Investor Presentation Q2 2017 SAFE HARBOR STATEMENT : The - - PowerPoint PPT Presentation

Investor Presentation Q2 2017

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 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 specialty tires, wheels and tracks.

• 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.

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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

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COMPETITIVE ADVANTAGES

TITAN/GOODYEAR MICHELIN BRIDGESTONE GKN

Titan International Overview: Portfolio

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Titan International Overview: Customers

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Titan International Overview: Global Footprint

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• Large hp equipment (4WD tractors and Combines) remain at historical lows. Smaller hp tractor demand remains

strong, but at lower ASP and gross margins than larger equipment

• Grain prices remain low; resulting in lower farm income (stabilized somewhat beginning in 2016)
• Used equipment inventory levels remain above historical averages, but declined within the past year
• Used equipment values have stabilized and in some cases increased over the past year
• Legislation passed to reinstate tax incentives including Section 179 deduction (permanent) and bonus depreciation

(phased out in 2020)

• Despite recent increases, interest rates remain at historically low levels for financing new equipment purchases

AGRICULTURE: Market Summary

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AGRICULTURE: Product Innovations

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AGRICULTURE: Product Innovations

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AGRICULTURE: Goodyear Expansion

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AGRICULTURE: Growth Opportunities

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• Private construction spending for resi and non-resi buildings continue to carry the industry
• Larger construction equipment used for highways and infrastructure have remained slow to recover
• Overall mining activity remains lower with low commodity prices
• Strong U.S. dollar

OTR: Market Summary

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OTR: Recent Highlight

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OTR: 23,000-Hour Giant Stands Out At Minexpo

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OTR: Product Innovations

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OTR: Product Innovations

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OTR: ITM Innovations

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CONSUMER: Products Innovations

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CONSUMER: Specialty Products Division

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Financial Overview

Financial Overview: Highlights & Challenges

 Net sales were $364.4 million, up 10% year-over-year which is the second consecutive quarter of significant YOY growth  SG&A expenses were reduced $1.9 million, or 5% over the same period last year while our net sales increased  Operating income improved by $1.4 million, or 53% year-over-year  Agriculture segment net sales increased 18% year over year during the second quarter with North America up 21% and Latin America up 45%  Cash, cash equivalents, and certificates of deposit ended the quarter at $153 million  Finalized new five year agreements with the United Steelworkers Union (USW) representing three North American tire plants Q2 Highlights Q2 Challenges  Continued trend of lower volumes in Large Ag products (higher ASP and margin) driven by lower commodities / farm income / cash receipts  When raw material costs increase quickly as they did during the first half of the year, we are negatively impacted. Rising raw material costs negatively impacted gross profit approximately $11 million during the quarter and approximately $20 million year-to-date  Raw material costs negatively impacted gross margins on a year-over-year basis as our OEM contracts in North America did not allow us to fully pass through these higher costs during the quarter

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Financial Overview: Q2 2017 by Market

48% 41% 11%

GP: 16.5% GP: 9.3%

GP: 13.2%

Agriculture: Tractors, combines, implements, irrigation Earthmoving/Construction: Mining, cranes, aerial lifts, haul trucks, scrapers Consumer: Primarily light-truck tires, ATVs and select golf and turf equipment markets Agriculture Consumer Earthmoving / Construction

Q2 2017 Segment Revenue Sales: $364.4M GP: 12.0% vs.Q216: -1.3%

⬆18% vs. Q2 2016 ⬆7% vs. Q2 2016 ⬇ 5% vs. Q2 2016 ⬇ 2.4% vs. Q2 2016 ⬇ 1.6% vs. Q2 2016 ⬆3.8% vs. Q2 2016 Sales GP %

*See Slide 25 for Q2 Challenges on Raw Material impacts.

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$257 $175 $147 $173 13% 15% 16% 13%

Q2 '14 Q2 '15 Q2 '16 Q2 '17

Financial Overview: Sales and Gross Margin

 Net Sales: Up 18% Q2 ‘17 vs. Q2 ‘16  Gross margin declined 240 basis points compared to Q2 ’16  Improvements in the North America aftermarket business  Volume up 11%; Price/mix up 5%; FX up 2%

AG 48%

 Net Sales: Down (5%) Q2 ’17 vs. Q2 ’16  Gross margin improved 379 basis points compared to Q2 ‘16  Lower demand for Bias truck tires in Latin America  Volume down (11%); Price/mix up 2%; FX up 4%

Consumer 11%

EMC 41%

 Net Sales: Up 7% Q2 ‘17 vs. Q2 ’16  Gross margin declined 163 basis points compared to Q2 ‘16  Positive movement within aftermarket business  Volume up 7%; Price/Mix up 1%; FX down (1%)

$185 $153 $141 $151 8% 10% 11% 9%

• 2%

Q2 '14 Q2 '15 Q2 '16 Q2 '17 $80 $48 $42 $41 10% 14% 13% 17%

• 2%

Q2 '14 Q2 '15 Q2 '16 Q2 '17 Note: Certain amounts from prior years have been reclassified to conform to the current year’s presentation.

*See Slide 25 for Q2 Challenges on Raw Material impacts.

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Note: Gross Margin and Operating Income net of adjustments. Net Income and EPS adjusted for Noncontrolling Interest and non GAAP items.

