What Titan International (TWI) Said on Its Q3 Earnings Call

Key Points

• Q3 results met guidance despite weak end markets: Titan reported $454 million in revenue, $28 million in adjusted EBITDA, 15% gross margin and $10 million in free cash flow.
• ITM divestiture is expected to close in January: Titan plans to use a significant portion of the proceeds to reduce debt while maintaining flexibility for targeted investments and partnerships.
• Agriculture remains pressured, but management sees potential improvement: Agricultural sales and margins declined sharply, while consumer margins and EMC sales improved; Titan expects 2026 may mark an agricultural-cycle floor and projects fourth-quarter revenue of $410 million to $430 million.

Titan International NYSE: TWI reported third-quarter 2026 revenue of $454 million and adjusted EBITDA of $28 million, with President and CEO Paul Reitz saying both measures were consistent with the company’s guidance despite prolonged weakness in its end markets.

The company also reported a 15% gross margin and $10 million of free cash flow during the quarter. Senior Vice President and CFO Tony Eheli said results included the operations of the ITM Undercarriage business, which Titan has agreed to sell and is now reporting as discontinued operations.

“Delivering with that range despite the prolonged cyclical downturn in our end markets reflects our focus on the factors we can control and the value our one-stop-shop strategy provides to our customers,” Reitz said.

ITM Sale Expected to Close in January

Titan announced in September that it had signed a definitive agreement to divest its ITM Undercarriage business. Reitz said the company expects the transaction to close in January, subject to customary regulatory and closing conditions.

The sale is intended to support Titan’s strategy as a more focused tire and wheel company. Management plans to use a significant portion of the proceeds to reduce debt while retaining the ability to invest in organic growth, acquisitions and strategic partnerships.

Reitz said ITM has been an important operation but does not have the same natural synergies with Titan’s wheel and tire businesses as the company’s Carlstar acquisition. He said Titan does not have another large transaction pending, but it is pursuing disciplined investments that expand its product offering and market position.

Management cited its investment in Brazilian agricultural-wheel manufacturer Rodaros and its Titan Yuxiang joint venture as examples of the type of targeted partnerships it may pursue. Titan invested $4 million for an initial 20% interest in Rodaros and has committed to acquire the remaining stake in 2029, with valuation based on financial-performance criteria.

Net debt, including ITM, stood at $406 million at the end of the third quarter, down from $413 million at the end of the second quarter. Eheli said the company does not expect significant tax leakage from the ITM sale. He also said the divested business had been operated separately, and Titan does not anticipate material cost dis-synergies from its departure.

Agriculture Remains Under Pressure

Titan’s agricultural segment faced the sharpest pressure among its businesses during the quarter. Segment sales fell 12% from the prior-year period as activity in the United States remained subdued and conditions in Brazil weakened. Agricultural gross margin declined to 7.6% from 13.2% a year earlier, reflecting reduced fixed-cost absorption and higher input costs.

Eheli said elevated financing, fuel and fertilizer expenses continued to weigh on agricultural equipment demand. In Brazil, management pointed to high interest rates, inflation linked to the Iran war, elevated inventories and uncertainty tied to the country’s presidential election.

Reitz said Titan expects Brazil’s agricultural market to remain difficult through the fourth quarter and first quarter regardless of the election outcome. However, he said the company was already prepared for that environment, including planned shutdowns by customers and Titan’s own cost-management actions.

Management sees 2026 as a potential floor for the agricultural cycle and expressed cautious optimism for improvement in 2027. Reitz cited higher grain prices than a year ago, potential support for farmer incomes, low channel inventories and the possibility of lower interest rates as factors that could help spur replacement demand for aged equipment.

“We don’t need the market to return to peak for us to benefit from a market,” Reitz said. “We need the market to improve and the volumes and the flow-through will help us at the production absorption cost level quite meaningfully.”

Consumer Margins Improve, EMC Sales Rise

Consumer-segment sales declined 3% year over year, although the comparison was affected by stronger purchasing activity in the third quarter of 2025 after customers had drawn down lower-cost inventory earlier that year. The segment’s gross margin increased to 27.6%, including $3.5 million of net tariff refunds. Excluding those refunds, gross margin rose to 24.7% from 23.4% in the prior-year quarter.

Reitz said the consumer aftermarket has remained a relative bright spot as customers continue maintaining existing equipment while demand for new equipment stays weak. He added that Titan has been securing original-equipment business through product innovation, with new product wins expected to support sales in 2026 and contribute further in 2027.

In the Earthmoving/Construction segment, or EMC, sales increased 5% to $57 million. The improvement was driven primarily by Europe and by U.S. products sourced through strategic suppliers. EMC gross margin improved to 7.1% from 6.1% in the prior-year period.

Titan will continue reporting EMC as a segment following the ITM divestiture. Reitz said its remaining EMC operations include wheels and tires used mainly in construction and industrial equipment, which management views as an area with growth potential.

Fourth-Quarter and Full-Year Outlook

For the fourth quarter, Titan expects total revenue of $410 million to $430 million and adjusted EBITDA ranging from breakeven to $7 million, inclusive of ITM. The outlook assumes ITM revenue of $115 million to $120 million and about $10 million in adjusted EBITDA.

• Fiscal 2026 revenue guidance: $1.85 billion to $1.87 billion, including $465 million to $470 million from ITM.
• Fiscal 2026 adjusted EBITDA guidance: $91 million to $101 million, including about $40 million from ITM.
• Expected additional net tariff refunds: approximately $6 million, currently anticipated in the fourth quarter.

Eheli said Titan’s fourth-quarter profitability outlook reflects a more difficult cost environment than the prior year, including higher energy and material costs, pricing lags and reduced Brazilian volume. The company expects tax expense in the fourth quarter to be similar to the approximately $200,000 recorded in the third quarter.

Operating cash flow from continuing operations was $29 million in the third quarter, compared with $19 million a year earlier, as Titan focused on working-capital management. Capital expenditures were $6 million, down from $8 million in the prior-year period.

About Titan International (NYSE:TWI)

Titan International, Inc NYSE: TWI designs, manufactures and sells wheels, tires and undercarriage systems for off-highway vehicles and equipment. Its products are used in agricultural, construction, earthmoving, mining and other industrial applications, with offerings that include specialized tires, wheels, wheel assemblies, tracks and related components.

The company serves original equipment manufacturers and replacement, or aftermarket, customers. Its products are used on tractors, combines, planting and harvesting equipment, loaders, graders, haulage vehicles and other heavy-duty machinery.

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