TITAN INTERNATIONAL INC
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
TWI$4.93+4.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0000899751-24-000056
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0000899751-24-000082
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 142 previous paragraphs and 159 current paragraphs.
97 unchanged; 38 reworded; 24 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
•Uncertainties from political or electoral changes in the United States, Europe and elsewhere;
Current report
•risks related to the Company's previously announced intention to negotiate a possible increase in the amount of the Company's common stock that American Industrial Partners and its affiliates may acquire under the Stockholders Agreement dated February 29, 2024 among the Company, Carlstar Intermediate Holdings I LLC, AIPCF V Feeder CTP Tire, LLC and AIPCF V Feeder C (Cayman), LP;
Current report
Net sales for the three months ended June 30, 2024 were $532.2 million, compared to $481.2 million in the comparable period of 2023. This growth was primarily driven by higher volumes in the consumer segment, bolstered by the net sales contribution from the Carlstar acquisition completed on February 29, 2024. The sales increase was partially offset by reduced sales in the agricultural and earthmoving/construction segments, stemming from weakened global agriculture end customer demand and lower steel prices in Europe. Furthermore, the net sales increase was impacted by negative price effects and an unfavorable currency translation impact of 3.7%.
Current report
Net sales for the six months ended June 30, 2024 were $1,014.4 million, compared to $1,029.8 million in the comparable period of 2023. Net sales change was primarily attributable to lower demand for agriculture and construction equipment, the adverse impact of price, particularly lower steel prices in Europe, as well as a 3.0% unfavorable foreign currency translation effect. The decrease was partially offset by increased sales volumes, resulting from the positive contribution from the Carlstar acquisition.
Current report
Gross profit for the six months ended June 30, 2024 was $157.8 million, or 15.6% of net sales, compared to $181.5 million, or 17.6% of net sales, for the six months ended June 30, 2023. The changes in gross profit and gross margin for six months ended June 30, 2024 as compared to the prior year period were primarily due to lower sales volume, negative price/mix resulting in reduced fixed cost leverage and inventory revaluation step-up of $10.7 million associated with the Carlstar purchase price allocation. Excluding the inventory revaluation step-up, adjusted gross margin for the six months ended June 30, 2024 would have been 16.6% of net sales.
Current report
Selling, general and administrative expenses for the six months ended June 30, 2024 were $91.0 million, or 9.0% of net sales, compared to $69.3 million, or 6.7% of net sales, for the six months ended June 30, 2023. The change in SG&A for the six months ended June 30, 2024 as compared to the prior year period was primarily driven by the continuing SG&A incurred on the Carlstar operations, which includes the management of distribution centers. Additionally, general inflationary cost impacts, such as rising personnel-related expenses, also contributed to the overall increase in SG&A during this period.
Current report
Interest expense was $7.2 million and $5.8 million for the three months ended June 30, 2024 and 2023, respectively, and $12.7 million and $12.3 million for the six months ended June 30, 2024 and 2023.
Current report
The increase in interest expense for the three months ended June 30, 2024 was attributable to a new domestic credit facility, which became effective on February 29, 2024, in connection with the acquisition of Carlstar. This resulted in additional interest expenses being recorded during this period. The higher interest expense for the six months ended June 30, 2024 was also primarily driven by the new domestic credit facility. However, this increase was partially offset by a rise in interest income generated from financial investments in Latin America. These changes in interest expenses reflected the Company's strategic financial decisions and its ongoing efforts to optimize its capital structure and financing activities.
Current report
Foreign Exchange Gain (Loss)
Current report
Other income was $3.3 million for the three months ended June 30, 2024, as compared to other income of $1.2 million in the comparable period of 2023. This change was primarily driven by a gain of $1.9 million from a property insurance settlement, which consisted of insurance proceeds received net of costs incurred to repair one of our operating facilities in Italy.
Current report
Net Income and Earnings per Share
Current report
Net income for the six months ended June 30, 2024 was $13.4 million, compared to net income of $65.3 million in the comparable period of 2023. For the six months ended June 30, 2024 and 2023, basic earnings per share were $0.16 and $0.99, respectively, and diluted earnings per share were $0.16 and $0.98, respectively. The Company's net income and earnings per share changes were due to the items previously discussed.
Current report
Net sales in the agricultural segment were $216.3 million for the three months ended June 30, 2024, as compared to $269.1 million for the comparable period in 2023. The net sales change was primarily attributed to significantly reduced global demand for agricultural equipment, most notably in North America and Brazil. Additionally, an unfavorable impact of foreign currency translation by 5.3% contributed to the change in net sales.
Current report
Gross profit in the agricultural segment was $32.3 million for the three months ended June 30, 2024, as compared to $48.7 million in the comparable period in 2023. The change in gross profit was attributed to the lower sales volume, reduced fixed cost leverage, negative price/mix and higher material costs and inventory revaluation step-up associated with the Carlstar purchase price allocation.
