BUSINESS COMBINATION

6 Months Ended

Jun. 30, 2024

Business Combination and Asset Acquisition [Abstract]

Acquisition of The Carlstar Group

On February 29, 2024, the Company acquired 100% of the equity interests of The Carlstar Group, LLC ("Carlstar") for the following purchase consideration and subject to a working capital adjustment based on an agreed upon working capital target (amounts in thousands):


	Purchase Consideration
Titan International, Inc. common stock	$	168,693
Base cash consideration, net of cash acquired of $10,288	127,500
	296,193
Additional cash consideration for excess net working capital acquired	18,372
Other debt-like items	(3,665)
Total purchase consideration, net of cash acquired	$	310,900

Carlstar is a global manufacturer and distributor of wheels and tires for a variety of end-market verticals including outdoor power equipment, power sports, trailers, and small to midsize agricultural and construction equipment. Carlstar has 17 manufacturing and distribution facilities located in four countries and provides solutions to customers in North America, Europe and China.

The following table summarizes the major classes of assets and liabilities to which we have preliminarily allocated the purchase price consideration (amounts in thousands). The final allocation is subject to review and agreement with the prior equity holders of Carlstar.


	Fair Values as of February 29, 2024
Accounts receivable	$	98,439
Inventories	145,988
Prepaid and other current assets	13,339
Property, plant, and equipment	128,162
Other long-term assets	96,203
Goodwill	12,867
Intangible assets	15,770
Fair value of assets acquired	$	510,768
Accounts payable	66,055
Other current liabilities	26,377
Operating leases	95,476
Deferred tax liabilities	10,451
Other long-term liabilities	1,509
Fair value of liabilities assumed	199,868
Purchase Price	$	310,900

Goodwill represents value the Company expects to be created by combining the operations of the acquired business with the Company's operations, including the expansion of customer relationships, access to new customers, and potential cost savings and synergies. Goodwill related to the acquisition is expected to be deductible for tax purposes. The assignment of the acquired goodwill to the Company's reporting units has not been completed.

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.

The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets as of February 29, 2024 (amounts in thousands):


	Carrying Value		Weighted Average Amortization (in Years)
Customer lists/relationships	$	10,347	10.00
Trade names	3,508		15.00
Other intangibles	1,915		6.25
Total	$	15,770	10.66

Through June 30, 2024, the actual revenue and income before taxes of Carlstar since the acquisition date of February 29, 2024 included in the Consolidated Statement of Operations is as shown below (amounts in thousands). The net income includes the effect of fair value adjustments for the amortization of inventory, intangible assets, and depreciation of property, plant and equipment.


	From Acquisition Date to June 30, 2024
Carlstar revenue	$	187,610
Carlstar income before taxes	8,084

The following is the unaudited pro forma financial information for the three and six months ended June 30, 2024 and 2023 that reflects our results of our operations as if the acquisition of Carlstar had been completed on January 1, 2023. This unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what the actual results of operations would have been had the transactions taken place on January 1, 2023, nor is it indicative of the future consolidated results of operations or financial position of the combined companies (amounts in thousands, except per share data).


	Three months ended				Six months ended
	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Pro forma revenues	$	532,170	$	643,341	$	1,116,197	$	1,369,116
Pro forma net income	10,752		41,999		36,197		65,055
Net income per common share, basic	$	0.15	$	0.56	$	0.50	$	0.87
Net income per common share, diluted	0.14		0.55		0.49		0.86

These pro forma amounts have been calculated after applying Titan's accounting policies and making certain adjustments, which primarily relate to: (i) severance-related costs, (ii) adjustments relating to the fair value step-ups to inventory, and (iii) transaction-related costs of both Titan and Carlstar. These pro forma amounts were adjusted to be excluded from the unaudited pro forma information for the three and six months ended June 30, 2024 and were adjusted to include these amounts for the three and six months ended June 30, 2023.

Total acquisition-related costs for the three and six months ended June 30, 2024 were $0.0 million and $6.2 million, respectively.