, then supply challenges needs. understand questions there in definitely As competition to chain, that Titan their de for supply and meet the to in better global the further is Ukraine. look our volatility

have in we accustomed XXXX before evidenced noted problems have see As and is our results, challenges and to in we you Titan solving that. overcoming proven

further along and our obviously with margin balance customer improvements. expectations, a in of crucial our It’s team to to see way management future strong solid to products focus company within cost years, as Titan. strong our and has meet come have been actions long and We will innovative discipline, drive protecting how the a improving in of great recent and that taken pricing our sheet really heartbeat profitability

drag suited and removed improved for improve our add our certain future. in and really period, with I really continued to have stated capacity have As needed global fits foreseeable portfolio to that to long-term wisely of were the That also our product our put comment strength want the us marketplace it’s in before, with it we the I and years that innovative a CapEx and and we within position in and streamlined meet products on remove well a capacity, our and we portfolio invest our combined that to are needs our have drive to financial And during recent efficiencies. have innovative businesses Titan increasing our increase our industries into core have businesses results. fact customers’ along SKU’s large production a operational with we we there products, our product our makes of footprint lines strategy. that, in

the result All prepared loudest over it I’d for capabilities that and our the performance the potential, managing place XXXX, has demonstrates of have dynamic sales foundation up and speak $X With been really matter. an what these adjusted or Titan like call for we built to at facts that illustrate our billion, is future EBITDA another now XXXX of XXXX this we and are $XXX you a and future million in and in Titan and XX% for good well a business with around environment that, team has really our over way. deliver the XXXX which turn to That quarter or that over for but in look XX% if $XX through to financial beyond. million put successful all of plan is operating good David. that

David Martin

we set call Thanks, years a the XXXX pieces capped Titan and There prior. foundational Paul, the the collective year organization for have quarter as today. our course unprecedented and concluded off we of come many just a that a morning everybody XXXX we towards start. decisions all are fourth at strongly we that that result remember. bear fruit and midst In volatility, and bright that to on The for are will will in made to results good our the a very it the of even future established

the begin highlights usual, quarter As will major the and with I the year. for

and from everything last $XX fourth which and Net For last sequentially for and strong. year. from from was and XXXX. last our production we year performance sequential quarter quarter X% with -- million, row we increased by grew for the QX quarter our quarter chain. fourth the strongest of the The led since almost profit grew representing XX% a This remained gross This deliver QX labor EBITDA the six put fourth segment, XX% Ag in growth. grew quarter sales had XX% quarter to a margins from together adjusted supply happen our year the was the accident, sales our sixth doesn’t as by in

million. $XX flow incredible adjusted year EBITDA sheet implies $XX row million, grew on This $XXX fiscal flow Our EBITDA an despite side, times the million, at end. operating making we requirements. was leverage cash the operating where positive X.X and XX.X%. And quarter increases fell fourth cash of large incremental second net which capital balance adjusted the sales by corresponding generated was cash our margins our in to working flow, and a finally, the debt then, year quarter

an year We touch few which a will I even in in minutes. a more stronger on and expect bit XXXX, Paul that discussed already

the hit Agriculture. let’s to relative points important segment quarter Now starting in performance with the

sales saw million, last balance it good sequentially over an this and sequential increase We aftermarket Agricultural million $XXX up a sales of Our OE from million, QX quarter. by representing segment growth. between was $XXX $XX X.X% again over QX net very from and year were

in And this efficiency to with cost the on effect volume XX.X% quarter for impact the to QX and prior actions The also $XX --be Agricultural Each increased of this costs. of over Ag the have a largest the between profit year, significant last in reflective year-over-year XX.X% over gross the representing good the $XXX is inflationary There of fourth million in segment growth and XX.X% for and year-over-year. $XX.X improvement. or pricing million, year increases margins in regional taken materials we a the segment The XX% was year strong was growth experienced other XX% drive from grew only driver OE’s cost were up of in million year. the year. and related businesses of and balance QX, in While the Ag last control higher continued raw global the gross our volume segment continue by very up along from for growth.

