Titan International, Inc. (DE)

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.

Thank you and good morning. I'd like to welcome everyone to Titan's first quarter of 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 8K filed earlier, as well as our latest Form 10K and Forms 10Q, 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 gap 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-gap measures to the most comparable gap 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.

Thanks, and 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, 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 it results in this just-in-time inventory paradigm that 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. So now flipping over to the market landscape, I think it's helpful to really look at that by segment. So 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. So There is the possibility that if input costs remain high, such as diesel, that will continue to be a drag. 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. It's 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 going to stoke that fire. So taken all together, the overall ag current outlook for 26 is pointing to a slightly down year, with many pointing to 27 as the likely timeframe for that growth to return. Conditions are improving around the margins, but 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. So for Titan, it's worth reiterating that during normal market conditions, our orders for OEMs are often a leading indicator. 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. So 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 27 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. So 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. So 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 its 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. And so 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. So 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 and 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're commercial driven, so they have inelastic demand and they need to continue to run their equipment to service their customers. So we see that business holding up better in that sub market. So again, I want to reiterate it for the full year and consumer, we expect to see revenue growth. So looking ahead to Q2, including our guidance, is an approximately $3 million headwind in operating margins due to the impact of the war in Iran. 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. So 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 in 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 to do 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 Carl Starr acquisition further strengthen our ability to navigate these market 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.