full year 2015 investor presentation - s3.amazonaws.com€¦why titan? 2015 objectives 12 “one...

Full Year 2015

Investor presentation

MARCH 2016

Titan International Overview

Titan International, Inc.

2

Titan International Inc. (TWI) is a publicly traded company on the New York Stock

Exchange. Headquartered in the heartland of the U.S. in Quincy, Illinois, Titan has

grown to become a top global manufacturer of specialty tires, wheels and tracks.

Titan has a heritage of over 100 years in the off-highway wheel manufacturing business

and is the world’s largest manufacturer of off-highway wheels. Titan has complete

research and development test facilities to validate wheel and rim designs.

Since Titan's entrance into the tire market in 1993, we have evolved into a leading

global supplier of complete wheel and tire assemblies for off-highway vehicles. Titan

manufactures two distinct tire brands: Titan Tire and Goodyear Farm Tires.


Corporate Strategy

3

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


Products

4

Wheels Tires and Assemblies Undercarriage Components (ITM)

85%

15%

OEM Aftermarket

60%

40%

OEM Aftermarket

75%

25%

OEM Aftermarket


Companies, Brands and Services

5

Titan Wheel

Corporation

Titan Tire Corporation ITM Voltyre-Prom

Titan Mining Services

Goodyear Farm Tires

Titan Tire Reclamation

Corporation

Grizz Squad


Customers

6


Market Leader – North American Ag

7

Wheels TIRES:

OEM 48%; REPLACEMENT 29%

WHEELS:

OEM & REPLACEMENT > 75%

Why Titan?

Titan International Headquarters Quincy, Illinois, USA Titan Wheel Corporation Quincy, Illinois, USA Saltville, Virginia, USA Titan Tire Corporation Des Moines, Iowa, USA Freeport, Illinois, USA Bryan, Ohio, USA Union City, Tennessee, USA São Paulo, Brazil Voltyre-Prom Volgograd, Russia (Majority Share)

Titan Mining Services (TMS) SWT Saskatchewan, Canada Titan Mining Services (TMS) Titan Australia Pty Ltd Emerald , QLD, Australia Kalgoorlie, WA, Australia Karratha, WA, Australia Muswellbrook, NSW, Australia Perth, WA, Australia Port Hedland, WA, Australia Sydney, NSW, Australia Yatala, QLD, Australia

Titan Mining Services (TMS) Titan Wheels South Africa (Pty) Ltd Nuffield, Springs, SA Titan Mining Services (TMS) PT Titan Wheels Indonesia Jakarta, Indonesia

Titan Mining Services (TMS) Aros del Pacifico S.A.C. Lima, Peru

Titan Mining Services (TMS) Aros del Pacifico S.A. Santiago, Chile

Titan Steel Wheels Ltd Kidderminster, UK Titan Distribution (UK) Ltd St. Helens, UK Titan Italia SpA Crespellano (BO), Italy Finale Emilia (MO), Italy Jesi (AN), Italy

Titan France SAS Flers, France

Titan Asia A.S. Aydin, Turkey

Wheels India Ltd Tamilnadu, India (Minority Share) Italtractor ITM SpA Fanano (MO), Italy Ceprano (FR), Italy Potenza, Italy Titan Intertractor GmbH Gevelsberg, Germany Pyrsa Piezas y Rodajes S.A. Monreal del Campo (Teruel), Spain

Intertractor America Corp. Elkhorn, WI, USA Winston-Salem, NC, USA ITM Latin America Ltda Atibaia, São Paulo, Brazil ITM Track (Tianjin) Ltd Tianjin, P.R. of China Titan ITM (Tianjin) Co. Ltd WDA Tianjin, P.R. of China Titan ITM Japan Ltd Akasaka, Tokyo, Japan

Why Titan?

Our Global Footprint

9

TIRES

WHEELS

UNDERCARRIAGE

SERVICE CENTERS

RECLAMATION

Best Portfolio in the World

Why Titan?

10

http://www.bridgestone.com/index.html

Why Titan?

Innovation

11

WAFFLE WHEEL

ONE PIECE HIGH-SPEED CRANE WHEEL

20kg lighter than current three-piece wheel

Increased safety - due to removal of loose parts

Rim profile is approved by Michelin and Bridgestone

We have 100% of European high-speed crane market

Patented product

Simplified design

Ease of wheel offset changes

Superior durability and long-term reliability

Reduced wheel wobble and hop

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 2016

Why Titan?

2015 Objectives

12

“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

Market Summary

52% 36%

12%

GP Margin: 6.7%

GP Margin: 6.6% GP Margin: 13.4%

Market Summary

Overview by Market Segment

Full Year 2015

14

Agriculture: 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

Agriculture

Consumer

Earthmoving / Construction

FY 2015 Segment Revenue

Total: $1.4 billion

29% decrease vs. FY 2014



Market Summary

Agriculture Drivers

15

$0.00

$5.00

$10.00

$15.00Pr/Bussel

Farm Commodity PricesCorn Soybeans

0%

20%

40%

60%

80%

100%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Global Ag Machinery Production

Europe Americas Asia Rest of the World

Mix Shift - Large hp equipment (4WD tractors and Combines) continue a cyclical downturn which began in

2014. Smaller hp tractor demand remains strong, but at lower ASP and gross margins

Passed legislation to reinstate tax incentives including Section 179 deduction (permanent) and bonus

depreciation (phased out in 2020)

Grain prices remain at lower levels; resulting in lower farm income

Potential EPA weakening of the Renewable Fuel Standard impacting ethanol

Used equipment inventory levels remain high, but have shown signs of stabilizing

Interest rates remain low for financing new equipment purchases

Market Summary

Earthmoving/Construction Drivers

16

Private construction spending for resi and non-resi buildings continue to carry the industry

Larger construction equipment used for highways and infrastructure have remained slow to recover

Mining remains weak with commodity prices low

Strong U.S. dollar

700

800

900

1,000

1,100

1,200

1,300U.S. Housing StartsU(000's)

-50%-40%-30%-20%-10%

0%10%20%30%

Asia/Pacific EAME Lat Am N Am World

Cat Retail Machine Sales

Financial Performance


Q4 Highlights

Improved gross margin rate performance (40 bps) for the year despite significant softening in our global markets and a 26% sales decline

Managed headcount reductions without sacrificing output per man hour

Adjusted income from operations nearly flat when compared to prior year despite a $500 million reduction in sales.

