Titan International Inc Q1 2026 Earnings Call - Europe Emerges as Strategic Growth Engine Amid Ag Cycle Lull

Operator: Good morning, ladies and gentlemen, and welcome to the Titan International, Inc. First Quarter 2026 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. If you need assistance during the call, please press star followed by zero on your telephone keypad. It is now my pleasure to turn the floor over to Alan Snyder, Vice President, Financial Planning and Investor Relations for Titan. Mr. Snyder, the floor is yours.

Alan Snyder, Vice President, Financial Planning and Investor Relations, Titan International, Inc.: Thank you. Good morning. I’d like to welcome everyone to Titan’s first quarter 2026 earnings call. On the call with me today are Paul Reitz, Titan’s President and CEO, and Tony Aheli, Titan’s Senior Vice President and CFO. I will begin with a reminder that the results we are about to review were presented in the earnings release issued this morning, along with our Form 10-Q, which was also filed with the Securities and Exchange Commission this morning. As a reminder, during this call, we will be discussing certain forward-looking information, including the company’s plans and projections for the future that involve risks, uncertainties, and assumptions that could cause our actual results to differ materially from the forward-looking information.

Additional information concerning factors that either individually or in the aggregate could cause actual results to differ materially from these forward-looking statements can be found within the safe harbor statement included in the earnings release attached to the company’s Form 8-K filed earlier, as well as our latest Form 10-K and Forms 10-Q, all of which have been filed with the SEC. In addition, today’s remarks may refer to non-GAAP financial measures, which are intended to supplement but not be a substitute for the most directly comparable GAAP measures. The earnings release which accompanies today’s call contains financial and other quantitative information to be discussed today, as well as the reconciliation of the non-GAAP measures to the most comparable GAAP measures. The Q1 earnings release is available on the company’s website.

A replay of this presentation, a copy of today’s transcript, and the company’s latest quarterly investor presentation will all be available soon after the call on Titan’s website. I would now like to turn the call over to Paul.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Thanks. Good morning, everyone. Our first quarter marked a solid start to the year, with revenues and adjusted EBITDA near the high end of our guidance ranges. That result was well-earned, given the continued headwinds we see in our end markets, largely due in part to the geopolitical developments that are out there. For Titan, times like this are when we set ourselves apart from others. Our diverse product portfolio, strong global footprint, and our one-stop-shop distribution surrounded by the strength, the resilience of our One Titan team is our competitive advantage. While we cannot control cycles, we can control how we respond, and our response is clear. We fight for every opportunity, we earn every customer’s business, and we continue to invest in innovation to make equipment perform better.

This past quarter, our results illustrate that our team continued to execute well and take operational, commercial, and organizational actions as needed. As our customers continue to contend with end market demand that is hard to predict, you know, the natural response is to limit downside exposure, with inventory being an area where many are hesitant to tie up working capital. That approach also limits their ability to respond to any instances of meaningful customer demand, and a result, this just-in-time inventory paradigm really becomes a self-fulfilling prophecy, where it’s, "How soon can you get me this?" Which is the typical response to customer orders. Throughout this cyclical trough, though, we have prioritized our ability to be highly responsive to our customers.

With every sale and customer experience so vital for OEMs and our dealers, our value built on our global manufacturing footprint, our strong distribution channels, and the strength of our JV and third-party partners is how we help our customers serve their end markets and their end customers every single day. Flipping over to the market landscape, I think it’s helpful to really look at that by segment. Let’s start with ag. In the U.S., farmer incomes are currently expected to be relatively flat compared with last year. Those estimates were published around the same time as the Iranian conflict, there is the possibility that if input costs remain high, such as diesel, that will continue to be a drag.

You know, on a positive note, though, our sense is that most U.S. farmers had already bought fertilizer for the season, so the recent increases there should not be as big of a factor. Used equipment inventories have continued to come down, albeit as slowly as major OEMs have been making significant progress on finished goods destocking. Obviously been a topic spoken about quite extensively over the past year. We do believe, and we’re seeing that sentiment is indicating a willingness to invest in the near future. We just need that catalyst that’s gonna stoke that fire. Taken all together, the overall ag current outlook for 2026 is pointing to a slightly down year, with many pointing to 2027 as the likely timeframe for that growth to return.

You know, conditions are improving around the margins, there really is just no clear signal right now for that timing of a rebound. We do believe that could come sharply, though, when that happens when you look at the length of the downturn, the age of the equipment, et cetera. For Titan, it’s worth reiterating that during normal market conditions, our orders for OEMs are often a leading indicator. You know, we’ve mentioned that a number of times. You think about the ordering process for us to get raw materials in, especially on the wheel side. With inventories lean out there in the market, it is reasonable to think that we would see some ordering later this year ahead of the anticipated 2027 OEM deliveries.

