# Titan International Inc: Form 10-Q for the period ended Sep 30, 2023

- Company: [Titan International Inc](/companies/twi.md) (CIK 899751)
- Form: 10-Q
- Filed: 2023-11-01
- Accepted by EDGAR: Nov 1, 2023, 20:26 ET
- Period: 2023-09-30
- Accession: 0000899751-23-000075
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/899751/000089975123000075/twi-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/899751/000089975123000075/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $401.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $1.43bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $335.7m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $1.18bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $66.1m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $247.5m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $3.2m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $9.4m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2023-07-01 to 2023-09-30 | $33.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-01-01 to 2023-09-30 | $102.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $27.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $128.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $3.9m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $16.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $4.7m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $28.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $19.3m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $81.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.31 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.29 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.31 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.29 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 63,095,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 63,271,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $140.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $41.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $19.1m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2023-09-30 | $881.3m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $1.26bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $374.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $824.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $433.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 53,169 characters.

Management's discussion and analysis of financial condition and results of operations (MD&A) is designed to provide a reader of the financial statements included in this quarterly report with a narrative from the perspective of the management of Titan International, Inc. (Titan or the Company) on Titan's financial condition, results of operations, liquidity, and other factors that may affect the Company's future results. The MD&A in this quarterly report should be read in conjunction with the condensed consolidated financial statements and other financial information included elsewhere in this quarterly report and the MD&A and audited consolidated financial statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 27, 2023 (the 2022 Form 10-K).

### Russia-Ukraine Military Conflict

In February 2022, in response to the military conflict between Russia and Ukraine, the United States, other North Atlantic Treaty Organization member states, as well as non-member states, announced targeted economic sanctions on Russia, certain Russian citizens and enterprises. The continuation of the conflict triggered additional economic and other sanctions enacted by the United States and other countries throughout the world. The scope of potential additional sanctions is unknown.

The Company currently owns 64.3% of the Voltyre-Prom, a leading producer of agricultural and industrial tires in Volgograd, Russia, which represents approximately 6% and 7% of consolidated assets of Titan both as of September 30, 2023 and December 31, 2022, respectively. The Russian operations represent approximately 5% of consolidated global sales for both the three months ended September 30, 2023 and 2022, while representing 6% of consolidated global sales for both the nine months ended September 30, 2023 and 2022. The impact of the military conflict between Russia and Ukraine has not had a significant impact on global operations. The Company continues to monitor the potential impacts on the business including the increased cost of energy in Europe and the ancillary impacts that the military conflict could have on other global operations.

As the military conflict in Ukraine exacerbates the global food crisis, Titan remains committed to the role it plays in the continuity of food supply and keeping essential goods moving, including its tire operation in Volgograd, Russia. Tires produced in the Voltyre-Prom facility are primarily sold into Commonwealth of Independent States (CIS) countries, located in Europe and Asia. This facility is in full compliance with all international sanctions on Russia. Titan has stopped any additional investments into this joint project and emphasizes that neither this operation, nor any other Titan operations, sell any products to the Russian military or other government agencies.

The potential impact of bans, sanction programs, and boycotts on our business is uncertain at the current time due to the fluid nature of the military conflict. The potential impacts include supply chain and logistics disruptions, financial impacts including disruptions to the execution of banking transactions with certain Russian financial institutions, volatility in foreign exchange rates and interest rates, inflationary pressures on raw materials and energy, loss of operational control and/or assets, heightened cybersecurity threats and other restrictions.

### Brazilian Tax Credits

In June 2021, the Company’s Brazilian subsidiaries received a notice that they had prevailed on an existing legal claim in regards to certain non-income (indirect) taxes that had been previously charged and paid. The matter specifically relates to companies’ rights to exclude the state tax on goods circulation (a value-added-tax or VAT equivalent, known in Brazil as “ICMS”) from the calculation of certain additional indirect taxes (specifically the program of social integration (“PIS”) and contribution for financing of social security (“COFINS”) levied by the Brazilian States on the sale of goods.

During the second quarter of 2023, one of the Company’s Brazilian subsidiaries received a notice that they had prevailed on an additional legal claim in regards to the non-income (indirect) tax credits that had been granted in a prior year ruling. The most recent ruling exempted the interest benefit on the indirect tax credits granted in prior year from taxation. For the nine months ended September 30, 2023, the Company recorded indirect tax credits of $0.5 million within other income in the condensed consolidated statements of operations. The Company also recorded $2.6 million within provision for income taxes in the condensed consolidated statements of operations for the nine months ended September 30, 2023.

During the second and third quarter of 2022, the Company submitted the related supporting documentation and received the approval from Brazilian tax authorities for the indirect tax credits for one of its Brazilian subsidiaries. For the three and nine months ended September 30, 2022, the Company recorded indirect tax credits of $9.5 million and $32.0 million within other income in the condensed consolidated statements of operations. The Company also recorded $1.6 million and $9.4 million of income tax expense associated with the recognition of these indirect tax credits for the three and nine months ended September 30, 2022.

The Company expects to be able to apply the tax credits received to settle the income tax liability that was incurred as a result of the credit. The Company also expects to utilize the majority of the credit against future PIS/COFINS and income tax obligations by the end of the year.

### FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements, which are covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Readers can identify these statements by the fact that they do not relate strictly to historical or current facts. The Company tried to identify forward-looking statements in this quarterly report by using words such as “anticipates,” “estimates,” “expects,” “intends,” “plans,” and “believes,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may,” and “could.” These forward-looking statements include, among other items, information concerning:

- the Company's financial performance;
- anticipated trends in the Company’s business;
- expectations with respect to the end-user markets into which the Company sells its products (including agricultural equipment, earthmoving/construction equipment, and consumer products);
- future expenditures for capital projects and future stock repurchases
- the Company’s ability to continue to control costs and maintain quality;
- the Company's ability to meet conditions of loan agreements, indentures and other financing documents;
- the Company’s business strategies, including its intention to introduce new products;
- expectations concerning the performance and success of the Company’s existing and new products; and
- the Company’s intention to consider and pursue acquisition and divestiture opportunities.

Readers of this Form 10-Q should understand that these forward-looking statements are based on the Company’s current expectations and assumptions about future events and are subject to a number of risks, uncertainties, and changes in circumstances that are difficult to predict, including those in Part I, Item 1A, Risk Factors, of the 2022 Form 10-K and Part II, Item 1A, Risk Factors, of this quarterly report on Form 10-Q, certain of which are beyond the Company’s control.

Actual results could differ materially from those expressed in, or implied by, these forward-looking statements as a result of various factors, including:

- the effect of the geopolitical instability resulting from the military conflicts between Russia and Ukraine on our Russian and global operations, and between the Israel and Hamas on our global operations;
- the effect of a recession on the Company and its customers and suppliers;
- the effect of the market demand cycles on the company's sales, which may have significant fluctuations;
- changes in the Company’s end-user markets into which the Company sells its products as a result of domestic and world economic or regulatory influences or otherwise;
- changes in the marketplace, including new products and pricing changes by the Company’s competitors;
- the Company's ability to maintain satisfactory labor relations;
- the Company's ability to operate in accordance with its business plan and strategies
- unfavorable outcomes of legal proceedings;
- the Company's ability to comply with current or future regulations applicable to the Company's business and the industry in which it competes or any actions taken or orders issued by regulatory authorities;
- availability and price of raw materials;
- availability and price of supply chain logistics and freight;
- levels of operating efficiencies;
- the effects of the Company's indebtedness and its compliance with the terms thereof;
- changes in the interest rate environment and their effects on the Company's outstanding indebtedness;
- unfavorable product liability and warranty claims;
- actions of domestic and foreign governments, including the imposition of additional tariffs and approval of tax credits or other incentives;
- geopolitical and economic uncertainties relating to the countries in which the Company operates or does business;
- risks associated with acquisitions, including difficulty in integrating operations and personnel, disruption of ongoing business, and increased expenses;
- results of investments;
- the effects of potential processes to explore various strategic transactions, including potential dispositions;
- fluctuations in currency translations;
- climate change and related laws and regulations;
- risks associated with environmental laws and regulations and increased attention to ESG matters;
- risks relating to our manufacturing facilities, including that any of our material facilities may become inoperable; and
- risks related to financial reporting, internal controls, tax accounting, and information systems, including cybersecurity threats.

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.

### OVERVIEW

Titan International, Inc., together with its subsidiaries, is a global wheel, tire, and undercarriage industrial manufacturer and supplier that services customers across the globe. As a leading manufacturer in the off-highway industry, Titan produces a broad range of products to meet the specifications of original equipment manufacturers (OEMs) and aftermarket customers in the agricultural, earthmoving/construction, and consumer markets. Titan manufactures and sells certain tires under the Goodyear Farm Tire, Titan Tire and Voltyre-Prom Tire brands and has complete research and development facilities to validate tire and wheel designs.

*Agricultural Segment:* Titan’s agricultural wheels, tires, and components are manufactured for use on various agricultural equipment, including tractors, combines, skidders, plows, planters, and irrigation equipment, and are sold directly to OEMs and to the aftermarket through independent distributors, equipment dealers, and Titan’s distribution centers. The wheels range in diameter from nine inches to 54 inches, with the 54-inch diameter being the largest agricultural wheel manufactured in North America. Basic configurations are combined with distinct variations (such as different centers and a wide range of material thickness) allowing the Company to offer a broad line of products to meet customer specifications. Titan’s agricultural tires range from approximately one foot to approximately seven feet in outside diameter and from five inches to 55 inches in width. Agricultural tires are offered in Titan, Goodyear, and Votyre brands with a full portfolio of sizes, load carrying capabilities, and tread patterns necessary for the markets served. The Company offers the added value of delivering a complete wheel and tire assembly to OEM and aftermarket customers.

*Earthmoving/Construction Segment:* The Company manufactures wheels, tires, and undercarriage systems and components for various types of OTR earthmoving, mining, military, construction, and forestry equipment, including skid steers, aerial lifts, cranes, graders and levelers, scrapers, self-propelled shovel loaders, articulated dump trucks, load transporters, haul trucks, backhoe loaders, crawler tractors, lattice cranes, shovels, and hydraulic excavators. The Company provides OEM and aftermarket customers with a broad range of earthmoving/construction wheels ranging in diameter from 15 to 63 inches and in weight from 125 pounds to 7,000 pounds. The 63-inch diameter wheel is the largest manufactured for the global earthmoving/construction market. Titan’s earthmoving/construction tires are offered in the Titan brand and range from approximately three feet to approximately 13 feet in outside diameter and in weight from 50 pounds to 12,500 pounds. Earthmoving/construction tires offered by Titan serve virtually every off-road application in the industry with some of the highest load requirements in the most severe applications. The Company also offers the added value of wheel and tire assembly for certain applications in the earthmoving/construction segment.

