Titan Europe Share Discussion Threads

[cottoner] 28/4/2012 11:19

Sorry -just noticed above info had previously been posted!

[cottoner] 28/4/2012 11:15

Announced this week - good news for Titan.

Caterpillar Reports Record Quarterly Profit;

Company Raises 2012 Profit Outlook

First-Quarter Sales and Revenues Increase 23 Percent, Profit Per Share Up 29 Percent



PEORIA, Ill. - Growth in mining, strong replacement demand for products in the United States and a continued focus on cost management helped Caterpillar Inc. (NYSE: CAT) deliver record quarterly profit per share of $2.37 in the first quarter of 2012. This represents an increase of 29 percent from first-quarter 2011 profit per share of $1.84. First-quarter 2012 sales and revenues of $15.981 billion were up 23 percent from $12.949 billion in the first quarter of 2011. Profit was a record $1.586 billion in the quarter, an increase of 29 percent from $1.225 billion in the first quarter of 2011.

"These outstanding results demonstrate our continued focus on execution and controlling costs as we increase production and expand capacity to meet increasing demand from our customers. We're seeing strong global demand for most mining products and significant growth in replacement demand for products in the United States, which more than offset slowing in China and Brazil," said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman. "During the quarter, I visited Caterpillar facilities, customers, suppliers and dealers around the world, and saw firsthand the progress we are making on safety, product quality, improved delivery times, factory efficiencies and customer service. These improvements have been impressive considering they've occurred while we have so much going on-we are building new facilities, expanding existing facilities, integrating acquisitions and continuing the introduction of new products," Oberhelman added.

"Our growth has also been good for jobs-increasing demand coupled with our acquisitions has led to a nearly 50-percent increase in our global workforce since the start of 2010, to a total of 155,710 people. Even without acquisitions, in the last year alone, our workforce in the United States has grown by more than 6,500 people while our workforce is up about 7,200 outside of the United States," Oberhelman said.

[kimboy2] 26/4/2012 15:32

Merchant Securities

Titan Europe (TSW.L/AIM/£115m)

Titan is the undercarriage and steel wheel producer for the heavy goods vehicle market have today reported a very solid set of full year numbers. I recently returned from an encouraging post-results analyst meeting, feeling the reasons to own this remained. As a reminder...

· Titan are one of the world leaders in the manufacturing and sale of high performance industrial steel wheels for 'off-road heavy good vehicles'. Basically, they make and sell the steel wheels (37% of sales) and undercarriages (63% of revenues) for the big players in the mining, agricultural and construction industry (e.g. Caterpillar, John Deere). It has facilities located in UK, Italy, France, Germany, Spain, Turkey, South Africa, USA, Brazil, Chile, Peru, Australia, Indonesia, Japan and China.

· FY no's: The company reported sales of £492.5m (+38.7%), trading profit of £33.0m (up £19m YoY), PBT £21.6m and net debt down £8.4m to £124.4m (despite a near £20m capital investment). Cash generated from operations was up 31.5% to £41.0m.

· Growth across the board: Titan said that they had seen growth in all regions and all markets. The investments being made in emerging markets by the likes of Caterpillar and John Deere continues to bode well. Plus, all of the top 10 customers for the company showed growth YoY.

· Key strategies: The key areas for strategic focus are 1) concentration on high growth products for the off-highway agricultural, mining and construction markets, 2) increase the bespoke engineering output, which, given the increased level of engineering also helps minimise the risk of competition from the Far East, 3) expanding capacity in the right areas, which aligns the company with the customer base, 4) matching the geographical needs of that customer base also, 5) driving for greater efficiencies in the established markets (notably, European markets).

· Margin potential: The company delivered 10.2% EBITDA margins and a 6.7% trading margin in 2011, but the company believe that a conservative target going forward is 15% EBITDA and 10% EBIT in the wheel division, and 13% and 8% in the undercarriage segment. This is very encouraging given the improvements in working capital as a % of sales, now 20% (vs. 24% 2010 and 34% in 2009).

