Off Highway Tires

North American Tire & Retread ExpoNew Orleans, Louisiana

April 16, 2015

Agenda

OHT Market Size and Breakdown

Some observations on main relevant sectors

Thoughts on what’s coming down the pike….

A Little Bit About Me…

Some OFF HIGHWAY TIRE observations…

• Great People• Cool Products, cool machines• End users appreciate value!• It’s a relationship business.

OHT Business Good Size

• Big enough to grow in and to make money.

• Small enough to be involved and make an impact.

OTR vs. OHT??

Forestry Mining / Earthmover

Construction

8

Segments of OHT Market

Agriculture

126

14

Above OHT market size excludes solid tire, racing tires and aircraft tire.

Source: Annual reports; Global Tire Report from Rubbernews.com

Global OHT Tire Market ~$14B!

OHT Market

Other Markets

14

Above OHT market size excludes solid tire, racing tires and aircraft tire.

Source: Annual reports; Global Tire Report from Rubbernews.com

Global OHT Market

OHT Market

OEM

Aftermarket / Replacement

29%

71%

Chart Title

Series1

14

Above OHT market size excludes solid tire, racing tires and aircraft tire.

Source: Annual reports; Global Tire Report from Rubbernews.com

Global OHT Market

OHT Market

34%

28%

38%

Chart Title

EuropeROW

North America

Global Market Breakdown

Agricul-ture

- 47%

Con-struction

26%

Forestry - 3%

Mining/EM 23%

North American OHT Market

Con-struction 26.0

%

Agricul-ture

- 39.3

%

Mining /EM 29.4

%

Forestry 5.3%

Mining

Mining….

“It was the best of times….it was the worst of times” Charles Dickens, A Tale of Two Cities

Mining….

• Highly specialized• Very regionalized• Cost of failure very high• High cost to serve

Mining Pockets of Opportunity

• Underground mining

• Sand and Gravel

Agriculture

THEIKPSOIUPRTE

AG vs. Mining

Agriculture

• Also specialized and regional

• But not as much as mining

• Farms in every state….opportunities unless you are an urban dealer

Farmers Very Tech Savvy

• Farmers research EVERYTHING online before buying

• Make sure your website is easy to find and easy to use.

GPS Guided Farming!

Heavy Users of Social Media

Productivity Driven….

Not Just Tractors….

Segment break-up of OHT market

Key OHT Segments

Agriculture

Forestry Mining Construction

Construction

Construction is Booming

• 2014 machinery sales up 8.7%

• 2015 forecasted to be even higher 8.9%

• 2016-2019 looking strong with CAGR of 4.5% or higher

Growth is Across the Board

• 2015 Single Family Housing Forecasted to be up 15% over 2014

• Commercial Building also forecasted in the 15% range

• Construction is EVERYWHERE….not just in Southeast or West.

• Not just suburbs as in past. INFILL in cities, led by millennials, driving urban construction

Construction Equipment

70% Of All OTR Tires 24”-25”

13.00-2414.00-2415.5-2517.5-2520.5-2523.5-2525.5-2529.5-25

OTR Segment Offers Greatest Short Term Opportunity

• You don’t have to be an OTR dealer to participate.

• Any commercial dealer, with a lift gate truck, can handle majority of tire sizes used on construction and industrial machines

Go Where the Numbers Are….• 800,000+ Skid Steers in

the USA alone• 600,000 on tires• 2.4 MILLION SS Tires in

the field right now• Severe use. High scrub

rate. Wear out fast• Limited sizes to

inventory10-16.512-16.5

Rental Companies Are Hot…

Rentals Are Hot!

• Over 50% of 2014 new equipment purchased by rental companies

• Trend forecasted to be even higher 2015-2019

• Driven by continuing uncertainty

• Users increasingly deploying specialized equipment for specialized jobs. More economical to rent than own

• Uncertainty over long term Federal Highway Bill

So What?

• Do not ignore the rental fleets• They are growing fast• Get to know local people at rental company

branch locations• United Rentals• Sunbelt• Cat Equipment• Etc.• They are everywhere. In all markets.

Where to Look….

Forestry

OHT…It’s a Dealer’s World.

• OTR Users Need Dealer Service and Value their servicing dealer

• You offer what manufacturers do not:

• 24 Hour emergency service• Inventory close at hand. • Trained technicians/OSHA certified• Data driven recommendations to

help lower production costs/reduce downtime

It’s All About Productivity & Cost

• No one cares about tires except for those of us in this room!

• Customers only care about lowering their production costs and improving productivity

• If this could occur through some new, disruptive technology, we’d be out of business

Good News…You are the Critical Link!

• Right service partner is still the critical link in making everything work

• Right tire recommendation• Right service offerings• You are in the driver’s seat. Customer

appreciates what you can do for him more than the brand of the tire.

• You can recommend the right bundle of products and services that you feel will help your customer best.

Majors De-Focused

• Pirelli spins off AG tire business to Trelleborg

• Goodyear spins off AG business to Titan

• Continental spins off OTR business in U.S. to Titan

• Conti spins off AG business in Europe to Mitas

It will be a buyer’s market

You Will Have Even More Choices in the Future….

Emerging Players starting to challenge the global giants

Emerging players more sophisticated

Choose Wisely….