Titan International, Inc. (NYSE:TWI) Q4 2022 Earnings Conference Call February 28, 2023 9:00 AM ET Company Participants Alan Snyder – Vice President, Financial Planning and Analysis Paul Reitz – President and Chief Executive Officer David Martin – Senior Vice President and Chief Financial Officer Conference Call Participants Steve Ferazani – Sidoti Larry DeMaria – William Blair Kirk Ludtke – Imperial Capital Operator Good morning, ladies and gentlemen, and welcome to the Titan International Incorporated Fou ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Titan International is a global manufacturer of wheels, tires, and undercarriage systems for off-highway vehicles, serving agricultural, earthmoving, and consumer sectors - The company is a global manufacturer and supplier of wheels, tires, and undercarriage systems for the agricultural, earthmoving/construction, and consumer markets[18](index=18&type=chunk)[19](index=19&type=chunk) - A key competitive strength is the ability to produce both wheels and tires, enabling the company to provide complete assembly solutions to customers like **AGCO, Caterpillar, CNH, and Deere & Company**[24](index=24&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - Strategic priorities include promoting its proprietary **LSW®** tire technology, growing its higher-margin aftermarket business, and improving operational efficiencies[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - In **March 2022**, the company sold its Australian wheel business to **OTR Tyres** for approximately **$17.5 million** in gross proceeds and repatriated cash as part of its strategy to divest non-core assets[33](index=33&type=chunk) Customer Concentration (FY **2022 vs 2021**) | Customer Group | % of Net Sales (2022) | % of Net Sales (2021) | | :--- | :--- | :--- | | Top 10 Customers | **43%** | 40% | | **Deere & Company** | **15%** | 12% | International Operations Net Sales Contribution | Region | % of Net Sales (2022) | % of Net Sales (2021) | | :--- | :--- | :--- | | Latin America | **19%** | 18% | | Europe | **21%** | 22% | | Russia | **6%** | **6%** | Research & Development Expenses (**2020-2022**) | Year | R&D Expense (in millions) | | :--- | :--- | | **2022** | **$10.4** | | **2021** | **$10.1** | | **2020** | **$9.0** | [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from commodity price volatility, concentrated customer base, cyclical end-markets, international operations, and potential IT system disruptions - The company is exposed to price fluctuations of key commodities like steel and rubber, as it does not typically enter into long-term contracts or use derivative instruments to hedge these risks[73](index=73&type=chunk) - Operations are subject to risks from cyclical industries (agriculture, construction) and a concentrated customer base, with the ten largest customers accounting for **43%** of **2022** net sales[79](index=79&type=chunk)[83](index=83&type=chunk) - The military conflict between Russia and Ukraine poses a risk to the company's Russian operations (**Voltyre-Prom**), which represent approximately **7%** of consolidated assets and **6%** of global sales in **2022**[93](index=93&type=chunk)[95](index=95&type=chunk) - Debt obligations contain covenants that could limit financial and operational flexibility, including restrictions on dividends, stock repurchases, and additional borrowings[88](index=88&type=chunk) - The company faces risks from potential IT system failures or cybersecurity attacks, especially as it upgrades to cloud-based ERP systems, and must comply with evolving data privacy laws like **GDPR**[103](index=103&type=chunk)[104](index=104&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None [Properties](index=20&type=section&id=Item%202.%20Properties) Titan owns several large manufacturing and distribution facilities, with its most significant properties located in Sao Paulo, Brazil, and various locations in the United States and Russia Major Owned Properties (>1M sq ft) | Location | Approx. Square Footage | | :--- | :--- | | **Sao Paulo, Brazil** | 2,917,000 | | **Union City, Tennessee** | 2,212,000 | | **Volzhsky, Russia** | 2,153,000 | | **Des Moines, Iowa** | 1,930,000 | | **Quincy, Illinois** | 1,205,000 | | **Freeport, Illinois** | 1,202,000 | [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal proceedings typical for its business, which are not anticipated to have a material effect on its financial position or results - The company is subject to routine legal proceedings and claims arising from the normal course of business. See **Note 24** for further details[116](index=116&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Titan's common stock trades on the **NYSE** under the symbol **TWI**, with quarterly cash dividends suspended since **June 2020** and no dividends paid in **2022 or 2021** - The company's common stock trades on the New York Stock Exchange (**NYSE**) under the symbol **TWI**[120](index=120&type=chunk) - The quarterly common stock dividend was suspended on **June 11, 2020**, and remained suspended through **2022**. No dividends were declared in **2022 or 2021**[120](index=120&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In **2022**, net sales grew **22%** to **$2.17 billion** and net income surged to **$179.2 million**, driven by strong demand, favorable pricing, and tax benefits, with robust operating cash flow of **$160.7 million** Financial Highlights (FY **2022 vs. FY 2021**) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | **$2,169.4 M** | $1,780.2 M | **+22%** | | Gross Profit | **$360.7 M** | $237.5 M | **+52%** | | Gross Margin | **17%** | **13%** | **+31%** | | Income from Operations | **$205.8 M** | $85.2 M | **+142%** | | Net Income | **$179.2 M** | $49.9 M | **+259%** | | Diluted EPS | **$2.77** | $0.79 | **+251%** | - The company's Russian operations (**Voltyre-Prom**) account for approximately **6%** of consolidated global sales and **7%** of consolidated assets as of year-end **2022**. The Russia-Ukraine conflict has not had a significant impact on global operations to date[129](index=129&type=chunk) - In **2022**, the company recorded **$32.0 million** in other income from the approval of Brazilian indirect tax credits, which also resulted in **$16.1 million** of associated income tax expense[134](index=134&type=chunk) - The company released a significant portion of its U.S. valuation allowance on deferred tax assets, resulting in a tax benefit of **$47.4 million** in **2022**, due to achieving a three-year cumulative income position[156](index=156&type=chunk)[157](index=157&type=chunk) - Net cash provided by operating activities was **$160.7 million** in **2022**, a substantial increase from **$10.7 million** in **2021**, primarily driven by higher net income[170](index=170&type=chunk)[171](index=171&type=chunk) - Capital expenditures for **2023** are forecasted to be between **$55 million and $60 million**, intended to enhance manufacturing capabilities and drive productivity[182](index=182&type=chunk) [Market Conditions and Outlook](index=24&type=section&id=Market%20Conditions%20and%20Outlook) The **2023** outlook is positive, with sustained stability in agriculture, modest growth in earthmoving/construction, and stability in the consumer market - **Agricultural Market:** Favorable conditions are expected to continue into **2023**, supported by strong farmer income, replacement of aging equipment, and low dealer inventories[137](index=137&type=chunk) - **Earthmoving/Construction Market:** Modest growth is expected in **2023**, driven by infrastructure development and healthy mining capital budgets, though rising interest rates may soften housing starts[138](index=138&type=chunk) - **Consumer Market:** Markets remained stable in **2022**. This segment is influenced by consumer spending, interest rates, and other macroeconomic factors[139](index=139&type=chunk)[140](index=140&type=chunk) [Results of Operations (FY 2022 vs. FY 2021)](index=26&type=section&id=Results%20of%20Operations) Net sales increased **22%** to **$2.17 billion** in **2022**, with gross margin expanding to **17%** and net income significantly boosted by tax credits and valuation allowance release - The **22%** increase in net sales was primarily driven by price increases in response to inflation, with a lesser impact from increased volume. Sales were unfavorably impacted by foreign currency translation (**3.6%**) and the sale of the Australian wheel business (**1.8%**)[144](index=144&type=chunk) - Gross profit margin improved from **13%** in **2021** to **17%** in **2022**, attributed to higher sales, better operating leverage, and cost reduction initiatives[145](index=145&type=chunk) - Other income increased to **$25.4 million**, mainly due to a **$32.0 million** gain on indirect tax credits in Brazil, partially offset by a **$10.9 million** loss on the sale of the Australian wheel business[154](index=154&type=chunk) - The effective tax rate was **11.4%** in **2022**, compared to **2.3%** in **2021**. The **2022** rate was favorably impacted by a **$47.4 million** valuation allowance release[155](index=155&type=chunk)[156](index=156&type=chunk) [Segment Information](index=28&type=section&id=Segment%20Information) All three segments, Agricultural, Earthmoving/Construction, and Consumer, reported strong sales and operating income growth in **2022**, driven by price/mix and volume increases Agricultural Segment Performance (FY **2022 vs. FY 2021**) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | **$1,192.2 M** | $949.4 M | **+26%** | | Gross Profit | **$193.6 M** | $135.8 M | **+43%** | | Income from Operations | **$130.5 M** | $77.7 M | **+68%** | Earthmoving/Construction Segment Performance (FY **2022 vs. FY 2021**) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | **$807.4 M** | $693.4 M | **+16%** | | Gross Profit | **$135.8 M** | $83.7 M | **+62%** | | Income from Operations | **$79.8 M** | $27.8 M | **+187%** | Consumer Segment Performance (FY **2022 vs. FY 2021**) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | **$169.8 M** | $137.5 M | **+24%** | | Gross Profit | **$31.3 M** | $18.0 M | **+74%** | | Income from Operations | **$22.8 M** | $9.6 M | **+139%** | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly improved in **2022** with **$159.6 million** in cash and **$160.7 million** in operating cash flow, supporting capital expenditures and stock repurchases, with sufficient liquidity anticipated for **2023** - Cash and cash equivalents increased by **$61.5 million** to **$159.6 million** at year-end **2022**[170](index=170&type=chunk) - Net cash from operating activities was **$160.7 million**, driven by strong net income, which more than offset increased working capital needs in receivables and inventory[170](index=170&type=chunk) - Investing activities used **$36.8 million**, including **$47.0 million** in capital expenditures, partially offset by **$9.3 million** in proceeds from the sale of the Australian wheel business[173](index=173&type=chunk) - Financing activities used **$61.3 million**, primarily for debt payments (**$124.7 million**) and a **$25.0 million** common stock repurchase[175](index=175&type=chunk) - At **December 31, 2022**, the company had no outstanding borrowings under its **$125 million** revolving credit facility, with **$117.8 