Superior Reports First Quarter 2024 Financial Results
Superior Industries International, Inc. reported first quarter 2024 financial results showing a net sales decline to $316M, a net loss of $33M, and adjusted EBITDA of $31M. The company successfully exited a high-cost German manufacturing facility and is undergoing strategic transformations. Despite challenges, the company expects to generate $190M in adjusted EBITDA by the end of 2024, driving future growth and shareholder value.
The successful exit of the high-cost German manufacturing facility will enhance the company's competitive positioning.
The ongoing strategic transformations in European and North American operations are expected to drive significant improvement in sales, earnings, and cash flows in the future.
Superior expects to generate approximately $190 million in adjusted EBITDA by the end of 2024, positioning the company for sustainable growth and long-term value creation for shareholders.
Net sales declined to $316 million in the first quarter of 2024, down from $381 million in the same period last year, primarily due to lower aluminum pass through, recovery of cost inflation, and unit shipments.
The company reported a net loss of $33 million in the first quarter of 2024, compared to a net loss of $4 million in the first quarter of 2023, indicating financial challenges.
Adjusted EBITDA decreased to $31 million in the first quarter of 2024, down from $46 million in the same period last year, mainly due to lower recovery of cost inflation and unit shipments.
Insights
The reported financial results of Superior Industries International reveal a contraction in net sales and value-added sales, alongside a transition aimed at enhancing their competitiveness. A notable point is the strategic exit from the high-cost German manufacturing facility, with operations transferring to Poland, which indicates a strategic shift focused on cost efficiency. The net loss of $33 million is a significant downturn from the previous year, reflecting operational challenges such as lower aluminum pass-through and recovery of cost inflation from customers. Furthermore, the adjusted EBITDA of $31 million, while decreased from the previous period, suggests that operational adjustments are having a mixed impact on earnings.
The projection of approximately $190 million of Adjusted EBITDA on unit sales of just over 15 million by the end of 2024 offers a glimpse into management's confidence in the strategic transformation. However, given the current financial figures, this target appears ambitious and hinges on successful restructuring and market factors. A decrease in cash flow from operating activities raises concerns about the company's liquidity and ability to fund ongoing operations without increasing its debt. Consequently, the negative free cash flow of $8 million indicates a pressing need for careful fiscal management to reverse the cash burn.
The company's performance has been impacted by external market factors such as foreign exchange rates and the deconsolidation of a subsidiary. The decline in value-added sales adjusted for these elements suggests that price and currency volatility are influencing financial outcomes. The 6% year-over-year decline in this adjusted metric and 4% decline in LTM Content per Wheel indicates an environment where the company is facing issues with pricing power and cost management amidst market fluctuations.
Investors should monitor the impact of the transition to Poland on overall cost structures and margin profiles. The focus on a competitively advantaged footprint speaks to the management's strategic intent to optimize operations. However, considering that the sector is sensitive to economic cycles, the global demand for their products and the pricing of raw materials such as aluminum will continue to play a critical role in their ability to achieve projected outcomes.
An increase in the income tax provision due to a non-cash tax restructuring charge and a rise in SG&A expenses due to restructuring suggests that the company's balance sheet is currently under pressure. The reported funded debt of $630 million and a slight increase in net debt year over year illustrates a leveraging scenario that could concern investors especially in the context of declining sales and profitability metrics. The ability to service this debt will likely depend on the success of the company's strategic initiatives and the broader economic environment affecting their customer base.
Investors should further analyze the terms of Superior's debt and their covenants, as the current trajectory might necessitate re-negotiation or raise the risk of covenant breaches.