*Consumer Segment:* 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 OEM's in tangential industries.

The Company’s top customers, including global leaders in agricultural and construction equipment manufacturing, have been purchasing products from Titan or its predecessors for numerous years. Customers including AGCO Corporation, Caterpillar Inc., CNH Global N.V., Deere & Company, Hitachi, Ltd., Kubota Corporation, Liebherr, and Volvo have helped sustain Titan’s market leading position in wheel, tire, assembly, and undercarriage products.

### MARKET CONDITIONS AND OUTLOOK

### AGRICULTURAL MARKET OUTLOOK

Agriculture-related commodity prices continued to remain at historically high levels during the first three quarters of 2023. High farmer income and replacement of an aging large equipment fleet are both market conditions which are anticipated to support continued healthy demand for our products in the mid to long term time horizon. There are concerns over a slowdown in OEM customer demand due to their elevated inventory levels, lower demand in small agricultural equipment primarily in the Americas, and softness in the Brazilian economy, which are resulting in uncertain demand in the near term. However, the underlying market conditions mentioned previously provide support for the mid to long term healthy demand for our products. Many more variables, including weather, volatility in the price of commodities, grain prices, export markets, foreign currency exchange 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.

### EARTHMOVING/CONSTRUCTION MARKET OUTLOOK

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 GDP by country and the need for infrastructure developments. The earthmoving/construction markets experienced some slow down in OEM demand during the second and third quarters of 2023, most notably in the Americas, that stems from concerns over elevated inventory levels and some economic softness in Brazil. We expect a recovery and continued market stability 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 that also currently support growth, while global recession concerns could impact demand in various parts of the world.

### CONSUMER MARKET OUTLOOK

The consumer market consists of several distinct product lines within different regions. These products include light truck tires, turf equipment, specialty products, including custom mixing of rubber stock, and train brakes. The markets remained stable during the first quarter of 2023, but experienced some slow down during the second and third quarters of 2023 due to elevated inventory levels in Latin America. There are strong initiatives underway to bolster opportunities in various specialty products including mixing of rubber stock in the United States. 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.

### RESULTS OF OPERATIONS

*(Amounts in thousands, except percentages)*

|  | Three months ended September 30, 2023 | 2022 | % Increase/(Decrease) | Nine months ended September 30, 2023 | 2022 | % Increase/(Decrease) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $401,781 | $530,722 | (24.3)% | $1,431,601 | $1,659,614 | (13.7)% |
| Cost of sales | 335,708 | 443,089 | (24.2)% | 1,184,076 | 1,375,599 | (13.9)% |
| Gross profit | 66,073 | 87,633 | (24.6)% | 247,525 | 284,015 | (12.8)% |
| Gross profit % | 16.4% | 16.5% | (0.6)% | 17.3% | 17.1% | 1.2% |
| Selling, general and administrative expenses | 33,587 | 31,410 | 6.9% | 102,917 | 102,306 | 0.6% |
| Research and development expenses | 3,167 | 2,434 | 30.1% | 9,399 | 7,592 | 23.8% |
| Royalty expense | 2,344 | 3,298 | (28.9)% | 7,200 | 9,217 | (21.9)% |
| Income from operations | $26,975 | $50,491 | (46.6)% | $128,009 | $164,900 | (22.4)% |

### Net Sales

Net sales for the three months ended September 30, 2023 were $401.8 million, compared to $530.7 million in the comparable period of 2022. Net sales change was due to sales decreases in all segments. Net sales change was primarily due to sales volume decrease caused by elevated inventory levels at our customers in the Americas, particularly OEM customers, lower levels of end customer demand in small agricultural equipment, and economic softness in Brazil. The net sales change was also impacted by negative price/mix from lower raw material costs and unfavorable currency translation of 1.1%.

Net sales for the nine months ended September 30, 2023 were $1,431.6 million, compared to $1,659.6 million in the comparable period of 2022. Net sales change was due to sales decreases in all segments. Net sales change was primarily due to the reduced demand caused by aforementioned elevated inventory levels with OEM customers, and slowdown in economic activity in Brazil and small agricultural equipment. It was also impacted by negative price/mix which was primarily due to lower raw material and other input costs, most notably steel, and unfavorable currency translation of 1.6%. Additionally, the Company sold its Australian wheel business in the first quarter of 2022 which resulted in a reduction of net sales of 0.6%, or $10.0 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

### Gross Profit

Gross profit for the three months ended September 30, 2023 was $66.1 million, or 16.4% of net sales, compared to $87.6 million, or 16.5% of net sales, for the three months ended September 30, 2022. The change in gross profit was primarily due to the lower sales volume, which resulted in lower fixed cost leverage. The gross profit margin was similar to the prior year, notwithstanding the net sales decline, primarily as a result of continued strong actions taken by the Company to improve financial performance.

Gross profit for the nine months ended September 30, 2023 was $247.5 million, or 17.3% of net sales, compared to $284.0 million, or 17.1% of net sales, for the nine months ended September 30, 2022. The change in gross profit for nine months ended September 30, 2023 as compared to the prior year period was due to the impact of lower sales volume in North America and the aforementioned factors experienced in the third quarter. The increase in gross margin was due to lower production input costs as a result of actions taken to improve financial performance, which have helped offset the impact of lower fixed cost leverage.

### Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2023 were $33.6 million, or 8.4% of net sales, compared to $31.4 million, or 5.9% of net sales, for the three months ended September 30, 2022. The change in SG&A for the three months ended September 30, 2023 as compared to the prior year period was due to certain personnel related inflationary cost impacts.

