Titan International, Inc. (de) · NYSE:TWI
Titan International, Inc. (de) — Q2 2023 Earnings Presentation
34 slides from Titan International, Inc. (de)'s earnings presentation, Aug 3, 2023
Slide 1: Investor Presentation August 2023
INVESTOR PRESENTATION AUGUST 2023 NYSE: TWI
Slide 2: Forward-Looking Statements & Non-GAAP Metrics
Forward-Looking Statements & Non-GAAP Metrics Forward-Looking Statements 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 a
Slide 3: Why Invest in TWI Now?
Why Invest in TWI Now? Global Market • Leading manufacturer of off-highway tires, wheels and undercarriage equipment 1 Leadership • Key end markets: agriculture, forestry, construction, mining and consumer Strategically • Multi-year focus to transform culture, optimize portfolio & build “One Titan”
Slide 4: Valuation Not Reflective of Stronger TWI
Valuation Not Reflective of Stronger TWI Titan’s EV / Adj. EBITDA multiple is significantly below other benchmarks $300 EV / Adj. EBITDA TTM 60x $250 Strategic Transformation Forward 11.8x 11.7x TTM Adjusted EBITDA 10.9x 10.5x EV / Adj. EBITDA 50x 9.8x 8.8x $200 40x $150 4.9x 4.2x 30x $100 20x 5 Yea
Slide 5: Strategic Actions Have Elevated The Baseline
Strategic Actions Have Elevated The Baseline 2019-2021 Strategic Transformation 3 2 ▪ 2022 AEBITDA: $253M Product 1 Operational Innovation ▪ 2021 AEBITDA: $135M Focus on Core Excellence ▪ New products ▪ Supply chain ▪ Increased market ▪ Sold underperforming penetration strengthening assets ▪ Quality
Slide 6: Significantly Enhanced Financial Performance
Significantly Enhanced Financial Performance Revenue ($B) Gross Margin +14% +770 CAGR $2.2 BPS $2.1 16.6% 16.7% $1.8 13.3% $1.4 $1.3 10.4% 8.9% 2019 2020 2021 2022 TTM 2019 2020 2021 2022 TTM Adj. EBITDA ($M) Adj. EPS +81% +$3.03 $2.20 CAGR $1.93 $241 $253 $0.60 $135 -$0.83 -$0.55 $54 $38 2019 2020
Slide 7: Long-term Growth Strategy/Engine
Long-term Growth Strategy/Engine Collaborative 1 Customer Relationships Key Drivers 2 Leverage Multi-year secular trends Secular Trends + Preeminent partner to leading OEMs & Develop aftermarket companies Innovative Solutions + 5 Commitment to R&D and innovation 3 + Allocate Capital Into Competitive
Slide 8: Strong Balance Sheet & FCF Supports Capital Optionality
Strong Balance Sheet & FCF Supports Capital Optionality ▪ Product innovation (R&D) Full-Year FCF* & Leverage Ratio** ▪ One Titan team development ▪ Expand manufacturing capabilities Free Cash Flow ▪ Grow customer relationships 160 Leverage Ratio 12x Organic 11.5x Growth 140 10x $146 120 8x Balanced
Slide 9: Clear Market Leader in Core Markets
Clear Market Leader in Core Markets Manufacturing essential products for our customers, backed by industry leading engineering capabilities, tooling assets and a global manufacturing footprint TIRES WHEELS UNDERCARRIAGE AM AM AM OE 10% 30% Mix 50% 50% OE OE 70% 90% Primary: N. America, S. America Pr
Slide 10: Unmatched Global Footprint, High Barriers to Entry
Unmatched Global Footprint, High Barriers to Entry Serving customers regionally and locally provides significant competitive advantage North America ⚫ Quincy, IL ⚫ Bryan, OH Europe / CIS ⚫ Dallas, TX ⚫ Ceprano, Italy ⚫ Kidderminster, UK $2.1B 7,500 ⚫ ⚫ ⚫ ⚫ Des Moines, IA Elkhorn, WI Freeport, IL For
Slide 11: Three Complementary Business Segments
Three Complementary Business Segments Helping farmers feed the world, construction operators develop projects and miners extract resources is at the heart of what we do and who we are EARTHMOVING / AGRICULTURAL CONSUMER CONSTRUCTION (“EMC”) Wheels, tires and undercarriage for Wheels, tires and under
