Titan International(TWI) - 2025 Q2 - Quarterly Results

Executive Summary This section highlights Titan International's Q2 2025 performance, including financial results within guidance and positive free cash flow, along with the Q3 2025 financial outlook Q2 2025 Performance Highlights Titan International, Inc. reported Q2 2025 revenues and Adjusted EBITDA within guidance, achieving positive free cash flow despite challenging end-market conditions - The company achieved revenues and Adjusted EBITDA within guidance and generated positive free cash flow for the quarter[2] - Gross and EBITDA margins remained meaningfully above levels seen during the last cyclical trough[2] - Strategic focus areas include expanding reach via a one-stop-shop strategy and innovation to drive future growth[2] Q2 2025 Key Financial Figures | Metric | Amount (Millions USD) | | :----- | :-------------------- | | Revenues | $461 | | Gross margin | 15% | | Adjusted EBITDA | $30 | | Free Cash Flow | $4 | Company Outlook Titan International, Inc. anticipates improved financial results for the third quarter of 2025, with projected sales and Adjusted EBITDA showing an increase compared to the third quarter of 2024 Q3 2025 Financial Guidance | Metric | Guidance Range (Millions USD) | | :----- | :---------------------------- | | Sales | $450 - $475 | | Adjusted EBITDA | $25 - $30 | - Both Q3 2025 sales and Adjusted EBITDA guidance represent improvements compared to Q3 2024[3] Consolidated Results of Operations This section details the company's consolidated financial performance for Q2 2025, covering net sales, gross profit, operating expenses, income from operations, and net income Net Sales Q2 2025 net sales significantly decreased due to lower sales volumes in agricultural and construction sectors, and tariff impacts on the Specialty business Net Sales (Three Months Ended June 30) | Period | Net Sales (Millions USD) | | :----- | :----------------------- | | Q2 2025 | $460.8 | | Q2 2024 | $532.2 | | Change | $(71.4) (-13.4%) | - Primary drivers for the decrease were reduced sales volumes due to lower end-market demand in global agricultural and construction equipment sectors[3] - The Titan Specialty business experienced a temporary slowdown attributed to tariffs[3] - Favorable price and product mix, reflecting higher input costs, partially offset the declines. Foreign currency translation had a negative impact of approximately 0.4%[3] Gross Profit and Margin Gross profit and gross margin slightly decreased in Q2 2025 compared to Q2 2024, mainly due to lower sales volumes which reduced fixed cost absorption across manufacturing facilities Gross Profit and Margin (Three Months Ended June 30) | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | | :----- | :--------------------- | :--------------------- | | Gross Profit | $69.3 | $80.4 | | Gross Margin | 15.0% | 15.1% | - The decrease in gross profit and margin was primarily due to lower sales volumes, leading to reduced fixed cost absorption[5] Selling, General and Administrative Expenses (SG&A) SG&A expenses increased in Q2 2025, both in absolute terms and as a percentage of net sales, primarily driven by general inflationary cost impacts, including higher personnel-related costs SG&A Expenses (Three Months Ended June 30) | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | | :----- | :--------------------- | :--------------------- | | SG&A Expenses | $52.4 | $51.6 | | % of Net Sales | 11.4% | 9.7% | - The increase in SG&A was mainly due to general inflationary cost impacts and higher personnel-related costs[6] Income from Operations Income from operations significantly decreased in Q2 2025 compared to Q2 2024, primarily due to lower gross profit and increased SG&A expenses Income from Operations (Three Months Ended June 30) | Period | Income from Operations (Millions USD) | | :----- | :---------------------------------- | | Q2 2025 | $10.2 | | Q2 2024 | $22.3 | | Change | $(12.1) (-54.2%) | - The reduction was primarily attributable to lower gross profit and other factors such as increased SG&A[7] Income Tax Expense Q2 2025 income tax expense and effective tax rate significantly increased due to foreign income tax rate differentials and valuation allowance on interest expense carryforward Income Tax Expense and Rate (Three Months Ended June 30) | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | | :----- | :--------------------- | :--------------------- | | Income