TWI - Earnings call transcript Q4 2018 | Titan International, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Titan International, Inc. Fourth Quarter and Full Year 2018 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to Todd Shoot, Treasurer and Vice President of Investor Relations for Titan. Mr. Shoot, the floor is yours.

Todd Shoot

Alison. you, Thank welcome year and our quarter fourth Good Earnings everyone call. full XXXX and morning to

On with an this the our we which Form results David President with and President in was about the have CFO. morning. the CEO, Securities to this call and issued also Paul review me reminder to today, that Reitz; will and I Martin, the release are Vice with pleased Senior begin and XX-K, Commission I'm Exchange morning presented filed were earnings along our with

be As plans a information. reminder, materially discussing future and this certain for our projections could information, morning that company's differ we actual the that the risks, to uncertainties will assumptions from including forward-looking the involve forward-looking and cause results

company's individually the safe X-K factors earlier which statements Exchange in these statement XX-Q, earnings release XX-K from or the concerning differ been latest results the Form aggregate, forward-looking Forms filed today's actual Commission. information that, well and attached in could with harbor to found today, filed in as cause Additional materially all included have and of Form can our Securities be either the to as

website. is recorded within be now over transcript under Relations like turn the of to accompanies call measures note, discussed are website to release may of and to call, within Paul. our GAAP Please non-GAAP a to information I'd refer reconciliation which addition, well a In remarks contains non-GAAP the portion today's supplement, quantitative financial intended the will Investor measures, financial being as on comparable other be but for most copy call today's the to The Events. as and directly earnings release, company's measures. the on earnings Relations which the to available and substitute be measures. The today's News the Investor not made today, a section most is available call comparable the GAAP

Paul Reitz

up recent concluding as start-off financial Thanks a comments the accomplished going through couple today the you run our provide the you We questions. our years, strategic wrap through back has and the joining And believe I'm on XXXX. go Todd. to and Martin progress with then in aspects, team your I call announcement our of before To our additional financial morning. proof is evidenced to we'll past us look firmly then will David highlights, that Titan some International of Good appreciate CFO, for global lot. our business results. at

mark XX% impact at ended Our finished in of reflect and sluggish the XXXX this that or business years. couple to extensive I environment year, decade bottom over few EBITDA of the of X% efforts improvements foreign million. the $XXX gains X.X a through back past where revenue year. that XXXX XXXX, adjusted volatile XXXX and tariff increase. into definitely a do name normal gains representing financial that's top income out you last XX% a landscape a that sales within market the or incremental of EBITDA adjusted equates That the challenges. know billion over seen $XX from EBITDA steel Keep say our increase had margin solid actually negative prices an just at year and well mind came commodity million XX% these in to line this an we this good represents highs, of is and year We I moved can't currency, the up but battles, sale over if farmer if impacted our really not, new have over prices represent posted type we

as original to very fortunate we XXXX recall, you we're the As laid refinance market, bonds. may look bond that our now to of our our through made X.X% XXXX. refinanced of the XXXX out were current considering outlook preparing volatility November have you we decision at business bonds When get in to

our So outlook that let's updated XXXX against provided. performance we the recap

outlook our beating to I drag this saw guidelines margin were low-end sales some X% raw on. improved noted of an As that compete that profit came $XX $X that of many compares our in impact excluding Gross at our expectations X% market increase. of XX% us tougher earlier XX% XX%, negative guidance currency. of against better I XXXX an was, to tariff led up well million. XX%. stated favorably much EBITDA SG&A growth. XX% guidance course of year Gross the by million. battles within to year XX% earlier, impacted within up as only landscape X.X% pricing as ag of XXX% we the our sales This in this continued parts by by or below by to We slightly were We our was mentioned of materials. the

are for this million good year note All-in-all, what we with we we $XX strong year again, job accomplishing to our said of XXXX. a XX% performance. outlook we do did for were to provided, income very $X.XX year not returned first we But EPS. those share. want with We issues. reflects think improvement or profitability we you gross going do in When our time all the of by this But XXXX per that I profit provide familiar to at a anything I did this look since

has these entered cyclical point if just where take low As looking in solid posted come improvements XXXX been its tough backdrop market them period. since material raw from I'd end a saw we in against wild heavy you that volatile you accomplishments reached a in in out as combine that growth business hard XXXX. good XXX% proud XX%, are like of growth we to second we've here over direction, these worked a of improvements Titan the overall of these and to operational that we've more past of couple to point. in and but low We've we've driving, do. gains revenue that still point the EBITDA know of with we continuously as have rubber. take and the kind resulted sales natural and conditions in know, that with been, of you gains work that it's are XXXX a adjusted a back have downturn in markets different years, situation two-year our Again made know, a

stronger to drive First, we margin need improvements. continue to

We have to raise our above today's level. margins gross

higher perform business of nice as impact profitability have to reaching definitely levels. return impedes was year, pieces quite we particular areas level negative unacceptable our These bottom company a it frankly while line an this have on a to from profitability. of Next our Titan even and

