Titan International Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 1, 2025
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Operator

Good morning all and thank you for joining us for the Titan International Inc. First Quarter twenty twenty five Earnings Call and Webcast. At this time, all participants have been placed on listen only mode and we will open the floor for questions and comments after the It is now my pleasure to turn the floor over to Alan Snyder, Vice President, Financial Planning and Investor Relations at Titan. Mr. Snyder, the floor is yours.

Alan Snyder
Alan Snyder
VP of Financial Planning & Investor Relations at Titan International

Thank you, and good morning. I'd like to welcome everyone to Titan's first quarter twenty twenty five earnings call. On the call with me today are Paul Reitz, Titan's President and CEO and David Martin, Titan's Senior Vice President and CFO. I will begin with a reminder that the results we are about to review were presented in the earnings release issued yesterday along with our Form 10 Q, which was also filed with the Securities and Exchange Commission yesterday. As a reminder, during this call, we will be discussing certain forward looking information, including the company's plans and projections for the future that involve risks, uncertainties and assumptions that could cause our actual results to differ materially from the forward looking information.

Alan Snyder
Alan Snyder
VP of Financial Planning & Investor Relations at Titan International

Additional information concerning factors that either individually or in the aggregate could cause actual results to differ materially from these forward looking statements can be found within the Safe Harbor statement included in the earnings release attached to the company's Form eight ks filed earlier as well as our latest Form 10 ks and Forms 10 Q, all of which have been filed with the SEC. In addition, today's remarks may refer to non GAAP financial measures, which are intended to supplement, but not be a substitute for, the most directly comparable GAAP measures. The earnings release, which accompanies today's call, contains financial and other quantitative information to be discussed today as well as a reconciliation of the non GAAP measures to the most comparable GAAP measures. Q1 earnings release is available on the company's website. A replay of this presentation, a copy of today's transcript and the company's latest quarterly investor presentation will all be available soon after the call on Titan's website.

Alan Snyder
Alan Snyder
VP of Financial Planning & Investor Relations at Titan International

I would now like to turn the call over to Paul.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Thanks, Alan, and good morning. We are pleased to report Q1 results that were at the higher end of our guidance ranges for revenue and adjusted EBITDA. Despite all the volatility floating around these days, the financial results for the quarter played out much as we'd expected. This was a good solid quarter that highlights the strengths of our broad portfolio of market leading products serving a diversified base of geographies and segments. As we noted in our earnings release, our leadership position in our markets coupled with our customer centric mindset are the core of who we are and by sticking to that focus we are able to navigate turbulent times such as these.

Paul Reitz
Paul Reitz
CEO & President at Titan International

We are actively assessing the evolving tariff situation and will be utilizing data driven analysis in our decision making process. Our diversified global business model enables us to be flexible with production and then we'll also be patient in evaluating our strategic business plans in light of the evolving trade scenarios. I do want to stress that we believe the tariffs applied consistently across the globe should benefit us in the longer term. Despite the short term uncertainty and confusion that nearly all businesses are facing as currently as we watch things getting negotiated and sorted out. I think this is a good time to also remind everyone that Titan has always been a proud with eight plants across The U.

Paul Reitz
Paul Reitz
CEO & President at Titan International

S. Over time, we have acquired manufacturing assets in other countries that allows us to better serve our global customers, but we've always maintained a strong U. S. Manufacturing presence. So moving over to our segments, I'm going start with Ag.

Paul Reitz
Paul Reitz
CEO & President at Titan International

We are leveraging our connection to end users by getting out to visit farmers and dealerships to really make sure we get an accurate picture of the current operating environment. On the whole, farmers appear to be guardedly optimistic that once the dust has settled, they will be okay with solid farmer income. Crop prices remain in healthy ranges and they firmly believe that government stands behind them as retaliatory tariffs impact their ability to sell their harvests outside The U. S. The uncertainty that businesses are facing is no different for farmers and is putting a damper on equipment demand in the short run.

Paul Reitz
Paul Reitz
CEO & President at Titan International

This will eventually pass and the cycle will turn and that's where Titan's broad product portfolio and our expansive production capability shine through. Our teams need to continue to manage costs effectively while also staying prepared to ramp up to meet demand when needed. While overall agriculture orders remain muted, we did see some positive OEM activity in The U. S. As a key customer had extensive drop in orders in Q1.