Slide 12: Long-term Secular Tailwinds
Long-term Secular Tailwinds STRONG AG DEMAND REPLACEMENT CYCLE CONSTRUCTION SPENDING LOCALIZED PRODUCTION Supported by population growth strong Driven by aging equipment, technological Supported by global government Driven by supply chain challenges, commodity prices & elevated farmer innovation, an
Slide 13: Industry Leading Product Innovation
Industry Leading Product Innovation Deep culture of product development and innovation to meet customers’ evolving needs, translating to increased performance and financial benefits Undercarriage in Ultimate Flex Single Piece Wheel AgraEDGE™ Forestry Technology TM (UFT TM) Innovation ▪ New Forestry
Slide 14: AG – Low Sidewall Technology (LSW)
AG – Low Sidewall Technology® (LSW®) End-user enthusiasm and demand for industry leading technology remains high ▪ Industry Leading Technology: Performance-enhancing LSW wheel and tire assemblies make farmers’ equipment perform better ▪ Continuing LSW Momentum: LSW has been growing in popularity sin
Slide 15: Continued Focus on Operational Excellence
Continued Focus on Operational Excellence Recent investments in our plants globally are driving operational efficiencies and energy savings North America Europe South America Asia 8% improvement in press 12% energy savings n output in Des Moines, Iowa Italian ITM facilities 11% increase in productio
Slide 16: Commitment to ESG
Commitment to ESG ENVIRONMENTAL SOCIAL GOVERNANCE • Titan is developing a life cycle assessment (LCA) to enhance new product development • Remain a dedicated signatory to UN Global • Increased Board diversity Compact • Remain dedicated to implementing • Separate Chairman of the Board and CEO respons
Slide 17: Segment Overview & Background
SEGMENT OVERVIEW & BACKGROUND
Slide 18: Agriculture Segment
Agriculture Segment Ag Segment Facts Revenue ($M) & Gross Margin (%) ▪ Wheels, tires, and undercarriage components for use on a variety $1,400.00 50 of agricultural equipment Tires and wheels produced in North America, Europe 45 ▪ Wide range of wheel and tire sizes including the largest $1,200.00 an
Slide 19: EMC Segment
EMC Segment EMC Segment Facts Revenue ($M) & Gross Margin (%) ▪ The majority of EMC revenue is undercarriage parts and complete $1,200.00 50 undercarriage solutions under the premium ITM brand, which Undercarriage parts produced in Europe, Latin 45 operates globally in both the OEM and aftermarket c
Slide 20: EMC – ITM Products and Customers
EMC – ITM Products and Customers OEM ITM Facts Undercarriage System ▪ Full-service provider and manufacturer of ITM undercarriage systems and products ▪ Significant blue-chip OEM customer base ▪ Strong relationships in mining aftermarket channels and expanding into forestry markets ▪ Full range and
Slide 21: Consumer Segment
Consumer Segment Consumer Segment Facts Revenue ($M) & Gross Margin (%) ▪ Bias truck tires and light truck tires outside of the US, customer mixing of rubber stock in the US, high speed breaks in Europe Tires and wheels produced Revenue $180.00 in North America, Europe 50 and Turf Tires and CIS and
Slide 22: Financials
Kim – can you please add ITM picture FINANCIALS 22
Slide 23: 2023 Financial Outlook
2023 Financial Outlook Revenue (in $B) Adj. EBITDA (in $M) Free Cash Flow (in $M) $2.17 $253 $110 - $120 $1.85 - $1.9 $114 $200 - $210 FY 2022 Actual FY 2023 Outlook FY 2022 Actual FY 2023 Outlook FY 2022 Actual FY 2023 Outlook Market / Financial Context: ▪ Net Sales: While underlying macroeconomic
