TITAN INTERNATIONAL INC Q1 FY2026 earnings call

Paul mentioned Q1 marked a solid start with revenues and adjusted EBITDA near the high end of guidance ranges despite end market headwinds. Titan's diverse product portfolio, global footprint, and one-stop shop distribution are competitive advantages. They prioritized being highly responsive to customers. Discussed ag market conditions in the U.S., South America, and Europe. EMC business showed growth, and consumer segment had positive trends. Highlighted innovation like LSW lineup to help farmers reduce fuel usage. Tony noted sales growth, segment details, SG&A, operating cash, CapEx, free cash flow, tax expense, and details about the plant closure in Jackson Tennessee.

In Q1, sales grew 2.9% year-over-year. EMC segment sales led growth, expanding 11% to $160 million. Ag segment sales were relatively flat from the prior year and slightly down organically. U.S. aftermarket sales were flat in the quarter. LSW sales increased. Brazilian ag business moderated due to higher input costs and high interest rates. Consumer Q1 sales were down modestly from the prior year. EMC gross margin in Q1 was 11.3% versus 10.4% in the prior year. Ag gross margin was 12.1% versus 12.4% in the prior year. Consumer gross margin improved to 19.9% compared with 19.6%.

Q2 2026 guidance: revenues $470 million to $490 million, adjusted EBITDA $25 million to $30 million. Fiscal year 2026 guidance remains unchanged: revenues $1.85 billion to $1.95 billion, adjusted EBITDA $105 million to $115 million. Q2 tax expense expected to be in the $4 to $5 million range. The plant closure in Jackson Tennessee had a $25 million restructuring expense, with an estimated $7 million cash cost to close and annual cash savings of $5 million starting next year.

Geopolitical developments affecting end markets, uncertainty in the ag market rebound timing, political climate in Brazil impacting ag business, competition in the European construction wheel market, timing mismatch of price increases with OEM contracts due to the Iran conflict, and potential impact of Section 232 tariff changes on costs and pricing.

Q: On AG markets in Europe, rest of South America compared to North America; A: Europe is more stable with Titan winning business, Brazil is affected by political climate, and North America has improving margins but uncertainty on the rebound timing.

Q: OEMs' thoughts on 2027; A: It's early to tell due to global disruptions, but some customers showed a small uptick in the remaining forecast for 2026.

Q: Impact of Section 232 tariff changes; A: There will be some cost increases but other parts of the business will benefit, resulting in a net-positive effect.

Q: Raw materials sourced from the Hormuz region; A: There is no direct impact.

Q: Europe as a strength; A: Titan has an integrated supply chain, low-cost plants in Turkey, and a joint venture partner in China, allowing them to win ag business in Europe.

Q: 2Q guide vs full year margin; A: The Q2 margin is pressured due to the timing of cost and price changes in contracts, but the rest of the year is expected to benefit.

Q: What is needed for the ag recovery; A: Stability in the world and improved farmer sentiment.

Q: Restructuring or impairment charges in 2Q; A: No impairment charges, but there will be restructuring expenses related to relocation.

Q: R&D expenditure; A: There is excitement in the consumer segment with products like those using the Goodyear brand.

Q: Construction to mining markets; A: Titan's business is diversified, and they are watching the situation with German OEMs in the European construction wheel market.

Q: U.S. farm incomes and subsidies; A: Secretary Besson supports farmers, but it's hard to tell the impact right now.

Q: Brazil election impact; A: Uncertainty from the election creates pullback in orders, but Titan's team in Brazil manages volatility well