Titan International(TWI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including statements of operations, comprehensive income, balance sheets, changes in equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items for the periods ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations This section provides a summary of the company's revenues, costs, and net income (loss) for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric (in thousands, except per share) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $460,830 | $532,170 | $951,538 | $1,014,379 | | Cost of sales | $391,557 | $451,728 | $813,621 | $856,567 | | Gross profit | $69,273 | $80,442 | $137,917 | $157,812 | | Income from operations | $10,160 | $22,322 | $21,959 | $47,394 | | Income before income taxes | $1,087 | $18,874 | $5,339 | $38,584 | | Provision for income taxes | $4,691 | $15,452 | $8,921 | $25,188 | | Net (loss) income | $(3,604) | $3,422 | $(3,582) | $13,396 | | Net (loss) income attributable to Titan | $(4,545) | $2,149 | $(5,194) | $11,350 | | Basic (Loss) earnings per common share | $(0.07) | $0.03 | $(0.08) | $0.16 | | Diluted (Loss) earnings per common share | $(0.07) | $0.03 | $(0.08) | $0.16 | Condensed Consolidated Statements of Comprehensive Income This section details the company's net income (loss) and other comprehensive income (loss) components, including derivative and currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(3,604) | $3,422 | $(3,582) | $13,396 | | Derivative loss | $(43) | $(74) | $(51) | $(72) | | Currency translation adjustment | $39,477 | $(16,363) | $85,702 | $(30,731) | | Pension liability adjustments, net of tax | $(25) | $(161) | $65 | $(13) | | Comprehensive income (loss) | $35,805 | $(13,176) | $82,134 | $(17,420) | | Comprehensive income (loss) attributable to Titan | $34,399 | $(16,662) | $73,106 | $(21,343) | Condensed Consolidated Balance Sheets This section presents the company's assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Assets | | | | Cash and cash equivalents | $184,669 | $195,974 | | Accounts receivable, net | $297,276 | $211,720 | | Inventories | $477,724 | $437,192 | | Total current assets | $1,035,597 | $912,037 | | Property, plant and equipment, net | $451,901 | $421,218 | | Total assets | $1,752,403 | $1,584,953 | | Liabilities | | | | Short-term debt | $19,795 | $12,479 | | Accounts payable | $265,141 | $219,586 | | Total current liabilities | $440,968 | $387,358 | | Long-term debt | $565,872 | $552,966 | | Total liabilities | $1,175,307 | $1,091,297 | | Equity | | | | Total Titan shareholders' equity | $570,485 | $496,073 | | Total equity | $577,096 | $493,656 | Condensed Consolidated Statements of Changes in Equity This section outlines changes in the company's equity, including common shares, retained earnings, and accumulated other comprehensive loss, from January 1 to June 30, 2025 Condensed Consolidated Statements of Changes in Equity (in thousands, except share data) | Metric (in thousands, except share data) | Balance January 1, 2025 | Balance June 30, 2025 | | :--------------------------------------- | :---------------------- | :-------------------- | | Number of common shares | 63,139,435 | 63,852,976 | | Additional paid-in capital | $740,223 | $735,848 | | Retained earnings | $164,063 | $158,869 | | Treasury stock | $(122,336) | $(116,655) | | Accumulated other comprehensive (loss) | $(285,877) | $(207,577) | | Total Titan Equity | $496,073 | $570,485 | | Noncontrolling interest | $(2,417) | $6,611 | | Total Equity | $493,656 | $577,096 | Condensed Consolidated Statements of Cash Flows This section details the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Category (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used for) provided by operating activities | $(24,278) | $72,846 | | Net cash used for investing activities | $(24,846) | $(171,272) | | Net cash provided by financing activities | $16,906 | $113,875 | | Effect of exchange rate changes on cash | $20,913 | $(11,600) | | Net (decrease) increase in cash and cash equivalents | $(11,305) | $3,849 | | Cash and cash equivalents, end of period | $184,669 | $224,100 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES This section outlines the accounting principles, policies, and significant judgments used in preparing the financial statements - The Company recognized net monetary losses of $1.3 million and $2.3 million for the three and six months ended June 30, 2025, respectively, due to hyperinflation in Argentina and Turkey, recorded in foreign exchange loss[20][21] - The Company's Russian operations (Voltyre-Prom) represented approximately 7% of consolidated assets as of June 30, 2025, and 5% of consolidated global sales for the three months ended June 30, 2025; the military conflict has not had a significant impact on global operations[23][25] - No shares were repurchased under the Share Repurchase Program during the six months ended June 30, 2025; as of June 30, 2025, $1.0 million remains available under the $50.0 million program[26] - Confirmed obligations under supplier financing programs included in accounts payable were $13.5 million at June 30, 2025, up from $13.2 million at December 31, 2024[27] - The Company is evaluating the impact of new