Paul Reitz
Paul Reitz
CEO & President at Titan International

These orders came in prior to the tariff introduction, so we believe they were driven by demand not pull forward buys. The experience of our OneTitan team continues to manage cycles like this, which really makes an important asset for us and our customers when the cycle turns because it typically turns fast. Our team and breadth of production capabilities are best suited to meet our customers' needs in those moments. And that's what I was highlighting with talking about that key customer dropping in those Q1 orders. We have competitors that have offered buyouts to their entire labor force while Titan is able to adjust to customers on the fly and meet their needs.

Paul Reitz
Paul Reitz
CEO & President at Titan International

And that again approves the expansive capabilities of Titan and our team. So moving over to Brazil, which historically is a good leading indicator for the broader global ag market, we have seen our business strengthening since Q4 of last year. Harvest season has gone well and it seems that farmers there will benefit from The U. S. Trade standoff by stepping up their exports to China.

Paul Reitz
Paul Reitz
CEO & President at Titan International

As the largest manufacturer of ag tires and undercarriage in Brazil, Titan is well positioned to benefit in South America. So looking at Europe, the economic and military investment into that region has become a priority along with the establishment of trade accords without The U. S. In the near term, European activity has been somewhat slowed down and basically stuck as the region continues to feel the effects of the situation in Ukraine while also working on the best path forward given the changes in the global trade policy. While our European business is being impacted in the short run, I want to mention that I was recently at our plant in Turkey and really excited to see our investments there to improve our overall European wheel capacity and lower our cost structure and things are coming together well nicely there.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Our consumer segment continues to be our gross margin leader. As a reminder, customers in that segment include both OEMs and aftermarket with a higher proportion of aftermarket sales than our other segments. End customers range from outdoor power sports equipment owners to businesses such as landscapers and golf courses. The latter group tends to use their equipment very regularly, which makes it a good source of aftermarket demand. That group also has a shorter replacement cycle for equipment since their businesses depend on operational uptime, which provides us a good diversification to our other segments.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Lastly, taking a look at our EMC segment, we are seeing the impact of the sluggish OEM demand, particularly in Europe and The U. S. It's worth noting that the type of work our products are used in tend to be in large and long term type projects tied to mining and nonresidential infrastructure. Companies and governments base those decisions on a type of work of long term inputs. And as such, the near term trade negotiations have had an impact.

Paul Reitz
Paul Reitz
CEO & President at Titan International

To that extent, a region such as Europe sees a renewed emphasis on internal investment, changes in trade policy would be seen as a long term positive. Similarity, volatility becomes a durable aspect of global trade, precious metal prices would seem to have a long term positive bias, supporting mining investment. These demand drivers are a good counterbalance to what I just mentioned in the consumer segment and the ag segment which is our largest segment. The feedback we received recently from the Bauma tradeshow in Germany was similar to what I've been saying in my comments about our EMC capabilities in the last quarter And I've noted that we're in a good position with our innovations and product development along with our strong service capabilities. So we are very poised when the market returns to growth to be in a good position in this segment.

Paul Reitz
Paul Reitz
CEO & President at Titan International

While we are firmly believing that we are well positioned in all three of our segments, I want to make it clear that we are not sitting back waiting for the world to find its footing. We have a number of internal growth initiatives underway including our continued investment in new product development across all of our businesses, driving revenue synergies amongst our segments and our product families and then offering new third party sourced products. I've been talking recently about the further penetration of our LSWs in market segments where we really haven't market them as aggressively in the past. With that I'm referencing more the midsized type farms. I got to tell you man, we got some really strong independent data from a group of farmers on LSW performance and the accompanying yield improvements that they bring when compared to dual tires and rubber tracks that really amplifies the ROI in LSW to a payback of well under a year for a mid sized farm.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Our teams are working on rolling out that promotional material around this information and we are really excited about the prospects that it brings with it as well as a couple of the dealers that we've mentioned this to. Wrapping up, we are off to a solid start in 2025. There's certainly a lot going on in the world today and our business will continue to move forward. Farmers are working their fields, precious metal prices are driving mining activity and lawns are going to get mowed. I tightened our investments and our domestic positioning, one stop strategy and our organic growth initiatives have us poised to provide products as a solution to our customer needs in times of complexity and dislocation that we're seeing today, therefore supporting a long term growth trajectory.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Further illustrating our long term growth prospects is our recently announced expansion of the Goodyear licensing rights into new product segments. As most of you know and our customers know, we've had a nearly a twenty year strong relationship with the Goodyear farm brand that we remain deeply committed to. And that couples really well with our excitement about the prospects of adding the Goodyear name into light construction, industrial, ATV, lawn and garden and golf tires. So with that, I'm going turn it over to David now.