So on gross units. driving the business touch and comment first improvements talk specifically margin largest let's our about America about North

team gross to portfolio all our below early still keenly in grow quarter to continues an launched gains points, that competitive said, announced opportunities improve good focused Last operate margin XXXX averages. historical challenging from being We We North market landscape. in management America room management made improve we XXXX. XX-XX in but with we is gaining that we - over that there. ample know in would on there's operate America margins. basis program a XXX be North remain With to Our in a have

big entrepreneurial put on tire little and formerly X We year. into to business our world that our both of January is that for a and good thing. The done and place business culture, off competing North tire in our have spirit that is guys they the in for a day America that started this this inherent wheel that's history as

way many balloon, continue see us that However, similar through overly in smaller product portfolio and efficient our through operations. and manufacturing all have really our companies for been years seeking processes turn to has many period that complex our less that more we in to growth made the

revamp often to implement is saying Russia another business going It well. burden product recently this longer-term to as our to a program for operations as XX-XX decisions our is cash complex Tire that Russia in organizations arena already we're journey and division they're a in also enabling daily discussion, the capital this quite program. will and on improve timely America. management reducing announced world-class in activities. fronts. on we well. and complexity our business wheel to the is North XX-XX margin have our of within of many XX-XX strategy implemented effective improve profitability, Group us without on year CNH operate heavily levels, be Many program flow believe embarking while We're our how running margin focused their manage by needs make us. confidently our Our working program We it goes later our this will then unit on Continuing and performance. we're

as put this complicated five us worked For option more it year. we through made the that due was came year

business within our users Our and is causing our Russian banking with working significant capital many primarily the in but sector have commodity that within dealers, just Russia constraints they distribution the prices system not et challenges is faced associated Ag-related a our channels, Ag cetera. end

been other over investments going with than increased that but drive today as Titan an been Our made. years operating need has XXXX the be, years. much We've margins that Titan near the is and made, very through years putting they Along Russia CIS near here and has Russia are enhancements efficiency impact. prudent are the levels a in they nowhere ago better results we've XX% our business not in in unit we've return where region. we ad improvements designed a they the investments gross on one the to is the few last tire well. number with quality are were the we're positive acceptable and producer that had few well to sit income

the as Titan That and developing the EU be the to in other future within of success that later are crucial markets exported We is tires Russia. can in phases well.

in to results Our better earlier, is and we'll get there the good decisions team noted but produce challenging need do I we improving as Russian their more management and navigating efficiencies market operational making financial there. to

to profitability. over moving Next

from earlier, an a our XXXX That Titan profit year operating income operating million improve mentioned this just XXXX. million improvement. solid loss is a of fairly I of to in has As $XX seen $XX

business. One our to Canada. in impact to us need parts to area the addressing TTRC that of is certain reduce reach our for bottom business we recycling negative needs line However, our of continue potential,

be materialized. financials our on the in EBITDA margins. not placed the would years. a profitable And has a destroy the previously fire had internal three of that of projections XXXX, publicly we TTRC, September reactors. we to Prior announced six we past at contains negative with the That has our that fire due of shared burden sizable we to As a TTRC business healthy in that fairly had building fire couple had

We the the nearing for are insurance complete the from at that and fire future. steps review operational that insurance next with the Titan completion settlement to and strategic hopefully point of point will and determine a TTRC

still total plans this year XXXX outlook drive jump and done I time on businesses our to financial is within the demand us area other is XXXX of operating In is will made determine Australia that segment with larger two next X.X% some $XX changes believe to both spending In these what of those that strategic made XXXX. we've what X% the market. in growth those performance. XXXX, area in strategic our But be with income for Another that improvements over and is there combined, sales The we else better believe goes X% improvements acceptable be mining organizational focus we tally the level We and produced to to range. release. the from need over financial press companies, areas Like despite construction unacceptable U.S. needs that already Ag the leading here tire to we'll over at business that operate want light and in have to our sizable well X.X% grow along analyzing to we've into them. towards million with see introduced both since we earthmoving our performance, in way these to provided Australia many an further we businesses, pent-up

on about in would X% cautiously represent optimistic in are focused will X% certain ag areas. range, market see share add the but XXXX, should in remain business go which that still the will evolved political and our We growing commodity we some I assuming to where things in expansion the place, pressures that we've in

an further adjusted XXXX, XX.X% XX.X% reported driving and in over As few on noted the XX.X% earlier, our over we we that to solid committed next see are for XXXX. basis XXXX the and margin to range, margins gross the we representing in improvements some XX.X% a years, in improvement the impairment

one million million no we've projections XXXX. the as is as divestitures that set we that into what our years, targets continue we be the a taken of that our SG&A results of couple to $XX reflection the than I assume As less we Adjusted All the more in of for XXXX million and business a approximately and reported we forecast therefore these Titan X% that the XXXX reported XXXX we've in This into will leverage $XXX place. In basis. conclusion, and will structure million. to Again R&D hard percentage to range SG&A we've the and worked in year, past strong $XXX discussed combined on drive we for have $XXX in compares this favorably accomplished think to EBITDA in million or $XXX all did said this and projected year. hit we

our more and over some have I'll our up now turn that, follow recent the With announcements. with doubled David EBITDA later since to like I'd XXXX. than to comments strategic We then call on

David Martin

or to XXXX to that repeat of the key Net which from items Thanks our was were or nearly on call. Paul, for fourth European This the I of last numbers release America I good currency want geographies. million, prior decline revenues everyone up $XX most from a felt and the performance, the a quarter will $XXX been prior impact million represents night. million XXXX all currency of on have year, would from Latin in of while from some don't but sales the highlight fourth the the quarter the X.X% basis year $X we outlined constant X% and the morning X.X%.

