CITI’S TAKE
We lower FY ’26 EBITDA -10% to $367mm reflecting weaker demand (especially in FL resi), weather, unplanned downtime & higher diesel costs; our est. are now slightly above the midpoint of the updated FY ’26 guide for sales (+5.9% vs +MSD%) & EBITDA margin (20.8%, or -260bp Y/Y vs -250-300bp guide). With weak pricing for Cement (-1.7% in 3Q) & Aggs (-1.0%) TTAM has sent out Jan 1 pricing notices (Cement +$12/ton, +HSD%; RMC +$15/cyd, +HSD%; Aggs $3/ton, +DD%) which we expect to see partial realization given cost support from raws/diesel. TTAM should drive margin upside with Keystone synergies, although the health of ready-mix customers and FL housing will be key in ‘27. TTAM echoed homebuilder reports of a sharp pullback in Sept/Oct but also noted abnormal FL weather (30-year rainfall impacted 3Q). Applying a 8.5x NTM EBITDA multiple (lowered from 9.5x on weaker resi), our target moves to $15.
Company description
Titan America (TTAM) is a leading vertically integrated, multi-regional manufacturer and supplier of heavy building materials and services operating primarily on the Eastern Seaboard of the United States. The company manufactures and sells Cement and Ready-mix Concrete, as well as construction Aggregates, Concrete Block and Fly Ash. TTAM operates 2 Cement plants, 3 Cement import terminals, more than 80 Ready-mix plants, 7 quarries, 8 Concrete Block plants, and 2 Fly Ash plants. The company employs more than 2,600 associates across its expansive production and distribution network. The company operates two regional business segments: Florida (59% of ‘25 revenues) and Mid-Atlantic (41%).
Investment strategy
We rate shares of Titan America (TTAM) Buy (1) as the valuation appears favorable relative to fundamentals. We believe TTAM is poised to outperform given: 1) a strong track record supporting an above-industry growth outlook; 2) favorable return metrics vs. peers; 3) an attractive geographic footprint in high growth Florida and Mid-Atlantic markets; and 4) TTAM’s healthy balance sheet provides dry powder for accretive M&A and greenfields.
Valuation
We assign TTAM shares a 12-month target price of $15 based on a target multiple of 8.5x NTM EBITDA, a premium to its current NTM EBITDA multiple (6.0x), and slightly below the peer average of 9-11x.
Risks
This stock screens High Risk based upon our quantitative model (partially due to its status as a new company), but assigning a High Risk rating is not supported by TTAM’s strong operational track record as a part of Titan International and underlying asset quality. Thus, a High Risk rating has not been applied.
Key risks to achieving or surpassing our target price include:
New public company risk – TTAM was spun out from its parent company and majority owner in 2025, with pre-IPO shareholders controlling ~87% of the company. TTAM’s concentrated ownership, small public float, and short history as a publicly traded company adds some risk relative to other public peers.
End market volatility – Residential is 37% of sales, and the housing market can be volatile. The private commercial market has shown mixed trends over the past several years; this represents 45% of sales. Public demand (18% of sales) tends to be more predictable, but can be impacted by funding/bureaucratic delays.
Geographic concentration – While the company’s southeast footprint is favorable given strong pricing and profitability, geographic concentration introduces some risk. Both the Mid-Atlantic and Florida can be impacted by severe weather; for example, Hurricane Helene in 2024 was significantly disruptive to operations.
Operational risk – The company is investing to improve operational performance and add production capacity; if these investments fail to meet expectations, TTAM shares could be impacted.
M&A risk – While M&A is not core to TTAM’s strategy, the company’s earnings profile could be adversely impacted if the company encounters delays, integration issues, or funding challenges when engaging in M&A or greenfield projects.
Lastly, a number of quantitative factors could cause downward deviations from our target price, including the cyclicality/seasonality of earnings, stock price volatility, and debt ratings.
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