Titan International, Inc. (NYSE:TWI) Q2 2021 Earnings Conference Call July 29, 2021 9:00 AM ET Company Participants Todd Shoot - Senior Vice President, Investor Relations & Treasurer Paul Reitz - President & Chief Executive Officer David Martin - Senior Vice President & Chief Financial Officer Conference Call Participants Steve Ferazani - Sidoti Kirk Ludtke - Imperial Capital Alex Blanton - Clear Harbor Asset Management Brian DiRubbio - Baird Operator Good morning, ladies and gentlemen and welcome to the Ti ...

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Washington, D.C. 20549 UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q For the Quarterly Period Ended: June 30, 2021 (State or other jurisdiction of incorporation or organization) or 1525 Kautz Road, Suite 600, West Chicago, IL (Address of principal executive offices) 36-3228472 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (I.R.S. Employer Identification No.) Com ...

Titan International, Inc. (NYSE:TWI) Q1 2021 Earnings Conference Call May 6, 2021 9:00 AM ET Company Participants Todd Shoot - Senior Vice President, Investor Relations and Treasurer Paul Reitz - President and Chief Executive Officer David Martin - Senior Vice President and Chief Financial Officer Conference Call Participants Steve Ferazani - Sidoti Larry De Maria - William Blair Alex Blanton - Clear Harbor Asset Management Steve Ferazani - Sidoti Operator Good morning, ladies and gentlemen and welcome to t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (State or other jurisdiction of incorporation or organization) 2701 Spruce Street, Quincy, IL 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, 2021 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 ch ...

Titan International, Inc. (NYSE:TWI) Q4 2020 Results Conference Call March 4, 2021 9:00 AM ET Company Participants Todd Shoot - SVP, IR & Treasurer Paul Reitz - CEO, President & Director David Martin - SVP & CFO Conference Call Participants Steve Volkman - Jefferies Steve Ferazani - Sidoti Larry De Maria - William Blair Kirk Ludtke - Imperial Capital Operator Good morning, ladies and gentlemen, and welcome to the Titan International, Inc. Fourth Quarter 2020 Earnings Conference Call. At this time, all parti ...

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the fiscal year ended December 31, 2020 FORM 10-K (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2701 Spruce Street, Quincy, IL 62301 (Address of principal executive offices) (217) 228-6011 (Registrant's telephone number, including area code ...

Financial Data and Key Metrics Changes - Titan International reported a 12% decrease in net sales compared to the previous year, with a decline of $41 million [10][34] - Adjusted EBITDA increased to $14.2 million, marking an improvement over both the previous year's third quarter and the second quarter of this year [13][31] - Gross margin percentage improved by 250 basis points to 10.3% from 7.8% in the prior year [12][42] - Operating cash flow was strong at $42 million, contributing to a cash balance of nearly $99 million, the highest since mid-2018 [31][56] Business Line Data and Key Metrics Changes - The Agriculture segment saw net sales decline by $3.6 million or 2.3%, but organic growth was 6% [36][43] - Earthmoving and Construction segment sales decreased by 19%, with a gross profit margin improvement to 10% from 8.3% [22][49] - Consumer segment net sales fell by 15%, primarily due to a 20.8% volume decrease in North America [51] Market Data and Key Metrics Changes - North American agricultural sentiment reached a five-year high, driven by favorable commodity prices and low inventory levels [17][78] - Latin American operations faced challenges due to currency devaluation, but sales volume increased by 29% on a constant currency basis [39][20] - Russian sales were down 13% due to currency headwinds, but volume and pricing were slightly favorable [40] Company Strategy and Development Direction - The company is focused on managing its balance sheet and operational aspects to navigate through the pandemic and position for future growth [26][27] - Titan plans to continue product development and innovation to drive new business in 2021 [25][100] - The company is evaluating noncore assets for potential sales to improve financial flexibility [81][82] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding market recovery, particularly in agriculture, despite concerns over COVID-19 [16][72] - The company anticipates full-year adjusted EBITDA to exceed 2019 levels, projecting between $40 million to $44 million [15] - Management highlighted the importance of government support for agriculture and infrastructure as a stabilizing factor [88][89] Other Important Information - SG&A expenses were reduced by over 12%, excluding a $5 million legal accrual related to a long-standing case [12][52] - The company expects capital expenditures to increase next year as market conditions improve [60] Q&A Session Summary Question: Guidance for Q4 and seasonality impacts - Management indicated that the guidance reflects traditional seasonality, particularly in the Earthmoving segment [69] Question: Impact of the pandemic on European operations - Management is closely monitoring operations in Europe, which are currently running smoothly despite lockdowns [70][74] Question: Farmer sentiment metrics and outlook for agriculture - Management measures sentiment through various services and polls, noting low inventory levels as a key driver for optimism [75][78] Question: Noncore asset sales and future cash flow - Management confirmed ongoing evaluations of noncore assets beyond the current $16 million to $20 million expected in Q4 [81][82] Question: Update on initiatives to boost utilization rates - Management confirmed that improving capacity utilization remains a priority, with ongoing evaluations of product lines [95] Question: Update on LSW product performance - Management reported that LSW has significantly impacted the agricultural industry, with strong sales directly to dealers [97][100]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited financial statements for Q3 2020 show decreased net sales, increased net loss, reduced assets and equity, improved operating cash flow, and a dividend suspension [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's net sales, gross profit, operating loss, and net loss for the three and nine months ended September 30, 2020 and 2019 Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $304,772 | $345,905 | $932,405 | $1,146,876 | | **Gross profit** | $31,317 | $27,100 | $88,428 | $110,672 | | **Loss from operations** | $(6,808) | $(12,616) | $(19,512) | $(10,910) | | **Net loss attributable to Titan** | $(12,643) | $(19,144) | $(43,174) | $(23,590) | | **Loss per common share (Basic & Diluted)** | $(0.21) | $(0.33) | $(0.71) | $(0.43) | - The company **suspended its quarterly common stock dividend** in June 2020, after paying **$0.005 per share** in Q1 2020[24](index=24&type=chunk) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity, as of September 30, 2020, and December 31, 2019 Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 (unaudited) | Dec 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $638,415 | $651,465 | | **Total assets** | $1,016,347 | $1,114,307 | | **Total current liabilities** | $315,254 | $327,153 | | **Total liabilities** | $822,137 | $850,319 | | **Total equity** | $169,210 | $238,988 | - **Cash and cash equivalents increased to $98.8 million** as of September 30, 2020, from **$66.8 million** at December 31, 2019[14](index=14&type=chunk) - **Inventories decreased to $284.2 million** from **$333.4 million**, with long-term debt remaining stable at **$431.8 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash flows from operating, investing, and financing activities for the nine months ended September 30, 2020 and 2019 Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $47,431 | $31,212 | | **Net cash provided by (used for) investing activities** | $25,364 | $(96,622) | | **Net cash (used for) provided by financing activities** | $(33,936) | $63,956 | | **Net increase (decrease) in