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TITAN INTERNATIONAL INC (TWI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue rose 4% year over year to $466.5M, gross margin expanded 210 bps to 15.2%, and adjusted EBITDA was $29.8M; free cash flow was $29.9M, enabling net debt reduction to $372.9M .
  • Results were ahead of Wall Street on both revenue and EPS: revenue of $466.5M vs S&P consensus $458.9M*, and EPS (Primary/adjusted) of $0.04 vs consensus -$0.02*; GAAP diluted EPS was -$0.04, reflecting FX and other items .
  • Management guided Q4 revenue to $385–$410M and adjusted EBITDA ~ $10M, citing normal seasonality and still-soft OEM demand; tax expense modeled at ~$2.5M for Q4 .
  • Narrative catalysts: inventories are normalizing; aftermarket mining and Latin America remain constructive; Brazilian wheel JV closed, improving assembly offering in the region .

What Went Well and What Went Wrong

What Went Well

  • Segment breadth and margin execution: Ag and EMC both posted y/y sales growth with margin expansion; Consumer gross margin improved despite lower revenues. “Our Ag and EMC segments each reported revenue growth … along with expanded gross margins” .
  • Cash generation and deleveraging: Operating cash flow was $41.5M and free cash flow $29.9M in Q3, reducing net debt to $372.9M from $401.0M in Q2 .
  • Aftermarket mining strength and customization capability: “Our foundry in Europe … customized cast parts … allowing us to grab additional growth in aftermarket mining” .

What Went Wrong

  • OEM softness and tariff/interest-rate headwinds weighed on Consumer y/y revenue (-2.8%); GAAP net loss of $2.3M and diluted EPS -$0.04 reflect FX and other items .
  • Asia revenues declined 22.6% y/y in Q3; EMC margin still below prior-year levels despite improvement (10.4% vs 8.5% last year, but segment operating income only $0.4M) .
  • Elevated royalty expense and non-GAAP adjustments persist (FX loss, loss from life insurance policy termination) impacting GAAP comparability .

Financial Results

Consolidated Trend (y/y and sequential)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$448.0 $490.7 $460.8 $466.5
Gross Margin (%)13.1% 14.0% 15.0% 15.2%
GAAP Diluted EPS ($)-0.25 -0.01 -0.07 -0.04
Adjusted EPS ($)-0.19 0.01 -0.02 0.04
Adjusted EBITDA ($USD Millions)$20.5 $30.8 $30.2 $29.8
Free Cash Flow ($USD Millions)$41.8 -$53.6 $4.2 $29.9

Q3 2025 vs S&P Global Consensus

MetricQ3 2025 ActualQ3 2025 Consensus
Revenue ($USD Millions)$466.5 $458.9*
Primary EPS ($)0.04 -0.02*

Values retrieved from S&P Global.*

Segment Breakdown (Q3 y/y)

SegmentNet Sales ($USD Millions)Gross Profit ($USD Millions)Gross Margin (%)Income from Operations ($USD Millions)
Ag (Q3 2024)$175.4 $16.7 9.5% $1.9
Ag (Q3 2025)$188.7 $25.2 13.4% $7.5
EMC (Q3 2024)$136.3 $11.7 8.5% -$1.9
EMC (Q3 2025)$145.4 $15.2 10.4% $0.4
Consumer (Q3 2024)$136.2 $30.4 22.3% $11.3
Consumer (Q3 2025)$132.4 $30.5 23.0% $9.0

KPIs

KPIQ1 2025Q2 2025Q3 2025
Operating Cash Flow ($USD Millions)-$38.6 $14.3 $41.5
Free Cash Flow ($USD Millions)-$53.6 $4.2 $29.9
Net Debt ($USD Millions)$411.0 $401.0 $372.9
Cash & Equivalents ($USD Millions)$174.4 $184.7 $205.4
Long-Term Debt ($USD Millions)$571.6 $565.9 $556.8

Drivers: y/y margin expansion from fixed-cost leverage, cost reduction and productivity initiatives; FX contributed +1.2% to reported revenue growth .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025$450–$475M (July guidance) Actual $466.5M Achieved high end
Adjusted EBITDAQ3 2025$25–$30M (July guidance) Actual $29.8M Achieved high end
RevenueQ4 2025N/A$385–$410M New
Adjusted EBITDAQ4 2025N/A~ $10M New
Tax ExpenseQ4 2025N/A~$2.5M (modeling) New