David Martin
David Martin
Senior VP & CFO at Titan International

Hey. Thank you, Paul, and good morning, and thanks to everyone listening in today. Paul talked about the tariffs earlier, and it is worth repeating that we are well positioned. We are among the only domestic manufacturers in our segments. And by virtue of that, we expect trade policy applied consistently around the globe to be a net positive for our business on a competitive basis.

David Martin
David Martin
Senior VP & CFO at Titan International

Like everyone, we hope that policy will be settled sooner than later as that will benefit our OEM customers along with everyone that buys their products, farmers to landscapers. At the same time, we will continuously evaluate our production strategies to fit the situation and we believe that we have strong plans to win the day. As Paul noted, our results for the first quarter were in line with our expectations and at the higher end of our guidance range and it marked a nice sequential improvement from the fourth quarter. Revenues in the first quarter were $491,000,000 with adjusted EBITDA of $31,000,000 Our gross margin in the first quarter was 14%, which was up from the 10.7% in the fourth quarter. That demonstrates the positive leverage that comes with increasing sales.

David Martin
David Martin
Senior VP & CFO at Titan International

Looking at our margins by segment in the quarter, all three showed expansion versus the fourth quarter. Ag gross margins were 12.4%, EMC was 10.4 and our consumer gross margins were 19.6%. Consumer continued to be our most profitable segment as the higher margin aftermarket business accounted for more than 65% of the sales in the segment. Our SG and A expense for the first quarter was $49,900,000 or 10% of sales compared to $39,000,000 in the prior year or 8% of sales. I want to remind everybody that we closed the acquisition of Carlstare in February of twenty four, so the first quarter of last year only included one month of SG and A expense for CoStar.

David Martin
David Martin
Senior VP & CFO at Titan International

Going forward, beginning with our second quarter results, our comparisons will be all on a like for like basis. Not including the inclusion of CoStar, our SG and A expense for legacy Titan was 2% lower than the first quarter of twenty twenty four. Our R and D expenses were $4,500,000 in the first quarter compared to $3,700,000 a year ago and relatively the same level with the $4,400,000 we spent in the fourth quarter of last year. Our operating income in the first quarter was almost $12,000,000 and reflected the combination of sales, margins and operational expenses I just noted. Also as expected, we began to increase our working capital balances, particularly accounts receivable and also inventories to a lesser extent, concurrently with the 107,000,000 sequential step up in sales, which resulted in a negative free cash flow for the quarter and that includes our CapEx of $15,000,000 Reiterating our commentary from last quarter, that usage of cash was expected and we fully expect to see improvements as the year goes on.

David Martin
David Martin
Senior VP & CFO at Titan International

Our net debt at the end of the quarter was $411,000,000 or 3.8 times trailing twelve month adjusted EBITDA. From a capital allocation standpoint, our primary focus in 2025 will continue to be paying down debt and our key investments in the business as we noted last quarter. We will curtail our capital investments in 2025 reflecting our cash flow expectations and the more challenging market climate, while we are still focused on the investments that drive our growth strategy. The first quarter income tax expense was $4,200,000 with an effective rate of almost 100%. Our elevated tax rate continues to be a function of where our profits and losses are distributed geographically and the associated tax jurisdictions that in each of those areas.

David Martin
David Martin
Senior VP & CFO at Titan International

Now moving on to our financial guidance for Q2 that we communicated yesterday. Our guidance range for the quarter are revenues of $450,000,000 to $500,000,000

David Martin
David Martin
Senior VP & CFO at Titan International

adjusted

David Martin
David Martin
Senior VP & CFO at Titan International

EBITDA of 25,000,000 to $35,000,000 which all reflects stability in our business in the second quarter. So reiterating our current prior comments on cash flow, we will continue to manage working capital tightly in the second quarter. And as we enter the second half of the year, we expect to see cash flow turn positive, allowing us to reduce our debt and continue our strategies. Our financial condition is solid. And let's just remember that we have a really good balance sheet and I'm fully confident that we're continuing to put ourselves in a really good position to accelerate our future performance.

David Martin
David Martin
Senior VP & CFO at Titan International

So thank you for your time this morning. And we would like to turn the call back over to Carly for the Q and A session.