Selling, general and administrative expenses for the nine months ended September 30, 2023 were $102.9 million, or 7.2% of net sales, compared to $102.3 million, or 6.2% of net sales, for the nine months ended September 30, 2022. The change in SG&A for the three and nine months ended September 30, 2023 as compared to the prior year period was due to certain personnel related inflationary cost impacts.

### Research and Development Expenses

Research and development (R&D) expenses for the three months ended September 30, 2023 were $3.2 million, or 0.8% of net sales, compared to $2.4 million, or 0.5% of net sales, for the comparable period in 2022. R&D expenses for the nine months ended September 30, 2023 were $9.4 million, or 0.7% of net sales, compared to $7.6 million, or 0.5% of net sales, for the comparable period in 2022. R&D spending reflects initiatives to improve product designs and an ongoing focus on innovation and quality.

### Royalty Expense

The Company has trademark license agreements with The Goodyear Tire & Rubber Company to manufacture and sell certain farm tires under the Goodyear brand. These agreements cover sales in North America, Latin America, Europe, the Middle East, Africa, Russia, and other Commonwealth of Independent States countries.

Royalty expenses for the three months ended September 30, 2023 were $2.3 million, or 0.6% of net sales, compared to $3.3 million, or 0.6% of net sales, for the three months ended September 30, 2022. Royalty expenses for the nine months ended September 30, 2023 were $7.2 million, or 0.5% of net sales, compared to $9.2 million, or 0.6% of net sales, for the nine months ended September 30, 2022. The changes in royalty expenses for the three months and nine months ended September 30, 2023 as compared to the prior year periods were due to the decreases in net sales, as described previously.

### Income from Operations

Income from operations for the three months ended September 30, 2023 was $27.0 million, compared to income from operations of $50.5 million for the three months ended September 30, 2022. Income from operations for the nine months ended September 30, 2023 was $128.0 million, compared to income from operations of $164.9 million for the nine months ended September 30, 2022. The changes in income from operations for the three months and nine months ended September 30, 2023 as compared to the prior year periods were primarily due to lower net sales and the net result of the items previously discussed.

### OTHER PROFIT/LOSS ITEMS

### Interest Expense, net

Interest expense was $3.9 million and $7.2 million for the three months ended September 30, 2023 and 2022, respectively, and $16.2 million and $22.8 million for the nine months ended September 30, 2023 and 2022. The decreases in interest expense for the three months and nine months ended September 30, 2023 were due to the reduced borrowing under the Company's global credit facilities, as compared to the prior year periods, and increased interest income associated with financial investments in Latin America and the United States.

### Foreign Exchange Gain (Loss)

Foreign exchange gain was $0.9 million for the three months ended September 30, 2023, compared to a gain of $1.2 million for the three months ended September 30, 2022. Foreign exchange loss was $0.9 million for the nine months ended September 30, 2023, compared to a gain of $8.7 million for the nine months ended September 30, 2022.

Foreign exchange gain experienced during the three months ended September 30, 2023 was primarily the result of a favorable impact of the movement of exchange rates in certain geographies in which we conduct business, offset by an 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 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. The foreign exchange loss experienced during the nine months ended September 30, 2023 was the result of an 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.

Foreign exchange gains experienced during the three months and nine months ended September 30, 2022 were primarily the result of a favorable impact of the movement of exchange rates in certain geographies in which we conduct business.

### Other Income

Other income was $0.5 million for the three months ended September 30, 2023, as compared to other income of $9.7 million in the comparable period of 2022. The change was primarily attributable to $9.5 million income on indirect tax credits in Brazil in the third quarter of 2022.

Other income was $2.4 million for the nine months ended September 30, 2023, as compared to other income of $24.5 million in the comparable period of 2022. The change was primarily attributable to miscellaneous income in 2022 that did not occur in 2023 which included $32.0 million indirect tax credits in Brazil, a gain of $1.3 million from a government grant associated with an earthquake that affected one of our Italian subsidiaries, and a loss of $10.9 million on sale of the Australian wheel business.

### Provision for Income Taxes

The Company recorded income tax expense of $4.7 million and $11.4 million for the three months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded income tax expense of $28.4 million and $39.1 million, respectively. The Company's effective income tax rate was 19.4% and 21.1% for the three months ended September 30, 2023 and 2022, respectively, and 25.0% and 22.3% for the nine months ended September 30, 2023 and 2022, respectively.

The Company’s 2023 and 2022 income tax expense and rates differed from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of foreign income tax rate differential on the mix of earnings, non-deductible royalty expenses in certain foreign jurisdictions, and certain permanent foreign inclusion items on the domestic provision.

On August 16, 2022, the “Inflation Reduction Act” (H.R. 5376) was signed into law in the United States. As part of the Inflation Reduction Act, the U.S. Congress enacted the corporate alternative minimum tax (CAMT). Titan does not currently expect the Inflation Reduction Act or CAMT to have a material impact on our financial results, including on our annual estimated effective tax rate.

### Net Income and Income per Share

Net income for the three months ended September 30, 2023 was $19.7 million, compared to net income of $42.7 million in the comparable period of 2022. For the three months ended September 30, 2023 and 2022, basic income per share were $0.31 and $0.69, respectively, and diluted income per share were $0.31 and $0.68, respectively. The Company's net income and income per share changes were due to the items previously discussed.

