Certainly, yeah, we live off-road. We make the wheels, tires, and the steel tracks that make off-road equipment move. We do it in the broadest, most diverse portfolio of really anybody that's in this industry. So we touch small pieces of equipment, turf, recreational vehicles, kind of move up the ladder into small ag, and then obviously touch large ag extensively. And we do that as well in off-road construction equipment and industrial equipment, earthmoving. So our approach to the world is we need to make everything that is off-road for our customers. And so, again, you'll hear this frequently, is we're gonna talk about our the depth of our portfolio, but we also have really good, diverse manufacturing.
So if you think about some of these large pieces of equipment that our wheels, tires, and tracks are going on, we have a really strong regional footprint that is designed to service our customers in an efficient manner. So, we do touch just about all parts of the world. And with that, we have a very diverse base of customers, both OEM and aftermarket dealers.
Great. So you recently announced some leadership changes in which David Martin, who was the CFO, was appointed Chief Transformation Officer, and Tony Eheli, former Chief Accounting Officer, was appointed CFO. Can you talk a little bit more about the change and specifically what David's new role will be?
Yeah, absolutely. But it's a great opportunity for Titan. So if you think a company like us, when you have the strong team, and you're able to make a change like that, I would say that's not the norm. You know, you would typically have to go outside the company, especially if you're looking for a CTO, looking for a CFO. But at Titan, we've built a great team, and so as we're looking at where the world is moving, with technology, David's been involved with technology, and I've been getting involved with AI, as most CEOs have been.
Just looking at the needs of continuing to grow and develop beyond just your standard operational systems and see where this new frontier is going, we needed to add some, you know, resource to do that. And so looking at Tony and with his incredible background that he came to Titan with, how much he's developed over the four or five years that he's been at Titan, we just had a great opportunity to put Tony into a role that he is very suitable and prepared to tackle. And then put David in a role where we can really jump into this new frontier. So we're shifting how we approach technology. Again, nothing different than what you're reading about with most companies, but you gotta have the people. That's...
You can, you can read about it, you can talk about it, but if you don't have the resources to execute, then you're just, you're just dreaming. We're really putting David into a role where he, he's gonna be focused on how we, how we drive AI innovation, and that could be anywhere. You know, what we've already learned, you know, David and I have learned, is that this AI, when you look at it from an agentic standpoint, it, it's gonna be a good fit for companies like Titan. You know, we're not, you know, you know, we're not a 10-billion-dollar company where we can just go do massive implementations.
When we do implementations, they're very disruptive, and I like what agentic AI does for companies like Titan, where you can be more precise and tailor more to your needs. And so, I'm really excited about where we're going with that and obviously really thrilled for Tony to get an opportunity to get promoted in the CFO role. He's a great fit, and I've already been working closely with him, so I don't need to say that, but I'm positive the investor community will enjoy working with Tony as well.
Great. Now, in your investor materials and in the logo behind you, you explain Titan as a one-stop shop. You know, can you help explain that term a bit? Why is that important to your customers and investors?
It just sounds cool, doesn't it? Now, what is good about the one-stop shop tagline is it didn't we didn't invent it with marketing. Like, we didn't sit in a room and go: All right, we need something that, all kidding aside, sounds cool. It really developed because it's who we are. And as we have seen our company evolve, and again, in this diverse set of customers and pieces of equipment that we're servicing around the world, Titan has really developed an agile organization, where we are committed to servicing our customers' needs. And they are deep and diverse. You know, if you look at just a typical large farm, they have about 350-400 different tires they use, on a farm.
So, you know, again, if you're not familiar with our space, just imagine every piece of equipment having a different wheel that's customized to them, and then having different tires based upon obviously the size of the equipment, but also the application-
... and the needs of what they're trying to accomplish. And so, we've been operating in that environment for a long time, but we've been doing that more tailored towards the OEM. So if you look back Titan, 10, 15 years ago, it was heavily OEM-based. A great advantage, not saying it's not, with the wheels and the tires and the products that we make, you know, kind of being able to service the needs of the OEMs. But when we launched LSW, we really tailored LSW towards going out to the farmers, understanding how LSW can help them, how it can make their equipment perform better, and we developed a deeper relationship with our dealers, with the end users.
