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TITAN INTERNATIONAL INC (TWI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $490.7M and adjusted EBITDA of $30.8M came in at the high end of management’s Q4-issued guidance ranges, with revenue above Wall Street consensus while EPS came in below the S&P Global “Primary EPS” consensus . Revenue Consensus Mean: $464.2M*; Primary EPS Consensus Mean: $0.055 vs actual $0.01* .
  • Headwinds persisted in Ag and EMC as OEM destocking and weaker demand pressured margins year over year (gross margin 14.0% vs 16.0% in Q1’24), partly offset by strong Consumer (aftermarket-led) profitability .
  • Tariff exposure is limited (CFO: “less than 10% of revenues have a net negative exposure”), and management expects minimal Q2 impact given strategic inventory and sourcing; Q2 2025 guidance: sales $450–$500M and adjusted EBITDA $25–$35M, implying sequential stability .
  • Balance sheet and cash: net debt rose to $411.0M (from $369.5M at YE’24) as working capital built with the ~$107M sequential sales step-up; free cash flow was -$53.6M in Q1, with management guiding to positive FCF in 2H 2025 .
  • Strategic catalysts: expansion of the Goodyear licensing agreement (to light construction/industrial, ATV, lawn & garden, golf) and ongoing LSW penetration initiatives are intended to accelerate growth into mid-size farm and consumer adjacencies .

What Went Well and What Went Wrong

What Went Well

  • Tariff positioning and domestic capacity: “less than 10% of our total revenues have a net negative exposure” to current retaliatory China tariffs; guidance assumes “minimal impact,” supported by domestic steel sourcing and diversified rubber sourcing (primarily West Africa) .
  • Aftermarket-led resilience and margin outperformance: Consumer gross margin 19.6% (aftermarket >65% of segment sales) vs Ag 12.4% and EMC 10.4%; overall gross margin improved sequentially from 10.7% in Q4 to 14.0% in Q1 as volumes recovered .
  • Strategic growth levers: Expanded Goodyear licensing (new segments) and LSW penetration into mid-size farms, with management citing independent data indicating sub-1-year LSW ROI for midsize farms .

What Went Wrong

  • Ag and EMC softness persisted: Ag net sales fell 17.5% YoY with margin compression (12.4% vs 16.9%), and EMC net sales decreased 13.3% YoY (margin 10.4% vs 13.9%), due to OEM destocking and weaker demand in North America/Europe, plus FX headwinds .
  • Gross margin down YoY: 14.0% vs 16.0% a year ago, driven by lower fixed-cost leverage on reduced volumes .
  • Elevated tax rate and cash usage: Effective tax rate ~99.5%; operating cash flow -$38.6M and FCF -$53.6M in Q1 as receivables rose with sequential sales growth; net debt increased to $411.0M .

Financial Results

P&L and Cash Metrics (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$448.0 $383.6 $490.7
GAAP Diluted EPS ($)$(0.25) $0.02 $(0.01)
Adjusted EPS ($)$(0.19) $0.09 $0.01
Gross Margin %13.1% 10.7% 14.0%
Adjusted EBITDA ($USD Millions)$20.5 $9.2 $30.8
Free Cash Flow ($USD Millions)$41.8 $(4.6) $(53.6)
Net Debt ($USD Millions)$291.2 $369.5 $411.0

Actual vs S&P Global Consensus – Q1 2025

MetricActualConsensus*Result
Revenue ($USD Millions)$490.7 $464.2*Beat
Primary EPS ($)$0.01*$0.055*Miss
EBITDA ($USD Millions)EBITDA $29.4; Adj. EBITDA $30.8 $27.5*Above

Values marked with * are from S&P Global.

Segment Breakdown – Q1 2025 vs Q1 2024

SegmentNet Sales ($M) Q1’25Net Sales ($M) Q1’24Gross Profit ($M) Q1’25Gross Profit ($M) Q1’24Gross Margin % Q1’25Gross Margin % Q1’24Op Income ($M) Q1’25Op Income ($M) Q1’24
Agriculture$197.7 $239.7 $24.5 $40.6 12.4% 16.9% $9.4 $24.0
Earthmoving/Construction$143.3 $165.2 $14.9 $23.0 10.4% 13.9% $1.7 $8.8
Consumer$149.7 $77.3 $29.3 $13.8 19.6% 17.8% $8.8 $5.1

KPIs and Balance Sheet

MetricQ4 2024Q1 2025
Cash & Equivalents ($M)$196.0 $174.4
Total Debt ($M)$565.4 $585.4
Net Debt ($M)$369.5 $411.0
Cash from Operations ($M)$8.7 (Q4’24) $(38.6)
Capital Expenditure ($M)$13.3 (Q4’24) $15.0
Free Cash Flow ($M)$(4.6) (Q4’24) $(53.6)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($M)Q2 2025n/a$450–$500 New
Adjusted EBITDA ($M)Q2 2025n/a$25–$35 New
Sales ($M)Q1 2025$450–$500 (issued 2/26/25) Delivered $490.7 Achieved
Adjusted EBITDA ($M)Q1 2025$25–$35 (issued 2/26/25) Delivered $30.8 Achieved

Management also indicated tariff impact is expected to be minimal in Q2 given inventory and sourcing actions .

