TITAN INTERNATIONAL INC Q4 FY2024 earnings call

Farmer Sentiment and Market Trends - Improvement in farmer sentiment due to new administration optimism, expecting government support for US agriculture. Corn prices up over 15% from a year ago, above $5 per bushel. - Brazil market showing increasing activity, with strong demand expected in OE and aftermarket channels. - Europe business slow, but hope for end to Ukraine situation. ### Business Segments - Ag: Early signs of cyclical recovery, farmer sentiment tied to crop prices, yield forecasts, and farm income. - Consumer: Aftermarket business held up better than OEMs, CarlStar integration driving synergies, off-road consumer products having steady replacement tire demand. - Mining: Solid mining activity with precious metal prices strong, driving demand for aftermarket undercarriage parts. ### Strategic Initiatives - One-stop-shop strategy expanded via CarlStar acquisition, focusing on cross-selling products. - Emphasis on innovation in new products and introducing existing products to new segments. - Geographical footprint and production flexibility to mitigate supply chain risks from tariffs.

In the fourth quarter, revenues were $384 million. Adjusted EBITDA was $9 million, and free cash flow was just under breakeven. Gross margin in the quarter was almost 11%. By segment, ag gross margins were 9%, EMC margins were around 6%, and consumer gross margins were 18%. Consumer's aftermarket business accounted for more than 60% of sales in the segment.

Q1 Guidance - Revenue guidance range for Q1 is $450 million to $500 million with adjusted EBITDA of $25 million. - Anticipate Q1 will show negative free cash flow initially, but expect cash flow to turn positive as year progresses and debt to be reduced.

Risks - Global economic and market conditions changes could impact business. - Uncertainty around tariff policies and their potential impact on supply chains. - OEM inventory corrections and adjustments could affect demand for products.

Q: Mike Schlinsky asked about cash flow and segment drivers.

A: David Martin said they will manage working capital based on visibility, and Paul Reitz discussed Ag, EMC, and consumer segments' outlooks with unique capabilities in each.

Q: Steve Ferazani followed up on customer sentiment and inventory disconnect.

A: Paul Reitz explained different trends between wheel/tire inventory and OEM inventory, and David Martin noted 2024 ag sector downturn due to destocking.

Q: Tom Kerr asked about tariffs and military opportunities.

A: Paul Reitz said Titan can move production based on customer needs and is working to pursue military opportunities with administration change.

Q: Kirk Ludtke inquired about third-party sourcing and tariff impact.

A: Paul Reitz talked about third-party sourcing to serve customers and minimal short-term tariff impact with long-term ability to mitigate supply chain risks.

Q: Brian Lantier asked about aftermarket opportunity, liquidity, and operating rates.

A: Paul Reitz discussed aftermarket percentage growth and target, David Martin talked about liquidity movement and operating rate analysis.