Titan International Q1 Earnings Call Highlights

Key Points

• Titan reported a “solid start” to 2026 with Q1 revenue up 2.9% year‑over‑year, gross margin of 14.1% and adjusted EBITDA of $31 million, with Earthmoving/Construction driving growth as EMC revenue rose 11% to $160 million.
• Operating cash flow was a use of $47 million and free cash flow was negative $60 million, leaving net debt at $441 million with a 4.3x leverage ratio; the company is closing its Jackson, TN plant, taking ~$25 million in restructuring charges (≈$23M non‑cash) and expecting about $5 million in annual cash savings.
• Titan reiterated full‑year 2026 guidance of $1.85–$1.95 billion revenue and adjusted EBITDA $105–$115 million, guided Q2 revenue of $470–$490 million and adj. EBITDA $25–$30 million, and said geopolitical headwinds will create an estimated $3 million Q2 margin drag while it views the agriculture downturn as cyclical with recovery likely by 2027.

Titan International NYSE: TWI reported what management described as a “solid start to the year” in the first quarter of 2026, with revenue and adjusted EBITDA coming in near the high end of the company’s guidance despite continued end-market uncertainty tied to geopolitical developments.

President and CEO Paul Reitz said Titan’s performance reflects operational and commercial execution in a difficult demand environment where customers are keeping inventories lean and leaning into just-in-time ordering. “While we cannot control cycles, we can control how we respond,” Reitz said, adding that Titan has prioritized responsiveness through its global manufacturing footprint, distribution network, and joint-venture and third-party partners.

First-quarter results and segment performance

Senior Vice President and CFO Tony Eheli said first-quarter sales increased 2.9% year over year, gross margin improved to 14.1%, and adjusted EBITDA rose to $31 million. Eheli noted that results were above the midpoints of Titan’s guidance ranges for the quarter.

By segment, Eheli said Earthmoving/Construction (EMC) led growth as construction demand remained strong. EMC revenue rose 11% to $160 million, with solid volume growth in both the Americas and Titan’s European wheel business, driven by OEM demand. Eheli added that foreign currency translation contributed 6.1% to EMC’s year-over-year performance.

Agriculture sales were “relatively flat” versus the prior year and “slightly down organically,” which Eheli said was encouraging given “several years of double-digit Q1 sales reductions” in the segment. He highlighted flat U.S. aftermarket sales year over year, an increase in LSW (low sidewall) tire sales, and “solid growth” in Titan’s European agriculture wheel business driven by improved customer orders. In Brazil, Eheli said agriculture demand continued to moderate amid higher input costs and high interest rates, and management expects 2026 “to remain challenging” in the region.

In consumer, Eheli said first-quarter sales were down modestly year over year due to market conditions “modulating due to tariffs and continued elevated interest rates,” but added that Titan saw improved OEM customer demand that aligned with analyst commentary and recent OEM earnings reports.

Margins, costs, and cash flow

On margins, Eheli said EMC gross margin expanded to 11.3% from 10.4% a year ago due to fixed-cost leverage on higher volume. Agriculture gross margin was slightly lower at 12.1% versus 12.4% in the prior year period. Consumer gross margin improved to 19.9% from 19.6%, which Eheli attributed to cost reductions and productivity initiatives.

SG&A, including R&D, was $57.7 million compared to $54.4 million a year earlier, primarily due to foreign currency and inflationary impacts, including healthcare, according to Eheli. He said the company continues to take actions to manage and reduce costs.

Operating cash flow was a use of $47 million in the first quarter, which Eheli said was consistent with the company’s normal seasonal working-capital ramp, particularly accounts receivable, alongside a sequential sales step-up of $95 million. Capital expenditures were $13 million, down from $15 million a year earlier. Free cash flow was negative $60 million, with net debt at $441 million and a leverage ratio of 4.3x. Eheli said the cash usage was in line with expectations and should improve over the balance of the year, adding that reducing leverage remains a key goal.

Tax expense was $4.6 million, and Eheli said the effective tax rate of negative 23% reflects the geographic distribution of profits and losses and varying tax laws. He said the company expects to return to normalized tax rates as domestic U.S. market conditions rebound, and guided second-quarter tax expense to $4 million to $5 million.

Restructuring and Jackson plant closure

Eheli also detailed Titan’s decision to close its Jackson, Tennessee plant. The company recorded approximately $25 million in non-recurring restructuring expense associated with the decision, with about $23 million described as non-cash. Eheli said the closure was a synergy identified when Titan completed the Carlstar acquisition, as the combined business had excess U.S. manufacturing capacity and the closure is expected to be accretive to earnings.