That is all obviously a couple quarters away, but I wanted to highlight this point as it supports our full year guidance. In addition, the recent news from the EPA when it comes to renewable fuel standards looks like to be another one of those somewhat supportive regulations and things that we can point to for the future as that would clearly be a good move to change those minimal renewable fuel obligations and helps the overall demand picture for grains. Taking that all together again, we continue to view the environment as cyclical, not structural. The elevated interest rates, tighter credit and policy uncertainty have led to this cautious behavior that we’ve seen across the ag sector. As we’ve noted before, a significant portion of our agriculture exposure is replacement driven, not discretionary.

Even in down cycles, equipment must stay operational and our products remain critical components of that equation. Lastly, what we’re seeing is that signs in the ag market is stabilizing after a multi-year reset rather than deteriorating further. While this is not a rapid recovery environment, early indicators, particularly in used equipment and farmer sentiment, suggest conditions are bottoming and normalizing gradually. That type of recovery path also aligns well with Titan’s operating model. Importantly, we believe Titan is well positioned from a trade and supply chain perspective. Our U.S. manufacturing base combined with our global production footprint provides flexibility in an environment where tariffs and trade policy continue to influence costs and sourcing decisions. We are seeing that play out now in the European wheel market where our well-established, integrated and efficient operating model that we have over there is winning us ag business at a healthy rate.

In summary, while ag remains in a down cycle today, Titan is well positioned to remain resilient through that cycle and participate as conditions improve. We don’t need a sharp rebound to perform. Incremental improvement combined with our disciplined execution supports our outlook. Moving on down to South America, Brazilian ag has been contending with really an unfavorable political climate to kind of put that simply and nicely. That has depressed activity generally and as a result, we’ve seen some softening in our ag tire sales there. Unlike their U.S. counterparts, Brazilian farmers have generally not purchased fertilizer for the next growing season, so higher costs will have a bigger impact on their activity. Conversely, our ITM business in Brazil has been performing really well to start the year. In fact, that’s surpassing our own expectations.

That segues nicely into our EMC business where if you look at our EMC business last quarter, that has reported, as was the case last quarter I should say, we once again reported the best growth of our three segments in EMC. Construction equipment demand in the U.S. has been a relative bright spot and looks to be well represented across a variety of end markets, giving us that confidence that demand will remain firm. Activity in Europe has gotten a little bit more muddled in terms of competitive dynamics, although the macro there continues to be supported by longer-term infrastructure investment. We have been winning business in the European construction wheel market, similar to what I noted about ag. Now lastly, flipping over to our consumer segment, we are seeing some positive trends there in Q2.

We have some really nice wins coming from our team with a few different customers to start the year. We are seeing our consumer business growing over the course of the year when you look back and compare that to 25. Overall inventory levels are healthy. Inventory sellout, or overall sellout I should say, and sell-in appear good. We did see a small drop in Q1 as power sports equipment has been a bit softer with higher gas prices creating that headwind. However, business consumers in outdoor power equipment and turf, they are commercial driven, so they have inelastic demand and they need to continue to run their equipment to service their customers. We see that business holding up better in that sub-market. Again, I want to reiterate it for the full year in consumer, we expect to see revenue growth.

Looking ahead to Q2, included in our guidance is an approximately $3 million headwind in operating margins due to the impact of the war in Ukraine. This is coming from the sudden acceleration of many costs and the mismatch in the timing of price increases with OEM contracts. We’ve talked about that previously. Overall, these contracts do serve to protect us, but at times there can be a timing difference. On a longer-term horizon though, looking beyond Q2, we do expect the lion’s share of the cost increases that will impact us in the second quarter to be directly offset with corresponding price increases. In summary, I want to leave with the overarching message that much as it was last quarter, it is ultimately consistent with our long-term focus and positioning. On a daily basis, we center ourselves and our business on servicing our customers.

That means having the products they need, where they need them, and when they need them. It also means a continued focus on innovation, which is guided by the ultimate question of how do we help our end market users. From farmers to miners to landscapers, we have the most diverse portfolio in our sector, and we want to see our customers get the most out of their machinery investments. That North Star, if you will, is guided by, helped guide the development of our LSW lineup, which has been a big win for Titan for a number of years. I’ve highlighted the benefits of LSW on many of these calls, but I want to emphasize it once again, the ability LSW has to help farmers reduce their fuel usage.

With fuel prices currently high due to the conflict in Iran, our LSWs offer farmers an important tool to help mitigate some of that increased fuel costs. We do, and we will continue to prioritize our investments in R&D, continue to bring these value-added products to the market, and in doing so, further solidify our market-leading position in off-road wheels, tires and undercarriage. Over time, we’ve deliberately repositioned Titan into a more structurally resilient and strategically focused organization, capable of delivering through these evolving cycles. That includes maintaining a balanced cost structure, a broad product offering, and a global manufacturing and distribution footprint that’s second to none. Strategic actions like the Carlstar acquisition further strengthen our ability to navigate these markets cycles with greater stability.

