Titan International Inc. posted net income of $2.1 million on net sales of $539 million for the first quarter ended March 31, 2014. That compares to income of more than $19.4 million on sales of $578.4 million for the same period in fiscal 2013.
Operating income decreased 99.4%, from nearly $47.9 million in 1Q 2013 to $264,000 for 1Q 2014. The company's net income-to-sales ratio was less than 1%.
"The first quarter performance fell short of our expectations," says Titan Chairman and CEO Morry Taylor. "There are a lot of reasons, but the simple fact is the buck stops with me.
"Winter's blast affected every factory in the United States with fuels costs up. The aftermarket and OEM farm business declined and OE construction business was also below forecast. The mining business was nonexistent in the first quarter.
"January and February business was weak," says Taylor. "March improved but could not offset the severe declines in the first two months of 2014."
Going forward, Taylor says agriculture and construction seem to be improving slightly, but a recovery in mining "looks like a long haul."
"We need to reduce our expenses and work harder during the rest of the year. Titan will be adjusting employment levels both in salary and hourly workforce in second quarter."
Taylor is optimistic about the future, particularly in Russia. "Our new tires and wheels are taking hold, and the LSW tires and wheels are performing great out in the market. We have begun an aggressive campaign for the LSW concept, which we expect to improve Titan's agriculture and construction wheels and tires business.
"Titan ITM, which makes tracks for construction and certain agricultural machines, is growing in South America. Europe remains weak and we do not expect much improvement for 2014. The Russian tire operation, in which Titan holds a 30% interest, is moving ahead. The political circumstances in Russia remain a challenge but we are proceeding on with our plan."
Taylor adds that new president Paul Reitz has visited all of Titan's operations and will be initiating his plan to increase Titan's operating margin and improve quality and delivery. John Hrudicka, Titan's new CFO, is partnering with Reitz to drive profit optimization throughout the company.