Our performed occurred very valuation XXXX business quarter. ITM currency during XX% revenues the absent with QX, that indicators well increasing from

of the experienced of a continued expectations, major that the variety net during during due which two our profit reasons earlier. tire expectations a the trend market $X currency in were revaluation primarily is of in the quarter some the Obviously, Russia a underperformance terms The I impact own from drivers decline in the described Paul about business aftermarket we which played and balances the impact gross expectations. half American shortfalls revenue XXXX the We sales currency North quarter. in and saw profit. softening to in profitability experienced throughout a bit. market our that as inter-company Australia the loans Our a impacts for another and softening overall second losses reported that expense price in talked other the already quarter largest of also more negative second to approximated on like gross against included in but from sales of part which a take fourth these volume I'll I'd versus while from discuss of million $X on performance was had from flat, to relative on our our essentially pickup and of our sales a a consolidated quarter mix in sales currency X%. basis to a we increased just discuss million. impact

fourth gross point impairment an to in on of Our gross sales which X%. down slower million comparing gross to while prior North tire dollars were $XX business the America. XXXX loss translation When fire aftermarket already $X $XX from behind I experienced year our adjusted reported profit this gross have alluded the was we Factors our million sales a quarter for profit margin. was In in of the the the XXXX impacted the out have than it, tire at due North negatively recycling net complex, but fourth sales year were year, approximately excluding compared to American assets or want X% X.X% also same or in quarter prior million profit very sales recorded would customers market our income. quarter year global QX or in cautious gross quarter to been been for million. the and somewhat the $XX we in related profit impairment the on Canada on full currency to effects XX.X% other after increase a net profit disruptions for ago. we and of experienced The farm negative have impacts net impact wars approximately that of the to trade

decline relates the inventory of QX in some So relative timing to dealer and levels.

and in of We and temporary also shipments The fourth profit slower challenges to the December. November gross These up the shortfall profit our million, construction our and that segment system quarter quarter American next. primarily in impact and improved margin during approximately had Australia which was the described wheel some relating conditions our from and should in year-over-year quarter market majority delays is in business. earthmoving expectations the to both ERP ITM's and in the earlier. start-up I us due of North this from related to now, of significantly are we terms $X in catch challenges our own largely to Russia behind and of Gross similar sales business new impact

a Now look each closer the little let's at three take of segments.

XX% X% Our in the down was were for just due the the recovery challenges in of experienced absent the down by most for though year-over-year, is year. and ag improved quarter, in headwinds some to America the I discussed. which were not would currency this a million currency Volume to primarily the net market, XX% were Latin due factors America quarter at impact. sales sales. that X.X% $XXX and Sales year-over-year segment while agriculture North down that favorable for segment on the have down price if segment X.X% been negative only sales mix net basis added in

million this basis same where segment the Volume portion segment segment in appears and tire mix you. volume year a sales which Continuing to fourth $XXX million decline quarter. XXX coming Volume with to was fourth impairment ITM the America gains X% to North Australia while currency have I've segment XXXX currencies factors driven earthmoving segment impact points we've for construction currency our market as decline was of Canada. profit the softening. by fourth represents ago. was X%, there be net in X% the from ago, down areas price well. a the mind in this the in prior and or talked last to came profit Europe quarter segment in year from million. were negative and $XX fire related the with business for a from there again sales from headwinds billion a the a an quarter XX% XX.X%, market in experienced the the nearly reclamation $XX.X were Our about the constant sales at Gross a trend. of million increase from to a our for $XX.X growth all $X close indicators and in margins within $X.X while of what Year-over-year short-term agricultural in the and would year construction asset Russia the declined the million, that by Keeping factor of just reviewed X.X%. strongest to Again, operations a as increase approximately experienced On was nearly from net quarter million this basis, lower was QX earthmoving $XX in year increased well. segment, largest for gross in year as as in

There compared were the sales currency net wrap On last have XX% million constant drag impact some down mix X% decreased a fixed was sales margin was negative while for to impact gained X%. year. prior $X.X million, America. million fourth Volume been of only This basis, XX.X%, sales was the when this a X% by Gross which decreased lower down the a felt favorable up consumer significant $XX over segment's quarter with the same segment, to would basis absorption was really and was in from FX and with of reflective again gross fourth with segment the of net biggest of America. year, decline Latin X%. almost year $X Now quarter price cost quarter year the volume with which points in the Latin almost last XXX of from ago. a impact period we profit

$XX the and to over Turning expenses SG&A year. R&D million decrease for fourth a from of million, operating our expenses, were X prior the quarter

to percentage operating was compared was As sales, $X relates during the quarter R&D X.X% primarily year. loss the in comparable able which outcome appears coming of of $XX we pre-tax net operating to a legal cumulative expense and in benefit, particularly the of tax losses million to a is last we’re to which year tax losses, a causes in where be expense unusual portion quarter in significant on lower period million, spending. have with but a in SG&A take Tax quarter. jurisdictions XX% our discrete an the This current unusual not

the tax $XX.X pre-tax is year was the of $X.X XX% For million normalized. income on income million, more or provision which

longer this prior between XXXX, $X.X discussion XX% rate adjustment to of the Russian any versus from the fall of from the U.S. quarter year RDIF. in the period, the our I A current all tax relates be dollar. item of relates our RDIF in of to expectation given the satisfied is final impact of adjustment and Almost which the related million. tax Russian pretax there portion mix for million, various For impact $X.X of to currency value the fourth will amount to income our jurisdictions. decreased performance non-controlling of of note option redemption interest XX% the The redeemable no put anticipate and the our of now would operation ruble devaluation

our balance move a to few capital and condition highlight sheet I’d key items. and liquidity Now over financial like to

remained relative XX would working as days. some see the that and in did we expectation capital in fourth the see at turnaround accounts business sales an receivable into to in levels DSOs Going had an our appropriate steady quarter, we levels we decline

from $XX million quarter during third quarter. the dropped AR fourth the total Our

in by and principal in from inventory wheel the undercarriage growth our third $XX two American business, the million our grew came ending This operations of our quarter. North areas December However, business.