accounting pronouncements: ASU 2023-09 (Improvements to Income Tax Disclosures) effective for fiscal years beginning after December 15, 2024, and ASU 2024-03 (Disaggregation of Income Statement Expenses) effective for annual periods beginning after December 15, 2026[28][29] 2. BUSINESS COMBINATION This section details the acquisition of The Carlstar Group, including purchase consideration, goodwill allocation, and pro forma financial information - On February 29, 2024, Titan acquired 100% of The Carlstar Group (now Titan Specialty) for a total purchase consideration of $312.3 million, net of cash acquired[30][32] Carlstar Group Purchase Consideration (in thousands) | Component | Amount | | :------------------------------------------ | :----- | | Titan International, Inc. common stock | $168,693 | | Base cash consideration, net of cash acquired | $127,500 | | 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 | Goodwill Allocation by Segment (in thousands) | Segment | Carrying Value | | :------------------ | :------------- | | Agricultural | $4,844 | | Earthmoving/construction | — | | Consumer | $24,719 | | Total | $29,563 | Unaudited Pro Forma Financial Information (Six months ended June 30, 2024, in thousands, except per share data) | Metric | Amount | | :---------------------- | :----------- | | Pro forma revenues | $1,116,197 | | Pro forma net income | $36,197 | | Net income per common share, basic | $0.50 | | Net income per common share, diluted | $0.49 | 3. ACCOUNTS RECEIVABLE, NET This section provides a breakdown of accounts receivable, net of allowance for credit losses, and changes in the allowance Accounts Receivable, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Accounts receivable | $299,277 | $214,952 | | Allowance for credit losses | $(2,001) | $(3,232) | | Accounts receivable, net | $297,276 | $211,720 | Changes in Allowance for Credit Losses (in thousands) | Metric | 2025 | 2024 | | :---------------------------------------------- | :------ | :------ | | Balance at January 1, | $3,232 | $5,340 | | Provision charged to expense | $21 | $112 | | Recoveries of accounts receivable | — | $(743) | | Other, including foreign currency translation and acquisition related activity | $(1,252) | $2,261 | | Balance at June 30, | $2,001 | $6,970 | 4. INVENTORIES This section details the composition of inventories, including raw material, work-in-process, and finished goods Inventories (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Raw material | $111,958 | $103,616 | | Work-in-process | $49,775 | $41,898 | | Finished goods | $315,991 | $291,678 | | Total | $477,724 | $437,192 | 5. PROPERTY, PLANT AND EQUIPMENT, NET This section presents the net carrying amount of property, plant, and equipment, along with depreciation expense Property, Plant and Equipment, Net (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Land and improvements | $47,744 | $42,534 | | Buildings and improvements | $283,998 | $260,256 | | Machinery and equipment | $762,344 | $703,899 | | Tools, dies and molds | $121,306 | $118,569 | | Construction-in-process | $46,095 | $46,997 | | Less accumulated depreciation | $(809,586) | $(751,037) | | Total, net | $451,901 | $421,218 | - Depreciation expense was $15.0 million for Q2 2025 (vs. $14.3 million in Q2 2024) and $29.1 million for YTD 2025 (vs. $25.9 million in YTD 2024)[46] 6. INTANGIBLE ASSETS, NET This section provides details on intangible assets, including customer lists, trade names, and estimated amortization expense Intangible Assets, Net (in thousands) | Component | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :------------------------ | :-------------------------------- | :---------------------------------- | | Customer lists/relationships | $5,360 | $5,600 | | Trade names | $4,767 | $5,042 | | Other intangibles | $1,286 | $1,343 | | Total | $11,413 | $11,985 | - Amortization related to intangible assets was $0.3 million for Q2 2025 (vs. $0.9 million in Q2 2024) and $0.6 million for YTD 2025 (vs. $1.1 million in YTD 2024)[47] Estimated Aggregate Amortization Expense (in thousands) | Period | Amount | | :------------------------- | :----- | | July 1 - December 31, 2025 | $644 | | 2026 | $1,287 | | 2027 | $1,226 | | 2028 | $1,153 | | 2029 | $1,153 | | Thereafter | $5,950 | | Total | $11,413 | 7. OTHER CURRENT LIABILITIES This section lists various other current liabilities, including compensation, warranty, and accrued taxes Other Current Liabilities (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Compensation and benefits | $54,348 | $47,735 | | Warranty | $13,296 | $12,571 | | Accrued insurance benefits | $18,814 | $20,218 | | Customer rebates and deposits | $14,226 | $15,004 | | Accrued other taxes | $11,793 | $12,142 | | Accrued interest | $5,614 | $5,646 | | Foreign government grant | $3,936 | $3,672 | | Other | $22,221 | $26,306 | | Total | $144,248 | $143,294 | 8. WARRANTY This section details changes in the company's warranty liability, including provisions and payments made Changes in Warranty Liability (in thousands) | Metric | 2025 | 2024 | | :---------------------------------------- | :------ | :------ | | Warranty liability at beginning of the period | $22,392 | $21,710 | | Provision for warranty liabilities | $6,397 | $9,751 | | Warranty payments made | $(5,017) | $(9,120) | | Other adjustments, including acquisition of Titan Specialty | — | $1,784 | | Warranty liability at end of the period | $23,772 | $24,125 | 9. DEBT This section provides information on the company's long-term debt, including senior secured notes, revolving credit facilities, and compliance with covenants Long-term Debt (in thousands) | Component | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :------------------------------ | :-------------------------------- | :---------------------------------- | | 7.00% senior secured notes due 2028 | $397,581 | $397,153 | | Revolving credit facility | $159,000 | $146,000 | | Titan Europe credit facilities | $19,157 | $15,199 | | Other debt | $9,929 | $7,093 | | Total long-term debt | $565,872 | $552,966 | Aggregate Principal Maturities of Debt (in thousands) | Period | Amount | | :------------------------- | :----- | | July 1 - December 31, 2025 | $13,125 | | 2026 | $10,389 | | 2027 | $2,129 | | 2028 | $559,602 | | 2029 | $597 | | Thereafter | $2,244 | | Total | $588,086 | - The total amount available for borrowing under the revolving credit facility at June 30, 2025, was $199.7 million; after outstanding letters of credit ($5.9 million) and borrowings ($159.0 million), the net amount available was $34.8 million[59] - The Company was in compliance with all debt covenants under its revolving credit facility and senior secured notes indenture as of June 30, 2025[63] 10. LEASES This section presents supplemental balance sheet information related to operating and finance leases, including their maturities Supplemental Balance Sheet Information Related to Leases (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Operating lease ROU assets | $125,125 | $117,027 | | Total operating lease liabilities | $128,377 | $118,019 | | Finance lease, net | $3,478 | $2,359 | | Total finance lease liabilities | $3,649 | $2,469 | Maturities of Lease Liabilities at June 30, 2025 (in thousands) | Period | Operating Leases | Finance Leases | | :------------------------- | :--------------- | :------------- | | July 1 - December 31, 2025 | $12,345 | $909 | | 2026 | $21,293 | $1,475 | | 2027 | $18,591 | $1,032 | | 2028 | $16,666 | $508 | | 2029 | $15,721 | $123 | | Thereafter | $121,636 | $82 | | Total lease payments | $206,252 | $4,129 | 11. EMPLOYEE BENEFIT PLANS This section details contributions to pension plans and the net periodic pension cost - The Company contributed approximately $0.2 million to pension plans during the six months ended June 30, 2025, and expects to contribute $0.1 million for the remainder of 2025[70] Net Periodic Pension Cost (in thousands) | Component | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $129 | $204 | $290 | $366 | | Interest cost | $936 | $951 | $1,881 | $1,903 | | Expected return on assets | $(1,385) | $(1,301) | $(2,714) | $(2,602) | | Net periodic pension benefit | $(321) | $(92) | $(540) | $(227) | 12. VARIABLE INTEREST ENTITIES This section outlines the company's investments in variable interest entities and its maximum exposure to loss VIE Assets and Maximum Exposure to Loss (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Investments | $10,233 | $7,919 | | Total VIE assets | $10,233 | $7,919 | | Accounts payable to the non-consolidated VIEs | $1,656 | $2,646 | | Maximum exposure to loss | $11,889 | $10,565 | 13. ROYALTY EXPENSE This section reports total royalty expenses and details trademark license agreements - Total royalty expenses were $2.4 million for Q2 2025 (vs. $2.3 million in Q2 2024) and $4.9 million for YTD 2025 (vs. $5.3 million in YTD 2024)[73] - The Company has trademark license agreements with The Goodyear Tire & Rubber Company (expiring 2029 for farm/ATV, 2027 for truck tires) and Carlisle Companies, Inc. (expiring 2033)[73] 14. OTHER INCOME This section provides a breakdown of other income sources, including equity investment income and pension plan income Other Income (in thousands) | Component | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gain on property insurance settlement | — | $1,913 | — | $1,913 | | Equity investment income | $230 | $241 | $404 | $568 | | Gain (loss) on sale of assets | $2 | $413 | $(38) | $388 | | Pension plan income | $526 | $405 | $1,053 | $810 | | Other income | $382 | $305 | $855 | $3 | | Total | $1,140 | $3,277 | $2,274 | $3,682 | 15. INCOME TAXES This section details income tax expense, effective tax rates, and the impact of tax law changes Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense (in thousands) | $4,691 | $15,542 | $8,921 | $25,188 | | Effective income tax rate | 431.6% | 81.9% | 167.1% | 65.3% | - The effective tax rate differed from the U.S. Federal rate primarily due to foreign income tax rate differentials, valuation allowance on interest expense carryforward, and foreign inclusion items[77] - The Company does not anticipate a material impact from the OECD BEPS Pillar 2 global minimum tax rules and did not record any tax associated with Pillar 2 for the six months ended June 30, 2025[79] - The 'One, Big, Beautiful Bill Act' signed on July 4, 2025, contains significant tax law changes affecting depreciation, R&D, and interest expense, which the Company is currently evaluating