Investor Presentation First Quarter 2018 Safe Harbor Statement SAFE - - PowerPoint PPT Presentation

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Investor Presentation First Quarter 2018 Safe Harbor Statement SAFE - - PowerPoint PPT Presentation

Oct 12, 2023 546 likes •942 views

Investor Presentation First Quarter 2018 Safe Harbor Statement SAFE HARBOR STATEMENT : The accompanying material includes forward-looking comments and information concerning the companys expectations and objectives for the future. Readers of

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Investor Presentation

First Quarter 2018

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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

  • r 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.

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  • 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.

Titan International Overview

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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

Titan International Overview: Strategy

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Titan International Overview: Customers

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Source: Titan filings North America 

Quincy, IL (International headquarters)

Bryan, OH

Des Moines, IA

Elkhorn, WI

Freeport, IL

Fort McMurray, AB, Canada

Saltville, VA (closing)

Saskatoon, SK

Union City, TN

Winston-Salem, NC

Latin / South America 

Atibaia, Brazil

Iquique, Chile

Lima, Peru

São Paulo, Brazil

Santiago, Chile

Naucalpan de Juarez, Mexico

Buenos Aires, Argentina

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

Australia 

Emerald, QLD

Kalgoorie, WA

Karratha, WA

Mildura, VIC

Muswellbrook, NSW

Perth, WA

Port Hedland, WA

Sydney, NSW

Yatala, QLD

Asia / Africa 

Aydin, Turkey

Jakarta, Indonesia (closing)

Nuffield Springs, South Africa

Tianjin, China

 Tires  Wheels  Undercarriage  Mining Services  Distribution

Titan International Overview: Global Footprint

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AGRICULTURE

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  • 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.

AGRICULTURE: Market Summary

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AGRICULTURE: Innovation Highlights

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AGRICULTURE: Low Sidewall Technology

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AGRICULTURE: Low Sidewall Technology

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AGRICULTURE: Low Sidewall Technology

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OTR: Earthmoving/Construction/Mining

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  • 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

OTR: Market Summary

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OTR: Product & Innovation Highlights

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OTR: Mining Rebound

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OTR: Product Innovations

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OTR: Product Innovations

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CONSUMER

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CONSUMER: Growing Opportunity

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Financial Overview

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Financial Overview: Highlights & Challenges

 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 Highlights 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.

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46% 44% 10%

GP: 16.8% GP: 11.9%

GP: 15.4%

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) Agriculture Consumer Earthmoving / Construction

Q1 2018 Segment Revenue Sales: $425.4M GP: 14.0% vs.Q1’17: +2.8%

⬆ 8% vs. Q1 2017 ⬆ 39% vs. Q1 2017 ⬆ 3% vs. Q1 2017 ⬆ 3.3% vs. Q1 2017 ⬆ 2.4% vs. Q1 2017 ⬆ 3.7% vs. Q1 2017 Sales GP %

Financial Overview: Q1 2018 by Market

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$194 $153 $181 $194 12% 11% 12% 15%

$5 $7 $9 $10 $1 30 $1 50 $1 70 $1 90 $2 10 0% 5% 10 % 15 % 20 % 25 % 30 % 35 % 40 % 45 % 50 %

Q1 '15 Q1 '16 Q1 '17 Q1 '18

 Net Sales: Up 8% Q1 ‘18 vs. Q1 ‘17  Gross margin improved 331 basis points compared to Q1 ’17  Improvements in both OEM and Aftermarket businesses  Volume up 3%; Price/mix up 4%; FX up 1%

AG 46%

 Net Sales: Up 3% Q1 ’18 vs. Q1 ’17  Gross margin improved 369 basis points compared to Q1 ‘17  Volume down (6%); Price/mix up 8%; FX up 1%

Consumer 10% EMC 44%

 Net Sales: Up 39% Q1 ‘18 vs. Q1 ’17  Gross margin improved 239 basis points compared to Q1 ‘17  Positive movement within OEM business  Volume up 29%; Price/Mix up 3%; FX up 7%

$159 $132 $136 $189 8% 7% 10% 12%

$1 00 $1 10 $1 20 $1 30 $1 40 $1 50 $1 60 $1 70 $1 80 $1 90 $2 00
  • 2%
8% 18 % 28 % 38 % 48 % 58 % 68 % 78 %

Q1 '15 Q1 '16 Q1 '17 Q1 '18 $50 $37 $41 $42 14% 7% 13% 17%

$0 $2 5 $5 $7 5
  • 2%
8% 18 % 28 % 38 % 48 % 58 % 68 % 78 %

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.

Financial Overview: Sales and Gross Margin

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28 (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 Gross Margin % 14.0% 11.2% 8.8% 10.6% 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.