capacity XXXX. our using the are and productive a market, way value the continue in strong and to our to that demand will We support in customers reinforcing

which largest business, of raw increase material and inflation segment X%. XX% year similar fourth year. gross year the versus adjusted quarter, to Overall, or well. Construction, the EMC balance asset was by profit $XX the gross relative This businesses XX% of third XX% from in the last Ag, up year, a of Construction last driver profit while compared came slightly of quarter. Ag like to the segment, sales rest Much QX charges year segment which and XX.X%. improvement and segment’s growth net represented X%, year-over-year. segment adjusted year-over-year to and growth an $XX.X all quarter during quarter. grew costs for by strong profitability one-time from across globe ITM, Similar largest higher for ITN’s other million growth. in in the sequentially quarter, volume Consumer third million, was year. pricing of sales margin up million XX% geographies and of devaluation drag grew Earthmoving an the million offset another the gross impairments increased was XX% prior dollar to from segment occurred over Earthmoving QX. of Moving increased $XX or last driven during the experienced sales our geographies favorably the were very for the the after our from the the in Again, and growth quarter last across as the year for the Again, of undercarriage last quarter experienced was the while from volume or from growth quarter about currency growth was the slight of currency the by fourth and The nicely it the Gross from sequential major the compares also XX.X% profit the all margin $XX.X million with $X.X was within The eliminating or costs to to net and EMC a

this Our balanced proportion growth from global our Gross million businesses the America quarter mix the reform XXXX This and year. gross was coming across million or XX.X% pricing improvements segment’s products. quarter. increase of improved margins $X.X some improved all $X.X largest QX from our positive was last North -- for were with margins, profit reflecting fourth in in again

the fourth net of general, and million, expenses R&D $XX.X only quarter. quarter representing administrative the selling, were Our X.X% for sales for

costs profitability For some the gross dropped were a spending basis percent as items after adjusted points well our -- sales significant sales. increase very year-over-year This year, and the expenses controlled one-time adjusted and of X% R&D sales for the year’s XXX SG&A net of and period. But variable included last during adjusting it we reflecting year. and compensation, spending in

fourth the reported color. Our bear on taxes some in income quarter

valuation of of model, our previously result recorded efforts our realign operating recorded reversed million certain in only tax intercompany Therefore, against quarter allowances a basis As of and a in tax the recent amount restructure the for jurisdictions our loan expense in improved tax year. structure reflect carry-forwards million $X.X benefit entities, on to of a loss along quarter. net and $X.X profitability in which with million operating the full we legal net $XX

cash taxes year approximately Our last in quarter. the that million I in had range the communicated $XX were

flow. Let’s to cash move over

last $XXX with quarter. level stable start net debt remained from that the at Let’s million fact our

we a the well. cash almost Our generated increase free of in million million, operating as balances $XX inventory $XX in tremendous We $XX we After quarter, million these in cash demand. notably actually million increased of meet the half increases, positive the cash of cash in to to year. breakeven the of end $X operating working an from able were growth about to flow flow flow generate in back Despite year, QX. invested this sales capital,

net our on year metric This capital, the favorably figure was plus team important versus liquid our IT XX% of inventory At compares as for it our percent our working quarter sales recent last of Another capital end liquid annualized year-end, XX%. [ph]. and management was was quarter third based when relates to most AR a the meaning the XX%. less working

We are and with progress making the focus across measurable discipline business.

end leverage times X.X X.X trailing at down XX debt December EBITDA, the last of was from times quarter. Our adjusted months

We the growing with this the leverage in a throughout are XXXX with leverage year. range gain earnings in expect position comfortable ratio in on