Tax Expense | $4.7 | $15.5 | | Effective Tax Rate | 431.6% | 81.9% | - Elevated tax rates in both periods were mainly due to foreign income tax rate differentials, valuation allowance on interest expense carryforward, and foreign inclusion items[8] Net (Loss) Income and EPS Titan International reported a net loss and negative EPS in Q2 2025, a significant decline from net income and positive EPS in Q2 2024, reflecting the overall challenging operational environment Net (Loss) Income and EPS (Three Months Ended June 30) | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | | :----- | :--------------------- | :--------------------- | | Net (Loss) Income | $(3.6) | $3.4 | | Basic EPS | $(0.07) | $0.03 | | Diluted EPS | $(0.07) | $0.03 | Segment Performance Analysis This section analyzes the Q2 2025 financial performance of the Agricultural, Earthmoving/Construction, and Consumer segments, highlighting key drivers for changes Agricultural Segment The Agricultural segment experienced a decline in net sales, gross profit, and income from operations in Q2 2025, primarily driven by reduced global demand, higher financing costs, and OEM inventory reduction initiatives Agricultural Segment Performance (Three Months Ended June 30) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | % Decrease | | :----- | :---------------------- | :---------------------- | :--------- | | Net sales | $193,223 | $216,330 | (10.7)% | | Gross profit | $28,280 | $32,303 | (12.5)% | | Profit margin | 14.6% | 14.9% | (2.0)% | | Income from operations | $11,453 | $15,772 | (27.4)% | - Net sales decreased due to reduced global demand for agricultural equipment, particularly in North America and Europe, lower farm income, higher financing costs, and OEM inventory reduction[9] - Unfavorable foreign currency translation (Brazilian real, Turkish lira) negatively impacted net sales by approximately 1.8%[9] - Gross profit decline was primarily due to lower sales volumes and reduced fixed cost leverage[10] Earthmoving/Construction Segment The Earthmoving/Construction segment reported decreased net sales, gross profit, and income from operations in Q2 2025, mainly driven by lower sales volumes due to a slowdown in demand from construction OEM customers Earthmoving/Construction Segment Performance (Three Months Ended June 30) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | % Decrease | | :----- | :---------------------- | :---------------------- | :--------- | | Net sales | $152,347 | $165,564 | (8.0)% | | Gross profit | $17,474 | $21,299 | (18.0)% | | Profit margin | 11.5% | 12.9% | (10.9)% | | Income from operations | $2,994 | $7,047 | (57.5)% | - Sales decreased primarily due to lower volumes in North America and the undercarriage business, reflecting a slowdown in demand from construction OEM customers[12] - A 1.1% favorable foreign currency translation (strengthening euro) and positive price/product mix partially offset the declines[12] - Gross profit change was mainly attributable to lower volumes and reduced fixed cost leverage[13] Consumer Segment The Consumer segment experienced a significant decrease in net sales, gross profit, and income from operations in Q2 2025, mainly due to tariffs and lower sales volumes in the Americas region Consumer Segment Performance (Three Months Ended June 30) | Metric | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | % Increase (Decrease) | | :----- | :---------------------- | :---------------------- | :-------------------- | | Net sales | $115,260 | $150,276 | (23.3)% | | Gross profit | $23,519 | $26,840 | (12.4)% | | Profit margin | 20.4% | 17.9% | 14.0% | | Income from operations | $3,230 | $6,449 | (49.9)% | - Net sales decreased mainly due to tariffs in the Titan Specialty business and lower sales volumes in the Americas region of the legacy Titan business[14] - Challenging market conditions and reduced demand from OEM customers amid broader economic pressures contributed to the decline[14] - Gross profit decrease was primarily due to lower sales volumes[15] Financial Condition and Cash Flow This section provides an overview of the company's financial condition and cash flow activities, including balance sheet metrics and cash flow from operations, investing, and financing Balance Sheet Overview As of June 30, 2025, Titan International's cash and cash equivalents decreased, while