TITAN INTERNATIONAL INC

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 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.

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 nine months ended September 30, 2024 were $6.2 million.

Previous wording

The purchase consideration was allocated on a provisional basis to the estimated fair value of assets acquired and liabilities assumed for Carlstar as of February 29, 2024. These fair value estimates are preliminary and subject to change as management completes further analyses and studies. For further information, refer to Note 2 to the consolidated financial statements.

Current wording

The purchase consideration was allocated on a provisional basis to the estimated fair value of assets acquired and liabilities assumed for Carlstar as of February 29, 2024. These fair value estimates are preliminary and subject to change as management completes further analyses and studies. For further information, refer to Note 2 to the condensed consolidated financial statements.

Previous wording

•the effects of the Company's indebtedness and its compliance with the terms thereof;

Current wording

•the effects of the Company's indebtedness and its compliance with the terms of its various indentures and credit agreements;

Previous wording

•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 wording

•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 and the Company's obligations under that agreement to file a resale registration statement with the Securities and Exchange Commission (the SEC) to facilitate sales of its shares by American Industrial Partners thereunder;

Previous wording

Any changes in such factors could lead to significantly different results. Any assumptions that are inaccurate or do not prove to be correct could have a material adverse effect on the Company’s ability to achieve the results as indicated in the forward-looking statements. Forward-looking statements speak only as of the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks and uncertainties, there can be no assurance that the forward-looking information and assumptions contained in this report will in fact transpire. The reader should not place undue reliance on the forward-looking statements included in this report or that may be made elsewhere from time to time by the Company, or on its behalf. All forward-looking statements attributable to Titan are expressly qualified by these cautionary statements.

Current wording

Any changes in these factors could lead to significantly different results. Any assumptions that are inaccurate or do not prove to be correct could have a material adverse effect on the Company’s ability to achieve the results as indicated in the forward-looking statements. Forward-looking statements speak only as of the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks and uncertainties, there can be no assurance that the forward-looking information and assumptions contained in this report will in fact transpire. The reader should not place undue reliance on the forward-looking statements included in this report or that may be made elsewhere from time to time by the Company, or on its behalf. All forward-looking statements attributable to Titan are expressly qualified by these cautionary statements.

Previous wording

Titan manufactures bias truck tires in Latin America and light truck tires in Russia. Titan also offers select products for ATVs, side-by-sides, rock climbers, turf, and have recently expanded our offering into the lawn and garden segment with a major OE customer. This segment also includes sales that do not readily fall into the Company's other segments, such as custom rubber stock mixing sales to a variety of OEMs in tangential industries.

Current wording

Titan manufactures bias truck tires in Latin America and light truck tires in Russia. Titan also offers select products for ATVs, side-by-sides, rock climbers, and turf, and has recently expanded its offering into the lawn and garden segment with a major OE customer. This segment also includes sales that do not readily fall into the Company's other segments, such as custom rubber stock mixing sales to a variety of OEMs in tangential industries.

Previous 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.

Current wording

During recent months, agriculture-related commodity prices have declined from historical highs and farmer income has experienced reduced levels. 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, have created market conditions which are anticipated to support continued demand for the Company's products in the mid- to long-term time horizon. The agricultural market is currently experiencing a significant slowdown in customer demand, but the underlying market conditions mentioned previously are expected to provide future support for the mid- to long-term demand for the Company's 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 earthmoving/construction segment is affected by many variables, including commodity prices, road construction, infrastructure, government appropriations, housing starts, and other macroeconomic drivers. The construction market is primarily driven by country-specific GDP and the need for infrastructure developments. The earthmoving/construction markets are currently experiencing a slowdown in OEM demand, however, we expect the market to stabilize over the mid to long term given the level of mining capital budgets and forecasted GDP growth. Mineral commodity prices are at relatively high levels, which also supports the forecasted mid- to long-term growth.

Current wording

The earthmoving/construction segment is affected by many variables, including commodity prices, road construction, infrastructure, government appropriations, housing starts, and other macroeconomic drivers. The construction market is primarily driven by country-specific GDP and the need for infrastructure developments. The earthmoving/construction markets are currently experiencing a slowdown in OEM demand, but we expect the market to stabilize over the mid to long term given the level of mining capital budgets and forecasted GDP growth. Mineral commodity prices are at relatively high levels, which also supports the forecasted mid- to long-term growth.

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. 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 consumer market are experiencing a significant 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

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 wording

Net sales for the three months ended September 30, 2024 were $448.0 million, compared to $401.8 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 end customer demand. Furthermore, the net sales increase was impacted by negative price effects primarily due to reductions in steel and energy costs and an unfavorable currency translation impact of 3.3%.

Previous wording

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 wording

Net sales for the nine months ended September 30, 2024 were $1,462.4 million, compared to $1,431.6 million in the comparable period of 2023. Net sales increase was primarily attributable to increased sales volumes, resulting from the positive contribution from the Carlstar acquisition. The increase was partially offset by lower demand for agriculture and construction equipment, the adverse impact of price, as well as a 3.1% unfavorable foreign currency translation effect.