Net income for the nine months ended September 30, 2023 was $85.0 million, compared to net income of $136.2 million in the comparable period of 2022. For the nine months ended September 30, 2023 and 2022, basic income per share were $1.29 and $2.13, respectively, and diluted income per share were $1.29 and $2.11, respectively. The Company's net income and income per share changes were due to the items previously discussed.

### SEGMENT INFORMATION

**Segment Summary** (amounts in thousands, except percentages):

| Three months ended September 30, 2023 | Agricultural | Earthmoving/ Construction | Consumer | Corporate/ Unallocated Expenses | Consolidated Totals |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net sales | $212,967 | $155,045 | $33,769 | $— | $401,781 |
| Gross profit | 37,026 | 22,257 | 6,790 | — | 66,073 |
| Profit margin | 17.4% | 14.4% | 20.1% | — | 16.4% |
| Income (loss) from operations | 21,383 | 8,501 | 4,526 | (7,435) | 26,975 |
| **Three months ended September 30, 2022** |  |  |  |  |  |
| Net sales | $289,259 | $199,921 | $41,542 | $— | $530,722 |
| Gross profit | 45,949 | 34,959 | 6,725 | — | 87,633 |
| Profit margin | 15.9% | 17.5% | 16.2% | — | 16.5% |
| Income (loss) from operations | 31,125 | 21,836 | 4,856 | (7,326) | 50,491 |

| Nine months ended September 30, 2023 | Agricultural | Earthmoving/ Construction | Consumer | Corporate/ Unallocated Expenses | Consolidated Totals |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net sales | $787,973 | $528,652 | $114,976 | $— | $1,431,601 |
| Gross profit | 135,012 | 88,583 | 23,930 | — | 247,525 |
| Profit margin | 17.1% | 16.8% | 20.8% | — | 17.3% |
| Income (loss) from operations | 86,071 | 46,561 | 17,183 | (21,806) | 128,009 |
| **Nine months ended September 30, 2022** |  |  |  |  |  |
| Net sales | $917,443 | $611,550 | $130,621 | $— | $1,659,614 |
| Gross profit | 155,794 | 102,651 | 25,570 | — | 284,015 |
| Profit margin | 17.0% | 16.8% | 19.6% | — | 17.1% |
| Income (loss) from operations | 106,126 | 59,952 | 18,976 | (20,154) | 164,900 |

### Agricultural Segment Results

Agricultural segment results for the periods presented below were as follows (amounts in thousands, except percentages):

|  | Three months ended September 30, 2023 | 2022 | % Increase (Decrease) | Nine months ended September 30, 2023 | 2022 | % Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $212,967 | $289,259 | (26.4)% | $787,973 | $917,443 | (14.1)% |
| Gross profit | 37,026 | 45,949 | (19.4)% | 135,012 | 155,794 | (13.3)% |
| Profit margin | 17.4% | 15.9% | 9.4% | 17.1% | 17.0% | 0.6% |
| Income from operations | 21,383 | 31,125 | (31.3)% | 86,071 | 106,126 | (18.9)% |

28

Net sales in the agricultural segment were $213.0 million for the three months ended September 30, 2023, as compared to $289.3 million for the comparable period in 2022. The net sales change was primarily due to lower sales volume in North and South America which was caused by actions taken by customers to reduce elevated inventory levels, most notably OEM customers, overall softness in demand for small agricultural equipment, and decline in Brazilian economic activity. In addition, the change in net sales was due to negative price/product mix partly impacted by contractual price reductions to customers that are reflective of raw material and other input cost reductions, and an unfavorable impact of foreign currency translation of 3.6%.

Gross profit in the agricultural segment was $37.0 million for the three months ended September 30, 2023, as compared to $45.9 million in the comparable period in 2022. The change in gross profit was due to lower sales volume, which also resulted in lower fixed cost leverage. The increase in profit margin was due to actions taken to improve financial performance, including cost reductions and productivity initiatives executed across global operations in addition to lower production input costs.

Income from operations in the company's agricultural segment was $21.4 million for the three months ended September 30, 2023, as compared to income of $31.1 million for the three months ended September 30, 2022. The overall change in income from operations was attributable to lower gross profit.

Net sales in the agricultural segment were $788.0 million for the nine months ended September 30, 2023, as compared to $917.4 million for the comparable period in 2022. The net sales change was primarily due to lower sales volume in the Americas which was caused by aforementioned high inventory levels most notably with OEM customers, overall softness in demand for small agricultural equipment, and slowdown in economic activity in Brazil. The change in net sales was also impacted by negative price/product mix associated with lower steel prices, an unfavorable impact of foreign currency translation of 2.7%.

Gross profit in the agricultural segment was $135.0 million for the nine months ended September 30, 2023, as compared to $155.8 million in the comparable period in 2022. The change in gross profit was due to lower sales volume. The increase in profit margin was due to the measures taken to improve financial performance, along with lower raw material and other input costs, which have helped offset the impact of lower fixed cost leverage.

Income from operations in the company's agricultural segment was $86.1 million for the nine months ended September 30, 2023, as compared to income of $106.1 million for the nine months ended September 30, 2022. The overall change in income from operations was attributable to lower gross profit from a decline in net sales.