Over the years, we've been moving towards, okay, how do we just become a one-stop shop where we can just take care of our customers' needs, whatever they are? That's where it starts, and then we bring it back to our manufacturing. And then this really accelerated when we brought Carlstar on. But, it's already been two years ago. They have the same things that Titan was built on, very diverse product portfolio, servicing diverse base of customers, but they did it in different products than what we had. So it was a really good symmetrical fit between the two companies. And from that standpoint then, we just saw our company really latch onto the tagline.
It's: We're a one-stop shop. Whatever you could have a little grass mowing company, commercial grass mowing company, lawn care company, or you could be a construction operator or a large wholesale farm, and we can service your needs, whatever they may be. So, again, it's something that really came to life as, you know, not just a tagline, but really who we are.
Okay, thanks for that. Now, since you mentioned LSW, our low sidewall tires, that product, and you've talked extensively about this in the past in your marketing and your investor materials. Can you tell the audience a bit about this product, and give us an update on how your expansion strategy is going with LSWs?
Yeah. Yeah, it's something that took a number of years to get going, you know, really going back to, you know, some efforts that our chairman had put into developing LSW. Cause he knew the concept would work because all you have to do is look at your pickup trucks, your SUVs, everything that we drive on road, and just see how the wheels and tires have evolved through the years. You know, go back to the 1970s, 1980s, and you're gonna see a small wheel and a big sidewall on the tires. And obviously, now if you walk out and look, you're gonna see a very small sidewall. And so that's why we drive SUVs today. If we didn't, your head would be bouncing, hitting the ceiling as you went down the road.
It used to be fine because trucks were used for mainly construction site purposes, not on-road, family-driven vehicles. So we understood the concept from what we'd seen on road, and being the only wheel tire manufacturer in the space with the capabilities to bring something like LSW to the market. We believe strongly in the concept. Now, getting the changes into the marketplace, kind of going back to what I was talking about earlier with the one-stop shop, took a lot of effort, and that's where we developed the expertise on how to go to the market differently, work with the end users, work with the dealers, even the equipment dealers and say: Look, we have this product to make your equipment perform better. It's an absolute win-win all around.
You're gonna not get just better performance, you're gonna reduce soil compaction, which is gonna be incredibly important to the longevity and the health of your fields. But guess what? You're gonna get better yields, and you're gonna get improved fuel efficiency. So it checks all the boxes from a performance standpoint. And you know, what we have been able to do through the years has really been you know quite impressive because it's again a tool. It's a tool that makes equipment perform better. Just envision a tire that's five-foot wide and going on the world's largest agricultural equipment, but you can run it as low as 12, maybe even 10, but kind of 12-14 PSI.
So if you think about most of our tires that we're driving right now, today, you're gonna be 35 up to low 40s PSI. But when you drop it down to that, that 10, 12, 14 range, that's where you get the benefit. You get a wider footprint, the tire can handle any conditions you throw at it, and you're gonna minimize that soil compaction. And so, it's incredible what it's been able to do for improving equipment. And one of the things we've recently learned, and kind of going to your next question, part of your question about how we continue to market it, is one of the things we've recently learned, again, from a farmer that's using LSW. This is not Titan-based study, but he's a...
He contracts farming from a number of different pieces of property, and he sent us some data last year, where it shows every time you turn a piece of equipment using LSW, it improves the yields every place you turn. So in essence, you're putting money in your pocket, and the improvements were over 30% everywhere you turn. Large farms, where LSWs typically have been geared, clearly have fewer turns, but what that does is it changes the economics for the smaller, mid-sized farms. Getting into a new set of LSWs, the economics greatly improved because clearly they're gonna have pieces of property that require more turns. If you can save 30% yields, the payback on LSW is obviously much, much better because of that new data.