cash** | $31,973 | $(3,082) | - Investing cash flow significantly improved due to the **sale of Wheels India Limited shares for $32.9 million** in 2020, contrasting with a **$71.7 million payment** in 2019[18](index=18&type=chunk) - **Capital expenditures were reduced to $13.4 million** in the first nine months of 2020 from **$26.3 million** in the prior year period[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides additional details on the financial statements, including impacts of COVID-19, asset impairments, debt changes, and legal proceedings - The COVID-19 pandemic significantly impacted operations from March through May 2020, particularly in Europe and Latin America, leading to curtailed production and increased operating costs[21](index=21&type=chunk) - The company recorded a **$2.6 million asset impairment charge** for TTRC equipment and a **$1.0 million inventory impairment** for its Saltville, Virginia operations closure[36](index=36&type=chunk)[71](index=71&type=chunk) - **Total debt decreased from $499.7 million to $464.4 million**, with the **$36.0 million revolving credit facility fully paid down**[44](index=44&type=chunk)[188](index=188&type=chunk) - A tentative settlement in the Dico environmental litigation case involves a proposed **$11.5 million payment**, with an incremental **$5.0 million accrual** in Q3 2020[89](index=89&type=chunk)[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2020 net sales decline due to COVID-19 and market slowdowns, improved gross profit from cost reductions, and sufficient liquidity despite an uncertain outlook [Market Conditions and Outlook](index=36&type=section&id=Market%20Conditions%20and%20Outlook) This section discusses the uncertain market outlook due to COVID-19, recent improvements in agricultural demand, and continued declines in the earthmoving/construction sector - The outlook for the remainder of 2020 remains uncertain due to the ongoing COVID-19 pandemic, despite operations resuming after significant curtailment from March to May[116](index=116&type=chunk)[131](index=131&type=chunk) - Agricultural market demand has somewhat increased with improved commodity prices, though major OEMs reduced production, and small equipment sales are rebounding faster[133](index=133&type=chunk) - The earthmoving/construction market continues to decline due to global economic uncertainty and COVID-19, with demand for mining and large construction equipment softening since 2019[134](index=134&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section analyzes the company's net sales, gross profit, and operating expenses for the three months ended September 30, 2020, compared to the prior year Key Operating Results (in thousands) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | % Change | | :--- | :--- | :--- | :--- | | **Net sales** | $304,772 | $345,905 | (11.9)% | | **Gross profit** | $31,317 | $27,100 | 15.6% | | **Loss from operations** | $(6,808) | $(12,616) | (46.0)% | - Q3 2020 net sales decreased **11.9% YoY**, driven by a **9.7% volume decline** and **5.8% negative currency impact**, with COVID-19 reducing sales by approximately **$8 million**[139](index=139&type=chunk) - Q3 gross profit margin improved to **10.3% from 7.8% YoY**, despite lower sales, due to cost reduction initiatives and lower raw material prices[141](index=141&type=chunk) - Q3 SG&A expenses decreased to **$33.5 million** from **$35.0 million**, impacted by a **$5.0 million contingent legal accrual** for the Dico case[144](index=144&type=chunk) [Segment Information](index=42&type=section&id=Segment%20Information) This section provides a breakdown of net sales and operating income by Agricultural, Earthmoving/Construction, and Consumer segments for Q3 2020 and 2019 Net Sales by Segment - Q3 2020 vs Q3 2019 (in thousands) | Segment | Q3 2020 Net Sales | Q3 2019 Net Sales | % Change | | :--- | :--- | :--- | :--- | | Agricultural | $153,067 | $156,625 | (2.3)% | | Earthmoving/construction | $123,227 | $155,659 | (20.8)% | | Consumer | $28,478 | $33,621 | (15.3)% | Income (Loss) from Operations by Segment - Q3 2020 vs Q3 2019 (in thousands) | Segment | Q3 2020 Income (Loss) | Q3 2019 Income (Loss) | | :--- | :--- | :--- | | Agricultural | $3,091 | $(1,230) | | Earthmoving/construction | $656 | $(2,938) | | Consumer | $(88) | $(229) | - The Agricultural segment's Q3 operating income significantly improved due to higher gross profit from production efficiencies and lower material costs, despite a slight sales decline[165](index=165&type=chunk)[166](index=166&type=chunk) - The Earthmoving/Construction segment experienced a **20.8% drop in Q3 sales** but improved operating income to a **$0.7 million profit** from a **$2.9 million loss** YoY due to cost containment[171](index=171&type=chunk)[172](index=172&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's liquidity position, including cash balances, operating cash flow, available credit, and planned capital expenditures - As of September 30, 2020, the company held **$98.8 million in cash and cash equivalents**, an increase of **$32.0 million** from year-end 2019[183](index=183&type=chunk)[192](index=192&type=chunk) - Cash from operations for the first nine months of 2020 was **$47.4 million**, an improvement from **$31.2 million** YoY, primarily due to a **$36.7 million reduction in inventories**[183](index=183&type=chunk) - The company had **$61.4 million available** under its **$125 million revolving credit facility** as of September 30, 2020, with no outstanding borrowings[192](index=192&type=chunk) - Management expects full-year 2020 capital expenditures to be approximately **$20 million**, a reduction aimed at preserving cash due to COVID-19 impacts[193](index=193&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states there have been no material changes in its market risk disclosures since its 2019 Form 10-K report - No material changes have occurred in quantitative and qualitative market risk disclosures since the 2019 Annual Report on Form 10-K[198](index=198&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2020. No material changes to internal control over financial reporting occurred during the third quarter of 2020 - Management concluded the company's disclosure controls and procedures were effective as of September 30, 2020[199](index=199&type=chunk) - No material changes to internal control over financial reporting occurred during Q3 2020[200](index=200&type=chunk) [Part II. Other Information](index=51&type=section&id=Part%20II.%20Other%20Information) This section addresses legal proceedings, updated risk factors, and a list of exhibits filed with the report [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings. Specific details regarding ongoing litigation, particularly environmental matters, are referenced in Note 17 of the financial statements - The company is subject to various legal proceedings, including environmental and product liability issues, with details referenced in Note 17 of the financial statements[205](index=205&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) The company highlights the ongoing adverse impact of the COVID-19 pandemic as a significant risk factor. This includes disruptions to operations, unpredictable product demand, and potential negative effects on economic growth and financial markets, which could heighten other existing business risks - A new risk factor details the adverse impacts of the COVID-19 pandemic on the company's business, operating results, and financial condition[206](index=206&type=chunk)[207](index=207&type=chunk) - The pandemic has caused and may continue to cause unpredictable disruptions in product demand, operational activities, and customer collections, with uncertain duration and impact[207](index=207&type=chunk)[208](index=208&type=chunk) [Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and Inline XBRL data files - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[212](index=212&type=chunk) - The filing also includes various Inline XBRL taxonomy documents for financial data reporting[212](index=212&type=chunk)

