Download - Investor Presentation FY 2017
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SAFE HARBOR STATEMENT: The accompanying material includes forward-looking comments and information
concerning the company’s expectations and objectives for the future. Readers of this material should understand that
these forward looking statements are based on the Company’s expectations and subject to a number of risks and
uncertainties, certain of which are beyond the Company’s control.
Actual results may differ materially from those projected in these forward looking statements as a result of certain factors
which are contained in the Company’s most recent 10K filing. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of
these risks and uncertainties, there can be no assurance that the forward-looking information contained in this document will in fact transpire.
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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 under the Goodyear Farm Tire and Titan Tire brands.
Titan International Overview
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Titan International Overview: 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
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COMPETITIVE ADVANTAGES
TITAN/GOODYEAR
MICHELIN
BRIDGESTONE
GKN
Titan International Overview: Portfolio
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Titan International Overview: Global Footprint
Source: Titan filings
North America
Quincy, IL
(International headquarters)
Bryan, OH
Des Moines, IA
Elkhorn, WI
Freeport, IL
Fort McMurray, AB, Canada
Saltville, VA (closing)
Saskatoon, SK
Union City, TN
Winston-Salem, NC
Latin / South America
Atibaia, Brazil
Iquique, Chile
Lima, Peru
São Paulo, Brazil
Santiago, Chile
Naucalpan de Juarez, Mexico
Buenos Aires, Argentina
Europe
Ceprano, Italy Kidderminster, UK
Fanano, Italy Monreal del Campo, Spain
Finale Emilia, Italy Potenza, Italy
Flers, France St. Helens, UK
Gevelsburg, Germany Valsamoggia, Italy
Jesi, Italy Volgograd, Russia
Australia
Emerald, QLD
Kalgoorie, WA
Karratha, WA
Mildura, VIC
Muswellbrook, NSW
Perth, WA
Port Hedland, WA
Sydney, NSW
Yatala, QLD
Asia / Africa
Aydin, Turkey
Jakarta, Indonesia
(closing)
Nuffield Springs,
South Africa
Tianjin, China
Tires
Wheels
Undercarriage
Mining Services
Distribution
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Large hp equipment (4WD tractors and Combines) remain well below historical averages. Smaller hp
tractor demand remains strong, but at lower ASP and gross margins than larger equipment
Grain prices remain low; resulting in lower farm income (began stabilizing somewhat beginning in 2016)
Used equipment inventory levels remain above historical averages, but declined within the past year
Used equipment values have stabilized and in some cases increased moderately recently
Tax Cuts & Jobs Act was passed making Section 179 deduction permanent and increasing limits. Bonus
depreciation is allowed for both new and used equipment, and is permitted at the 100% rate through 2022,
and phased down by 20% each year thereafter.
AGRICULTURE: Market Summary
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Private construction spending for resi and non-resi buildings continue to carry the industry
Larger construction equipment used for highways and infrastructure have recovered modestly from the lower base in recent years
Potential for a U.S. infrastructure bill, but not anticipated to have an impact until after 2018
Overall mining activity remains lower with commodity prices remaining at lower levels, but has improved somewhat recently within certain regions
OTR: Market Summary
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Financial Overview: Highlights & Challenges
Net sales increased $68.7 million to $376 million, up 22% year-over-year; the fourth consecutive quarter of significant YOY growth
For the first time since becoming a public company in 1993, experienced sequential growth each quarter throughout 2018
Gross profit increased $3.4 million (+11% YOY). After adjusting for the asset impairment noted below, GP increased $13.3 million (+42% YOY)
SG&A expenses were down $2.2 million (-6% YOY) to $35.1 million (9.3% of net sales); compared to prior year of $37.3 million (12.1% of net sales)
Loss from operations was $(4.9) million. After adjusting for the asset impairment, income from operations was $5.0 million (+$14.7 million YOY)
Earthmoving / Construction segment net sales increased 35% YOY during the quarter with all regions improving on increased volume
EBITDA was $10.2 million while adjusted EBITDA was $22.1 million (+$15 million YOY)
Cash and cash equivalents ended the quarter at $143.6 million
Q4 Highlights
Q4 Challenges & Unusual Items
Continued trend of lower volumes in Large Ag products (higher ASP and margin) driven by lower commodities / farm income / cash receipts
Loss on senior note repurchase of $18.6 million was recorded in connection with the completion of a tender offer settlement and redemption of
all outstanding $400 million principal amount of 6.875% senior notes due in 2020.
An asset impairment of $9.9 million was recorded relating to a previously announced fire at Titan Tire Reclamation Corporation. Insurance
proceeds are anticipated in future periods and these proceeds will be reflected in our financial results once the cash is received.
