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FY 2014 INVESTOR PRESENTATION

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Page 1: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

FY 2014 INVESTOR PRESENTATION

Page 2: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

2

Titan International Products

Titan Strategy

Wheels

Undercarriage components (ITM)

To become the worldwide leader in manufacturing and distribution of wheels, tires, assemblies and undercarriage products and to serve

our customers’ needs through product innovation and quality service in our key markets:

Agriculture

Earthmoving / Construction

Consumer

Tires, and Assemblies Undercarriage components (ITM)

85%

15%

OEM Aftermarket

60%

40%

OEM Aftermarket

75%

25%

OEM Aftermarket

Page 3: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Titan/

Goodyear

40%

Others

<5% ea

27%

* Source: Modern Tire Dealer

Market Leader North American Ag

TIRES:

OEM 48%; REPLACEMENT 29%*

WHEELS:

OEM & REPLACEMENT > 75%

®

®

®

®

®

®

®

Page 4: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Market Summary

Page 5: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Overview by Market Segment - FY 2014

Agriculture

Consumer

Earthmoving / Construction

FY 2014 Segment Revenue

Agricultural: Tractors, combines, implements, irrigation

Earthmoving / Construction: Mining, cranes, aerial lifts, haul trucks, scrapers

Consumer: Primarily light-truck tires, ATVs and select golf and turf equipment markets, brakes and actuators

Total: $1.9 billion

14% decrease vs. FY 2013

18% decrease vs. FY 2013

15% increase vs. FY 2013

54% 32%

14%

GP Margin: 6.1%

GP Margin: (1.2)% GP Margin: 13.2%

Page 6: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

20

13

20

13

20

13

20

13

20

14

20

14

20

14

20

14

$0

$100

$200

$300

$400

Q1 Q2 Q3 Q4

Agriculture

Sales by Market ($M)

6

20

13

20

13

20

13

20

13

20

14

20

14

20

14

20

14

$0

$20

$40

$60

$80

Q1 Q2 Q3 Q4

Consumer

20

13

20

13

20

13

20

13

20

14

20

14

20

14

20

14

$0

$50

$100

$150

$200

$250

Q1 Q2 Q3 Q4

Earthmoving/Construction

20

13

20

13

20

13

20

13

20

14

20

14

20

14

20

14

$0

$200

$400

$600

$800

Q1 Q2 Q3 Q4

Total Sales

Page 7: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Agricultural Drivers Ag Drivers 2014

Mix Shift - Large Ag equipment (4WD and Combines) experienced a cyclical downturn after 3 good

years of massive growth. Smaller hp tractors sales are increasing but are lower priced and less

profitable

Reinstatement of the Section 179 tax deduction

Grain prices are low; Corn crop revenue is at a 5 year low

Interest rates are low for equipment purchases

Inventory levels are still considered high

Source: farmdoc.illinois.edu , Ag Equipment Intelligence January 2015

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

Pr/BusselFarm Commodity Prices

Corn Soybeans

0%

20%

40%

60%

80%

100%

2007 2008 2009 2010 2011 2012 2013 2014E

Global Ag Machinery Production

Europe Americas Asia Rest of the World

Page 8: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Year over year U.S. construction spending rose from one year ago

Private construction spending for resi and no-resi buildings continue to carry the industry

Larger construction equipment used for highways and infrastructure are slow to recover

Mining remains weak with commodity prices low

Strong U.S. dollar

8

Earthmoving / Construction Drivers Earthmover/Construction Drivers in 2014

Source: Caterpillar website, US Consensus Bureau

$200

$450

$700

$950

$1,200

U.S. Construction Spending

Private Public

Ubillion

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%Asia/Pacific EAME Lat Am N Am World

Cat Retail Machine Sales

Page 9: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Why Titan?

Page 10: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Our Global Footprint

Page 11: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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The Titan Advantage

* MTD Jan 2014; all other market share figures are approximate/estimated

TIRES WHEELS UNDER-

CARRIAGE SERVICE CENTERS

RECLAMATION

Page 12: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

TITAN INTERNATIONAL PROVIDES THE TOTAL SYSTEM.

LSW (Low Sidewall) tire/wheel systems feature a larger rim diameter and smaller tire sidewall

Today’s equipment is getting larger and more powerful. This design offers: smoother ride,

improved stability, speed/fuel efficiencies, increase in operator safety.