Operator

Thank you very much. We'd now like to open the lines for Q Our first question comes from Mike Sklowski of D. A. Davidson. Your line is now open, Mike.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Good morning. Thanks for taking my question. I guess I wanted to start by maybe asking about how you source things like rubber. There are pretty high intended tariffs for some of the major rubber exporting countries like Vietnam or or or Thailand, which you can also source rubber. Other big countries that have rubber are in, West Africa where tariffs are being kept to a pretty low minimum, you know, 10% or the the least possible tariffs.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

So I guess I'm kinda wondering if you could clarify which one of those two is it for Titan, which one do you use more or do you use most of? And if you can comment also on your ability to to contractually pass through along, any higher, rubber costs or steel costs through your OEM contracts with your customers?

David Martin
David Martin
Senior VP & CFO at Titan International

Yeah. Great question, Mike. We have good sourcing of all of our rubber products and they're primarily West Africa. And we have good solid contracts in place for those. And so we feel very confident about our ability to get the materials and at a very cost competitive positioning.

David Martin
David Martin
Senior VP & CFO at Titan International

And we expect the year not to be impacted dramatically at all based on tariffs in that regard. But I think I want to add to that in that our steel sourcing is primarily domestic and the other things such as fabric chemicals and so forth are either get domestic sources or sources from areas that have fairly low tariff impacts at this point in time. So we're in a really strong position relative to on all parts of our sourcing globally. And in reference to your question about pricing, we do have contracts and mechanisms in place for our OEM customers regarding raw material and other inflationary cost impacts. And they're adjusted typically either on a three or six month basis.

David Martin
David Martin
Senior VP & CFO at Titan International

So again, we're not going to be impacted dramatically by that and we'll continue to really work closely with our sources to be strategic and mitigate cost impacts in any event. So feel like we're in a good position there.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Got it. Thanks for that. Then I just want to get maybe take a step back and ask about the broader global ag market. You had mentioned there were potentially some challenges with The U. S.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Farmer because of tariffs or other things that are happening. But do you feel like, globally everyone has to eat. Do you feel like globally other regions may pick up the slack? We just heard from one of the major tractor OEMs this morning that, South America was actually up in the quarter. Curious if you've seen something similar.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

I just kind of want to get a sense as to the net global read on which you serve most of those markets. Are things getting dramatically better or worse on a net basis?

Paul Reitz
Paul Reitz
CEO & President at Titan International

Yeah. I think, Mike, that feeds in perfectly to what makes Titan strongest in our space. It's our ability to serve all segments large all the way down to the small like we've been highlighting. Specifically in your question to ag, by having our manufacturing presence in the key agriculture locations of Brazil and The U. S.

Paul Reitz
Paul Reitz
CEO & President at Titan International

In times like this where you see the strength in Brazil starting to come through, which we've been highlighting and started to really see going back to Q4 last year. They're buying they have been buying more grains overseas from Brazil than The U. S. And that trend is really propelling demand and growth down there. So for Titan, we're doing extremely well in Brazil.

Paul Reitz
Paul Reitz
CEO & President at Titan International

And that's again, that highlights our diversification. So as the farming economy may switch to meet the needs of the global population like you highlighted, People are going to eat. They're going to eat protein based diets and we're able to position ourselves to meet the needs of the customers wherever they may reside and whatever trends may be going on in the marketplace. And with Ag, Brazil is coming along very well continuing the strong trend we saw in Q4 as we get into Q1 and seeing that continue into the second quarter as well. The U.

Paul Reitz
Paul Reitz
CEO & President at Titan International

S. Is The U. S. There's a number of moving parts to it. But really what we're highlighting is in times like this where farmer income is at a level where they're looking to mitigate costs in every angle they can.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Products like we have with LSW, like I mentioned with when we keep finding more data that supports the ROI on LSW, It's a product that provides a solution where if you need to drive yields, improve your performance of your farm income, we have products that can do that in The U. S. So we're not sitting still in The U. S. While the market seems to be stuck a little bit right now kind of waiting for these different scenarios to play out with global trade.

Paul Reitz
Paul Reitz
CEO & President at Titan International

But Titan is well positioned in any angle and around the world. And I haven't mentioned, but I will mention, our European presence is really strong as well with our wheel business. And again, think that the ag market, you said it and I'll repeat it. I mean, the people are going to eat and they're going to continue to eat well and we're positioned to serve those needs.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Great. I also wanted to ask about sorry, was it earlier?

Paul Reitz
Paul Reitz
CEO & President at Titan International

Well, just one other comment. Mike, one other comment I want to add though, I put it in my comments, and I think it is worth noting, as The U. S. Comes out of this cycle, which they will, I mean, on how you measure it, we're going on close to two years of a downturn in The U. S.

