Titan International(TWI) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company experienced a revenue decrease of 27%, resulting in net sales of $104 million, down from the previous year [10][37] - Adjusted EBITDA was over $13 million, exceeding levels from the first quarter of 2020 and year-over-year from the second quarter of 2019 [10][11] - Gross profit margins increased to 10.4% from 9.8% last year, despite a gross profit decline of $8 million [12][46] - Free cash flow for the quarter was approximately $7 million, with cash levels increasing by nearly $20 million from the previous quarter [11][68] Business Line Data and Key Metrics Changes - Agricultural segment net sales were down $17 million or 10%, with a volume decline of 8.4% and a positive pricing and mix impact of 4.9% [39][47] - Earthmoving and construction segment sales decreased by 39% or $72 million, with a volume drop of 37.5% [51][55] - Consumer segment net sales fell by 36%, with a volume decrease of 25.7% [57] Market Data and Key Metrics Changes - North American wheel sales were down 27%, primarily due to lower OEM volumes [41] - Latin American sales decreased by 37%, with half of the decline attributed to lower currency translation effects [42] - European agricultural sales were down 18%, while Russian agricultural sales increased by 13% [48] Company Strategy and Development Direction - The company is focused on managing costs and maintaining flexibility in operations to navigate the volatile COVID-19 environment [24][25] - There is an emphasis on selling non-core assets and improving working capital management to position for future growth [25][84] - The company anticipates growth in the infrastructure sector post-election, regardless of the election outcome [31] Management's Comments on Operating Environment and Future Outlook - The management expressed uncertainty regarding the second half of the year due to limited visibility from customers and ongoing pandemic impacts [14][23] - There are expectations of pent-up demand in the agricultural sector, which may eventually be released into the marketplace [18] - The management remains committed to navigating the challenges posed by the pandemic while preparing for future recovery [84] Other Important Information - The company completed the sale of its remaining shares in Wheels India, generating approximately $50 million in net proceeds over nine months [29][65] - SG&A expenses were reduced by 20% year-over-year, reflecting efforts to control costs [60][62] - The company recorded a foreign exchange gain of almost $9 million in the second quarter [63] Q&A Session Summary Question: Outlook for the back half of the year - Management indicated that visibility is limited and that typical seasonality is expected, but the order flow is changing rapidly [90][92] Question: Cost structure and raw materials - Raw material prices remain low, and the overall cost structure is stable, with temporary costs expected to return as demand increases [104][108] Question: Structural changes and consolidation - Ongoing discussions regarding structural changes are taking place, with management confident in identifying opportunities for improvement [115][118]