Financial Data and Key Metrics Changes - The company experienced a revenue decrease of 27%, resulting in net sales of $104 million, down from the previous year [10][37] - Adjusted EBITDA was over $13 million, exceeding levels from the first quarter of 2020 and year-over-year from the second quarter of 2019 [10][11] - Gross profit margins increased to 10.4% from 9.8% last year, despite a gross profit decline of $8 million [12][46] - Free cash flow for the quarter was approximately $7 million, with cash levels increasing by nearly $20 million from the previous quarter [11][68] Business Line Data and Key Metrics Changes - Agricultural segment net sales were down $17 million or 10%, with a volume decline of 8.4% and a positive pricing and mix impact of 4.9% [39][47] - Earthmoving and construction segment sales decreased by 39% or $72 million, with a volume drop of 37.5% [51][55] - Consumer segment net sales fell by 36%, with a volume decrease of 25.7% [57] Market Data and Key Metrics Changes - North American wheel sales were down 27%, primarily due to lower OEM volumes [41] - Latin American sales decreased by 37%, with half of the decline attributed to lower currency translation effects [42] - European agricultural sales were down 18%, while Russian agricultural sales increased by 13% [48] Company Strategy and Development Direction - The company is focused on managing costs and maintaining flexibility in operations to navigate the volatile COVID-19 environment [24][25] - There is an emphasis on selling non-core assets and improving working capital management to position for future growth [25][84] - The company anticipates growth in the infrastructure sector post-election, regardless of the election outcome [31] Management's Comments on Operating Environment and Future Outlook - The management expressed uncertainty regarding the second half of the year due to limited visibility from customers and ongoing pandemic impacts [14][23] - There are expectations of pent-up demand in the agricultural sector, which may eventually be released into the marketplace [18] - The management remains committed to navigating the challenges posed by the pandemic while preparing for future recovery [84] Other Important Information - The company completed the sale of its remaining shares in Wheels India, generating approximately $50 million in net proceeds over nine months [29][65] - SG&A expenses were reduced by 20% year-over-year, reflecting efforts to control costs [60][62] - The company recorded a foreign exchange gain of almost $9 million in the second quarter [63] Q&A Session Summary Question: Outlook for the back half of the year - Management indicated that visibility is limited and that typical seasonality is expected, but the order flow is changing rapidly [90][92] Question: Cost structure and raw materials - Raw material prices remain low, and the overall cost structure is stable, with temporary costs expected to return as demand increases [104][108] Question: Structural changes and consolidation - Ongoing discussions regarding structural changes are taking place, with management confident in identifying opportunities for improvement [115][118]

Part I. Financial Information This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements, including statements of operations, comprehensive loss, balance sheets, changes in equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's net sales, gross profit, operating loss, and net loss for the specified periods | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | Six months ended June 30, 2020 (in thousands) | Six months ended June 30, 2019 (in thousands) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net sales | $286,133 | $390,597 | $627,633 | $800,971 | | Gross profit | $29,867 | $38,308 | $57,111 | $83,572 | | (Loss) income from operations | $(3,101) | $(2,430) | $(12,704) | $1,706 | | Net loss | $(4,643) | $(6,677) | $(32,142) | $(5,670) | | Net loss applicable to common shareholders | $(5,045) | $(7,085) | $(30,531) | $(5,883) | | Basic loss per common share | $(0.08) | $(0.12) | $(0.50) | $(0.10) | | Diluted loss per common share | $(0.08) | $(0.12) | $(0.50) | $(0.10) | [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This statement presents net loss and other comprehensive income (loss) components, leading to total comprehensive loss | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | Six months ended June 30, 2020 (in thousands) | Six months ended June 30, 2019 (in thousands) | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net loss | $(4,643) | $(6,677) | $(32,142) | $(5,670) | | Comprehensive loss | $(3,787) | $(716) | $(63,764) | $(3,622) | | Comprehensive loss attributable to Titan | $(4,680) | $(1,101) | $(60,862) | $(3,939) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Asset/Liability/Equity | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $80,160 | $66,799 | | Accounts receivable, net | $192,410 | $185,238 | | Inventories | $294,537 | $333,356 | | Total current assets | $641,201 | $644,262 | | Total assets | $1,031,294 | $1,114,307 | | Short-term debt | $40,784 | $61,253 | | Accounts payable | $136,802 | $158,647 | | Total current liabilities | $298,571 | $327,153 | | Long-term debt | $462,240 | $443,349 | | Total liabilities | $829,637 | $850,319 | | Total equity | $176,657 | $238,988 | [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This statement outlines changes in total equity, including net loss, currency translation, and stock-based compensation - Total Titan shareholders' equity decreased from **$234.9 million** at January 1, 2020, to **$175.4 million** at June 30, 2020, primarily due to a net loss of **$25.5 million** and a significant currency translation adjustment loss of **$32.0 million** for the six months ended March 31, 2020[15](index=15&type=chunk) - For the three months ended June 30, 2020, Titan shareholders' equity decreased by **$5.0 million** due to net loss, partially offset by positive currency translation adjustments and stock-based compensation[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash flows from operating, investing, and financing activities | Cash Flow Activity | Six months ended June 30, 2020 (in thousands) | Six months ended June 30, 2019 (in thousands) | | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by (used for) operating activities | $5,501 | $(10,001) | | Net cash provided by (used for) investing activities | $11,898 | $(56,490) | | Net cash provided by financing activities | $2,792 | $50,041 | | Effect of exchange rate changes on cash | $(6,830) | $1,131 | | Net increase (decrease) in cash and cash equivalents | $13,361 | $(15,319) | | Cash and cash equivalents, end of period | $80,160 | $66,366 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the company's accounting policies, financial instrument fair values, debt, leases, employee benefits, variable interest entities, restructuring activities, and segment information, offering context to the condensed consolidated financial statements [1. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=1.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This section details accounting principles, COVID-19 impact, dividend suspension, and new accounting standard adoptions - The COVID-19 pandemic significantly impacted the Company's operations, leading to curtailments in Europe and Latin America from March through May 2020, increased operating costs due to health measures, and an uncertain outlook for returning to historical levels[21](index=21&type=chunk)[22](index=22&type=chunk) - The Board of Directors unanimously approved the suspension of the Company's quarterly common stock dividend until further notice on June 11, 2020[24](index=24&type=chunk) - The Company adopted new accounting standards for credit losses (ASU No. 2016-13) and fair value measurement disclosures (ASU No. 2018-13) on January 1, 2020, neither of which had a material effect on the financial statements[27](index=27&type=chunk)[28](index=28&type=chunk) [2. Accounts Receivable](index=11&type=section&id=2.