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Financial Overview: FY 2017 by Market
47%
41%
12%
GP: 14.7%
GP: 9.6% GP: 12.3%
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
Agriculture
Consumer
Earthmoving / Construction
FY 2017 Segment Revenue
Sales: $1.5B GP: 11.5% vs.FY16: +0.5%
⬆ 18% vs. FY 2016
⬆ 16% vs. FY 2016
⬆ 8% vs. FY 2016
⬇ 0.6% vs. FY 2016
⬆ 0.8% vs. FY 2016
⬆ 3.7% vs. FY 2016
Sa
les
GP
%
* GP% net of adjustments. See details for all 2017 adjustments on page 28.
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$924
$652$583
$690
12% 11% 13% 12%
$50
$150
$250
$350
$450
$550
$650
$750
$850
$950
$1, 050
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
FY '14 FY '15 FY '16 FY '17
Financial Overview: Sales and Gross Margin
Net Sales: Up 18% FY ‘17 vs. FY ‘16
Gross margin declined 64 basis points compared to FY ’16
Improvements in both OEM and Aftermarket businesses
Volume up 13%; Price/mix up 2%; FX up 3%
AG
47%
Net Sales: Up 8% FY ’17 vs. FY ’16
Gross margin improved 367 basis points compared to FY ‘16
Volume up 1%; Price/mix up 1%; FX up 5%
Consumer
12%
EMC
41%
Net Sales: Up 16% FY ‘17 vs. FY ’16
Gross margin improved 81 basis points compared to FY ‘16
Positive movement within aftermarket business
Volume up 13%; Price/Mix up 2%; FX up 1%
$685
$567$524
$609
6% 8% 9% 10%
$100
$200
$300
$400
$500
$600
$700
$800
-2%
8%
18%
28%
38%
48%
58%
68%
78%
FY '14 FY '15 FY '16 FY '17
$287
$176$158
$170
10%11%
11% 15%
$0
$25
$50
$75
$100
$125
$150
$175
$200
$225
$250
$275
$300
$325
-2%
8%
18%
28%
38%
48%
58%
68%
78%
FY '14 FY '15 FY '16 FY '17
Note: Certain amounts from prior years have been reclassified to conform to the current year’s presentation.
* GP% net of adjustments. See details for all 2017 adjustments on page 28.
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Financial Overview: Summary Income & EPS
(Amounts in millions) 2017 2016 2015 2014
Sales $1,468.9 $1,265.5 $1,394.8 $1,895.5
Adjusted Gross Margin $168.2 $138.9 $134.7 $180.6
Adjusted Gross Margin % 11.5% 11.0% 9.7% 9.5%
Adjusted Operating Income (Loss) $3.2 ($25.0) ($26.7) ($16.1)
Adjusted Operating Income % 0.2% (2.0%) (1.9%) (0.8%)
Adjusted Net loss attributable to Titan ($28.9) ($37.6) ($77.7) ($26.3)
Adjusted Earnings Per Share - Diluted ($0.49) ($0.70) ($1.45) ($0.49)
* Amounts are shown net of adjustments. See details for all 2017 adjustments on page 28.
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Financial Overview: Income Reconciliation
Q4 2017USD Amounts in Millions Q4 2017 Q4 2016 FY 2017 FY 2016
Net loss applicable to common shareholders (32.7) (14.7) (66.4) (47.2)
Remove redemption value adjustment (2.4) (1.1) (6.4) (9.6)
Net income (loss) attributable to Titan (30.3) (13.6) (60.0) (37.6)
Contingency accrual 6.5
Debt termination expense 18.6 18.6
Asset impairment 6.0 6.0
Adjusted net income (loss) attrib. to Titan (5.7) (13.6) (28.9) (37.6)
Adjusted EPS - Diluted (0.10) (0.25) (0.49) (0.70)
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Financial Overview: EBITDA Reconciliation
Q4 2017USD Amounts in Millions Q4 2017 Q4 2016 FY 2017 FY 2016
Net income (loss) (35.7) (14.6) (64.1) (39.8)
Provision for income taxes 5.2 0.7 11.2 3.3
Interest expense 7.7 7.3 30.2 32.5
Debt termination expense 18.6 - 18.6 -
Depreciation and amortization 14.4 14.9 58.4 59.8
EBITDA 10.2 8.3 54.4 55.8
Contingency accrual - - 6.5 -
Foreign exchange gain (loss) 2.0 (1.1) 2.0 (8.6)
Asset impairment 9.9 - 9.9 -
Adjusted EBITDA 22.1 7.1 72.8 47.3
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tme
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Appendix
Sales – N. America vs. International-12 Quarters -8 Quarters -4 Quarters Current Quarter
(Amounts in $ millions) 2014 2015 2016 2017
Sales - Total $1,895.5 $1,394.8 $1,265.5 $1,468.9
Sales - N. America $910.1 $664.5 $523.2 $600.4
Sales - International $985.4 $730.3 $742.3 $868.5
Gross Margin $180.6 $134.7 $138.9 $168.2
Gross Margin - N. America $105.3 $71.1 $56.7 $65.4
% 11.6% 10.7% 10.8% 10.9%
Gross Margin - International $75.3 $63.6 $82.2 $102.8
% 7.6% 8.7% 11.1% 11.8%
Gross Margin% 9.5% 9.7% 11.0% 11.5%
Operating Profit ($21.1) ($26.7) ($25.0) $3.2
Operating Profit - N. America $10.1 ($18.1) ($34.6) ($25.4)
% 1.1% -2.7% -6.6% -4.2%
Operating Profit - International ($31.2) ($8.6) $9.6 $28.6
% -3.2% -1.2% 1.3% 3.3%
Operating Profit % -1.1% -1.9% -2.0% 0.2%
Note: Gross Margin and Operating Income net of adjustments.