· Debt Burden: The big negative in most non-holder's minds is the debt. Super growth will cause pressure on the debt pile due to working capital, the company is aware of this and has already acted. The management have a close relationship with the banks, helping them understand the day-to-day demands, and agreed to re-organise the current banking facility, so that repayments on the €110m term loan go from €22m p.a. to €11 p.a. for 2011, 2012 and 2013. The margin payable is already down to 325bps, given the ratchet. This could drop to 275bps in H2 2012.

· But what has changed?: Bridgestone came out yesterday and said that Chinese tire demand had begun to slow, alongside the decelerating economy. According to the VP 'the Chinese market is in an adjustment phase, growth in tire sales for trucks and buses, or half of the country's demand, may slow to near the rate of gross domestic product expansion at 7.5 to 8 percent annually from last year's 11 percent'. The hope is that A slowdown in Chinese sales may be offset by faster expansion in other emerging markets including India and Southeast Asian nations, with Bridgestone forecasting Indian demand for replacement tires for trucks and buses will grow 39 percent this year from last year. Tire use in Thailand is expected to grow 24 percent for trucks and buses.

Titan is trading on

[pedr01] 26/4/2012 14:50

Do you have any info on management timescales for achieving those targets Kimboy ?

[kimboy2] 26/4/2012 13:41

I make it about 32% lfl sales. TWI is mainly agricultural and a different product/geography mix, but again indicative.

TSW are predicting 5%. However they are shutting their 'idler' plant in Italy which accounted for $18m last year, so that may account for 3.5%.

I notice that the TSI gross margin was 22% which is a long way north of the 6% achieved last year by TSW. The TSW target is I believe about 10-15%.

[greedy rooster] 26/4/2012 12:03

TWI Results

First quarter highlights:



•Sales for first quarter 2012 were $463.1 million up 65 percent, compared to $280.8 million in the first quarter of 2011.
•Gross profit increased 66 percent for first quarter 2012 to $93.4 million, or 20.2 percent of net sales, compared to $56.3 million in 2011, or 20.0 percent of net sales. Gross profit excluding the Latin American business was $84.9 million or 22.8 percent of net sales for the first quarter 2012.
•First quarter income from operations was $58.7 million up 118 percent, compared to $26.9 million last year.
•Adjusted net income for the first quarter was $40.5 million, compared to $18.7 million in the first quarter of last year (see table and appendix below).


Statement of Chief Executive Officer:

Chairman and CEO, Maurice Taylor states, "The first quarter 2012 was another record quarter in sales, net profit, EBITDA, etc. The order book is filled for the year and we must keep increasing our output. Farming, construction and earthmoving and mining are all very strong and we expect 2012 to be another year of growth. The dynamics in agriculture are changing around the world and are positively impacting the demand for machinery in the industry. Prices for metals, oil and gas prices in the Earthmoving and Mining markets are expected to remain at attractive levels to support strong demand."

"In this past quarter there were some bloggers who were concerned over inventory and the auto supply industry. Titan International is not in the auto supply business, but we are in the OTR tire and wheel business. Titan builds to order. We do not estimate or forecast future business. If the orders were cancelled, we would have extra raw materials, but most raw materials would be processed in 30 days."

Taylor adds, "Titan's mining service business is a hot market. We have just opened a facility in the oil sands in Canada and already are receiving the demand to double the facility. Our partner in the oils sands is Saskatoon Wholesale Tire and they have never seen anything like this. In order to meet demand, all of Titan's factories will be hiring and expanding operations. Titan has also ventured in to some new areas with the Union City, Tennessee factory. This large facility used to produce 48,000 passenger car tires per day. Since Titan doesn't produce auto or truck tires, we will be contracting to various firms where we will supply the equipment and they will operate the business of mixing, calendaring and fabricating. Titan will still operate warehousing, equipment repair and new material inventory received. There is no question, with 2.2 million square feet under roof, we have plenty of room to expand or lease the space at this facility. To better visualize the size of this building, translate 2.2 million square feet into approximately 53 acres under roof."