As we look ahead, we are confident in the durability of our business model, the diversity of our product portfolio, our global footprint, and most importantly, the strength of our people and our ability to continue delivering value to our customers. With that, I will turn it over to Tony.

Tony Aheli, Senior Vice President and Chief Financial Officer, Titan International, Inc.: Thank you, Paul. Good morning, everyone. Thanks for joining us today. As Paul noted, our results for the first quarter were solid, with revenues and adjusted EBITDA above the midpoints of our guidance ranges. There are some important financial metrics to highlight this quarter. First, sales grew 2.9% year-over-year. EMC segment sales led our growth, expanding 11%. Gross margins improved to 14.1%. Adjusted EBITDA grew to 31%-- sorry, grew to $31 million. Reviewing our business by segments, I’ll start with EMC as it continued to lead our growth as construction remains strong. Segment revenues were up 11% to $160 million. Geographically, sales volumes had solid growth in both the Americas and the European wheel business, driven by strong OEM demand.

As was the case last quarter, the EMC Segment enjoyed a nice contribution from foreign currency translation, which added 6.1% to the relative performance. While AG Segment sales were relatively flat from the prior year and slightly down organically, we are encouraged by this, as we have had several years of double-digit Q1 sales reductions in the Segment. U.S. aftermarket sales were flat in the quarter compared to prior year, but more importantly, is expected to grow when looking ahead. We also saw an increase in LSW sales. Another positive note is that we had solid growth in our Europe wheel AG business, driven by improved customer orders and are expecting to have a stronger year altogether in Europe. Our Brazilian AG business continued to moderate as farmers in Brazil are still contending with higher input costs and high interest rates.

Governments in the region have been working to support their farmers by boosting renewable fuel production, thereby absorbing some of the grain supply. Altogether, we expect 2026 to remain challenging in the region. Lastly, in consumer, Q1 sales were down modestly from the prior year due to market conditions modulating due to tariffs and continued elevated interest rates. On a positive note, we saw improved demand from our OEM customers, which aligns with recent analyst and recent OEM earnings reports that pointed to tough exposed businesses being less cyclical and more resilient. Looking at margins by the segment in the quarter, EMC showed nice expansion as revenue growth allowed for better fixed cost leverage. EMC gross margin in Q1 was 11.3% versus 10.4% in the prior year.

Our gross margin was slightly lower compared to prior year at 12.1% versus 12.4%. Consumer gross margin improved to 19.9%, compared with 19.6% as cost reductions and productivity initiatives had a positive impact. Moving on to SG&A, if you followed our company for any length of time, you know that we maintain a lean organization that handles market ups and downs with more predictability. For the first quarter of 2026, SG&A, including R&D, was $57.7 million, compared to $54.4 million for the comparable period in prior year. Primarily due to foreign currency and general inflationary impacts, including healthcare. We continue to take actions to manage and reduce our costs.

Operating cash used during the first quarter was $47 million, which was consistent with our normal seasonal ramp in working capital, particularly accounts receivable, which increased concurrently with a sequential step-up of $95 million in sales. CapEx in the first quarter was $13 million compared to $15 million in the prior year period, as we continue to be prudent and make measured investments in our business. As a result, free cash flow was negative $60 million with net debt at quarter end of $441 million and a leverage ratio of 4.3 times. This usage of cash was in line with our expectations for the quarter, and we expect it to improve through the rest of the year.

Reducing our leverage remains a key goal as we progress through the year. Tax expense for the first quarter was $4.6 million, which was in line with our expectations. The effective tax rate of -23%, as we have previously explained, is a function of where our profits and losses are distributed geographically and the applicable tax laws in each of these areas are reiterated. As we see a rebound in market conditions domestically in the U.S., we expect to get back to normalized tax rate levels. For Q2 2026, we expect tax expense to be in the $4 million-$5 million range, which is similar on a sequential basis to Q1 this year and comparable to Q2 last year. A strategic event of note during the quarter was our decision to close our Jackson, Tennessee plant.

We recorded non-recurring restructuring expense of approximately $25 million associated with this decision. Of this $25 million, it is important to note that the vast majority, approximately $23 million, was non-cash. The plant closure was a long-term synergy that was identified at the time we closed the Carlstar acquisition, as we knew the combined business would have excess manufacturing capacity in the U.S. and that this decision would be accretive to our earnings. We expect to complete the closure by the end of October. An estimated total cash cost to close the plant to be approximately $7 million, while yielding annual cash savings of $5 million, which will accrue beginning next year. Moving on to our financial guidance for Q2 2026. Our guidance for the quarter is revenues of $470 million-$490 million and adjusted EBITDA of $25 million-$30 million.

