Q INVESTOR PRESENTATION

Transcription

1 Q INVESTOR PRESENTATION

2 Titan International Products Wheels Tires, and Assemblies Undercarriage components (ITM) Undercarriage components (ITM) Titan 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 2

3 Market Leader North American Ag TIRES: OEM 48%; REPLACEMENT 29%* WHEELS: OEM & REPLACEMENT > 75% Others <5% ea 27% Titan/ Goodyear 40% * Source: Modern Tire Dealer, December

4 Market Summary 4

5 Overview by Market Segment- Q Agricultural: 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, brakes and actuators Q2 Segment Revenue 12% decrease vs. Q % decrease vs. Q % GP Margin: 6% 22% decrease vs. Q % 31% GP Margin: (14%) GP Margin: 15% Agriculture Earthmoving / Construction Consumer Total: $523.7 million 5

6 Agricultural Drivers Ag Drivers 2014 Mix Shift- Large Ag equipment (4WD and Combines) are experiencing downward cycle after 3 good years of massive growth. Smaller hp tractors sales are increasing but are lower priced and less profitable Reinstatement of the Section 179 tax deduction to $500,000 for 14 and 15 passed House and Senate; awaiting President Obama s approval. This will have a positive effect on equipment purchases. Grain prices are lower but the condition of this years crop is rated good to excellent Interest rates are low for equipment purchases Drought in Brazil could increase exports from North America Inventory levels are still considered high Input costs for seed, chemicals and fuel are rising lowering cash receipts Mechanization- Tractor units per 1,000 farmers North American Farm Machinery Sales Outlook Indonesia 1 China Africa 3 5 <100 hp tractors 4WD tractors combines India Pakistan Brazil , , ,870 Russia 96 Australia 705 Japan 732 UK 932 Germany 1,018 France USA 1,406 1,586 8,545 12,760 8,480 13,715 8,545 12,530 Canada 1, F Source: World Development Indicators, World Bank; Ag Equipment Intelligence January 2014; Starks 7/7/14 6

7 Earthmoving / Construction Drivers Earthmover/Construction Drivers in 2013/2014 Small construction equipment sales in North America are forecasted to grow ~10-12% YoY through 2016 primarily due to residential and commercial improvements Larger construction equipment purchases used for highways and infrastructure are slow to recover Mining is weak: Commodity prices are low; Cap Ex and Op Ex reduced at mine locations, Tire inventory is being destocked to minimum levels Global Construction Equipment forecast (in thousands) Titan s projections F 2016F Source: Wall Street Research 7

8 Why Titan? 8

9 Our Global Footprint and Market Share * MTD Jan 2014; all other market share figures are approximate/estimated 9

10 The Titan Advantage TIRES WHEELS UNDER- CARRIAGE SERVICE CENTERS RECLAMATION * MTD Jan 2014; all other market share figures are approximate/estimated 10

11 Innovation technology TITAN INTERNATIONAL PROVIDES THE TOTAL SYSTEM. LSW (Low Sidewall) tire/wheel systems feature a larger rim diameter and smaller tire sidewall Today s equipment is getting larger and more powerful. This design offers: smoother ride, improved stability, speed/fuel efficiencies, increase in operator safety. Waffle Wheel Simplified design Ease of wheel offset changes Superior durability and long-term reliability Reduced wheel wobble and hop TTRC-Recycling venture 10 year agreement with Suncor to recycle used tires Oil, Carbon black and steel reclaimed First location, Fort McMurray, Canada to be in operation in 2015 Each site will process 100 million pounds of rubber annually Significant margins projected Visit: lswadvantage.com 11

12 The Low Sidewall Revolution - LSWadvantage.com 12

13 Thompson Harvesting LSW Case Study 13

14 2014 Objectives ONE TITAN Maximize collaboration between wheel and tire business units to accelerate market penetration Exercise one common strategy across company divisions WHEEL/TIRE SYSTEM ADVANTAGE Exploit our competitive advantage as the only wheel/tire assembly solution provider in North America Accelerating adoption of our unique system solution One stop supplier PROFIT OPTIMIZATION Measure, Evaluate and drive Net Economic Profit Align investments with One Titan strategy Drive decision making through detailed understanding of Cost to Serve = INCREASE SHAREHOLDER VALUE 14