Slide 24: Focus on Balanced Growth & Margin Enhancement
Focus on Balanced Growth & Margin Enhancement Revenue Mix/Trend Gross Margin Trend (in $ billions) 20% $1.4 $1.2 $1.8 $2.2 $2.1 $0.2 $0.2 15% $0.2 $0.8 $0.8 $0.1 $0.8 10% $0.1 $0.5 $0.7 5% $1.2 $1.1 $1.2 $0.6 $1.0 0% 2019 2020 2021 2022 TTM 2018 2019 2020 2021 2022 TTM AG EMC Consumer Total AG EMC C
Slide 25: 2021-2023 Quarterly Financial Trends
2021-2023 Quarterly Financial Trends Revenue By Quarter ($M) Gross Profit ($M) & GM % By AEBITDA ($M) & % of Sales by $573 Quarter $125.0 Quarter 20% 18% 19.1% $556 $549 $120.0 20% $105.0 17.4% 17.9% $531 $510 16.5% 18% 16% $488 $481 $110 $100.0 15.6% 14.3% 15.0% $450 16% $439 $85.0 14.0% 12.3%14% $
Slide 26: Consistent Working Capital Management
Consistent Working Capital Management Net Q2 – Working Capital ($M) - - - - - - 2022 - - - - - - 2023 30.6% 30% Q1 Q2 Q3 Q4 Q1 Q2 $880 Days Sales 25% 51 48 49 48 54 53 $680 Outstanding (DSO) 22.2% 21.2% 20% Days A/P in $480 19.1% 84 85 87 86 81 90 Inventory (DPI) $423 $378 15% Days Payable $280 $345
Slide 27: Strong Growth, Supportive Balance Sheet
Strong Growth, Supportive Balance Sheet Net Debt / TTM AEBITDA ($M) $430M Debt Breakdown $300.0 Leverage Ratio Trend 6 as of June 30th, 2023 $250.0 $264 5 $396 $253 $236 $241 $200.0 4.1x 4 $210 3.3x $150.0 $166 3 2.9x 2.6x $27 $7 $0 $100.0 $116 2 1.8x $95 7.0% Secured Titan Europe Other $125M Revolv
Slide 28: Flexible Operating Structure
Flexible Operating Structure COGS Structure Raw Materials ▪ Demonstrated ability to manage labor and variable overhead costs while Labor leveraging global buying power ~10% Other* ~30% Steel ▪ Significant coordination between ~40% supply chain inventory control, Overhead Raw production, operations,
Slide 29: Appendix
Kim – can you please add ITM picture APPENDIX 29
Slide 30: Diverse, Global Revenue Base
Diverse, Global Revenue Base Revenue by Segment Revenue by Geography Consumer Other 8% 4% Latin America 20% U.S. Earthmoving/ Agricultural 49% Construction (“EMC”) 55% Europe/CIS 37% Revenue by Product 27% Revenue by Channel Wheels Aftermarket 25% ("AM") Tires 35% 50% Original Equipment Undercarriag
Slide 31: Q2 2023 Cash Flow
Q2 2023 Cash Flow In $ Millions Cash – Dec. 2022 Net Income Depreciation & Net Change in Net Payment of Repurchase of All Other* Cash – June. 2023 CAPEX Amortization Working Capital Debt Common Stock * “All Other” category primarily of income tax liabilities of $14M 31
Slide 32: Q2 Financial Overview
Q2 Financial Overview* 2020 2021 2022 2023 Sales $286M $439M $573M $481M Gross Profit $31M $61M $110M $86M Gross Margin % 10.8% 14.0% 19.1% 17.9% Adjusted EBITDA $13M $37M $82M $59M Adjusted EBITDA % 4.6% 8.5% 14.3% 12.3% Net income (loss) attrib. to Titan ($5M) ($3M) $67M $30M Adjusted EPS - Dilute
Slide 33: Q2 EBITDA Reconciliation
Q2 EBITDA Reconciliation Adj. EBITDA Reconciliation | Q2 2020-2023 ($ Millions) Q2 2020 Q2 2021 Q2 2022 Q2 2023 Net Income / (Loss) (5) (2) 69 32 Provision for Income Taxes 2 2 19 9 Interest Expense 8 9 8 7 Depreciation & Amortization 13 12 11 11 EBITDA 19 21 107 59 Foreign exchange (Gain) / Loss (9
Slide 34: Investor Contact Information
Investor Contact Information Investor Relations Contacts: Lisa Fortuna or Griffin Morris Phone: 312-445-2870 twi@alpha-ir.com 34
Titan International, Inc. (DE) — Q2 2023 Earnings Presentation on 6ix