million** available[181](index=181&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks including foreign currency fluctuations, commodity price volatility for raw materials, and interest rate changes on its variable-rate debt - The company is exposed to foreign currency risk, with a net investment in foreign entities of **$249.0 million** at year-end **2022**. A hypothetical **10%** adverse change in exchange rates would result in a loss of value of approximately **$25.0 million**[192](index=192&type=chunk) - Titan is exposed to commodity price risk for materials like steel and rubber and does not use derivative instruments to hedge these fluctuations[193](index=193&type=chunk) - Interest rate risk is tied to the variable-rate **$125 million** credit facility. A **100 basis point (1%)** increase in interest rates would change annual interest expense by about **$1.2 million** if the facility were fully drawn[194](index=194&type=chunk) [Financial Statements and Supplementary Data](index=34&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the detailed financial statements and schedules located in **Part IV, Item 15** of the report - Reference is made to **Part IV, Item 15** of this report for the full financial statements and supplementary data[196](index=196&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=35&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - None [Controls and Procedures](index=35&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of **December 31, 2022**, management concluded that the company's disclosure controls and internal control over financial reporting were effective, with no material changes during the **fourth quarter of 2022** - Management concluded that the company's disclosure controls and procedures were effective as of **December 31, 2022**[198](index=198&type=chunk) - Management assessed internal control over financial reporting using the **COSO 2013 framework** and concluded it was effective as of **December 31, 2022**[201](index=201&type=chunk) - No changes in internal control over financial reporting occurred during the **fourth quarter of 2022** that materially affected, or are reasonably likely to materially affect, these controls[199](index=199&type=chunk) [Other Information](index=35&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=35&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable Part III [Directors, Executive Officers and Corporate Governance](index=36&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on the company's directors and executive officers, including **Paul G. Reitz** and **David A. Martin**, is incorporated by reference from the **2023 Proxy Statement** - Information regarding directors and corporate governance is incorporated by reference from the Company's **2023 Proxy Statement**[206](index=206&type=chunk) - Key executive officers include **Paul G. Reitz**, President and CEO, and **David A. Martin**, SVP and CFO[207](index=207&type=chunk)[208](index=208&type=chunk) [Executive Compensation](index=36&type=section&id=Item%2011.%20Executive%20Compensation) Detailed information regarding executive officer compensation is incorporated by reference from the company's **2023 Proxy Statement** - Information required by this item is incorporated by reference from the Company's **2023 Proxy Statement**[212](index=212&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=36&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of beneficial owners, management, and related stockholder matters is incorporated by reference from the company's **2023 Proxy Statement** - Information required by this item is incorporated by reference from the Company's **2023 Proxy Statement**[212](index=212&type=chunk) [Certain Relationships, Related Transactions, and Director Independence](index=36&type=section&id=Item%2013.%20Certain%20Relationships%2C%20Related%20Transactions%2C%20and%20Director%20Independence) Details concerning certain relationships, related party transactions, and director independence are incorporated by reference from the **2023 Proxy Statement** and **Note 27** of the Consolidated Financial Statements - Information required by this item is incorporated by reference from the Company's **2023 Proxy Statement** and also appears in **Note 27** of the Notes to Consolidated Financial Statements[213](index=213&type=chunk) [Principal Accounting Fees and Services](index=36&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding fees paid to the principal accountant for audit and other services is incorporated by reference from the company's **2023 Proxy Statement** - Information required by this item is incorporated by reference from the Company's **2023 Proxy Statement**[214](index=214&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=38&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed with the Form 10-K, with full financial statements beginning on page **F-1** - This item lists the financial statements, financial statement schedules, and exhibits included in or incorporated by reference into the Form 10-K[217](index=217&type=chunk) [Form 10-K Summary](index=40&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None

Titan International, Inc. (NYSE:TWI) Q3 2022 Results Conference Call November 8, 2022 9:00 AM ET Company Participants Todd Shoot - Senior Vice President, Investor Relations and Treasurer Paul Reitz - President and CEO David Martin - Senior Vice President and CFO Conference Call Participants Steve Ferazani - Sidoti Kirk Ludtke - Imperial Capital Operator Good morning, ladies and gentlemen. And welcome to the Titan International Incorporated Third Quarter 2022 Earnings Conference Call. At this time, all parti ...