### Earthmoving/Construction Segment Results

Earthmoving/construction segment results for the periods presented below were as follows (amounts in thousands, except percentages):

|  | Three months ended September 30, 2023 | 2022 | % Decrease | Nine months ended September 30, 2023 | 2022 | % Decrease |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $155,045 | $199,921 | (22.4)% | $528,652 | $611,550 | (13.6)% |
| Gross profit | 22,257 | 34,959 | (36.3)% | 88,583 | 102,651 | (13.7)% |
| Profit margin | 14.4% | 17.5% | (17.7)% | 16.8% | 16.8% | 0.0% |
| Income from operations | 8,501 | 21,836 | (61.1)% | 46,561 | 59,952 | (22.3)% |

Net sales in earthmoving/construction segment were $155.0 million for the three months ended September 30, 2023, as compared to $199.9 million in the comparable period in 2022. The change in earthmoving/construction sales was primarily due to decreased volume in the Americas and the undercarriage business which were caused by elevated customer inventory levels and a slowdown with certain construction OEM customers. In addition, the net sales change was impacted by negative price/product mix from decreased raw material and other input costs. Net sales were favorably impacted by foreign currency translation of 2.5%.

Gross profit in the earthmoving/construction segment was $22.3 million for the three months ended September 30, 2023, as compared to $35.0 million for the three months ended September 30, 2022. The changes in gross profit and margin were primarily due to the lower sales volume, which also resulted in lower fixed cost leverage primarily in the Americas.

The Company's earthmoving/construction segment income from operations was $8.5 million for the three months ended September 30, 2023, as compared to income of $21.8 million for the three months ended September 30, 2022. The change was due to the decrease in sales volume and lower profitability.

The Company's earthmoving/construction segment net sales were $528.7 million for the nine months ended September 30, 2023, as compared to $611.6 million in the comparable period in 2022. The change in earthmoving/construction sales was primarily due to decreased volume in the Americas and the undercarriage business which was caused by elevated customer inventory levels and a slowdown at construction OEM customers, mentioned earlier. In addition, the net sales change was impacted by negative price/mix from lower raw material and other input costs, unfavorable impact of foreign currency translation of 0.3%, and the effects of the disposed Australian business of 1.0%.

Gross profit in the earthmoving/construction segment was $88.6 million for the nine months ended September 30, 2023, as compared to $102.7 million for the nine months ended September 30, 2022. The change in gross profit were primarily due to the lower sales volume, which also resulted in lower fixed cost leverage, primarily in the Americas. The profit margin remained consistent due to lower production input costs which have helped offset the impact of lower fixed cost leverage.

The Company's earthmoving/construction segment income from operations was $46.6 million for the nine months ended September 30, 2023 , as compared to $60.0 million for the nine months ended September 30, 2022. The change was due to the decrease in sales volume as mentioned previously.

### Consumer Segment Results

Consumer segment results for the periods presented below were as follows (amounts in thousands, except percentages):

|  | Three months ended September 30, 2023 | 2022 | % Increase (Decrease) | Nine months ended September 30, 2023 | 2022 | % Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $33,769 | $41,542 | (18.7)% | $114,976 | $130,621 | (12.0)% |
| Gross profit | 6,790 | 6,725 | 1.0% | 23,930 | 25,570 | (6.4)% |
| Profit margin | 20.1% | 16.2% | 24.1% | 20.8% | 19.6% | 6.1% |
| Income from operations | 4,526 | 4,856 | (6.8)% | 17,183 | 18,976 | (9.4)% |

Consumer segment net sales were $33.8 million for the three months ended September 30, 2023, as compared to $41.5 million for the three months ended September 30, 2022. The change was due to negative price/product mix, and lower sales volumes, mainly in Latin America for light utility truck tires, which experienced a decline in demand due to elevated customer inventories and a general economic slowdown in the region. In addition, net sales were unfavorably impacted by foreign currency translation of 0.8%.

Gross profit from the consumer segment was $6.8 million for the three months ended September 30, 2023, as compared to $6.7 million for the three months ended September 30, 2022. The increases in gross profit and margin were primarily due to lower raw material and other input costs, mainly in the North American wheel and the undercarriage operations.

Consumer segment income from operations was $4.5 million for the three months ended September 30, 2023, as compared to income of $4.9 million for the three months ended September 30, 2022. The change was due to higher foreign exchange loss at certain foreign subsidiaries.

Consumer segment net sales were $115.0 million for the nine months ended September 30, 2023, as compared to $130.6 million for the nine months ended September 30, 2022. The change was due to lower sales volumes, mainly in Latin America for light utility truck tires, where demand was lower from the softer economic conditions in the region and elevated customer inventory levels. In addition, net sales were unfavorably impacted by negative price/product mix from lower raw material and other input costs, foreign currency translation of 0.5%, and the effects of the disposed Australian business of 0.2%.

Gross profit from the consumer segment was $23.9 million for the nine months ended September 30, 2023, as compared to $25.6 million for the nine months ended September 30, 2022. The change in gross profit was primarily due to lower sales volumes, which also resulted in lower fixed cost leverage. The increase in profit margin was due to lower input costs which have helped offset the impact of lower fixed cost leverage.

Consumer segment income from operations was $17.2 million for the nine months ended September 30, 2023, as compared to income of $19.0 million for the nine months ended September 30, 2022. The change was due to decrease in gross profit as mentioned previously.

### Corporate & Unallocated Expenses

Income from operations on a segment basis did not include unallocated costs of $7.4 million for the three months ended September 30, 2023, and $21.8 million for the nine months ended September 30, 2023, as compared to $7.3 million for the three months ended September 30, 2022, and $20.2 million for the nine months ended September 30, 2022. Unallocated expenses are primarily comprised of corporate selling, general and administrative expenses. The changes in corporate and unallocated expenses for the three and nine months ended September 30, 2023 as compared to the prior year periods were related to the increase in certain SG&A expenses primarily associated with legal costs.

