BUSINESS COMBINATION

9 Months Ended

Sep. 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	19,759
Other debt-like items	(3,616)
Total purchase consideration, net of cash acquired	$	312,336

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.

Since the initial measurement of the identified assets acquired and liabilities assumed, the Company has made significant progress in completing certain of our additional valuation and analyses. As such, we have updated our initial allocation of the purchase consideration during the third quarter of 2024. The principle changes include (i) increase in the value of inventory to include inventory in-transit to a customer locations for which transfer of title has not occurred, (ii) decrease in the value of Property, Plant, and Equipment primarily to reflect updated assumptions surrounding disposed and idle assets, and (iii) decrease in the fair market value adjustment associated with a certain right-of-use asset based on updated underlying valuation assumptions.

The following table summarizes the measurement period changes since the first quarter of 2024, as well as the updated and initial preliminary allocation of purchase price consideration to the major classes of assets and liabilities (amounts in thousands) as of February 29, 2024:


	Updated Purchase Price Allocation		Measurement Period Changes		Initial Purchase Price Allocation
Accounts receivable	$	92,043	$	(6,396)	$	98,439
Inventories	150,900		4,912		145,988
Prepaid and other current assets	13,339		—		13,339
Property, plant, and equipment	111,580		(16,582)		128,162
Other long-term assets	94,304		(1,899)		96,203
Goodwill	35,810		22,943		12,867
Intangible assets	12,000		(3,770)		15,770
Fair value of assets acquired	$	509,976	$	(792)	$	510,768
Accounts payable	$	66,055	$	—	$	66,055
Other current liabilities	26,377		—		26,377
Operating leases	95,476		—		95,476
Deferred tax liabilities	8,459		(1,992)		10,451
Other long-term liabilities	1,273		(236)		1,509
Fair value of liabilities assumed	$	197,640	$	(2,228)	$	199,868
Purchase Price	$	312,336	$	1,436	$	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 preliminary carrying value of goodwill by operating segment as of September 30, 2024 is as follows:


	Carrying Value as of September 30, 2024
Agricultural	$	5,478
Earthmoving/construction	—
Consumer	30,332
Total	$	35,810

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	$	6,500	10.00
Trade names	5,500		13.50

Total	$	12,000	11.90

Through September 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 September 30, 2024
Carlstar revenue	$	316,496
Carlstar income before taxes	22,069

The following is the unaudited pro forma financial information for the three and nine months ended September 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				Nine months ended
	September 30,				September 30,
	2024		2023		2024		2023
Pro forma revenues	$	447,985	$	547,410	$	1,564,182	$	1,916,526
Pro forma net (loss) income	(17,399)		24,731		18,798		89,786
Net (loss) income per common share, basic	$	(0.24)	$	0.33	$	0.26	$	1.20
Net (loss) income per common share, diluted	(0.24)		0.33		0.26		1.19

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 nine months ended September 30, 2024 and were adjusted to include these amounts for the three and nine months ended September 30, 2023.

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