Part I [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022, and 2021, encompassing statements of operations, comprehensive income, balance sheets, changes in equity, and cash flows, along with detailed explanatory notes [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported significant growth in net income for both the three and nine months ended September 30, 2022, with net sales increasing by 18% for the quarter and 28% for the nine-month period, driving substantial rises in gross profit and net income attributable to Titan shareholders Consolidated Statements of Operations Highlights (Unaudited, in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $530,722 | $450,382 | $1,659,614 | $1,292,539 | | **Gross profit** | $87,633 | $60,292 | $284,015 | $175,027 | | **Income from operations** | $50,491 | $22,900 | $164,900 | $60,850 | | **Net income attributable to Titan** | $43,169 | $11,187 | $134,262 | $21,988 | | **Diluted EPS** | $0.68 | $0.18 | $2.11 | $0.35 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, total assets increased to $1.25 billion from $1.18 billion at year-end 2021, driven by higher current assets, while total liabilities decreased slightly, leading to a substantial increase in total equity to $321.0 million from $227.2 million Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 (unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $900,647 | $813,304 | | **Total assets** | $1,247,479 | $1,182,685 | | **Total current liabilities** | $470,952 | $450,813 | | **Long-term debt** | $414,566 | $452,451 | | **Total liabilities** | $926,492 | $955,513 | | **Total Titan shareholders' equity** | $315,763 | $229,300 | | **Total equity** | $320,987 | $227,172 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, net cash provided by operating activities significantly improved to $102.2 million, a turnaround from the prior year's usage, while investing activities remained stable and financing activities primarily focused on debt repayment and stock repurchase, resulting in an $18.5 million increase in cash and cash equivalents Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net cash provided by (used for) operating activities** | $102,240 | $(2,290) | | **Net cash used for investing activities** | $(22,782) | $(23,111) | | **Net cash (used for) provided by financing activities** | $(57,541) | $7,275 | | **Net increase (decrease) in cash and cash equivalents** | $18,473 | $(22,791) | | **Cash and cash equivalents, end of period** | $116,581 | $94,640 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant events and accounting policies, including the impact of the Russia-Ukraine conflict, the $10.9 million loss from the sale of its Australian wheel business, the recognition of $32.0 million in Brazilian indirect tax credits, and increased sales and operating income across all business segments - The company's Russian subsidiary, Voltyre-Prom, represents approximately **8% of consolidated assets**[25](index=25&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The impact of the Russia-Ukraine military conflict has not been significant on global operations, but the company has stopped additional investments into the project[25](index=25&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - On March 31, 2022, the company sold its Australian wheel business, resulting in a loss on sale of **$10.9 million**, primarily from the release of a cumulative translation adjustment[26](index=26&type=chunk)[61](index=61&type=chunk) - The company recognized **$32.0 million** in other income for the nine months ended Sep 30, 2022, from Brazilian indirect tax credits (PIS/COFINS) after prevailing on a legal claim[69](index=69&type=chunk)[70](index=70&type=chunk) Segment Net Sales (in thousands) | Segment | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Agricultural | $917,443 | $684,636 | | Earthmoving/construction | $611,550 | $509,930 | | Consumer | $130,621 | $97,973 | | **Total** | **$1,659,614** | **$1,292,539** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strong financial performance, highlighting an 18% quarterly and 28% year-to-date sales increase driven by favorable pricing, product mix, and volume across all segments, alongside improved gross profit margins, positive market outlooks, limited impact from the Russia-Ukraine conflict, a significant income boost from Brazilian tax credits, and strong liquidity from operations [Market Conditions and Outlook](index=34&type=section&id=Market%20Conditions%20and%20Outlook) The outlook for the agricultural market remains strong, supported by high commodity prices and improved farmer income, while the earthmoving/construction market shows continued growth momentum, and the consumer market remains stable but subject to macroeconomic variables - **Agricultural Outlook:** Strong demand is anticipated to continue, supported by high commodity prices, improved farmer income, and replacement of aging equipment[121](index=121&type=chunk) - **Earthmoving/Construction Outlook:** Growth momentum is expected to continue, driven by low equipment inventory levels and increased mining capital budgets[122](index=122&type=chunk) - **Consumer Outlook:** Markets have stabilized, but growth can vary[123](index=123&type=chunk) - Initiatives are underway to bolster opportunities in specialty products like custom rubber mixing[123](index=123&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) For the third quarter of 2022, net sales grew 18% to $530.7 million and gross profit rose 45% to $87.6 million with margins expanding, while nine-month sales increased 28% to $1.66 billion and operating income surged 171% to $164.9 million, driven by price increases and strong demand, with other income boosted by $32.0 million in Brazilian tax credits partially offset