Investor Presentation November 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. Russian Ag has been challenged with both higher 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 showing signs of weakening 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: Highlights & Challenges Q3 Financial Highlights Net sales were $345.9 million, a $38.8 million decrease YoY, net sales would have decreased nearly $33.1 million on a constant currency basis SGARD expenses were $37.3 million (10.8% of net sales) Loss from operations was $12.6 million Net loss applicable to common shareholders was $19.6 million and EPS was $(0.33), with adjusted EPS of $(0.28) Adjusted EBITDA was $8.5 million Operating cash flow of $41 million and free cash flow of $31 million Q3 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 Conditions in North America Ag have not improved from the difficult planting season and uncertainty abounds from a global economic perspective. These factors have added to weakening demand beyond North American Ag and into the global construction market, which led to OEMs producing below retail demand levels during the quarter, which had a significant effect on our performance . Gross profit and margin declined as a result of overall lower sales and continued underperformance in our N.A. Wheel operation from inventory at higher than current prevailing prices of steel, which compressed gross profit ($7 million). In Australia, we experienced lower margins as we continue to liquidate our OTR tire inventories as we shift away from this business. The decline in gross profit from the third quarter of 2018 to this year was over $3 million . 21
Financial Overview: Quarterly Comparison 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) Q3 2019 Segment Revenue GP: 11.1% 10% ⬇ 4.1% vs. Q3 2018 Sales ⬇ 13.7% vs. Q3 2018 Agriculture 45% ⬇ 18.0% vs. Q3 2018 Earthmoving / Construction GP: 6.7% GP: 8.3% ⬇ 5.5% vs. Q3 2018 Consumer 45% GP % ⬇ 1.6% vs. Q3 2018 ⬇ 1.3% vs. Q3 2018 Sales: $345.9M GP: 7.8% vs. Q3’18: -3.6% 22
Financial Overview: Sales and Gross Margin 50 % $1 90 $171 $163 45 % $157 $1 70 Net Sales: Declined 4.1% Q3‘19 vs . Q3‘18 40 % $139 $1 50 35 % 30 % Gross margin declined ~554 bps YoY $1 30 AG 25 % 13% $1 10 45% 12% 20 % 11% Volume down (0.6%); Price/mix down (2.4%); FX down (1.1%) 15 % 7% $9 0 10 % $7 0 5% 0% $5 0 Q3 '16 Q3 '17 Q3 '18 Q3 '19 $1 90 $180 78 % Net Sales: Declined 13.7% Q3‘19 vs. Q3‘18 $1 80 % 68 $1 70 $156 % 58 $156 Gross margin declined ~157 bps YoY $1 60 % 48 $1 50 EMC Volume down (9.3%); Price/mix down (2.3%); FX down (2.1%) 38 % 45% $1 40 $129 % 28 $1 30 10% 9% 9% 8% 18 % $1 20 8% $1 10 2% - $1 00 Q3 '16 Q3 '17 Q3 '18 Q3 '19 $50 $44 78% Net Sales: Declined 18.0% Q3‘19 vs. Q3‘18 $41 $39 68% $34 Gross margin declined ~343 bps YoY 58% Consumer 48% 10% Volume down (21.3%); Price/mix up 4.3%; FX down (1.0%) $25 38% 14% 28% 15% 12% 11% 18% 8% - 2 % $0 Q3 '16 Q3 '17 Q3 '18 Q3 '19 * GP% net of adjustments. Note : Certain amounts from prior years have been reclassified to conform to the current year’s presentation. 23
Financial Overview: Summary Income & EPS (Amounts in millions) Q3 2019 Q3 2018 Q3 2017 Q3 2016 Sales $345.9 $384.7 $371.0 $306.2 Gross Margin $27.1 $43.7 $39.7 $34.9 7.83% 11.36% 10.7% 11.4% Gross Margin % Operating Income (Loss) ($12.6) $4.8 ($5.1) ($6.3) Operating Income % (3.6%) 1.3% (1.4%) (2.1%) Net income (loss) attrib. to Titan ($19.1) $2.3 ($12.0) ($8.0) Earnings per share - Diluted ($0.33) ($0.03) ($0.22) ($0.17) Note : Certain amounts from prior years have been reclassified to conform to the current year’s presentation. 24
Financial Overview: EBITDA Reconciliation EBITDA Reconciliation (Non-GAAP) Q3 2019 Q3 2018 YTD 2019 YTD 2018 USD Amounts in Millions Net income (20.0) 2.7 (25.7) 27.1 Adjustments Provision for income taxes 2.1 2.8 0.8 3.7 Interest expense 8.4 7.6 24.6 22.8 Depreciation and amortization 13.5 13.2 41.3 43.4 EBITDA 3.9 26.3 41.0 97.0 Foreign exchange loss 2.3 (0.9) (2.2) 7.2 Adj ITM IPO costs 2.3 - 2.3 - Adjusted EBITDA 8.5 25.5 41.1 104.2 25
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