Good morning ladies and gentlemen and welcome to the Titan International, Inc. Fourth Quarter 2023 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for questions and comments after the presentation. It is now my pleasure to turn the floor over to Alex Snyder, Vice President, Financial Planning and Investor Relations for Titan. Mr. Snyder, the floor is now yours.

Thank you. Good morning. I'd like to welcome everyone to Titan's fourth quarter 2023 earnings call. On the call with me today are Paul Reitz, Titan's President and CEO, and David Martin, Titan's Senior Vice President and CFO. I will begin with a reminder that the results we are about to review were presented in the earnings release issued this morning along with our Form 10-K, which was also filed with the Securities and Exchange Commission this morning. As a reminder, during this call, we will be discussing certain forward-looking information, including the company's plans and projections for the future that involve risks, uncertainties, and assumptions that could cause our actual results to differ materially from the forward-looking information. Additional information concerning factors that either individually or in the aggregate could cause actual results to differ materially from these forward-looking statements can be found within the Safe Harbor statement included in the earnings release attached to the company's Form 8-K filed earlier, as well as our latest Form 10-K and Forms 10-Q, all of which have been filed with the SEC. In addition, today's remarks may refer to non-GAAP financial measures, which are intended to supplement, but not be a substitute for the most directly comparable GAAP measures. The earnings release, which accompanies today's call, contains financial and other quantitative information to be discussed today as well as the reconciliation of the non-GAAP measures to the most comparable GAAP measures. The Q4 earnings release is available on the company's website. A replay of this presentation, a copy of today's transcript, and the company's latest quarterly investor presentation will all be available soon after the call on Titan's website. I would now like to turn the call over to Paul.