for impact[80] 16. (LOSS) EARNINGS PER SHARE This section presents the net (loss) income attributable to Titan and the basic and diluted (loss) earnings per common share (Loss) Earnings Per Share (in thousands, except per share data) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income attributable to Titan | $(4,545) | $2,149 | $(5,194) | $11,350 | | Weighted average shares outstanding (basic) | 63,722 | 72,737 | 63,504 | 68,833 | | Weighted average shares outstanding (diluted) | 63,722 | 73,078 | 63,504 | 69,361 | | Basic (Loss) earnings per common share | $(0.07) | $0.03 | $(0.08) | $0.16 | | Diluted (Loss) earnings per common share | $(0.07) | $0.03 | $(0.08) | $0.16 | 17. LITIGATION This section addresses the company's involvement in legal proceedings and management's assessment of their financial impact - The Company is involved in routine legal proceedings but management believes no current proceedings, individually or in aggregate, will have a material effect on its financial position, results of operations, or cash flows[83] 18. SEGMENT INFORMATION This section provides financial data by reportable segment, including net sales and income from operations, for agricultural, earthmoving/construction, and consumer markets - Titan operates in three reportable segments: Agricultural, Earthmoving/Construction, and Consumer, based on customer markets; the CEO (CODM) uses segment gross profit and operating profit to assess performance and allocate resources[84][86] Segment Net Sales (in thousands) | Segment | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Agricultural | $193,223 | $216,330 | $390,969 | $456,003 | | Earthmoving/Construction | $152,347 | $165,564 | $295,637 | $330,772 | | Consumer | $115,260 | $150,276 | $264,932 | $227,604 | | Total Net Sales | $460,830 | $532,170 | $951,538 | $1,014,379 | Segment Income from Operations (in thousands) | Segment | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Agricultural | $11,453 | $15,772 | $20,895 | $39,782 | | Earthmoving/Construction | $2,994 | $7,047 | $4,670 | $15,881 | | Consumer | $3,230 | $6,449 | $12,037 | $11,562 | | Corporate & Unallocated | $(7,517) | $(6,946) | $(15,643) | $(19,831) | | Total Income from Operations | $10,160 | $22,322 | $21,959 | $47,394 | 19. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME This section details the components of accumulated other comprehensive (loss) income, including currency translation adjustments and derivative gains/losses Accumulated Other Comprehensive (Loss) Income (in thousands) | Component | Balance January 1, 2025 | Balance June 30, 2025 | | :-------------------------------------- | :---------------------- | :-------------------- | | Currency Translation Adjustments | $(289,678) | $(211,392) | | Gain (Loss) on Derivatives | $505 | $454 | | Unrecognized Losses and Prior Service Cost | $3,296 | $3,361 | | Total | $(285,877) | $(207,577) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition, results of operations, and liquidity for the three and six months ended June 30, 2025, compared to the prior year; it covers key financial metrics, segment performance, market outlook, and capital resources, highlighting the impact of market demand, acquisitions, and foreign currency fluctuations Acquisition of Carlstar Group (now also known as "Titan Specialty") This section discusses the acquisition of The Carlstar Group and its integration into the 'One Titan platform' - Titan acquired 100% of The Carlstar Group (now Titan Specialty) on February 29, 2024, integrating its operations into the 'One Titan platform'[97][32] Acquisition-Related Expenses (in thousands) | Period | Amount | | :------------------------- | :----- | | Three months ended June 30, 2024 | $0.0 | | Six months ended June 30, 2024 | $6.2 | FORWARD-LOOKING STATEMENTS This section highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including financial performance, market trends, capital expenditures, cost control, geopolitical uncertainties (Russia/Ukraine, Middle East), changes in laws/policies (tariffs), compliance with loan agreements, new products, acquisitions (especially Titan Specialty), and various other operational and economic factors[99][100][101][103] OVERVIEW This section provides a general description of Titan's business as a global manufacturer and supplier of industrial products across key markets - Titan is a global manufacturer and supplier of wheels, tires, and undercarriage industrial products for agricultural, earthmoving/construction, and consumer markets[106] - Key brands include Goodyear Farm Tire, Titan Tire, Carlstar, Voltyre-Prom, ITP, Black Rock, and Unique[106][107][109] - Major customers include AGCO Corporation, Caterpillar Inc., CNH Global N.V., Deere & Company, Hitachi, Ltd., Kubota Corporation, Liebherr, and Volvo[111][113] MARKET CONDITIONS AND OUTLOOK This section analyzes current market conditions and future outlook for the agricultural, earthmoving/construction, and consumer segments - Agricultural market: Experiencing a significant slowdown in North America and Europe due to lower farm income, higher financing costs, and OEM inventory reduction; South America shows early signs of recovery; tariffs create uncertainty[114] - Earthmoving/Construction market: Slowdown in OEM demand, but expected to stabilize mid-to-long term due to mining capital budgets and forecasted GDP growth; mineral commodity prices are high[115] - Consumer market: Slowdown in the Americas, particularly impacted by tariffs in the Titan Specialty business; the Company is assessing evolving tariff situations and exploring mitigation strategies like re-sourcing products[116] RESULTS OF OPERATIONS This section analyzes the company's financial performance, including net sales, gross profit, and various expenses, for the periods presented Net Sales This section analyzes the changes in net sales for the quarter and year-to-date periods, highlighting contributing factors Net Sales (in thousands) | Period | 2025 | 2024 | % Change | | :----- | :--- | :--- | :------- | | Q2 | $460,830 | $532,170 | (13.4)% | | YTD | $951,538 | $1,014,379 | (6.2)% | - Q2 2025 net sales decreased primarily due to reduced sales volumes in global agricultural and construction equipment, and a slowdown in Titan Specialty due to tariffs, partially offset by favorable price/product mix; foreign currency translation had a negative impact of 0.4%[119] - YTD 2025 net sales decreased due to reduced sales in agricultural and earthmoving/construction segments (North America and Europe), partially offset by increased contributions from Titan Specialty acquisition and favorable price/product mix; foreign currency translation negatively impacted by 1.9% (Brazilian real depreciation)[120] Gross Profit This section examines the company's gross profit and margin performance, identifying factors influencing changes Gross Profit (in thousands) and Margin | Period | Gross Profit 2025 | Gross Profit 2024 | % Change | Gross Profit % 2025 | Gross Profit % 2024 | % Change | | :----- | :---------------- | :---------------- | :------- | :------------------ | :------------------ | :------- | | Q2 | $69,273 | $80,442 | (13.9)% | 15.0% | 15.1% | (0.7)% | | YTD | $137,917 | $157,812 | (12.6)% | 14.5% | 15.6% | (7.1)% | - Gross profit and margin decreased in Q2 and YTD 2025 primarily due to lower sales volumes, which reduced fixed cost absorption in North America and Europe; YTD also impacted by inflationary pressures on raw materials[121][122] Selling, General and Administrative Expenses This section analyzes changes in selling, general, and administrative expenses and their impact on net sales Selling, General and Administrative Expenses (in thousands) | Period | SG&A 2025 | SG&A 2024 | % Change | SG&A % of Net Sales 2025 | SG&A % of Net Sales 2024 | | :----- | :-------- | :-------- | :------- | :----------------------- | :----------------------- | | Q2 | $52,353 | $51,583 | 1.5% | 11.4% | 9.7% | | YTD | $102,208 | $91,003 | 12.3% | 10.7% | 9.0% | - Q2 2025 SG&A increased due to general inflationary cost impacts, including higher personnel-related costs[123] - YTD 2025 increase largely attributable to two additional months of SG&A from the Titan Specialty acquisition, including distribution center costs and higher depreciation/amortization[124] Acquisition Related Expenses This section details expenses incurred in relation to business acquisitions Acquisition Related Expenses (in thousands) | Period | 2025 | 2024 | % Change | | :----- | :--- | :--- | :------- | | Q2 | $0 | $0 | 0.0% | | YTD | $0 | $6,196 | (100.0)% | - Acquisition-related expenses for YTD 2024 were $6.2 million, associated with one-time transaction costs for the Titan Specialty acquisition, with no comparable expenses in 2025[127] Research and Development Expenses This section reports research and development expenses, reflecting ongoing initiatives for product improvement Research and Development Expenses (in thousands) | Period | R&D 2025 | R&D 2024 | % Change | R&D % of Net Sales 2025 | R&D % of Net Sales 2024 | | :----- | :------- | :------- | :------- | :---------------------- | :---------------------- | | Q2 | $4,341 | $4,218 | 2.9% | 0.9% | 0.8% | | YTD | $8,885 | $7,872 | 12.9% | 0.9% | 0.8% | - R&D spending reflects ongoing initiatives to improve product designs, innovation, and quality[128] Royalty Expense This section details royalty expenses associated with trademark license agreements Royalty Expense (in thousands) | Period | Royalty 2025 | Royalty 2024 | % Change | Royalty % of Net Sales 2025 | Royalty % of Net Sales 2024 | | :----- | :----------- | :----------- | :------- | :-------------------------- | :-------------------------- | | Q2 | $2,419 | $2,319 | 4.3% | 0.5% | 0.4% | | YTD | $4,865 | $5,347 | (9.0)% | 0.5% | 0.5% | - Royalty expenses are associated with trademark license agreements for Goodyear and Carlisle brands[129] Income from Operations This section analyzes the company's income from operations, highlighting the impact of gross profit and other factors Income from Operations (in thousands) | Period | 2025 | 2024 | % Change | | :----- | :--- | :--- | :------- | | Q2 | $10,160 | $22,322 | (54.5)% | | YTD | $21,959 | $47,394 | (53.7)% | - The reduction in income from operations for both Q2 and YTD 2025 was primarily due to lower gross profit and other factors discussed[130][131] Interest Expense This section details interest expense, noting consistency in Q2 and an increase in YTD due to higher borrowing Interest Expense (in