Paul Reitz
Paul Reitz
CEO & President at Titan International

We positioned our plants in The U. S. For both wheels and tires to meet that demand. That's easier said than done. One, you got to have the tooling and the production capabilities to meet that demand as it changes.

Paul Reitz
Paul Reitz
CEO & President at Titan International

But two, you got to be prepared. And we've seen our competition do mass layoff notices and buyouts to their people, whereas Titan has really maintained the capabilities. And as I mentioned, when a customer a large customer comes to you and drops in orders, which we're seeing more of in today's world, being able to meet that is again, it's easier said than done. And Titan is well positioned in The U. S, not just having the plants and the tooling, but also having the team that's ready to meet that change in demand because we all know it's coming.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Trying to predict exactly when is the guessing game, but it is going to happen. And just want to highlight again, that's why I've made that comment in my prepared remarks is that we did have some pretty serious drop in orders in Q1 that happens, that's been happening, but we're able to meet that demand.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Great. I also wanted to ask about visibility. You had mentioned in prior conversations, it got very tough during 2024 with OEMs who typically gives you a quarter or a little over a quarter of visibility as to what they're looking for, coming ahead. It was tough to predict. They really had a really rough third and fourth quarter of of last year.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Things changed pretty rapidly. Sounds like things seem more stable now first quarter versus now coming up in the second quarter from an EBITDA perspective. I am curious whether you feel like the visibility, has improved greatly from the second half of twenty four, you can plan ahead a lot better than you could just six months ago.

Paul Reitz
Paul Reitz
CEO & President at Titan International

It's still not where it used to be. And and you gotta adjust to the world. The world's not gonna adjust to you. And so that that's really what we've been doing. You know?

Paul Reitz
Paul Reitz
CEO & President at Titan International

Our team has to be prepared to handle whatever the market conditions are and however our customers' needs need to be met. We do envision a world where after you get through this inventory cycle, which is most comments are, it's getting really close to the inventory being at a level they feel more comfortable. Then you start getting that visibility back because the market demand is going to tie more into their production needs. I think really what distorted us last year was the dislocation with inventory levels and production cycles. And so that part will really get the visibility back and that's going to happen.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Is it happening right now? Not quite. But that doesn't mean we can't be prepared to handle the world that we're in. And I think that's what we're saying is it's a good solid Q1. Clearly, we've adapted to these market conditions.

Paul Reitz
Paul Reitz
CEO & President at Titan International

As David highlighted, our guidance for Q2 is illustrating the same thing, good financial performance and then we'll go from there. But we've adapted well to these market conditions. But I do think the visibility will get better. And as David talked a lot about in his comments, our pull through will improve. I mean, we're at you look at our financial results, we're in a trough market and still putting out good financial results.

Paul Reitz
Paul Reitz
CEO & President at Titan International

And so that pull through of efficiency through to our margins when that visibility comes into place and our plants are operating at a better utilization level in The U. S. Is the day we're looking forward to and we know it will come.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Okay. I appreciate the discussion. I'll leave it there. Thank you.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Thanks, Mike.

Operator

Thank you very much. Our next question comes from Steve Ferranzani of Sidoti. Steve, your line is now open.

Steve Ferazani
Senior Equity Analyst - Diversified Industrials & Energy at Sidoti & Company, LLC

Hey, good morning, Paul. Good morning, David. Appreciate all the color on the call so far this morning. Paul, you and Titan, unfortunately, have been through this trade war before and not that long ago. Can you touch on maybe what you learned the last time around, how you can apply it this time?

Steve Ferazani
Senior Equity Analyst - Diversified Industrials & Energy at Sidoti & Company, LLC

And how well your aftermarket may be positioned, which may be more important over the next three or four quarters on the ag side?

Paul Reitz
Paul Reitz
CEO & President at Titan International

Yes. I mean, what we are doing and what we're prepared to do is meet the needs of our customers by being flexible with our production. We have multiple locations where we can produce products. We have a strong U. S.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Manufacturing base. We have seen some customers in The U. S. Start asking, can you source products in the or produce products in The U. S.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Even at a higher price. And so that risk mitigation, when our customers start looking in that direction that plays into Titan's strength. And that's what we've seen in prior periods of dislocation, whether it's the tariff trade war or it's even COVID. When dislocations go on in the world, that's where our production capabilities are tooling. We have massive arsenals of tooling available to meet the needs of our customers.