Previous 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.

Current wording

Gross profit for the three months ended September 30, 2024 was $58.8 million, or 13.1% of net sales, compared to $66.1 million, or 16.4% of net sales, for the three months ended September 30, 2023. The changes in gross profit and margin were attributed to negative price/mix, reduced fixed cost leverage, a slight increase in material costs, and an inventory revaluation step-up of $0.8 million related to the purchase price allocation for Carlstar. Excluding the inventory revaluation step-up, adjusted gross margin for the three months ended September 30, 2024 would have been 13.3% of net sales.

Previous wording

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 wording

Gross profit for the nine months ended September 30, 2024 was $216.6 million, or 14.8% of net sales, compared to $247.5 million, or 17.3% of net sales, for the nine months ended September 30, 2023. The changes in gross profit and gross margin for nine months ended September 30, 2024 as compared to the prior year period were primarily due to reduced fixed cost leverage, higher material costs and inventory revaluation step-up of $11.5 million associated with the Carlstar purchase price allocation. Excluding the inventory revaluation step-up, adjusted gross margin for the nine months ended September 30, 2024 would have been 15.6% of net sales.

Previous 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.

Current wording

Selling, general and administrative expenses (SG&A) for the three months ended September 30, 2024 were $49.5 million, or 11.1% of net sales, compared to $33.6 million, or 8.4% of net sales, three months ended September 30, 2023. The change in SG&A for the three months ended September 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

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 wording

Selling, general and administrative expenses for the nine months ended September 30, 2024 were $140.5 million, or 9.6% of net sales, compared to $102.9 million, or 7.2% of net sales, for the nine months ended September 30, 2023. The change in SG&A for the nine months ended September 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, and general inflationary cost impacts, such as rising personnel-related expenses.

Previous 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.

Current wording

Acquisition related expenses for the nine months ended September 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 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.

Current wording

Research and development (R&D) expenses for the three months ended September 30, 2024 were $4.2 million, or 0.9% of net sales, compared to $3.2 million, or 0.8% of net sales, for the comparable period in 2023. R&D expenses for the nine months ended September 30, 2024 were $12.1 million, or 0.8% of net sales, compared to $9.4 million, or 0.7% 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 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.

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, currently scheduled to expire in 2025. 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 September 30, 2024 were $2.3 million, or 0.5% of net sales, compared to $2.3 million, or 0.6% of net sales, for the three months ended September 30, 2023. Royalty expenses for the nine months ended September 30, 2024 were $7.6 million, or 0.5% of net sales, compared to $7.2 million, or 0.5% of net sales, for the nine months ended September 30, 2023.

Previous 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.

Current wording

Income from operations for the three months ended September 30, 2024 was $2.8 million, compared to income from operations of $27.0 million for the three months ended September 30, 2023. Income from operations for the nine months ended September 30, 2024 was $50.2 million, compared to income from operations of $128.0 million for the nine months ended September 30, 2023. The changes in income from operations for the three and nine months ended September 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

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 wording

The increase in interest expense for the three months ended September 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 nine months ended September 30, 2024 was also primarily driven by the new domestic credit facility. These changes in interest expenses reflected the Company's strategic financial decisions and its ongoing efforts to optimize its capital structure and financing activities.

Previous 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.

Current wording

Foreign exchange loss was $2.5 million for the three months ended September 30, 2024, compared to a gain of $0.9 million for the three months ended September 30, 2023. The change in foreign exchange (loss) gain during the three months ended on September 30, 2024, as compared to the prior year period, was attributable to the unfavorable 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 these intercompany loans are expected to be settled at some point in the future, the loans are adjusted each reporting period to reflect the current exchange rates.

Previous wording

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 wording

Other income was $4.1 million for the nine months ended September 30, 2024, as compared to other income of $2.4 million in the comparable period of 2023. This growth was mainly driven by a $1.9 million gain from a property insurance settlement, reflecting net insurance proceeds received after costs incurred to repair one of our operating facilities in Italy, along with an additional $0.5 million from equipment at our North American wheel facility. This increase was partially offset by the aforementioned loss on the sale of the Indian undercarriage business.

Previous 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.

Current wording

The Company recorded income tax expense of $12.9 million and $4.7 million for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, the Company recorded income tax expense of $38.1 million and $28.4 million, respectively. The Company's effective income tax rate was (244.4)% and 19.4% for the three months ended September 30, 2024 and 2023, respectively, and 114.4% and 25.0% for the nine months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, the income tax expense differed each period due to an overall decrease in pre-tax income. For the nine months ended September 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.

Previous 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.

Current wording

Net loss for the three months ended September 30, 2024 was $18.2 million, compared to net income of $19.7 million in the comparable period of 2023. For the three months ended September 30, 2024 and 2023, basic (loss) earnings per share were $(0.25) and $0.31, respectively, and diluted (loss) earnings per share were $(0.25) and $0.31, respectively. The Company's net (loss) income and (loss) earnings per share changes were due to the items previously discussed.