Current report
Gross profit in the agricultural segment was $72.9 million for the six months ended June 30, 2024, as compared to $98.0 million in the comparable period in 2023. The change in gross profit was attributed to the lower sales volume, reduced fixed cost leverage and higher material costs.
Current report
Income from operations in the Company's agricultural segment was $39.8 million for the six months ended June 30, 2024, as compared to income of $64.7 million for the six months ended June 30, 2023. The overall change in income from operations was primarily due to the lower gross profit resulting from the decrease in net sales.
Current report
The Company's earthmoving/construction segment net sales were $165.6 million for the three months ended June 30, 2024, as compared to $174.7 million in the comparable period in 2023. Sales volume was higher during the period driven by increased sales in the undercarriage business and the positive contribution from the Carlstar acquisition. However, this increase was more than offset by the impact of contractual price givebacks resulting from lower raw material costs, particularly lower steel prices in Europe, as well as an unfavorable impact of foreign currency translation by 1.5%.
Current report
Gross profit in the earthmoving/construction segment was $21.3 million for the three months ended June 30, 2024, as compared to $29.1 million for the three months ended June 30, 2023. The change in gross profit was primarily attributed to lower sales volume in North America, and reduced fixed cost leverage.
Current report
Gross profit in the earthmoving/construction segment was $44.3 million for the six months ended June 30, 2024, as compared to $66.3 million for the six months ended June 30, 2023. Similar to the three-month period, the change in gross profit was attributed to lower sales volume, negative/price mix, and reduced fixed cost leverage.
Current report
The Company's earthmoving/construction segment income from operations was $15.9 million for the six months ended June 30, 2024, as compared to $38.1 million for the six months ended June 30, 2023. The change was attributed to lower sales volume and its impact on gross margins.
Current report
Consumer segment net sales were $150.3 million for the three months ended June 30, 2024, as compared to $37.3 million for the three months ended June 30, 2023. This growth was primarily driven by increased sales volumes resulting from the positive impact of the Carlstar acquisition. The increase was partially offset by negative price/product mix and reduced sales volumes in the Americas region due to weaker market conditions.
Current report
Consumer segment income from operations was $6.4 million for the three months ended June 30, 2024, as compared to income of $5.9 million for the three months ended June 30, 2023. The increase was primarily due to increased sales volumes as mentioned above.
Current report
Gross profit from the consumer segment was $40.6 million for the six months ended June 30, 2024, as compared to $17.1 million for the six months ended June 30, 2023. The increase in gross profit was influenced by the Carlstar acquisition. The change in profit margin from 21.1% for the six months ended June 30, 2023 to 17.8% for the six months ended June 30, 2024, was primarily due to the effect of the inventory revaluation step-up of $8.6 million associated with the Carlstar acquisition. The impact of lower sales volume in the Americas on fixed cost leverage was also a driver in the change in profit margin.
Current report
Income from operations on a segment basis did not include unallocated costs of $6.9 million for the three months ended June 30, 2024, and $19.8 million for the six months ended June 30, 2024, as compared to $6.6 million for the three months ended June 30, 2023, and $14.4 million for the six months ended June 30, 2023.
Removed paragraphs (7)
Previous report
Net sales for the three months ended March 31, 2024 were $482.2 million, compared to $548.6 million in the comparable period of 2023. Net sales changes were primarily attributed to the agricultural and earthmoving/construction segments. This was due to a decrease in sales volume caused by lower levels of end customer demand in agricultural and construction equipment globally, with particular economic softness in Brazil. The volume change was positively impacted by the net sales from the Carlstar acquisition in March 2024, subsequent to the acquisition which was consummated on February 29, 2024. It was also negatively impacted by price due to lower raw material and other input costs, most notably steel in Europe, and unfavorable foreign currency translation of 2.3%.
Previous report
Interest expense was $5.5 million and $6.5 million for the three months ended March 31, 2024 and 2023. The change in interest expense for the three months ended March 31, 2024 was attributed to the increase in interest income from financial investments in Latin America and the United States.
Previous report
Foreign Exchange Loss
Previous report
The foreign exchange loss experienced during the three months ended March 31, 2024 was primarily the result of an unfavorable impact of the movement of exchange rates in certain geographies in which we conduct business, particularly in Argentina and Turkey (refer to Note 1 to the consolidated financial statements). Foreign exchange loss experienced during the three months ended March 31, 2023 was primarily the result of an unfavorable impact of the movement of exchange rates in certain geographies in which we conduct business, primarily due to fluctuations in the Euro.