shipments we temporary As during discussed fourth our the start with new up in challenges system. the had to delays related quarter of earlier, ERP isolated some

stabilization and half of we year. first able to substantially achieved have being subsequent year-end the We catch the to anticipate up during

at undercarriage to involves meet the XX, year million experienced has maintaining growth improving are XXXX. relates is of our turnover the the have million business management impact increased not our to inventory increasingly on we for some $XX to and from coming balance in we business appropriately Obviously the our $XX financial September to the requiring finance, sustainable in demands. business ITM approximately the continue in balances It continuous capital - the across rate climate trends dramatic growth year. of operations from Inventory by course business, and business disciplined it simply As we capital making end has focus to continued to saw teams. improvements processes declining cash are the during $XX they was continue over in supply throughout strong XXXX our chain and our increases see also in cash build planning remained production the of XXXX Working of focused relatively steady the working year, million management them approximately systems. this at our the teams and and

reinvigorated management for able in we on to increased organization, in our turnaround a capital XXXX levels the We meet this operating flow anticipated see to our the throughout year are we working certainly demand with beyond. believe with should inventory and well cash focus be our and positioned

discussion, before wrap the with Now just I items up a couple debt. more starting

December, the where we totaled Current Again were totaled notes which within relates considered over expect on and are cash XXXX. use for quarter. of stable consists with year. debt last demand million current of maturities but of be portion the at $XX roll generally current million. of end with as $XXX will one the able a senior mature working overdraft significant A combined to reporting reminder, at end $XXX debt secured the during local maturities was Our to primarily to and are purposes, in the long-term which of year due capital facilities, million which our

We level first related increased to RDIF XXXX the the quarter manage borrowing have our the of to payment to put in option.

anticipate While in our flow to it improve we year cash should pay I down. coming sufficiently the

operating be assets of from will could non-core believe flows between idle million in to shed in able we deliver cash I into also Some this $XX $XX improved while cash. or the cash come some and will that near-term million

bit came to that cash to is more the business running opportunities. all of note We and the financial in markets $XX a our advantage we at and appropriately a and in where of now within to at the is and were We times. increased XXXX our to to million on our a the year for the and XXXX in business important will It's sufficient volatile cost in is the improvement and take global million returns that $XX through continue improvements in $XX the liquidity expectations we to have business, range range of $XX targeting in areas expect million to we for roughly I have the Given invest to that expenditures anticipate of XXXX that for growth bolster Due Capital flow, year. profit spend million million deliver for anticipated the growth XXXX. in to have. versus aspirations and specific $XX can we depreciation amortization and range we and closed highest it reductions. similar we efficiency be in planned that out XXXX. believe positioned the positive believe our balanced performance our remains unpredictable the in The of outlook metrics approved view year needs

front we in be improved should but the to portfolio driving restating margin The to them performance in fixed business. improvement longstanding committed us. across significant by returns of us reducing for operation driving underway discuss our important components business operating on on challenges sales get to are remain initiatives. a program priorities to cost of American the financial incurring also behind drive detail, losses few are their from operational a that or business, today and I to want our steps this of continue We're improvements. shareholders across terms that by focused eliminate XX-XX have improving the I'll profitability. step conclude in improve to focusing as North We to we initiatives taking our some but

didn't to stronger practices. and path of We the flow cash have the the organization fluctuations progress strategies practices. financial hard our management also global accountability down quarter related we we visibility management started reducing expected, build to volatility and improved aimed in about quarter while in treasury at that impacts a talked on drive in to I make focus improved appropriate capital performance develop and I working currency, working to Last are fourth

focused building business ERP to improved our our are in platform. the capability We the innovations also base significantly more to timely deliver business and analytics on through in

All progress take of significant during but initiatives XXXX. these will making are we committed to time,

might Now any few call to you into questions I'd the more like comments we to that turn back have. for Paul before over a get

Paul Reitz

week few it. strategic want job, appreciate our on comments close regarding a Good ITM. to David, I with announcement last

investment ITM is The that Special that. interest Titan triggered received determined one of it for did it not of that discussions the letter a we recall, I was at best XXXX announce publicly in March advisory to formation was time. announced interest of of shareholders a may leading thing of Committee ITM we engage won't that all that you Titan that our selling in came in that with of the had As that then XXXX April out repeat bank.

ITMs sales, this path of continue our operating made we've as in and will ITM have Our is this what predominantly morning, financial the We previously our both business on and North and you've financial outside ITM's in comments income don't I business performance and EBITDA. the divulge primarily America, XXXX, well, has a heard of to we and construction has undercarriage some from financial strategic filings, segment. but focus a reminder, to excellent earthmoving say, been continued to us operates in then became what separately in Since that's done. see performance exactly successfully as growth pursue overall that strong growth as