We flexibilities have around initiatives. business these including the levels, inorganic at organic growth and

on is table We are that progress it year us, and and but look XXXX how in it reflect March is back important beyond. the the we and really now during for sets and made behind feels far that this like the year to the

are is markets ever unit As been. Paul as good about earlier, our it’s and position strong talked our as

that another $X start expect first in great year expect gross exceed implies to that and It the controllable are match that costs, quarter. around an bears have at we This is off our to inherent EBITDA our to raw million. to fluctuations we We are and Titan and billion our and inflation target with material a this expand margins will we sales that repeating in great continue $XXX pricing discipline markets. comes

and expect X.X% royalties well sales We about R&D the SG&A as year. of not and be costs, including controlled net for to

approved is million believe range to in the we $XX approximately capital spending year, focused somewhat on on targeted investments, than by We spend earlier, higher as that remains for also relative sales to capital we I XXXX and but the the Board, investments which will management, for very our last have working disciplined and appropriate in reviewed capital our remain $XX million to expect and operating based of plan business.

flow expect we to year. One we from the generate -- is today’s meaningful takeaways most important conversation what this that cash free business of in expected the that

questions flow $XX based should momentum seasonality on million capital We we as between traditional profitability, and $XX generate through free the in see and working assumptions cash potential initiatives the Positive with shareholders. in our Q&A positive flow and now cash and progress current in that’s for year, investments. start important this free Our XXXX a story requirements. turn current expectations capital our today. affords happy we I to million expectations to working should us Victoria to to capital are is that any growth and generation, you free following -- the over flow with and I in debt and will Well, even to have our am cash cash for take balance back and downs for optionality minute potential it pay

Operator

you. And Ferazani Sidoti & Instructions] [Operator Steve Company. comes question Thank our first from go from Please ahead.

line open. Your is

Steve Ferazani

manage everyone. in much I the morning, the appreciate on the all stronger David How Paul, say, on get caught stronger XQ? you to prepared detail are as you into holidays up production the in and did there, you sales got XQ XQ, sense typically can the the Good a front how labor be on stronger a versus sales have even to I in what go some have call. XXXX. capacity how you want could you much

Paul Reitz

get other execute in to on most continues sign And output our is continue union increasing stronger get with labor to the and force contract Steve we importantly force top that their North training that we labor did Well, along on of incentive element synch continues that have throw levels to America. our clause by some that as the then in is increase. would new I

we further as continue to output So XXXX. improvements into drive to look move on

we executing really So already have place. in it’s of what combination on a I think just

union retain with then have recruit it a in that good We the work and and clauses how to top further to We throw this hard driving that for at contracts continue incentive of output team you on knows help to year. people.

Steve Ferazani

my there? my think I going of, to think for do are margins I are on you am flow, at unless assumptions to capital trying you I growth. and just be David you gave -- other am going guidance won’t you about trying working steep going to though on are What capital get even in way have am free off? sort sales I be how cash to the Okay. build the side margin working there’s to model When clearly looking the as

David Martin

the talk can look you from some but impact working later, you as that Well, through we model, do -- capital. how certainly about we have

built don’t than working our we some believe are in. levels But have capital where significantly inventory growth investment been. we require We more have that

we working in shape. and we manage really inventory been we of because pretty the have the year that start some hard good through of are year. benefits generating will the to We that really growth we to start flow will some to operating see natural determine but climate in good as just see to able the And first of the cash progress balance and have, will part be

Steve Ferazani

I mean I conflict? in AIF the you you walk current have general the of. one, Russian Great. the transaction, been of stock lot am your if and questions, getting your Thanks. well have just. [ph] Russia-Ukraine venture a with And then sure just where on venture stands can I just as now Russian given terms thoughts perspective

David Martin

complete earlier are matters, and standpoint Yeah. execute the according before stock everything in it AIF without all well conflict was from will compliance Steve, were that it regulatory we started repurchase any we and part. that month it’s February. this to a we the regulatory able to sorry, that in needed the in to relates and early to David. do I obviously anything with -- the was We first take did

Paul Reitz

are when got then, really share been lot we including business market that They a calls now. within that outside look stated And one a CIS face management region. on Steve, challenges, good at business at strong there, always prior strong as a team. the export region. have have handling don’t our We you they We we a has the and

that important note of item as well. an is that’s think I

and exporting not the is item is really have products societies just really that has throughout produce critical we one but business customers region. but important share our are relating in food we Titan the facilities all move really There We certainly with there. of in this we is couple are of last the forward at a from think we other situation. or the our the material long-term that operate we territories supply continue that market Ukrainian world compliance there. At high what impact this and the to that Russian to we really overall time no about true serve, in to seen is moment the I that to around is the within current have will that talked more, operation The our years sections

Steve Ferazani

Great. will have that. over Thanks I addition if queue much it back for turn in Thanks get very questions. I and guys.