Management expects to complete the closure by the end of October. Eheli estimated total cash cost to close the plant at approximately $7 million, with annual cash savings of about $5 million expected to begin next year.

Market outlook: agriculture, EMC, and consumer

Reitz provided a market-by-market update, emphasizing that Titan views the agriculture downturn as cyclical rather than structural. In the U.S., he said farmer incomes are expected to be relatively flat versus last year, while noting the potential drag from higher input costs such as diesel amid geopolitical tensions. He added that many U.S. farmers had already purchased fertilizer for the season, which could limit the impact of recent fertilizer price increases.

Reitz said used equipment inventories have continued to come down, and Titan is seeing sentiment indicating a willingness to invest, but the market still lacks a clear catalyst. He said many observers expect 2026 to be “a slightly down year,” with 2027 viewed as the likely timeframe for growth to return. With inventories lean, Reitz said Titan could see OEM ordering later in 2026 ahead of anticipated 2027 OEM deliveries, reiterating Titan’s view that its OEM orders can be a leading indicator in normal conditions.

In Europe, Reitz said Titan is winning agriculture business “at a healthy rate” in the European wheel market, citing Titan’s integrated and efficient operating model there and adding that Europe has been “less susceptible to the ups and downs.” In South America, he described Brazilian agriculture as affected by an unfavorable political climate and election-driven uncertainty, which has contributed to softening in Titan’s agriculture tire sales. Reitz noted that, unlike U.S. farmers, Brazilian farmers generally have not purchased fertilizer for the next growing season, making higher costs more impactful. He added that Titan’s ITM business in Brazil has performed well to start the year, surpassing internal expectations.

In EMC, Reitz said construction demand in the U.S. has been a relative bright spot, while competitive dynamics in Europe have become “more muddled” even as longer-term infrastructure investment supports the macro outlook. In response to analyst questions, Reitz also flagged volatility in forecasts from German OEMs as an area Titan is watching closely.

In consumer, Reitz said Titan is seeing positive trends entering the second quarter, with “nice wins” from customers to start the year and expectations for revenue growth versus 2025. He said power sports was somewhat softer in the first quarter amid higher gas prices, while outdoor power equipment and turf have held up better due to commercial, less elastic demand.

Guidance and geopolitical impacts

For the second quarter, Titan guided to revenue of $470 million to $490 million and adjusted EBITDA of $25 million to $30 million. Eheli said the outlook implies some top-line growth versus last year but “modest reduction” in bottom-line performance, driven primarily by OEM pricing pressure and additional cost pressure tied to the Iran conflict.

Reitz said Titan’s second-quarter guidance includes an estimated $3 million headwind to operating margins due to the war in Ukraine, stemming from rapidly rising costs and a timing mismatch on price increases under OEM contracts. Eheli later emphasized in Q&A that the issue is largely timing within structured contract mechanisms (quarterly or semi-annual), and that Titan is not renegotiating contracts. He said the company does not expect much impact beyond the second quarter and may ultimately see a benefit later as price adjustments catch up.

Titan maintained its full-year 2026 guidance of revenue of $1.85 billion to $1.95 billion and adjusted EBITDA of $105 million to $115 million. Eheli said the range reflects modest improvement versus 2025 and includes Titan’s expectation for increased customer activity in the fourth quarter, supporting readiness for an anticipated agriculture recovery in 2027.

During Q&A, Reitz addressed Section 232 tariff changes that took effect in early April, saying Titan expects both costs and benefits depending on the business line. He said Titan should be able to pass through its cost increases via price increases, and that the net impact could be positive if competitors pass along higher costs on imported products. Eheli also said the company does not have raw materials directly impacted by shipments passing through the Strait of Hormuz.

Reitz also discussed R&D priorities, highlighting product development in the consumer segment and enthusiasm around leveraging the Goodyear brand. He cited a tire product that can operate with “no air at all,” which he said could compete against higher-priced offerings that can degrade over time.

Closing the call, Reitz said Titan remains focused on servicing customers with the products they need “where they need them, and when they need them,” while continuing to invest in innovation such as its LSW lineup, which he said can help farmers reduce fuel usage amid elevated fuel prices.

About Titan International NYSE: TWI

Titan International, Inc is a leading global manufacturer of wheels, tires and undercarriage systems designed for off-highway vehicles. The company serves a diverse range of markets including agricultural, construction, earthmoving and consumer segments. Titan's product portfolio encompasses a variety of tire sizes and tread designs, steel and cast centers, wheels, tracks and complete wheel‐and‐tire assemblies tailored to meet the needs of tractors, combines, skid steers, loaders, haul trucks and other specialized equipment.

In addition to original equipment manufacturing, Titan provides extensive aftermarket support through its network of distributors and sales offices.

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