Versus last year, that guidance implies some top-line growth along with modest reduction in bottom-line performance compared with last year’s Q2. The primary factors driving the bottom-line reduction are OEM pricing pressure and additional cost pressure that Paul went through related to the Iran conflict. For fiscal year 2026, our financial guidance remains unchanged and is as follows: revenues of $1.85 billion-$1.95 billion and adjusted EBITDA of $105 million-$115 million. This guidance range is reflective of modest improvement compared to 2025 on both the top line and bottom line and reflects our belief that Titan should benefit from increased customer activity in the fourth quarter, supporting readiness for an expected ag recovery next year. On the whole, our end markets remain dynamic as equipment buyers contend with ever-changing and challenging market conditions.

We at Titan have the financial discipline and are strategically well-positioned to navigate these conditions, serving our customers better than anyone else. Thank you for your time this morning. We would now like to turn it back over to the operator for the Q&A session.

Operator: We will now begin the question-and-answer session. Your first question comes from Michael Shlisky with D.A. Davidson. Please go ahead.

Linda, Analyst, D.A. Davidson: Hi, good morning. This is Linda on for Mike. Thank you for letting us ask questions. My first question is on ag. I think in your ag commentary, you highlighted challenges, particularly in Brazil. My apologies if I missed your commentary in Europe, but could you give us a little more detail on ag markets in Europe and the rest of South America compared to North America?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Yeah. No, it’s a good question. We are seeing some differences in those regions, and it has somewhat come on suddenly. There’s always a number of different moving parts going on in the global marketplace. You know, starting more specifically in Europe, you know, we’ve seen that market just remain more stable through time. As the challenges in the world are out there, you know, Europe has remained more stable. What we’re seeing in particular to Europe, though, is really getting some good wins. Our team is built a very well-established supply chain integrated network and an efficiently efficient working model. We’ve been able to pick up some nice-sized wins in that business, in that marketplace.

Specifically, my comments on Europe were more directed at what Titan has done specifically there to garner some new business. We’ll see that impact through the course of the year, as Tony and I mentioned. You know, overall, the European market has just been less susceptible to the ups and downs. You flip over to Brazil, that is definitely not the case, where Brazil can swing in larger movements quite rapidly. What we’re seeing there, you know, outside kind of what’s going on with the global ag marketplace, farmer incomes, et cetera, is just the politics in Brazil have gotten complicated and messy for them. You know, spending a lot of time with our team talking through that, it’s just having an impact on business in the short term.

You know, again, overall, I think the dynamics of Brazilian agriculture are good and certainly they had a strong 2025. They are facing some political headwinds right now as they work through a presidential election that has some differing viewpoints on what’s best for society and the economy there. That’s where our comments are directed with Brazil, is that we are seeing some short-term impacts there, but again, remain positive in just the fundamentals of what’s going on in Brazil. North America, I mean, there’s been so much talk about North America.

You, as you look back to the beginning of last year and the expectations for when the rebound was gonna happen, a lot of thoughts were that that should have already taken place, and then some global disruptions have pushed it back. You know, we continue to see that mindset where around the margins things have continued to improve, however you wanna look at it from inventory, the age of equipment. I do believe what Secretary Vilsack has been saying about the administration support towards farmers is important. I think we’re at a point where it will go up. It’s just, again, that continuing question of when.

What our comments are directed at is at Titan, in order for the OEMs to fulfill their orders when demand picks up, we are a strong leading indicator for that, especially on the wheel side. What we are saying in our guidance is that with that belief that we support as well, that 2027 will be an uptick for agriculture, we expect to see some orders that would start coming in later this year to support that.

With the inventory positions in the marketplace, you know, we believe that, and the age of the equipment, you know, there’s enough factors that if things do improve, you know, it can be a nice healthy improvement that kicks into gear, you know, in relatively short order because of the length of the downturn, which I believe we’re kind of getting right on that 40-month mark, which is really long in duration. Hopefully I answered your question. I kind of touched all the key areas. If you have any follow-up, let me know.

Linda, Analyst, D.A. Davidson: That’s very helpful. Yeah, thank you for the color. Sticking with ag, with the commentary, what are you hearing, or what are the ag OEMs telling you about 2027 at this point?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Yeah, it’s tough. I mean, it’s still a little bit early, especially when you throw in the Iranian situation and just the spike in energy prices and costs around the world. Little early to get those feelings for 2027. You know, we have seen, one of our major customers did put a little uptick in for the remaining forecast for the rest of 2026. Really if they did start giving us forecast for 2027, I’m not sure we would take a lot of action and spend a lot of time focused on it just yet. As we get past Q2 into the second half of the year, that’s when we’ll start having those serious conversations with our OEM customers about where 2027 is going.

Right now, the global disruption just makes 27 pretty hard to talk about.