%20Accounts%20Receivable) This section provides a breakdown of gross accounts receivable and the allowance for doubtful accounts | (Amounts in thousands) | June 30, 2020 | December 31, 2019 | | :--------------------- | :------------ | :---------------- | | Accounts receivable | $195,786 | $188,952 | | Allowance for doubtful accounts | $(3,376) | $(3,714) | | Accounts receivable, net | $192,410 | $185,238 | [3. Inventories](index=12&type=section&id=3.%20Inventories) This section details the composition of inventories, including raw material, work-in-process, and finished goods | (Amounts in thousands) | June 30, 2020 | December 31, 2019 | | :--------------------- | :------------ | :---------------- | | Raw material | $68,894 | $83,569 | | Work-in-process | $42,243 | $48,369 | | Finished goods | $183,400 | $201,418 | | Total Inventories | $294,537 | $333,356 | [4. Property, Plant and Equipment, Net](index=12&type=section&id=4.%20Property%2C%20Plant%20and%20Equipment%2C%20Net) This section outlines fixed assets, accumulated depreciation, asset impairment, and planned facility closures | (Amounts in thousands) | June 30, 2020 | December 31, 2019 | | :--------------------- | :------------ | :---------------- | | Land and improvements | $41,026 | $44,386 | | Buildings and improvements | $257,572 | $265,281 | | Machinery and equipment | $591,561 | $605,743 | | Tools, dies and molds | $112,307 | $113,603 | | Construction-in-process | $11,360 | $16,237 | | Less accumulated depreciation | $(676,180) | $(670,452) |\ | Property, plant and equipment, net | $337,646 | $374,798 | - The Company recorded a **$2.6 million** asset impairment charge for the six months ended June 30, 2020, related to machinery and equipment at Titan Tire Reclamation Corporation (TTRC) due to market declines[36](index=36&type=chunk) - The Company plans to finalize the closure of its wheel operations in Saltville, Virginia, by the end of Q3 2020, with approximately **$0.5 million** of net property, plant and equipment at this location[37](index=37&type=chunk) [5. Intangible Assets, Net](index=13&type=section&id=5.%20Intangible%20Assets%2C%20Net) This section details intangible assets, accumulated amortization, and estimated future amortization expense | (Amounts in thousands) | June 30, 2020 | December 31, 2019 | | :--------------------- | :------------ | :---------------- | | Customer relationships | $12,420 | $12,629 | | Patents, trademarks and other | $10,507 | $11,598 | | Total at cost | $22,927 | $24,227 | | Less accumulated amortization | $(14,391) | $(14,461) |\ | Intangible assets, net | $8,536 | $9,766 | | Estimated Amortization Expense (in thousands) | | :-------------------------------------------- | | July 1 - December 31, 2020: $972 | | 2021: $1,390 | | 2022: $972 | | 2023: $972 | | 2024: $971 | | Thereafter: $3,259 | | Total: $8,536 | [6. Warranty](index=13&type=section&id=6.%20Warranty) This section presents the changes in warranty liability, including provisions and payments made during the periods | (Amounts in thousands) | 2020 | 2019 | | :--------------------- | :------------ | :------------ | | Warranty liability, January 1 | $14,334 | $16,327 | | Provision for warranty liabilities | $3,555 | $1,722 | | Warranty payments made | $(3,784) | $(2,987) | | Warranty liability, June 30 | $14,105 | $15,062 | [7. Debt](index=14&type=section&id=7.%20Debt) This section breaks down debt, including senior secured notes, credit facilities, capital leases, and maturity schedules | (Amounts in thousands) | June 30, 2020 | December 31, 2019 | | :--------------------- | :------------ | :---------------- | | 6.50% senior secured notes due 2023 | $396,410 | $395,960 | | Titan Europe credit facilities | $51,272 | $43,591 | | Revolving credit facility | $28,000 | $36,000 | | Other debt | $22,742 | $24,171 | | Capital leases | $4,600 | $4,880 | | Total debt | $503,024 | $504,602 | | Less amounts due within one year | $(40,784) | $(61,253) |\ | Total long-term debt | $462,240 | $443,349 | | Aggregate Principal Maturities of Long-Term Debt at June 30, 2020 (in thousands) | | :----------------------------------------------------------------- | | July 1 - December 31, 2020: $25,822 | | 2021: $24,056 | | 2022: $38,612 | | 2023: $406,836 | | 2024: $5,545 | | Thereafter: $5,743 | | Total: $506,614 | - At June 30, 2020, the Company had **$28.0 million** in borrowings under its **$125 million** revolving credit facility, with **$19.7 million** in outstanding letters of credit, leaving **$37.9 million** available for borrowing[48](index=48&type=chunk) [8. Redeemable Noncontrolling Interest](index=16&type=section&id=8.%20Redeemable%20Noncontrolling%20Interest) This section details redeemable noncontrolling interests, including put option exercises and equity impact - RDIF exercised a put option in November 2018, leading to Titan paying **$25 million** in cash and agreeing to issue 4,032,259 shares of restricted Titan common stock, which remained pending regulatory approval as of June 30, 2020[51](index=51&type=chunk) - OEP exercised a put option in January 2019, which was settled by Titan's subsidiary paying OEP **$46.7 million** in cash (**$16.0 million** in Q2 2019 and **$30.7 million** in July 2019), resulting in Titan Purchaser and RDIF owning **64.3%** and **35.7%** of Voltyre-Prom, respectively[52](index=52&type=chunk) | (Amounts in thousands) | 2020 | 2019 | | :--------------------- | :------------ | :------------ | | Balance at January 1 | $25,000 | $119,813 | | Reclassification as a result of Agreement regarding put option | — | $(49,883) | | Payment of interest on redeemable noncontrolling interest | — | $(16,000) | | Loss attributable to redeemable noncontrolling interest | — | $(599) | | Currency translation | — | $749 | | Redemption value adjustment | — | $1,437 | | Balance at June 30 | $25,000 | $55,517 | [9. Leases](index=17&type=section&id=9.%20Leases) This section outlines operating and finance lease assets and liabilities, including maturity schedules | (Amounts in thousands) | June 30, 2020 | December 31, 2019 | | :--------------------- | :------------ | :---------------- | | Operating lease ROU assets | $21,480 | $23,914 | | Operating lease current liabilities | $6,226 | $6,729 | | Operating lease long-term liabilities | $15,918 | $17,360 | | Total operating lease liabilities | $22,144 | $24,089 | | Finance lease, net | $4,855 | $4,490 | | Finance lease current liabilities | $1,391 | $1,110 | | Finance lease long-term liabilities | $3,209 | $3,770 | | Total finance lease liabilities | $4,600 | $4,880 | | Lease Liabilities Maturity at June 30, 2020 (in thousands) | | :------------------------------------------------------- | | **Operating Leases:** | | July 1 - December 31, 2020: $3,960 | | 2021: $6,702 | | 2022: $5,344 | | 2023: $3,511 | | 2024: $2,006 | | Thereafter: $3,577 | | Total lease payments: $25,100 | | Less imputed interest: $2,956 | | **Finance Leases:** | | July 1 - December 31, 2020: $820 | | 2021: $1,615 | | 2022: $1,528 | | 2023: $1,100 | | 2024: $411 | | Thereafter: $191 | | Total lease payments: $5,665 | | Less imputed interest: $1,065 | [10. Employee Benefit Plans](index=19&type=section&id=10.%20Employee%20Benefit%20Plans) This section presents the net periodic pension cost components for the company's employee benefit plans | Net Periodic Pension Cost (in thousands) | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $242 | $205 | $528 | $430 | | Interest cost | $876 | $1,106 | $1,738 | $2,229 | | Expected return on assets | $(1,358) | $(1,188) | $(2,718) | $(2,377) | | Amortization of unrecognized prior service cost | — | $57 | — | $113 | | Amortization of net unrecognized loss | $696 | $765 | $1,392 | $1,530 | | Net periodic pension cost | $456 | $945 | $940 | $1,925 | [11. Variable Interest Entities](index=19&type=section&id=11.