### LIQUIDITY AND CAPITAL RESOURCES

### Cash Flows

As of September 30, 2023, the Company had $211.9 million of cash, which increased as compared to the December 31, 2022 ending balance of $159.6 million, due to the following items:

### Operating Cash Flows

Summary of cash flows from operating activities:

*(Amounts in thousands)*

|  | Nine months ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Net income | $84,988 | $136,212 | $(51,224) |
| Depreciation and amortization | 31,598 | 32,283 | (685) |
| Loss on sale of the Australian wheel business | — | 10,890 | (10,890) |
| Deferred income tax provision | 5,868 | (1,631) | 7,499 |
| Income on indirect taxes | (3,096) | (32,043) | 28,947 |
| Foreign currency gain | (2,348) | (4,176) | 1,828 |
| Accounts receivable | 17,503 | (43,499) | 61,002 |
| Inventories | 32,197 | (44,180) | 76,377 |
| Prepaid and other current assets | 18,386 | 6,361 | 12,025 |
| Accounts payable | (62,751) | (9,516) | (53,235) |
| Other current liabilities | 12,241 | 49,885 | (37,644) |
| Other liabilities | 1,310 | 1,963 | (653) |
| Other operating activities | 4,210 | (309) | 4,519 |
| Cash provided by operating activities | $140,106 | $102,240 | $37,866 |

For the first nine months of 2023, cash flows provided by operating activities was $140.1 million, driven primarily by net income of $85.0 million, and decreases in working capital components of $17.6 million. Included in net income of $85.0 million was a non-cash charge for depreciation and amortization expense of $31.6 million and deferred income tax provision of $5.9 million.

Operating cash flows increased by $37.9 million when comparing the first nine months of 2023 to the comparable period in 2022. Cash flows from operating activities increased primarily due to focused working capital management on inventories, and solid collections efforts on accounts receivable by $76.4 million and $61.0 million, respectively.

Summary of the components of cash conversion cycle:

|  | September 30, 2023 | December 31, 2022 | September 30, 2022 |
| --- | ---: | ---: | ---: |
| Days sales outstanding | 54 | 48 | 49 |
| Days inventory outstanding | 101 | 86 | 87 |
| Days payable outstanding | (55) | (57) | (55) |
| Cash conversion cycle | 100 | 77 | 81 |

Cash conversion cycle increased by 19 days when comparing September 30, 2023 to September 30, 2022, which was primarily due to the decreases in net sales in a short period of time, and cost of sales for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. Inventory management is critical for the business in preparation for the future periods to supply customers efficiently, which was the driver of increased days in inventory at the end of September 30, 2023.

### Investing Cash Flows

Summary of cash flows from investing activities:

*(Amounts in thousands)*

|  | Nine months ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Capital expenditures | $(41,480) | $(32,755) | $(8,725) |
| Proceeds from the sale of the Australian wheel business | — | 9,293 | (9,293) |
| Proceeds from sale of fixed assets | 1,795 | 680 | 1,115 |
| Cash used for investing activities | $(39,685) | $(22,782) | $(16,903) |

Net cash used for investing activities was $39.7 million in the first nine months of 2023, as compared to net cash used for investing activities of $22.8 million in the first nine months of 2022. The Company invested a total of $41.5 million in capital expenditures in the first nine months of 2023, compared to $32.8 million in the comparable period of 2022. Capital expenditures represent plant equipment replacement and improvements, along with new tools, dies and molds related to new product development. The overall capital outlay for 2023 increased as the Company seeks to enhance the Company's existing facilities and manufacturing capabilities and drive plant efficiency and labor productivity gains. Cash used for investing activities for the first nine months of 2022 included $9.3 million from proceeds for the sale of the Australian wheel business.

### Financing Cash Flows

Summary of cash flows from financing activities:

*(Amounts in thousands)*

|  | Nine months ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Proceeds from borrowings | $6,628 | $88,907 | $(82,279) |
| Payment on debt | (25,017) | (120,728) | 95,711 |
| Repurchase of common stock | (19,064) | (25,000) | 5,936 |
| Other financing activities | (2,540) | (720) | (1,820) |
| Cash used for financing activities | $(39,993) | $(57,541) | $17,548 |

During the first nine months of 2023, $40.0 million of cash was used for financing activities. Payment on debt of $25.0 million and repurchase of common stock of $19.1 million was offset partially by proceeds from borrowings of $6.6 million. In 2022, the Company borrowed on the domestic revolving credit facility during the first quarter to facilitate the repurchasing of the Company's common stock from RDIF, and subsequently repaid the borrowing during the second quarter as cash flow improved.

### Debt Restrictions

The Company’s $125 million revolving credit facility (credit facility) and indenture relating to the 7.00% senior secured notes due 2028 contain various restrictions, including:

- When remaining availability under the credit facility is less than 10% of the total commitment under the credit facility ($12.5 million as of September 30, 2023), the Company is required to maintain a minimum fixed charge coverage ratio of not less than 1.0 to 1.0 (calculated quarterly on a trailing four quarter basis);
- Limits on dividends and repurchases of the Company’s stock;
- Restrictions on the ability of the Company to make additional borrowings, or to consolidate, merge, or otherwise fundamentally change the ownership of the Company;
- Limitations on investments, dispositions of assets, and guarantees of indebtedness; and
- Other customary affirmative and negative covenants.