"As we enter a new year, Steve Briggs took over as president of our North American tire plants. We also have David Salen, president of the wheel group; Paul Reitz, CFO Titan International; and Mike Troyanovich, assistant general counsel. The above team will be running this company's operations in the future. The senior team (myself included) will be focusing on the new opportunities we believe will grow this business. As I've outlined before, our vision is to be between a run rate of $3 to $4 billion in revenue by the end of 2013," concluded Taylor.



Financial overview:

Sales: Titan recorded sales of $463.1 million for the first quarter of 2012, compared to first quarter 2011 sales of $280.8 million. The higher sales levels were the result of the April 2011 acquisition of the Goodyear Latin American farm tire business which recorded sales of $90.3 million for the first quarter 2012 and continued strong demand in the agriculture and earthmoving/construction segment combined with price/mix improvements.

Gross profit: For the first quarter of 2012, gross profit was $93.4 million or 20.2 percent of net sales, compared to $56.3 million or 20.0 percent of net sales for the first quarter of 2011. Gross profit excluding the Latin American business was $84.9 million or 22.8 percent of net sales for the first quarter 2012. The increase in gross margin was due to the increase in sales as well as gains from improved plant utilizations.

Selling, general and administrative expenses: SG&A expenses for the first quarter of 2012 were $30.8 million or 6.7 percent of net sales, compared to $25.3 million or 9.0 percent of net sales in 2011. The higher SG&A expenses were primarily the result of higher selling and marketing expenses of approximately $3 million related to increased sales levels and increased information technology expenses, and approximately $2 million of expenses at the Company's Latin American facilities. Net of the CEO compensation award, SG&A was $22.7 million in the first quarter 2012 or 4.9 percent of net sales compared to $16.5 million or 5.9 percent of net sales in 2011.

Income from operations: For the first quarter of 2012, income from operations was $58.7 million, or 12.7 percent of net sales, compared to $26.9 million, or 9.6 percent of net sales, in 2011.

Interest expense: Interest expense was $6.3 million for the first quarter of 2012, compared to $6.3 million in 2011.

Noncash convertible debt conversion charge: As a result of the exchange agreement in the first quarter 2011 to convert approximately $59.6 million of 5.625 percent convertible notes into approximately 6.6 million shares of the Company's common stock, the Company recognized a noncash charge of $16.1 million in accordance with accounting standards. No conversion occurred in the three months ended March 31, 2012.

Adjusted Net income: Adjusted net income for the first quarter ended March 31, 2012 was $40.5 million, compared to $18.7 million in 2011 (see Appendix below).

Earnings per share: For the first quarter of 2012, basic and diluted earnings per share were $.84 and $.68 respectively. This compared to the same period last year, basic and diluted loss per share was $(.07) and $(.07) respectively. On an adjusted basis (see Appendix below), basic and fully diluted earnings per share were $.96 and $.78 respectively for the first quarter 2012 and $.46 and $.37 for 2011.

Capital expenditures: Titan's capital expenditures were $8.2 million for the first quarter of 2012 and $3.5 million for the first quarter 2011.

Debt balance: Total long term debt balance was $317.9 million at March 31, 2012 in agreement to the balance at December 31, 2011. Short-term debt balance was zero at March 31, 2012, and $11.7 million at December 31, 2011.

Equity balance: The Company's equity was $443.7 million at March 31, 2012, compared to $396.9 at December 31, 2011.





First Quarter Conference Call:

The Titan International Inc. earnings conference call for the first quarter that ended March 31, 2012, will be held at 9 a.m. Eastern Time on Thursday, April 26, 2012. To participate in the conference call, dial [phone] five minutes prior to the scheduled time. International callers dial [phone]. A replay of the call will be available until May 10, 2012. To access the replay, dial [phone] and enter access code 244424. International callers dial [phone].

[mr. t] 25/4/2012 17:26

Thanks for picking up that Kimboy. Three additional points from their statement that stood out for me:

1. Cat's order book is at a record high (order backlog is $30.7bn cf. $29.8bn at the end of 2010). Sounds promising for TSW.

2. Revenue has increased both by higher sales (primarily) but also higher prices. The increase in realised price has more than offset increases in production costs. Sounds promising for TSW.

