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Executives

Maurice Taylor – Chairman and Chief Executive Officer

Analysts

C. Schon Williams – BB&T Capital Markets

Alex Blanton – Clear Harbor Asset Management, LLC

Ryan Connors – Janney Capital Markets

Titan International Inc. (TWI) 2013 Guidance Call December 6, 2012 4:30 PM ET

Operator

Ladies and gentlemen, welcome to the Titan International Incorporated CEO 2012 Goals Conference Call. During the session, all lines will be muted until the question-and-answer portion of the call. (Operator Instructions)

Any statements made in the course of this conference call that state the Company’s or management’s intentions, hopes, believes, expectations or predictions for the future are considered forward-looking statements. Please note that the Safe Harbor statements contained in the Company’s latest Form 10-K and Form 10-Q filed with the Securities and Exchange Commission extend to this conference call and any forward-looking statements involve risks and uncertainties as detailed therein.

At this time, I would like to introduce Titan’s Chairman and CEO, Maurice Taylor. Please go ahead, sir.

Maurice Taylor

Yeah, thank you. Good afternoon, everyone. You wouldn’t be on a call like this if you don’t have already the press release. Just a moment that the main thing I take most of this is that of course we do not look at what our goals are until we have presented the whole management team presented to our Board what they expect the various operating groups to how to perform, and also our sales people and everything else, so this is how I work, that goes into this every time before. And at that point and I get myself involved and we kind of like hash it out whether we think and look at all what we come up with and what I have personally absorbed through it.

So with that, we’re going to turn it over to your questions. Go ahead first.

Question-and-Answer Session

Operator

All right, thank you. (Operator Instructions) And our first question comes from Schon Williams. Please go ahead.

C. Schon Williams – BB&T Capital Markets

Hi, good afternoon, Morry.

Maurice Taylor

Good afternoon, Schon. How are you?

C. Schon Williams – BB&T Capital Markets

Very well, thank you. I just wanted to maybe dive into the guidance a little bit. Is there anything you can give us in terms of what gets us to the low end versus what gets us to the high end, are you counting on additional acquisitions or what is going to drive maybe the top end of that guidance number versus…

Maurice Taylor

All right. The first thing is, there is no future acquisitions or divestitures, or anything involved in these numbers, all right. So I think I’ve answered part of your question. The unknown is the situation of what the world so to speak as I tried to say in the guidance I sent out. The Ag is going to maintain, so I don’t think there is any question in North and South America that Ag is going to be equal to if not that have been last year.

We have added quite a bit of a capacity for what we can do and we’re looking very favorably for what that goes. We’ve taken a pretty negative situation in reference to Europe. Europe, we believe the Ag will be out there, but we don’t know at this point, how much the governments are going to be funding, like they’ve been funding for every year for the last 20 years. We’re not that rosy on what goes on in Europe. When you look at other parts of the world, we’ve been making quite a few inroads and it’s also the situation of what we believe we have the opportunity and our new mining service ventures.

Since we have done the acquisition of Titan Europe, we have picked up, now we have locations, physical locations in not only Chile, Peru, we have on then more or so in Australia. I’ll be going to my first visit down there wonderful continent. In the latter part of January, we have numerous locations there now. We also have a new location in South Africa.

Now, what that means is that you have people on the ground there even though they might have been doing exactly what we wish to do in the Titan Mining Service. But what it does mean is that it’s so much easier that you got accounting – that you have the sales. And we take Europe, even though it was on other things, there is no problem with what we wish to do. In fact today as I’m talking to you, there are people from my names that are over there. So we’re really say that for what we can build that.

The other situation is that it’s a known fact that the shortage is that we have seen this past year and back in 2007 are really not a case of a manufacturing shortage in the OTR tires. It’s a supply situation, because your major minds all turnaround and have weight in, all of them have at least pretty close to a year supply, because the haulage tires are if they don’t have them, it won’t be own their stuff.

So they make sure, they maintain a huge inventory. And as you think about it, if they were only doing a six month inventory and then someone got a nervous nail and heard rumors, they just telling, hey put him another six months and it’s one of my Board member would say, that’s chunk change, that chunk change could be collectively $500 million of tires, but when you decide that’s roll it in or purchasing department store, it creates adding to an industry that is not ready for it. And we don’t know what is going to happen on that side reference, the situation of all those physical where we work and that everybody is doing in Washington that work through airways, I don’t think it means anything, but that’s just my personal believe.