Paul Reitz

Thank you.

Operator

Perfect. Thank you, Steve, for your question.

Our Komal next Patel Goldman Sachs. question from from ahead. comes Please go

open. Your line is

Komal Patel

your Hi. on experienced, Thanks quarter XXXX nice you much have that in order show this the the are of and the you could strong, and consecutive the you orders that in visibility comment this after the but seeing Thinking in? strength know and you that deceleration at visibility of about so stage. XXXX. are still have, backlog pretty still I coming any if and books rate quarters

Paul Reitz

to much book going as can. is to we order And continue we are strong. The is to work strong. as visibility The hard produce

Komal Patel

works. Maybe chain, of light That the continuing in is, the challenges raw of some material, labor, supply etcetera. on second question

could on think that any touch capacity room to further kind that pricing, you have additional if Thanks. to versus needed? pricing, pull you on If take that lever you additional of need peers any

David Martin

energy labor, and pricing to we our tell worked costs, inflationary with and around to in be and that there to given that, And customers able just the well required not that cost, XXXX. different the really we fully costs all that we same XXXX would we logistics work we to we progress those through have going costs, you were relative adjustments needed to pricing we are but Obviously, make thing relative I in -- XXXX, do really well our as raw the to components. Yeah. material them transparency expect

Paul Reitz

chains. meeting far Yeah. supply our is And in extremely customers further strong I of footprint to our relation and the derisking needs think as as their

we to areas. we And to the so volumes add continue need that add need our to we we to continue add clearly into see core labor, as continue the strategic capacity, efficiencies capacity and that at in benefit add key to

off We are that or not into veer on. trying in haven’t new we or past volumes the focused maybe to take different been anything

remain think disciplined. we just So I

As But books really, positive our we customers beyond said hard pricing, the response tidal this work continue you continuing order when David relation like meet has to I we especially in out our at and and a and forces Ag there needs XXXX. of increase as my with previous to XXXX think in as we the we to, look see the all said, costs to see our to wave our it well. to output will good for got into sector, multiyear in

Komal Patel

elaborate sounds Great. If be mentioned leverage versus squeeze some funded. it positive your if range. in come I comments on the could that could outlook potentially you had one down potential share pretty like or just that, X.X The lot. you could has a times repurchase, Again, times on X there. I know more in, are the X your capital comments allocation debt

you If that great. would be there shed could some light

David Martin

and we warrants. don’t still I -- Komal, the flow cash around that conversations Yeah. as make have need to decisions

at point this in decisions or another We one time. haven’t made way any

Paul Reitz

Yeah. we the that optionality… is have The point

Komal Patel

Understood.

Paul Reitz

around where of the paying returns in business, investing down to have variety the potential work we We that the the for optionality warranted obviously, we so. debt and components, or feel then opportunistic -- shareholder it’s

Komal Patel

color. Got Thanks much it. so the for That’s fair.

Paul Reitz

Thank you.

Operator

your for next And much Imperial Ludtke Capital. question so from from you question. Kirk our ahead. Please go Thank comes

Kirk Ludtke

Good morning, guys.

Paul Reitz

Good morning. Hi.

