TITAN INTERNATIONAL INC Q3 FY2024 earnings call

• Market conditions: Current cyclical ag bottom is deep, with Q4 being a seasonal low compounded by OEM and dealer inventory slashing. The election impacts trade policy, and clarity on this could boost capital equipment demand. - Initiatives: LSW tires for mid-sized tractors with fuel savings, improved field performance, and reduced soil compaction; BPO technology for consumer segments; re-entry into military market; synergies from Carlstar acquisition including Titan branded high-speed trailer tire and expanding Carlstar products into new geographies; focus on aftermarket business offsetting OEM weakness; product innovation via strategic supplier partnerships to expand tire and wheel portfolio.

The ag segment had margins of 9.6%, the EMC segment had 8.6%, and the Consumer segment had an adjusted gross margin of 22.9%. Revenues for the third quarter were $448 million. The ag segment was heavily impacted by low volume in global plants, EMC was also affected by low plant levels, while the Consumer segment's aftermarket business held well through the quarter.

• Q4 revenues guided to $375 million to $425 million, adjusted EBITDA guided to $0 million to $10 million, free cash flow breakeven. - Continued share repurchases, with net debt at quarter end $291 million or 1.9x trailing 12 month adjusted EBITDA. - Focus on working capital management, with CapEx expected to be lower in Q4 and tax rate expected to normalize in 2025.

• Macroeconomic conditions posing challenges. - Interest rates impacting consumer segments like recreational vehicles and riding mowers. - High inventory levels in EMC. - Uncertainty in ag market recovery tied to factors like crop prices and trade policy.

Q: Steve Ferazani asks about significant variability in segment performance, specifically Consumer segment margins.

A: David Martin says Consumer segment has healthy aftermarket business mix holding well, while Ag and EMC are weighed down by low plant volumes.

Q: Steve Ferazani asks about seasonality in Consumer business vs others.

A: David Martin says Consumer business has more even seasonality than Ag and EMC.

Q: Steve Ferazani asks about catalysts for Ag market recovery and military contract/small tires.

A: Paul Reitz says crop prices are key driver, military sales are accretive and using innovation to recapture, small tires and wheels have similar or less competition with Carlstar.

Q: Unidentified Analyst asks about operating rates, working capital, cash balances, and Titan tractor business.

A: Paul Reitz says operating rates impact margins, inventory is key for working capital, cash is mostly offshore, and Titan tractor is core but Board would consider divestment if approached.

Q: Brian Lantier asks about trade shows, military sales pitch, and share count guidance.

A: Paul Reitz says trade shows have energy around innovations, military sales pitch is about efficiencies and performance, David Martin says share count is in $63 million range.

Q: Kirk Ludtke asks about Carlstar synergies, sourcing, Q4 guidance, and ag prices.

A: David Martin says synergies are on track, Carlstar China facility is for sourcing, Q4 CapEx lower and working capital good, Paul Reitz says ag prices affected by crop supply and demand drivers like protein consumption and government policies.