One of our priorities for this year is getting out there and marketing that. Farmers are not easy to market to. Generational-type businesses, where they feel like they know a lot because they've been doing it a long time, can be difficult, especially when you have multiple generations involved. I think the younger farmers, it's much easier to target with LSW. If you're multi-generational farmer and you got a grandpa watching over your shoulders, he looks at these five-foot-wide tires and go: Why do we need those things? You know, I think again, we're just... For us, the future's gonna be, how do we continue to market LSWs better?
This new information on the yields with every turn as you go through that turning cycle is gonna be something that Titan's really gotta push this year.
Great. Let's switch gears for a second and talk about tariffs. You've previously stated that tariffs should be a net benefit to Titan. Now, we're nearly a year into this. Can you provide an update to how you have seen that playing out so far? What has the competitive reaction been?
It's kind of a few different ways to answer that question. I mean, the emotional net benefit is there. I'll start there. You know, we're a company that has gone before the International Trade Commission, three separate times, and we've won unanimously the two that I've been involved with... and the challenge we have is that when you win unanimously, you go in front of the International Trade Commission. Again, it's five judges, who listen to testimony both from us and the defendant companies. And the judges ruled again unanimously that Titan was being harmed. I would say other people in our industry, but Titan brought the lawsuit, so, but Titan was being harmed. The problem we had in the past is the Commerce Department then sets the rate.
You have no idea how the rate gets set. It's done in a corner. You don't have access to anybody. And I didn't have a lot of confidence in the U.S. Commerce Department, you know, and I'll say that specifically from what I learned going through this twice. And the emotional benefit that I saw immediately from the tariff action by the administration is at least they're recognizing what we already knew, that the world is not a fair place. It's that simple. I mean, again, you can't argue with what I just told you from that standpoint, because we've been in front of the International Trade Commission. This isn't propaganda. This is, you know, this is again, rulings that, you know, I've read the judge's opinions, and that's what they said.
So for me, I thought it was very positive for Titan, that at least we now have somebody recognizing that there is, there is things going on, and I could elaborate on that for 30 minutes. I won't. I'll stop there. The challenge is on the financial side, I mean, we've all seen tariffs are horribly messy. You know, the execution or the implementation of them, you know, drawing them on a whiteboard, then erasing them, then changing them, then doing, you know, this week is that, then finally the week is something different. That's not good for any company. So I think what we look forward to getting the financial benefit from tariffs is gonna be when the world stabilizes around what the tariff policy is.
You know, competitively, to answer your question on that, Joe, it's difficult to answer 'cause every competitor approaches it differently. You know, some of our competitors are getting government assistance to say: Look, we're gonna outwait. We're just gonna wait out the administration. If the administration doesn't know what they're doing, then why overreact to. Or I shouldn't say, not what they're doing. If the administration's gonna keep changing tariffs, then why react to every change? And so we have some competitors that simply haven't reacted to tariffs. They, whatever they're doing on their side to absorb the cost, I have no idea. I could speculate.
I do know some governments have stepped in and said: Okay, we'll help you offset some of that. But for us, I mean, I think just stability around tariffs is what we're waiting for. So I think the emotional side's definitely positive. I mean, the tariffs are recognizing a problem that exists. And I think the financial side, Joe, it can't hurt us, right? That's kind of the way I approach it. I look at 2025, we had some challenges because there was a lot of inventory shipped to the U.S. This is not just Titan. This is all companies that have to deal with a lot of inventory was shipped in pre-tariffs, and I think we've worked our way through that.
You know, I look forward to a day when the administration gets their arms around having a consistent policy and really sticking to it. You know, as business leaders, uncertainty is a challenge we're all facing, but we can't keep having uncertainty around tariffs. We got to get a policy and stick to it.
Right. Thanks for that insight. From a supply chain perspective, we know that you manufacture products across the globe, but you've also supplemented that manufacturing with third-party and joint venture source products. Can you help explain that strategy for us?
Yeah. Yeah, it goes back to that one-stop shop. And, again, things that have evolved through the years that we're really seeing materialize now and talking about it more publicly. So these aren't something that we just started, something we've been working on, but we got to take care of our customers. Whatever needs they have, we need to find a way to solve it and meet them. And so what we have done is utilize joint ventures. We have a really nice one in China we've been using, in Brazil, have one in the European area, but supplemented as well with third-party contract manufacturers. And the reason being is we can't develop everything on our own.