These restrictions could limit the Company’s ability to respond to market conditions, provide for unanticipated capital investments, raise additional debt or equity capital, pay dividends, or take advantage of business opportunities, including future acquisitions. The Company is in compliance with these debt covenants at September 30, 2023.

### Guarantor Financial Information

The Company's 7.00% senior secured notes due 2028 are guaranteed by the following 100% owned subsidiaries of the Company: Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport, and Titan Wheel Corporation of Illinois (together, the "Guarantors"). The note guarantees are full and unconditional, joint and several obligations of the guarantors. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

The following summarized financial information of both the Company and the Guarantors is presented on a combined basis. Intercompany balances and transactions between the Company and the Guarantors have been eliminated and the summarized financial information does not reflect investments of the Company or the Guarantors in the Non-Guarantor Subsidiaries. The information is presented in accordance with the requirements of Rule 13-01 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations or financial position had the guarantor subsidiary operated as an independent entity.

Summarized Balance Sheets:

*(Amounts in thousands)*

| Assets | September 30, 2023 |
| --- | ---: |
| Current assets | $105,366 |
| Property, plant, and equipment, net | 86,288 |
| Intercompany accounts, non-guarantor subsidiaries | 497,330 |
| Other long-term assets | 57,166 |
| **Liabilities** |  |
| Current liabilities | 87,591 |
| Long-term debt | 396,058 |
| Other long-term liabilities | 4,844 |

Summarized Statement of Operations:

*(Amounts in thousands)*

|  | Nine months ended September 30, 2023 |
| --- | ---: |
| Net sales | $633,676 |
| Gross profit | 91,719 |
| Income from operations | 39,206 |
| Net income | 16,071 |

34

### Liquidity Outlook

At September 30, 2023, the Company had $211.9 million of cash and cash equivalents. At September 30, 2023, there were no borrowings under the Company's $125 million credit facility. Titan's availability under this credit facility may be less than $125 million as a result of outstanding letters of credit and eligible accounts receivable and inventory balances at certain domestic subsidiaries. Based on eligible accounts receivable and inventory balances, the Company's amount available for borrowing totaled $102.1 million at September 30, 2023. With outstanding letters of credit totaling $6.2 million, the net amount available for borrowing under the credit facility totaled $95.9 million at September 30, 2023. The cash and cash equivalents balance of $211.9 million included $168.1 million held in foreign countries.

The Company is expecting full year capital expenditures to be approximately $55 million to $60 million. These capital expenditures are anticipated to be used primarily to continue to enhance the Company’s existing facilities and manufacturing capabilities and drive productivity gains, along with the purchase of new tools, dies and molds related to new product development.

Cash payments for interest are currently forecasted to be approximately $15.0 million for the remainder of 2023 based on September 30, 2023 debt balances. The forecasted interest payment is comprised primarily of the semi-annual payment of $14 million to be paid in October for the 7.00% senior secured notes.

Cash and cash equivalents along with anticipated internal cash flows from operations and utilization of availability on global credit facilities, are expected to provide sufficient liquidity for working capital needs, debt maturities, and capital expenditures. Potential divestitures and unencumbered assets are also a means to provide for future liquidity needs.

### CRITICAL ACCOUNTING ESTIMATES

There were no material changes in the Company’s Critical Accounting Estimates since the filing of the 2022 Form 10-K. As discussed in the 2022 Form 10-K, the preparation of the condensed consolidated financial statements in conformity with US GAAP requires management to make estimates, assumptions, and judgments that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from those estimates and assumptions. Refer to Note 1. Basis of Presentation and Significant Accounting Policies in Part I, Item 1, Notes to Condensed Consolidated Financial Statements of this Form 10-Q for a discussion of the Company’s updated accounting policies.

## Market risk

As filed, 389 characters.

Titan is exposed to market risks, including changes in foreign currency exchange rates and interest rates, and commodity price fluctuations. Our exposure to market risk has not changed materially since December 31, 2022. For quantitative and qualitative disclosures about market risk, see Item 7A - Quantitative and Qualitative Disclosures About Market Risk included in the 2022 Form 10-K.

## Controls and procedures

As filed, 1,831 characters.

### Evaluation of Disclosure Controls and Procedures

Titan management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the Exchange Act)) as of September 30, 2023. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2023, Titan's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by Titan in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported accurately and within the time frames specified in the SEC's rules and forms and accumulated and communicated to Titan management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

### Changes in Internal Controls

There were no changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the third quarter of fiscal year 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

### Inherent Limitations on the Effectiveness of Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

## Risk factors

As filed, 929 characters.

Except for the additional risk factor set forth below, there have been no material changes from the risk factors disclosed in Item 1A. Risk Factors to the 2022 Form 10-K.

**The Israeli-Hamas military conflict may adversely affect our business and financial statements.**

In October 2023, an armed conflict between the Hamas-led militant groups and Israel military forces began and has continued to escalate in Israel through the date of the filing of the Form 10-Q. The Company does not have operations in the region affected by the military conflict and has not had a significant impact on global operations. The military conflict and a continued escalation could have broader economic consequences beyond their current scope. The Company continues to monitor the potential impacts on the business, including increased cost of energy, and the ancillary impacts that the military conflict could have on other global operations.

Filed Nov 1, 2023.
Source: SEC EDGAR, the filing index for accession 0000899751-23-000075. Last ingested by Listed: Oct 24, 2026, 15:00 ET. No prices; not investment advice.