Kirk Ludtke

quick the is allocation Thanks follow-up still times topic, a capital X range? presentation. just Very on the the target and call your X to for helpful. And updated

David Martin

to obviously and better be are bit drive obviously of that to have I right things would right in for X as just comfortable our in feel a at we are to we and and that with level. the try things We X constituents. the here are to do a do say times times for in range lot we to time look more we all low opportunities times with a the very well returns going healthy X the of way a comfortable

Kirk Ludtke

Great. Thank you.

to X get time times a hoping was to there when to So X times. you were

doing are closer distributions you will look at math at without to of if the right, am below any be I shareholders, X you XXXX. times it, Now the end

run times So as B X prefer does to to you X a down, business BB that type the would times a growth? to move as a, opposed say,

David Martin

so as to doing lot But love. comfortable and Well, that. as long-term make are to the what totally to range, be that to And and Board we X want do I feel want again, and in to that the a better and I need have are aligned I e drive obviously, again, the for CFO w to business returns drive to try to we a range. like -- a may options try this that. we times sure I in always if in but, like, our think investments stay credit some

Kirk Ludtke

you leverage is you leverage, a -- Do as think cyclical… Right. about do how still it or cycle a I over mean the of think your

David Martin

Okay.

Kirk Ludtke

are run, how though have are …even volatile curious business is just multiyear I you about you been mean, earnings I still, you where think an mean, a and think a historically. leverage? it’s in upswing you it

David Martin

their I cycle. a we levels of that want to be able leverage to through maintain have done

last been long any of number a We It’s years. haven’t more cycle the over had challenging. sort of

cycle the time, over it view so. do moment in a versus I So just

Kirk Ludtke

where where than about of the I is Okay. to and look think maybe tire concern Thank it obviously, you very But -- there your you a your Russian actually do equipment any are the your not where sense where facilities a located And other be you It of know, But you this lot slide point, you -- plant facilities have does shows in for, them a have that? but have this you. recession and in into facilities might visibility, use, your Europe helpful. four is Got it. is are do a in are, I in visibility are. Warzone. none -- do know at

Paul Reitz

We know our where to. are products shipped

I to exactly through follow would at main have customers used. our you where it’s the think see to look from

ship within to trends the answer our actually going to question are no, equipment to of main customers. assembly. we where your We those used manufacturing follow and as specifically, to directly point their But gets

Kirk Ludtke

to in see to expect too this say is what’s see the what comments you or planting Ukraine Any season, happening it. Got what early there? it you just on

Paul Reitz

to is, too really I say. Yeah. mean, it’s It early

I the look looking at light. are the is think we the obviously what you inventories in current at prices, U.S. are commodity

going look areas. pressure situation put other at to their American yields You some on where the South are

I at So incomes, tell broader in are all and out to, it’s production How we all production to farmer very with just is gets are sorted too a exported scope looking we getting strong. at still looking think early where ends that up the that. and prices on commodity that

Kirk Ludtke

you. then lastly, it. Kubota, -- that financials Thank off. thank Got how affect the agreement And that will Then does rates appreciate utilization does it. your it hand you. then with or improve does lastly I I and

Paul Reitz

win-win for both Yeah. sides. It’s a

are be. will I think product we Kubota a that very that about excited has

let’s be differently, product, a it be new We with will Kubota. are have label a new we we say, have product to going private partnering Kubota, that with

it’s for dealers. us with users and a It’s So plants it good space and product a marketplace good a them will we their leading are their as for also win-win that about deal to good improving our for way excited in be all position our to something just customers. great as customer far efficiencies for their a with new not as Again, capability the connect well. improving their us but around into end really

Kirk Ludtke

much. very you Thank Great.

Operator

for your question. Perfect. Kirk, you, Thank

from DeForest Co. comes & Our go ahead. next Walthausen question Please Hitman from

DeForest Hitman

help in Thank can years years the EBITDA? $XXX around versus talk billion in ago XX obviously, you billion the were taking thinking EBITDA and understand aligns shareholders. people profile, XX But and Can ago is difference sales $X it Hey. now you how sales foot had different, just you we of what questions XX for about this the years from have question, your and XX,XXX over those passed.