ITM, are announced And now in again, worth we of ITM for a of strategic process. value evaluating the advisers offers us assist last to I we does couple once listing engaged option that much As performance now, with the is include received we based in we've a ITM's this the past alternatives on now higher believe public firmly than years, Europe. that XXXX. week,

disruption not declaring be ITM Regardless ITM and business, that want conclusion I of announcements, are foregone without strong believe major or to this but split with that from cost. We a apart not we'll is continue to dispose a can noncore a that we our it's excellent future. add ITM business Titan asset an

our our interest However, the believe we've ITM, Changing shareholders evaluate our couple with this best announcements of to from briefly RDIF. directions options time. made we option a it's firmly recent also regarding in strategic at Russian of put

years. payment cash that consideration of First, that an we issuance included holdings agreement an mature restricted in this own immediate $XX a Titan's that months in their put total we to XX within we on and would stock reached we million XX%. RDIFs RDIF of million announced million of in cash stock and reduce ownership of can that our $XX will would $XX then receive of three the for buyback Russia within discretion, XX% Titan Completely

XXth, and stock $XX subject million million the closed to latest that the be making we'll payment stated transaction Our we announcement cash of shares still by regulatory X roughly on restricted that's issuing February approval.

put the equity. Voltyre-Prom One exercised Partners of together Titan with for equity now want Russia Russia, call more XX% OEP return to the Equity the interest. continue I a on in to for work than approve Titan I'd matters, stating wrap our our the filing shareholders. XX% up later Titan in month advisers, over financial the these that in option best like questions. to this decisions your regulatory Board towards interest approximately also to other will in making million that, David, owning would of That to turn pay to require their be our Operator? With Our and subject has and would $XX myself partner by that both

Operator

go Our will of come Steve from Volkmann Jefferies. Instructions] ahead. question [Operator first Please

Steve Volkmann

- if XXXX. some to out don't talk know working magnitude. income about flow but I'll lots flow questions. in way I So, David we relative maybe I of it of little order of net a And, with this to guess on questions, to sort like is maybe trying start cash figure an Can a free bit as we're I maybe about think guess, cash bring I'm capital to down maybe sounds going that?

Paul Reitz

there'll last sales inventory. that particularly drawdown working will from from a is levels to saw perspective we certain the able to expectation year, some be extent capital in be while that growth Our we that that a

not operating you of with that may to year. that get that we increase, be see net see downturn we cash While the significantly course, close flow we targets profit are levels see and cash different Then, can to see potentially should of but income. I growth able flow it, in big the a pretty the to in our expect free number. Xx this range levels And,

Steve Volkmann

there? in think I million could more that little just expect what to detail and the a is you'd million about million say or that is potentially assets can in you bit $XX dispose then to a mentioned you you idle little And what more $XX of, $XX proceeds million $XX

Paul Reitz

question. that's a producing have Yes, properties have and assets lately. anything some we that have been some good certainly that not We

TTRC to And in look at us to so make for some in such are the properties, there operations as sales opportunities of addition Canada. we the potential

Steve Volkmann

the in the that what million $XX expecting value of is assets again, are million on And or…? what or the is to you're proceeds that books $XX

Paul Reitz

proceeds. would be That

Steve Volkmann

in pass line. Thanks. and Proceeds, on okay, get good I'll back right

Operator

& Please will Mondillo Sidoti from question of next go Joe Company. come Our ahead.

Joe Mondillo

if just to So on sort on sort commentary. add-on in the you of wondering questioning just the liquidity, you of terms liquidity went expand prepared could of fast through that

like sounded this liability Are million it biggest RDIF year? debt of those at So, million you liability buckets have and equity. for X owe of some a you the probably a you sort some to about XX the $XX million, $XX current of paid

Paul Reitz

you think I I notified but the I would use to deadlines. Yes, would OEP, mean outlined I or guess guess in have that optionality this time, that we be say would correctly. at cash, OEP's I still stock. some missed million we for of regards settled have we stock $XX

you at worth So $XX million million be them, cash. RDIF this as like said, would we've that announced. $XX juncture the already of paid With

million would stock will that worth which We issuing restricted be of another stock, $XX exists restricted be using to $XX in million. but – trade the optionality cash,

$XX So right the two the total mark. would exposure that cash around be million between

David Martin

million if to that have in debt the senior or Joe, at the notes. that demand they're demand working look outside international overdraft have of on any our demand other not any anything locations because there, you to add in just Those that repayments we $XX leases And capital and we expected capital related ongoing significant of will. if you lines credit, of of to see facilities obviously and are just the those type

immediately So do cash it's these flow roll year. not with we each often over and

Joe Mondillo

being capital one what equity And it's to terms do anything you of RDIF guess, – whether for the so if last I a RDIF imagine what up means, year, year I compensate little as in the working biggest bit the paying of not you’ll in strong in in to one as portion equity? the have not beginning seasonally, the the ramp

David Martin

Yes.

Joe Mondillo

of I'm liquidity? looking near-term just sort at

David Martin

opportunity in these a with be closely in can any lines able to United work the the we States. our to million the have, have respect we access $XX business spikes our have and with obviously Overall, that line So to like – seeing our have partners. and to ABL we payments we what sufficient we banks credit we of for provide we're liquidity that

Joe Mondillo

Okay so overall…

David Martin

are can moves the can down. actually So flow these to and near payments term accessing continues we so cash then pay that as we manage they that time on get better

Joe Mondillo

repeat and that? missed for I segment Ag the mix the guys volume you price FX Could

David Martin

fourth the overall and decline currency of for and improvement mix income had to X% of a a X.X% impact itself, volume quarter in related a in Yes, the we negative price currency X%.