both long-term and short-term debt increased, resulting in a higher net debt position Key Financial Condition Metrics (Thousands USD) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Cash and cash equivalents | $184,669 | $195,974 | | Long-term debt | $565,872 | $552,966 | | Short-term debt | $19,795 | $12,479 | | Net debt | $400,998 | $369,471 | Cash Flows from Operating Activities For the first six months of 2025, cash flows used for operating activities significantly increased, driven by lower net income and substantial working capital investment, particularly in accounts receivable and inventory Net Cash (Used for) Provided by Operating Activities (Six Months Ended June 30) | Period | Net Cash (Used for) Provided by Operating Activities (Millions USD) | | :----- | :---------------------------------------------------------------- | | 2025 | $(24.3) | | 2024 | $72.8 | | Change | $(97.1) | - The decline was mainly due to lower net income and increased investment in working capital[20] - Key factors contributing to the working capital increase were a $52.5 million increase in accounts receivable and a $47.9 million increase in inventory, partially offset by a $27.0 million increase in accounts payable[20] Cash Flows from Investing Activities Cash flows used for investing activities significantly decreased for the first six months of 2025, primarily due to the absence of a large business acquisition that occurred in the prior year Net Cash Used for Investing Activities (Six Months Ended June 30) | Period | Net Cash Used for Investing Activities (Millions USD) | | :----- | :-------------------------------------------------- | | 2025 | $(24.8) | | 2024 | $(171.3) | - The significant decrease in cash used for investing activities was largely due to the absence of a business acquisition in 2025, which was a major outflow in 2024 ($142.2 million)[31] Cash Flows from Financing Activities Cash flows provided by financing activities decreased substantially for the first six months of 2025, mainly due to lower proceeds from borrowings and the absence of common stock issuance related to business acquisitions Net Cash Provided by Financing Activities (Six Months Ended June 30) | Period | Net Cash Provided by Financing Activities (Millions USD) | | :----- | :----------------------------------------------------- | | 2025 | $16.9 | | 2024 | $113.9 | - Proceeds from borrowings decreased from $159.5 million in 2024 to $54.9 million in 2025[31] - The prior year included a significant non-cash financing activity of $168.7 million for the issuance of common stock in connection with a business acquisition, which was absent in 2025[31] Non-GAAP Financial Measures Reconciliation This section reconciles non-GAAP financial measures such as Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income, Net Sales on a Constant Currency Basis, Net Debt, and Free Cash Flow Adjusted Gross Profit Adjusted gross profit for Q2 2025 remained consistent with reported gross profit, as there were no Carlstar inventory fair value step-up adjustments in the current period Adjusted Gross Profit (Three Months Ended June 30, Thousands USD) | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Gross profit, as reported | $69,273 | $80,442 | | Carlstar inventory fair value step-up | — | $7,324 | | Gross profit, as adjusted | $69,273 | $87,766 | Adjusted Gross Profit (Six Months Ended June 30, Thousands USD) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Gross profit, as reported | $137,917 | $157,812 | | Carlstar inventory fair value step-up | — | $10,700 | | Gross profit, as adjusted | $137,917 | $168,512 | Adjusted EBITDA Adjusted EBITDA for Q2 2025 decreased compared to Q2 2024, primarily due to lower net income and the absence of certain prior year adjustments Adjusted EBITDA (Three Months Ended June 30, Thousands USD) | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Net (loss) income | $(3,604) | $3,422 | | EBITDA | $27,164 | $43,809 | | Adjustments: | | | | Foreign exchange loss (gain) | $2,995 | $(462) | | Carlstar inventory fair value step-up | — | $7,324 | | Gain on property insurance settlement | — | $(1,913) | | Adjusted EBITDA | $30,159 | $48,758 | Adjusted EBITDA (Six Months Ended June 30, Thousands USD) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Net (loss) income | $(3,582) | $13,396 | | EBITDA | $56,602 | $83,667 | | Adjustments: | | | | Foreign exchange