Executing strategic transformation to enhance competitive positioning
First Quarter 2024 Highlights:
- Successfully exited high-cost German manufacturing facility, as planned
-
Net Sales of
$316M 4% before giving effect to lower cost of aluminum and Deconsolidation of Subsidiary1) -
Value-Added Sales Adjusted for FX and Deconsolidation1 of Subsidiary of
$171M 6% YoY -
Net Loss of
$33M -
Adjusted EBITDA1 of
$31M -
Cash Flow Provided by Operating Activities of
$4M -
Unlevered Free Cash Flow1 of
$8M
| ($ in millions) | |||||||
| Three Months | |||||||
|
1Q 2024 |
|
1Q 2023 |
||||
| Net Sales | |||||||
$ |
193.5 |
$ |
211.6 |
||||
|
122.8 |
|
169.3 |
||||
| Global | $ |
316.3 |
$ |
381.0 |
|||
| Value-Added Sales (1) | |||||||
$ |
100.7 |
$ |
105.8 |
||||
|
71.5 |
|
96.9 |
||||
| Global | $ |
172.2 |
$ |
202.7 |
|||
|
|||||||
1 See “Non-GAAP Financial Measures” below for a definition and the appendix for reconciliation to the most comparable GAAP measure. |
“We are pleased with the progress we have made in executing on the transformation of our European business we announced last year. Production in our manufacturing facility in
“Having completed the transformation of our North American operations, and following the completion of similar actions in
First Quarter 2024 Results
Net Sales for the first quarter of 2024 were
Gross Profit for the first quarter of 2024 was
Selling, General, and Administrative (“SG&A”) expenses for the first quarter of 2024 were
Income from Operations was
Income Tax Provision for the first quarter of 2024 was
For the first quarter of 2024, the Company reported a Net Loss of
Adjusted EBITDA, a Non-GAAP financial measure, was
The Company reported Cash Flow Provided by Operating Activities of
Financial Position
As of March 31, 2024, Superior had funded debt of
2024 Outlook
Superior’s full year 2024 Outlook is as follows:
| FY 2024 Outlook | |||||
| Net Sales | |||||
| Value-Added Sales | |||||
| Adjusted EBITDA | |||||
| Unlevered Free Cash Flow | |||||
| Capital Expenditures | |||||
Value-Added Sales, Adjusted EBITDA, and Unlevered Free Cash Flow are Non-GAAP measures, as defined below. In reliance on the safe harbor provided under section 10(e) of Regulation S-K, Superior has not quantitatively reconciled from Net Income (the most comparable GAAP measure) to Adjusted EBITDA, Net Sales (the most comparable GAAP measure) to Value-Added Sales, nor Cash Flow Provided by Operating Activities (the most comparable GAAP measure) to Unlevered Free Cash Flow presented in the 2024 Outlook, as Superior is unable to quantify certain amounts included in Net Income, Net Sales and Cash Flow Provided by Operating Activities without unreasonable efforts and due to the inherent uncertainty regarding such variables. Superior also believes that such reconciliation would imply a degree of precision that could potentially be confusing or misleading to investors. However, the magnitude of these amounts may be significant.
Conference Call
Superior will host a conference call beginning at 8:30 AM ET on Thursday, May 2, 2024. The conference call may be accessed by dialing +1 786 697 3501 for participants in the
During the conference call, the Company's management plans to review operating results and discuss financial and operating matters. In addition, management may disclose material information in response to questions posed by participants during the call.
About Superior Industries
Superior is one of the world’s leading aluminum wheel suppliers. Superior’s team collaborates with customers to design, engineer, and manufacture a wide variety of innovative and high-quality products utilizing the latest light weighting and finishing technologies. Superior serves the European aftermarket with the brands ATS®, RIAL®, ALUTEC®, and ANZIO®. Headquartered in
Non-GAAP Financial Measures
In addition to the results reported in accordance with GAAP included throughout this earnings release, this release refers to the following non-GAAP measures:
“Adjusted EBITDA,” defined as earnings before interest income and expense, income taxes, depreciation, amortization, restructuring charges and other closure costs and impairments of long-lived assets and investments, changes in fair value of redeemable preferred stock embedded derivative, acquisition and integration, certain hiring and separation related costs, proxy contest fees, gains associated with early debt extinguishment and accounts receivable factoring fees. “Net Sales Adjusted for Change in Cost of Aluminum and Deconsolidation of Subsidiary” defined as Net Sales less the change from cost of aluminum and deconsolidation of subsidiary. “Value-Added Sales,” defined as Net Sales less the value of aluminum and other costs, as well as outsourced service provider (“OSP”) costs that are included in Net Sales. “Value-Added Sales Adjusted for FX," which is also referred to as “Value-Added Sales Adjusted for Foreign Exchange,” defined as Value-Added Sales adjusted for the impact of foreign exchange translation. “Value-Added Sales Adjusted for FX and Deconsolidation,” which is also referred to as “Value-Added Sales Adjusted for Foreign Exchange and Deconsolidation,” defined as Value-Added Sales adjusted for the impact of foreign exchange translation and the impact of deconsolidating SPG. “Content per Wheel,” defined as Value-Added Sales Adjusted for Foreign Exchange on a per unit (wheel) shipment basis. “Free Cash Flow,” defined as Cash Flow Provided by Operating Activities less Cash used in Investing Activities less non-debt components of financing activities. “Unlevered Free Cash Flow,” defined as Cash Flow Provided by Operating Activities less Capital Expenditures plus Cash Interest Paid. “Net Debt,” defined as total funded debt less cash and cash equivalents.
