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    TWI
    Earnings call· Jun 2026(Q2 FY26)

    TITAN INTERNATIONAL Q2 FY26 earnings call TWI

    Jul 30, 2026 Source

    Executive summary

    Titan International, Inc. Q2 FY26 — Solid Q2 Results Despite Ag Headwinds, AI Initiatives for Future Efficiency

    Titan International delivered solid Q2 FY26 results, with revenues and adjusted EBITDA exceeding expectations, driven by strong performance in the Consumer segment and effective working capital management. Despite continued headwinds in the Ag segment, the company's diverse business model and aftermarket strength provided resilience. Management is focused on operational improvements through AI and transformation initiatives, aiming for future cost reductions and efficiency gains.

    Highlights

    5

    • Revenue of $484 million, near the top end of guidance.

    • Adjusted EBITDA of $34 million, above the top end of guidance.

    • Consumer segment sales increased 27% year-over-year.

    • Gross margin was solid at 15.5% for the quarter.

    • Free cash flow generated $26 million, driven by working capital optimization.

    Concerns

    4

    • Ag segment sales declined 5% year-over-year due to lower farm income and elevated financing costs.

    • Ag segment gross margins declined to 11.4% from 14.6% year-over-year.

    • Full-year sales are now expected to trend towards the lower half of the guidance range.

    • Brazil agriculture business remains challenging due to high interest rates, political uncertainty, and elevated input costs.

    Guidance & targets

    8
    CategoryTargetConfidence
    Q3 FY26 Revenue
    $440 million to $460 million
    high materiality
    High
    Q3 FY26 Adjusted EBITDA
    $27 million to $33 million
    high materiality
    High
    FY26 Revenue
    $1.85 billion to $1.95 billion
    high materiality
    Medium
    FY26 Adjusted EBITDA
    $105 million to $115 million
    high materiality
    High
    Remaining FY26 Tariff Refunds (net)
    $7 million to $9 million
    medium materiality
    High
    Q3 FY26 Tax Expense
    $4 million to $5 million
    low materiality
    High
    AI/Transformation Operating Improvements
    up to $15 million
    medium materiality
    High
    AI/Transformation Operating Improvements
    $3 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Ag
    Sales declined from the prior year period. Lower activity levels impacted fixed cost leverage and, together with higher input costs, resulted in segment gross margins of 11.4% compared with 14.6% a year ago. Brazil agriculture business remains challenging.
    		—-5%—11.4%
    Consumer
    Sales led growth, with the Titan specialty line experiencing a notable rebound in demand. Reported segment gross margin was 23.7% compared with 20.4% a year ago. The current quarter includes $4.6 million of net tariff reforms.
    		—27%—23.7%
    EMC
    Sales increased compared with the prior year. Gross margin improved to 12.5% from 11.5% last year. Foreign currency translation remained a tailwind, contributing 3.2% to segment revenues. Margins benefited from cost reduction and productivity initiatives.
    		—1.4%—12.5%

    Operational metrics

    11
    Adjusted EBITDA
    $34 millionabove top end of guidance
    Q2 FY26

    Reflecting strong operating performance and $6 million of tariff reforms.

    Sales growth
    5.2%YoY
    Q2 FY26

    Compared with last year's second quarter.

    Gross margin
    15.5%
    Q2 FY26

    Solid gross margin for the quarter.

    Tariff reforms (net)
    $6 million
    Q2 FY26

    Benefited the quarter by reducing cost of goods sold. This is incremental to the $7M-$9M expected for the remainder of the year.

    SG&A (including R&D) expense
    $58.1 millionvs $56.7 million in Q2 FY25
    Q2 FY26

    Increased slightly year-over-year.

    SG&A as percentage of sales
    12%vs 12.3% in Q2 FY25
    Q2 FY26

    Primarily reflecting the benefit of cost reduction initiatives.

    Capital expenditure
    $13 millionvs $10 million in Q2 FY25
    Q2 FY26

    Primarily due to timing of capital expenditure. Year-to-date CapEx remains comparable to prior year.

    Net debt
    $413 milliondown from $441 million at Q1 FY26 end
    Q2 FY26 end

    Reduction reflects progress towards strengthening the balance sheet and reducing leverage.

    Tax expense
    approximately 0
    Q2 FY26

    Main driver of variance versus prior range was discrete tax benefits recognized and jurisdictional mix of earnings.

    Aftermarket sales as percentage of aggregate sales
    45%
    Q2 FY26

    Roughly 45% of aggregate sales consist of aftermarket products, positioning the company to benefit from replacement demand.

    Plant consolidation benefits
    beginning Q1 2027
    FY27

    Expected benefits from plant consolidation initiatives.

    Industry KPIs

    4
    MetricValueDetails
    Tariff cost impactnegative impact
    Parts aftermarket business~45%%
    Dealer inventory months of supplybetter positioned
    Order backlog order intake by segmentwinning business, new business with OEs

    Product announcements

    1
    ProductTypeDetails
    VPOlaunch

    Capital programs

    1
    AI and Transformation Initiativesunderway
    Period spend: funded through our ongoing capital expenditure programs
    Funding: ongoing capital expenditure programs
    Start: underway

    Benefit: up to $15 million in operating improvements over the next 3 years, with $3 million targeted by end of 2027

    These initiatives focus on improving performance, speed, and information access across operations, supply chain, and administrative functions. Investments are funded within existing CapEx, not requiring additional spending.