If politicians trying to be very public and get everybody, because we raised a whole lot of everybody’s taxes always with that way, not just too much folks and also you play that game. So when you’re going to look at it, you’ve got to have a range, yes. If things just work, we will let’s just say just started on pretty good and nothing edge for south. We should be able to go forward with the higher range. But I’m also taking the notion that just in case they screw up and everybody panics, I went through the 2007, 2008 period into 2009 and I can see how, I am only one person, everybody runs in panic and rather just sit back. So we cannot run through at all. So that’s how that that number came about.

C. Schon Williams – BB&T Capital Markets

Okay. Thank you for your color, Morry. And then maybe just to the rest of the topic that you mentioned about the acquisitions. Could you talk about maybe what you’re targeting here towards the end of the year and any update on Goodyear, Europe?

Maurice Taylor

Well, I think Goodyear, Europe made an announcement then they just had enough with the situation in France. You can’t come and you could rather say, everything over there is like funny land, so I believe they announced that they’re pulling the plug. So they’re just going to start it right now. So we’ll just sit back and see how that place out for our friends at Goodyear, all right.

We move them on and we’ve been active as I said a long time ago, there is more than one opportunity out there, and we come along quite away. So probably hopefully in the next 30 days that we have it, but we can announce it. If we don’t have with them and there will be a shortly after. And we have a plan and our plan has more than one row that we can take to get to what we want to do. And so it’s not just one avenue, there is quite a few. So we’re taking them all and we just trying to do.

C. Schon Williams – BB&T Capital Markets

But these are the opportunities that they involve in a production capacity or would they be more on the distribution side, the opportunities, the JVs with dealers?

Maurice Taylor

No, they’re going to be the, what I talk about when I put in there, are going to be adding to our core product and then that going to be anything that we do with joint ventures and everything else that’s with dealers. I mean my god if I calls you up and talks; I did a couple of million dollars deal with the dealer. That’s all I get that and we are at, you look at the numbers and look at where we’re going, I’m not going to get to where we want to go, that was just all being real sweetest it comes down, but that’s not in, okay.

And when I tell everybody who like to take mining or what that does for us that not only that just falls right on, I’m not looking for the income that we’re making from the service of the mining side, I’m looking for what it does for selling our product. And that’s you tied it two together and as long as you perform you’re kind of going, you’re not going to be hammered on pricing or something. So it’s just the big other one, its manufacturing.

C. Schon Williams – BB&T Capital Markets

All right, perfect. Thank you for the update, Morry, I’ll get back in line.

Maurice Taylor

No problem.

Operator

Thank you. And now from the line of Christopher [Egan], please go ahead.

Unidentified Analyst

Hey, it’s (inaudible). I was wondering the guidance what’s your assumption for tight Europe in that guidance?

Maurice Taylor

I can’t breakout individual little parts, but it’s – and the guidance that we looked at it got that Titan Europe was saved substantially. So there is a lot of things as I said on the previous call and if Europe for some reason is not going to be as bad off and was I think then there will be substantial uptick from that side, okay. We believe that they probably have the Rockies road of any of the facilities and of course they got facilities done that over. But it’s also a chance for them to rise up and shine, so that’s what we sit there. And are you guys (inaudible)?

Unidentified Analyst

If fact (inaudible) in New York.

Maurice Taylor

Okay.

Unidentified Analyst

Now let me ask you the other question, on the construction comments you had, you got in the (inaudible) category are now just trying to see some size of the housing market improving. How can you recall out maybe North America is being an area, where we might see some strength in construction?

Maurice Taylor

Well, because the first thing is that I can tell you and this is just not my friends at Caterpillar. This is all the other construction people. Everybody got caught, I don’t even know why Caterpillar has economists. They got all these economists and they never get it right, it hit on them between the eyes, so they went the other way. So but the problem I see is that I think most of them send out their schedules and they kind of like slaughtered the back in like even in the middle of the summer, those sectors were all pointed north. And then all of a sudden, they kind of projected in a mount then all of a sudden they just jumped over the side, panics heavier.

You might be correct, may be home building will move up and may be they are just starting to get the shower ready, who knows what now is coming off. But I am not, I don’t have that much pace, but if we know our taxes are all going to go up, now what are they going to do with the money just spent more than share, there will be a lot more stuff to go but I don’t know what they are going to do.