%20Variable%20Interest%20Entities) This section describes consolidated and non-consolidated variable interest entities, including assets and liabilities - The Company consolidates two joint ventures (Canada and Australia) for which it is the primary beneficiary, operating distribution facilities for mining products[64](index=64&type=chunk)[66](index=66&type=chunk) - In March 2020, the Company terminated supply agreements with two other manufacturing-related VIEs at its Tennessee facility, ceasing its variable interest in them[65](index=65&type=chunk) | Consolidated VIEs' Assets and Liabilities (in thousands) | June 30, 2020 | December 31, 2019 | | :----------------------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $1,857 | $2,190 | | Inventory | $1,038 | $1,070 | | Other current assets | $786 | $1,027 | | Property, plant and equipment, net | $1,236 | $1,327 | | Total assets | $4,917 | $5,614 | | Current liabilities | $862 | $1,110 | | Other long-term liabilities | $542 | $579 | | Total liabilities | $1,404 | $1,689 | | Non-Consolidated VIEs' Assets and Maximum Exposure to Loss (in thousands) | June 30, 2020 | December 31, 2019 | | :-------------------------------------------------------------------- | :------------ | :---------------- | | Investments | $4,786 | $4,973 | | Other current assets | $6 | — | | Total VIE assets | $4,792 | $4,973 | | Accounts payable | $1,231 | $2,006 | | Maximum exposure to loss | $6,023 | $6,979 | [12. Restructuring Activities](index=20&type=section&id=12.%20Restructuring%20Activities) This section details severance costs and inventory impairment from restructuring and plant closures - The Company incurred **$0.4 million** in severance costs for the three and six months ended June 30, 2020, as part of its North American and Corporate Restructuring plan[70](index=70&type=chunk) - An inventory impairment charge of **$1.0 million** was recorded for the three and six months ended June 30, 2020, related to the closure of the Saltville, Virginia wheel operations[70](index=70&type=chunk) [13. Royalty Expense](index=21&type=section&id=13.%20Royalty%20Expense) This section reports the royalty expenses incurred by the company for trademark license agreements | Royalty Expense (in thousands) | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Royalty expense | $2,400 | $2,400 | $4,900 | $5,100 | [14. Other Income](index=21&type=section&id=14.%20Other%20Income) This section details other income and loss items, including insurance settlements, asset sales, and equity investment | Other Income (Loss) (in thousands) | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gain on property insurance settlement | — | — | $4,936 | — | | Loss on sale of Wheels India Limited shares | $(2,005) | — | $(703) | — | | Equity investment income | $(236) | $974 | $369 | $1,849 | | Gain on sale of assets | $544 | $397 | $892 | $767 | | Building rental income | $398 | $479 | $714 | $734 | | Interest income | $102 | $301 | $217 | $641 | | Other (expense) | $807 | $(82) | $621 | $(926) | | Total | $(390) | $2,069 | $7,046 | $3,065 | [15. Income Taxes](index=21&type=section&id=15.%20Income%20Taxes) This section presents income tax provision (benefit) and effective tax rates, explaining key drivers | Income Tax (in thousands) | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision (benefit) for income taxes | $1,980 | $(3,218) | $2,035 | $(1,303) | | Effective income tax rate | (74)% | 33% | (7)% | 19% | - The Company's income tax rates differed from the U.S. Federal rate primarily due to full valuation allowances on deferred tax assets in the U.S. and certain foreign jurisdictions, and non-deductible royalty expenses[76](index=76&type=chunk) - The CARES Act is not expected to materially impact the Company's financial position or results, except for the deferral of Social Security payroll taxes, which will benefit operating cash flows through 2020[80](index=80&type=chunk) [16. Earnings Per Share](index=22&type=section&id=16.%20Earnings%20Per%20Share) This section reports net loss applicable to common shareholders and basic and diluted loss per share | EPS (in thousands, except per share data) | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss applicable to common shareholders | $(5,045) | $(7,085) | $(30,531) | $(5,883) | | Basic EPS | $(0.08) | $(0.12) | $(0.50) | $(0.10) | | Diluted EPS | $(0.08) | $(0.12) | $(0.50) | $(0.10) | | Basic weighted average shares outstanding | 60,602 | 60,000 | 60,481 | 59,973 | | Diluted weighted average shares outstanding | 60,602 | 60,000 | 60,481 | 59,973 | [17. Litigation](index=23&type=section&id=17.%20Litigation) This section details CERCLA litigation involvement, including liabilities and court rulings - Titan Tire and Dico, Inc. are involved in CERCLA litigation, with a District Court order in September 2017 holding them jointly and severally liable for **$5.45 million** in response costs and Dico liable for **$5.45 million** in punitive damages[88](index=88&type=chunk) - As of June 30, 2020, a **$6.5 million** contingent liability remains outstanding for the CERCLA order, which was affirmed by the U.S. Court of Appeals for the Eighth Circuit in April 2019[88](index=88&type=chunk)[89](index=89&type=chunk) [18. Segment Information](index=24&type=section&id=18.%20Segment%20Information) This section provides detailed financial results and assets for agricultural, earthmoving/construction, and consumer segments | Segment Operating Results (in thousands) | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Net Sales:** | | | | | | Agricultural | $147,267 | $164,284 | $320,206 | $356,014 | | Earthmoving/construction | $112,457 | $184,782 | $249,379 | $361,527 | | Consumer | $26,409 | $41,531 | $58,048 | $83,430 | | Total Net Sales | $286,133 | $390,597 | $627,633 | $800,971 | | **Gross Profit:** | | | | | | Agricultural | $15,613 | $14,247 | $29,640 | $36,372 | | Earthmoving/construction | $11,614 | $19,701 | $22,368 | $37,871 | | Consumer | $2,640 | $4,360 | $5,103 | $9,329 | | Total Gross Profit | $29,867 | $38,308 | $57,111 | $83,572 | | **(Loss) Income from Operations:** | | | | | | Agricultural | $6,992 | $4,365 | $2,298 | $18,293 | | Earthmoving/construction | $(1,902) | $5,697 | $(8,897) | $11,225 | | Consumer | $1,425 | $1,228 | $1,131 | $3,349 | | Corporate & Unallocated | $(9,616) | $(13,720) | $(7,236) | $(31,161) | | Total (Loss) Income from Operations | $(3,101) | $(2,430) | $(12,704) | $1,706 | | Segment Assets (in thousands) | June 30, 2020 | December 31, 2019 | | :---------------------------- | :------------ | :---------------- | | Agricultural | $430,894 | $423,955 | | Earthmoving/construction | $447,867 | $496,988 | | Consumer | $107,028 | $123,320 | | Corporate & Unallocated | $45,505 | $70,044 | | Total assets | $1,031,294 | $1,114,307 | [19. Related Party Transactions](index=26&type=section&id=19.%20Related%20Party%20Transactions) This section discloses sales of products and commissions paid to companies controlled by a related party - Sales of Titan products to companies controlled by Mr. Fred Taylor (brother of the Chairman) were approximately **$0.2 million** for Q2 2020 and **$0.5 million** for H1 2020, comparable to 2019[96](index=96&type=chunk) - Sales commissions paid to these related companies were approximately **$0.4 million** for Q2 2020 and **$0.7 million** for H1 2020, compared to **$0.3 million** and **$0.8 million** for the respective periods in 2019[96](index=96&type=chunk) [20. Accumulated Other Comprehensive Loss](index=26&type=section&id=20.%20Accumulated%20Other%20Comprehensive%20Loss) This section details accumulated other comprehensive loss components, primarily currency translation adjustments | Accumulated Other Comprehensive Loss (in thousands) | Balance at April 1, 2020 | Balance at January 1, 2020 | | :-------------------------------------------------- | :----------------------- | :------------------------- | | Currency Translation Adjustments | $(224,511) | $(192,507) | | Gain (Loss) on Derivatives | — | — | | Unrecognized Losses and Prior Service Cost | $(24,836) | $(26,144) | | Total | $(249,347) | $(218,651) | | Balance at June 30, 2020 | $(248,982) | $(248,982) | - The increase in currency translation adjustments for the six months ended June 30, 2020, was due to foreign currency rate fluctuations and the settlement of certain intercompany loans[97](index=97&type=chunk) [21. Subsidiary Guarantor Financial Information](index=27&type=section&id=21.