For reconciliations of these Non-GAAP measures to the most directly comparable GAAP measure, see the attached supplemental data pages. Management believes these Non-GAAP measures are useful to management and may be useful to investors in their analysis of Superior’s financial position and results of operations. Further, management uses these Non-GAAP financial measures for planning and forecasting purposes. This Non-GAAP financial information is provided as additional information for investors and is not in accordance with or an alternative to GAAP and may be different from similar measures used by other companies.
Forward-Looking Statements
This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and can generally be identified by the use of future dates or words such as “assumes,”, “may,” “should,” “could,” “will,” “expects,” “expected,” “seeks to,” “anticipates,” “plans,” “believes,” “estimates,” “foresee,” “intends,” “Outlook,” “guidance,” “predicts,” “projects,” “projecting,” “potential,” “targeting,” “will likely result,” or “continue,” or the negative of such terms and other comparable terminology. These statements also include, but are not limited to, the 2024 Outlook included herein, the impact of COVID-19 and the resulting supply chain disruptions, increased energy costs, semiconductor shortages, rising interest rates, the Russian military invasion of
New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect Superior. It should be remembered that the price of the ordinary shares and any income from them can go down as well as up. Superior disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except as may be required by law.
| SUPERIOR INDUSTRIES INTERNATIONAL, INC. | |||||||||
| Condensed Consolidated Statements of Income (Loss) (Unaudited) | |||||||||
| (Dollars in Millions, Except Per Share Amounts) | |||||||||
| Three Months | |||||||||
|
1Q 2024 |
|
|
1Q 2023 |
|
||||
| Net Sales | $ |
316.3 |
|
$ |
381.0 |
|
|||
| Cost of Sales |
|
295.1 |
|
|
346.4 |
|
|||
| Gross Profit | $ |
21.1 |
|
$ |
34.6 |
|
|||
| SG&A Expenses |
|
20.8 |
|
|
19.4 |
|
|||
| Income From Operations | $ |
0.3 |
|
$ |
15.1 |
|
|||
| Interest Expense, net |
|
(15.9 |
) |
|
(15.7 |
) |
|||
| Other Expense, net |
|
(0.5 |
) |
|
(0.2 |
) |
|||
| Loss Before Income Taxes | $ |
(16.1 |
) |
$ |
(0.7 |
) |
|||
| Income Tax Provision |
|
(16.6 |
) |
|
(3.3 |
) |
|||
| Net Loss | $ |
(32.7 |
) |
$ |
(4.0 |
) |
|||
| Loss Per Share: | |||||||||
| Basic | $ |
(1.52 |
) |
$ |
(0.49 |
) |
|||
| Diluted | $ |
(1.52 |
) |
$ |
(0.49 |
) |
|||
| Weighted Average and Equivalent Shares Outstanding for EPS (in Thousands): |
|||||||||
| Basic |
|
28,254 |
|
|
27,299 |
|
|||
| Diluted |
|
28,254 |
|
|
27,299 |
|
|||
| SUPERIOR INDUSTRIES INTERNATIONAL, INC. | |||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | |||||||||