15 Financial Performance 15

16 Q2 Highlights Accomplishments Significant headcount reduction Established a profit optimization framework whereby executive team identified key initiatives for immediate focus in 2H 2014 Introduction of EVA (Economic Value Added) performance management framework Traction on LSW receptiveness Challenges Large Ag products (higher ASP and margin) are in a downward cycle after 3 robust years Weak mining market conditions which Impacts-North American, ITM and Australia business units Impairment recorded of $23.2 on mining equipment and inventory writedowns of $11.6 Inventory destocking and pricing pressures for EMC product continues Russia contributed $25M in sales with no profit flow through Raw material prices continue to fall thus price concessions will be passed through 16

17 Q2 Financial Summary (M$) $600 $400 $ % 17.6% $ % $524 $404 $ % Q Q Q Q % 10% 0% -10% Sales Operating Income (Amounts in millions) Q Q Q Q Sales $404.4 $459.2 $593.2 $523.7 Gross Margin $64.3 $82.1 $86.7 $22.6 Gross Margin % 15.9% 17.9% 14.6% 4.3% Adjusted Net Income $23.7 $28.8 $13.7 $1.7 1 Adjusted Earnings Per Share-Diluted $0.44 $0.56 $0.24 $0.03 Note: Net income and EPS adjusted for non GAAP items. 17

18 66% 56% 46% 36% 26% 16% 6% - 4% 75% 65% 55% 45% 35% 25% 15% 5% - 5% - 15% 78% 68% 58% 48% 38% 28% 18% 8% - 2% $300 $250 $200 $150 $100 $50 $0 $400 $350 $300 $250 $200 $150 $100 $100 $75 $50 $25 $0 Sales and Gross Margin by Market ($M) $257 $289 18% 21% $324 $285 17% 15% AG 59% Net Sales: Down 12% Q2 14 vs. 13; Down 5% YTD 14 vs. 13 Volume on Large Ag in a cyclical downturn Pricing reduced due to lower raw material prices Russia Ag revenue contribution = $17M Q2; $41M YTD Q2 '11 Q2 '12 Q2 '13 Q2 '14 $208 $164 Net Sales: Down 21% % Q2 14 vs. 13; Down 24% YTD 14 vs. 13 $77 $111 15% 18% 13% -14% EMC 28% Super Giant Mining tires down $28M QoQ; Down $72M YoY Mining equipment impairment and inventory writedown of $34.8M Q2 '11 Q2 '12 Q2 '13 Q2 '14 $75 $70 $60 $61 10% 6% 7% 6% Consumer 13% Net Sales: Up 22% % Q2 14 vs. 13; Up 20% YTD 14 vs. 13 New sales in Russia and Titan Europe increased brake sales Margins challenged due to Russia inventory destocking at dealers and Brazil with competitive pressure Volume increase of 34% offset by currency devaluation of 16% Q2 '11 Q2 '12 Q2 '13 Q2 '14 Note: Consumer sales shown post the Latin American farm/;consumer plant acquisiton (April 2011) 18