Previous report
Net Income and Income per Share
Previous report
Gross profit in the agricultural segment was $40.6 million for the three months ended March 31, 2024, as compared to $49.3 million in the comparable period in 2023. The change in gross profit was attributed to lower sales volume. The increase in profit margin was due to the measures taken to improve financial performance, along with lower raw material and other input costs, which have helped offset the impact of lower fixed cost leverage.
Previous report
Gross profit in the earthmoving/construction segment was $23.0 million for the three months ended March 31, 2024, as compared to $37.2 million for the three months ended March 31, 2023. The changes in gross profit and margin were primarily attributed to the lower sales volume, which also resulted in lower fixed cost leverage and contractual price givebacks due to lower steel prices particularly in Europe.
Reworded paragraphs (38)
Previous wording
On February 29, 2024, the Company acquired 100% of the equity interests of Carlstar. The agreements associated with the purchase of the equity interests of Carlstar are included in the Exhibits within this Form 10-Q and the Current Report on Form 8-K filed on February 29, 2024. The results of Carlstar's operations are included in our consolidated financial statements since February 29, 2024. Total acquisition-related costs for the three months ended March 31, 2024 were approximately $6.2 million.
Current wording
On February 29, 2024, the Company acquired 100% of the equity interests of Carlstar. The agreements associated with the purchase of the equity interests of Carlstar are included in the Exhibits to our Form 10-Q for the quarter ended March 31, 2024 and the Current Report on Form 8-K filed on February 29, 2024. The results of Carlstar's operations are included in our consolidated financial statements since February 29, 2024. Total acquisition-related costs for the six months ended June 30, 2024 were $6.2 million.
Previous wording
•the effect of a recession on the Company and its customers and suppliers;
Current wording
•the effect of a recession or depression on the Company and its customers and suppliers;
Previous wording
Agriculture-related commodity prices have come off the recent highs reached over the last couple years, however, population growth, farmer income levels and the replacement of an aging large equipment fleet are market conditions which are anticipated to support continued demand for our products in the mid to long term time horizon. The agricultural market is currently experiencing a slowdown in customer demand in the near term, however, the underlying market conditions mentioned previously provide support for the mid to long term demand for our products. Many more variables, including weather, volatility in the price of commodities, grain prices, export markets, foreign currency exchange rates, interest rates, government policies, subsidies, and the demand for used equipment can greatly affect the Company's performance in the agricultural market in a given period.
Current wording
Agriculture-related commodity prices have come off the recent highs reached over the last couple years, however, population growth, a shift in consumer preference towards higher protein diets, and the replacement of an aging large equipment fleet in favor of newer and higher productivity technology, are market conditions which are anticipated to support continued demand for our products in the mid- to long-term time horizon. The agricultural market is currently experiencing a significant slowdown in customer demand, however, the underlying market conditions mentioned previously provide support for the mid- to long-term demand for our products. Many more variables, including weather, volatility in the price of commodities, grain prices, export markets, foreign currency exchange rates, interest rates, government policies, subsidies, and the demand for used equipment can greatly affect the Company's performance in the agricultural market in a given period.
Previous wording
The consumer market consists of several distinct product lines within different regions. These products include specialty tires and products under the Carlstar brands within powersports, outdoor power equipment and high speed trailers. The consumer market also includes light truck tires and other specialty products, including custom mixing of rubber stock, and train brakes. Some aspects of the markets are experiencing slowdown, particularly in the Americas. There are strong initiatives underway to bolster opportunities in various specialty products including mixing of rubber stock in the United States. The consumer segment pace of growth can vary from period to period and is affected by many variables including inflationary impacts, consumer spending, interest rates, government policies, and other macroeconomic drivers.
Current wording
The consumer market consists of several distinct product lines within different regions. These products include specialty tires and products under the Carlstar brands within powersports, outdoor power equipment and high-speed trailers. The consumer market also includes light truck tires and other specialty products, including custom mixing of rubber stock, and train brakes. Some aspects of the markets are experiencing slowdown, particularly in the Americas. The consumer segment pace of growth can vary from period to period and is affected by many variables including inflationary impacts, consumer spending, interest rates, government policies, and other macroeconomic drivers.
Previous wording
Gross profit for the three months ended March 31, 2024 was $77.4 million, or 16.0% of net sales, compared to $95.6 million, or 17.4% of net sales, for the three months ended March 31, 2023. The changes in gross profit and gross margin for three months ended March 31, 2024 as compared to the prior year period were due to the lower sales and lower fixed cost leverage.
Current wording
Gross profit for the three months ended June 30, 2024 was $80.4 million, or 15.1% of net sales, compared to $85.9 million, or 17.9% of net sales, for the three months ended June 30, 2023. The changes in gross profit and margin were attributed to negative price/mix, reduced fixed cost leverage, higher material costs and inventory revaluation step-up of $7.3 million associated with the Carlstar purchase price allocation. Excluding the inventory revaluation step-up, adjusted gross margin for the three months ended June 30, 2024 would have been 16.5% of net sales.