%20Subsidiary%20Guarantor%20Financial%20Information) This section provides condensed consolidating financial statements for parent, guarantor, and non-guarantor subsidiaries - This section provides condensed consolidating financial statements (Statements of Operations, Comprehensive Loss, Balance Sheets, and Cash Flows) for Titan International, Inc. (Parent), Guarantor Subsidiaries, and Non-Guarantor Subsidiaries, along with eliminations to arrive at the consolidated totals[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Titan's financial condition, results of operations, and liquidity, highlighting the significant impact of the COVID-19 pandemic, market outlooks for its segments, and detailed analysis of financial performance and cash flows [COVID-19 Pandemic](index=35&type=section&id=COVID-19%20Pandemic) This section discusses the adverse impact of COVID-19 on operations, costs, and uncertain outlook - The COVID-19 pandemic adversely affected the Company's financial results and business operations for the six months ended June 30, 2020, with significant curtailments in European and Latin American operations from March through May 2020[117](index=117&type=chunk) - Operations have resumed with increased sanitary and protective health measures, leading to higher operating costs, and the outlook for returning to historical levels remains uncertain due to the pandemic's evolving nature[117](index=117&type=chunk)[118](index=118&type=chunk) [Forward-Looking Statements](index=35&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements and potential risks causing material differences in actual results - This Form 10-Q contains forward-looking statements regarding financial performance, business trends, end-user markets, capital expenditures, cost control, loan compliance, new products, and acquisition opportunities[120](index=120&type=chunk)[121](index=121&type=chunk) - Actual results could differ materially due to various risks, including the COVID-19 pandemic, economic recession, changes in end-user markets, competition, labor relations, legal proceedings, regulatory compliance, raw material availability, operating efficiencies, indebtedness, interest rates, product liability, government actions, geopolitical uncertainties, acquisition risks, currency fluctuations, climate change, facility risks, and financial reporting issues[123](index=123&type=chunk)[124](index=124&type=chunk) [Overview](index=37&type=section&id=Overview) This section describes Titan International, Inc. as a global manufacturer of off-highway wheels, tires, and undercarriage products - Titan International, Inc. is a global manufacturer of off-highway wheels, tires, assemblies, and undercarriage products for agricultural, earthmoving/construction, and consumer markets[127](index=127&type=chunk) - The Company's top customers include global leaders in agricultural and construction equipment manufacturing such as AGCO Corporation, Caterpillar Inc., CNH Global N.V., and Deere & Company[131](index=131&type=chunk) [Market Conditions and Outlook](index=37&type=section&id=Market%20Conditions%20and%20Outlook) This section assesses uncertain market conditions and outlook for agricultural, earthmoving/construction, and consumer segments due to COVID-19 - The outlook for the remainder of 2020 remains uncertain across all segments due to the ongoing effects of the COVID-19 pandemic, which caused production losses and market disruptions in Europe, Asia, and Latin America[132](index=132&type=chunk) - Agricultural market conditions remain uncertain due to low commodity prices, tariffs, trade concerns, and OEM production pullbacks, though small agriculture equipment sales are rebounding faster than large equipment[134](index=134&type=chunk) - The earthmoving/construction market continues to decline due to global economic uncertainty and COVID-19, with demand for larger construction and mining equipment softening, and the outlook dependent on global economic recovery[135](index=135&type=chunk) - The consumer market is expected to remain highly uncertain through 2020, with sales likely suppressed relative to the prior year due to factors like consumer spending and government policies[136](index=136&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section analyzes financial performance, including net sales, gross profit, and operating results across various periods [Net Sales](index=39&type=section&id=Net%20Sales) This section analyzes net sales changes, attributing them to volume, price/mix, and currency translation effects | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :------- | :--------------------------------------------- | :--------------------------------------------- | :------- | | Net sales | $286,133 | $390,597 | (26.7)% | - Net sales decreased by **26.7%** for Q2 2020 and **21.6%** for H1 2020, primarily driven by a **24.0%** (Q2) and **18.1%** (H1) decrease in volume due to global construction slowdowns and COVID-19 related plant closures (**$31 million** in Q2, **$45 million** in H1)[139](index=139&type=chunk)[140](index=140&type=chunk) - Unfavorable currency translation negatively impacted net sales by **5.1%** in Q2 and **4.1%** in H1, partially offset by favorable price/mix contributing **2.4%** (Q2) and **0.6%** (H1) increases[139](index=139&type=chunk)[140](index=140&type=chunk) [Gross Profit](index=39&type=section&id=Gross%20Profit) This section examines gross profit and margin changes, highlighting impacts from sales volume and cost initiatives | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :--------- | :--------------------------------------------- | :--------------------------------------------- | :------- | | Gross profit | $29,867 | $38,308 | (22.0)% | | Gross profit % | 10.4% | 9.8% | 0.6 pp | - Gross profit decreased by **$8.4 million** (**22.0%**) for Q2 2020 and **$26.5 million** (**31.7%**) for H1 2020, primarily due to lower sales volume and a **$1.0 million** inventory impairment for the Saltville, Virginia plant closure[141](index=141&type=chunk)[142](index=142&type=chunk) - Gross profit as a percentage of sales increased to **10.4%** in Q2 2020 (from **9.8%** in Q2 2019) due to strong initiatives to reduce labor and overhead costs and lower raw material prices, despite a decrease to **9.1%** for H1 2020 (from **10.4%** in H1 2019)[141](index=141&type=chunk)[142](index=142&type=chunk) [Selling, General and Administrative Expenses](index=39&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) This section details SG&A expense reduction due to cost-cutting, including lower professional fees and payroll | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------- | | Selling, general and administrative expenses | $28,441 | $35,746 | (20.4)% | - SG&A expenses decreased by **20.4%** for Q2 2020 and **15.7%** for H1 2020, driven by lower professional fees (related to ERP stabilization), reduced payroll costs, lower marketing expenses, and decreased travel expenses due to company-wide cost reduction initiatives[143](index=143&type=chunk)[144](index=144&type=chunk) [Research and Development Expenses](index=39&type=section&id=Research%20and%20Development%20Expenses) This section reports R&D expense decrease, primarily driven by reduced payroll and professional fees | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------- | | Research and development expenses | $2,132 | $2,544 | (16.2)% | - R&D expenses decreased by **16.2%** for Q2 2020 and **12.0%** for H1 2020, primarily due to lower payroll-related costs and professional fees, reflecting management's initiatives to decrease costs amidst a sales downturn[145](index=145&type=chunk) [Royalty Expense](index=40&type=section&id=Royalty%20Expense) This section discusses the stability of royalty expenses related to trademark license agreements | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :------------- | :--------------------------------------------- | :--------------------------------------------- | :------- | | Royalty expense | $2,395 | $2,448 | (2.2)% | - Royalty expenses remained relatively stable, at **$2.4 million** for Q2 2020 and **$4.9 million** for H1 2020, related to trademark license agreements with The Goodyear Tire & Rubber Company[147](index=147&type=chunk)[148](index=148&type=chunk) [(Loss) Income from Operations](index=40&type=section&id=%28Loss%29%20Income%20from%20Operations) This