Paul Reitz

profitability XX would When EMC Absolutely. look stated, you from more far as is goes. it’s coming today, that. coming Yeah. we XX% the agriculture. as our segment of our our company as ago, sales you at And years breadbasket our seen is have Back from

you our EMC look by is undercarriage business. ITM, segment at our So today primarily when driven

and brand now So the there good see grow, and so it’s you good and diversified going picking it’s global when a our aftermarket And see bulk that share, that earnings. sales tires. earnings, to of sales products so upon be continues tremendous ITM you have that strong leader, you a business and primarily undercarriage look and product, is up a Ag Spain, market presence good at EMC strong wheels our market-leading solid based businesses OEM in strong to and and foundry very

strong So our coming what are from versus is years earnings Where I good core today there see is businesses. see XX things a definitely ago. a different today mix, what see you you

And not stretching areas we so that a out LAM. are into are these

the trying to cracks marketplace. in We are the in reach

that’s core XXXX. We our have where businesses with today outlined around growing I see things forward our see in things and and the as for certainly near guidance are we future we going business our where

DeForest Hitman

I think, I on about that been to at labor availability, don’t lot are maybe think Okay. can in dealing in of companies we have a lots material That’s those. ability industrial topic, us Titan supply hearing raw XXXX. execute and spoke what understand have well we But Separate have reported, things issues with, still length helpful. help about makes chains, you

about labor unions tire, parts. have available. your business, wheel, on cord you security past, is a we spoke your making got about It in the have talk lot steel a availability go dyeing, but making perspective dynamic steel readily and labor to got making a we can seems a there, metal how of rubber, You from steel, like simplify

going relates it’s view of terms chain So labor, to in you and and to of us logistics, can it allow just your well as update execute going the XXXX you supply forward? how

Paul Reitz

we mean, the that starts have. with I it team

type one We really global have strong team. a

with even just lot of good been pieces our for Titan that at team references, today’s as across not our today’s number could And team. secret very there about as the operated here a have our a on, we is noted pleased building dynamic in world a there with has business that strong and people talking our you calls, we years foundation but more of in downtimes, during we with moving I be out environment a what how prior kept the team illustrate, not have. were in sauce We just call I starts

job over couple us. that last in front are good put with very the of of the a challenges done years have We

a We every continue like dealing with see good basis, to company. challenges those weekly these team we a issues. just as at But are on very other

well. are We our managing customers

have are products quality what here XXXX Titan our you as results, a to footprint. serve I able really to The believe Titan to we we have through team. perform customers around umbrella it’s team good to innovative have. one We point Really in evidence one and these our and been with the we see wrapped will how that times our to would we continue all challenging strong of global the strong production that execute continue

DeForest Hitman

that as to historically operation? helpful. EBITDA disclosed things to probably that through it That’s are Russian I willing you mix have EBITDA And it relates if as changing But revenue the $XXX and disclose the Okay. understand real your guidance to you are million Russian guidance, operations. contribution from relates $XXX within in million relates time, the the expectation to

David Martin

disclose the to that on you general practice overall results. currently the business sales. upon segment the But related to we our not based report in what’s our only We of just Russian In sales. would XX-K by completely the total roughly disclose see We with business see what situation. units XX-K do X% as that information comprises our unrelated beyond going you as any

our at business Earthmoving Construction look and is we Consumer. farm, how really based So, upon

to this time, from can just at see sales we Russia. come where you you X% the our of XX-K, really refer So

Paul Reitz

certainly... But

DeForest Hitman

for my taking question. Thanks

Paul Reitz

comment taking yeah, will guidance factored that XXXX make One our I certainly into into is, though. were all We account. all it’s

DeForest Hitman

taking my for you Thank question. Okay.

Operator

Management. go Blanton you Alex for our ahead. from Thank [Operator from your question And question. Perfect. comes Asset Instructions] next Please Clear Harbor

Alex Blanton

on just have been would what to benefit, your tax the clarify I Congratulations morning. the taxes benefit? Good quarter. wanted the without Hi.

David Martin

roughly quarter $X the the... million it For to $X would about believe million been without I have

Alex Blanton

million. say you $X.X Did

David Martin

No. I Accounting our Chief Officer. said I just got clarification from

he -- quarter. million I have So $X me been the for told it would

Alex Blanton

$X even. point -- million $X

David Martin

$X million roughly.