thousands) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $9,673 | $9,732 | | YTD | $19,208 | $18,099 | - Q2 2025 interest expense remained consistent with the prior year[132] - YTD 2025 interest expense increased primarily due to higher borrowing associated with the new credit facility for the Titan Specialty acquisition and share repurchases[133] Interest Income This section reports interest income, noting a decline in YTD 2025 due to reduced short-term financial investments Interest Income (in thousands) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $2,455 | $2,545 | | YTD | $4,694 | $5,420 | - Q2 2025 interest income was consistent with the prior year; YTD 2025 interest income declined primarily due to a reduction in short-term financial investments in Brazil and Argentina[134] Foreign Exchange (Loss) Gain This section analyzes foreign exchange losses, primarily driven by unfavorable intercompany balance translation and currency fluctuations Foreign Exchange (Loss) Gain (in thousands) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $(2,995) | $462 | | YTD | $(4,380) | $187 | - Foreign exchange loss in Q2 and YTD 2025 was primarily driven by unfavorable translation of intercompany balances at foreign subsidiaries and adverse currency fluctuations, particularly in Brazil[136][137] Other Income This section reports other income, noting a decrease due to a prior-year property insurance settlement gain Other Income (in thousands) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $1,140 | $3,277 | | YTD | $2,274 | $3,682 | - Other income decreased in Q2 and YTD 2025 primarily due to a $1.9 million gain recognized in the prior year period from a property insurance settlement[138][139] Provision for Income Taxes This section details the provision for income taxes and effective tax rates, explaining the factors for their differences Provision for Income Taxes (in thousands) and Effective Tax Rate | Period | Tax Expense 2025 | Tax Expense 2024 | Effective Tax Rate 2025 | Effective Tax Rate 2024 | | :----- | :--------------- | :--------------- | :---------------------- | :---------------------- | | Q2 | $4,691 | $15,452 | 431.6% | 81.9% | | YTD | $8,921 | $25,188 | 167.1% | 65.3% | - The income tax expense and rates differed due to an overall decrease in pre-tax income, foreign income tax rate differentials, valuation allowance on interest expense carryforward, and foreign inclusion items[140][141] Net (Loss) Income and (Loss) Earnings per Share This section presents the net (loss) income and (loss) earnings per share, attributing changes to lower sales volumes and reduced gross profit Net (Loss) Income and (Loss) Earnings per Share | Period | Net (Loss) Income 2025 | Net Income 2024 | Basic EPS 2025 | Basic EPS 2024 | Diluted EPS 2025 | Diluted EPS 2024 | | :----- | :--------------------- | :-------------- | :------------- | :------------- | :--------------- | :--------------- | | Q2 | $(3,604) | $3,422 | $(0.07) | $0.03 | $(0.07) | $0.03 | | YTD | $(3,582) | $13,396 | $(0.08) | $0.16 | $(0.08) | $0.16 | - The change in net (loss) income and (loss) earnings per share for both Q2 and YTD 2025 was primarily attributable to lower sales volumes and reduced gross profit[142][143] SEGMENT INFORMATION This section provides a detailed analysis of the financial performance for each of the company's reportable segments Segment Summary This section provides a consolidated overview of net sales, gross profit, and income from operations across all segments Segment Performance Summary (Q2 2025 vs Q2 2024, in thousands) | Segment | Net Sales 2025 | Net Sales 2024 | Gross Profit 2025 | Gross Profit 2024 | Income (Loss) from Operations 2025 | Income (Loss) from Operations 2024 | | :----------------------- | :------------- | :------------- | :---------------- | :---------------- | :--------------------------------- | :--------------------------------- | | Agricultural | $193,223 | $216,330 | $28,280 | $32,303 | $11,453 | $15,772 | | Earthmoving/Construction | $152,347 | $165,564 | $17,474 | $21,299 | $2,994 | $7,047 | | Consumer | $115,260 | $150,276 | $23,519 | $26,840 | $3,230 | $6,449 | | Corporate/Unallocated Expenses | — | — | — | — | $(7,517) | $(6,946) | | Consolidated Totals | $460,830 | $532,170 | $69,273 | $80,442 | $10,160 | $22,322 | Segment Performance Summary (YTD 2025 vs YTD 2024, in thousands) | Segment | Net Sales 2025 | Net Sales 2024 | Gross Profit 2025 | Gross Profit 2024 | Income (Loss) from Operations 2025 | Income (Loss) from Operations 2024 | | :----------------------- | :------------- | :------------- | :---------------- | :---------------- | :--------------------------------- | :--------------------------------- | | Agricultural | $390,969 | $456,003 | $52,767 | $72,922 | $20,895 | $39,782 | | Earthmoving/Construction | $295,637 | $330,772 | $32,367 | $44,276 | $4,670 | $15,881 | | Consumer | $264,932 | $227,604 | $52,783 | $40,614 | $12,037 | $11,562 | | Corporate/Unallocated Expenses | — | — | — | — | $(15,643) | $(19,831) |\ | Consolidated Totals | $951,538 | $1,014,379 | $137,917 | $157,812 | $21,959 | $47,394 | Agricultural Segment Results This section analyzes the financial performance of the Agricultural segment, noting decreases in sales and profit due to reduced