And so I do know what the other people and what the other order deck and how that looks forecasted to us on the construction side is a starting pickup in the second quarter. And what I am going to love to give the guidance, I am not counting on that. I am counting now at just PMA or what moving all the way through 2013. And when you, that’s why there is a differential and I didn’t just give a number, I gave a range. So I got a lot of negativity and the consistency of the business that we got.

Unidentified Analyst

Okay, all right. Thanks a lot. I appreciate it, Morry, happy holiday.

Maurice Taylor

Thanks to you and your family.

Operator

Thank you, and now from line of Alex Blanton. Please go ahead.

Alex Blanton – Clear Harbor Asset Management, LLC

Hi, Maurice.

Maurice Taylor

Hello.

Alex Blanton – Clear Harbor Asset Management, LLC

I am from Clear Harbor Asset Management. Question on the margins guidance that you gave for 2013, that’s the EBITDA margin…

Maurice Taylor

Yeah.

Alex Blanton – Clear Harbor Asset Management, LLC

Which, it comes out in a range of 12.6% to 16.7% depending on how you match them up, sales with EBITDA ranges? So do you expect that, or how will that change I should put it this way if it will change between now and 2015? What kind of a EBITDA range can we look for on the $4 billion to $4.5 billion that you are looking for in 2015?

Maurice Taylor

Come on, I know and I am here. Titan Europe was a public, as you can go back and look at the six members over the first six months of this past year Titan Europe, okay. And if you look at Titan Europe numbers, percentages, and you look at our numbers and percentages, you can see that we run a higher percent.

Alex Blanton – Clear Harbor Asset Management, LLC

Right.

Maurice Taylor

Now on everything, okay, if it’s like same product, okay.

Alex Blanton – Clear Harbor Asset Management, LLC

Yeah.

Maurice Taylor

Now, there’s a 10,000 different reasons for that, okay. But the thing is I believe we’re going to increase their percentages.

Alex Blanton – Clear Harbor Asset Management, LLC

Okay.

Maurice Taylor

On the same sales we would increase, okay.

Alex Blanton – Clear Harbor Asset Management, LLC

Okay.

Maurice Taylor

We’re not going to have the corporate staff. We’re not going to have all the other, because we don’t need that, all right.

Alex Blanton – Clear Harbor Asset Management, LLC

Okay.

Maurice Taylor

The same thing is we should be able to leverage most of those customers on the wheel side, we’re much bigger than they are, and there is some others that will help. We have the tendency to try to create more new products, okay. They did an excellent job and they got some good ideas and they were trying, they went through a couple of times. So we believe we can leverage and increase that. You increase that isn’t almost all the same sales and increase your EBITDA just because of that. But they are also where you get into their track situation that we believe there are some great opportunities to bring along volume in that sense of the business, especially in the aftermarket, which they really did not play to.

Now in order to do that and get into that aftermarket, you’re going to have to carry a lot different inventory levels, then you would the previous, and because they had a high debt and they went through a tough, tough time in the last turndown and I’ll be the first one to say, because I said it to some bankers over there that they probably had one of the best working relations and the best help from banks I’ve ever seen. I was more used to the bankers who just basically tell you, I don’t give that in. I want my money back now, okay.

And so I can see a lot of items of the possibility of real growth on that point. But it’s takes time. It’s not something ongoing to just flash out and as I said in my remarks before you get on the question period, how I do this or taken this is Titan Europe comes in with their budget, by tell your boys come in with their budget, so do the real boys. And what happens is they bring their budget working with our Chief Financial Officer, working with the salespeople…

Alex Blanton – Clear Harbor Asset Management, LLC

Yeah.

Maurice Taylor

And they all encouraged to take the same brand – bring it in. Now right before it gets to the Board, I review it for any wild off things, I don’t change nothing, I change nothing. They present their budget to my Board. I got a bad, a real Board, okay. It’s now said politicians on my Board per se are professors or other people. These guys know all these business. They’ve been through every war with me. And they just sit, and they go through and these guys defend it. And then what I do is back up and let the Board do the budget. Then I go through it myself, my numbers that I come out with are not the budget numbers that these people are working to, okay.

So that’s why I call it my goal. My goal is this, and when I talk to many people, it’s real simple. I talk to them, they know what my goals are now, and as I’ve explained it exactly how I explain it to you. The only difference is, I tell them okay. You hit this number and here is why. You hit that number, and you are going to have a good boss, I believe this number here. I mean if the sales are there and this is there, you best figure out and watch.