Alex Blanton

is this is it rate tax your And when expected expected year? -- to what’s be

David Martin

which taxes I expect what cash taxes, is can most valuation roughly. there and those of be say, because here’s this million, book would around variation $XX to do the of piece always important with be because Well, to kinds the of I respect things. allowances

Alex Blanton

Well, I is in… this guess,

David Martin

Similar to XX…

Alex Blanton

…taxes are going in per to be se… income

David Martin

…XXXX…

Alex Blanton

what I be will rate income will taxes tax What be wonder for will in statement? the be? taxes

David Martin

the expectation But top I my of I out ahead. like later. of about million the here. -- for you don’t $XX I can that is have the said get it lower

Alex Blanton

paying? in? in am I is you to Well, now going interested what are what statements What’s be income

David Martin

any can That’s able allowances any that before Yeah. roughly that or well. might to as it we take special be take benefits

that… So

Alex Blanton

a… That’s Okay.

David Martin

That giving is now the for Alex, expectation I am $XX million.

Alex Blanton

that’s That’s tax tax, of rate. rate, not that’s sort Okay. not

David Martin

I understand.

You so. in calculation can your the modeling, do okay,

Alex Blanton

to Well, are I three taxes to rate. going have to the know which be get

David Martin

of part our That’s so. not guidance,

Alex Blanton

the go Okay. tax in benefit The Well, let’s earnings? then on. is included adjusted

David Martin

Yes.

Alex Blanton

Yeah.

rate So correct? earnings income, to if XX% I apply about $X.XX, the tax come out

David Martin

I believe yeah. that’s the math,

Alex Blanton

Yeah.

benefit. So the why earnings you for adjust tax didn’t the

David Martin

We could have.

Alex Blanton

didn’t why But you.

David Martin

Paul.

Paul Reitz

had have XXX valuation allowances time. adjustments [ph] long in adjustments a variation we for mean in to related I Yeah.

just not it’s it’s -- not… So

Alex Blanton

the… Yeah. But

Paul Reitz

the.. of part order in …

Alex Blanton

variations smooth earnings a to those and number. is adjusted realistic earnings out But more grow of your The these out of present earnings short-term. purpose

am do I that. why you you just wondering, So didn’t

David Martin

in it there the release. in not so has and outlined that it, press that to it practice our the numbers is Standard that leave been and adjust at clear I we just remarks

Alex Blanton

Okay.

at incremental might The or year the on. do expect in XX% all go for earnings forward that Let’s you think the going we it that’s right, beginning, the do about upper you talked increase? sustainable

David Martin

our yes, our implied in as have it all we vary of things the but for good a is Inherently in place will continue guidance that’s result could margins expectations expand. Yeah. we year, in business that across continued for around that put the efficiencies XXXX last number, to guidance have that and case, the

Alex Blanton

is an That’s incremental Yeah. operating good. pretty

think So sustain going forward for that can you least you while? a at

David Martin

Yeah.

Alex Blanton

that to to go mean capacity but... when get tends peak you close clearly I down,

David Martin

Let me…

Alex Blanton

Just what capacity your is?

Paul Reitz

to are with we point trying our appreciate customers know the certainly, the to we some production footprint that’s more get grow, do think illustrate our efficient. I and of I Alex, continue to and but the have this, Well, capacity comments,

improve inherent our what that about XXXX as we continue with we company efficiencies. So is in talked a in will to

We it. on our can again out contracts we improve on that earlier output there get very look we a American and new release more out put we in a effective forward with much help efficient As clauses press union North the as that our well that as some only I, incentive plants will from to put basis mentioned well.