Previous wording

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 wording

Net loss for the nine months ended September 30, 2024 was $4.8 million, compared to net income of $85.0 million in the comparable period of 2023. For the nine months ended September 30, 2024 and 2023, basic (loss) earnings per share were $(0.10) and $1.29, respectively, and diluted (loss) earnings per share were $(0.10) and $1.29, respectively. The Company's net (loss) income and (loss) earnings per share changes were due to the items previously discussed.

Previous wording

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 wording

Net sales in the agricultural segment were $175.4 million for the three months ended September 30, 2024, as compared to $213.0 million for the comparable period in 2023. The net sales change was primarily attributed to a significant reduction in global demand for agricultural equipment, particularly in North America and Europe. Additionally, an unfavorable foreign currency translation impact of 4.9% further contributed to the change in net sales, mainly due to the weakening Brazilian real and Argentine peso.

Previous wording

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 wording

Gross profit in the agricultural segment was $16.7 million for the three months ended September 30, 2024, as compared to $37.0 million in the comparable period in 2023. The change in gross profit was attributed to the lower sales volume, reduced fixed cost leverage, adverse price/mix effects, and increased material costs.

Previous 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.

Current wording

Income from operations in the Company's agricultural segment was $1.9 million for the three months ended September 30, 2024, as compared to income of $21.4 million for the three months ended September 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 $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.

Current wording

Net sales in the agricultural segment were $631.4 million for the nine months ended September 30, 2024, as compared to $788.0 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, mainly due to the weakening Argentine peso and Turkish lira.

Previous wording

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 wording

Gross profit in the agricultural segment was $89.6 million for the nine months ended September 30, 2024, as compared to $135.0 million in the comparable period in 2023. The change in gross profit was attributed to the lower sales volume, negative price/mix, higher material costs, and inventory revaluation step-up associated with the Carlstar purchase price allocation.

Previous wording

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 wording

Income from operations in the Company's agricultural segment was $41.7 million for the nine months ended September 30, 2024, as compared to income of $86.1 million for the nine months ended September 30, 2023. The overall change in income from operations was primarily due to the lower gross profit resulting from the decrease in net sales.

Previous wording

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 wording

Gross profit in the earthmoving/construction segment was $11.7 million for the three months ended September 30, 2024, as compared to $22.3 million for the three months ended September 30, 2023. The change in gross profit was primarily attributed to lower sales volume in North America and Europe, and reduced fixed cost leverage.

Previous 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.

Current wording

The Company's earthmoving/construction segment net sales were $467.1 million for the nine months ended September 30, 2024, as compared to $528.7 million in the comparable period in 2023. The change in earthmoving/construction sales was mainly due to reduced sales volume in the Americas and Europe, a slowdown among construction OEM customers, lower steel prices in Europe, and a 0.7% negative impact from foreign currency translation.

Previous wording

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 wording

Gross profit in the earthmoving/construction segment was $55.9 million for the nine months ended September 30, 2024, as compared to $88.6 million for the nine months ended September 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.

Previous 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.

Current wording

Gross profit from the consumer segment was $30.4 million for the three months ended September 30, 2024, as compared to $6.8 million for the three months ended September 30, 2023. The increase in gross profit and profit margin was largely driven by the benefits derived from the Carlstar acquisition.

Previous wording

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 wording

Gross profit from the consumer segment was $71.0 million for the nine months ended September 30, 2024, as compared to $23.9 million for the nine months ended September 30, 2023. The increase in gross profit was influenced by the Carlstar acquisition. The change in profit margin from 20.8% for the nine months ended September 30, 2023 to 19.5% for the nine months ended September 30, 2024, was primarily due to a $9.4 million inventory revaluation step-up associated with the acquisition.

Previous wording

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.

Current wording

Income from operations on a segment basis did not include unallocated costs of $8.5 million for the three months ended September 30, 2024, and $28.3 million for the nine months ended September 30, 2024, as compared to $7.4 million for the three months ended September 30, 2023, and $21.8 million for the nine months ended September 30, 2023.

Previous 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.

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 September 30, 2024 as compared to the prior year period was mainly attributed to higher SG&A expenses, particularly professional service fees. The increase in corporate and unallocated expenses for the nine months ended September 30, 2024 as compared to the prior year period was primarily due to transaction costs of $6.2 million related to the Carlstar acquisition in the first quarter of 2024.

Previous 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:

Current wording

As of September 30, 2024, the Company had $227.3 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 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.

Current wording

During the first nine months of 2024, cash flows provided by operating activities was $132.8 million. This was mainly driven by working capital reduction and non-cash adjustments for depreciation and amortization expense of $40.1 million and deferred income tax provision of $21.6 million. Additionally, the Company incurred $6.2 million in transaction costs associated with the Carlstar acquisition in the first quarter of 2024.