3. Their inventories (mainly finished goods) have increased by a pretty big $2bn - the main reason behind Cat's rubbish cash flow. This could lead to reduced purchasing by them in the coming months. Sounds less promising for TSW.

All in all, I see these results as a good sign that Titan Europe will still be performing nicely.

T

[kimboy2] 25/4/2012 13:50

Cat Q1/12 out;



They say that China and Brazil are down but compensated for by increase in Nort America and are holding their revenue guidance for the year.

If you strip out the acquisition last year then revenues are up 14.5% and operating profit by 23.6%.

There is not a direct read through as slightly different products and market mix but strongly indicative.

[greedy rooster] 24/4/2012 17:43

Titan International Conf call due Thursday re results.

[smicker] 23/4/2012 13:36

David,
Did they make any comment on the stakes held by Titan Inc and Mefro Wheels?

[davidosh] 23/4/2012 13:22

Kimboy2...It is easy to think nobody is interested on TMF but most are extremely shy about commenting. I was once told by a TMF representative that for every posting there are about 2000 lurkers many of whom never even register to be able to post on the boards ! You will be amazed how many do take an interest and note the information posted though. Even the market makers check Paulypilots Pub allegedly !

[kimboy2] 23/4/2012 11:22

There didn't seem much interest in the other place but I will add something later.

I thought the presentation was excellent particularly the breakdown of customers and markets.

But then I would say that wouldn't I.

[davidosh] 23/4/2012 10:50

Naturally the FD said he could not make direct comment on the brokers forecasts and certainly not make any forecasts. I think we commented that it is better to be light in the forecasting to enable upgrades as the year progresses rather than up with the customers forecasts that may disappoint in the current climate !

Kimboy2...You should post those links and comment on the TMF thread too

[kimboy2] 23/4/2012 10:31

That sounds promising.

On the GKN Wheels which is allegedly for sale;



The price is apparently £130m.



Turnover said to be £190m.

If we assumed it was to be solde debt free then that would put an EV valuation of £337 on TSW.

If you take out £124m of debt you get £213m or £2.43/TSW share.

I certainly don't think that TSW wants to be buying GKN Wheels and most certainly not with paper at the present valuation.


Did they say why the brokers were forecasting a 5% turnover increase next year but their customers a 10-20% increase ?

[davidosh] 23/4/2012 09:37

There is a write up over on TMF that was posted last week...



I can also confirm that an institutional investor attended and it was interesting to compare notes with their view on the presentation. Incidentally there was a superb results presentation document entitled 'We Move the World' which I asked if the slides could be put on the website for those who could not make the meeting. I was particularly impressed by the FD who seems a very safe pair of hands and had a very good understanding of the business and the whole sector for comparisons that were requested.

[kimboy2] 23/4/2012 09:12

Has there been any feedback from the shareholders meeting ?

[greedy rooster] 16/4/2012 15:27

Looks like the AXA stock has been mopped up and we're ready to push towards 200p.

If this stocks stays on this rating, it will be interesting to see what Titan Int or Mefro try and engineer.

[nurdin] 16/4/2012 12:38

Surprised we are not past 140p yet...should come soon though imo

[venture traveller] 16/4/2012 12:03

Looking like a text book cup with handle.

[mr. t] 15/4/2012 16:59

Here's a four minute interview with Mike Akers, Titan Europe's CEO, from 11 April:

[kimboy2] 12/4/2012 14:27

The only announcement I can find from Wheels is;

[bubbleandleek] 12/4/2012 11:10

the ramp up in px yesterday was to do with the wheels india announcement and the fact the stock is trading at an all time high. TSW owns 35% of wheels india (WHL IN)

[darcon] 11/4/2012 10:17

Davidosh,

I would like to but I am not based in UK

Darcon

[eddie catflap] 11/4/2012 08:59

davidosh,

wish I could but it's simply too far for me. I feel I've missed out seeing how
productive the Lo-q ones have been.

As usual, I will console myself with post-event summaries.

I appreciate your proactive involvement.

Thanks.