Previous wording
Selling, general and administrative expenses for the three months ended March 31, 2024 were $39.4 million, or 8.2% of net sales, compared to $34.5 million, or 6.3% of net sales, for the three months ended March 31, 2023. The change in SG&A for the three months ended March 31, 2024 as compared to the prior year period was due to recurring SG&A incurred on the Carlstar operations that includes management of distribution centers, and general inflationary cost impacts, including personnel related costs.
Current wording
Selling, general and administrative expenses (SG&A) for the three months ended June 30, 2024 were $51.6 million, or 9.7% of net sales, compared to $34.9 million, or 7.2% of net sales, three months ended June 30, 2023. The change in SG&A for the three months ended June 30, 2024 as compared to the prior year period was attributable to the ongoing SG&A associated with the Carlstar operations, specifically related to the management of distribution centers.
Previous wording
Acquisition related expenses for the three months ended March 31, 2024 were $6.2 million, associated with the one-time transaction costs for Carlstar.
Current wording
Acquisition related expenses for the six months ended June 30, 2024 were $6.2 million, associated with the one-time transaction costs for Carlstar.
Previous wording
Research and development (R&D) expenses for the three months ended March 31, 2024 were $3.7 million, or 0.8% of net sales, compared to $3.0 million, or 0.5% of net sales, for the comparable period in 2023. R&D spending reflects initiatives to improve product designs and an ongoing focus on innovation and quality.
Current wording
Research and development (R&D) expenses for the three months ended June 30, 2024 were $4.2 million, or 0.8% of net sales, compared to $3.2 million, or 0.7% of net sales, for the comparable period in 2023. R&D expenses for the six months ended June 30, 2024 were $7.9 million, or 0.8% of net sales, compared to $6.2 million, or 0.6% of net sales, for the comparable period in 2023. R&D spending reflects initiatives to improve product designs and an ongoing focus on innovation and quality.
Previous wording
The Company has trademark license agreements with The Goodyear Tire & Rubber Company to manufacture and sell certain farm tires under the Goodyear name. These agreements cover sales in North America, Latin America, Europe, the Middle East, Africa, Russia, and other Commonwealth of Independent States countries. The Company also has a trademark license agreement with Carlisle Companies, Inc. to manufacture and sell certain tires under the Carlisle brand. Royalty expenses for the three months ended March 31, 2024 were $3.0 million, or 0.6% of net sales, compared to $2.9 million, or 0.5% of net sales, for the three months ended March 31, 2023.
Current wording
The Company has trademark license agreements with The Goodyear Tire & Rubber Company to manufacture and sell certain farm tires under the Goodyear name. These agreements cover sales in North America, Latin America, Europe, the Middle East, Africa, Russia, and other Commonwealth of Independent States countries. The Company also has a trademark license agreement with Carlisle Companies, Inc. to manufacture and sell certain tires under the Carlisle brand. Royalty expenses for the three months ended June 30, 2024 were $2.3 million, or 0.4% of net sales, compared to $1.9 million, or 0.4% of net sales, for the three months ended June 30, 2023. Royalty expenses for the six months ended June 30, 2024 were $5.3 million, or 0.5% of net sales, compared to $4.9 million, or 0.5% of net sales, for the six months ended June 30, 2023.
Previous wording
Income from operations for the three months ended March 31, 2024 was $25.1 million, compared to income from operations of $55.1 million for the three months ended March 31, 2023. The change in income from operations for the three months ended March 31, 2024 as compared to the prior year periods was primarily due to lower net sales and the net result of the items previously discussed.
Current wording
Income from operations for the three months ended June 30, 2024 was $22.3 million, compared to income from operations of $45.9 million for the three months ended June 30, 2023. Income from operations for the six months ended June 30, 2024 was $47.4 million, compared to income from operations of $101.0 million for the six months ended June 30, 2023. The change in income from operations for the three and six months ended June 30, 2024 as compared to the prior year periods were primarily due to lower gross profit and the net result of the items previously discussed.
Previous wording
Foreign exchange loss was $0.3 million for the three months ended March 31, 2024, compared to a loss of $1.8 million for the three months ended March 31, 2023.
Current wording
Foreign exchange gain was $0.5 million for the three months ended June 30, 2024, compared to a nominal gain for the three months ended June 30, 2023. Foreign exchange gain was $0.2 million for the six months ended June 30, 2024, compared to a loss of $1.8 million for the six months ended June 30, 2023. The increases in foreign exchange gains during the three and six months ended on June 30, 2024, as compared to the prior year periods, were attributable to the favorable impact of the translation of intercompany loans at certain foreign subsidiaries, which are denominated in local currencies rather than the reporting currency, which is the United States dollar. Since such loans are expected to be settled at some point in the future, these loans are adjusted each reporting period to reflect the current exchange rates.