loss (gain) | $4,380 | $(187) | | Carlstar transaction costs | — | $6,196 | | Carlstar inventory fair value step-up | — | $10,700 | | Gain on property insurance settlement | — | $(1,913) | | Adjusted EBITDA | $60,982 | $98,463 | Adjusted Net (Loss) Income Adjusted net income applicable to common shareholders for Q2 2025 was a loss, a significant decrease from the positive adjusted net income in Q2 2024 Adjusted Net (Loss) Income (Three Months Ended June 30, Thousands USD) | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Net (loss) income attributable to Titan and applicable to common shareholders | $(4,545) | $2,149 | | Adjusted net (loss) income attributable to Titan and applicable to common shareholders | $(1,550) | $7,098 | | Adjusted (loss) earnings per common share (Basic) | $(0.02) | $0.10 | Adjusted Net (Loss) Income (Six Months Ended June 30, Thousands USD) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Net (loss) income attributable to Titan and applicable to common shareholders | $(5,194) | $11,350 | | Adjusted net (loss) income attributable to Titan and applicable to common shareholders | $(814) | $26,146 | | Adjusted (loss) earnings per common share (Basic) | $(0.01) | $0.38 | Net Sales on a Constant Currency Basis For Q2 2025, foreign currency translation had a minor negative impact on total net sales, reducing reported results by 0.4%, with varied regional impacts Net Sales by Geography (Three Months Ended June 30, Thousands USD) | Region | 2025 | 2024 | % Change from 2024 | Change due to currency translation ($) | % Impact | | :----- | :--- | :--- | :----------------- | :------------------------------------- | :------- | | United States | $215,561 | $276,170 | (21.9)% | — | — % | | Europe / CIS | $119,255 | $133,456 | (10.6)% | $7,165 | 5.4 % | | Latin America | $84,770 | $77,026 | 10.1 % | $(7,810) | (10.1)% | | Asia and other regions | $41,244 | $45,518 | (9.4)% | $(1,435) | (3.2)% | | Total | $460,830 | $532,170 | (13.4)% | $(2,080) | (0.4)% | Net Sales by Geography (Six Months Ended June 30, Thousands USD) | Region | 2025 | 2024 | % Change from 2024 | Change due to currency translation ($) | % Impact | | :----- | :--- | :--- | :----------------- | :------------------------------------- | :------- | | United States | $482,065 | $525,128 | (8.2)% | — | — % | | Europe / CIS | $228,308 | $261,478 | (12.7)% | $4,677 | 1.8 % | | Latin America | $161,788 | $149,506 | 8.2 % | $(21,293) | (14.2)% | | Asia and other regions | $79,377 | $78,267 | 1.4 % | $(2,788) | (3.6)% | | Total | $951,538 | $1,014,379 | (6.2)% | $(19,404) | (1.9)% | Net Debt Reconciliation Net debt increased significantly as of June 30, 2025, compared to December 31, 2024, driven by an increase in both long-term and short-term debt, coupled with a decrease in cash Net Debt (Thousands USD) | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :----- | :------------ | :---------------- | :------------ | | Long-term debt | $565,872 | $552,966 | $535,907 | | Short-term debt | $19,795 | $12,479 | $14,588 | | Total debt | $585,667 | $565,445 | $550,495 | | Cash and cash equivalents | $184,669 | $195,974 | $224,100 | | Net debt | $400,998 | $369,471 | $326,395 | Free Cash Flow Free cash flow for the first six months of 2025 was a significant outflow, a substantial decrease from the positive free cash flow in the comparable period of 2024 Free Cash Flow (Six Months Ended June 30, Thousands USD) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Net cash provided by (used for) operating activities | $(24,278) | $72,846 | | Capital expenditures | $(25,121) | $(34,199) | | Free cash flow | $(49,399) | $38,647 | Free Cash Flow (Three Months Ended June 30, Thousands USD) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Net cash provided by (used for) operating activities | $14,313 | $70,841 | | Capital expenditures | $(10,094) | $(17,592) | | Free cash flow | $4,219 | $53,249 | Additional Company Information This section provides background information on Titan International, details of the Q2 2025 teleconference and webcast, and the company's safe harbor statement for forward-looking information About Titan Titan International, Inc. is a leading global manufacturer of off-highway wheels, tires, assemblies, and undercarriage products for agricultural, earthmoving/construction, and consumer markets - Titan International, Inc. is a global manufacturer of off-highway