| (Dollars in Millions) | |||||||||
| 3/31/2024 | 12/31/2023 | ||||||||
| Current Assets | $ |
473.5 |
|
$ |
459.9 |
|
|||
| Property, Plant and Equipment, net |
|
386.3 |
|
|
398.6 |
|
|||
| Intangibles and Other Assets |
|
106.0 |
|
|
131.5 |
|
|||
| Derivative Financial Instruments |
|
39.7 |
|
|
40.5 |
|
|||
| Total Assets | $ |
1,005.5 |
|
$ |
1,030.6 |
|
|||
| Current Liabilities | $ |
212.2 |
|
$ |
198.9 |
|
|||
| Long-Term Liabilities |
|
660.5 |
|
|
668.4 |
|
|||
| Redeemable Preferred Shares |
|
255.0 |
|
|
248.2 |
|
|||
| European Non-controlling Redeemable Equity |
|
0.7 |
|
|
0.9 |
|
|||
| Shareholders’ Deficit |
|
(122.9 |
) |
|
(85.9 |
) |
|||
| Total Liabilities and Shareholders’ Deficit | $ |
1,005.5 |
|
$ |
1,030.6 |
|
|||
| SUPERIOR INDUSTRIES INTERNATIONAL, INC. | ||||||||
| Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| (Dollars in Millions) | ||||||||
| Three Months | ||||||||
|
1Q 2024 |
|
|
1Q 2023 |
|
|||
| Net Loss | $ |
(32.7 |
) |
$ |
(4.0 |
) |
||
| Depreciation and Amortization |
|
21.9 |
|
|
22.8 |
|
||
| Income tax, Non-cash Changes |
|
16.3 |
|
|
2.3 |
|
||
| Stock-based Compensation |
|
1.7 |
|
|
0.8 |
|
||
| Amortization of Debt Issuance Costs |
|
1.2 |
|
|
1.2 |
|
||
| Other Non-cash Items |
|
2.8 |
|
|
2.4 |
|
||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable |
|
(12.4 |
) |
|
(13.3 |
) |
||
| Inventories |
|
(5.6 |
) |
|
(7.2 |
) |
||
| Other Assets and Liabilities |
|
(3.1 |
) |
|
4.1 |
|
||
| Accounts Payable |
|
16.3 |
|
|
32.2 |
|
||
| Income Taxes |
|
(2.8 |
) |
|
(2.4 |
) |
||
| Cash Flow Provided By Operating Activities | $ |
3.5 |
|
$ |
38.7 |
|
||
| Capital Expenditures |
|
(6.6 |
) |
|
(15.6 |
) |
||
| Net Cash Used In Investing Activities | $ |
(6.6 |
) |
$ |
(15.6 |
) |
||
| Debt Repayment |
|
(1.7 |
) |
|
(2.2 |
) |
||
| Cash Dividends |
|
(3.3 |
) |
|
(3.3 |
) |
||
| Financing Costs Paid and Other |
|
(0.2 |
) |
|
- |
|
||
| Payments Related to Tax Withholdings for Stock-Based Compensation |
|
(1.1 |
) |
|
(3.3 |
) |
||
| Finance Lease Payments |
|
(0.2 |
) |
|
(0.3 |
) |
||
| Cash Flow Used In Financing Activities | $ |
(6.5 |
) |
$ |
(9.2 |
) |
||
| Effect of Exchange Rate on Cash |
|
(0.8 |
) |
|
1.6 |
|
||
| Net Change in Cash | $ |
(10.5 |
) |
$ |
15.6 |
|
||
| Cash - Beginning |
|
201.6 |
|
|
213.0 |
|
||
| Cash - Ending | $ |
191.1 |
|
$ |
228.6 |
|
||
| SUPERIOR INDUSTRIES INTERNATIONAL, INC. | ||||||||
| Earnings Per Share Calculation (Unaudited) | ||||||||
| (Dollars and Outstanding Shares in Millions, Except Per Share Amounts) | ||||||||
| Three Months | ||||||||
|
1Q 2024 |
|
|
1Q 2023 |
|
|||
| Basic EPS Calculation(1) | ||||||||
| Net Loss | $ |
(32.7 |
) |
$ |
(4.0 |
) |
||
| Less: Accretion of Preferred Stock |
|
(6.8 |
) |
|
(6.1 |
) |
||
| Less: Redeemable Preferred Stock Dividends |