Alex Blanton – Clear Harbor Asset Management, LLC

Well, I am trying to get what your goal is on earnings, because I’m just trying to find out whether you have a sales…

Maurice Taylor

If I heard in-between, the EBITDA is going to be between that range and the EBITDA is going to be on the low side if sales are on the low side. It’s going to go up, as they go up.

Alex Blanton – Clear Harbor Asset Management, LLC

Yeah, but what I’m saying is this, your product mix is going to change, you are going to make acquisitions…

Maurice Taylor

No, no, acquisitions don’t have anything to do with this.

Alex Blanton – Clear Harbor Asset Management, LLC

Well, it will if they change the product mix in the different margin – I’m trying to get at what your earning to be…

Maurice Taylor

Okay.

Alex Blanton – Clear Harbor Asset Management, LLC

on the $4 billion to $4.5 billion and whether or not that’s a 130% increase from your sales forecast for this year. And EPS also going to be up 130% or more that that?

Maurice Taylor

Yeah, yeah. First thing is let’s just back up, okay.

Alex Blanton – Clear Harbor Asset Management, LLC

Okay.

Maurice Taylor

You back up and I went through and I’ve had a loss value going to do this, what you’re going to do? All right, if you turnaround and you say, oh, that’s a 140% that’s a big or my question to you is this. Because in 2010, which is two years ago, we were 8.66. And if I hit over my goal for this year, which is 2.40% to 2.27%.

Alex Blanton – Clear Harbor Asset Management, LLC

All right.

Maurice Taylor

It’s one hell of the lot more then 140%.

Alex Blanton – Clear Harbor Asset Management, LLC

No, no I think from this year to 2015, you forecast a 130% increase from this year to 2015, not from two years ago?

Maurice Taylor

Yeah, thank you.

Alex Blanton – Clear Harbor Asset Management, LLC

And therefore when your EPS increased by approximately the same amount, less or more, that’s the question?

Maurice Taylor

Well, let’s say you’ll have to assume that the biggest chunk of that will fall with one, two, probably three acquisitions.

Alex Blanton – Clear Harbor Asset Management, LLC

Yeah.

Maurice Taylor

Okay. And all three acquisitions would internal growth that really back up in second. Internal growth, I can probably add close to – I have that ability to increase maybe $500 million, but that’s by going and taking it from someone else or the market grows.

Alex Blanton – Clear Harbor Asset Management, LLC

Yeah.

Maurice Taylor

All right, it will be there.

Alex Blanton – Clear Harbor Asset Management, LLC

Yeah.

Maurice Taylor

So that puts me at three. So I got $1 billion to $1.5 billion and that takes just mainly two to three of the acquisitions and they would more likely to be in the tire side, okay.

Alex Blanton – Clear Harbor Asset Management, LLC

Tire side, okay.

Maurice Taylor

That’s what they’re going to come. Now, the ads are that we should be able to get those things done within the next year. And I if do get them all done in the next year then of course, the numbers after every acquisition I got to rebuild the, if I’m not in trouble by some, if we allow some, I will update the guidance. But I have to somewhat do it, I can’t turnaround and the reason I put that $4 billion to $4.5 billion in there, this is around 68. So again if this is done…

Alex Blanton – Clear Harbor Asset Management, LLC

Okay.

Maurice Taylor

We can’t go any higher, because if your market share and the size of you, I’ll run into more regulatory problems you shake and steak, okay. And when you get to that point, as I’ve said many times, if I was running it, you would run it. So that you didn’t do anything more, you’d streamline, so you have a bad machine and then so you don’t have a much of private equity guy running in and loading it all up and running with the money, I just pay the dividends. I’m not going to go and borrow money to pay it, but I would just pay dividends and you keep your cash down and that’s what you do. And if they run it right, it just becomes a little more cash count.

Alex Blanton – Clear Harbor Asset Management, LLC

But if you get those acquisitions done in 2013, then you have two years…

Maurice Taylor

Thank you my friend. I told you, I’m 68.

Alex Blanton – Clear Harbor Asset Management, LLC

Yeah.

Maurice Taylor

I don’t want to be around. I figure two more years I got to get it done.

Alex Blanton – Clear Harbor Asset Management, LLC

What I’m saying is…

Maurice Taylor

Perfectly running around all these goofy game places.