Alex Blanton

Yeah.

that are now? commodity you are what’s of account for benefiting prices as commodity of Ukraine even soybean that going see the Do oil on the least in that the corn, to shorter to a obviously at they major guidance wheat that been. would Russia prices in taking gain, in fact and have going front, from be Russia commodity higher are your and going those are you than On producers result supply and -- into be

Paul Reitz

Right.

comments think just of forward. implied and based market will that’s being our There in what exist are a I the that not this is guidance upon with see marketplace number multiyear our what’s characteristic referencing positive we a that continue one particular attributes in to cycle. propel

at could is that fall crumbles there is one this agricultural space not that So the pillar not point. entire one

legs the that retail you are and there, those got immediate got you impact is see that about got there out has at forces think inventory a of have some to on to to all just of on going whether you it forces. are of and look talk going, where it at I really number positive picture predict demand, its just demand in So totality commodity Alex, were prices, because that big trying levels, look to prices this commodity instead direct

precise I So of instead regardless think where predict of prices go that to commodity level. trying

to think comments the levels to to continue not comments, environment already going provide sheets belief, very my are my of that prices at -- farmers my my I mention will balance say, just agriculture, strong. a supportive belief is are should for commodity good not would I remain

to you and think, look that, Alex, big the pretty at evident. on again, becomes got answer I picture So, the

Alex Blanton

comment not what -- you to are Yes. No. said going on the sure I really happen am there? not might you that

Paul Reitz

number I now What for We I we worked leadership over we together before, there. have of it said years. look at really good a this mean, and team a have did

region. infrastructure the not Our business throughout our have the we that share. just to products market society CIS pandemic, And as critical agricultural whole the but that, are seen in there, high has of the needs

and are more continue that, we don’t it’s an anything evolving will see Alex. monitor, situation, compliance beyond in really we So but to

Alex Blanton

Yeah.

Just be on controls? domestic, those would by affected that, thing -- more export is business, it mainly it one that

Paul Reitz

We CIS correct. primarily operate That’s region. That correct. in the is

Alex Blanton

Yeah.

affected So are there if exports that be well would it wouldn’t sanctions as you? against affect

Paul Reitz

region primarily operate We the agricultural CIS. within there in the strong No.

but we clear times at in region talked to on export more our calls, previous is. future, our and have and recent the production So for to operation be been this CIS in ability that in the very footprint so the the about demand time, that’s strong has where primarily

Alex Blanton

Yeah.

Okay. All you right. Thank very much.

Paul Reitz

Thanks, Alex. Yeah.

Operator

question Perfect. your from Alex, question. for comes go ahead. Thank And final you, from Asset Please our Jack Voigt Balyasny Management.

Jack Voigt

rubber? into little all exposure? then from does taking disclosed -- you X% a come Europe, bit, Russia Russia XXXX, question. And sales See XX% of in that Hey, came guys. or is, from that Ukraine any of sales for you is second dived include my Thanks but question the this

David Martin

And is just Go knew. if X% back our that that big any, is you look a little, tires. is to part Jack, question Europe, start, first said XXXX, then Russia rubber of very at your is about are of in not those -- we that sales, would you again, sales were you there is that if Ukrainian what

for tires. within then the really within Europe sales Our and are the Western CIS region

Jack Voigt

it. Got

rubber that So rubber exporting means what don’t is export you assume to lot out you continents to product. of mentioned so if finished Russia? production of of I’d product your guys Russia, out make Russia percentage and other you Are finished a

David Martin

not parts put. the do world, We export other Yeah. simply for of rubber

Jack Voigt

then it. for pretty allocation, significant Got of is over talked capital implying talked about amount you to leverage time. about returning cash that XXXX And your guidance shareholders flow,

buyback versus about implementing So stock? how think potentially do you a dividend

David Martin

Yeah. There are options around the table.

that have this have at in we and made not will in Board, with we decisions make decision time. any consult right our at we the make but time, appropriate We will point the optionality again

Jack Voigt

Thanks the Helpful. it. Congrats. time. for Got

David Martin

Yeah. Thank you.

Operator

to This the Reitz Jack, for session. closing turn Perfect. our for to like concludes Mr. any Thank I’d your question. over question-and-answer remarks. you, conference back

Paul Reitz

their in with base I participation and everybody Well, wanted for touching Thank call to soon. earnings to QX look you forward you. just thank our

Operator

attending concluded. conference call has for you presentation. The Thank today’s now

Titan International (TWI) 3 Mar 222021 Q4 Earnings call transcript