Investor Presentation First Quarter 2018
Safe Harbor Statement SAFE HARBOR STATEMENT : The accompanying material includes forward-looking comments and information concerning the company’s expectations and objectives for the future. Readers of this material should understand that these forward looking statements are based on the Company’s expectations and subject to a number of risks and uncertainties, certain of which are beyond the Company’s control. Actual results may differ materially from those projected in these forward looking statements as a result of certain factors which are contained in the Company’s most recent 10K filing. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this document will in fact transpire. 2
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. 3
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 4
Titan International Overview: Customers 5
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 Australia Elkhorn, WI Emerald, QLD Freeport, IL Kalgoorie, WA Fort McMurray, AB, Canada Karratha, WA Saltville, VA (closing) Mildura, VIC Saskatoon, SK Muswellbrook, NSW Union City, TN Perth, WA Asia / Africa Winston-Salem, NC Port Hedland, WA Aydin, Turkey Sydney, NSW Latin / South America Jakarta, Indonesia Yatala, QLD Tires (closing) Atibaia, Brazil Nuffield Springs, Iquique, Chile Wheels South Africa Lima, Peru Tianjin, China São Paulo, Brazil Undercarriage Santiago, Chile Mining Services Naucalpan de Juarez, Mexico Distribution Source: Titan filings Buenos Aires, Argentina 6
AGRICULTURE 8
AGRICULTURE: Market Summary Large hp equipment (4WD tractors and Combines) remain well below historical averages. Smaller hp tractor demand remains strong, but at lower ASP and gross margins than larger equipment Ag-related commodity prices remain lower; however farmer income has stabilized Used equipment inventory levels and values have both improved in recent months North America equipment dealer sentiment has improved for 2018 Tax Cuts & Jobs Act was passed making 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, and phased down by 20% each year thereafter. 9
AGRICULTURE: Innovation Highlights 10
AGRICULTURE: Low Sidewall Technology 11
AGRICULTURE: Low Sidewall Technology 12
AGRICULTURE: Low Sidewall Technology 13
OTR: Earthmoving/Construction/Mining 15
OTR: Market Summary Private construction spending for residential and non-residential remains strong Larger construction equipment used for highways and infrastructure have recovered modestly from the lower base in recent years Potential for a U.S. infrastructure bill, but not anticipated to have an impact until after 2018 Overall mining activity has improved recently within certain regions with certain commodity prices improving 16
OTR: Product & Innovation Highlights 17
OTR: Mining Rebound 18
OTR: Product Innovations 19
OTR: Product Innovations 20
CONSUMER 22
CONSUMER: Growing Opportunity 23
Financial Overview
Financial Overview: Highlights & Challenges Q1 Financial Highlights EPS was $0.23, a $0.41 YOY improvement Net sales increased $68 million to $425 million, up 19% year-over-year; the fifth consecutive YOY quarter of double-digit growth Gross profit increased $19 million (+48% YOY); gross margin improved to 14% (from 11.2%) SG&A expenses were down $5 million (-12% YOY) to $36 million (8.4% of net sales) Income from operations was $18 million (+$25 million YOY) Earthmoving / Construction segment net sales increased 39% YOY on increased volume (+29%) EBITDA was $37 million (+$21 million YOY) Q1 Financial Challenges Continued trend of lower volumes in Large Ag products (higher ASP and margin) driven by lower commodities / farm income / cash receipts Working capital use during the quarter of $36 million Cash conversion cycle days worsened by 3 days. We began to see some improvement during March with further improvement forecasted to continue during the second quarter and more significantly during the second half of this year. 25
Financial Overview: Q1 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) Q1 2018 Segment Revenue GP: 16.8% 10% ⬆ 8% vs. Q1 2017 Sales ⬆ 39% vs. Q1 2017 Agriculture 46% ⬆ 3% vs. Q1 2017 Earthmoving / Construction GP: 15.4% GP: 11.9% ⬆ 3.3% vs. Q1 2017 44% Consumer GP % ⬆ 2.4% vs. Q1 2017 ⬆ 3.7% vs. Q1 2017 Sales: $425.4M GP: 14.0% vs.Q1’17: +2.8% 26
Financial Overview: Sales and Gross Margin $194 50 % $2 10 $194 $181 45 % $1 90 Net Sales: Up 8% Q1 ‘18 vs . Q1 ‘17 40 % $1 70 $153 35 % $1 50 Gross margin improved 331 basis points compared to Q1 ’17 30 % AG 25 % $1 30 46% Improvements in both OEM and Aftermarket businesses 20 % $10 15 % $9 0 Volume up 3%; Price/mix up 4%; FX up 1% 10 % 15% 12% 12% $7 0 11% 5% 0% $5 0 Q1 '15 Q1 '16 Q1 '17 Q1 '18 $189 $2 00 78 % Net Sales: Up 39% Q1 ‘18 vs. Q1 ’17 $1 90 68 % $1 80 58 % $1 70 Gross margin improved 239 basis points compared to Q1 ‘17 $159 EMC 48 % $1 60 44% $1 50 38 % Positive movement within OEM business $136 $132 $1 40 28 % 12% 10% $1 30 8% 7% Volume up 29%; Price/Mix up 3%; FX up 7% 18 % $1 20 8% $1 10 - 2% $1 00 Q1 '15 Q1 '16 Q1 '17 Q1 '18 $7 5 78 % Net Sales: Up 3% Q1 ’18 vs. Q1 ’17 68 % $50 Gross margin improved 369 basis points compared to Q1 ‘17 58 % $42 $5 0 $41 Consumer 48 % $37 10% Volume down (6%); Price/mix up 8%; FX up 1% 38 % 28 % 17% 14% 13% $2 5 7% 18 % 8% 2% - $0 Q1 '15 Q1 '16 Q1 '17 Q1 '18 Note : Certain amounts from prior years have been reclassified to conform to the current year’s presentation. 27
Financial Overview: Summary Income & EPS (Amounts in millions) Q1 2018 Q1 2017 Q1 2016 Q1 2015 * Sales $425.4 $357.5 $321.8 $402.1 Gross Margin $59.6 $40.2 $28.3 $43.5 14.0% 11.2% 8.8% 10.6% Gross Margin % Operating Income (Loss) $18.1 ($6.6) ($11.5) $2.2 Operating Income % 4.3% (0.2%) (3.6%) 0.0% Adjusted Net Income (Loss) attrib. to Titan $16.4 ($11.5) ($12.7) $4.1 Adjusted Earnings Per Share - Diluted $0.27 ($0.20) ($0.24) $0.08 * Amounts are shown net of adjustments. See details of 2015 adjustments on Income Reconciliation page to follow. 28
Financial Overview: Income Reconciliation Q1 2018 Q1 2018 Q1 2017 Q1 2016 Q1 2015 USD Amounts in Millions Net income (loss) appl. to common shareholders 14.0 (10.5) (18.0) (2.0) Remove redemption value adjustment (2.3) 0.9 (5.2) (2.9) Net income (loss) attributable to Titan 16.4 (11.5) (12.7) 0.9 Subsidiary currency correction 2.7 Adj Italy restructuring 0.5 Adjusted net income (loss) attrib. to Titan 16.4 (11.5) (12.7) 4.1 Adjusted EPS - Diluted 0.27 (0.20) (0.24) 0.08 29
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