S&P upgrades Titan

S&P said it raised its ratings on Titan International Inc. and its senior unsecured notes to B from B-. The 4 recovery rating on the senior secured notes (30%-50%; rounded estimate: 40%) remains unchanged.

“In 2022, we forecast the company will increase its revenue by the low-20% area due to healthy demand for equipment across its key agricultural, construction, and mining end markets. We also expect sustained farmer profitability in 2023, with elevated commodity prices offsetting the inflation in input costs, which we believe will translate to healthy demand in the agricultural end market. In the mining end market, we expect commodity prices will support continued mining activity,” the agency said in a press release.

S&P said it sees Titan’s EBITDA margin will widen by 300 basis points to 400 bps in 2022. “This margin improvement will translate to a significant expansion in its S&P Global Ratings-adjusted EBITDA of about 60%-80% in 2022. In 2023, we expect relatively flat margins and very modest deleveraging due to a significant moderation in its volume expansion from the robust levels in 2022.”

The outlook is stable.

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