section analyzes operating loss or income changes, primarily influenced by net sales performance | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------- | | (Loss) income from operations | $(3,101) | $(2,430) | 27.6% | - Operating loss increased to **$3.1 million** for Q2 2020 (from **$2.4 million** in Q2 2019) and to **$12.7 million** for H1 2020 (from income of **$1.7 million** in H1 2019), primarily driven by lower net sales[149](index=149&type=chunk) [Other Profit/Loss Items](index=40&type=section&id=Other%20Profit%2FLoss%20Items) This section covers interest expense, foreign exchange gains/losses, and other non-operating income and expenses [Interest Expense](index=40&type=section&id=Interest%20Expense) This section reports on the stability of interest expense due to consistent long-term debt levels - Interest expense remained comparable at **$8.0 million** for Q2 2020 (vs. **$8.3 million** in Q2 2019) and **$16.0 million** for H1 2020 (vs. **$16.2 million** in H1 2019) due to similar levels of long-term debt[150](index=150&type=chunk) [Foreign Exchange Gain (Loss)](index=40&type=section&id=Foreign%20Exchange%20Gain%20%28Loss%29) This section details foreign exchange gains and losses, influenced by currency rate movements and intercompany loan settlements - The Company recorded an **$8.8 million** foreign exchange gain for Q2 2020 (vs. **$1.2 million** loss in Q2 2019), but an **$8.4 million** foreign exchange loss for H1 2020 (vs. **$4.5 million** gain in H1 2019)[151](index=151&type=chunk) - The H1 2020 loss was primarily due to significant movements in foreign currency exchange rates and the settlement of intercompany loans as part of a restructuring initiative[151](index=151&type=chunk) [Other (Loss) Income](index=40&type=section&id=Other%20%28Loss%29%20Income) This section summarizes other non-operating income and losses, including asset sales and insurance settlements - Other loss was **$0.4 million** for Q2 2020 (vs. **$2.1 million** income in Q2 2019), mainly due to a **$2.0 million** loss on the sale of remaining Wheels India Limited shares[152](index=152&type=chunk) - Other income was **$7.0 million** for H1 2020 (vs. **$3.1 million** in H1 2019), driven by **$4.9 million** from a property insurance settlement and a **$1.3 million** gain from an earlier sale of Wheels India Limited shares, partially offset by the **$2.0 million** loss in June[153](index=153&type=chunk) [Provision (Benefit) for Income Taxes](index=40&type=section&id=Provision%20%28Benefit%29%20for%20Income%20Taxes) This section analyzes income tax provision (benefit) and effective tax rates, noting impacts from valuation allowances and non-deductible expenses - The Company recorded income tax expense of **$2.0 million** for Q2 2020 (vs. **$3.2 million** benefit in Q2 2019) and **$2.0 million** for H1 2020 (vs. **$1.3 million** benefit in H1 2019)[154](index=154&type=chunk) - Effective income tax rates were **(74)%** for Q2 2020 and **(7)%** for H1 2020, primarily due to valuation allowances on deferred tax assets from projected losses and non-deductible royalty expenses[154](index=154&type=chunk)[155](index=155&type=chunk) [Net Loss and Loss per Share](index=41&type=section&id=Net%20Loss%20and%20Loss%20per%20Share) This section reports net loss and corresponding basic and diluted loss per share for the periods - Net loss for Q2 2020 was **$4.6 million** (vs. **$6.7 million** in Q2 2019), with basic and diluted loss per share of **$(0.08)** (vs. **$(0.12)** in Q2 2019)[158](index=158&type=chunk) - Net loss for H1 2020 was **$32.1 million** (vs. **$5.7 million** in H1 2019), with basic and diluted loss per share of **$(0.50)** (vs. **$(0.10)** in H1 2019)[159](index=159&type=chunk) [Segment Information](index=41&type=section&id=Segment%20Information) This section provides detailed financial results for agricultural, earthmoving/construction, and consumer segments [Agricultural Segment Results](index=42&type=section&id=Agricultural%20Segment%20Results) This section analyzes agricultural segment net sales, gross profit, and operating income, highlighting volume and cost impacts | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :------------------ | :--------------------------------------------- | :--------------------------------------------- | :------- | | Net sales | $147,267 | $164,284 | (10.4)% | | Gross profit | $15,613 | $14,247 | 9.6% | | Income from operations | $6,992 | $4,365 | 60.2% | - Agricultural net sales decreased by **10.4%** in Q2 2020 and **10.1%** in H1 2020, primarily due to lower sales volume (**8.4%** in Q2, **4.8%** in H1) and unfavorable currency translation (**6.8%** in Q2, **4.9%** in H1), exacerbated by commodity market weakness and COVID-19[162](index=162&type=chunk)[165](index=165&type=chunk) - Q2 2020 agricultural gross profit increased by **9.6%** to **$15.6 million**, and income from operations increased by **60.2%** to **$7.0 million**, driven by production efficiencies, cost reduction initiatives, and lower raw material costs[163](index=163&type=chunk)[164](index=164&type=chunk) [Earthmoving/Construction Segment Results](index=42&type=section&id=Earthmoving%2FConstruction%20Segment%20Results) This section details significant declines in net sales, gross profit, and operating results for the earthmoving/construction segment | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------- | | Net sales | $112,457 | $184,782 | (39.1)% | | Gross profit | $11,614 | $19,701 | (41.0)% | | (Loss) income from operations | $(1,902) | $5,697 | (133.4)% | - Earthmoving/construction net sales decreased significantly by **39.1%** in Q2 2020 and **31.0%** in H1 2020, primarily due to decreased volume (**37.5%** in Q2, **30.4%** in H1) from a tightening construction market and approximately **$26 million** (Q2) / **$40 million** (H1) direct impact from COVID-19[169](index=169&type=chunk)[171](index=171&type=chunk) - Gross profit decreased by **41.0%** in Q2 2020 and **40.9%** in H1 2020, leading to an operating loss of **$1.9 million** in Q2 2020 and **$8.9 million** in H1 2020, driven by lower sales volume, production inefficiencies, COVID-19 impact, and unfavorable foreign currency translation[170](index=170&type=chunk)[172](index=172&type=chunk) [Consumer Segment Results](index=43&type=section&id=Consumer%20Segment%20Results) This section examines consumer segment net sales, gross profit, and operating income changes, noting volume and currency impacts | Metric | Three months ended June 30, 2020 (in thousands) | Three months ended June 30, 2019 (in thousands) | % Change | | :------------------ | :--------------------------------------------- | :--------------------------------------------- | :------- | | Net sales | $26,409 | $41,531 | (36.4)% | | Gross profit | $2,640 | $4,360 | (39.4)% | | Income from operations | $1,425 | $1,228 | 16.0% | - Consumer segment net sales decreased by **36.4%** in Q2 2020 and **30.4%** in H1 2020, primarily due to lower sales volume (**25.7%** in Q2, **21.9%** in H1) in North America, Latin America, and Australia, unfavorable currency translation, and unfavorable price mix[173](index=173&type=chunk)[176](index=176&type=chunk) - Gross profit decreased by **39.4%** in Q2 2020 and **45.3%** in H1 2020 due to lower sales in light utility truck markets. Income from operations increased by **16.0%** in Q2 2020 but decreased by **66.2%** in H1 2020[174](index=174&type=chunk)[177](index=177&type=chunk) [Corporate & Unallocated Expenses](index=44&type=section&id=Corporate%20%26%20Unallocated%20Expenses) This section reports on the decrease in unallocated corporate expenses due to refined allocation processes - Unallocated loss decreased to **$9.6 million** for Q2 2020 (from **$13.7 million** in Q2 2019) and to **$7.2 million** for H1 2020 (from **$31.2 million** in H1 2019), attributed to a refinement of the allocation process[178](index=178&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses cash flows, debt restrictions, and overall liquidity outlook, including capital expenditure plans [Cash Flows](index=45&type=section&id=Cash%20Flows) This section provides an overview of cash generated or used in operating, investing, and