Earnings Call Themes & Trends

TopicQ3 2024 (prior)Q4 2024 (prior)Q1 2025 (current)Trend
Tariffs / trade policyAwait clarity post-election; tariffs as potential long-term positive Tariffs “not a significant issue,” flexibility to localize; China plant optionality <10% revenue at net negative exposure; minimal Q2 impact expected Stabilizing; manageable
Aftermarket vs OEMAftermarket down HSD vs ~25% OEM decline YTD; aftermarket ~45% of sales Emphasis on aftermarket steadiness across segments Consumer aftermarket >65% of segment; margin leader Aftermarket resilience sustained
Regional trends (Ag)Deep cyclical bottom; Brazil strength building Improved farmer sentiment; Brazil starting strong; Europe weak Brazil strength continues; U.S. OEM “drop-in” orders; Europe still soft Gradual improvement led by Brazil
LSW technologyStrong farmer feedback; fuel savings >10–15% cited Innovation cornerstone; expand to mid-/low-HP tractors Independent data supports sub-1-year ROI for midsize farms; push into new segments Accelerating push/penetration
Supply chain / onshoringWorking capital discipline; distribution strength via Carlstar Ability to relocate production; domestic sourcing advantage Strategic inventory; steel mostly domestic; rubber primarily West Africa Risk mitigation improving
Military opportunityRe-engagement discussed Target to regain U.S. military sales; accretive Continued outreach; view as upside optionality Early-stage, positive optionality

Management Commentary

  • “Our revenues of $491 million and Adjusted EBITDA of $31 million were both at the higher end of our guidance range.” — Paul Reitz, CEO .
  • “Less than 10% of our total revenues have a net negative exposure to the current retaliatory China tariffs…we expect tariffs will have minimal impact on the quarter.” — David Martin, CFO .
  • “Consumer continued to be our most profitable segment as the higher-margin aftermarket business accounted for more than 65% of the sales in the segment.” — David Martin, CFO .
  • “We are excited to expand our [Goodyear] rights into new segments…light construction/industrial, ATV, lawn and garden, and golf tires…reaffirming our commitment to the farm tires segment.” — Paul Reitz, CEO .
  • “We got some really strong independent data…LSW…amplifies the ROI…to a payback of well under a year for a midsized farm.” — Paul Reitz, CEO .

Q&A Highlights

  • Tariff exposure and sourcing: Rubber primarily sourced from West Africa; steel is primarily domestic; OEM contracts include 3–6 month pass-through mechanisms—management expects minimal 2025 tariff impact .
  • Visibility: Still below pre-2024 norms but improving; Titan expects better visibility as inventory normalization completes and notes Titan typically leads OEM production cycles for wheels/tires .
  • Brazil and regional demand: Brazil remains strong across OE and aftermarket; Europe softer; U.S. received “drop-in” OEM orders in Q1 .
  • Aftermarket mix and margins: Consumer aftermarket >65% of segment sales driving margin leadership; aftermarket strategy is central to “one-stop shop” positioning .
  • Goodyear licensing expansion: Expected to accelerate sales in Carlstar legacy categories with brand lift and broadened distribution .

Estimates Context

  • Q1 2025 revenue beat S&P Global consensus ($490.7M actual vs $464.2M consensus*), while “Primary EPS” missed ($0.01 actual vs $0.055 consensus*) and EBITDA was above consensus ($29–31M actual vs $27.5M consensus*) .
  • Q2 2025 guidance (sales $450–$500M; adjusted EBITDA $25–$35M) suggests relative stability QoQ; Street models may need to reflect aftermarket margin mix and minimal tariff impact assumptions .

Values marked with * are from S&P Global.

Key Takeaways for Investors

  • Q1 delivered top-line and adjusted EBITDA at the high end of guidance with a revenue beat versus consensus; EPS below consensus reflects mix, lower fixed-cost leverage and an elevated tax rate .
  • Aftermarket strength remains the buffer in a soft OEM environment; Consumer’s 19.6% gross margin led segments, and overall gross margin expanded sequentially to 14.0% .
  • Tariffs appear manageable near term (<10% of revenue at net negative exposure) with domestic steel and diversified rubber sourcing; guidance embeds minimal tariff impact .
  • Working capital investment drove negative FCF in Q1; management targets positive FCF in 2H 2025 as volumes stabilize and receivables normalize .
  • Brazil-led Ag recovery and Goodyear brand expansion into new segments, plus LSW penetration into mid-size farms, offer multi-quarter top-line catalysts .
  • Q2 guidance implies steady performance; watch for OEM inventory normalization, Brazil demand durability, and Consumer aftermarket mix to sustain margin resilience .
  • Balance sheet leverage increased to 3.8x TTM adjusted EBITDA; management prioritizes debt paydown and disciplined capex in 2025 .