Q1 '16 Investor Presentation · PDF fileTitan International Overview Corporate Strategy To become the worldwide leader in manufacturing and distribution of wheels, tires, assemblies

Investor PresentationQ1 2016Investor PresentationQ1 2016

Titan International Overview

Titan International, Inc. 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 two distinct tire brands: Titan Tire and Goodyear Farm Tires.


Corporate 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


Customers

Market Summary

Overview by Market SegmentQ1 2016

47%

41%

12%GP Margin: 7.6%

GP Margin: 7.4%GP Margin: 12.6%

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, brakes and actuators

Agriculture

Consumer

Earthmoving / Construction

Q1 2016 Segment Revenue

Total: $321.8 million

21% decrease vs. Q1 2015



AGRICULTURE: Products/Brands

AGRICULTURE: Major 2015 Highlight

AGRICULTURE: Product Innovations

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Market Summary

Agricultural Drivers Mix Shift - Large hp equipment (4WD tractors and Combines) continue a cyclical downturn which began in

2014. Smaller hp tractor demand remains good, but at lower ASP and gross margins Passed legislation to reinstate tax incentives including Section 179 deduction (permanent) and bonus

depreciation (phased out in 2020) Grain prices remain at lower levels; resulting in lower farm income (although expected to stabilize in 2016) Used equipment inventory levels remain above average, but have started to decline recently Used equipment values have increased in Q1; first time since Q2 2013 Interest rates remain low for financing new equipment purchases

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Pr / Bushe

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Farm Commodity PricesCorn Soybeans

0%

20%

40%

60%

80%

100%

Global Ag Machinery ProductionEurope Americas Asia Rest of World

OTR: Products/Brands

OTR: Major 2015 Highlight

OTR: Product Innovations



Market Summary

Earthmoving/Construction Drivers

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 Mining remains weak with commodity prices low Strong U.S. dollar

‐60.0%‐50.0%

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10.0%

Cat Retail Machine SalesAsia/Pacific EAME Lat Am N Am World

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1,000

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1,400

U.S. Housing Starts

CONSUMER: Products/Brands

CONSUMER: Products Innovations

Financial Performance


Q1 Accomplishments & Challenges Improved Ag gross margin rate performance (84 bps) for the quarter despite a 21% sales decline compared to prior year

Operating profit decline of only $8 million on $250 revenue decline from 2014 levels

Reduced inventory during the quarter defying the customary Q4 to Q1 pattern. This is the result of our continued efforts to effectively manage our balance sheet and proactively manage our working capital

Cash ended the quarter at $191 million compared to $200 million at the beginning of the year which demonstrates our diligence in managing our liquidity despite the expected seasonal demands on working capital

Decreased material costs comprising steel, natural and synthetic rubber and carbon black; under our Business Improvement Framework there are a number of design and sourcing initiatives underway to further remove costs from the material content of our products

Continued investments in R&D, sales and marketing (specifically supporting LSW) adding value for the long term

Continued momentum with our customers with innovative solutions such as LSW in North America, as well as the waffle wheel in Europe and a single piece crane wheel used by crane manufacturers

Accomplishments

Challenges Continued downward trend in Large Ag products (higher ASP and margin) driven by lower commodities / farm income / cash receipts

Weak mining market conditions which impacts North America, ITM and Australia business units

Strong US dollar impacting U.S. exports and reported sales

Decreased OEM production levels commensurate with lower demand driven by lower farm income and lower commodity prices


Financial Summary

Note: Gross Margin and Operating Income net of adjustments.

Net Income and EPS adjusted for Noncontrolling Interest and non GAAP items.

(Amounts in millions) Q1 2016 Q1 2015

Sales $321.8 $402.1

Gross Margin $31.9 $42.8

Gross Margin % 9.9% 10.6%

Operating Income ($7.9) $0.8

Operating Income % (2.5%) 0.2%

Adjusted Net Income ($9.2) $3.2

Adjusted Earnings Per Share-Diluted ($0.17) $0.06


Adjusted Income

Note: Adjustments for non GAAP items are net of taxes.


Adjusted EBITDA

$311 $317

$194$153

17% 15%12% 13%

$ 10 0

$ 15 0

$ 20 0

$ 25 0

$ 30 0

$ 35 0

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5 %

1 0%

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2 0%

2 5%

3 0%

3 5%

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4 5%

5 0%

Q1 '13 Q1 '14 Q1 '15 Q1 '16


Sales and Gross Margin by Market Net Sales: Down (21%) Q1 ‘16 vs. Q1 ‘15

Equipment dealers report sales erosion of 10-12% vs. Q1 ‘15

Reduced OEM demand for products

FX devaluation of (6%); volume down (12%); price/mix down (3%)

AG47%

Net Sales: Down (25%) Q1 ’16 vs. Q1 ‘15

Reduced demand in the Chinese market for High Speed Train brakes

FX devaluation of (16%); volume down (13%); price/mix up 4%

Consumer12%

EMC41%

Net Sales: Down (17%) Q1 ‘16 vs. Q1 ‘15

Key customer volume reductions

FX devaluation of (4%); volume down (8%); price/mix down (5%)

$210$153 $159 $132

18%

3%8% 7%

$ 0

$ 50

$ 10 0

$ 15 0

$ 20 0

$ 25 0

$ 30 0

$ 35 0

‐2 %

8 %

1 8%

2 8%

3 8%

4 8%

5 8%

6 8%

7 8%

Q1 '13 Q1 '14 Q1 '15 Q1 '16

$58$69

$50$37

11% 6% 14%8%

$ 0

$ 25

$ 50

$ 75

$ 10 0

$ 12 5

‐2 %

8 %

1 8%

2 8%

3 8%

4 8%

5 8%

6 8%

7 8%

Q1 '13 Q1 '14 Q1 '15 Q1 '16

Note: Certain amounts from prior years have been reclassified to conform to the current year’s presentation. The company has implemented new technology resources which allow for more accurate segregation of sales and profit by segment. The previous year segment information has been updated to be consistent. Gross Margin net of adjustments.

Financial Appendix

Appendix

Sales – N. America vs. International

Appendix

Working Capital

Appendix

YTD Cash Activity

Appendix

Debt Structure

Appendix

Cost Structure

RawMaterials

55%

Overhead25%

Labor20%

Primary Raw MaterialsCost Structure Breakdown

Steel

Natural Rubber

Synthetic Rubber

Carbon Black

Nylon

Documents

Q1 '16 Investor Presentation · PDF fileTitan International Overview Corporate Strategy To become the worldwide leader in manufacturing and distribution of wheels, tires, assemblies