financing activities [Operating Cash Flows](index=45&type=section&id=Operating%20Cash%20Flows) This section details operating cash flows, highlighting changes in inventories and other current liabilities | Operating Cash Flows (in thousands) | Six months ended June 30, 2020 | Six months ended June 30, 2019 | Change | | :---------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by (used for) operating activities | $5,501 | $(10,001) | $15,502 | - Operating activities provided **$5.5 million** in cash for H1 2020, a **$15.5 million** increase from H1 2019, primarily due to a **$23.1 million** reduction in inventories and a **$19.2 million** increase in other current liabilities[181](index=181&type=chunk)[182](index=182&type=chunk) | Cash Conversion Cycle (in days) | June 30, 2020 | December 31, 2019 | June 30, 2019 | | :------------------------------ | :------------ | :---------------- | :------------ | | Days sales outstanding | 61 | 56 | 63 | | Days inventory outstanding | 111 | 111 | 105 | | Days payable outstanding | (51) | (53) | (57) | | Cash conversion cycle | 121 | 114 | 111 | [Investing Cash Flows](index=46&type=section&id=Investing%20Cash%20Flows) This section describes cash flows from investing activities, including asset sales and capital expenditures | Investing Cash Flows (in thousands) | Six months ended June 30, 2020 | Six months ended June 30, 2019 | Change | | :---------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by (used for) investing activities | $11,898 | $(56,490) | $68,388 | - Investing activities provided **$11.9 million** in cash for H1 2020 (vs. **$56.5 million** used in H1 2019), driven by **$15.7 million** from the sale of Wheels India Limited shares and **$4.9 million** from a property insurance settlement[185](index=185&type=chunk) - Capital expenditures decreased to **$8.4 million** in H1 2020 (vs. **$16.7 million** in H1 2019) as a direct response to cash preservation activities due to COVID-19[185](index=185&type=chunk) [Financing Cash Flows](index=46&type=section&id=Financing%20Cash%20Flows) This section outlines cash flows from financing activities, including borrowings and debt payments | Financing Cash Flows (in thousands) | Six months ended June 30, 2020 | Six months ended June 30, 2019 | Change | | :---------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by financing activities | $2,792 | $50,041 | $(47,249) | - Financing activities provided **$2.8 million** in cash for H1 2020 (vs. **$50.0 million** in H1 2019), with **$76.8 million** from borrowings offset by **$74.0 million** in debt payments, including a reduction in the domestic revolving credit facility balance[186](index=186&type=chunk) [Debt Restrictions](index=47&type=section&id=Debt%20Restrictions) This section details covenants and limitations from the revolving credit facility and senior secured notes - The Company's revolving credit facility and senior secured notes indenture contain various restrictions, including maintaining a minimum fixed charge coverage ratio (if availability falls below **10%** of commitment), limits on dividends and stock repurchases, and restrictions on additional borrowings, mergers, investments, and asset dispositions[189](index=189&type=chunk) [Liquidity Outlook](index=47&type=section&id=Liquidity%20Outlook) This section provides management's assessment of future liquidity, including available cash, credit, and anticipated cash flows - As of June 30, 2020, the Company had **$80.2 million** in cash and cash equivalents, with **$37.9 million** available under its **$125 million** credit facility[190](index=190&type=chunk) - The Company expects sufficient liquidity for working capital, debt maturities, and capital expenditures from existing cash, anticipated internal cash flows, and available credit facilities, with forecasted full-year capital expenditures of approximately **$20 million** and remaining interest payments of **$15 million** for 2020[191](index=191&type=chunk)[192](index=192&type=chunk) - Despite business disruption from COVID-19, management does not anticipate violating any financial covenants or significant liquidity constraints in the foreseeable future, having taken measures for financial flexibility and cost reduction[193](index=193&type=chunk) [Critical Accounting Estimates](index=47&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section confirms no material changes to critical accounting estimates since the prior annual filing - There were no material changes in the Company's Critical Accounting Estimates since the filing of the 2019 Form 10-K[194](index=194&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the quantitative and qualitative disclosures about market risk since the filing of the 2019 Form 10-K - No material changes in quantitative and qualitative disclosures about market risk have occurred since the 2019 Form 10-K filing[196](index=196&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures, confirming their effectiveness, and reports no material changes in internal control over financial reporting during the second quarter of 2020, while acknowledging inherent limitations of control systems [Evaluation of Disclosure Controls and Procedures](index=48&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2020 - The Chief Executive Officer and Chief Financial Officer concluded that Titan's disclosure controls and procedures were effective as of June 30, 2020, providing reasonable assurance that required information is accurately recorded, processed, summarized, and reported[197](index=197&type=chunk) [Changes in Internal Controls](index=48&type=section&id=Changes%20in%20Internal%20Controls) This section reports no material changes in internal control over financial reporting during the second quarter of 2020 - No changes in internal control over financial reporting occurred during the second quarter of fiscal year 2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[198](index=198&type=chunk) [Inherent Limitations on the Effectiveness of Controls](index=48&type=section&id=Inherent%20Limitations%20on%20the%20Effectiveness%20of%20Controls) This section acknowledges that control systems provide reasonable, not absolute, assurance due to inherent limitations - The Company acknowledges that its control systems, due to inherent limitations and resource constraints, can only provide reasonable, not absolute, assurance and may not prevent or detect all misstatements or fraud[199](index=199&type=chunk)[200](index=200&type=chunk) Part II. Other Information This section covers legal proceedings, updated risk factors, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 17 in the financial statements for details on the Company's routine legal proceedings, including environmental issues, product liability, contracts, and labor and employment matters - The Company is subject to routine legal proceedings, including environmental issues, product liability, contracts, and labor and employment matters, with further details provided in Note 17[203](index=203&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors, specifically highlighting the adverse and uncertain impacts of the COVID-19 pandemic on the Company's business, operations, financial results, and the potential to heighten other existing risks - The COVID-19 pandemic has adversely impacted and will likely continue to affect the Company's business, operating results, and financial condition, leading to unpredictable disruption in product demand and potential material impacts on operational and commercial activities, costs, customer orders, and collections[205](index=205&type=chunk)[206](index=206&type=chunk) - The pandemic's effects could exist for an extended period, impacting global economies, foreign currency exchange rates, and interest rates, and could result in asset impairment charges[206](index=206&type=chunk) - The COVID-19 pandemic may also heighten many of the other risks previously described in the 2019 Form 10-K[207](index=207&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including certifications, XBRL taxonomy documents, and the cover page - Exhibits include certifications (31.1, 31.2, 32), In