Investor Presentation August 2019 Titan International Overview - PowerPoint PPT Presentation

Investor Presentation August 2019

Titan International Overview  Titan International Inc. (TWI) is a publicly traded company on the New York Stock Exchange. Headquartered in the heartland of the U.S. in Quincy, Illinois, Titan has grown to become a top global manufacturer of off-highway wheels, tires, assemblies and undercarriage products.  Titan has a heritage of over 100 years in the off- highway wheel manufacturing business and is the world’s largest manufacturer of off-highway wheels. Titan has complete research and development test facilities to validate wheel and rim designs.  Since Titan's entrance into the tire market in 1993, we have evolved into a leading global supplier of complete wheel and tire assemblies for off-highway vehicles. Titan manufactures under the Goodyear Farm Tire and Titan Tire brands. 2

Titan International Overview: Strategy To become the worldwide leader in manufacturing and distribution of wheels, tires, assemblies and undercarriage products and to serve our customers’ needs through product innovation and quality service in our key markets:  Agriculture  Earthmoving/Construction  Consumer 3

Titan International Overview: Customers 4

Titan International Overview: Global Footprint Europe   Ceprano, Italy Kidderminster, UK   Fanano, Italy Monreal del Campo, Spain   Finale Emilia, Italy Potenza, Italy  Flers, France  St. Helens, UK   Gevelsburg, Germany Valsamoggia, Italy   Jesi, Italy Volgograd, Russia North America  Quincy, IL (International headquarters)  Bryan, OH  Des Moines, IA  Elkhorn, WI Australia  Freeport, IL  Emerald, QLD  Fort McMurray, AB, Canada  Kalgoorie, WA   Saltville, VA (closing) Karratha, WA   Saskatoon, SK Mildura, VIC   Union City, TN Muswellbrook, NSW   Winston-Salem, NC Perth, WA Asia / Africa  Port Hedland, WA  Latin / South America Aydin, Turkey  Yatala, QLD  Nuffield Springs, Atibaia, Brazil   Tires South Africa  Iquique, Chile  Tianjin, China  Lima, Peru  Wheels  São Paulo, Brazil  Undercarriage  Santiago, Chile  Naucalpan de Juarez, Mexico  Mining Services  Buenos Aires, Argentina  Distribution Source: Titan filings 5

AGRICULTURE: Market Summary  Large hp equipment (4WD tractors and Combines) remain well below historical averages.  News involving bad weather, local flooding, prevented planting, poor crop conditions, negative farm sentiment, and ongoing trade concerns have slowed the U.S. Ag equipment market.  Ag-related commodity prices have declined in the midst of tariffs and trade concerns but have rebounded somewhat due to recent weather-related concerns over a reduced harvest.  Russian Ag remains challenged by high dealer inventory levels and local economic conditions while European Ag demand has stabilized at lower levels.  Tax Cuts & Jobs Act makes Section 179 deduction permanent and increasing limits. Bonus depreciation is allowed for both new and used equipment, and is permitted at the 100% rate through 2022. This is good for farmers purchasing equipment. 7

AGRICULTURE: Low Sidewall Technology 8

AGRICULTURE: Low Sidewall Technology TIRES vs TRACKS 9

AGRICULTURE: Low Sidewall Technology 10

OTR: Market Summary  Demand for larger construction equipment used for highways and infrastructure remains steady after several years of strong growth.  Construction driven by GDP by country and the need for infrastructure developments.  Overall mining equipment demand is driven by both demand and pricing of commodities.  Potential for a U.S. infrastructure bill, but not anticipated to have an impact in the near-term 12

OTR: ITM Products & Customers 13

OTR: ITM Product Applications 14

OTR: Europe Wheel 15

OTR: Product Highlights 16

OTR: Product Innovations 17

CONSUMER: Growing Opportunity The consumer market continues to present opportunities for Titan with products that have strong margins. The specialty products group had its first full year of operations in 2017, and saw significant sales increases for mud flaps and cattle mats for the dairy market. We continued this expansion into the swine and equestrian market during 2018. 19

Financial Overview

Financial Overview: 2019 Outlook 2018 Actual 2019 Outlook (Amounts in millions) $1,554 – $1,602 Net Sales $1,602 Down 3% to Flat Between 11.2% – 11.6% Gross Margin $198 $174 - $186 SGA & RD $146 ~ $150 EBITDA (excludes FX) $119 $75 - $90 CAPEX $39 ~ $40 21