Alex Blanton – Clear Harbor Asset Management, LLC

You have two years to work up to get the margins up if they need to be, right?

Maurice Taylor

Well, I’m going to get the acquisitions done, I am going to have a team on it. And then, we might end up being in such and less than two years with the politicians. Wouldn’t it be more colorful for someone who really knows how to create jobs, would know a lot better that you don’t run around and just tell you the way it is and here’s what we are going to do, I would have a blush. And by then I am going to know all you guys if someone hits you up with some noise since you are making all the money.

Alex Blanton – Clear Harbor Asset Management, LLC

I agree with you. Okay listen, just one suggestion Morry. You guys have been having your conference calls, for earnings calls on Thursday morning for a long time.

Maurice Taylor

Yeah.

Alex Blanton – Clear Harbor Asset Management, LLC

But that’s the most popular time for conference calls of all times Thursday morning for some reason. So you keep running…

Maurice Taylor

So what do you think it could have it?

Alex Blanton – Clear Harbor Asset Management, LLC

You keep running into conflicts with people like TerraMax and Oshkosh and those guys, you are a smaller company. So the analysts will listen to TerraMax or Oshkosh instead of you, and I don’t think that’s fair for you. So you should probably pick a time when there are not as many…

Maurice Taylor

Maybe I don’t want to take all the questions, because…

Alex Blanton – Clear Harbor Asset Management, LLC

No, no.

Maurice Taylor

You see, primarily the CEO is on the phone, that doesn’t get off till there is no more questions.

Alex Blanton – Clear Harbor Asset Management, LLC

Well, that’s true. But then why do you have a conference call.

Maurice Taylor

Because I don’t have work and the people really want to ask yourself then and I don’t have the problem, but what do you say?

Alex Blanton – Clear Harbor Asset Management, LLC

Tuesday morning is the better time. Tuesday morning is nice to any calls.

Maurice Taylor

Okay, all right. It’s going to be Tuesday morning that means it goes out on Monday. Now I’m going to hear from everyone of my grumpy accountants and being on their (inaudible).

Alex Blanton – Clear Harbor Asset Management, LLC

Well, they don’t run the company that you do.

Maurice Taylor

Hey, I know where we stay over triple time either, okay.

Alex Blanton – Clear Harbor Asset Management, LLC

Okay, all right. Thank you.

Maurice Taylor

I’ll do the next one on Tuesday morning.

Alex Blanton – Clear Harbor Asset Management, LLC

Thank you.

Maurice Taylor

Okay, my pleasure.

Operator

Thank you. And after the line on the call [Larry], please go ahead.

Unidentified Analyst

Well, good morning, Mr. Taylor, and then Mr. Taylor…

Maurice Taylor

Yeah, good afternoon, grandfather. How are you doing? I got a question for you.

Unidentified Analyst

Sure.

Maurice Taylor

I can’t remember that you told me. You never told me that doing on Tuesday morning.

Unidentified Analyst

I believe those important…

Maurice Taylor

Tell us some before.

Unidentified Analyst

I believe those are important.

Maurice Taylor

Yeah, all right.

Unidentified Analyst

First of all, 70 is too young for you to retire, that’s number one.

Maurice Taylor

I didn’t say I was retiring.

Unidentified Analyst

Oh, okay.

Maurice Taylor

So wouldn’t it be firm watching me, everybody talks, but they never cut the budget, nobody has, okay.

Unidentified Analyst

Okay, let me ask the question that we’re interested in.

Maurice Taylor

Sure.

Unidentified Analyst

You wrap, on these acquisitions on the deal that is pretty close, is this from a size standpoint, is this a good size up or maybe between $500 billion and I’m trying to put it into the proper planet.

Maurice Taylor

No.

Unidentified Analyst

It’s not that big?

Maurice Taylor

No.

Unidentified Analyst

Okay, so they call it the near one is a smaller deal?

Maurice Taylor

It would just put it this way, if you want to figure it out, it’s probably closer to $300 million to, well, it’s got some real growth potential, but…

Unidentified Analyst

I mean current whether it’s the $300 million business?

Maurice Taylor

Yes.

Unidentified Analyst

Okay. Second, as you think about these acquisitions, you’re now in certain type of tires, farm tires, construction tires of the road, mining et cetera. Will the acquisitions be in those product categories, or would you move outside of those product categories and consider other types of tires, say, I have to say smaller, because they’re not going to get any bigger. So would you consider smaller tires, but not passenger tires or truck tires? What other types of tires that are smaller, but are outside your current severe of product categories?