by a $10.9 million loss on the Australian business sale Key Operating Results (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $530,722 | $450,382 | $1,659,614 | $1,292,539 | | **Gross profit** | $87,633 | $60,292 | $284,015 | $175,027 | | **Gross profit %** | 17% | 13% | 17% | 14% | | **Income from operations** | $50,491 | $22,900 | $164,900 | $60,850 | - Net sales increase for both three and nine-month periods was driven by price/product mix and volume[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - Price increases were implemented to offset rising raw material, freight, and energy costs[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - Other income for the nine months ended Sep 30, 2022, was **$24.5 million**, primarily due to **$32.0 million** from Brazilian tax credits, partially offset by a **$10.9 million** loss on the sale of the Australian wheel business[144](index=144&type=chunk) [Segment Information (MD&A)](index=38&type=section&id=Segment%20Information%20(MD%26A)) All segments demonstrated strong performance, with Agricultural sales rising 18% in Q3 and 34% YTD, Earthmoving/Construction sales increasing 19% in Q3 and 20% YTD, and the Consumer segment growing 10% in Q3 and 33% YTD, all driven by pricing, volume, and market demand, leading to significant improvements in gross profit and operating income across the board Agricultural Segment Results (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net sales** | $289,259 (+18% YoY) | $917,443 (+34% YoY) | | **Gross profit** | $45,949 (+38% YoY) | $155,794 (+58% YoY) | | **Income from operations** | $31,125 (+71% YoY) | $106,126 (+96% YoY) | Earthmoving/Construction Segment Results (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net sales** | $199,921 (+19% YoY) | $611,550 (+20% YoY) | | **Gross profit** | $34,959 (+64% YoY) | $102,651 (+62% YoY) | | **Income from operations** | $21,836 (+176% YoY) | $59,952 (+186% YoY) | Consumer Segment Results (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net sales** | $41,542 (+10% YoY) | $130,621 (+33% YoY) | | **Gross profit** | $6,725 (+16% YoY) | $25,570 (+91% YoY) | | **Income from operations** | $4,856 (+38% YoY) | $18,976 (+169% YoY) | [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly improved, with cash from operations reaching $102.2 million in the first nine months of 2022, a substantial turnaround from the prior year, maintaining a stable cash conversion cycle and ending the period with $116.6 million in cash and $117.8 million available under its credit facility, with projected full-year capital expenditures between $45 million and $50 million - Cash provided by operating activities was **$102.2 million** for the first nine months of 2022, a **$104.5 million** improvement from the same period in 2021, driven by higher net income and managed working capital[181](index=181&type=chunk)[182](index=182&type=chunk) - Financing activities used **$57.5 million**, which included a **$25.0 million** repurchase of common stock from RDIF and net debt payments[186](index=186&type=chunk) - As of September 30, 2022, the company had **$116.6 million** in cash and cash equivalents and **$117.8 million** available for borrowing under its **$125 million** credit facility[190](index=190&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its exposure to market risks, which include changes in foreign currency exchange rates, interest rates, and commodity price fluctuations, has not undergone any material changes since the end of the previous fiscal year (December 31, 2021) - Exposure to market risk, including foreign currency, interest rates, and commodity prices, has not materially changed since December 31, 2021[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of September 30, 2022, the company's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the third quarter - The CEO and CFO concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective[197](index=197&type=chunk) - No material changes to internal control over financial reporting occurred during the third quarter of fiscal year 2022[198](index=198&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings arising from its normal business operations, which management believes are not expected to have a material effect on its financial condition, results of operations, or cash flows - The company is party to routine legal proceedings from the normal course of business, which are not expected to have a material effect on its financial position[75](index=75&type=chunk)[203](index=203&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) The company reports that there have been no material changes to the risk factors that were disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes from the risk factors disclosed in the 2021 Form 10-K[204](index=204&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q report, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002, and the Inline XBRL financial data files List of Exhibits | Exhibit No. | Description | | :--- | :--- | | 31.1 | Certification of the Principal Executive Officer (Section 302) | | 31.2 | Certification of the Principal Financial Officer (Section 302) | | 32 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act | | 101 | Inline XBRL Taxonomy Documents |

Titan International, Inc. (NYSE:TWI) Q2 2022 Earnings Conference Call August 2, 2022 9:30 AM ET Company Participants Todd Shoot - Senior Vice President, Investor Relations and Treasurer Paul Reitz - President and CEO David Martin - Senior Vice President and CFO Conference Call Participants Steve Ferazani - Sidoti Kirk Ludtke - Imperial Capital Operator Good morning, ladies and gentlemen. And welcome to Titan International, Inc. Second Quarter 2022 Earnings Conference Call. At this time, all participants hav ...