Context: Q4 guidance reflects typical seasonal trough, softer OEM activity, and a stronger Q1 seasonal uptick expected, particularly in aftermarket .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Tariffs & macroQ1: “Uniquely positioned” for tariff environment; small net negative exposure; built strategic inventory . Q2: Tariff uncertainty weighing on Specialty and Consumer OEM .Tariffs dampened new equipment demand; management expects more static tariff rates and rate relief as catalysts .Headwind easing into 2026.
Interest ratesQ2: Higher rates impacting purchasing decisions .Fed actions regarding rate cuts seen as net positive .Improving backdrop.
OEM destocking/inventoriesQ1/Q2: OEM destocking and inventory normalization underway .Dealer inventories decreasing; drop-in orders signal low inventory pockets .Normalizing; supportive for 2026.
Aftermarket strengthQ1/Q2: Aftermarket more resilient; one-stop-shop focus .Consumer aftermarket demand offsetting OEM softness; mining aftermarket strong on customization .Structural offset to cyclicality.
Regional trends (LATAM/Asia)Q1: LATAM growth amid China demand shift; FX headwinds . Q2: LATAM up; Asia mixed .LATAM +21.9% y/y; Asia -22.6% y/y; EMC Europe OEM stagnant, mining aftermarket robust .Mixed; LATAM positive, Asia timing effects.
Goodyear licensingQ1: Expanded license announced; premium positioning opportunity .2026 timing for new categories; premium margin opportunity, royalty mix true-up in Q3 .Long-tail ramp into 2026.
Brazil JVQ2: Announced intent; regulatory review underway .Closed Rodaros JV, enabling wheel/tire assemblies offering in Brazil .Strategic capability gain.

Management Commentary

  • CEO on segment and margin performance: “Our Ag and EMC segments each reported revenue growth… along with expanded gross margins… aftermarket sales continue to be less cyclical, providing an important offset to OEM channel softness” .
  • CFO on Q3 metrics: “Gross margins expanded 210 basis points to 15.2%… adjusted EBITDA grew 45%—$30 million… operating cash flow of $42 million… free cash flow to $30 million… reduced our net debt to $373 million” .
  • CEO on inventories and demand setup: “Overall wheel and tire inventories… are decreasing… gives us confidence that broad-based demand will improve in due course” .
  • CEO on aftermarket mining: “Customized cast products… very specific to the applications… go attack a niche part of the market that others can’t quite get to” .
  • CEO on 2026 setup: “We do see a return to growth… rate cuts… soybean purchases by China… OEM forecast is flat to start the year awaiting initiatives” .

Q&A Highlights

  • Ag outlook and drivers: Aftermarket steady with slight improvements; Latin America up; OEMs still cautious; management views sector at or near the bottom with positive 2026 catalysts .
  • EMC trajectory: Early looks support growth in 2026 across diversified exposures (U.S., Europe, mining aftermarket) .
  • Inventory dynamics: OEM inventories normalized by ~30 days in some categories; frequent drop-in orders indicate low inventory pockets; Titan’s flexible ops enable rapid response .
  • Goodyear brand strategy: New categories expected to ramp in 2026; focus on premium products and margins, not relabeling existing brands .
  • Royalty expense: Mix favorable toward Goodyear; some Q3 payment true-ups .
  • Brazil JV: Rodaros transaction closed; begins enhancing assembly offering; management optimistic on execution .

Estimates Context

  • Beat vs consensus: Q3 revenue $466.5M vs $458.9M*; Primary EPS $0.04 vs -$0.02* (consensus appears to track adjusted EPS), while GAAP diluted EPS was -$0.04 .
  • Full-year path: FY25 revenue consensus $1,817.0M* and EPS consensus -$0.15*; FY26 revenue $1,904.9M* and EPS $0.47*, suggesting recovery embedded in models. Values retrieved from S&P Global.*
MetricFY 2025 ConsensusFY 2026 Consensus
Revenue ($USD Millions)1,817.0*1,904.9*
Primary EPS ($)-0.15*0.47*

Values retrieved from S&P Global.*

Implications: Q3 beat and constructive commentary likely support modest upward adjustments to near-term quarterly revenue and EPS tracks, but Q4 guidance (~$10M adj. EBITDA) tempers aggressive revisions for the seasonal trough .

Key Takeaways for Investors

  • Quality of beat: Broad-based margin gains and FCF strength underpin a credible beat on revenue and adjusted EPS; non-GAAP adds (FX, life insurance loss) explain GAAP/adjusted gap .
  • Seasonal near-term: Q4 guidance signals typical trough and disciplined OEM production; expect aftermarket-led uptick in Q1 seasonality .
  • Mix resilience: Aftermarket mining and LATAM demand provide offsets to OEM softness, supporting mid-cycle margin durability .
  • Strategic positioning: Goodyear licensing expansion and Rodaros JV enhance premium margin potential and assembly capability in Brazil, setting up 2026–2027 product cycle tailwinds .
  • Balance sheet progress: Net debt reduced with strong FCF; leverage down to 3.7x per CFO, increasing optionality for growth investments .
  • Watch catalysts: Trade developments (soy purchases), rate cuts, inventory normalization, and OEM scheduling into 2026 could inflect demand; monitor Q4 tax expense ~$2.5M for modeling .
  • Trading lens: Near-term consolidation likely on Q4 seasonality; medium-term risk/reward improves as 2026 catalysts materialize and premium product initiatives scale .