Titan International, Inc. (DE)

good morning ladies and gentlemen and welcome to the titan international inc third quarter 2021 earnings conference call at this time all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation if you should need assistance please dial star zero and an operator will assist you it is now my pleasure to turn the floor over to todd shoot senior vice president investor relations and treasurer for titan mr shoot the floor is yours

Thank you, Nadia. Good morning and welcome everyone to our third quarter 2021 earnings call. On the call today we also have Titans President and CEO Paul Reitz and Titans Senior Vice President and CFO David Martin. I will begin with a reminder that the results we are about to review were presented in the earnings release issued yesterday along with our form 10Q, which has also been filed with the Securities and Exchange Commission this morning. As a reminder during the call, we will be discussing certain forward-looking information including the company's plans and projections for the future that involve risk, uncertainties, and assumptions that could cause our actual results to differ materially from the forward-looking information. Additional information concerning factors that either individually or in the aggregate could cause actual results to differ materially from these forward-looking statements can be found within the Safe Harbor statement included in the earnings release attached to the company's Form 8-K filed earlier today, as well as our latest Form 10-K and Forms 10-Q, all of which have been filed with the SEC. In addition, today's remarks may refer to non-GAAP financial measures which are intended to supplement but not be a substitute for the most directly comparable GAAP measures. The earnings release which accompanies today's call contains financial and other quantitative information to be discussed today as well as a reconciliation of the non-GAAP measures to the most comparable GAAP measures. The Q3 earnings release is available on the company's website within the investor relations section under news and events. Please note today's call is being recorded. A replay of this presentation will be available soon after the call with the investor relations section of our website. A copy of today's call transcript will also be made available on our site. In addition, our latest quarterly investor presentation will be available on our website after today's call. I would now like to turn the call over to Paul.

Thanks, Todd, and good morning, everyone. Titan definitely had a good quarter as our results exceeded expectations as we posted our strongest third quarter for revenue and profitability since 2013. We had adjusted EBITDA of $35.1 million this quarter on sales that were up 48% to $450 million. This quarter's adjusted EBITDA has been exceeded only twice in any quarter since 2014, and one of those occurred just last period when we posted $37 million of adjusted EBITDA. We are now expecting to see our full year adjusted EBITDA coming in above 130 million, which is our highest annual total since 2013. Our global team has been working very hard to produce these results and increase production levels to meet growing customer demand as we continue to drive forward to grow our production capabilities further in coming quarters. It really is impressive to see our OneTitan team continue to perform well, building on that strong foundation we've built in recent years I want to thank all of our Titans employees around the world for doing a great job and their dedication to our company. So looking at our segments, Titan, again, this quarter experienced strong sales growth in each of our segments, with agriculture leading the way with a 60% increase compared to last year. Our order books continue to strengthen, especially on the ag side, where commodity prices remain at good levels with corn above 5%, soybean above 12%. and cotton at record highs, thus ensuring another year of strong farmer incomes for 2022. Yes, I realize that commodity prices have dipped from their peak levels earlier this year, and farmer sentiment has dipped as well, but let's not get caught in the trees and miss the abundant forests around us. Times are good. Farmer incomes are still at high levels again this year. There is pent-up demand sitting on order decks. There is an aged large ag fleet. There's historically low inventory levels at all our dealers, whether it's small ag, large ag, or an aftermarket dealer. And also throw into that equation that current sales levels in large ag are still well below historical average. And do not forget that large ag is Titan's long-term sweet spot. We believe this all adds up to a good tailwind for business that we see continuing throughout 2022. So moving from ag over to earth moving and construction, We have seen demand continue to be above our expectations that we had at the start of the year with sales growth at this quarter of 36% on a year-over-year basis. Our EMC segment continues to look increasingly promising as we round the corner into next year. Just like ag, our order books are strong, but we also see those infrastructure investments coming into many places. And as we've stated before, we are a global business. in our EMC segment and a large part of our business from that segment does come from our undercarriage division, ITM. ITM is a business that has a good global footprint. It has a strong OEM and aftermarket channel for distribution. And then we have a market leading and almost unique, I'm pretty sure it's unique, I'm gonna use that word today, foundry in Spain, and I mean unique for our undercarriage type operations, where we have our own foundry in Spain that enables us to customize cast products that meet the specific needs of our customers. Again, just a strong business for us and a large part of where we get our EMC growth and performance from. David will spend some more time today talking about our financial results, but I do want to offer a couple thoughts. First, while our business operates in many different global geographies and produces three primary products, wheels, tires, and undercarriage, which end up touching various end markets, We again this quarter saw growth and improved financial performance in all of our business units, so good, solid, consistent growth. Second, we have and continue to operate with a disciplined mindset to control our costs in SG&A and within our overall operational structure, and you see that reflected in our results. Next, we have invested our CapEx wisely and strategically in recent years to continue driving our innovative products into the marketplace, and to increase capacity in our core businesses where the market needs it. You know, we've also made the necessary investments into safety, environmental and maintenance, and we will continue to ensure that happens in the future. My point with all that is, is while Titan has reduced our CapEx over the prior few years to ensure we protect our balance sheet, we have invested properly into our company and have not under invested in recent years. Lastly, we will continue to make the investments incur the expenses into expanding our production capabilities. and increasing our headcount in areas that meet demand. We are not simply going to sell our existing production capacity into the market, but rather take advantage of this existing opportunity to get more of our market leading products into the hands of our customers. So let me conclude by saying something that we all know. I mean, this is without a doubt one of our most dynamic business environments all of us in business have faced. TITAN, IN ADDITION TO OUR SOLID OPERATION RESULTS AGAIN THIS QUARTER, AND REALLY FOR ALL OF 2021 FOR THAT MATTER, TITAN HAS STRENGTHENED OUR FINANCIAL POSITION THIS YEAR BY REFINANCING OUR $400 MILLION BONDS. WE'VE ALSO THIS YEAR FURTHER IMPROVED OUR LIQUIDITY WITH OUR RECENTLY ANNOUNCED ABL EXTENSION AND UPSIZING. WE BELIEVE THAT TITAN IS IN A POSITION OF STRENGTH WITHIN OUR INDUSTRIES. WITH OUR GLOBAL PRODUCTION FOOTPRINT THAT IS SECOND TO NONE IN OUR BUSINESS, and our plants that are well suited geographically for our customers. We also have an expansive and innovative product portfolio with an arsenal of highly engineered tooling. These attributes enable us to deliver a strong value proposition to our customers and as a result for Titan to continue to benefit from the current trends that are in today's markets. With that being said, our order books are strong as we've seen really in years. There are continuing positive signs in our end markets, which puts Titan in a good position, as I stated earlier, to post-adjusted 2021 adjusted EBITDA of over $130 million. And on top of that, we see a path to further growth for next year. Again, Titan is in a good position at this time to capitalize on our reinvigorated strength. which makes me think about a comment this week that I heard from our audit committee chair, who happens to be a leader in the private equity space. The comment he made during our meeting this week was that Titan has reported strong results throughout 2021. We have fortified our balance sheet this year and has all this positive going on, yet our stock is trading at only around 6.5 times current year adjusted EBITDA. He's a pretty smart guy, by the way. So, With that, let's jump into the financials, and I'd like to turn the call over to David now.