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Titan International (TWI) to Divest Wheel Business in Australia
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Titan International, Inc. has entered into an agreement to divest its Australia-based wheel business to a local leading national tire, wheel and service provider — OTR Tyres. Per the agreement, the sale includes gross proceeds, cash to be repatriated of approximately A$23 million, and the assumption of all liabilities, including employee and lease obligations. The deal proceeds will be primarily utilized to reduce debt levels and pay advisory fees. It is expected to close on Mar 31, 2022.
In the past few years, Titan International has undertaken several actions, including leaving the tire servicing business and less profitable products, to improve financial performance in its Australian wheel business. The management stated that the divestment will have a nominal impact on the company’s sales of manufactured tires. TWI, the leading global manufacturer of off-highway wheels, tires, assemblies and undercarriage products, will continue to operate its undercarriage business in Australia. The company’s wheel and tire products are mainly focused on the agricultural markets, while the undercarriage business is a key player in the global construction and mining markets.
Recently, Titan International entered a three-year supply agreement with CNH Industrial N.V. (CNHI - Free Report) to supply farm wheels and tires manufactured at its plants across North America, South America and Europe to various CNH Industrial manufacturing locations. The deal is valued at around $400 million.
On Mar 2, Titan International reported adjusted earnings per share of 39 cents which beat the Zacks Consensus Estimate of 18 cents. The bottom-line figure also marked a turnaround from a loss per share of 10 cents reported in the prior-year quarter. Revenues of $488 million increased 49% year over year and surpassed the Zacks Consensus Estimate of $442 million.
The stellar performance was driven by higher volumes, stemming from increased demand across all segments, particularly agriculture. Pricing actions to offset escalating cost pressures and other inflationary impacts in the markets, including freight, contributed to bottom-line growth.
The Agricultural segment has been benefiting from strong demand across all geographic markets and pricing actions. Rising agricultural commodity prices and the consequent improvement in farmer income, as well as the need to replace old equipment, will continue to support the Agricultural segment’s performance.
Improvements in global economic conditions and recovery in the construction markets have been driving the Earthmoving/Construction segment’s performance. The company will gain from the ramp-up of infrastructure spending in the United States. The Consumer segment has been witnessing higher volumes related to general market improvements.
Considering these factors, Titan International expects to generate revenues of more than $2 billion in 2022. The company expects an adjusted EBITDA of $175 million for the year.
Price Performance
Titan International’s shares have surged 103.9% over the past six months compared with its industry’s rally of 19.5%.
Some other top-ranked stocks in the Industrial Products sector are AGCO Corporation (AGCO - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) , both carrying a Zacks Rank #2 (Buy), at present.
AGCO Corp's fourth-quarter 2021 adjusted EPS increased 100% year over year to $3.08, beating the Zacks Consensus Estimate of $1.72. AGCO pulled off a trailing four-quarter earnings surprise of 56.6%, on average. In the past six months, the company’s shares have gained 12.2%.
AGCO Corp has an estimated earnings growth rate of around 12.1% for 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 10.8%.
Applied Industrial Technologies reported adjusted EPS of $1.46 in second-quarter fiscal 2022 (ended Dec 31, 2021), up 49% year over year and beating the Zacks Consensus Estimate of $1.09. AIT pulled off a trailing four-quarter earnings surprise of 27.9%, on average.
Applied Industrial Technologies has an expected earnings growth rate of 24.3% for fiscal 2022. The Zacks Consensus Estimate for the fiscal year’s earnings has moved up 8.8% in the past 60 days. AIT’s shares have gained 8.6% in the past six months.
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Titan International (TWI) to Divest Wheel Business in Australia
Titan International, Inc. has entered into an agreement to divest its Australia-based wheel business to a local leading national tire, wheel and service provider — OTR Tyres. Per the agreement, the sale includes gross proceeds, cash to be repatriated of approximately A$23 million, and the assumption of all liabilities, including employee and lease obligations. The deal proceeds will be primarily utilized to reduce debt levels and pay advisory fees. It is expected to close on Mar 31, 2022.
In the past few years, Titan International has undertaken several actions, including leaving the tire servicing business and less profitable products, to improve financial performance in its Australian wheel business. The management stated that the divestment will have a nominal impact on the company’s sales of manufactured tires. TWI, the leading global manufacturer of off-highway wheels, tires, assemblies and undercarriage products, will continue to operate its undercarriage business in Australia. The company’s wheel and tire products are mainly focused on the agricultural markets, while the undercarriage business is a key player in the global construction and mining markets.
Recently, Titan International entered a three-year supply agreement with CNH Industrial N.V. (CNHI - Free Report) to supply farm wheels and tires manufactured at its plants across North America, South America and Europe to various CNH Industrial manufacturing locations. The deal is valued at around $400 million.
On Mar 2, Titan International reported adjusted earnings per share of 39 cents which beat the Zacks Consensus Estimate of 18 cents. The bottom-line figure also marked a turnaround from a loss per share of 10 cents reported in the prior-year quarter. Revenues of $488 million increased 49% year over year and surpassed the Zacks Consensus Estimate of $442 million.
The stellar performance was driven by higher volumes, stemming from increased demand across all segments, particularly agriculture. Pricing actions to offset escalating cost pressures and other inflationary impacts in the markets, including freight, contributed to bottom-line growth.
The Agricultural segment has been benefiting from strong demand across all geographic markets and pricing actions. Rising agricultural commodity prices and the consequent improvement in farmer income, as well as the need to replace old equipment, will continue to support the Agricultural segment’s performance.
Improvements in global economic conditions and recovery in the construction markets have been driving the Earthmoving/Construction segment’s performance. The company will gain from the ramp-up of infrastructure spending in the United States. The Consumer segment has been witnessing higher volumes related to general market improvements.
Considering these factors, Titan International expects to generate revenues of more than $2 billion in 2022. The company expects an adjusted EBITDA of $175 million for the year.
Price Performance
Titan International’s shares have surged 103.9% over the past six months compared with its industry’s rally of 19.5%.
Image Source: Zacks Investment Research
Zacks Rank & Other Stocks to Consider
Titan International currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked stocks in the Industrial Products sector are AGCO Corporation (AGCO - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) , both carrying a Zacks Rank #2 (Buy), at present.
AGCO Corp's fourth-quarter 2021 adjusted EPS increased 100% year over year to $3.08, beating the Zacks Consensus Estimate of $1.72. AGCO pulled off a trailing four-quarter earnings surprise of 56.6%, on average. In the past six months, the company’s shares have gained 12.2%.
AGCO Corp has an estimated earnings growth rate of around 12.1% for 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 10.8%.
Applied Industrial Technologies reported adjusted EPS of $1.46 in second-quarter fiscal 2022 (ended Dec 31, 2021), up 49% year over year and beating the Zacks Consensus Estimate of $1.09. AIT pulled off a trailing four-quarter earnings surprise of 27.9%, on average.
Applied Industrial Technologies has an expected earnings growth rate of 24.3% for fiscal 2022. The Zacks Consensus Estimate for the fiscal year’s earnings has moved up 8.8% in the past 60 days. AIT’s shares have gained 8.6% in the past six months.