Thanks Alan and good morning to everyone. As all of you have hopefully seen by now, along with the announcement of our Q4 and year-end earnings this morning, we announced the acquisition of Caraustar. This is an accretive transformative transaction for us. The addition of Caraustar will significantly expand our customer base and product portfolio, while also adding key manufacturing and distribution assets. With that in mind, I'm not going to spend as much time as normal on our Q4 and year-end results today as our business going forward will be substantially different. Instead, I will focus my remarks on the strategic rationale for our acquisition of Caraustar, along with a brief discussion of market conditions. Then David will provide comments on our reported results, the financial aspects of the Caraustar transaction, and then, of course, we'll have time for questions. We're really excited for the opportunity to make the Caraustar team part of the Titan family. Caraustar is a global manufacturer of specialty wheels and tires. The primary end markets for the products are outdoor power equipment, powersports, high-speed trailers, and smaller agriculture equipment. Powersports, trailers, and outdoor power equipment are verticals where Titan has not competed in recent years. So, adding Caraustar's product portfolio in those end markets will add some meaningful diversification to our business. Caraustar maintains strong relationships with a number of key national retailers and Commercial Servicing dealers. Caraustar has built a one-stop shop and a connection to customers in their three key segments that is unparalleled. Titan has done the same at our key segment, large agriculture, where we offer an unmatched arsenal of wheels and tires with a strong connection to our customers and end users. Titan and Caraustar are better together, and we're excited to add these new customer relationships and products into Titan's business. It's no secret that agriculture and construction industries are cyclical. So, the addition of these more retail-centric categories is something we expect will benefit the consistency of our sales, margins, and profitability over time by reducing some of that cyclicality. Caraustar has developed a secret sauce. I'm going to use the term one-stop-shop repeatedly because they have done a tremendous job in the three segments where they operate by building that secret sauce around their business model. Part of that formation of that secret sauce is Caraustar's world-class portfolio in specialty areas such as outdoor power equipment, ATV and UTVs, powersports, and high-speed trailers, along with agriculture products for smaller equipment such as tractors, backhoes, and implements. This portfolio dovetails well with our existing Titan lineup. Although we do have some products through these channels, our bread and butter has really been innovating the larger wheels and tires for the biggest tractors and combines. Going forward, we believe our combined product line will feature the best-in-class offerings in these segments. We are really pleased to be extending our market leadership there and to be able to offer the product portfolio I just mentioned. While we are excited for the top-line opportunities with a broad product base, we are particularly excited about Caraustar's business model that connects their manufacturing and distribution assets with third-party producers in a very effective and efficient manner. Caraustar has a plant strategically located in Beijing, China, with a knowledgeable workforce and access to lower-cost materials. Caraustar's three U.S. facilities, two in Tennessee and one in South Carolina, fit well with our existing production base, which is primarily located throughout the Midwest. Together, Caraustar and Titan form a manufacturing base that can produce an extensive product portfolio, unmatched in our industry, while also providing value-added risk mitigation to our valued customers. Complementing that manufacturing platform is Caraustar's one-stop-shop operating approach, which connects their manufacturing and distribution with their customers. From the beginning, I've been impressed with learning more about their market approach and their customer connection. We're looking forward to the addition of the 12 distribution centers that allow them to deliver products to their customers in a timely manner regardless of source of origin. Their distribution centers are located in key strategic areas, including the Central and Southern United States, where their domestic manufacturing facilities are, with good penetration on the West Coast and into Canada, as well as a distribution center in Hungary. This is a good opportunity for Titan to expand our existing market penetration there. Overall, we like how well Caraustar is vertically integrated and we look forward to having these operations in-house. As I noted earlier, Caraustar's business is more retail-oriented than Titan's. Approximately 75% of Caraustar's sales fit within Titan's consumer segment with the remaining 25% going to agriculture and construction. Retail and even some smaller agriculture are less correlated with commodities, and as such, we expect to see our annual revenues going forward have less volatility than they have in the past. Caraustar aligns strongly with Titan strategically, and we are eager to start integrating their operations into our business and diving into the growth opportunities for the Caraustar and Titan teams as we move forward. Regarding the financial details, we were able to do this deal at a fair valuation, approximately four times adjusted EBITDA. It's accretive, leaving our balance sheet in good shape. We've worked hard to reduce our leverage over the past couple of years, and the modest use of our asset-backed revolver to help fund this acquisition places our post-deal leverage at a manageable 1.3 times net based on pro forma combined company profitability. Before handing it off to David, I want to touch on market conditions. As many of you have heard from market leaders in the agriculture and construction equipment sectors, expectations for 2024 are described as conservative or softer. This is being driven by anticipated declines in farmer incomes, combined with global uncertainties from grain supply, government actions, and overall geopolitics, which have weighed on current demand. The destocking dynamic that impacted 2023 has run its course, so we start this year with inventories in a more normal state. We expect agricultural market activity over the year will be down, driven by current commodity prices. Nevertheless, as we look towards 2024, we expect less impact from the headwind of lagging inventory throughout 2023. It's worth noting that amidst the current market noise, North American farmer balance sheets and land values remain strong, which bodes well for future prospects compared to cycles from prior decades. In summary, 2023 was a solid year for Titan, and I'm proud of our ability to navigate challenges, serve our customers, and maintain margins. The plan we implemented a few years ago centered around our One Titan team has proven effective, gaining momentum with our dedication and relentless focus on serving customers. I want to thank the Titan team for their efforts during the due diligence process to get the Caraustar transaction completed. Their hard work is reflected in our financial performance and growth initiatives. Lastly, I’d like to welcome the Caraustar team to Titan. They are an excellent group that has done a remarkable job building Caraustar into the business we've discussed today. Titan and Caraustar are indeed better together. With that, I'd like to turn the call over to David.

