Titan International(TWI) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales for Q3 2024 were $448.0 million, an increase of 11.5$401.8 million in Q3 2023, driven by higher volumes in the consumer segment and the contribution from the Carlstar acquisition[122]. - Gross profit for Q3 2024 decreased to $58.8 million, down 11.0$66.1 million in Q3 2023, resulting in a gross profit margin of 13.1%, compared to 16.4% in the prior year[121]. - Income from operations for Q3 2024 was $2.8 million, a decrease of 89.6$27.0 million in Q3 2023[121]. - Net sales for the nine months ended September 30, 2024, were $1,462.4 million, a 2.2$1,431.6 million in the same period of 2023, primarily due to increased sales volumes from the Carlstar acquisition[125]. - Gross profit for the nine months ended September 30, 2024, was $216.6 million, or 14.8$247.5 million, or 17.3% of net sales in the prior year, attributed to reduced fixed cost leverage and higher material costs[127]. - Income from operations for the nine months ended September 30, 2024, was $50.2 million, a significant decrease from$128.0 million in the same period of 2023, primarily due to lower gross profit[133]. - Net loss for the three months ended September 30, 2024, was $18.2 million, compared to net income of$19.7 million in the same period of 2023, resulting in basic and diluted loss per share of $(0.25)[146]. Expenses - Selling, general, and administrative expenses rose by 47.5$49.5 million in Q3 2024, compared to 33.6 million in Q3 2023[121]. - Selling, general and administrative expenses (SG&A) 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$4.2 million in Q3 2024, up from 3.2 million in Q3 2023[121]. - Research and development (R&D) expenses for the nine months ended September 30, 2024, were 12.1 million, or 0.8% of net sales, up from $9.4 million, or 0.7$6.2 million for the nine months ended September 30, 2024[105]. - The acquisition of Carlstar on February 29, 2024, contributed approximately 28.8% and 21.6% to total net sales for the three and nine months ended September 30, 2024, respectively[192]. - Carlstar's total assets represented approximately 12.9% of the Company's total assets as of September 30, 2024[192]. - The Company is currently integrating Carlstar into its internal control over financial reporting process, excluding it from the assessment for up to one year post-acquisition[193]. Cash Flow and Liquidity - Cash flows from operating activities for the first nine months of 2024 were $132.8 million, down$7.4 million compared to the same period in 2023[173]. - The cash conversion cycle increased by 10 days from 100 days in September 2023 to 110 days in September 2024, primarily due to the Carlstar acquisition[175]. - The company reported a net cash outflow of $189.0 million from investing activities in the first nine months of 2024, compared to a$39.7 million outflow in the same period of 2023, largely due to the Carlstar acquisition costing $143.6 million[176]. - Financing activities provided$73.1 million in cash during the first nine months of 2024, driven by $159.6 million in proceeds from borrowings[177]. - The Company expects sufficient liquidity for working capital needs, debt maturities, and capital expenditures through cash flows from operations and global credit facilities[188]. Debt and Capital Expenditures - Long-term debt increased from$396.3 million at the end of 2023 to $493.9 million as of September 30, 2024[182]. - The company incurred$52.3 million in capital expenditures in the first nine months of 2024, up from $41.5 million in the same period of 2023[176]. - Full year capital expenditures are expected to be approximately$65 million to $70 million, primarily for enhancing existing facilities and new product development[186]. - Forecasted cash payments for interest for the remainder of 2024 are between$16 million and $18 million, including a semi-annual payment of$14 million for 7.00% senior secured notes[187]. Tax and Other Income - The effective income tax rate for the nine months ended September 30, 2024, was 114.4%, significantly impacted by nondeductible interest expense and transaction costs associated with the Carlstar acquisition[144]. - Other income for the nine months ended September 30, 2024, was $4.1 million, an increase from$2.4 million in the same period of 2023, driven by a $1.9 million gain from a property insurance settlement[140]. Segment Performance - The agricultural segment reported net sales of$631.4 million for the nine months ended September 30, 2024, a decrease of 19.9% from $788.0 million in 2023[154]. - The earthmoving/construction segment net sales were$467.1 million for the nine months ended September 30, 2024, down 11.6% from $528.7 million in the same period of 2023[160]. - Consumer segment net sales increased significantly to$363.8 million for the nine months ended September 30, 2024, up 216.4% from $115.0 million in 2023[167]. - The gross profit margin for the agricultural segment decreased to 14.2$41.7 million for the nine months ended September 30, 2024, down 51.6% from $86.1 million in 2023[156]. - The earthmoving/construction segment reported a loss from operations of$1.9 million for the three months ended September 30, 2024, compared to income of $8.5 million in the same period of 2023[159]. - The consumer segment's profit margin decreased from 20.8% in the nine months ended September 30, 2023, to 19.5% in the same period of 2024, influenced by inventory revaluation step-up associated with the acquisition[168]. Risk and Controls - The Company remains exposed to market risks, including foreign currency exchange rates and commodity price fluctuations, with no material changes since December 31, 2023[190]. - There were no material changes in the Company's Critical Accounting Estimates since the last filing[189]. - No changes in internal control over financial reporting occurred during the third quarter of fiscal year 2024 that materially affected the Company's internal controls[194].