Linda, Analyst, D.A. Davidson: Yeah, no, that makes sense. Then switching to a different topic, have the Section 232 tariff changes that took effect in early April made any impact on your pricing and orders for 2026?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: It, it will have an impact. It, it certainly will. It’s kind of a balance between good and bad. We’ve spent some time really over the last week understanding that. Depending on which part of our business we’re looking at, there may be some cost increases, but other parts of our business will see some benefits as the imported products will face some cost increases. My overall assessment in working with our team on the, on the Section 232 changes is that we will get some cost increases that we will be able to support through price increases. It is smaller than the amount of cost increases that our competitors will face with what’s being imported.

Net-net, we should see a positive, again, assuming that our competitors are not just gonna eat those Section 232 cost increases and that they will have to pass most, if not all of that on to the end customer. The net-net balance to us would be positive from the Section 232 changes.

Linda, Analyst, D.A. Davidson: Thank you. That makes sense. Then my last question. I understand your rubber is sourced mostly from West Africa and not so much passes through the Strait of Hormuz. Do you have any of your chemicals or any, I don’t know, other raw materials sourced, or passed through from that region?

Tony Aheli, Senior Vice President and Chief Financial Officer, Titan International, Inc.: The short answer is no. There’s nothing we do that is directly impacted passing through there.

Linda, Analyst, D.A. Davidson: Good. Thank you for it.

Operator: Your next question comes from Steve Ferazani from Sidoti. Please go ahead.

Steve Ferazani, Analyst, Sidoti: Morning, Paul. Morning, Tony. Appreciate all the commentary this morning. You certainly addressed some of the main questions I had. Appreciate that. Paul, you know, it’s been 2 years since we’ve had any company that we cover point to Europe as a strength. Do you wanna cover a little bit about what specifically? ’Cause I don’t hear that a lot, so that’s a nice surprise. Also in general, your thoughts on EMC. You know, obviously in your guide, you’re assuming EMC remains very healthy. I mean, that was your best margin and revenue in that segment in it looks like 7 quarters. What can hold that up, maintain it, versus what are the risks given all the geopolitical concerns?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Yeah. Yeah, no, it’s good. You’re right, Europe doesn’t get mentioned often, and I guess that maybe says something about the continent and what’s been going on there. For us, Europe, I’m gonna point to really the strength of Titan when I answer this. I mean, we play the long game with what we do. You know, we talk about that a lot with how we approach servicing our customers, how we look at this business where we wanna have the most diverse product portfolio. I mean, having that one-stop shop isn’t just about distribution, it’s a one-stop shop of having the products available for our customers. In Europe, we took an ultimate long game, started many years ago with different pieces.

As I look back a year, 10 years ago, excuse me, you know, building an integrated supply chain that used low-cost countries. You know, the problem with Europe is obviously the cost structure there is high. It’s why the continent is not talked about in a positive way often. We built an integrated supply chain that started with a joint venture partner in China, that has performed tremendous. We’re able to service a number of needs with finished goods in markets. A big part of that is we’re able to service our own plants in Europe, with components that keep our cost structure better than the competition.

We also have a low-cost plant in Turkey that’s fantastic, that we’ve continued to invest in, and we’re able to take components from Turkey while servicing and being by far the dominant provider to the Turkish ag market, which is, I still believe, the fifth largest ag market in the world. We have a dominant market share there, where we have run a competitor out of business in Turkey. We’re also again able to supply components from Turkey into our European wheel business. With all that being said, it’s really starting to pay off. I mean, our structure’s better than anybody else’s. Wheels are critically important. They’re highly engineered products that require massive investments into not just plants and equipment, but in the tooling to service that.

We’ve really put the squeeze on our competitors there, and we’re starting to win a lot of business. I think as the chaos goes on in the world, that’s where these decisions that Titan has made over the long term can really pay off. Europe is a really good example of that. That’s why today I’ve been highlighting Europe. It’s become an important part of our message for this year. Like I said, we’ve been talking about how we run the business for a long time, and just wanna highlight that as a strength of us as it’s starting to pay off. It is in some of our Q1 numbers. It will continue to be in more of our numbers throughout the course of the year.

Answering your question kinda EMC overall, Steve, I mean, it is clearly an area of strength just globally. You know, some of that maybe gets distorted on energy, AI center build, et cetera. But for us, it’s performed well. I think typical to what we say about Titan, it’s the diversity of where and what we serve with our products. We’ve picked up some strength in U.S. We’re doing good in Australia. We’re continuing to, you know, to see the aftermarket hold up as we reference quite frequently. I think the part that we kinda cautioned some of our comments with EMC, Steve, is just around the primarily the German OEMs. You know, they’re facing some pretty intense competition.

I do think over time, Europe has got to wake up and put some regulations in place that I know they’re doing some local content rules with autos, but the large equipment manufacturers there, I think something’s needed as well. We’ve seen our German OEM forecasts have been more volatile this year, and for many years, they were just stable as could be. The one spot that we’re keeping a close eye on is just what happens with some of the German OEMs that. Maybe our commentary is a little bit different than what you’ll hear from some of the larger OEMs just talking about EMC in general.