19 Titan performance: % domestic; 50% International $300 $200 $100 $0 Adjusted EBITDA In millions $244 $184 $192 $

20 APPENDIX

21 $600 Q2 SALES / OPERATING INCOME 17.6% 20.0% $ % 11.0% $263.9 $400 $84.9 $92.3 $272.9 $ % $ % 5.0% $ % $ % $312.2 $329.4 $250.9 $250.9 $ % -5.6% $ % * Sales - N. America Sales - International Operating Profit % Q2 FINANCIAL SUMMARY (Amounts in $ millions) * Sales - Total $404.4 $459.2 $593.3 $523.7 $523.7 Sales - N. America $312.2 $374.3 $329.4 $250.9 $250.9 Sales - International $92.3 $84.9 $263.9 $272.9 $272.9 Gross Margin $64.3 $82.1 $86.7 $22.6 $57.4 Gross Margin - N. America $55.6 $73.1 $57.0 ($0.5) $32.6 % 17.8% 19.5% 17.3% -0.2% 13.0% Gross Margin - International $8.7 $9.0 $29.7 $23.1 $24.8 % 9.4% 10.5% 11.3% 8.5% 9.1% Gross Margin% 15.9% 17.9% 14.6% 4.3% 11.0% Operating Profit $44.4 $81.0 $36.9 ($29.5) $5.3 Operating Profit - N. America $38.0 $49.5 $30.3 ($24.4) $8.7 % 12.2% 13.2% 9.2% -9.7% 3.5% Operating Profit - International $6.4 $31.5 $6.6 ($5.1) ($3.4) % 6.9% 37.1% 2.5% -1.9% -1.2% Operating Profit % 11.0% 17.6% 6.2% -5.6% 1.0% * 2014 adjusted for Mining Impairment and Inventory Write-down 21

22 Q2 - WORKING CAPITAL (In Millions) 26.6% 23.8% 23.8% 19.9% AR Inventory AP Working Capital as % of Sales 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Days of Sales O/S Days of Inventory Cash $ 508,447 $ 424,387 $ 447,456 $ 189,360 $ 200,094 $ 162,961 Cash % of 12 Month Sales 26.3% 21.0% 20.7% 8.8% 9.4% 7.9% 22

23 201 4 YTD C as h Activity Jun 30 Mar 31 Dec Cash & Investments $163.0 $200.1 $189.4 (Amounts in Millions) $400.0 $350.0 $300.0 $23.2 $14.3 $11.6 $7.2 $6.2 $5.3 $5.0 $30.0 $53.4 $250.0 $32.0 $30.9 $200.0 $150.0 $46.8 $29.0 $18.3 $13.4 $3.0 $100.0 $50.0 $189.4 $163.0 $0.0 23

24 Capital Structure CASH / DEBT Q2'14 Q1'14 Q4'13 Q3 '13 Q2 '13 Cash $163 $200 $189 $447 $424 Total Debt $528 $577 $572 $742 $744 Titan International $478 $482 $474 $615 $615 Titan Europe $50 $95 $98 $127 $129 Net Leverage (Net Debt / Trailing 12 Mos Adjusted EBITDA) 2.91x 2.57x 1.99x 1.44x 1.46x Interest Expense $8.9 $9.2 $11.2 $12.4 $ % Secured Notes Due 2017 $0.0 $0.0 $1.4 $9.0 $ % Convertible Notes Due 2017 $0.8 $0.8 $0.8 $0.9 $ % Secured Notes Due 2020 $6.9 $6.9 $6.4 $0.0 $0.0 European Credit Facilities $0.5 $0.7 $1.8 $1.7 $2.4 Latin America Working Capital Facilities $0.0 $0.2 $0.2 $0.2 $0.2 Voltyre Prom Line of Credit $0.1 $0.0 $0.0 $0.0 $0.0 Revolver/ABL Fees $0.1 $0.1 $0.1 $0.1 $0.1 Financing Fees Amortization $0.4 $0.4 $0.5 $0.5 $0.5 CURRENT DEBT STRUCTURE $60 $400 $16 $50 $ % Convertible Notes - Due Jan % Secured Notes - Due Oct 2020 Brazil Working Capital Debt European Bank Credit Facilities $150m ABL Credit Facility - Due Dec 2017 May 2014: Paid off Titan Europe's bank overdraft facility with Lloyds - $38.5M 24

25 Cost Structure Cost Structure Breakdown Primary Raw Materials Steel Natural Rubber Synthetic Rubber Carbon Black Nylon 25

26 Company Website: 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. 26