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company achieved significant year-over-year growth in Q2 and H1 2022, with net sales reaching **$1.13 billion** and net income surging to **$93.5 million**, driven by strong demand and favorable pricing Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $572,895 | $438,639 | $1,128,892 | $842,157 | | **Gross profit** | $109,653 | $61,470 | $196,382 | $114,735 | | **Income from operations** | $69,701 | $23,719 | $114,409 | $37,950 | | **Net income attributable to Titan** | $67,171 | $(2,773) | $91,093 | $10,801 | | **Diluted EPS** | $1.06 | $(0.04) | $1.43 | $0.17 | Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $929,381 | $813,304 | | **Total assets** | $1,289,184 | $1,182,685 | | **Total current liabilities** | $497,259 | $450,813 | | **Total liabilities** | $983,514 | $955,513 | | **Total equity** | $305,670 | $227,172 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Net cash provided by (used for) operating activities** | $48,918 | $(17,487) | | **Net cash used for investing activities** | $(9,874) | $(13,888) | | **Net cash (used for) provided by financing activities** | $(22,617) | $10,849 | | **Net increase (decrease) in cash** | $18,595 | $(21,627) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key accounting policies and significant events are detailed, including the impact of the Russia-Ukraine conflict, the sale of the Australian wheel business, and **$22.5 million** in Brazilian tax credit recognition - The company's Russian operations (Voltyre-Prom) represent approximately **9% of consolidated assets** and **6% of global sales**, with the Russia-Ukraine military conflict not significantly impacting global operations to date[24](index=24&type=chunk) - On March 31, 2022, the company sold its Australian wheel business for approximately **$17.5 million** in proceeds, recognizing a loss of **$10.9 million**, primarily from the release of a cumulative translation adjustment[25](index=25&type=chunk)[61](index=61&type=chunk) - In Q2 2022, the company recognized **$22.5 million** in other income after receiving approval from Brazilian tax authorities for indirect tax credits, with an additional **$10 million** potentially recognized upon future approval for another subsidiary[67](index=67&type=chunk)[68](index=68&type=chunk) Segment Net Sales (in thousands) | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Agricultural** | $318,585 | $231,504 | $628,184 | $440,263 | | **Earthmoving/construction** | $210,370 | $176,715 | $411,629 | $341,522 | | **Consumer** | $43,940 | $30,420 | $89,079 | $60,372 | Segment Income from Operations (in thousands) | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Agricultural** | $44,884 | $20,789 | $75,001 | $36,072 | | **Earthmoving/construction** | $22,276 | $7,462 | $38,116 | $13,037 | | **Consumer** | $9,238 | $1,881 | $14,120 | $3,548 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong H1 2022 performance to robust demand and effective cost management, leading to significant gross margin expansion and improved liquidity [Overview and Market Outlook](index=31&type=section&id=Overview%20and%20Market%20Outlook) Titan International, a global off-highway products manufacturer, anticipates continued strong demand in agricultural and earthmoving/construction markets, despite global recession concerns - Agricultural Market Outlook: Favorable conditions are expected to continue for the remainder of 2022, supported by high commodity prices, improved farmer income, and the need to replace an aging large equipment fleet[118](index=118&type=chunk) - Earthmoving/Construction Market Outlook: Momentum is expected to continue due to low equipment inventory levels and increased mining capital budgets, although global recession concerns could impact demand[119](index=119&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q2 2022 saw substantial growth, with net sales up **30.6%** to **$572.9 million** and gross profit rising **78.4%** to **$109.7 million**, driven by strong price/product mix and volume Q2 2022 vs Q2 2021 Performance Summary (in thousands) | Metric | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | **Net sales** | $572,895 | $438,639 | 30.6% | | **Gross profit** | $109,653 | $61,470 | 78.4% | | **Gross profit %** | 19.1% | 14.0% | - | | **Income from operations** | $69,701 | $23,719 | 193.9% | - The increase in net sales was driven by price/product mix and volume across all segments, with pricing actions implemented to counter rising raw material, freight, and energy costs[123](index=123&type=chunk)[125](index=125&type=chunk) - Other income for Q2 2022 was **$23.7 million**, primarily driven by a **$22.5 million** gain from indirect tax credits related to Brazilian operations[141](index=141&type=chunk) [Segment