Titan may invite private equity firm to purchase more shares

WEST CHICAGO, Ill.—An equity company may be invited to purchase a larger share of Titan International Inc.

The West Chicago-based maker of off-highway tires, wheels, assemblies and undercarriage products said that it plans to discuss with its largest shareholder, equity funded American Industrial Partners, changing a clause in the parties' stockholder agreement that would allow AIP to increase its ownership of Titan common stock in open market purchases.

According to Titan, AIP currently owns approximately 16.4 percent of Titan stock, which the equity company acquired when Titan purchased Carlstar Group L.L.C. in February.

As part of that acquisition, AIP and Titan entered into a stockholder agreement that included, among other customary terms, an agreement that AIP not acquire additional Titan shares without the company's consent for the period stated in the agreement.

The agreement also requires AIP to vote in accordance with the board's recommendations to shareholders generally through Titan's 2025 annual shareholders meeting; and for AIP not to sell its Titan stock for the period set forth in the agreement.

The filing with the Securities and Exchange Commission is available here.

"The board continues to focus on growing the company's shareholder value over the long term," Maurice N. Taylor Jr., chairman of the Titan Board of Directors, said. "We are delighted to have AIP as a principal shareholder of Titan by virtue of our successful Carlstar acquisition. We greatly appreciate AIP's support of our company and the opportunity to engage with them to explore the possibility of amending the stockholder agreement on terms acceptable to the board to enable AIP to increase their ownership position if they chose to do so."

Taylor admitted business has slowed, but said "our management team is highly experienced in dealing with these market cycles and will make good, timely decisions. Let's not forget that our end-markets are tied to important global segments that will rebound and be strong as populations grow, more protein is consumed and critical infrastructure is built. There is no company in the world better suited in wheels, tires and undercarriage to meet the needs of our customers."

In its first quarter financial report, Titan said that net sales, gross profit and income operations were down for the three months ended March 31. Net sales were $482.2 million, compared to $548.6 million in the comparable period of 2023. T

The company said the volume change was positively impacted by including net sales from the Carlstar Group.

Titan President and CEO Paul Reitz said Titan is positioned to deliver "more consistent, stronger results throughout various market cycles" as a result of structural changes as well as opportunities created by the Carlstar acquisition.

"... We believe the combined companies in a typical year would have earnings power of $250 million to $300 million of adjusted EBITDA with free cash flow of at least $125 million. Our team is focused on implementing the short and long-term actions needed to deliver this and more, and while fiscal year 2024 results will be impacted by soft market conditions, it is good for our investors to have a perspective on the future opportunities and our steadfast focus on building shareholder value."

Titan closed the $296 million cash and stock transaction to acquire Carlstar on Feb. 29.