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Investor Presentation
Q3 2016
Titan International Overview
Titan International, Inc. Titan International Inc. (TWI) is a publicly traded company on the New York Stock
Exchange. Headquartered in the heartland of the U.S. in Quincy, Illinois, Titan has
grown to become a top global manufacturer of specialty tires, wheels and tracks.
Titan has a heritage of over 100 years in the off-highway wheel manufacturing business
and is the world’s largest manufacturer of off-highway wheels. Titan has complete
research and development test facilities to validate wheel and rim designs.
Since Titan's entrance into the tire market in 1993, we have evolved into a leading
global supplier of complete wheel and tire assemblies for off-highway vehicles. Titan
manufactures two distinct tire brands: Titan Tire and Goodyear Farm Tires.
Titan International Overview
Corporate Strategy
To become the worldwide leader in manufacturing and distribution of wheels, tires,
assemblies and undercarriage products and to serve our customers’ needs through
product innovation and quality service in our key markets:
Agriculture
Earthmoving/Construction
Consumer
COMPETITIVE ADVANTAGES
TITAN/GOODYEAR
MICHELIN
BRIDGESTONE
GKN
Titan International Overview
Customers
AGRICULTURE: Products/Brands
/
AGRICULTURE: Major 2015 Highlight
AGRICULTURE: Product Innovations
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AGRICULTURE: Product Innovations
AGRICULTURE: Product Innovations
AGRICULTURE: Product Innovations
Market Summary
Agricultural Drivers
Mix Shift - Large hp equipment (4WD tractors and Combines) continue a cyclical downturn which began in
2014. Smaller hp tractor demand remains good, but at lower ASP and gross margins
Grain prices remain low; resulting in lower farm income (although expected to stabilize somewhat in 2016)
Used equipment inventory levels remain above average, but have started to decline recently
Used equipment values began to increase during early 2016; first time since 1H 2013
Legislation passed to reinstate tax incentives including Section 179 deduction (permanent) and bonus
depreciation (phased out in 2020)
Interest rates remain low for financing new equipment purchases
OTR: Products/Brands
OTR: Major Highlight
TITAN TIRE RECLAMATION CORPORATION (TTRC)
Disposal of giant mining tires is the responsibility of the end-user, and doing
so responsibly has traditionally come with a significant cost, leading many in
the industry to stockpile used tires until a less cost-prohibitive solution is
developed. Since 2007, development of that solution has been underway.
Titan Tire Reclamation Corp has now completed a pyrolysis system that can
convert reclaimed tires into raw materials. The first facility officially opened in
Fort McMurray, Alberta with a ribbon cutting in March 2016.
OTR: Product Innovations
OTR: Product Innovations
OTR: Product Innovations
Market Summary
Earthmoving/Construction Drivers
Private construction spending for resi and non-resi buildings continue to carry the industry
Larger construction equipment used for highways and infrastructure have remained slow to recover
Mining remains weak with commodity prices low
Strong U.S. dollar
CONSUMER: Products/Brands
CONSUMER: Products Innovations
Financial Performance
Market Summary
Overview by Market Segment
Q3 2016
45%
42%
13%
GP Margin: 12.2%
GP Margin: 8.7%GP Margin: 12.2%
Agriculture: Tractors, combines, implements irrigation
Earthmoving/Construction: Mining, cranes, aerial lifts, haul trucks, scrapers
Consumer: Primarily light-truck tires, ATVs and select golf and turf equipment markets, brakes and actuators
Agriculture
Consumer
Earthmoving / Construction
Q3 2016 Segment Revenue
Total: $306.2 million
1% decrease vs. Q3 2015
3% increase vs. Q3 2015
9% decrease vs. Q3 2015
$273
$228
$140 $139
18%13%
10%12%
$50
$100
$150
$200
$250
$300
$350
$400
0%
10%
20%
30%
40%
50%
60%
Q3 '13 Q3 '14 Q3 '15 Q3 '16
Financial Performance
Sales and Gross Margin by Market
Net Sales: Down (1%) Q3 ‘16 vs. Q3 ‘15
Gross margin improved 235 basis points with every region showing
improvement from the same quarter to last year
Continued reduction in OEM demand for products
Price/mix up 4%; volume down (6%); FX 1%
AG
45%
Net Sales: Down (10%) Q3 ’16 vs. Q3 ’15
Gross margin improved 230 basis points on lower sales
Decline in low-margin supply agreements in Brazil; Lower sales of
High Speed Train brakes
Price/mix up 14%; volume down (27%); FX 3%
Consumer
13%
EMC
42%
Net Sales: Up 3% Q3 ‘16 vs. Q3 ’15
Gross margin improved 239 basis points with all regions showing
gains compared to Q3 ‘15
Positive movement within the Aftermarket segment
Price/mix down (7%); volume up 10%; FX flat
$169 $154$126
$129
7% 7% 6% 9%
$0
$50
$100
$150
$200
$250
$300
$350
-2%
8%
18%
28%
38%
48%
58%
68%
78%
Q3 '13 Q3 '14 Q3 '15 Q3 '16
$55
$68
$43 $39
6%7% 10% 12%
$0
$25
$50
$75
$100
$125
-2%
8%
18%
28%
38%
48%
58%
68%
78%
Q3 '13 Q3 '14 Q3 '15 Q3 '16
Note: Certain amounts from prior years have been reclassified to conform to the current year’s presentation. The company has implemented new technology resources which allow for
more accurate segregation of sales and profit by segment. The previous year segment information has been updated to be consistent. Gross Margin net of adjustments.