Information](index=37&type=section&id=Segment%20Information) All segments performed strongly in Q2 2022, with Agricultural net sales growing **37.6%** to **$318.6 million** and Earthmoving/Construction net sales up **19.0%** to **$210.4 million** Q2 2022 Segment Performance vs Q2 2021 (in thousands) | Segment | Net Sales | % Change | Income from Operations | % Change | | :--- | :--- | :--- | :--- | :--- | | **Agricultural** | $318,585 | 37.6% | $44,884 | 115.9% | | **Earthmoving/Construction** | $210,370 | 19.0% | $22,276 | 198.5% | | **Consumer** | $43,940 | 44.4% | $9,238 | 391.1% | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity strengthened in H1 2022, with cash increasing to **$116.7 million** and operating cash flow turning positive at **$48.9 million**, supported by **$94.8 million** available credit - Cash and cash equivalents increased to **$116.7 million** at June 30, 2022, from **$98.1 million** at December 31, 2021[174](index=174&type=chunk) - Net cash from operating activities was **$48.9 million** for the first six months of 2022, a **$66.4 million** improvement over the same period in 2021, primarily due to higher net income[174](index=174&type=chunk)[175](index=175&type=chunk) - During the first six months of 2022, the company repurchased **$25.0 million** of its common stock[179](index=179&type=chunk) - As of June 30, 2022, the company had **$94.8 million** available for borrowing under its **$125 million** revolving credit facility[182](index=182&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's exposure to market risks, including foreign currency, interest rates, and commodity prices, has not materially changed since year-end 2021 - The company's exposure to market risk, including foreign currency, interest rates, and commodity prices, has not changed materially since December 31, 2021[187](index=187&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[188](index=188&type=chunk) - No changes in internal control over financial reporting occurred during the second quarter of 2022 that have materially affected, or are reasonably likely to materially affect, the company's internal controls[190](index=190&type=chunk) Part II. Other Information [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, which management does not expect to have a material effect on its financial condition or operations - The company is involved in routine legal proceedings but does not believe they will have a material effect on its financial position, results of operations, or cash flows[71](index=71&type=chunk)[195](index=195&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K have occurred - There have been no material changes from the risk factors disclosed in the company's 2021 Form 10-K[196](index=196&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Act and Inline XBRL financial data files - The exhibits filed with the report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, along with XBRL data files[199](index=199&type=chunk) [Signatures](index=47&type=section&id=Signatures) The Form 10-Q report was signed and authorized on August 1, 2022, by the Principal Executive Officer and Principal Financial Officer - The report was signed on August 1, 2022, by the company's Principal Executive Officer and Principal Financial Officer[203](index=203&type=chunk)

Financial Data and Key Metrics Changes - Q1 2022 revenue reached $556 million, the highest quarterly revenue since early 2013, with a gross margin improvement to 15.6% [9][33] - Adjusted EBITDA for Q1 was $57 million, up over $30 million from the previous year, and adjusted EPS was $0.44 compared to $0.07 last year [10][33] - Net debt leverage decreased to 2.6 times adjusted EBITDA from 2.9 times at year-end [34][53] Business Line Data and Key Metrics Changes - Agricultural segment net sales accounted for 56% of total sales, totaling $310 million, an increase of $101 million year-over-year and $45 million sequentially [35][36] - Earthmoving and Construction (EMC) segment net sales grew by $36.5 million or 22% year-over-year, with a gross profit of $31.4 million, representing a 59% increase from the previous year [38][41] - Consumer segment net sales increased by 51% year-over-year, with gross profit rising to $7.4 million, reflecting strong margins [43][44] Market Data and Key Metrics Changes - Strong commodity prices and supportive government programs are positively impacting the agricultural sector, creating a robust demand environment [12][13] - The OEM market is expected to see continued demand, with low dealer inventories projected to persist into 2023 [17][19] - The EMC segment is benefiting from anticipated infrastructure investments, supporting strong demand levels [18] Company Strategy and Development Direction - The company has