Joe Mondillo

to So just on that. guess the I volume sort Ag looking expand at segment wanted the and of at

the of better than quarter have bounce and aftermarket going think terms sort what a happened in fourth I sort rate from there Could you but why guidance, certainly touched that of confidence growth the volumes? XXXX where back, into in that quarter will in in your there you on you regarding things any just little things fourth terms light some revenue was suggests will color were of provide the get you more of. that

Paul Reitz

is the ERP Yes, the of I one of Joe, that items implementation think David mentioned, systems. the us impacted –

other as period on next shipments note we item quarter from the is fourth So volume the into the had going in we some were implementation through process. over side the that of And that rolled the that.

commodity a XXXX. of a ramp really If doing XXXX was much up going there QX with you prices stronger back aggressive in what pre-tariffs throughout year recall XXXX, into that expectations of more was they and did

we're And our sit so, Why OEMs going and coming of kind then sector it's quarter – of into last to Ag where the still, where more lean for is compared inventory we good still at from feel we're an where today we build firm. we about saw of XXXX. in is XXXX the foundation that

most are larger either environment by to I of them acquired problems ones of most ones this have the to gotten and good operators continued dealers better. fact used think some In have dealers. type larger have or been weaker farms The

our We on the back think cautiously we areas. tougher with But what If get that we're We ourselves received push see drive we how what and meetings can and that on XXXX. about I initiatives the metric our dealer changes outgrowing look then of different think from America certain all is projected. our continued hosted we're When that I producing if And talked to could We're wrapped that And initiatives. that than that business positioned things is the about feel we're have outlook dealers are at as seeing look XX-XX is everybody's favorable. in working the cautiously definitely markets. and customers that that in North market can to so, side we the through some I the grow market back in that going, in up Again markets. at even type strong, we're being further definitely optimistic. the that you share activities pent-up we've continue initiatives like we has we here I the environment, we good with gain this well but even into feeling some every place continue and the to network XXXX. optimistic that our – the There in feel look products replacement I nearly products good demand. some going to dealer are you our put said, well with more of

that XXXX on And a it's path. that good outlook think I continue again all so we cautiously put that will and optimistic out reflects the

Joe Mondillo

a mainly share follow-up is that that is gains to side as just on the the volume, aftermarket then, correct? referring the you're And a

Paul Reitz

we that I say well Yes, opportunities would OEMs. that's some with correct. I think where ourselves see position we Certainly also

direct the And impact XX-XX so, on have comments we'll do have with – of but impact we’ll of mainly with your a would what XX-XX direct yeah are agree at your more I a correct more comments aftermarket. we

Joe Mondillo

you the mix put a increase September. price the I that a cost given on surprised in price And was actually I to then relative from was price decelerated which the little side, third quarter, growth revenue think

was we quarter, were ago. quarters might the actually where Do relative I'm sure mix happened to of in with the you terms accelerate. price that of going but I side So price cost a to on back starting getting Where see what we in still cost the things. side not of or things, that assuming forward that of spread? benefit five sort six first are

Paul Reitz

how predict I be challenging. that neutral, think the to seen and we trying We've market grow. models for projected is that what built XXXX our it we've all will is

the smaller costs the If you a the definitely on seen necessarily last mix side, element, of look over than few large. not but it, horsepower we've at price grow mix side just quicker years, the

We are well positioned in that market.

play in I good servicing heavy arena. got we've very that think a customers that our job

we're of good point to some in taking been in we've think excuse being well a as stabilized me far a don't I mix, the price getting I lack at neutral. that's market think because part see make has hurt. to our the change that – a been the of as there mean actually some doing raw the us customers again be mix saw job cost, the tire it's competitors performing us, on pretty that's for being with that sizable. again increases point benefit mix, this far come off-road out And we're in not or space, that they On assumption better area. the I good place So volatility now actually I but price that I space at price going as from price road been that's on as materials, that's we and

don't have So, contracts where it's But OEM go. raw raw within a at protect tough just are within to we question this to answer materials materials know because going point, on we do the us help – sector aftermarkets. the that

regular and we're a guys basis. on point this on stay again, neutral of fairly top on pricing, at these some think I

Joe Mondillo

assume in - mix. that And of so, mix September? the the fourth guess, you unfavorable I the put revenue then, I growth, price the off increases in the terms relative to in mix quarter, price offset aspect

Paul Reitz

David? were we think - what I it Yes, we, X%? Was

David Martin

saw little impact our was better yeah, increases We AMC But any our Yes. business. It ag. X% I - for bit it's Well, in a was just was segment. impacted price that a by say the overall of portion mix. for think to fair unfavorable

Joe Mondillo

- EBITDA; guidance you other is do the a guidance provided? on income in non-operating the of And that the clarification terms EBITDA just in you included that guys

David Martin

Yes.

Joe Mondillo

you're sort you looking much that quantify of for for, can income? non-operating how And

Paul Reitz

operating of You're talking line the about below the other line? kind or

Joe Mondillo

Yes.

Paul Reitz

last things But so basis that normal year one-time million. the I number $X million you to see $X during obviously, reasonable. some not expect, about know, to don't we would expect year, I significant is had Yes, would

David Martin

forecast We cemented - either don't We large cash routine in the in would you our like something number EBITDA standardized into are XXXX. built that the or flow be a have that. we expectation see contract, by outlook things that XXXX what the

Paul Reitz

investments income would have and we joint our venture all that over thing other minority world. our the of And the some be

well. what that's that represents So as

Operator

Komal of Our will come Patel ahead. from go next question Goldman Sachs. Please

Komal Patel

deadlines on that to using or stock it the definitely restricted clarify, not apologies, you're have mean misheard I missed just side, does settle cash missed I might anything? earlier, the might could Again, have but it I if First, OEP and it.