Financial Overview: Summary Income & EPS

(Amounts in millions) Q2 2017 Q2 2016 YTD 2017 YTD 2016 Sales $364.4 $330.2 $721.9 $652.0 Gross Margin $43.6 $43.7 $83.3 $72.0 Gross Margin % 12.0% 13.2% 11.5% 11.0% Operating Income (Loss) $4.0 $2.6 ($3.1) ($8.9) Operating Income % 1.1% 0.8% (0.4%) (1.4%) Net loss applicable to common shareholders ($10.3) ($5.2) ($20.8) ($23.1) Earnings Per Share - Diluted ($0.17) ($0.10) ($0.35) ($0.43)

*See Slide 25 for Q2 Challenges on Raw Material impacts.

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Financial Overview: EBITDA Reconciliation

Q2 2017

USD Amounts in Millions

Q2 2017 Q2 2016 YTD 2017 YTD 2016 Net income (loss) (6.5) (3.8) (17.1) (16.1)

Provision for income taxes 0.1 3.6 3.6 4.7 Interest expense 7.3 8.0 15.0 16.5 Depreciation & amortization 15.0 15.4 29.5 30.6

EBITDA

15.9 23.2 31.0 35.6

FX

Foreign exchange gain (loss) (5.3) 2.2 (0.7) 7.0

Adjusted EBITDA

21.2 21.0 31.7 28.6

Adjustments

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*See Slide 25 for Q2 Challenges on Raw Material impacts.

Financial Appendix

Appendix

Sales – N. America vs. International

• 12 Quarters
• 8 Quarters
• 4 Quarters

Current Quarter

(Amounts in $ millions)

2014 2015 2016 2017

Sales - Total

$521.9 $376.1 $330.2 $364.4

Sales - N. America

$252.0 $178.1 $131.6 $155.8

Sales - International

$269.9 $197.9 $198.6 $208.6

Gross Margin

$57.4 $47.9 $43.7 $43.6

Gross Margin - N. America

$33.1 $28.9 $18.8 $17.7

%

13.1% 16.2% 14.3% 11.4%

Gross Margin - International

$24.3 $19.1 $24.9 $25.8

%

9.0% 9.6% 12.5% 12.4%

Gross Margin%

11.0% 12.7% 13.2% 12.0%

Operating Profit

$6.1 $4.4 $2.6 $4.0

Operating Profit - N. America

$8.6 $5.6 ($3.4) ($3.6)

%

3.4% 3.2%

• 2.6%
• 2.3%

Operating Profit - International

($2.6) ($1.2) $6.0 $7.5

%

• 0.9%
• 0.6%

3.0% 3.6%

Operating Profit %

1.2% 1.2% 0.8% 1.1%

Note: Gross Margin and Operating Income net of adjustments.

FINANCIAL SUMMARY

252 178 132 156 270 198 199 209

1.2% 1.2% 0.8% 1.1%

0% 1% 2% 3% 4% 5% 6% 7% 8% $0 $100 $200 $300 $400 $500 $600 2014 2015 2016 2017 Millions

Q2 - Sales / Operating Income (Amounts in Millions)

Sales - N. America Sales - International Operating Profit %

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Appendix

Working Capital

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Days Sales Outstanding (DSO) 61 55 55 53 59 55 Days A/P in Inventory (DPI) 88 93 100 95 88 96 Days Payable Outstanding (DPO) (45) (50) (54) (52) (56) (56) Cash Conversion Cycle 104 98 101 96 91 95 Cash & CDs $191,097 $207,238 $215,509 $197,827 $181,158 $153,236 Cash & CDs % of 12 Mo Sales 14.5% 16.3% 17.0% 15.6% 13.9% 11.5% 2016 2017 303 225 197 220 387 313 275 323 201 136 146 187

23.3% 26.7% 24.7% 24.4%

21% 22% 23% 24% 25% 26% 27% $0 $100 $200 $300 $400 $500 $600 $700 $800 2014 2015 2016 2017 Millions

Q2 - WORKING CAPITAL (Amounts in Millions)

AR Inventory AP Working Capital as % of Sales 32

Appendix

YTD Cash & CDs Activity

June 2017

$197.8 $153.2 29.5 27.7 24.2 6.5 2.0 1.7 1.3 15.2 17.1 29.1 34.9 43.7

• 50.0

100.0 150.0 200.0 250.0 300.0 350.0

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Appendix

Debt Structure

Q2 '17 Q1 '17 Q4 '16 Q3 '16 Q2 '16 Cash & CDs $153 $181 $198 $216 $207 Total Debt $451 $456 $506 $501 $504

6.875% Secured Notes Due 2020 $396 $396 $396 $396 $395 Titan Europe Credit Facilities $35 $36 $34 $37 $39 Other $20 $24 $76 $68 $70

Net Leverage (Net Debt / Trailing 12 Mos EBITDA) 5.83x 4.70x 5.52x 5.47x 11.18x Interest Expense $7.3 $7.7 $7.3 $8.7 $8.0

6.875% Secured Notes Due 2020 $6.9 $6.9 $6.9 $6.9 $6.9 Titan Europe Credit Facilities $0.0 $0.1 $0.4 $0.4 $0.2 Other $0.4 $0.7 $0.0 $1.4 $0.9

CASH / DEBT

$396 $35 $20 $0 6.875% Secured Notes Due Oct 2020 Titan Europe Credit Facilities Other $75m ABL Credit Facility Due Feb 2022 34

Appendix

Cost Structure

Raw Materials 55% Overhead 25% Labor 20%

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

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Investor Relations todd.shoot@titan-intl.com

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.

Company Website: www.titan-intl.com