Paul Reitz
Paul Reitz
CEO & President at Titan International

That's when we do really well. So dislocation can be our friend. It's not the easiest thing to get through and that's where we rely on the experience of the Titan team. So moving our production, being flexible with our production, we have built a good stable of third party suppliers. It's something we've been working on as Titan, but also working on as we with our acquisition last year.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Those capabilities and what we bring to the table through third party suppliers with our distribution, our brands and really our ability to meet the needs of the customers is attractive to third party suppliers. So again, we can move within our own production. We can move production within other channels. And so for us, we've been through this before like you said. And I think our team is one thing I keep hearing from our team is they're confident in times like this.

Paul Reitz
Paul Reitz
CEO & President at Titan International

And they go out to our customers and they exude that confidence. And so we do feel that these times are good for us in the long run. In the short run, it does require some keeping your head down and just working your tail off to get through it. And again, our experience does show, as you highlighted in that question.

Steve Ferazani
Senior Equity Analyst - Diversified Industrials & Energy at Sidoti & Company, LLC

Okay. Thanks, Paul. I also wanted to get a chance to touch on the expanded Goodyear licensing agreement. That seems pretty substantial now that it's going to cover some of the former CarlStar products. I know those agreements don't happen overnight, so you've had some time on this.

Steve Ferazani
Senior Equity Analyst - Diversified Industrials & Energy at Sidoti & Company, LLC

Can you talk about how important or useful it will be to apply the Goodyear brand to some of the former CarlStar products and what that means towards realizing those synergies you had talked about a year ago when you made that acquisition? Yes.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Steve, you're exactly right. Those things don't happen overnight. So it's pretty cool today to be able to talk about it. It's been in the works for quite a while ever since we did the acquisition. And so we love and respect and cherish the Goodyear brand.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Just it's been great for us and I think we've been really good for them. And so almost immediately once we got the acquisition done, our sales team at Carlstar was excited to potentially get their hands on the Goodyear name and what they could do with it. And like you highlighted, it took a while to get that negotiated and work through with Goodyear. Now that it's in place, man, I think there's a lot of good things we can do. With Carlstare, the brands they have with the Carlstare name, the ITP brand, it's already very well respected in the marketplace.

Paul Reitz
Paul Reitz
CEO & President at Titan International

But what we can do now with Goodyear and our product development and our designs that we can bring and just having that brand behind it, it just accelerates the path. When you have a brand name that stands out, we're using it with LSW, you don't have to knock down the doors quite as hard. They sort of open up for you. So if you combine that with the Titan strength and recognition that we have in the marketplace with our customers and you throw their Goodyear brand with it, it just makes it so much easier for our sales group when they're going through that door. So yes, we're really excited.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Yes, it's been a while working on it, but great to get it released and look forward to what we can do with it.

Michael Shlisky
Managing Director & Senior Equity Research Analyst at D.A. Davidson

Great. Thanks, Paul. Thanks, David.

Paul Reitz
Paul Reitz
CEO & President at Titan International

All right. Thanks, Steve.

Operator

Thank you very much. Our next question comes from Derek Soderbergh of Cantor Fitzgerald. Derek, your line is now open.

Derek Soderberg
Director, Senior Equity Research Analyst at Cantor Fitzgerald

Yeah. Hey, guys. Thanks for taking the questions. David, want to start with you. So you guys mentioned minimal impact due to tariffs this quarter, about 10% of revenue having exposure.

Derek Soderberg
Director, Senior Equity Research Analyst at Cantor Fitzgerald

It sounds like that's going to be the case in 2Q. But we're going to have a full quarter of impact in 2Q on that 10% of revenue, right? So first, am I thinking about that right? And then looking at EBITDA guidance to 2Q, flat quarter over quarter roughly. So wondering if you could talk about some of the puts and takes going on in EBITDA for 2Q specifically what might be making up for, if I'm correct, greater dollar impact from that tariff cost in 2Q.

Derek Soderberg
Director, Senior Equity Research Analyst at Cantor Fitzgerald

Again, looking for some of the puts and takes. Thanks.

David Martin
David Martin
Senior VP & CFO at Titan International

Yes. Thanks, Derek. Great question. The second quarter is considered to be a very fairly stable quarter relatively speaking And that's a good thing because in terms of demand, sometimes you see a little bit of a trade off in Q2 in the mix, not just to mention the production in Ag.