Maurice Taylor

What you’re basically asking me, do I like solid tires or all these other things, no…

Unidentified Analyst

No, trailer tires or small farm tires?

Maurice Taylor

Well, I think small farm tires.

Unidentified Analyst

Okay.

Maurice Taylor

Like more than anybody in the world.

Unidentified Analyst

Okay.

Maurice Taylor

And right at this moment, I think right now we are (inaudible) near close to be in the largest farm tire producer in the world (inaudible), larger than the big boy, okay.

Unidentified Analyst

Right.

Maurice Taylor

Which is missing, not bad for, used to worry how it’s going to get so big. But our core business, what could happen to tell you the truth is, we might end up with an acquisition and it’s a little bit like in Brazil, we’re making all of those bias tires down there and we make them under the Goodyear brand. There are for down there to a different world. We do a great job at that. We would may be continue in something else like that, but what we would not be doing is, deciding to go after what the big dogs, the mid-sized dogs all run after the models and all the nice cars. We would state the things that everybody else really doesn’t pay any attention to.

Unidentified Analyst

Okay. Let me just, in the acquisition that’s closed in hand. I assume that’s not the Goodyear deal. I mean you sort of put that on the side depending on what happens there and this is something…

Maurice Taylor

That’s right, that’s not the Goodyear deal. Goodyear deal is, they could not come, I mean the union is so dump over there and the authorities in France, they just let it play like that. And I think it was the God sent at least, I don’t think France a Goodyear, we’re really actually, I think people yet above corporations. I think they had a consents who are trying to save jobs for people, and they are not…

Unidentified Analyst

How big is that? How big is that Goodyear business in Europe?

Maurice Taylor

Well, the Europe business is…

Unidentified Analyst

The farm, I think in Europe?

Maurice Taylor

Well, that business you end up with not just Europe, you end up with Africa everything else, so…

Unidentified Analyst

Okay.

Maurice Taylor

It’s probably – they have other people producing tires under the Goodyear-brand. But I would say that’s probably between a roughly maybe three and four month backs.

Unidentified Analyst

Okay. Okay, so the conclusion that I get from my questions is the near-term acquisitions is more under 300-ish and it’s going to be in product lines that you are currently in and they would be either their geographic expansion or increasing share, but not moving out to some new type of tire?

Maurice Taylor

You got it. You got that size pretty good and it would be where – it will take our footprint and expand our footprint much, much bigger and so that’s – I think we will do pretty good.

Unidentified Analyst

Well, taken me a lot of years to figure these things out Maurice, so…

Maurice Taylor

Well, it can probably. I was a baby boy when…

Unidentified Analyst

Okay.

Maurice Taylor

running in your prime and you just then guiding me along or what can I say.

Unidentified Analyst

Okay, great. Good luck to you and I glad to hear your optimism about the future. Thanks a lot Maurice. Happy holidays to you.

Maurice Taylor

(inaudible) for your wife.

Unidentified Analyst

Thank you.

Maurice Taylor

Putting up review for all these years (inaudible) over 50 years?

Unidentified Analyst

51 so far.

Maurice Taylor

Congratulations to her and to you too my friend.

Unidentified Analyst

Thank you, Maurice.

Maurice Taylor

Thank you, have a great day.

Operator

Thank you. (Operator Instructions) And now to the line of Ryan Connors, please go ahead.

Ryan Connors – Janney Capital Markets

Hi, Maurice, how are you?

Maurice Taylor

Good to hear Brian, and yourself.

Ryan Connors – Janney Capital Markets

Well, thanks. So let’s talk about the topic of product mix between OEM and aftermarket, and I wonder if you can comment on it in the context of just your scenario analysis for next year and specifically kind of where I am after is, you sound like you have a very bullish view or at least a fairly bullish view on agriculture and the trajectory there. But what’s the (inaudible) that we do get pay downwards slope healthy if not steep, but some of those downward trend in OEM equipment sales. Might that offer you the opportunity to up your sales in the aftermarket and end up actually not taking much of a unit volume hit the sales and actually improving margin, because that actually helps you a bit, is that a proper way to successfully think about that or if there are some flaw in that thinking?