Previous wording
Other income was $0.4 million for the three months ended March 31, 2024, as compared to other income of $0.8 million in the comparable period of 2023. The change was primarily attributable to the decrease in equity income and other miscellaneous income.
Current wording
Other income was $3.7 million for the six months ended June 30, 2024, as compared to other income of $1.9 million in the comparable period of 2023. The increase was primarily due to a gain of $1.9 million from a property insurance settlement as discussed above.
Previous wording
The Company recorded income tax expense of $9.7 million and $14.2 million for the three months ended March 31, 2024 and 2023, respectively. The Company's effective income tax rate was 49.4% and 29.8% for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024 and 2023, the income tax expense differed in each period due to an overall decrease in pre-tax income. For the three months ended March 31, 2024, the rate was negatively impacted by non-deductible interest expense and one-time impacts associated with transaction costs, which were also not fully deductible for income tax purposes.
Current wording
The Company recorded income tax expense of $15.5 million and $9.4 million for the three months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, the Company recorded income tax expense of $25.2 million and $23.6 million, respectively. The Company's effective income tax rate was 81.9% and 22.8% for the three months ended June 30, 2024 and 2023, respectively, and 65.3% and 26.6% for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, the income tax expense differed in each period due to an overall decrease in pre-tax income. For the six months ended June 30, 2024, the rate was negatively impacted by non-deductible interest expense in the United States, foreign branch income related to the Carlstar acquisition,and one-time impacts associated with transaction costs, which were also not fully deductible for income tax purposes. Additionally the rate was impacted by the results of foreign income tax rate differential on the mix of earnings, non-deductible royalty expenses in certain jurisdictions, and certain foreign inclusion items on the domestic provision. Without these impacts, the income tax rate would have been about 36% of pre-tax income, a slightly elevated rate due to the majority of pre-tax income being derived from foreign jurisdictions.
Previous wording
The Company’s 2024 and 2023 income tax expense and rates differed from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of foreign income tax rate differential on the mix of earnings, non-deductible royalty expenses in certain jurisdictions, the valuation allowance on the interest expense carryforward, and certain foreign inclusion items on the domestic provision. The 2024 rate further differed from the statutory rate due to non-deductible transaction costs.
Current wording
The Company’s 2023 income tax expense and rate differed from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of foreign income tax rate differential on the mix of earnings, non-deductible royalty expenses in certain jurisdictions, the valuation allowance on the interest expense carryforward, and certain foreign inclusion items on the domestic provision.
Previous wording
Net income for the three months ended March 31, 2024 was $10.0 million, compared to net income of $33.4 million in the comparable period of 2023. For the three months ended March 31, 2024 and 2023, basic income per share were $0.14 and $0.51, respectively, and diluted income per share were $0.14 and $0.50, respectively. The Company's net income and income per share changes were due to the items previously discussed.
Current wording
Net income for the three months ended June 30, 2024 was $3.4 million, compared to net income of $31.9 million in the comparable period of 2023. For the three months ended June 30, 2024 and 2023, basic earnings per share were $0.03 and $0.48, respectively, and diluted earnings per share were $0.03 and $0.48, respectively. The Company's net income and earnings per share changes were due to the items previously discussed.
Previous wording
Income from operations in the company's agricultural segment was $24.0 million for the three months ended March 31, 2024, as compared to income of $32.6 million for the three months ended March 31, 2023. The overall change in income from operations was attributable to lower gross profit from a decrease in net sales.
Current wording
Income from operations in the Company's agricultural segment was $15.8 million for the three months ended June 30, 2024, as compared to income of $32.1 million for the three months ended June 30, 2023. The change in income from operations was mainly due to the lower gross profit resulting from the decline in net sales.
Previous wording
Net sales in the agricultural segment were $239.7 million for the three months ended March 31, 2024, as compared to $305.9 million for the comparable period in 2023. The net sales change was primarily attributed to lower sales volume in North and South America, resulting from overall softness in demand for agricultural equipment, and a decline in Brazilian economic activity. The change in net sales was also influenced by the unfavorable impact of foreign currency translation of 4.3%.
Current wording
Net sales in the agricultural segment were $456.0 million for the six months ended June 30, 2024, as compared to $575.0 million for the comparable period in 2023. The net sales change was primarily attributed to lower sales volume in North and South America, reflecting the soft demand for agricultural equipment and a decline in Brazilian economic activity. The unfavorable effect of foreign currency translation by 4.8% also contributed to the change in net sales.