David Martin
David Martin
Senior VP & CFO at Titan International

But so overall, we have a fairly good stable order deck and are able to produce very similar. And we also have the strength of Brazil that's continuing to happen. So one thing that's really important, we put out the minimal impact, call it 10% of sales, and that's an important thing to talk about because that's probably less than what people thought. Right? So we believe that it's something that can be managed and it's just a portion of our overall business that within even the Carlstare business, which is where it's at.

David Martin
David Martin
Senior VP & CFO at Titan International

So we believe it's a very manageable thing. But the most important aspect of the stability of Q2 is the fact that we have been strategically sourcing our materials and have very minimal impact on the cost position relative to our, again, raw materials and shipping and all those types of things. So we don't have any major dislocation or puts and takes, if you will, relative to the cost of the materials that we produce. So we're we feel like we're in a really good position to create that stability in Q2.

Derek Soderberg
Director, Senior Equity Research Analyst at Cantor Fitzgerald

That's helpful. And then Paul, you mentioned a couple of times your position versus your peers. Your peers are offering employee buyouts. Is there a scenario here in the short term, say, over the next two quarters where Titan actually benefits from this environment? I don't know if it'd be through better pricing or market share gains just simply because of that position.

Derek Soderberg
Director, Senior Equity Research Analyst at Cantor Fitzgerald

Just wondering if there's any potential upside here in the short term. Thanks.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Yes. Do Derek, do think there's potential. I mean, the inquiries are changing. And so customers and again I use U. S.

Paul Reitz
Paul Reitz
CEO & President at Titan International

As an example. The customers in The U. S. On some smaller products where they're used to foreign source supply chains have been asking the question what are your capabilities in The U. S.

Paul Reitz
Paul Reitz
CEO & President at Titan International

And we are the only company in The U. S. That has those capabilities and some of these smaller sized tire ranges and wheel ranges. And so if they're looking to mitigate risk then they're going to turn to Titan. And that's we're not always the lowest priced.

Paul Reitz
Paul Reitz
CEO & President at Titan International

We never have been. But that's okay. In times of dislocation and risk mitigation and the fact that we have premier products and great relationships with customers and end users, that's when this really shines through. So yes, we are seeing a different type of inquiries. Derek, to answer your question, I think there are there is a period of time where a lot of businesses, not just specific to ours that people are sort of sitting still, asking questions, sitting still and getting prepared for the next round of actions that they'll take.

Paul Reitz
Paul Reitz
CEO & President at Titan International

And I think that favors us in the long run, those actions that they take because we are very well suited to mitigate their risk and meet their needs.

Derek Soderberg
Director, Senior Equity Research Analyst at Cantor Fitzgerald

Perfect. Thanks guys.

Operator

Thank you very much. Our next question comes from Tom Kerr of Zacks Small Cap Research. Tom, your line is now open.

Thomas Kerr
Senior Analyst at Zacks Small Cap Research

Good morning, guys. Just a little more color on the farmer sentiment from your perspective. They you see the news stories out there, farmers are in crisis. They use the word crisis. What word would you use or how would you describe your outlook of farmer sentiment?

Paul Reitz
Paul Reitz
CEO & President at Titan International

Farmers are always in crisis if you ask them. So yes, the farmer sentiment has decreased and there's not always a direct correlation between farmer sentiment and equipment purchases. So, what we really rely on in times like this is we just got to get out and talk to people. And that's where being connected to our dealers, the end users and our overall customer base gives us the knowledge that we really rely on. Last week, I had dinner with a very large OEM equipment dealer and I use that as a source of information.

Paul Reitz
Paul Reitz
CEO & President at Titan International

We talk to large farmers and so I would not definitely would not use this data crisis. I think what we're hearing is and we all see it in the commodity prices. The commodity prices are fine. They're not good. They're not bad.

Paul Reitz
Paul Reitz
CEO & President at Titan International

They're sort of fine. But what we're hearing is that, look, our government is going to have to stand behind our farmers and our food production. And so there seems like there's a good floor to what farmer income is going to be and it's at a again, it's at a respectable fine level. And so I think the state of crisis is more hyperbola than it is reality. But that's okay.

Paul Reitz
Paul Reitz
CEO & President at Titan International

If they use that hyperbola to get to help improve farmer income and get the government's intention, there's nothing wrong with that. I think in the end, we're in a pretty good place with farmer income and just watch it play out. Think it'll be fine.

