Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Titan International Inc (NYSE:TWI) reported Q1 results at the higher end of their guidance ranges for revenue and adjusted EBITDA.
• The company has a diversified global business model, allowing flexibility in production and strategic planning.
• Titan's strong US manufacturing presence, with 8 plants, positions it well in the face of global trade uncertainties.
• The company is well-positioned in Brazil, benefiting from increased exports to China amid US trade tensions.
• Titan's consumer segment continues to lead in gross margins, driven by a higher proportion of aftermarket sales.

Negative Points

• The agricultural equipment demand is dampened due to uncertainty from retaliatory tariffs affecting US farmers.
• European business is impacted by the ongoing situation in Ukraine and changes in global trade policy.
• The EMC segment is experiencing sluggish OEM demand, particularly in Europe and the US.
• The company faces challenges with visibility and planning due to dislocation in inventory levels and production cycles.
• Titan's net debt at the end of the quarter was $411 million, with a focus on debt reduction in 2025.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with TWI.

Q: Can you clarify how Titan International sources rubber and whether tariffs impact your costs? A: (David Martin, CFO) We primarily source rubber from West Africa and have solid contracts in place, minimizing tariff impacts. Our steel sourcing is mostly domestic, and other materials like fabric and chemicals are sourced from areas with low tariffs. We have mechanisms in place to adjust pricing with customers based on raw material costs, ensuring minimal impact from tariffs.

Q: How is the global agricultural market performing, and do you see any regional strengths? A: (Paul Wrights, CEO) The global agricultural market remains strong, with Brazil showing significant growth due to increased grain exports to China. Titan's presence in key agricultural regions like Brazil and the US allows us to adapt to market shifts. While the US market faces challenges, our diversified product portfolio positions us well to meet global demand.

Q: Has visibility with OEMs improved since last year, and how does it affect your planning? A: (Paul Wrights, CEO) Visibility is not yet back to pre-2024 levels, but we are adapting to current market conditions. As inventory levels stabilize, we expect visibility to improve, which will enhance our operational efficiency and financial performance. We are prepared to handle the current environment and anticipate better visibility in the future.

Q: How does Titan plan to leverage the expanded Goodyear licensing agreement? A: (Paul Wrights, CEO) The expanded Goodyear licensing agreement allows us to apply the Goodyear brand to former Carlstar products, enhancing market penetration. This partnership accelerates our product development and sales efforts, leveraging the strong brand recognition of Goodyear to open new market opportunities.

Q: What is the current sentiment among farmers, and how does it impact equipment demand? A: (Paul Wrights, CEO) Farmer sentiment has decreased, but it doesn't always correlate directly with equipment purchases. Commodity prices are stable, and government support provides a safety net for farmer income. We believe the situation is more stable than some reports suggest, and we continue to engage with farmers and dealers to understand their needs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.