After 18 quarters of declining revenue, Titan International Inc. (NYSE:TWI) is finally growing again. Management has been saying a recovery was coming for nearly a year, and in the first quarter of 2017 that prediction came true.

It wasn't all smooth sailing for Titan International, as some headwinds hit the company's operations. Here's a look at the highlights and what we learned in the first quarter.

Giant tires shown on a piece of mining equipment

Image source: Getty Images.

Titan International results: The raw numbers

MetricQ1 2017Q1 2016Year-Over-Year Change
Revenue $357.5 million $321.8 million 11.1%
Net income ($10.5 million) ($18.0 million) N/A
EPS ($0.18) ($0.33) N/A

Data source: Titan International Q1 2017 earnings report. EPS = earnings per share.

What happened with Titan International this quarter?

Management has been saying that demand for big tires was at a bottom since last summer and now there's solid evidence that the market is turning around. And the details behind the earnings increase bear that out:

  • Volume was up 4%, helped by agriculture and consumer segments, but the earth-moving and construction business is still a drag.
  • Currency translation was behind 4% of the increase in sales and higher prices drove another 3% increase.
  • Increased tariffs on off-road tires from China, put in place in April, could help future sales. Management said importers will owe back tariffs for the 2014 to 2015 time frame, and that's a risk they may not want to take in the future.
  • Rising rubber prices had a negative impact of $9 million in the quarter, but management said prices are stabilizing at lower levels, which should expand margins in the future.
  • A $6.3 million legal fee was also a negative for the quarter that shouldn't be repeated.
  • On an operational front, Titan International has reached a tentative deal with the United Steelworkers union to extend agreements in Iowa, Ohio, and Illinois that expired last November.

What management had to say

Management was fairly bullish on the increase in revenue, but was a little cautious after fits and starts in financial performance the last few quarters. Investors will want to see a few more quarters of growth to know this is a trend and not a blip, but the facts that growth was broad-based and margins are expanding are good signs for Titan International long-term.

Looking forward

It wasn't fully evident this quarter, but the work management has done to lower costs is starting to have a positive effect on the business. And if revenue grows in the rest of 2017, it looks like Titan International will be highly profitable once again. With end markets picking up and margins expanding, this is a company with a financial turnaround and a lot of upside ahead.

Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Titan International. The Motley Fool has a disclosure policy.