Continued improvement in our cost of quality ($2 - $3M quarterly)

Decreased net material costs (natural and synthetic rubber, carbon black, fabric, and chemicals) through new supply chain organization

Continued investments in EVA, profit optimization and pricing initiatives adding value for the long term

Goodyear license agreement allowing distribution and sale of Goodyear-brand farm tires in Europe, the Middle East, Africa, Russia and other CIS countries

Continued momentum with our customers with innovative solutions such as LSW in North America, as well as the waffle wheel in Europe and a single piece crane wheel used by crane manufacturers

Accomplishments

Challenges

Continued downward trend in Large Ag products (higher ASP and margin) driven by lower farm income / cash receipts.

Weak mining market conditions which impacts North America, ITM and Australia business units

Strong US dollar impacting U.S. exports and reported sales

Decreased OEM production levels commensurate with lower demand driven by lower farm income, lower commodity prices, increasing rents

and high used inventory levels

18


Financial Summary

19

Note: Gross Margin and Operating Income adjusted for Asset Impairment and Inventory Write-down.

Net Income and EPS adjusted for Noncontrolling Interest and non GAAP items.

(Amounts in millions) 2015 2014 2013 2012

Sales $1,394.8 $1,895.5 $2,163.6 $1,820.7

Gross Margin $137.8 $180.6 $295.2 $294.1

Gross Margin % 9.9% 9.5% 13.6% 16.2%

Operating Income ($24.3) ($21.1) $102.4 $174.7

Operating Income % (1.7%) (1.1%) 4.7% 9.6%

Adjusted Net Income ($7.1) ($26.3) $43.5 $101.2

Adjusted Earnings Per Share-Diluted ($0.13) ($0.49) $0.78 $1.93


Adjusted Income

20

Note: Adjustments for non GAAP items are net of taxes.


Adjusted EBITDA

21


Sales and Gross Margin by Market

22

Net Sales: Down (29%) 2015 vs. 2014

High - Horsepower Tractor/Combine sales continued weakness

Reduced OEM demand for products

FX devaluation of (8%); volume down (17%); price/mix down (4%)

AG

52%


Exit from several low-margin compound supply agreements (10%) as

a result of bringing this process in-house to improve profit


Consumer

12%

EMC

36%


Mining remains weak with commodity prices low


$1,080$1,182

$1,017

$724

19% 17%13% 13%

$100

$300

$500

$700

$900

$1, 100

$1, 300

$1, 500

0%

10%

20%

30%

40%

50%

60%

70%

2012 2013 2014 2015

$502

$749

$611$505

15%11%

5% 7%

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1, 000

-2%

8%

18%

28%

38%

48%

58%

68%

78%

2012 2013 2014 2015

$239 $232$268

$165

7% 7%6% 7%

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

$300

$325

$350

$375

$400

$425

$450

$475

$500

-2%

8%

18%

28%

38%

48%

58%

68%

78%

2012 2013 2014 2015

Note: Gross Margin adjusted for Asset Impairment and Inventory Write-down.


Titan performance: 2012-2015

23

$621$798

$519$345

$0

$500

$1,000

2012 2013 2014 2015

Shareholder EquityIn millions

$244$197

$89$54

$0

$100

$200

$300

2012 2013 2014 2015

Adjusted EBITDAIn millions

50% Domestic;

50% International

$1,821$2,164

$1,896$1,395

$0

$1,000

$2,000

$3,000

2012 2013 2014 2015

SalesIn millions

Financial Appendix

Appendix

Sales – N. America vs. International

25

Appendix

Working Capital

26

Appendix

Cash Activity

27

Appendix

Debt Structure

28

Appendix

Cost Structure

29

Raw

Materials

55%

Overhead

25%

Labor

20%

Primary Raw Materials Cost Structure Breakdown

Steel

Natural Rubber

Synthetic Rubber

Carbon Black

Nylon

LSW Technology Appendix


What is LSW Technology?

31


Why LSW in Agriculture?

32



33



34



35



36


Why LSW in OTR?

37


Why LSW in OTR?

38


Why LSW in OTR?

39


Why LSW in OTR?

The stability is great. You can work

faster because there’s not as much

side-to-side movement when you’re

digging. It’s got a good tread and it

rides smooth. It runs faster, harder;

it’s definitely a lot better.”

Mickey Cook, comparing the Titan STL3 LSW

to a comparable standard tire.

Cedar Lake Mining, Inc.

Pinson, Alabama

40


LSWAdvantage.com

The site includes an overview of LSW technology and its benefits, the history behind the development of the technology, product

information, details on how to buy from your dealer and videos of real-world equipment owners who have benefited from making the

switch from standard tires to LSW tires.

41

Investor Relations

[email protected]

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.

Company Website:

www.titan-intl.com

full year 2015 investor presentation - s3.amazonaws.com€¦why titan? 2015 objectives 12 “one...

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