wheels, tires, assemblies, and undercarriage products[23] - The company serves original equipment manufacturers (OEMs) and aftermarket customers across agricultural, earthmoving/construction, and consumer markets[23] Teleconference and Webcast Details Titan hosted a teleconference and webcast on July 31, 2025, to discuss its second-quarter financial results, with replay access available on its investor relations website - A teleconference and webcast for Q2 2025 financial results was held on Thursday, July 31, 2025, at 9:00 a.m. Eastern Time[21] - The real-time, listen-only webcast was accessible via a provided link and the company's investor relations website[21] - A webcast replay is available on the company's website after the live event[22] Safe Harbor Statement This section provides a safe harbor statement regarding forward-looking statements, cautioning that such statements are subject to significant risks and uncertainties that could cause actual results to differ materially from projections - The press release contains forward-looking statements covered by the Private Securities Litigation Reform Act of 1995[24] - These statements are based on current expectations and beliefs but are subject to significant risks and uncertainties, including economic conditions, market changes, tariffs, and geopolitical factors[24] - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[24] Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated statements of operations, balance sheets, and cash flows for the specified periods Statements of Operations The Condensed Consolidated Statements of Operations present the company's financial performance for the three and six months ended June 30, 2025, and 2024, detailing revenues, costs, expenses, and net income (loss) Condensed Consolidated Statements of Operations (Unaudited) (Amounts in thousands, except per share data) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $460,830 | $532,170 | $951,538 | $1,014,379 | | Cost of sales | $391,557 | $451,728 | $813,621 | $856,567 | | Gross profit | $69,273 | $80,442 | $137,917 | $157,812 | | Selling, general and administrative expenses | $52,353 | $51,583 | $102,208 | $91,003 | | Research and development expenses | $4,341 | $4,218 | $8,885 | $7,872 | | Income from operations | $10,160 | $22,322 | $21,959 | $47,394 | | Income before income taxes | $1,087 | $18,874 | $5,339 | $38,584 | | Provision for income taxes | $4,691 | $15,452 | $8,921 | $25,188 | | Net (loss) income | $(3,604) | $3,422 | $(3,582) | $13,396 | | Net (loss) income attributable to Titan and applicable to common shareholders | $(4,545) | $2,149 | $(5,194) | $11,350 | | Basic (Loss) earnings per common share | $(0.07) | $0.03 | $(0.08) | $0.16 | | Diluted (Loss) earnings per common share | $(0.07) | $0.03 | $(0.08) | $0.16 | Balance Sheets The Condensed Consolidated Balance Sheets provide a snapshot of the company's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Assets | | | | Cash and cash equivalents | $184,669 | $195,974 | | Accounts receivable, net | $297,276 | $211,720 | | Inventories | $477,724 | $437,192 | | Total current assets | $1,035,597 | $912,037 | | Property, plant and equipment, net | $451,901 | $421,218 | | Total assets | $1,752,403 | $1,584,953 | | Liabilities | | | | Short-term debt | $19,795 | $12,479 | | Accounts payable | $265,141 | $219,586 | | Total current liabilities | $440,968 | $387,358 | | Long-term debt | $565,872 | $552,966 | | Total liabilities | $1,175,307 | $1,091,297 | | Equity | | | | Total Titan shareholders' equity | $570,485 | $496,073 | | Total equity | $577,096 | $493,656 | | Total liabilities and equity | $1,752,403 | $1,584,953 | Statements of Cash Flows The Condensed Consolidated Statements of Cash Flows detail the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (Unaudited) (All amounts in thousands) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | | Net cash (used for) provided by operating activities | $(24,278) | $72,846 | | Net cash used for investing activities | $(24,846) | $(171,272) | | Net cash provided by financing activities | $16,906 | $113,875 | | Effect of exchange rate changes on cash | $20,913 | $(11,600) | | Net (decrease) increase in cash and cash equivalents | $(11,305) | $3,849 | | Cash and cash equivalents, beginning of period | $195,974 | $220,251 | | Cash and cash equivalents, end of period | $184,669 | $224,100 |