Steve Ferazani, Analyst, Sidoti: Got it. Got it. Appreciate all the detail on that. You covered a lot of this, but I just want to make sure I have clarity on it in terms of your 2Q guide versus full year. Because it looks like, certainly sounds like lower than maybe what you were in margin-wise 2Q. A little bit lower than probably where you were internally, certainly lower than us. It sounds like you are addressing this as. I remember post-COVID, the inflationary period where you had to re-change some of your agreements with the larger OEMs where you would get to catch up on the inflationary pressures. There’s a lag to that.

Is that what you’re sort of pointing to in terms of 2Q versus the rest of the year, where the margins will be particularly pressured ’cause of inflation in 2Q, and then you catch up in the second half of the year? Is that what I was hearing?

Tony Aheli, Senior Vice President and Chief Financial Officer, Titan International, Inc.: Yes, it’s timing, in a sense.

Steve Ferazani, Analyst, Sidoti: Yeah

Tony Aheli, Senior Vice President and Chief Financial Officer, Titan International, Inc.: when the costs take effect, like, you know, the pricing change is based on structured contracts that have specific times.

Steve Ferazani, Analyst, Sidoti: Yeah

Tony Aheli, Senior Vice President and Chief Financial Officer, Titan International, Inc.: some semi-annually. It doesn’t happen the same time. We already have it in the contracts. What’s different this time is we have to go renegotiate. It’s already there. We’re not renegotiating anything. It’s gonna come through.

Steve Ferazani, Analyst, Sidoti: Right.

Tony Aheli, Senior Vice President and Chief Financial Officer, Titan International, Inc.: For the rest of the year, we don’t expect to see much of an impact because we’d have had that price come through outside of Q2. At some point, we will actually get a benefit because of the hits we are taking in Q2 now. That’s why we called out Q2, because it’s just timing.

Steve Ferazani, Analyst, Sidoti: Okay. This is really, a lot of this is thanks to a lot of those agreements you worked on three, four years ago. You were ahead of this.

Tony Aheli, Senior Vice President and Chief Financial Officer, Titan International, Inc.: Yes.

Steve Ferazani, Analyst, Sidoti: Got it. That’s very helpful. And then in terms, Paul, of your guides, you are indicating you do expect to see that recovery on ag to at least some degree in 4 Q ahead of what we hope is a better recovery in 2027. What do you need to see over the next three to four months that would give you more or less confidence that that could be coming?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: I think it’s a common answer. It’s just some stability in the world.

Steve Ferazani, Analyst, Sidoti: Yeah

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: ... the farmer income, you know, that gets beat up all the time. Clearly that it’s getting enough government support that I’m not concerned about farmer income, but clearly some stability. I think it kind of comes down to psychology and sentiment, really. I think farmers are wanting to purchase. They got equipment that’s aging. Inventories at the most levels look okay. It’s just getting that psychology and that sentiment to kick into gear and say, "Yeah, now is a good time to buy." It’s just that confidence. I’m of the belief that the world is gonna get more stable versus more complex, even though some days that’s hard to see that. I think we’re on a path where that could happen.

You know, we believe that there is some uptick coming later in the year. Also we are getting some wins kind of scattered across different parts of our business. That’s also implied in the guidance. You know, it’s tough to see when you’re in a flattish type environment. You know, there are some good things going on and some good projects that we’re winning. We’re not really spending a lot of time highlighting a ton of that. I talked about Europe, there’s some one-offs that have been going our favor as well. That’s built into the guidance as well. I think it’s two things that are realistic and attainable. We’re not shooting for the stars when we say that.

I do believe, again, ag’s got to kick into somewhat of a more positive gear. Like we said in our comments, Steve, it doesn’t have to be, you know, shooting to the moon. It just needs to-

Steve Ferazani, Analyst, Sidoti: Right

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: get a little positive sentiment. I think it’ll that recovery will happen in 2027.

Steve Ferazani, Analyst, Sidoti: Great. Thanks, Paul. Thanks, Tony.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Thanks, Steve.

Steve Ferazani, Analyst, Sidoti: Thank you.

Operator: Your next question comes from Joe Gomes with Noble Capital. Please go ahead.

Joe Gomes, Analyst, Noble Capital: Good morning. Thanks for taking the questions.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Good morning, Joe.

Joe Gomes, Analyst, Noble Capital: First just kind of technically, any more restructuring or impairment charges you’re going to be taking in the second quarter?

Tony Aheli, Senior Vice President and Chief Financial Officer, Titan International, Inc.: Yes. Not impairment, just restructuring expenses related to moving, relocation costs and all that. You know, like I said in my script, it’s a total cash cost of $7 million. We’ve taken a piece of that this quarter or, you know, in Q1. We’ll take the remaining, you know, through the rest of the year. There’s no other non-cash impairments happening.