Previous wording
The Company's earthmoving/construction segment income from operations was $8.8 million for the three months ended March 31, 2024 , as compared to $23.5 million for the three months ended March 31, 2023. The change was due to the decrease in sales volume and the impact on gross margins.
Current wording
The Company's earthmoving/construction segment income from operations was $7.0 million for the three months ended June 30, 2024 , as compared to $14.5 million for the three months ended June 30, 2023. The change was primarily due to lower sales volume, resulting in lower fixed cost leverage, and its impact on gross margins.
Previous wording
The Company's earthmoving/construction segment net sales were $165.2 million for the three months ended March 31, 2024, as compared to $198.9 million in the comparable period in 2023. The change in earthmoving/construction sales was primarily due to lower sales volume in the Americas and the undercarriage business which was caused by a slowdown at construction OEM customers. In addition, the net sales change was impacted by negative price due to lower raw material and other input costs.
Current wording
The Company's earthmoving/construction segment net sales were $330.8 million for the six months ended June 30, 2024, as compared to $373.6 million in the comparable period in 2023. The change in earthmoving/construction sales was mainly due to the impact of contractual price givebacks resulting from lower raw material costs, lower sales volume in the Americas and the European business due to a slowdown in construction OEM customers, and a 0.5% negative impact from foreign currency translation.
Previous wording
Gross profit from the consumer segment was $13.8 million for the three months ended March 31, 2024, as compared to $9.1 million for the three months ended March 31, 2023. The increase in gross profit was driven by the positive effects of Carlstar acquisition. The change in profit margin was primarily due to the effect of the inventory revaluation step-up associated with the Carlstar purchase price allocation.
Current wording
Gross profit from the consumer segment was $26.8 million for the three months ended June 30, 2024, as compared to $8.1 million for the three months ended June 30, 2023. The increase in gross profit was primarily driven by the benefits of the Carlstar acquisition. The shift in profit margin was influenced by the inventory revaluation step-up of $6.0 million associated with the Carlstar purchase price allocation and reduced fixed cost leverage resulting from lower sales volumes in the Americas.
Previous wording
Consumer segment net sales were $77.3 million for the three months ended March 31, 2024, as compared to $43.9 million for the three months ended March 31, 2023. The increase in sales was driven by the positive effects of Carlstar acquisition in March 2024, subsequent to consummation of the acquisition on February 29, 2024. The increase was partially offset by lower sales volumes, primarily in Americas, where demand was lower from the softer market conditions.
Current wording
Consumer segment net sales were $227.6 million for the six months ended June 30, 2024, as compared to $81.2 million for the six months ended June 30, 2023. The increase in sales was driven by the positive effects of the Carlstar acquisition. However, lower sales volumes in the Americas stemming from challenging market conditions, and unfavorable foreign currency impact of 1.6% offsetting some of this increase.
Previous wording
Consumer segment income from operations was $5.1 million for the three months ended March 31, 2024, as compared to income of $6.8 million for the three months ended March 31, 2023. The change was due to lower profitability as mentioned previously.
Current wording
Consumer segment income from operations was $11.6 million for the six months ended June 30, 2024, as compared to income of $12.7 million for the six months ended June 30, 2023. The change was due to lower profitability stemming from the aforementioned factors.
Previous wording
Income from operations on a segment basis did not include unallocated costs of $12.9 million for the three months ended March 31, 2024, as compared to $7.8 million for the three months ended March 31, 2023. Unallocated expenses are primarily comprised of corporate selling, general and administrative expenses. The increase in corporate and unallocated expenses for the three months ended March 31, 2024 as compared to the prior year period was attributed to the transaction costs associated with the Carlstar acquisition in the first quarter of 2024, of $6.2 million.
Current wording
Unallocated expenses are primarily comprised of corporate selling, general and administrative expenses. The increase in corporate and unallocated expenses for the three months ended June 30, 2024 as compared to the prior year period was related to the increase in certain SG&A expenses primarily associated with legal costs. The increase in corporate and unallocated expenses for the six months ended June 30, 2024 as compared to the prior year period was attributed to the transaction costs associated with the Carlstar acquisition in the first quarter of 2024 of $6.2 million.
Previous wording
As of March 31, 2024, the Company had $203.6 million of cash, which decreased as compared to the December 31, 2023 ending balance of $220.3 million, due to the following items:
Current wording
As of June 30, 2024, the Company had $224.1 million of cash, which increased as compared to the December 31, 2023 ending balance of $220.3 million, due to the following items:
Previous wording
During the first three months of 2024, cash flows provided by operating activities was $2.0 million. This was primarily driven by net income of $10.0 million, offset by increases in working capital components. The net income of $10.0 million included a non-cash charge for depreciation and amortization expense of $12.0 million. The Company also incurred $6.2 million in transaction costs related to the Carlstar in the first quarter of 2024.