FINANCIAL SUMMARY
910
664 523 600
985
730 742
869
-1.1%-1.9%
-2.0%
0.2%
-4%
-2%
0%
2%
4%
6%
8%
$0
$500
$1,000
$1,500
$2,000
2014 2015 2016 2017
Mill
ions
Full Year - Sales / Operating Income (Amounts in Millions)
Sales - N. America Sales - International Operating Profit %
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Appendix
Working CapitalQuarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Days Sales Outstanding (DSO) 61 54 55 54 59 55 58 55
Days A/P in Inventory (DPI) 88 92 100 95 88 96 95 98
Days Payable Outstanding (DPO) (45) (49) (54) (52) (56) (56) (53) (56)
Cash Conversion Cycle 104 97 101 97 91 95 100 97
Cash & CDs $191,102 $207,244 $215,515 $197,827 $181,158 $153,236 $155,675 $143,570
Cash & CDs % of 12 Mo Sales 14.5% 16.3% 17.0% 15.6% 13.9% 11.5% 11.1% 9.8%
2016 2017
199 177 179227
341276 272
340
146 123 148195
25.7%
26.9%
24.7% 24.7%
24%
24%
25%
25%
26%
26%
27%
27%
28%
$0
$100
$200
$300
$400
$500
$600
2014 2015 2016 2017
Mill
ion
s
Q4 - WORKING CAPITAL (Amounts in Millions)
AR Inventory AP Working Capital as % of Sales
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Appendix
YTD Cash & CDs ActivityDecember 2017
$197.8
$143.6
58.4
37.3
24.4
15.32.7 1.7 0.8 4.3
32.6
38.5
55.6
64.1
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
Millio
ns
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Appendix
Debt Structure
Q4 '17 Q3 '17 Q2 '17 Q1 '17 Q4 '16
Cash & CDs $144 $156 $153 $181 $198
Total Debt $451 $447 $451 $456 $506
6.50% Secured Notes Due 2023 $394 $0 $0 $0 $0
6.875% Secured Notes Due 2020 $0 $396 $396 $396 $396
Titan Europe Credit Facilities $34 $34 $35 $36 $34
Other $23 $17 $20 $24 $76
Net Leverage (Net Debt / Trailing 12 Mos EBITDA) 4.34x 4.94x 5.83x 4.70x 5.52x
Interest Expense $7.6 $7.5 $7.3 $7.6 $7.0
6.50% Secured Notes Due 2023 $2.9 $0.0 $0.0 $0.0 $0.0
6.875% Secured Notes Due 2020 $4.0 $6.9 $6.9 $6.9 $6.9
Titan Europe Credit Facilities $0.3 $0.1 $0.0 $0.0 $0.1
Other $0.5 $0.5 $0.4 $0.7 $0.0
CASH / DEBT
$394
$34 $23 $0
6.50% Secured NotesDue 2023
Titan Europe Credit Facilities Other $75m ABL Credit FacilityDue Feb 2022
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Appendix
Cost Structure
Raw
Materials
~50-55%
Overhead
~30-35%
Labor
~10-15%
Primary Raw MaterialsGP Cost Structure Breakdown
Steel
Natural Rubber
Synthetic Rubber
Carbon Black
Nylon
Investor Relations
SAFE HARBOR STATEMENT: The accompanying material includes forward-looking comments and information concerning the company’s expectations and objectives for the
future. Readers of this material should understand that these forward looking statements are based on the Company’s expectations and subject to a number of risks and
uncertainties, certain of which are beyond the Company’s control.
Actual results may differ materially from those projected in these forward looking statements as a result of certain factors which are contained in the Company’s most recent 10K
filing. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this document will in fact transpire.
Company Website:
www.titan-intl.com