Joe Gomes, Analyst, Noble Capital: Okay. Thanks. Thanks for that. The R&D expenditure was a little bit higher than I think the consensus view in year-over-year. You know, Paul, may, you know, you just give us a little idea of what you guys are looking investing in on the R&D side these days. What can we looking forward to coming out here from the labs, so to speak?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: That’s it’s a good question, and we actually were just talking about it yesterday. Looking back on the quarter, all the announcements that we’ve put out on products. For us, we see a lot of excitement in where we can use the Goodyear brand in our consumer segment. We have a tire coming out, or it is out, just saw it in our plant actually on Tuesday, where you can use it in the consumer segment and run it with no air at all. It’s not even just a run flat where you have to put in air to start with.

We can compete against some of those higher priced products in that segment that have a tendency to degrade over time, whereas we believe ours is going to hold up. By putting that Goodyear brand on there, feel like we can get the attention of the marketplace really quick. We’ve seen a lot of excitement in our consumer division on product development. You know, just like I was referencing being with that team on Tuesday at our plant. I think the words they said were, "We have introduced and will be introducing more products in the next year" or if you take last year and this year, than they did in the 10 years prior to Titan owning that consumer segment. It’s great to see the excitement that, you know, we’re having.

A lot of that is just our team is got products and well-positioned in the marketplace already. Don’t wanna make it seem like we’re reinventing the wheel. We are making that wheel and that tire better, and that’s what we’re good at. The Goodyear brand is a nice way to do that. You know, along with that, we’re always looking for other ways to continue to invest and improve our product portfolio. We at Titan, you know, Dave, Tony, and I have always said, you know, when it comes to product development, we will support that investment, and we do. That’s the engine of our company. I’m just overall really excited about what our teams are doing, what they’re coming out with.

I think that’s one product I would highlight, is just what we can do with the Goodyear brand on the consumer division.

Joe Gomes, Analyst, Noble Capital: Okay. Thank you for that. One more, if I may. I mean, there’s some, you know, reports out there about a broadening recovery and, you know, mining/construction equipment demand that the channel to destocking has run its course there. You know, it sounds like, you know, Europe, you know, and your E&C division is doing well. Just Pardon me. Just wanted to, you know, double-check with you. You know, you’re hearing and seeing the same things as we’re seeing in the broader reports out there on the construction to mining markets?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: I would say so. I mean, our business does move in a few different directions than what the global OEMs report. There’s not just an easy comp where you can say, "Okay, this is how Titan’s business is gonna perform." You know, we at Titan, you know, where our success comes from is just having that diversity of our geographical footprint and our product portfolio. We do some things that are different. You know, we have a foundry that can get us into the aftermarket in pretty unique ways so we can, as aftermarket remains as a more stable place than OEMs over the long run, we can service that. You know, for OEMs, you know, we are seeing good orders.

I think there’s a lot of support out there in the infrastructure side, government investment, data centers, et cetera. You know, I think on a global basis, we’re able to ride that as well. You know, as I mentioned earlier, probably the only thing that we’re watching a little bit closely is kind of where things go in Germany. You know, it’s a big customer base of ours with our strong European manufacturing footprint we have there. We’re watching that closely. You know, Joe, I would just characterize it. I mean, we try to be as diversified as we can in everything we do and touch as many different corners as we can. Sometimes it’s a little bit tough to just catch an OEM report and say, "Okay, well, that belly weather’s just.

Let’s go match it up to what Titan does. We want to be successful over the long run and I think there’s some good short-term trends in EMC. We’ve seen it in our numbers and, you know, for the year, we got a good outlook of that continuing.

Joe Gomes, Analyst, Noble Capital: Great. Thanks for that. I’ll get back in queue. Thank you.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Thanks, Joe.

Operator: Your next question comes from Kirk Ludtke with Imperial Capital. Please go ahead.

Kirk Ludtke, Analyst, Imperial Capital: Hello, Paul, Tony, Alan. Thank you for the call.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Kirk.

Kirk Ludtke, Analyst, Imperial Capital: I was just curious if maybe, we’ve talked about U.S. farm incomes a bit. I know that that’s a, you know, an important metric for your business. Have you been hearing anything about additional farm subsidies to help U.S. farmers offset the impact of the conflict?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Yeah. I had a chance to hear Secretary Vilsack speak to a small group 2 weeks ago. Look, when you, when you hear him talk on TV, he always mentions the farmer. He’s good at that with his background with the South Dakota farms that he had in his family. I believe he’s divested them now. He understands the economics of farming very well. In the comments I heard from him 2 weeks ago, again, small group, wasn’t public, he does continue to bring up the importance of farmers to our society, our economy, the struggles they have been having. I point that as a leading indicator. You know, it’s hard to take that and run to the bank with it.