Paul Reitz

Yes, by that. we in I with - this to We've is we just, OEP. And notify at OEP mean, make of had them. meant a comments not did we if had to I middle it's the stock, we're really we utilize notice were that settled But what to where going time my not legally it's of deadline discussions.

would in a It have yes. the to answer cash. would be, on So, legal settled strict be basis

Komal Patel

the in maybe maybe RDIF, them manner anticipated? I consider could them the why been similar question originally that's And keep that, settling trying than - to them business follow-up in you guess a as and is with longer lasting in have discussions to

Paul Reitz

At comments this any on can't I make that. point

Komal Patel

growth guess I growth beyond? it some think much kind that Is on you've the the to experienced a need rationale ITM What's touch about just business well. fair And of already, just of for maybe in next for you liquidity that selling are or a as Europe business how year now? to expecting or way increase the slower as given you it

Paul Reitz

debt we've put clearly it flows would talking been and No, that required made cash issue. lot David liquidity the of is capital a be lot what of move good to we've highlighted But is the or put Clearly, will into in translate the settle as has we liquidity of options. working I think positive XXXX. as investments there to with option, question about a more

continue were And couple last the XXXX. believe is so, much with business ITM, it in has the certainly We valuation well what than future, at we seen into do can just where to not see of areas in we grow the in positioned well business, the higher the great this years, was we look what expansion, we very those we've you areas. believe the prospects that become but seeking

did drive point, week. So, is make the we possibly the strategic something the But right it's believe this issue announcement, with some we ITM here time clearly with at alternatives, discussions just those liquidity and last to would to that seek us advisors. have the

Komal Patel

it if cost you cutting a just can expecting little bit, about that made, I could you of comments switch then you're bit And some gears talk the the cadence that cuts some the a kind of of you any and expect achieve is kind that, with cost weighted, half back of just us to these that savings? what of you share of information quarter-to-quarter do could to some incur beyond

Paul Reitz

of fixed So, of related and cost in cost in we talk reductions, about absorption plans our some terms to are so forth. the

comes go basically ratable, us versus will, So, wasn't that you that runs more business one, - is time. that facilities that a achieve a have as say XX-XX of basically of production is a one quarter anything - through the which over so we lot changeovers there's create in helps if runs, lot the our take cadence year. It versus better to another cost And time we also it I'll indirect significant do small forth. production and today, and up initiative, runs long is in

to avoid that costs of kind are we're these forward. looking the And moving so

SG&A we're are and we far value-added as activities. As costs SG&A those actually go, them significant any prudent more at looking we but cuts our being not how towards with here, invest directing

you So see some maybe trade-offs.

this to cost significant say achieve as far the point. wouldn't anything As it's savings, significant at I

Komal Patel

willingness politically kind in And all to equipment, on recent the last kind things invest or outlook for updated of your that one from how, of me, any in side far. sentiment you've I tariff customers, so changed seen any the guess discussions the at change of

Paul Reitz

have well, shift of I discussions markets any that favorable there place. with other taking business. are into dramatic some think certainly the for about noted but the been and optimism back And our is coming say Turkey, there's recently I other countries us wouldn't as and some think that's yet, India comments including the I positive

and think So inventory good yes, future. but in its good overall investing a willing trends, bright some seen The equipment. the I end investing in in to users again invest are or dealers there that is customers, OEMs expansion whether

ones the to continuing that. do I are good think overall

what the of get for But I results our being other things to and in have parts guidance think and paint books better the the end reflecting overall of in onto weaker I for business. you XXXX cover reflects true overall coming operators expenses of for some Fed – we’re brought users that's debt Kansas our the all guidance think think to the see to nothing way, the operating where our that's potential that. are I slightly out City Some

Operator

come Financial. will from question of next ahead. Justine Ho Mesirow Our Please go

Justine Ho

been wanted just Actually check of but questions have I my most answered clarification. get I double if can to

regarding notifying listed stock. mentioned that about OEP with you deadline past You the to were if do

decided So just make to have all the that cash in understand sure XX million? to that it I you means settle

David Martin

Yes, of anything OPE either or ago that has made myself cash. to them OEP I that to can’t point to settle a utilize say we not other mean XX we’re Directors a $XX stock could decision stock. option the and weeks notify we million exercised were standpoint. that at going date this Board we just we a that couple in The going I which really from more legal owe than up certain million means consideration a of put

update, as everything have soon RDFI like we have that with as from start we as we a can. We final perspective conclusion at So we legal final but this this let we are make legal is situation update date just and certainly results as do the where we a we as start an just we’ll point, and point soon on strict will with pass strictly so soon and OEP. those stand you at the transacting

Justine Ho

or regarding any you make far now interest I the is in process? of too has you guess see thoughts any so terms on your – it right can comments in there And that ITM early been

Paul Reitz

more be well. very our too able the last press more to both good say out today. clearly about get and engaged we good feel valuation, we release, the provide as a valuation a clearly our any in But with can't announcement updates company. than in putting advisors really those some at press a much that as strong And what but put we good process we a point week point, our prospects we in that comments belief see that reflects we've further for to the we this release said pretty until Well won't even

we I at think say point. can that's this about all

Justine Ho

what of from there? that – I'm into And you're on based do lastly, you Ag the in now Do current conditions, wondering you it still, feel in months the you are business. two growth about is cautiously we optimistic guidance your do still I quarter, first just seeing guess and particularly that

