Global situation giving Titan International its ‘best’ future

Taking stock of recent business at Titan International, Inc. (Titan or TWI), chairman of the board Morry Taylor opined that the company’s future is “the best it’s ever been.” He credits this happy situation to a number of global trends.

In regards to the cost of food in the USA, Taylor notes that “the price of corn, soybeans, wheat and cotton are all near historic highs” with no surplus existing. This, he believes, should “lead to farmers spending on equipment for quite a while.”

Major equipment manufacturers are working at capacity to maximise their output, and Taylor thus anticipates that Titan’s business should “run hot for a while” as there is “no significant equipment inventory on dealer lots.” He expects any change to the situation will be “a long way off.” Taylor adds that the aftermarket for used farm equipment is also experiencing a similar situation, with dealer lots remaining “bone dry” with little to no used equipment. “This further helps Titan because some farmers cannot get new equipment, so they opt to repair their older equipment. That means new tyres, and if they want new larger, wider tyres that means new wheels and tyres.”

Turning his attention to the shortage of food in some parts of the world, Taylor notes that the efforts made by many to address this will stave off a slowdown in the global agricultural business. “Even politicians understand that the government doesn’t grow food, so farmers will be very busy. That is great for TWI given our strong position.”

Managing raw material costs with pricing

Despite the threat of hunger and high food prices driving strong turnover at Titan, Taylor identifies several points of concern. Steel is the most critical raw material for Titan’s wheel business, and steel prices have more than doubled over the past 18 months and have been volatile throughout this time. The chairman shares that Titan has nonetheless managed costs by increasing its prices.

Tyres contain a range of raw materials, including carbon black, natural rubber and synthetic rubber. Taylor says the presence of multiple materials gives Titan “more options, including substitutes in a pinch, if needed.” He adds that Titan’s products don’t contain microchips and therefore aren’t affected by the shortage of these. “I believe TWI is sitting solid and is managing well in this volatile and tricky environment.”

A new & better prosperity

“I have never seen business like this and the opportunity for TWI continues to be great,” states Taylor. He agrees with Titan’s forecast of EBITDA exceeding US$200 million for the 2022 financial year.

“TWI’s future is the best it’s ever been, in my opinion, and I want to thank all our shareholders, many of whom have been shareholders for a long time,” he continues. “I am a very proud, old man who has been a part of this company for a lot of years. Paul Reitz and his team are going to bring TWI to new and better prosperity. I could not be prouder of the entire Titan Team.”