I do believe he’s one of the most powerful people in our administration. He’s an incredible guy. He’s done an incredible job. When he says something, I think it’s important. I put a lot of my weight in that, Kirk, with some of the comments I made today, that he just continues to reinforce the importance of making sure the farmer’s taken care of. It’s kind of hard to tell the impact of the farmers right now. You know, where’s oil going to go? It just continues to gyrate. You know, I think as we noted and you know, I mean, the fertilizer costs are fairly locked in for the first part of the year as they got to continue to make more expenditures. You know, do they need more support or are they going to need less? It’s really tough to tell right now.

I think just look at the overall broad support that Secretary Vilsack has continued to say will be there is a strength, a confidence that, you know, again, I rely on and I put a lot of faith in that. For us, I mean, as Tony mentioned in his comments, we’ve seen an increase in LSW sales. We gotta continue to market that. You know, one of the things David was working on when he was, you know, transitioning from CFO to CTO that we’re continuing to work on is just how we can ensure we’re getting LSWs into as many hands as we possibly can. You know, do we need to look at how we finance them to get into the market? Rent-to-own, whatever it may be.

These LSWs do save on fuel. It’s been proven. It’s not our studies, it’s theirs. As fuel costs do go up, it does give us an advantage to sell more LSWs. You know, the one comment I’m gonna make, I’m sorry, I got a lot of thoughts in my head. I’m gonna say one more thing. When we keep talking about ag, the one thing that I think has been overlooked is when’s the last time we’ve had a weather disruption for ag? You know, one of the things that drove the farmer income and commodity prices over a long period of time is that there was weather disruption somewhere in the world, you know, every few years. We haven’t really seen anything for, you can tell me.

It’s been, seems like it’s been six, seven years. I think at some point something happens and when that does, that can change commodity prices really fast. You know, it’s like with everything when, you know, you extrapolate what you see today too long into the future and then something changes and you have to change, you know, your models. I think we’re looking at models that are just assuming there’ll never be weather disruptions again. I just don’t know if that’s gonna be the case.

Kirk Ludtke, Analyst, Imperial Capital: Got it. Thank you for the color. I appreciate it. With respect to Brazil, you mentioned the politics are messy. I believe that election you’re referring to is in October.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Yeah.

Kirk Ludtke, Analyst, Imperial Capital: You know, you know, politicians say a lot of things. It’s hard to know what actually happens once they’re elected. Is there anything in that election that you think might fundamentally change the outlook for your Brazilian business?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Yeah, that’s the hard part. We, we don’t know. If you, if you, if you look at Brazil, you know, things happen there and they don’t blink an eye. If things happen here in the U.S. or Europe, it would be like a asteroid just hit the planet and we’re all gonna turn to vapor. It, it’s incredible how resilient the Brazilians are. I mean that in the highest regard. What they’ve seen is a market that was running really fast, all of a sudden because of the elections and, and their political elections, you think ours are volatile, theirs are a different level. They could sway the economy in ways that maybe we’re not as used to in the U.S.

Just in talking with our team, in fact we’ll be making a trip there in just about three weeks. Just in talking with our team, it’s moving and gyrating quite rapidly. They don’t quite know what it’s going to mean, but for right now, it’s created uncertainty, and uncertainty creates pullback in orders. You know, we’re seeing the OEMs take some weeks out of their schedule in their, in their recent forecast. Does that continue the rest of the year all the way until October? It’s, it’s really tough to tell. Things in Brazil change fast. You know, what we do, Kirk, with our team in Brazil, what I think is one of our strengths, I mean, they’ve been together with us for a decade plus. They’re incredibly good at managing this.

The way we can shift our cost structure, the way we can adjust volumes and what our team does to handle this volatility is. I say it many times, but, you know, I think our results prove it. I mean, the strength of our team is our competitive advantage. These things that go on that, you know, maybe we talk about in the U.S. are just crazy, they’re used to the craziness and they do a really good job responding effectively and quickly. You know, again, I’ll be down there in a few weeks, maybe pick up a little more as to what we see for the back half of the year. You know, just in working with them through the first quarter, just had a call with them last week.

It’s just tough to predict the back half of the year right now. Just sort of dealing with what we got in front of us today and it’s become volatile and the election’s been the primary driver of that.

Kirk Ludtke, Analyst, Imperial Capital: Got it. No, I appreciate it. Thank you. Yeah, ag exports are critical to their economy. That’s not gonna change.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Exactly.

Kirk Ludtke, Analyst, Imperial Capital: Is that fair to say?

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Yeah, exactly.

Kirk Ludtke, Analyst, Imperial Capital: Got it. I appreciate it.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Exactly. You bet. Thank you, Kirk.

Kirk Ludtke, Analyst, Imperial Capital: Thank you.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Reitz for any closing remarks.

Paul Reitz, President and Chief Executive Officer, Titan International, Inc.: Well, thank you. I appreciate everybody’s attention. Of course, I really appreciate what the Titan team did this first quarter. I look forward to talking to everybody again next quarter. Have a great rest of your week. Thank you.

Operator: Thank you for attending today’s presentation. The conference call has now concluded.