TITAN INTERNATIONAL INC Q2 FY2025 earnings call

• Titan had solid Q2 results within guidance, driving positive free cash flow. - Took operational, commercial, and administrative actions in response to market softness. - Tariffs impacted the consumer segment, but some July orders from consumer customers. - Highlighted strategic partnership with Brazilian wheel manufacturer Roderos, initial minority investment of $4 million for 20% stake. - Focused on managing costs effectively, staying close to customers, and being prepared to ramp up demand. - Non-U.S. markets had cross currents, with Europe flattish and Brazil best among operating regions. - EMC segment activity unchanged from Q1, driven by European infrastructure investment.

In the second quarter, Titan's revenues were $461 million with adjusted EBITDA of $30 million. The ag segment had farmers guardedly optimistic with inventory considerations. Non-U.S. markets saw Europe with flattish demand and Brazil faring best. The consumer segment was impacted by tariffs but saw some orders in July. The EMC segment had little change from Q1, driven by European infrastructure investment. Gross margins improved sequentially, SG&A expense was $52 million (11% of sales) up 1.5% year-over-year, R&D expenses were $4.3 million, and operating income was $10 million.

• Q3 guidance: revenues $450 million to $475 million, adjusted EBITDA $25 million to $30 million, tax expense around $4 million to $5 million similar to Q2. - Sequential comparison positive as consumer segment rebounds due to low inventories, countering normal seasonality with plant shutdowns and holiday schedules.

• Tariffs and trade policy uncertainties impacting market sentiment. - Interest rates being a gating factor for customer purchasing decisions. - Uncertainty around tariffs and trade policy creating a cautious mindset among buyers.

Q: Mike Shlisky asked about Q3 guidance where sales could be similar to 2Q but EBITDA down, and what's behind the assumption.

A: David Martin said it's due to normal seasonality with plant shutdowns and holiday schedules, and moderate product mix change.

Q: Steve Ferazani asked about consumer gross margin improvement despite tariff impact.

A: David Martin said it was due to product mix, and Paul Reitz added pricing is neutral.

Q: Derek Soderberg asked about Japan trade deal and Brazil investment.

A: Paul Reitz discussed Japan trade deal being net positive and details on Roderos investment as a minority stake.

Q: Joe Gomes asked about consumer segment confidence in temporary lull.

A: Paul Reitz said low inventory and potential positive resolution on tariffs and interest rates are reasons.

Q: Kirk Ludtke asked about Roderos investment and tariff impact on U.S. ag customers.

A: Paul Reitz discussed Roderos investment details and customers being cautiously optimistic about 2026 but well-positioned for Titan's capabilities.