Current wording
During the first half of 2024, cash flows provided by operating activities was $72.8 million. This was mainly driven by working capital reduction and reduction in net income to $13.4 million. The net income of $13.4 million included a non-cash charge for depreciation and amortization expense of $27.4 million. Additionally, the Company incurred $6.2 million in transaction costs associated with the Carlstar acquisition in the first quarter of 2024.
Previous wording
Operating cash flows decreased by $22.1 million when comparing the first three months of 2024 to the comparable period in 2023. This decrease was primarily due to lower net income, partially offset by the positive effect of focused working capital management, especially the change in accounts payable of $15.0 million and solid collections efforts on accounts receivable by $15.4 million, which helped offset the inventory effect of $11.6 million.
Current wording
Operating cash flows decreased by $16.0 million when comparing the first half of 2024 to the comparable period in 2023. This decline was primarily attributed to lower net income, partially offset by the positive impact of focused working capital management. Key factors contributing to this management included a $29.1 million increase in accounts payable, a $7.9 million improvement due to collections efforts on accounts receivable, and a $10.7 million improvement in inventory management.
Previous wording
Cash conversion cycle increased by 19 days when comparing March 31, 2024 to March 31, 2023. This increase was primarily due to the effect of the Carlstar acquisition, which carried additional accounts receivable at the end of the first quarter of 2024, resulting from deferred payment schedules related to sales promotion campaigns.
Current wording
Cash conversion cycle increased by 10 days when comparing June 30, 2024 to June 30, 2023. This increase was primarily due to the Carlstar acquisition, which led to additional accounts receivable and inventory at the end of the second quarter of 2024, as a result of its customer mix and use of distribution centers to have product on demand for customers. Inventory management is critical for the business in preparation for the future periods to supply customers efficiently, which was the driver of increased days in inventory at the end of June 30, 2024.
Previous wording
Net cash used for investing activities was $158.8 million in the first three months of 2024, as compared to net cash used for investing activities of $11.4 million in the first three months of 2023. The increase was primarily due to the acquisition of Carlstar for a cash consideration of $142.2 million, which included a $18.4 million excess working capital payment to the sellers. The Company also invested a total of $16.6 million in capital expenditures in the first three months of 2024, compared to $11.7 million in the first three months of 2023. Capital expenditures represent plant equipment replacement and improvements, along with new tools, dies and molds related to new product development. The overall capital outlay for 2024 increased as the Company seeks to enhance the Company's existing facilities and manufacturing capabilities and drive plant efficiency and labor productivity gains.
Current wording
During the first half of 2024, Titan reported a net cash outflow of $171.3 million from investing activities, as compared to the $27.3 million outflow recorded in the same period of 2023. This rise was primarily attributed to the acquisition of Carlstar for a cash consideration of $142.2 million, which included an additional payment of $18.4 million for excess working capital to the sellers, which has now been recovered through active working capital management during the quarter. The Company also invested a total of $34.2 million in capital expenditures in the first half of 2024, compared to $27.6 million in the corresponding period of 2023. These capital expenditures were directed toward the replacement and enhancement of plant equipment, as well as the procurement of new tools, dies, and molds to support new product development initiatives. The increased capital outlay in 2024 reflects Titan's strategic efforts to improve its existing facilities, enhance manufacturing capabilities, and drive operational efficiency and labor productivity gains. The proceeds from property insurance settlement of $3.5 million in the first half of 2024 was relate to the repair of one of our operating facilities in Italy associated with a 2023 hail storm weather event.
Previous wording
During the first three months of 2024, $145.7 million cash was provided by financing activities. On February 29, 2024, the Company acquired Carlstar. To facilitate the purchase, Titan borrowed $147.0 million from the new domestic credit facility.
Current wording
During the first half of 2024, $113.9 million cash was provided by financing activities. This was primarily driven by the acquisition of Carlstar on February 29, 2024, for which Titan borrowed $147.0 million under a new domestic credit facility.
Previous wording
During the first three months of 2023, the company made debt payments of $11.4 million and repurchase common stock of $1.3 million, partially offset by proceeds from borrowings of $2.4 million.
Current wording
During the first half of 2023, the Company made debt payments of $21.0 million and repurchased common stock of $6.4 million, partially offset by proceeds from borrowings of $4.4 million.
Previous wording
Additionally, Titan issued common stock worth $168.7 million in connection with the business acquisition of Carlstar. This was reflected in “Non cash financing activity” of the Condensed Consolidated Statements of Cash Flow.
Current wording
Additionally, Titan issued common stock worth $168.7 million in connection with the business acquisition of Carlstar. This was reflected in “Non cash financing activity” in the Condensed Consolidated Statements of Cash Flows.