    Risks & headwinds

    5
    Difficult end market conditions in Ag segmentOngoing

    Ag segment sales declined 5% YoY; gross margin 11.4% vs 14.6% YoY.

    Mitigation: Diverse business model, Ag aftermarket business, global footprint.

    Lower commodity prices and elevated input costs (fertilizer)Ongoing

    Pressuring farm incomes.

    Mitigation: Counterbalancing mechanism expected to lead to higher crop prices longer term.

    Elevated borrowing costsOngoing

    Weighing on OEM activity, pressuring farmer profitability.

    Mitigation: Diverse business model, aftermarket sales.

    Brazil agriculture business challengesOngoing, until election is over.

    High interest rates, political uncertainty, elevated input costs.

    Mitigation: Adapting business, managing plant operations, union negotiations.

    Section 232 steel tariffsOngoing

    Negative impact on results for the last 2 years due to inflation on raw steel.

    Mitigation: Management has pricing leverage to handle volatility, but calls for better-aligned tariffs.

    What to watch in Q3 FY26

    5

    Ag segment recovery

    2027
    Currentfoundation is there for next year
    TargetUptick in activity and sales

    Why it matters

    Ag segment is a significant portion of revenue and currently facing headwinds; recovery is key to overall growth.

    We're seeing things building. Commodity prices are more favorable. Equipment is aging. Used inventory is better positioned. So we're seeing the market conditions really, really improve to create that foundation for an uptick that is coming. Again, we just haven't quite seen all the indications that it's going to hit this year, but still remain favorably in position exactly like you stated that the foundation is there for next year.

    Q&A highlights

    6

    With improving commodity prices, do you foresee Ag segment improvement in 2027, even if not in late 2026?

    Management confirmed that improving commodity prices, aging equipment, and better used inventory are building a foundation for an Ag uptick in 2027, though a significant hit this year is less likely.

    “We're seeing things building. Commodity prices are more favorable. Equipment is aging. Used inventory is better positioned. So we're seeing the market conditions really, really improve to create that foundation for an uptick that is coming. Again, we just haven't quite seen all the indications that it's going to hit this year, but still remain favorably in position exactly like you stated that the foundation is there for next year.”

    asked by Michael Shlisky · answered by Paul Reitz

    2 min read6 chapters

    Detailed Narrative

    01

    Diverse Business Model Resilience

    Titan's diverse business model, with each of its three segments (Ag, Consumer, EMC) contributing between 30% and 40% of revenues, enabled solid Q2 performance despite difficult Ag market conditions. The company's one-stop shop product and distribution strategy, coupled with geographical and product diversification within segments, helps navigate varied market challenges🌐. Aftermarket sales, representing roughly 45% of aggregate sales, provide a stable revenue stream as worn-out tires and parts necessitate replacement even in softer economic conditions.

    02

    Ag Segment Headwinds and Outlook

    The Ag segment continues to face pressure from lower farm incomes, elevated borrowing costs, and high input costs like fertilizer, impacting OEM activity. While higher horsepower units used by large row crop farmers are most affected, lower horsepower units serving hobby users and municipalities have fared better. Management notes that while the foundation for an Ag upturn is building with improving commodity prices and aging equipment, a significant acceleration in customer activity is now less likely in Q4 FY26, pushing full-year sales towards the lower end of guidance.

    03

    Consumer Segment Growth Drivers

    The Consumer segment led growth with a 27% increase in sales, driven by a rebound in demand for Titan's specialty line. This growth is attributed to strategic new product launches, including the VPO product, and new OEM wins, which are offsetting less favorable market conditions. The Goodyear brand is also contributing to future margin and growth potential, positioning the company well for market improvements.

    04

    EMC Segment Stability and European Demand

    The EMC segment saw a 1.4% increase in sales, benefiting from a 3.2% tailwind from foreign currency translation. European infrastructure activity is a key driver, and the global footprint allows Titan to partner with OEMs focusing on stronger demand areas. Margins improved due to cost reduction and productivity initiatives, providing stability through the rest of FY26 despite modest softening in North American construction OEM demand.

    05

    AI and Transformation Initiatives

    David Martin, Chief Transformation Officer, outlined initiatives focused on improving performance, speed, and information access. These include plant-level industrial analytics, supply chain visibility, and connecting data across design, production, and commercial feedback. The goal is to reduce manual work, standardize processes, and generate up to $15 million in operating improvements over the next three years, with $3 million targeted by the end of 2027, funded within existing CapEx.

    06

    Working Capital and Balance Sheet Strength

    Operating cash flow improved significantly to $39 million in Q2 FY26, compared to a usage of $47 million in Q1 and $14 million generated in the prior year. This was driven by focused execution on optimizing working capital, including strong collections on accounts receivable and managing inventory levels. Net debt decreased to $413 million from $441 million at the end of Q1, reflecting progress towards strengthening the balance sheet and reducing leverage.

    AI-generated summary of the company’s earnings call. Not investment advice.