We can't constantly be doing changeovers, mold changes, all the production scheduling around, shifting the schedules to meet the needs of the customers. It's inefficient for us. But if we can find the right partners who we work with, when we put our name behind a product, it's not just slapping it on there and saying: Here it is. When we put it through our distribution channels, when we get involved, that means we're signing off on the technical capabilities, the performance, but also the quality, and we stand behind it. So we treat the product like it's one of our own.
And again, going back to that one-stop shop concept, we are here to meet the needs of the customers, and this is an efficient, more efficient, effective way to do that. So we're constantly gonna be looking at, do we rely on a JV partner? Do we rely on a contract manufacturer? Do we produce it ourselves on a regular basis? And we need to move quick. We got to be agile. I think we're doing a really good job with it.
But to be a one-stop shop, if you're gonna live up to it and to be agile, which is needed in today's world, you can't manufacture everything on your own, because, again, that diverse product portfolio, it's in the hundreds of different products we produce every single day at most of our plants around the world. And so I'm trying to articulate that in a way for investors without complaining about it, because it's our strength. It's what makes us who we are. But there's just that balance between keeping your plants efficient and overdoing your production schedules and your changeovers, trying to service the needs of that diverse customer base and product portfolio.
... Great! Now, we're clearly in an extended down cycle across Titan's three segments. Can you dive in a bit into each of those three segments? Any hope for a market turnaround? You know, where do we see things currently, and what further spark would be needed to get these segments back to more mid-cycle levels?
It's—boy, ag has been a wild ride. For us, it's been this inventory balancing issue as well, whether it's equipment with the dealers, whether it's wheels and tires with the OEMs, a number of different factors. And so, as we talk about this, it can seem overly complex. But I think a simple way to look at it is I think inventories are getting more balanced, and so we've seen some customers come to us throughout 2025 and put in drop-in orders because they need to get inventory balanced again. So that's a positive sign, and I think as the market is at least remaining flat in certain parts of ag.
We've seen some positive signs with one, our channel's managing inventory better, and two, again, drop in orders have been very beneficial for Titan. You know, as we look at 2026, you know, the small ag side of the business is performing better. We do really like small ag. We have the capabilities to service small ag, but with what we do with wheels and tires and our ability to put them together as an assembly for that market space, the small ag has been a strong part of our business. And so we've seen improvements in that side of the business. Think that's gonna continue, you know, throughout, you know, throughout 2026. Brazil had a good 2025 and is holding up pretty solid as we go into 2026.
But then, you know, the story is large ag, and that's what gets all the media attention. That's clearly, you know, when you look at that—when you look at the dollars because of the size of the equipment, that gets more attention. But, you know, I think for large ag, you know, what it's gonna take to turn it around, I think, you know, the government's gonna have to realize they got to pay attention to farmers. You know, and I think that's—we're seeing that with Secretary Vilsack, with the comments. I hate to, I hate to say I'm relying on government. That's why I paused. I wasn't thinking of what to say. It's just a weird comment to make.
But, I do think the government has to realize how important the farmers are to, you know, really to society. And I think Secretary Vilsack has been really strong with his comments about protecting the farmer. I think Trump has made some positive signals as well. But at the end of the day, there's these, you know, the input costs are still high. The global demand is difficult to assess relative by region. Is China buying more? Is China not buying enough? You know, Brazil's obviously been pumping a lot into the global commodity, and yields have been good. So, to answer your question, what does it take? I think eventually you're gonna see some more balancing between supply and demand. I think yields every year, we've had perfect weather for five years.
Yields have been really high. You can't always assume that. You got to be prepared for some disruptions, but I think the government's just got to realize that they got to stay attuned to the farmers' needs. You can't lose $85 an acre planting and harvesting soybeans. And so, I like what Secretary Vilsack's been saying. I think that's a good positive. It's on their radar. So I would believe the administration is not just gonna turn their back on it with the public comments they've been making. And so, you know, again, we look at ag globally. I think Europe is holding up better, as well. They don't go through as many peaks and valleys.