Thank you, Paul, and good morning to everyone on the call. As Paul noted, the acquisition of Caraustar is a transformative deal for us. It is important to emphasize all the benefits it brings to Titan and, more importantly, the people that come with it. Our operations and financial results moving forward will look different than they have previously. Paul mentioned that the acquisition multiple was four times, and we expect the deal to be immediately accretive, which is something we're excited about. I will touch on some highlights from our fourth quarter and fiscal year 2023 results. A primary theme to emphasize is that these results provide evidence that the work we've done to optimize our operations is improving our durable gross margin profile. Full-year revenues came in at $1.8 billion for 2023, compared to over $2 billion in 2022, and our adjusted EBITDA was $205 million. For the fourth quarter, revenues were $390 million with adjusted EBITDA of $38 million. Our full-year gross margins improved 20 basis points from 16.6% to 16.8% in 2023, despite sales being driven down year-over-year due to destocking and other economic factors. As one might expect, our margins typically follow the ag cycle, and our goal has always been to manage input costs while balancing product pricing to earn a fair return on our assets. Over the past several years, we have improved our production and operations. By controlling areas under our influence, we've been able to make durable gains in our cost structure, resulting in a higher gross margin floor reflected in our 2023 results. SG&A expenses for the fourth quarter were $32 million compared to $30.5 million in the prior year, with the increase due primarily to inflation pressures, particularly in employee compensation. For the full year, these expenses totaled $135 million, up a modest 1.6% from $133 million in 2022. This stability in a challenging environment with inflation is noteworthy. R&D expense was $3.1 million for the fourth quarter and $12.5 million for the full year, reflecting our commitment to prioritizing R&D investments. Our operating income was $20.7 million for the fourth quarter and $149 million for the full year, with operating cash flow for the year at $179 million, up 11.6% from the prior year, showcasing discipline from our global operating and finance teams focusing on working capital. During the year, we experienced non-operating events impacting the income statement, such as the devaluation of the Argentinean peso relative to the U.S. dollar. We applied hyperinflation accounting rules to Argentina and Turkey, recognizing $21 million in foreign exchange losses. Additionally, we approved a restructuring plan at one of our European businesses to adjust our cost structure, costing $1.6 million. Both the foreign exchange loss and restructuring costs were excluded from our EBITDA and net income calculations. Our strong cash flow enabled key investments in the business, with CapEx totaling $61 million compared to $47 million in the prior year. We executed a share repurchase program, buying back 1 million shares for $13.5 million during the fourth quarter, totaling nearly 2.7 million shares for $33 million for the year, leaving $17 million of capacity remaining. We’ve consistently highlighted our strong free cash flow, and with the acquisition of Caraustar, the total cost was $296 million, comprising $127 million in cash and $169 million in TWI stock as newly issued shares. Post-transaction leverage stands at a manageable 1.3 times net debt to adjusted EBITDA on a pro forma basis. In conjunction with the closing, we expanded our asset-based lending line from $125 million to $225 million with similar terms to our existing facility. This dramatic expansion includes the domestic and Canadian assets of Caraustar, maintaining a similar pricing structure. We will share more information about cost synergies as we integrate the two businesses in the coming months. As we noted in our earnings release, we are not providing fiscal year 2024 guidance at this time due to the transformative nature of the acquisition. We think it's prudent to integrate first before predicting how 2024 will look for our combined operations. We will provide guidance during subsequent earnings reports as we develop a clearer understanding. Thank you for your time this morning.

We would now begin the question-and-answer session. Your first question comes from Larry De Maria with William Blair. Your line is now open.

Thanks. Good morning and congratulations on the deal. Can you give some color on you said costs are reduced cyclicality? What does Caraustar look like in 2024 pre-standout?

David had mentioned in his comments, Caraustar is experiencing some softness in the market, similar to Titan, primarily due to interest rates and farmer income impacts. However, their results for 2023 were exceptional, and we expect they will have another good year in 2024. Their business is primed for growth opportunities, combining capabilities with Titan's portfolio and existing footings. The unique one-stop-shop model will enhance connectivity with customers and distribution efficiency. We're eagerly looking forward to leveraging these synergies further.

Any customer overlap to speak of?

Our businesses are complementary, with some minimal overlap. We plan to reach out to any overlapping customers as a unified team, assuring them of our collective strength. Overall, there’s very little overlap in products and customers' segments.

Your advantage has always been operating in niche markets. Can you compare the competitive landscape for Caraustar?

The competitive landscape for Caraustar is similar to ours. They focus on being connected to customers with a robust product portfolio, allowing them to mitigate various risks effectively. Their customer connection and margin profile are also very strong. There aren’t any competitors operating across all three primary segments as effectively as they do. Titan and Caraustar complement each other well.

The Caraustar business is indeed less capital-intensive compared to Titan, which is advantageous. They have maintained profitability relatively consistent with our margins, and we believe this positions us well moving forward.

How would you compare Caraustar to what you're already doing in your consumer segment?

Caraustar operates at a world-class level in the consumer segment, and their capabilities surpass what we previously achieved. Where we have common ground, it's mainly in complementary areas rather than direct competition. Their business is advanced, and the integration with Titan will amplify our market presence and service capabilities.

In fiscal year 2023, we were over 16% in gross margins, and we expect to maintain that similar range going forward. Our operating discipline will support our goals despite any market fluctuations.

To summarize, we are thrilled about the Caraustar acquisition, and we believe it will yield significant benefits and improvements for Titan in the future. Thank you for all your questions, and let’s keep working to drive the combined value of both organizations.