Titan International (NYSE: TWI) reported Q4 EPS of ($0.28), $0.06 worse than the analyst estimate of ($0.22). Revenue for the quarter came in at $326.9 million versus the consensus estimate of $300.85 million.

"The new year is already looking like a completely different story compared to 2020," stated Paul Reitz, President and Chief Executive Officer. "The confidence of U.S. farmers is at record levels with the tailwinds from strong commodity prices and healthy government payments received last year. Dealers are hungry for inventory as channels have been depleted to the lowest levels seen in the past 20 years. As seen in our fourth quarter results, the momentum is building and 2021 is off and running in a very positive direction. Last year is thankfully over and amidst the challenges of dealing with the COVID-19 pandemic, the Titan team remained focused on the imperative to improve our financial position. The success of our efforts has been evidenced as our 2023 bonds have been trading around par in recent months, allowing us an opportunity to explore the potential of a refinancing prior to their maturity.

"We finished the year with strong momentum as the results of our fourth quarter reflect the continued improvement in our financial position. We finished the year with a significant turnaround during Q4, as demand from many of our customers, particularly in the agriculture markets, continued to strengthen as the quarter progressed. Our continued cost reduction and cash preservation measures positioned us well heading into 2021 as evidenced by our strengthening cash position, net debt and margins. With cash at $117 million and net debt at $347 million, we have now reached levels not achieved since the end of 2017. The adjusted gross margin percentage of 11.8% achieved during Q4 was our strongest margin achieved over the previous ten quarters and reflects an incremental of nearly 33% over Q3. Adjusted EBITDA of $17.3 million was the highest since the first quarter of 2019. We have also delivered our sixth consecutive quarter with positive operating and free cash flow.

"The positive trends that we saw late in 2020 have only increased during the first few months of 2021. We expect this favorable trend in South America to continue along with North America demand accelerating through 2021 due to strong farmer income and commodity prices combined with low levels of inventory in many channels. Along with market improvements, we are seeing an improved pricing environment. In the first quarter of 2021, we have increased prices to offset rising raw material costs. We will continue to increase prices to offset higher production costs, and as the year progresses, we expect to improve our pricing leverage to manage our gross margins. With the business trending positively in many ways, we are looking toward a noticeable EBITDA improvement in 2021. The market has shifted positively so quickly in a relatively short time period making it difficult to provide a reasonable full-year 2021 forecast for sales and EBITDA. We do expect our 2021 capital expenditures to be in the range from $35 million to $40 million with continued flexibility based upon cash flow. With continued working capital focus and similar interest levels as 2020, we expect the full year to end cash flow positive. We also expect that we can improve our payment terms with customers to offset the impact on working capital from the growth in sales.

"The recent surge in agricultural demand, coming off the tail of the global pandemic, has created a high degree of volatility for our customer base and for Titan. We are rapidly hiring and training people to meet this growing demand, while in the midst of restrictions and challenges in the marketplace. Titan has a long history of being flexible to adjust to market volatility, and we have created robust production capabilities to meet the needs of our customers. Flexibility and scalability is a strength at Titan, and we expect to earn a good return on providing this to customers. The breadth of our wheel tooling at our Quincy, Illinois operation is one shining example of Titan's capabilities. We are currently in discussions with major OEM's on long-term supply agreements that would be a win-win for both sides in today's ever changing world, and time is of the essence for everyone.

"Our entire global Titan team has worked tirelessly in order to continue to operate throughout the pandemic. Due to their efforts and diligence, we feel that we are now in position to be able to meet the growing needs of our customers. Again, I want to thank our Titan team for their efforts in safely navigating plant operations through this extraordinary time over this past year and protecting our employees throughout. Our 2020 performance positively reflects the strength and resiliency of our people and our products."

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