Previous wording
•Limitations on investments, dispositions of assets, and guarantees of indebtedness; and
Current wording
•Limits on investments, dispositions of assets, and guarantees of indebtedness; and
Previous wording
These covenants are subject to a number of exceptions and qualifications that are described in the credit and security agreement. These restrictions could limit the Company’s ability to respond to market conditions, provide for unanticipated capital investments, raise additional debt or equity capital, pay dividends, or take advantage of business opportunities, including future acquisitions. The Company is in compliance with these debt covenants at March 31, 2024.
Current wording
These covenants are subject to a number of exceptions and qualifications that are described in the credit and security agreement. These restrictions could limit the Company’s ability to respond to market conditions, provide for unanticipated capital investments, raise additional debt or equity capital, pay dividends, repurchase stock or take advantage of business opportunities, including future acquisitions. The Company is in compliance with these debt covenants at June 30, 2024.
Previous wording
The Company's 7.00% senior secured notes due 2028 are guaranteed by the following 100% owned subsidiaries of the Company: Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport, and Titan Wheel Corporation of Illinois (together, the "Guarantors"). The note guarantees are full and unconditional, joint and several obligations of the guarantors. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions.
Current wording
The Company's 7.00% senior secured notes due 2028 are guaranteed by the following 100% owned subsidiaries of the Company: Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport, and Titan Wheel Corporation of Illinois (together, the "Guarantors"). The note guarantees are full and unconditional, joint and several obligations of the guarantors. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the satisfaction of certain customary conditions.
Previous wording
At March 31, 2024, the Company had $203.6 million of cash and cash equivalents. At March 31, 2024, there were $147.0 million of borrowings under the Company's $225 million credit facility. Titan's availability under this credit facility may be less than $225 million as a result of outstanding letters of credit and eligible accounts receivable and inventory balances at certain domestic and Canadian subsidiaries. Based on eligible accounts receivable and inventory balances, the Company's amount available for borrowing totaled $225.0 million at March 31, 2024. With outstanding letters of credit totaling $10.6 million, the net amount available for borrowing under the credit facility totaled $67.4 million at March 31, 2024. The cash and cash equivalents balance of $203.6 million included $169.2 million held in foreign countries.
Current wording
At June 30, 2024, the Company had $224.1 million of cash and cash equivalents. At June 30, 2024, there were $127.0 million of borrowings under the Company's $225 million credit facility. Titan's availability under this credit facility may be less than $225 million as a result of outstanding letters of credit and eligible accounts receivable and inventory balances at certain domestic and Canadian subsidiaries. Based on eligible accounts receivable and inventory balances, the Company's amount available for borrowing totaled $204.2 million at June 30, 2024. With outstanding letters of credit totaling $9.9 million, the net amount available for borrowing under the credit facility totaled $67.3 million at June 30, 2024. The cash and cash equivalents balance of $224.1 million included $188.0 million held in foreign countries.
Previous wording
The Company is expecting full year capital expenditures to be approximately $70 million to $75 million. These capital expenditures are anticipated to be used primarily to continue to enhance the Company’s existing facilities and manufacturing capabilities and drive productivity gains, along with the purchase of new tools, dies and molds related to new product development.
Current wording
The Company is expecting full year capital expenditures to be approximately $55 million to $65 million. These capital expenditures are anticipated to be used primarily to continue to enhance the Company’s existing facilities and manufacturing capabilities and drive productivity gains, along with the purchase of new tools, dies and molds related to new product development.
Previous wording
Cash payments for interest are currently forecasted to between $36 million and $38 million for the remainder of 2024 based on March 31, 2024 debt balances. The forecasted interest payment is comprised primarily of the semi-annual payment of $14 million to be paid in April and October for the 7.00% senior secured notes, and between $6 million and $8 million of payments on the credit facility, which will be variable dependent upon on the prevailing SOFR rate and debt levels within each month.
Current wording
Cash payments for interest are currently forecasted to between $22 million and $24 million for the remainder of 2024 based on June 30, 2024 debt balances. The forecasted interest payment is comprised primarily of the semi-annual payment of $14 million to be paid in October 2024 for the 7.00% senior secured notes, and between $6 million and $8 million of payments on the credit facility, which will be variable dependent upon on the prevailing SOFR rate and debt levels within each month.
Previous wording
Cash and cash equivalents along with anticipated internal cash flows from operations and utilization of availability on global credit facilities, are expected to provide sufficient liquidity for working capital needs, debt maturities, and capital expenditures. Potential divestitures and unencumbered assets are also a means to provide for future liquidity needs.
Current wording
Cash and cash equivalents along with anticipated internal cash flows from operations and utilization of availability on global credit facilities, are expected to provide sufficient liquidity for working capital needs, debt maturities, and capital expenditures. Potential divestitures and unencumbered assets may also be a means to provide for future liquidity needs.