|
(3.4 |
) |
|
(3.3 |
) |
||
| Numerator | $ |
(42.9 |
) |
$ |
(13.4 |
) |
||
| Denominator: Weighted Avg. Shares Outstanding |
|
28.3 |
|
|
27.3 |
|
||
| Basic (Loss) Earnings Per Share | $ |
(1.52 |
) |
$ |
(0.49 |
) |
||
| Diluted EPS Calculation(1) | ||||||||
| Net Loss | $ |
(32.7 |
) |
$ |
(4.0 |
) |
||
| Less: Accretion of Preferred Stock |
|
(6.8 |
) |
|
(6.1 |
) |
||
| Less: Redeemable Preferred Stock Dividends |
|
(3.4 |
) |
|
(3.3 |
) |
||
| Numerator | $ |
(42.9 |
) |
$ |
(13.4 |
) |
||
| Weighted Avg. Shares Outstanding-Basic |
|
28.3 |
|
|
27.3 |
|
||
| Dilutive Stock Options and Restricted Stock Units |
|
- |
|
|
- |
|
||
| Denominator: Weighted Avg. Shares Outstanding |
|
28.3 |
|
|
27.3 |
|
||
| Diluted (Loss) Earnings Per Share | $ |
(1.52 |
) |
$ |
(0.49 |
) |
||
| (1) Basic earnings per share is computed by dividing net income (loss), after deducting preferred dividends and accretion and European non-controlling redeemable equity dividends, by the weighted average number of common shares outstanding. For purposes of calculating diluted earnings per share, the weighted average shares outstanding includes the dilutive effect of outstanding stock options and time and performance based restricted stock units under the treasury stock method. The redeemable preferred shares are not included in the diluted earnings per share because the conversion would be anti-dilutive for the periods ended March 31, 2024 and 2023. | ||||||||
| Value-Added Sales; Value-Added Sales Adjusted for Foreign Exchange; and Value-Added Sales Adjusted for Foreign Exchange and Deconsolidation; and Content per Wheel (1) | |||||||||||||||
| Three Months | Trailing Twelve Months | ||||||||||||||
|
1Q 2024 |
|
|
1Q 2023 |
|
|
1Q 2024 |
|
|
1Q 2023 |
|
||||
| Net Sales | $ |
316.3 |
|
$ |
381.0 |
|
$ |
1,320.6 |
|
$ |
1,620.4 |
|
|||
| Less: Aluminum, Other Costs, and Outside Service Provider Costs |
|
(144.1 |
) |
|
(178.3 |
) |
|
(603.5 |
) |
|
(836.5 |
) |
|||
| Value-Added Sales (1) | $ |
172.2 |
|
$ |
202.7 |
|
$ |
717.1 |
|
$ |
783.9 |
|
|||
| Currency Impact on Current Period Value-Added Sales |
|
(0.9 |
) |
|
- |
|
|
(12.6 |
) |
|
- |
|
|||
| Value-Added Sales Adjusted for Foreign Exchange (1) | $ |
171.3 |
|
$ |
202.7 |
|
$ |
704.5 |
|
$ |
783.9 |
|
|||
| Deconsolidation Impact |
|
- |
|
|
(20.6 |
) |
|||||||||
| Value-Added Sales Adjusted for Foreign Exchange and Deconsolidation (1) | $ |
171.3 |
|
$ |
182.1 |
|
|||||||||
| Wheels Shipped |
|
3,623 |
|
|
3,858 |
|
|
14,327 |
|
|
15,366 |
|
|||
| Content per Wheel (1) (3) | $ |
47.29 |
|
$ |
52.54 |
|
$ |
49.17 |
|
$ |
51.02 |
|
|||
| Adjusted EBITDA (1) | Three Months | |||||||
|
1Q 2024 |
|
|
1Q 2023 |
|
|||
| Net Loss | $ |
(32.7 |
) |
$ |
(4.0 |
) |
||
| Adjusting Items: | ||||||||
| - Interest Expense, net |
