Titan International(TWI) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales for Q1 2025 increased to $490,708, up 1% from $482,209 in Q1 2024[8] - Gross profit decreased to $68,644, down 11% from $77,370 in the same period last year[8] - Net income attributable to Titan was a loss of $649, compared to a profit of $9,201 in Q1 2024[8] - Comprehensive income attributable to Titan was $38,707, compared to a loss of $4,681 in Q1 2024[9] - For the three months ended March 31, 2025, Titan International reported a net income of $22,000, a significant decrease from $9,974,000 in the same period of 2024[14] - Operating cash flows showed a net cash used of $38,591,000 compared to a net cash provided of $2,005,000 in the prior year, indicating a decline in operational efficiency[14] - The company reported a loss before income taxes of $15.7 million for Q1 2025, compared to a loss of $18.2 million in Q1 2024, showing an improvement of 8.5%[86][88] - Net income for the three months ended March 31, 2025, was $0.0 million, a significant decrease from $10.0 million in the same period of 2024, resulting in basic and diluted loss per share of $(0.01) compared to earnings of $0.14[130] Assets and Liabilities - Total assets increased to $1,722,012, up 9% from $1,584,953 at the end of 2024[12] - Cash and cash equivalents decreased to $174,430, down from $195,974 at the end of 2024[12] - Total liabilities increased to $1,182,556, up 8% from $1,091,297 at the end of 2024[12] - Accounts receivable increased significantly by $97,101,000 in Q1 2025, compared to an increase of $43,140,000 in Q1 2024, indicating potential liquidity concerns[14] - Long-term debt as of March 31, 2025, totaled $574.2 million, with a weighted-average interest rate of approximately 2.6%[49] - The fair value of Titan's senior secured notes due 2028 was approximately $390,800,000 as of March 31, 2025, reflecting a slight decrease from $390,000,000 at the end of 2024[17] Expenses - Research and development expenses rose to $4,544, an increase of 24% from $3,654 in Q1 2024[8] - Selling, general and administrative expenses increased to $49.9 million, or 10.2% of net sales, compared to $39.4 million, or 8.2% in the prior year, largely due to recurring expenses from Titan Specialty operations[117] - Interest expense for the three months ended March 31, 2025, was $9.5 million, compared to $8.4 million in the same period of 2024, indicating an increase of 13.2%[86][88] - Total depreciation and amortization expense for Q1 2025 was $15.9 million, up from $12.0 million in Q1 2024, reflecting a 32.5% increase[88] Acquisition and Growth - The company acquired The Carlstar Group for a total purchase consideration of $312,336,000, enhancing its product offerings in wheels and tires[29] - Titan Specialty, the product line from the Carlstar acquisition, generated revenue of $51,788,000 and income before taxes of $1,254,000 from the acquisition date to March 31, 2024[33] - The acquisition of Carlstar Group (now Titan Specialty) was completed on February 29, 2024, with related costs of $6.2 million recognized in Q1 2024[93] - Consumer segment net sales increased by 93.6% to $149.7 million for the three months ended March 31, 2025, compared to $77.3 million in 2024, driven by the Titan Specialty acquisition[141] Market Conditions - The agricultural market is experiencing a slowdown in North America and Europe, while South America shows early signs of recovery, influenced by global tariffs and commodity prices[110] - The earthmoving/construction segment is currently facing a slowdown in OEM demand but is expected to stabilize over the mid to long term due to mining capital budgets and GDP growth forecasts[111] - The consumer market is seeing varied growth, with some segments slowing down, particularly in the Americas, influenced by macroeconomic factors such as inflation and consumer spending[112] Cash Flow and Financing - Cash flows used for operating activities amounted to $38.6 million for the three months ended March 31, 2025, a decline of $40.6 million compared to the same period in 2024, primarily due to lower net income and increased working capital[150] - Cash provided by financing activities in Q1 2025 was $18.6 million, primarily from $26.6 million in borrowings, offset by $8.0 million in debt repayments[154] - Titan's total amount available for borrowing under its $225 million credit facility was $56.6 million as of March 31, 2025, after accounting for outstanding letters of credit and borrowings[166] Tax and Compliance - The Company recorded income tax expense of $4.2 million for the three months ended March 31, 2025, with an effective income tax rate of 99.5%[75] - The company's effective income tax rate rose to 99.5% for the three months ended March 31, 2025, compared to 49.4% in 2024, due to a decrease in pre-tax income[128] - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002[187] Strategic Outlook - The company anticipates continued focus on cost control and quality maintenance in its operations moving forward[97] - Forward-looking statements indicate potential impacts from the Titan Specialty acquisition on future financial results, depending on actual performance versus expectations[97] - The company expects full-year capital expenditures to be between $55 million and $65 million, focused on enhancing existing facilities and productivity gains[167] - Titan faces substantial uncertainties from newly imposed tariffs, which may lead to increased costs and supply chain disruptions, potentially affecting financial performance[180]