Financial Performance
Q3 Accomplishments & Challenges
Improved overall gross margin rate performance (230 bps) for the quarter despite a 1% sales decline compared to prior year
Latin America, Australia, Europe, ITM and Russia teams all improved results (sales & gross profit) in tough market conditions
Cash ended the quarter at $216 million compared to $200 million at the beginning of the year and $207 million at the end of the previous
quarter; At the start of the Ag downturn in 2014 this balance was $189 million, clearly demonstrating the diligent manner in which we are
managing liquidity and cash flow
Released test results from a Missouri farm using Goodyear LSW Super Single tires demonstrating increased yield on the corn and soybeans
tested by approximately three percent per acre (See October 21 Press Release)
Re-aligned our Grizz Squad with our sale territory managers unleashing a much larger sales group in North America
Continued investments in R&D, sales and marketing (specifically supporting LSW) adding value for the long term
Accomplishments
Challenges
Continued downward trend in Large Ag products (higher ASP and margin) driven by lower commodities / farm income / cash receipts
Weak mining market conditions which impacts North America, ITM and Australia business units
Strong US dollar impacting U.S. exports and reported sales
Decreased OEM production levels commensurate with lower demand driven by lower farm income and lower commodity prices
Financial Performance
Financial Summary
Note: Gross Margin and Operating Income net of adjustments.
Net Income and EPS adjusted for Noncontrolling Interest and non GAAP items.
(Amounts in millions) Q3 2016 Q3 2015 YTD 2016 YTD 2015
Sales $306.2 $308.8 $958.2 $1,087.0
Gross Margin $33.0 $26.2 $109.9 $120.0
Gross Margin % 10.8% 8.5% 11.5% 11.0%
Operating Income (Loss) ($8.3) ($14.5) ($12.3) ($5.6)
Operating Income % (2.7%) (4.7%) (1.3%) (0.5%)
Adjusted Net Income (Loss) ($10.0) ($31.5) ($21.0) ($27.0)
Adjusted Earnings Per Share-Diluted ($0.18) ($0.59) ($0.39) ($0.50)
Financial Performance
Adjusted Income
Note: Adjustments for non GAAP items are net of taxes.