Our Brazilian team is really strong in that marketplace, and so things are, you know, we're benefiting from what's going on in Brazil. But clearly here in America, everybody looks at U.S. large ag. And, you know, again, I think it's gonna take some involvement by the administration to make sure we get the farmer in a good position for 2026 and beyond.
Okay. Can you-
Construction, which I will talk one. Sorry, Joe, one quick comment. I mean, construction is. We're seeing some good signals in construction. Down in Brazil, we're doing really well. Construction's doing very well in parts that we serve. Again, my comments maybe are totally broad because we have, you know, some niche areas we play in construction. You know, I think the only thing on our radar now right now with construction is some of the German OEMs. Great customers, long-term customers, but they're facing some, you know, some forecasting difficulties for 2026 is trying to understand the market. But overall construction, you know, Australia, Brazil, U.S., you know, throughout parts of Europe, we see moving in a good place. And consumer is holding up.
It's a good part of our business as well. It's holding up. I think the equipment we put out there is a good mix between, you know, commercial applications and recreational. So, what we need to do with the recreational is continue to innovate, continue to put new products out there that are desirable for the customers, and we got some great ones coming out that, you know, I think will put us in a really good position for the consumer base. I think that's an area with Carlstar and Titan coming together, further integration. You know, one of the things David did and is gonna work with the Carlstar team and the leadership team there, as well as how do we continue to grow in that consumer division through innovation?
So I think there's some opportunities there, more specific to Titan, but you know, we'll see. You know, we got to be agile, we got to adjust to whatever the markets are, and I think our team's done a good job in 2025 doing that, and we got to continue to do that in 2026.
Okay. We're getting a little bit short on time, but I do want to get this one in. Can you discuss the capital allocation strategy, kind of on your short-term thoughts and your longer-term thoughts?
Yeah. I mean, it's something that Tony and I, you know, hit the ground running pretty strong to start this year is, you know, safety, environmental, maintenance, are key, obviously, as a global manufacturer. That's a big part of our, you know, capital allocation. We will continue to invest in product development. That has always been something, good times or bad, Titan always continues to invest in product development, so that's inherent in our culture. If we're gonna be that one-stop shop, meeting the needs of the customer base, then we certainly gotta continue to invest there, and we will. But beyond that, we are focused on, okay, so let's say large ag stays, you know, down through the first half of this year.
I know some of the reports coming out are talking about it being beyond first half of this year. I don't know, not gonna guess, but you know, I think for us, we start seeing an uptick in production before, obviously, the equipment gets sold. So, I'll only kind of comment through the first half of the year, but we know the first half of the year with large ag is still continuing to be in a tough place, and so we gotta be very disciplined with our balance sheet, and I think we've done a very good job with that. And so, you know, as we look at our capital allocation, it. You know, the discipline towards the balance sheet is a top priority.
You know, Tony is doing a great job, you know, making our team aware of that, and, you know, we will continue to do that. So, you know, our balance sheet's in a good position, you know. So the markets have been tough, and so I think companies, small cap companies like Titan that, you know, try to service a global market, I think we're set up very well. Again, a lot of diverse products, diverse customer base, and a good balance sheet. So, you know, small cap companies going through the couple years of a downturn like we have with our primary segment in ag, to still have a strong balance sheet is a sign of strength for Titan.
You know, we could keep doing what we're doing, be agile, invest in new product development. We'll be very well positioned when the market gets better, but we're gonna have a very strong, disciplined approach to capital allocation, certainly through the first half of this year.
Great! Well, Paul, we covered a lot of ground today and got significant insight into what Titan does, its markets, and opportunities. We appreciate you taking the time to do this fireside chat, and we wish you and the company the best in the future. Again, thank you.
No, appreciate it, everybody. Again, if you have any follow-up questions with Titan, reach out to Anna Snyder, Tony, myself, and we'd love to follow up with you. But Joe, again, thanks for the opportunity.
Thanks.