Paul Reitz

seeing that are full optimism and a reflected certainly reflects our think cautious outlook, is I absolutely outlook year in what cyclical our Yes, XXXX we're business. we

in there’ll business ups year So be this and it, moving answer a it’s I then some the year growth. feel far Ag Obviously to and of and we but end them overall just in them positive things our standard I reflects direction. guidance be market throughout of the definitely at mid-point some yeah, for as see year point point year. as believe downs single-digit at do flows that this different a earth for our construction. are revenue as reasons, are we But the think throughout are think how on question, the changes. and what all range I And Again that think a next going in with reflects the of that both good good higher it being growth in to your areas certainly it's moving

Operator

question Clear Alex go ahead. next Asset Harbor Our will from Please come Management. Blanton of

Alex Blanton

from in third change a the third decline it your $XX about was quarter $X the and was million in million decline looking gross from sales. and a at I profit your quarter

that what So on that's kind XX.X%, incremental. decline sales of XX.X% would expect which one is about a

that material normal. had raw greater then be costs much a doesn't correct? it Is would look quarter that from like So impact in you

David Martin

I would correct, that's say yeah.

Alex Blanton

year increases be there, the cost in offsetting past But steel from total, cost the your how would other and much let's prospect what's and raw materials increases this said is for that. about and impact the balance I that your increases you say at in the year. know for price

increases? is are price you of re-coping those there saying no that So,

David Martin

if prices, how or down for steel mechanisms and it that. we take to fold at got deal with up – two look in pricing certainly you on steel certainly built You there

part, in most our with were changes respect those any work quarter-to-quarter forth. the so for So covered to and prices

how could be expectations first and but are and So, And time, given what period significance but as of we – you we expectations year very some with other the to materials, have what price half see the the saw in we in much the were. steel of marketplace some closer over volatility, the saw We we you on cautious last where our our what years, saw second far that a became as rubber. increases time. the synthetic price the half pricing all reflecting of we that about line raw in see our on products based

The we price in other terms in our can working market. kind products of together the think, where we of prices

but anything we're it Paul So we on is, was that, the we forecast today, I and how confines we pricing this that like adding can the for believe year, raw side. if particularly feel cover tire don't really of materials to within the

Alex Blanton

of and that X% the quarter XXXX. inventory and in at and was I probably extended and Fed that down were recession that standpoints, the recession overall OEMs XXXX the your by mind market assume your to October very out forth. of the of said are a expect negative people to was very came executive a frame quarter, from by and of who corporate Had and many executives Going early back fourth stock the end that negative and expected so the XX% among dealers to reducing end

it So how in there increases materials much impact impact the was negative efficiencies and as raw sales getting seeing from not like some a because you're looks on improvements indicated greater you're it here results to if biggest it line like the quarter ought bottom third you're a sales impact, pretty sales incremental the really is have from problem improved volume. looks the by good if

Paul Reitz

Yes.

Alex Blanton

correct? that Is

Paul Reitz

I reduced than driven just right we've you're in has years cost exactly of because we've that's quality. revenue mean that gotten last think, we've done EBITDA doubled. we've And increase of driven a think XX% more it's with on business I efficiencies our the couple Alex. what better. look the I over at We've – efficiencies,

as XX-XX portfolio talked to about very do managed are product program. we our we continue setup, and we well that better We

becomes mean you in then And right, so issue volume you're an when volume. it I of that and see shift

QX of and mentioned going they we into to were a like lot concern was QX, XXXX, for day no, the in early say saying of one are next you not reasons. recession day, As in seems it happen. it's number they a there's heightened and going It are

it flow. order impact creates that that of So it's level the just does uncertainty,

that on much for a be got we is that's what So as realizing business exactly done can us, When than XXXX what less environment at in a we've getting also operating you $XX to XX% million EBITDA And volatile. growth. is is is XXXX and keep that at in to doing, $XXX we what and highly but we focus million, we're revenue volume prepared do good control and we look which a manage again, in job. as we

on is the there get of at and at much stock I point TTRC, RDIF if all our our at has and option, issues. it it that was your fire lost with good the topics half this the on gets to, continues a the at But think focus and all is what alluding down we've to you Company that been done put look put so negative other why lost in unfortunate what that liquidity. made message job. like option has these And us focusing gets announcement And frustrating and it's we've question that really ITM. that's business is underlying because these

make We to solid. have ways are sure we

We that that are. strategic million can with some assets. mentioned liquidity again, other have that $XX additional we David options we're a the got great we million of to that, seeing $XX tap asset what

credit that's North only of We upon ample is that assets. America have line and a based

inventory. on AR So

tapping We aren't that into. have world to all we capital access the around

frustrating. in What XXXX So, it's did growing leverage damn and to yeah, gets we this a these performing. job and good do comments in lost business what all is

Alex Blanton

marketplace on the is that it's current the Company, point a growing construction price your situation you're never the side. value that's revolved; your the than in and tariff on And this tremendous this It's in leader the fair business. ag world potential of assessment? In at less million. the stock, rebound side has Well, at business the $XXX gets

Paul Reitz

that topics option, valuation, this something to the gets here away a million we've has And the we've take and again, going put and unfortunately fact this to what's going you the tough been what's give going all it's, Yes, take to that that for like said, clear And we're doing we able of we're $XXX today but place, that's be be all from the mean, talking again, I that. how long about exactly Absolutely, can't. that's and business it's very and these back is been EBITDA time. of sit And XX% $XXX to happen going you double than in settled a leveraged more to stated indication completely grow the again, sales with than getting is all more going than the look, well. not of today doubled lost million part itself -- question, and other topics. and to it's less your to EBITDA, fact original in it's

Alex Blanton

Titan International (TWI) 7 Mar 192018 Q4 Earnings call transcript