Q3 2016USD Amounts in Millions Q3 2016 Q3 2015 YTD 2016 YTD 2015
Net loss applicable to common shareholders (11.3) (42.5) (29.5) (35.9)
Remove redemption value adjustment 1.3 11.0 8.5 11.4
Net income (loss) attributable to Titan (10.0) (31.5) (21.0) (24.5)
Subsidiary currency correction (3.1)
Italy restructuring 0.5
Adjusted net income (loss) attrib. to Titan (10.0) (31.5) (21.0) (27.0)
Adjusted EPS - Diluted (0.18) (0.59) (0.39) (0.50)
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Financial Performance
Adjusted EBITDAQ3 2016
USD Amounts in Millions Q3 2016 Q3 2015 YTD 2016 YTD 2015
Operating income (loss) (8.3) (14.5) (12.3) (6.1)
Other income (expense) 3.6 0.8 10.5 6.3
Depreciation & amortization 14.3 16.4 44.9 53.0
Subsidiary currency correction (3.1)
Italy restructuring 0.7
Adjusted EBITDA 9.6 2.7 43.2 50.8
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Financial Appendix
Appendix
Sales – N. America vs. International
(Amounts in $ millions) 2013 2014 2015 2016
Sales - Total $497.5 $449.6 $308.8 $306.2
Sales - N. America $282.8 $209.9 $144.4 $118.5
Sales - International $214.7 $239.7 $164.4 $187.7
Gross Margin $62.5 $43.6 $26.2 $33.0
Gross Margin - N. America $38.7 $21.8 $12.7 $10.8
% 13.7% 10.4% 8.8% 9.1%
Gross Margin - International $23.8 $21.8 $13.4 $22.2
% 11.1% 9.1% 8.2% 11.8%
Gross Margin% 12.6% 9.7% 8.5% 10.8%
Operating Profit $17.1 ($2.5) ($14.5) ($8.3)
Operating Profit - N. America $9.9 ($1.2) ($10.6) ($12.5)
% 3.5% (0.6%) (7.3%) (10.5%)
Operating Profit - International $7.2 ($1.3) ($3.9) $4.2
% 3.3% (0.6%) (2.3%) 2.3%
Operating Profit % 3.4% (0.6%) (4.7%) (2.7%)
Note: Gross Margin and Operating Income net of adjustments.
Q3 FINANCIAL SUMMARY
283
210
144 119
215 240
164 188
3.4%(0.6%)
(4.7%)
(2.7%)
-6%
-4%
-2%
0%
2%
4%
6%
8%
$0
$100
$200
$300
$400
$500
$600
2013 2014 2015 2016
Mill
ions
Q3 - Sales / Operating Income (Amounts in Millions)
Sales - N. America Sales - International Operating Profit %
Appendix
Working Capital
Q1 Q2 Q3 Q4 Q1 Q2 Q3
Days Sales Outstanding (DSO) 54 55 54 53 61 54 55
Days A/P in Inventory (DPI) 82 91 98 90 88 92 98
Cash $190,557 $187,490 $193,817 $200,188 $191,097 $207,238 $215,509
Cash % of 12 Month Sales 10.8% 11.6% 13.2% 14.4% 14.5% 16.3% 17.0%
2015 2016
290248
184 184
376375
287 278
195 169128 152
23.7%
25.3%
27.8%
25.3%
21%
22%
23%
24%
25%
26%
27%
28%
29%
$0
$100
$200
$300
$400
$500
$600
$700
2013 2014 2015 2016
Mill
ion
s
Q3 - WORKING CAPITAL (Amounts in Millions)
AR Inventory AP Working Capital as % of Sales
September 2016
$200.2 $215.5
44.9
27.3
9.8 3.0 2.8 2.5 2.4 1.8 0.2 12.314.0
22.1
30.8
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
Appendix
YTD Cash Activity
Appendix
Debt Structure
Q3 '16 Q2 '16 Q1 '16 Q4 '15 Q3 '15
Cash $216 $207 $191 $200 $194
Total Debt $501 $504 $504 $507 $508
Titan International $456 $455 $456 $456 $455
Titan Europe Credit Facilities $37 $39 $40 $38 $40
Other $8 $10 $8 $13 $13
Net Leverage (Net Debt / Trailing 12 Mos EBITDA) 6.16x 7.51x 7.76x 5.67x 5.24x
Interest Expense $8.7 $8.0 $8.5 $8.3 $8.3
5.625% Convertible Notes Due 2017 $0.8 $0.8 $0.8 $0.6 $0.6
6.875% Secured Notes Due 2020 $6.9 $6.9 $6.9 $6.9 $6.9
European Credit Facilities $0.4 $0.2 $0.2 $0.4 $0.3
LAT/AUS/VP Working Capital Facilities $0.0 $(0.0) $0.0 $(0.1) $(0.0)
Revolver Commitment/Letter of Credit Fees $0.2 $0.2 $0.2 $0.2 $0.2
Financing Fees Amortization $0.4 $(0.1) $0.4 $0.4 $0.4
CASH / DEBT
$396
$60 $37 $8
6.875% Secured NotesDue Oct 2020
5.625% Convertible NotesDue Jan 2017
Titan EuropeCredit Facilities
Other $150m ABL Credit FacilityDue Dec 2017
Appendix
Cost Structure
Raw
Materials
55%
Overhead
25%
Labor
20%
Primary Raw MaterialsCost Structure Breakdown
Steel
Natural Rubber
Synthetic Rubber
Carbon Black
Nylon