Thomas Kerr
Senior Analyst at Zacks Small Cap Research

Got it. Thanks. And on the increase in working capital, increase in accounts receivables, is there anything else in there besides the large increase in sales, changing terms to customers, customers not paying or anything like that?

David Martin
David Martin
Senior VP & CFO at Titan International

No discernible change. It's it's been very, very fairly stable in that regard. So, you know, again, it was a fairly quick ramp up in sales and so you'll start to see the natural progression in in q two and beyond, you know, more stable.

Thomas Kerr
Senior Analyst at Zacks Small Cap Research

Got it. Yes. The last question, just an industry or big picture question. What other verticals or industries are out there for you guys to explore? And I know you talked about military.

Thomas Kerr
Senior Analyst at Zacks Small Cap Research

I mean, could you guys make aircraft wheels and tires? What else is out there?

Paul Reitz
Paul Reitz
CEO & President at Titan International

Yes. Military is a good one for us because it's something that is not a big part of our overall revenue right now. And so as Europe makes more investments into military, our undercarriage business is well positioned to benefit from that. We've talked about The U. S.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Exploring military options as they look to have a U. S. Supply chain instead of a foreign based supply chain for the military. Aircraft, we've done we really have seen one of our plants produce that as an off take when we acquired it from Goodyear. And I don't think that's an area we would get into because it's highly regulated.

Paul Reitz
Paul Reitz
CEO & President at Titan International

So I think where Titan goes is more the off road non regulated types of businesses. So anything that requires DOT regulation or those type of requirements just quite isn't suited for us. What we like, what we're good at is high complexity. So smaller production runs, lots of SKUs, different tough applications that the products go into. And so I would say we our verticals would be more filling in where we already are and that's why product development is such a big part of what we do because we can keep filling in those cracks in the verticals that we're already in along with again pursuing broader verticals like military.

Paul Reitz
Paul Reitz
CEO & President at Titan International

But yes, would think our product development pipeline is pretty good as it sits just in the verticals we're currently in because they're complicated.

Paul Reitz
Paul Reitz
CEO & President at Titan International

There's a

Paul Reitz
Paul Reitz
CEO & President at Titan International

lot of places we keep filling in.

Thomas Kerr
Senior Analyst at Zacks Small Cap Research

Got it. Thanks. That's all I

Thomas Kerr
Senior Analyst at Zacks Small Cap Research

have for today. Thank you.

Paul Reitz
Paul Reitz
CEO & President at Titan International

Thank you.

Operator

Thank you very much. We currently have no further questions. So I'd like to hand back to Mr. Wright for any further remarks.

Paul Reitz
Paul Reitz
CEO & President at Titan International

No. Look, appreciate everybody's time and attention today with our Q1 results and look forward to talking to you again in a few months with the second quarter. Have a good day. Thank you.

Operator

As we conclude today's call, we'd like to thank everyone for joining. You may disconnect your lines.

Executives
    • Alan Snyder
      Alan Snyder
      VP of Financial Planning & Investor Relations
    • Paul Reitz
      Paul Reitz
      CEO & President
    • David Martin
      David Martin
      Senior VP & CFO
Analysts
    • Michael Shlisky
      Managing Director & Senior Equity Research Analyst at D.A. Davidson
    • Steve Ferazani
      Senior Equity Analyst - Diversified Industrials & Energy at Sidoti & Company, LLC
    • Derek Soderberg
      Director, Senior Equity Research Analyst at Cantor Fitzgerald
    • Thomas Kerr
      Senior Analyst at Zacks Small Cap Research
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Key Takeaways

  • Titan delivered Q1 revenue of $491 million and adjusted EBITDA of $31 million, with gross margin rising to 14% from 10.7% in Q4.
  • Only about 10% of revenue has tariff exposure, and Titan’s diversified global manufacturing footprint—especially its strong U.S. presence—provides flexibility to manage costs and benefit competitively over the longer term.
  • In Ag, U.S. orders remain muted amid farmer caution, but Brazil sales are strengthening, and new data on low‐slippage wheels (LSWs) show sub-one-year ROI for mid-sized farms.
  • The company expanded its nearly 20-year Goodyear farm tire license to include light construction, industrial, ATV, lawn & garden and golf tires, enhancing Carlstar-sourced product lines.
  • Q2 guidance of $450–500 million in revenue and $25–35 million in adjusted EBITDA reflects stability, while Titan expects positive cash flow and ongoing debt reduction in H2 2025.
AI Generated. May Contain Errors.
Earnings Conference Call
Titan International Q1 2025
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