|
15.9 |
|
|
15.7 |
|
||
| - Income Tax Provision (Benefit) |
|
16.6 |
|
|
3.3 |
|
||
| - Depreciation |
|
17.1 |
|
|
18.0 |
|
||
| - Amortization |
|
4.9 |
|
|
4.8 |
|
||
| - Restructuring and Other |
|
7.9 |
|
|
6.7 |
|
||
| - Factoring Fees |
|
1.2 |
|
|
1.0 |
|
||
$ |
63.6 |
|
$ |
49.5 |
|
|||
| Adjusted EBITDA (1) | $ |
30.8 |
|
$ |
45.5 |
|
||
| (1) Value-Added sales and Adjusted EBITDA are non-GAAP financial measures; see page 4 for definitions. | ||||||||
| SUPERIOR INDUSTRIES INTERNATIONAL, INC. | |||||||||
| Non-GAAP Financial Measures (Unaudited) | |||||||||
| (Dollars in Millions) | |||||||||
| Free Cash Flow (1) | Three Months | ||||||||
|
1Q 2024 |
|
|
1Q 2023 |
|
||||
| Cash Flow Provided By Operating Activities | $ |
3.5 |
|
$ |
38.7 |
|
|||
| Net Cash Used In Investing Activities |
|
(6.6 |
) |
|
(15.6 |
) |
|||
| Cash Payments for Non-debt Financing Activities |
|
(4.4 |
) |
|
(6.6 |
) |
|||
| Free Cash Flow (1) | $ |
(7.5 |
) |
$ |
16.5 |
|
|||
| Unlevered Free Cash Flow (1) | Three Months | ||||||||
|
1Q 2024 |
|
|
1Q 2023 |
|
||||
| Cash Flow Provided By Operating Activities | $ |
3.5 |
|
$ |
38.7 |
|
|||
| Capital Expenditures |
|
(6.6 |
) |
|
(15.6 |
) |
|||
| Cash Interest Paid |
|
10.7 |
|
|
10.8 |
|
|||
| Unlevered Free Cash Flow (1) | $ |
7.6 |
|
$ |
33.9 |
|
|||
| Net Debt (1) (3) | 3/31/2024 | 3/31/2023 | |||||
| Long Term Debt (Less Current Portion) | $ |
625.6 |
|
$ |
639.8 |
|
|
| Short Term Debt |
|
4.6 |
|
|
10.0 |
|
|
| Total Debt |
|
630.2 |
|
|
649.8 |
|
|
| Less: Cash and Cash Equivalents |
|
(191.1 |
) |
|
(228.6 |
) |
|
| Net Debt (1) |
|
439.1 |
|
|
421.2 |
|
|
| Currency Impact on Current Period Net Debt (2) |
|
2.5 |
|
|
- |
|
|
| Net Debt Adjusted for Foreign Exchange (1) | $ |
441.6 |
|
$ |
421.2 |
|
|
| (1) Net Debt, Net Debt Adjusted for Foreign Exchange, Free Cash Flow and Unlevered Free Cash Flow are non-GAAP financial measures; see page 4 for definitions. | |||||||
| (2) Exchange rate adjustment to state March 2024 net debt at March 2023 currency levels | |||||||
| (3) Excluding Debt Issuance Cost | |||||||
| Net Sales Adjusted for Change in the Cost of Aluminum and Deconsolidation (1) | ||||||
| Three Months | ||||||
|
1Q 2024 |
|
1Q 2023 |
|
||
| Net Sales | $ |
316.3 |
$ |
381.0 |
|
|
| Change in Cost of Aluminum |
|
- |
|
(31.2 |
) |
|
| SPG Deconsolidation |
|
- |
|
(20.6 |
) |
|
| Net Sales Adjusted for Change in the Cost of Aluminum and Deconsolidation (1) | $ |
316.3 |
$ |
329.2 |
|
|
| (1) Net Sales Adjusted for Change in the Cost of Aluminum and Deconsolidation is a non-GAAP financial measure; see page 4 for definitions. | ||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240502756692/en/
Superior Investor Relations
(248) 234-7104
Investor.Relations@supind.com
Source: Superior Industries International, Inc.