Maurice Taylor

No, there is no flaw in that thinking, but let me just help you out. We are going to increase our aftermarket size, that’s marching orders to everybody. Number two, the OE side of the business is going to stay firm, I don’t see and I have seen nothing of the, in fact I think some [other gear] already just finished the year. I think the year came out and showed you what they are planning to do and I don’t – you can not and I’ve been out in the field, and I can tell you right now that whenever the U.S. agriculture department finally figures out what, where and how, you are going to have a record year in ‘09 which top over ‘11 and you are going to have the farmers are going to continue buying the equipment.

And one thing I do agree with Warren Buffett besides he should pay more taxes is the situation at farming for the next 25 years. It is going to rock and roll. I don’t see any of that up with that but I would caution everybody that the only thing that could – the bright spot some of the other end of (inaudible) is whatever happens in Russia, there is a grains and new everything else, and love them or hate them, Mr. Putent, he is a pure Russian and he is coming to grow that business which means fertilizers you name it. Nobody in the world does a better job than the U.S. farming. So I got a lot of faith on that side. It’s the other side that more and more the tumult side, okay.

Ryan Connors – Janney Capital Markets

What I’m hearing Ben is that, it sounds like capacity itself is not necessarily one of the strengths that is limiting sales for the aftermarket now. Is that a correct reason but you what you are saying there then.

Maurice Taylor

Yeah. What has happened is we have spent money, everybody likes to look at what your cap X is, okay. Well, two things I learned a long time of doing business. When you are a public company and you tell everybody in the world, you are going to go spend X number of dollars, everyone of your competitor sees it. And so everybody then runs back to their people and use that as an excuse, we need more money, we didn’t get enough money. So then they all trick what we say.

So, I come from the private side. So, we are an entrepreneur company only fools want to put out CapEx and take so long, I would rather fight [every swinging year] with my friends at the IRS because if I’m going to expense it, it’s my CapEx. So that’s why I put in there this year on R&D. We have developed so many new products, which are not only four, the OE some of that stuff is strictly for the aftermarket. And what happens is, you’ve got so many farmers who turnaround and look and this is the only thing we got.

My dealers after we showed them in November at the big dealer event, we showed what we come up with. I was just haunted by why didn’t you tell us because number one, they know farmers who want back, so this modern up the figure, because they’re all entrepreneurs. They’re going to buy the real farmers, and they’re going to put the tire on, and that’s what we do with that farmer. And we got that information, because I don’t spend a lot of time much spending a lot of months in farmers. In fact last week I was up in South Dakota and let me tell you. I went to some farms out there, froze my (inaudible) by the work that have as bad as grown by some of the feed lock and my gallon, that we put all that more, those are like pure big huge farms more or like.

Those are one times that deduction at Greece don’t get confused about, oh God, making a clear drive the damn car. I’ve learned out there what a problem they have and I was shocked, because I thought there were a still a lot of wheat for everybody switch to corn and beans. And then they’ve got a little different situation up there, because they’re trying to hit the field right in the spring and generally up there, because it gets a damn cold.

They’re trying to hit probably two weeks to three weeks and the ground is pretty wet there, okay. If they get it in and they don’t get a real heavy frost, they’re going to get a good yield, that’s what they’ve been getting. They’re buying equipment big times. So there is a lot of things in the room in the office. There is no self service either running around there and say, get into town. So that’s what we’re learning. So aftermarket, we’re going to do pretty, we are going to improve that big time as next year.

Ryan Connors – Janney Capital Markets

Okay. And then last question for me is I’m not sure whether Paul is there or not to comment on more of balance sheet question, but if you look at the….

Maurice Taylor

No, Paul is doing the due diligence right with the whole team, okay.

Ryan Connors – Janney Capital Markets

Got it, okay, will either way as you look at the out-year growth forecast, can you talk about 130% or whatever it is, what’s the intention for financing that growth? How much of that do you think you come from internal cash flow versus equity capital increase and debt financing, whether it’s acquisition or internal?

Maurice Taylor

The next one is going to be funded with cash, okay, that we have. I will have a couple of partners mainly because I’m kind of cautious. And then it will probably be a period of time, however, a situation to take them out. And when I take them out it will be for cash. So that one that is no one ask to worry about any dilution.

I think here there is no question that we will probably when the period of time comes, we will utilize the bond markets to take out the bonds that we have. And probably at that period of your time put enough out there for our cash that we’re going to require.

Ryan Connors – Janney Capital Markets

Got it. Okay, well, thanks for the color. Thanks for us to take online. Take care, happy holidays.