demand Agricultural Segment Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | % Decrease | YTD 2025 | YTD 2024 | % Decrease | | :---------------------- | :------ | :------ | :--------- | :------- | :------- | :--------- | | Net sales | $193,223 | $216,330 | (10.7)% | $390,969 | $456,003 | (14.3)% | | Gross profit | $28,280 | $32,303 | (12.5)% | $52,767 | $72,922 | (27.6)% | | Income from operations | $11,453 | $15,772 | (27.4)% | $20,895 | $39,782 | (47.5)% | - Net sales and gross profit decreased due to reduced global demand for agricultural equipment, particularly in North America and Europe, driven by lower farm income, higher financing costs, and OEM inventory reduction; unfavorable foreign currency translation (Brazilian real, Turkish lira) also contributed to the decline[148][149][151][152] Earthmoving/Construction Segment Results This section analyzes the financial performance of the Earthmoving/Construction segment, noting decreased sales and profit due to lower OEM demand Earthmoving/Construction Segment Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | % Decrease | YTD 2025 | YTD 2024 | % Decrease | | :---------------------- | :------ | :------ | :--------- | :------- | :------- | :--------- | | Net sales | $152,347 | $165,564 | (8.0)% | $295,637 | $330,772 | (10.6)% | | Gross profit | $17,474 | $21,299 | (18.0)% | $32,367 | $44,276 | (26.9)% | | Income from operations | $2,994 | $7,047 | (57.5)% | $4,670 | $15,881 | (70.6)% | - Net sales and gross profit decreased due to lower sales volumes in North America and the undercarriage business, reflecting reduced demand from construction OEM customers; partially offset by favorable foreign currency translation (strengthening euro in Q2) and positive price/product mix[154][155][158][159] Consumer Segment Results This section analyzes the financial performance of the Consumer segment, highlighting the impact of tariffs and the Titan Specialty acquisition Consumer Segment Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | YTD 2025 | YTD 2024 | % Change | | :---------------------- | :------ | :------ | :------- | :------- | :------- | :------- | | Net sales | $115,260 | $150,276 | (23.3)% | $264,932 | $227,604 | 16.4% |\ | Gross profit | $23,519 | $26,840 | (12.4)% | $52,783 | $40,614 | 30.0% | | Income from operations | $3,230 | $6,449 | (49.9)% | $12,037 | $11,562 | 4.1% | - Q2 2025 net sales and gross profit decreased due to the impact of tariffs on the Titan Specialty business and lower sales volumes in the Americas region of the legacy Titan business[161][162] - YTD 2025 net sales and gross profit increased primarily due to the inclusion of two additional months of sales from the Titan Specialty acquisition and its strong aftermarket presence, despite market softness[163][164] Corporate & Unallocated Expenses This section details unallocated corporate expenses, explaining the drivers for quarterly and year-to-date changes - Unallocated corporate expenses were $7.5 million for Q2 2025 (vs. $6.9 million in Q2 2024) and $15.6 million for YTD 2025 (vs. $19.8 million in YTD 2024)[167] - The Q2 increase was driven by higher SG&A costs, particularly professional service fees for domestic system implementation; the YTD decrease was due to $6.2 million in non-recurring transaction-related costs for the Titan Specialty acquisition in Q1 2024[168] LIQUIDITY AND CAPITAL RESOURCES This section assesses the company's ability to generate and manage cash, covering cash flows, debt, and future liquidity outlook Cash Flows This section provides an overview of cash flows from operating, investing, and financing activities Operating Cash Flows This section details cash flows from operating activities and the cash conversion cycle Cash Flows from Operating Activities (in thousands) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :---------------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net (loss) income | $(3,582) | $13,396 | $(16,978) | | Depreciation and amortization | $32,494 | $27,423 | $5,071 | | Accounts receivable | $(60,964) | $(8,437) | $(52,527) | | Inventories | $(13,172) | $34,764 | $(47,936) | | Accounts payable | $24,038 | $(2,930) | $26,968 | | Net cash (used for) provided by operating activities | $(24,278) | $72,846 | $(97,124) | - Cash flows used for operating activities were $24.3 million in YTD 2025, a decrease of $97.1 million from YTD 2024, primarily due to lower net income and increased investment in working capital (accounts receivable up $52.5 million, inventory up $47.9 million, partially offset by accounts payable up $27.0 million)[170][171] Cash Conversion Cycle (in days) | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :---------------------- | :------------ | :---------------- | :------------ | | Days sales outstanding | 59 | 51 | 54 | | Days inventory outstanding | 116 | 123 | 97 | | Days payable outstanding | (64) | (62) | (53) | | Cash conversion cycle | 111 | 112 | 98 | - The cash conversion cycle increased by 13 days from June 30, 2024, to June 30, 2025, mainly due to decreases in net sales and cost of sales, and increased days in inventory to support future demand[172] Investing Cash Flows This section details cash flows used for investing activities, including capital expenditures and