12

TTRC-Recycling venture

10 year agreement with Suncor to recycle used tires

Oil, Carbon black and steel reclaimed

First location, Fort McMurray, Canada to be in operation in 2015

Simplified design

Ease of wheel offset changes

Superior durability and long-term reliability

Reduced wheel wobble and hop

Innovation

technology

Waffle Wheel

Visit: lswadvantage.com

Page 13: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

“ONE TITAN”

• Maximize collaboration between wheel and tire business units to accelerate market penetration

• Exercise one common strategy across company divisions

WHEEL/TIRE

SYSTEM

ADVANTAGE

•Exploit our competitive advantage as the only wheel/tire assembly solution provider in North America

•Accelerating adoption of our unique “system” solution “One stop” supplier

PROFIT

OPTIMIZATION

•Measure, Evaluate and drive Net Economic Profit

•Align investments with “One Titan” strategy

•Drive decision making through detailed understanding of “Cost to Serve”

2014/15 Objectives

13

= INCREASE SHAREHOLDER VALUE

Page 14: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Financial Performance

Page 15: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Significant headcount reduction

Established a profit optimization framework whereby executive team identified key initiatives for immediate focus in 2H 2014

Introduction of EVA (Economic Value Added) performance management framework

Traction on LSW receptiveness

15

2014 Highlights

Accomplishments

Challenges

Large Ag products (higher ASP and margin) are in a downward cycle after 3 robust years

Weak mining market conditions which Impacts-North American, ITM and Australia business units

Impairment recorded of $23.2M on mining equipment and inventory writedowns of $18.2M

Inventory destocking and pricing pressures for EMC product continues

Russia contributed $86.4M in sales with no profit flow through

Raw material prices declined thus price concessions were passed through

Goodwill impairment of $36.6M impacting each segment

Page 16: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Financial Summary (M$)

(Amounts in millions)

2011 2012

2013 2014

Sales $1,487.0 $1,820.7 $2,163.6 $1,895.5

Gross Margin $232.1 $294.2 $295.2 $140.6

Gross Margin % 15.6% 16.2% 13.6% 7.4%

Adjusted Net Income $75.8 $101.2 $46.0 $(17.6)

Adjusted EPS – Diluted $1.51 $1.93 $0.82 $(0.33)

Note: Net Income and EPS adjusted for Currency Exchange, Noncontrolling Interest, and non GAAP items.

$1,487 $1,821 $2,164 $1,896

8.9%

9.6% 4.7%

-5.2%-10%

0%

10%

20%

$0

$1,000

$2,000

$3,000

2011 2012 2013 2014

Sales Operating Income

Page 17: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Adjusted Income

17

Page 18: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Adjusted EBITDA

18

Page 19: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Sales and Gross Margin by Market ($M)

Note: Consumer sales shown post the Latin American farm/;consumer plant acquisiton (April 2011)

Net Sales: Down (14%) ‘14 vs. ‘13

Volume on Large Ag in a cyclical downturn

Lower OEM demand for products

Russia Ag revenue contribution = $71M

AG

54%

Net Sales: Up 15% ‘14 vs. ‘13

New sales in Russia and Titan Europe increased brake sales

Volume increase of 14% offset partially by FX devaluation of (8%)

Consumer

14%

EMC

32%

Net Sales: Down (18%) ‘14 vs. ‘13

Super Giant Mining tires down ($88M) YoY

Mining equipment impairment and inventory write-down of $39.9M

$961$1,080

$1,182$1,017

18% 19% 17%13%

$0

$200

$400

$600

$800

$1, 000

$1, 200

$1, 400

-4%

6%

16%

26%

36%

46%

56%

66%

2011 2012 2013 2014

$307

$502

$749

$611

13%

15% 11%

-1%

$0

$100

$200

$300

$400

$500

$600

$700

$800

-15%

-5%

5%

15%

25%

35%

45%

55%

65%

75%

2011 2012 2013 2014

$219$239 $232

$268

9% 7% 7% 6%

$0

$50

$100

$150

$200

$250

$300

-2%

8%

18%

28%

38%

48%

58%

68%

78%

2011 2012 2013 2014

Page 20: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

$1,487$1,821

$2,164$1,896

$0

$1,000

$2,000

$3,000

2011 2012 2013 2014

SalesIn millions

Titan performance: 2011-2014

20

$397

$632$798

$590

$0

$500

$1,000

2011 2012 2013 2014

Shareholder EquityIn millions

$184$244

$197

$86

$0

$100

$200

$300

2011 2012 2013 2014

Adjusted EBITDAIn millions

50% domestic;

50% International

Page 21: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

APPENDIX

Page 22: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Sales – North America vs. International

22

Page 23: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Working Capital

23

Page 24: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Cash Activity

24

Page 25: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Debt Structure

25

Page 26: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

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Cost Structure

Raw

Materials

55%

Overhead

25%

Labor

20%

Primary Raw Materials Cost Structure Breakdown

Steel

Natural Rubber

Synthetic Rubber

Carbon Black

Nylon

Page 27: PowerPoint Presentation · PDF file2 Titan International Products Titan Strategy Wheels Undercarriage components (ITM) To become the worldwide leader in manufacturing and distribution

Company Website:

www.titan-intl.com

Investor Relations [email protected]

27

SAFE HARBOR STATEMENT: The accompanying material includes forward-looking comments and information concerning the company’s expectations and objectives for the future. Readers of this material should understand that these forward looking statements are based on the Company’s expectations and subject to a number of risks and uncertainties, certain of which are beyond the Company’s control. Actual results may differ materially from those projected in these forward looking statements as a result of certain factors which are contained in the Company’s most recent 10K filing. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this document will in fact transpire.