READ THE FULL TWI RESEARCH REPORT
2nd Quarter 2025 Financial Results
Titan International (NYSE:TWI) continues to effectively manage global macroeconomic challenges such as tariff risks and interest rates that remain at stubbornly high rates. During the quarter, the company was able to improve gross margins and EBITDA margins in each segment on a sequential basis. The company remains confident that wheel and tire inventories throughout the chain are reaching low enough levels where order increases may be coming this year.
In the 2nd quarter of 2025, adjusted EBITDA was $30.1 million compared to $30.8 million in the 1st quarter of 2025.
Net sales for the 2nd quarter of 2025 were $460.8 million, compared to $490.7 million in the 1st quarter of 2025. The company continues to experience a slowdown in the Ag and EMC segments, and also saw substantial sales declines in its Consumer segment.
Gross profit in the 2nd quarter was $69.3 million (15.0% gross margin), compared to gross profit of $80.5 million (15.1% gross margin) in the prior year period. The 2nd quarter gross margin improved from the 1st quarter of 2025, which was 14.0%. The declines in gross profit were primarily due to significantly lower volumes that affected fixed cost leverage across most of the company’s global production facilities.
Operating Income for the 2nd quarter was $10.2 million, compared to operating income of $11.8 million In the 1st quarter of 2025. The decline was due to high inflationary costs and higher employee costs.
The company continues to maintain a safe and liquid balance sheet with cash of $184.7 million and total debt of $585.7 million as of 6/30/25. Working capital was net positive at $594.6 million at the end of the quarter. The trailing 12-month leverage ratio at quarter-end was 4.4x. We believe this may be the peak leverage ratio as we expect positive free cash flow for the rest of 2025.
Segment Results
The Agricultural segment showed a sales decline of 10.7% with sales of $193.2 million compared to $216.3 million in the prior year period. The decline in sales was primarily driven by a big reduction in global demand for agricultural equipment, particularly in North America and Europe. This was caused by lower farm income, higher financing costs, and inventory reduction efforts by OEM customers. Agricultural gross profits declined to $28.3 million from $32.2 million, and gross margins decreased to 14.6% from 14.9%. However, gross margins increased sequentially from 12.4% in the 1st quarter of 2025.
The Earthmoving/Construction segment generated revenues of $152.4 million, which was a decrease of 8.0% from $165.6 million in the prior year period. The sales decline was primarily due to lower sales volumes in North America and the undercarriage business, which reflects a slowdown in demand from construction OEM customers. Gross profits declined to $17.5 million from $21.3 million in the prior year period. Gross margins deteriorated to 11.5% from 12.9% in the prior year period. However, gross margins increased sequentially from 10.4% in the 1st quarter of 2025.
The Consumer segment generated revenues of $115.3 million which was a decrease of 23.3% when compared to $150.7 million in the prior year period. The decline was primarily due to the impact of tariffs in the Titan Specialty business, which caused a slowdown that the company anticipates will be temporary. Also contributing were lower sales volumes in the Americas region of the legacy Titan business, which reflects challenging market conditions and reduced demand from OEM customers due to economic pressures such as inflation and higher financing costs. The company indicated they have seen a rebound in the Consumer segment in July 2025. Gross profits declined to $23.5 million from $26.8 million in the prior year period. Gross margins increased to 20.4% from 17.9% in the prior year period. However, gross margins increased sequentially from 19.4% in the 1st quarter of 2025.
Management Commentary
Paul Reitz, President and Chief Executive Officer, stated, “Our One Titan team continued to execute, enabling the Company to report revenues and Adjusted EBITDA within our guidance range, as well as positive free cash flow for the quarter. Overall conditions in our end markets are currently defined primarily by the impact of higher interest rates and tariff uncertainty. On a longer-term basis, we are encouraged by the broad support the recently passed legislation included for farmers.”
Mr. Reitz continued, “Among the highlights from our second quarter, we were able to maintain gross and EBITDA margins, which continued to be meaningfully above where they were during the last cyclical trough. We also continued to focus on expanding our reach via our one-stop-shop strategy and our focus on innovation, and we expect those efforts to help drive growth when broad-based industry demand resumes. In the near term, we remain confident that wheel and tire inventories throughout the chain are reaching levels where the only path forward is up. We are well-positioned as a leader in our industry and fully expect to see improving financial results as macro tailwinds begin to emerge.”
Estimates & Update
The company’s effective tax rate has continued to be excessive as a result of generating positive taxable income in most international markets while generating operating losses in the U.S. The consolidated tax rate was approximately 431% in the 2nd quarter of 2025 and we believe the consolidated tax rate will exceed 90% in the remaining 2 quarters of 2025.
We are lowering our estimates slightly based on the business environment mentioned above and management commentary. The company provided preliminary 3rd quarter 2025 guidance, which included revenues between $450 million and $475 million and Adjusted EBITDA between $25 million and $30 million.
We believe the company will generate de minimis net profits over the next 2 quarters of 2025 due to the factors mentioned above. Our EPS estimates are adjusted to ($0.01) for the 3rd quarter of 2025 and ($0.02) for the 4th quarter. We update our 2025 full year EPS estimate to ($0.11) per diluted share. Our 2026 EPS estimate is $0.29. Our 2025 Adjusted EBITDA estimate is approximately $106.3 million.
Valuation
We maintain our price target of $16.00 as the majority of free cash flow used in our DCF calculation occurs in the middle to out years of our 10-year time frame.
The transitory depressed earnings experienced in 2024 and 2025 are not reflective of the steady generation of positive EBITDA and free cash flow that is expected as the cycle turns around. The company has positioned itself in recent years to not only survive cyclical downturns but to also thrive and continue to develop advanced technologies that position them as the industry leader.
The company recently provided a framework for what a normal year could look like financially when a sustained rebound in its end markets happens. Adjusted EBITDA could range between $250-$300 million, and free cash flow of at least $125 million could be generated.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives payments totaling a maximum fee of up to $50,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.