Financial Overview: Summary Income & EPS

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Financial Overview: Income Reconciliation

Q1 2018

USD Amounts in Millions

Q1 2018 Q1 2017 Q1 2016 Q1 2015 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 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

Adj

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Financial Overview: EBITDA Reconciliation

Q1 2018

USD Amounts in Millions

Q1 2018 Q1 2017 Q1 2016 Q1 2015 Net income (loss) 14.7 (10.6) (12.3) (0.6)

Provision for income taxes (0.8) 3.4 1.0 1.6 Interest expense 7.5 7.7 8.5 8.8 Depreciation and amortization 15.3 14.5 15.2 18.4

EBITDA

36.7 15.0 12.4 28.2

Foreign exchange gain (loss) 4.4 (4.5) (4.8) (6.0) Subsidiary currency correction

  • 2.7

Italy restructuring

  • 0.7

Adjusted EBITDA

41.2 10.6 7.6 25.6

Adjustments

Adj

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2018 Outlook

(Amounts in millions) 2017 Actual 2018 Guidance 2018 Outlook Net Sales $1,469 7% – 12% Growth $1,572 - $1,645 Gross Margin $158 25% – 40% Growth $198 - $221 SGA & RD $161 10% - 10.5% of Net Sales $157 - $173 AEBITDA $72.8 50% – 100% Growth $109 - $146 CAPEX $32.6 $35 - $45 $35 -$45

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Appendix

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Appendix

Sales – N. America / Rest of World

  • 12 Quarters
  • 8 Quarters
  • 4 Quarters

Current Quarter

(Amounts in $ millions)

2015* 2016 2017 2018

Sales - Total

$402.1 $321.8 $357.5 $425.4

Sales - N. America

$199.9 $149.4 $150.2 $179.1

Sales - Rest of World

$202.1 $172.4 $207.3 $246.3

Gross Margin

$43.5 $28.3 $40.2 $59.6

Gross Margin - N. America

$24.9 $11.5 $15.4 $28.2

%

12.4% 7.7% 10.2% 15.8%

Gross Margin - Rest of World

$18.6 $16.8 $24.8 $31.3

%

9.2% 9.8% 12.0% 12.7%

Gross Margin%

10.8% 8.8% 11.2% 14.0%

Operating Profit

$2.2 ($11.5) ($6.6) $18.1

Operating Profit - N. America

$1.7 ($11.3) ($12.0) $5.2

%

0.9%

  • 7.6%
  • 8.0%

2.9%

Operating Profit - Rest of World

$0.4 ($0.2) $5.4 $12.9

%

0.2%

  • 0.1%

2.6% 5.2%

Operating Profit %

0.5%

  • 3.6%
  • 1.8%

4.3%

*Operating Profit net of adjustments.

FINANCIAL SUMMARY

200 149 150 179 202 172 207 246

0.5%

  • 3.6%
  • 1.8%

4.3%

  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2015* 2016 2017 2018 Millions

Q1 - Sales / Operating Income (Amounts in Millions)

Sales - N. America Sales - Rest of World Operating Profit %

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Appendix

Working Capital / CCC

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Days Sales Outstanding (DSO) 59 55 58 55 63 Days A/P in Inventory (DPI) 88 96 95 98 96 Days Payable Outstanding (DPO) (56) (56) (53) (56) (59) Cash Conversion Cycle 91 95 100 97 100 Cash & CDs $181,158 $153,236 $155,675 $143,570 $112,429 Cash & CDs % of 12 Mo Sales 13.9% 11.5% 11.1% 9.8% 7.3% 2017 2018 239 216 232 295 318 268 292 368 153 138 186 228

25.1% 26.9% 23.7% 25.6%

22% 23% 24% 25% 26% 27% 28% $0 $100 $200 $300 $400 $500 $600 $700 2015 2016 2017 2018 Millions

Q1 - WORKING CAPITAL (Amounts in Millions)

AR Inventory AP Working Capital as % of Sales

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Appendix

YTD Cash & Activity

March 2018

$143.6 $112.4 21.7 15.3 14.7 10.8 3.8 2.5 1.1 0.7 1.9 7.8 26.1 65.9

  • 50.0

100.0 150.0 200.0 250.0

Millions

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Appendix

Cash / Debt

Q1 '18 Q4 '17 Q3 '17 Q2 '17 Q1 '17 Cash & CDs $112 $144 $156 $153 $181 Total Debt $463 $451 $447 $451 $456

6.50% Secured Notes Due 2023 $394 $394 $0 $0 $0 6.875% Secured Notes Due 2020 $0 $0 $396 $396 $396 Titan Europe Credit Facilities $33 $34 $34 $35 $36 Other $36 $23 $17 $20 $24

Net Leverage (Net Debt / Trailing 12 Mos EBITDA) 3.78x 4.34x 4.95x 5.83x 4.70x Interest Expense $7.5 $7.6 $7.5 $7.3 $7.7

6.50% Secured Notes Due 2023 $6.5 $2.9 $0.0 $0.0 $0.0 6.875% Secured Notes Due 2020 $0.0 $4.0 $6.9 $6.9 $6.9 Titan Europe Credit Facilities $0.2 $0.3 $0.1 $0.0 $0.1 Other $0.8 $0.5 $0.5 $0.4 $0.7

CASH / DEBT

$394 $33 $36 $0 6.50% Secured Notes Due 2023 Titan Europe Credit Facilities Other $75m ABL Credit Facility Due Feb 2022

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Appendix

Cost Structure

Raw Materials ~50-55% Overhead ~30-35% Labor ~10-15%

Primary Raw Materials GP Cost Structure Breakdown Steel Natural Rubber Synthetic Rubber Carbon Black Nylon

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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

  • r 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.

Titan Website: www.titan-intl.com

Investor Relations todd.shoot@titan-intl.com