Maurice Taylor

Happy holidays to you.

Operator

Thank you. And I have Robert Morrison. Please go head.

Unidentified Analyst

Hi, Mark. How you are doing? You are less than example of what kind of growth margin expansion you’d expect from mixed shift and his from validating the acquisitions and (inaudible) leaner and leaner way. So over say three years if you get closer to your target what kind of gross margin expansion you have in basis point. Thank you.

Maurice Taylor

I understand the question and I think though that if I was to take that right now and throw that out, I would have – I do believe we can grow the margin but I need the first quarter. I yes to I have the margins, yeah I got him all right now. What apps boys have committed to this next year, but I really need to see how fast the synergies that they should be using, what we have works are damn hard to last year, the put in place and I don’t believe that’s a cap out on you, but I do believe that I would be prudent for everybody out that we turn around and await till the first quarter. And I think Paul would tell you the same thing. I know he is all really excited but he is young. He has been through all of this as much as I am, okay. So on this model – but I’m just planning at real cautious, okay.

Unidentified Analyst

Okay.

Maurice Taylor

That’s…

Unidentified Analyst

All right. The chart went up into the right, but you are going to spend sometime figuring it out before you want to quantify for it?

Maurice Taylor

Yeah, it’s true. But I’d tell you exactly what I said to my Board, and one of my group presidents. I spent 18 months with a bad bang in his head in because I got not only myself with staff everybody else, is a great (inaudible). But we came and while this is the palliative way. Well, if you think at big question, you look at the business and I am referring to our wheel business and so many people have looked we weren’t so good, so lean 30,000 different parts. They count on us everybody when you do the inventory hundreds of millions of dollar business and you are 10 gram, I mean those we know what we are doing. So, you beat them in the head, because these in the long day.

And I call them in and I gave a good recommendation to the Board who will send his bonus and I said, I want to tell you this for 18 months. And when you set records in sales, records in the EBITDA, and you kind of like – you are in the tight mode now, we just smile on this and says, I am so thankful, you took the time there, help me understand. But he has made what he is now as before an improvement. And we got a few of those to do. Everybody that’s come into the organization bring something to it. But everything we’ve done up to this point is not law. So you got to take the best of each one and that’s how you move ahead.

And sometimes you give some real good beetle and you just got to beat a whole lot of them for a long time. And these are either you beat them in the shape for that they move that way or your hands get sore, so then you just saw the hell of it just shooting then move on to the next. So I’ve got some that of doing a hell of a job and some that, my hands aren’t sore yet. So we’re already seeing shooting and moving on to the next is Bryan up and right smoothly and you shop somebody and move to the next.

My hands aren’t sore. My gun is loaded, okay. I mean, I was there the past two days and I see bodies in there. I see what they’re doing. I see what they’re trying. But they got my words, but they would be doing better, yes, okay, because they’re doing a lot better, yes, all right.

But when you look at it like I get to sale that they do for Bryan, do they do record sales, yes. Did they make great margins, yes. Are they where they’re supposed to be, no, and that’s the frustration. But a lot of times because information they have – we are really – give me a break. But we’re getting there, it’s been – it is tough. And it is not just tough from a management side, you will also have the same situation from the (inaudible) workforce where you have a lot of old timers.

I have various at three port volume plan, I have what they call the double dippers. Now those guys have been double dipper for seven years, some of them, and it’s like when you guys going to officially retire, they – we kind of like it. Give me a break, why do I want that? James, you have said question on margins, as margins are going to go up, because I don’t have the high cost of them with the newer workforce coming in. That’s the good and that’s also the bad.

Unidentified Analyst

Okay, thank you very much. Have a good holiday.

Maurice Taylor

Same to you.

Operator

Thank you. And we have no one else in queue.

Maurice Taylor

I got almost one flat hour, I thank everybody, Merry Christmas and Happy New Year, Happy Hanukah and if got an eight minutes or two, you made the double warm you, don’t get all upset, just a joke. Have a great one (inaudible). Thanks.

Operator

Thank you. And ladies and gentlemen, this conference will be available for replay after 6:30 pm Eastern Time today through midnight December 13. You may access the AT&T replay system at anytime by dialing 1-800-475-6701 and entering the access code of 273748. International participants may dial 320-365-3844. Again those numbers are 1-800-475-6701 and 320-365-3844 with the access code of 273748.

And that does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.

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