increased its 2022 expectations, forecasting full-year net sales above $2.1 billion and adjusted EBITDA around $200 million [25][54] - A focus on improving operational efficiencies and restructuring underperforming businesses has positioned the company for growth [27][29] - The company is committed to sustainability, having published its first comprehensive sustainability report [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the agricultural sector's demand dynamics, stating that inflation will not significantly impact supply-demand relationships [86][92] - The company is optimistic about maintaining strong production levels and managing labor effectively despite potential challenges in the market [90][91] - Management highlighted the importance of long-term agreements with customers to ensure consistent volume and mitigate risks [95][106] Other Important Information - The company reported stable cash balances of $98 million, with operating cash flow impacted by increased working capital due to sales growth [33][47] - Capital expenditures for the year are expected to be in the range of $40 million to $50 million, with ongoing investments in production efficiency [48][49] Q&A Session Summary Question: Can you delineate between price and volume in the outlook? - Management indicated a good mix of price and volume growth, with increased production levels and improved labor productivity [61][62] Question: How does the strike at one of your customers affect guidance? - Management expressed confidence in the customer's leadership and stated that Titan can adjust deliveries without significant impact on operations [63][64] Question: What drove the substantial sequential growth in revenue? - Management attributed growth to evolving pricing strategies and a clean production period in Q1 compared to Q4, which had maintenance and holiday shutdowns [68][71] Question: Can you provide insights into the consumer business growth? - Management noted growth from utility truck tires in Latin America and strategic moves in third-party custom mixing rubber, contributing to strong margins [78][80] Question: How does inflation impact demand in the agricultural sector? - Management believes strong supply-demand dynamics will prevail despite inflation, emphasizing the importance of food production [86][92] Question: What are the plans for capital allocation? - Management stated that improved cash flow provides flexibility for growth initiatives and investments while maintaining a conservative leverage posture [114][115] Question: Are there any other non-core businesses considered for divestiture? - Management mentioned the tire recycling business as a potential area for partnership or divestiture, focusing on environmental-friendly processes [99][100]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-12936 TITAN INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 1525 Kautz Road ...

Titan International, Inc. (NYSE:TWI) Q4 2021 Earnings Conference Call March 3, 2022 9:00 AM ET Company Participants Todd Shoot - Senior Vice President, Investor Relations and Treasurer Paul Reitz - President and CEO David Martin - Senior Vice President and CFO Conference Call Participants Steve Ferazani - Sidoti & Company Komal Patel - Goldman Sachs Kirk Ludtke - Imperial Capital DeForest Hitman - Walthausen & Co. Alex Blanton - Clear Harbor Asset Management Jack Voigt - Balyasny Asset Management Operator G ...

Company Overview - Titan is a top global manufacturer of off-highway wheels, tires, and undercarriage products[5] - Titan operates in three business segments: Agricultural, Earthmoving/Construction (EMC), and Consumer[6] - Titan has a diverse global footprint with manufacturing facilities in North America, Latin/South America, Europe/Russia, Asia/Africa, and Australia[9] Financial Performance (Q4 2021) - Net sales were $488 million, a $161 million increase year-over-year, representing 51% organic revenue growth[62] - Adjusted EBITDA was $36.1 million, a $19 million increase year-over-year[62] - Gross margin was 12.8%, up 106 bps from 11.8% in Q4 of the prior year[63] - Adjusted net income attributable to Titan was $24.7 million, with diluted EPS of $0.39, compared to an adjusted net loss of ($5.9M) and diluted EPS of ($0.10) in Q4 2020[63] Financial Performance (FY 2021) - Sales reached $1.8 billion, compared to $1.3 billion in FY 2020[91] - Adjusted EBITDA was $135.0 million, compared to $54.0 million in FY 2020[91] - Net income attributable to Titan was $53.6 million, compared to a net loss of ($33.2M) in FY 2020[91] - Earnings per share - Diluted was $0.85, compared to ($0.55) in FY 2020[91] Segment Performance (YTD'21 vs YTD'20) - Agricultural net sales increased 49.6%[81] - EMC net sales increased 35.9%[84] - Consumer net sales increased 20.0%[86]