acquisitions Cash Flows from Investing Activities (in thousands) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :---------------------------------------- | :----------------------------- | :----------------------------- | :----- | | Capital expenditures | $(25,121) | $(34,199) | $9,078 |\ | Business acquisition, net of cash acquired | — | $(142,207) | $142,207 | | Net cash used for investing activities | $(24,846) | $(171,272) | $146,426 | - Net cash outflow from investing activities decreased by $146.4 million in YTD 2025 compared to YTD 2024, primarily due to the Carlstar acquisition in February 2024 ($143.6 million cash consideration) not recurring; capital expenditures were lower in YTD 2025 ($25.1 million vs. $34.2 million) to manage cash given decreased product demand[174] Financing Cash Flows This section details cash flows from financing activities, including borrowings, debt repayments, and stock repurchases Cash Flows from Financing Activities (in thousands) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :---------------------------------------- | :----------------------------- | :----------------------------- | :----- | | Proceeds from borrowings | $54,936 | $159,539 | $(104,603) | | Repayments of debt | $(37,956) | $(34,095) | $(3,861) | | Repurchase of common stock | — | $(7,762) | $7,762 | | Net cash provided by financing activities | $16,906 | $113,875 | $(96,969) | - Net cash provided by financing activities decreased by $97.0 million in YTD 2025 compared to YTD 2024[175] - YTD 2025 saw $54.9 million in borrowings (for working capital) offset by $38.0 million in debt repayments; YTD 2024 included $147.0 million in borrowings for the Titan Specialty acquisition and $168.7 million in common stock issuance for the acquisition[175][176][177] Debt Restrictions This section outlines the various restrictions and covenants associated with the company's debt agreements - The Company's revolving credit facility and senior secured notes contain various restrictions, including maintaining a minimum fixed charge coverage ratio (if availability is low), limits on dividends/stock repurchases, restrictions on additional borrowings/mergers, and limits on investments/dispositions[179][183] - Titan was in compliance with all debt covenants as of June 30, 2025[179] Guarantor Financial Information This section provides summarized financial information for the subsidiaries guaranteeing the senior secured notes - The 7.00% senior secured notes due 2028 are fully and unconditionally guaranteed, jointly and severally, by 100% owned subsidiaries: Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport, and Titan Wheel Corporation of Illinois[180] Summarized Balance Sheets (Company and Guarantors, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Current assets | $57,611 | $58,860 | | Property, plant, and equipment, net | $90,623 | $91,100 | | Intercompany accounts receivable from non-guarantor subsidiaries, net | $689,297 | $703,454 | | Current liabilities | $73,868 | $74,164 | | Long-term debt | $556,581 | $543,153 | Summarized Statement of Operations (Company and Guarantors, Six months ended June 30, 2025, in thousands) | Metric | Amount | | :------------------ | :----- | | Net sales | $232,389 | | Gross profit | $24,574 | | Loss from operations | $(10,462) | | Net loss | $(24,205) | Liquidity Outlook This section provides management's assessment of the company's future liquidity, including cash position, borrowing capacity, and capital expenditure forecasts - The Company does not anticipate significant liquidity constraints; as of June 30, 2025, cash and cash equivalents were $184.7 million, with $168.8 million held in foreign countries[186] - Net available borrowing under the $225.0 million revolving credit facility was $34.8 million at June 30, 2025[187] - Full-year capital expenditures are forecasted to be between $50 million and $60 million, primarily for facility enhancements, manufacturing capabilities, and new product development[188] - Cash and cash equivalents, internal cash flows, and global credit facilities are expected to provide sufficient liquidity for working capital, debt maturities, and capital expenditures; potential divestitures may also provide future liquidity[190] CRITICAL ACCOUNTING ESTIMATES This section confirms no material changes to the company's critical accounting estimates since the last annual report - There were no material changes in the Company's Critical Accounting Estimates since the filing of the 2024 Form 10-K[191] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that the Company's exposure to market risks, including foreign currency exchange rates, interest rates, and commodity price fluctuations, has not materially changed since December 31, 2024 - Titan is exposed to market risks from changes in foreign currency exchange rates, interest rates, and commodity price fluctuations[192] - The Company's exposure to market risk has not materially changed since December 31, 2024[192] Item 4. Controls and Procedures This section details management's evaluation of the Company's disclosure controls and procedures, concluding their effectiveness, and confirms no material changes in internal control over financial reporting during the second quarter of