Financial Overview: Highlights & Challenges Q2 Financial Highlights  Net sales were $390.6 million, a $38.3 million decrease YoY, net sales would have increased nearly $16.5 million on a constant currency basis  SGARD expenses were $38.3 million (9.8% of net sales)  Income from operations was a loss of $2.4 million  Net loss applicable to common shareholders was $7.1 million and EPS was -$0.12  Adjusted EBITDA was $12.8 million Q2 Financial Challenges  Continued trend of volumes below longer-term, historical averages in Large Ag products (higher ASP and margin) driven by overall lower commodities / farm income / cash receipts  U.S. Ag perspective was dominated by news involving bad weather, local flooding, prevented planting, poor crop conditions, negative farmer sentiment and the ongoing trade battle  Gross profit and margin declined as a result of overall lower sales and 1) N.A. wheel inventory challenges associated with higher priced steel due to inventory build-up for ERP implementation combined with an expectation of growing demand and then as prices decreased we weren’t able to fully realize those lower costs as we worked to reduce elevated inventory levels ($8 million); 2) challenges in Russia and Europe in the Ag markets, which caused margin decline due to production inefficiencies created with lower volume ($4 million); and 3) footprint reduction in Australia tire distribution resulting in sales at lower levels to reduce inventory ($2.5 million). 22

Financial Overview: FY 2018 by Market Agriculture: Tractors, combines, implements, irrigation Earthmoving/Construction: Mining, cranes, aerial lifts, haul trucks, scrapers Consumer: Light-truck tires, ATVs, turf equipment, specialty products (includes livestock mats and mud flaps) Q2 2019 Segment Revenue GP: 10.5% 11% ⬇ 12.1% vs. Q2 2018 Sales 42% ⬇ 7.1% vs. Q2 2018 Agriculture ⬇ 3.6% vs. Q2 2018 Earthmoving / Construction GP: 8.7% GP: 10.7% ⬇ 5.9% vs. Q2 2018 Consumer GP % ⬇ 1.5% vs. Q2 2018 47% ⬇ 5.2% vs. Q2 2018 Sales: $390.6M GP: 9.8% vs. Q2’18: -3.8% 23

Financial Overview: Sales and Gross Margin 50% $210 $187 45% $173 $190 $164  Net Sales: Declined 12.1% Q2‘19 vs . Q2‘18 40% $170 $147 35% $150  On a constant currency basis, net sales would have increased 3.6% 30% AG 25% $130 16% 15% 13% 42% 20%  $110 Gross margin declined ~590 bps YoY 9% 15% $90 10%  Volume down (6.5%); Price/mix down (2.0%); FX down (3.6%) $70 5% 0% $50 Q2 '16 Q2 '17 Q2 '18 Q2 '19 $220 78% $199  Net Sales: Declined 7.1% Q2‘19 vs. Q2‘18 68% $185 $200 58%  Gross margin declined ~150 bps YoY $180 48% EMC $151 $160  38% Volume down (3.0%); Price/mix down (0.1%); FX down (4.0%) 47% $141 28% $140 12% 11% 11% 9% 18% $120 8% - 2 % $100 Q2 '16 Q2 '17 Q2 '18 Q2 '19 $50 78% $43 $42  Net Sales: Declined 3.6% Q2‘19 vs. Q2‘18 $42 $41 68%  58% Gross margin declined ~520 bps YoY Consumer 48% 11%  Volume down (1.0%); Price/mix up 1.6%; FX down (4.2%) $25 38% 17% 28% 16% 13% 10% 18% 8% - 2 % $0 Q2 '16 Q2 '17 Q2 '18 Q2 '19 * GP% net of adjustments. Note : Certain amounts from prior years have been reclassified to conform to the current year’s presentation. 24

Financial Overview: Summary Income & EPS (Amounts in millions) Q2 2019 Q2 2018 Q2 2017 Q2 2016 Sales $390.6 $428.9 $364.4 $330.2 Gross Margin $38.3 $58.3 $44.0 $43.7 9.8% 13.6% 12.1% 13.2% Gross Margin % Operating Income (Loss) ($2.4) $16.2 $4.4 $2.6 Operating Income % (0.6%) 3.8% 1.2% 0.8% Net income (loss) attrib. to Titan ($6.4) $8.4 ($6.3) ($3.3) Earnings per share - Diluted ($0.12) $0.06 ($0.17) ($0.10) Note : Certain amounts from prior years have been reclassified to conform to the current year’s presentation. 25

Financial Overview: EBITDA Reconciliation (Non-GAAP) Q2 2019 Q2 2018 YTD 2019 YTD 2018 USD Amounts in Millions Net income (6.7) 8.5 (5.7) 24.4 Adjustments Provision for income taxes (3.2) 1.7 (1.3) 0.9 Interest expense 8.3 7.7 16.2 15.2 Depreciation and amortization 13.1 14.8 27.8 30.2 EBITDA 11.5 32.7 37.0 70.7 Foreign exchange loss 1.2 3.6 (4.5) 8.0 Adj Adjusted EBITDA 12.7 36.3 32.5 78.7 26

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