First Quarter 2017 Highlights:
- Q1 unit shipments of 2.8
million
- Q1 2017 net sales of $174.2 million;
value-added sales of $95.5 million
- Q1 net income of $3.1 million and
diluted EPS of $0.12 including a $4.8 million, or $0.19 per diluted
share, impact related to acquisition support costs
- Q1 2017 adjusted EBITDA of $19.1
million
- Previously announced transformative
acquisition of UNIWHEELS AG (“UNIWHEELS”)
- 2017 outlook reaffirmed
Superior Industries International, Inc. (NYSE:SUP), the
largest manufacturer of aluminum wheels for light vehicles in North
America, today reported financial results for the first quarter
ended March 26, 2017.
“As anticipated, our first quarter results reflect lower unit
volume due to the timing of program changes as well as higher
production costs compared to the first quarter of 2016,” commented
Don Stebbins, President and Chief Executive Officer. “During the
first quarter, we also announced our intent to acquire 100% of
UNIWHEELS AG. This accretive transaction will position Superior as
one of the world’s largest automotive OEM aluminum wheel suppliers,
while diversifying our customer base and extending our geographic
reach. With the enhanced global manufacturing capacity of the
combined businesses, we believe this transaction will strengthen
our ability to serve our customers and provides a stronger platform
for growth.”
First Quarter Results
Wheel unit shipments were 2.8 million in the first quarter of
2017, a decrease of 10.6%, compared to first quarter unit shipments
of 3.2 million in the prior year period. The decline in unit
shipments was due to overall industry trends and the expected
timing of launches and completion of certain programs.
Net sales for the first quarter of 2017 were $174.2 million,
compared to net sales of $186.1 million in the first quarter of
2016. Value-added sales, a non-GAAP financial measure defined as
net sales less pass-through charges, primarily for the value of
aluminum, were $95.5 million for the first quarter of 2017, a 6.7%
decrease compared to the first quarter of 2016, driven by lower
unit volume. See “Non-GAAP Financial Measures” below and the
reconciliation of consolidated net sales to value-added sales in
this press release.
Gross profit for the first quarter of 2017 was $19.2 million, or
11.0% of net sales, compared to $27.7 million, or 14.9% of net
sales in the prior year period. Gross profit as a percentage of
value-added sales was 20.1% compared to 27.1% of value-added sales
in the prior year period. The decrease in gross profit was due
mainly to lower unit shipments and increased manufacturing
expenses, which were partially offset by improved product mix, in
particular for 19 inch diameter and larger products which were up
8% from the prior year period.
Selling, general and administrative expenses for the first
quarter were $15.3 million, or 8.8% of net sales, compared to $9.0
million, or 4.8% of net sales in the prior year period. The
increase is due to $7.0 million in professional support fees for
the acquisition of UNIWHEELS.
Income from operations for the first quarter of 2017 was $3.9
million, or 2.3% of net sales, compared to operating income of
$18.7 million, or 10.1% of net sales in the prior year period.
Income from operations as a percentage of value-added sales was
4.1% for the first quarter of 2017 compared to 18.3% of value-added
sales in the prior year period. The decrease was driven primarily
by the aforementioned acquisition expenses and lower gross margin.
Excluding acquisition-related costs, income from operations as a
percentage of net sales and value-added sales would have been
higher than reported by 400 basis points and 729 basis points,
respectively.
The provision for income taxes for the first quarter of 2017 was
$0.2 million, resulting in an effective tax rate of 6.0%. This
compares to an income tax expense in the first quarter of 2016 of
$4.6 million and an effective tax rate of 24.0%. The low 2017 rate
reflects the impact of the acquisition-related costs on the mix of
taxable income.
For the first quarter of 2017, the Company reported net income
of $3.1 million, or $0.12 per diluted share including a $4.8
million, or $0.19 per diluted share, impact related to acquisition
support costs. This compares to $14.5 million of net income, or
$0.56 per diluted share, in the first quarter of 2016.
Adjusted EBITDA, a non-GAAP financial measure, was $19.1
million, or 11.0% of net sales, for the first quarter of 2017. This
compares to $28.1 million, or 15.1% of net sales, for the first
quarter of 2016. Adjusted EBITDA as a percentage of value-added
sales was 20.0% compared to 27.5% of value-added sales in the prior
year period. The decline includes the aforementioned lower unit
volume and higher costs for the quarter. See “Non-GAAP Financial
Measures” below and the reconciliation of net income to adjusted
EBITDA in this press release.
Financial Position and Cash Flow
The Company reported net cash used by operating activities of
$1.6 million in the first quarter of 2017 compared to cash
generated from operating activities of $16.0 million during the
first quarter of 2016. The decrease was primarily due to lower net
income and a greater use of cash from working capital when compared
to the prior year period.
During the first quarter of 2017, the Company paid a quarterly
dividend of $0.18 per share. The Company repurchased 215,841 shares
for a total of $5.0 million in the first quarter.
UNIWHEELS Transaction
On March 23, 2017, Superior announced that it commenced a tender
offer for 100% of the outstanding shares of UNIWHEELS. The tender
was commenced in connection with the signing of an irrevocable
agreement with UNIWHEELS Holdings (Malta) Ltd., the owner of
approximately 61% of the outstanding UNIWHEELS shares, to tender
its shares. The tender offer is not conditioned on receipt of any
antitrust approvals, but does require that 75% of the total shares
are tendered. The aggregate equity purchase price, assuming all
outstanding shares are tendered, is anticipated to be approximately
$715 million.
This accretive transaction will create one of the world’s
largest automotive OEM aluminum wheel suppliers and positions the
combined company as a leading global partner to automotive OEMs in
Europe and North America.
2017 Outlook
Based on the current outlook for the year, Superior reaffirms
its previous 2017 outlook provided on March 2, 2017. This outlook
is based on Superior stand-alone and excludes any future impact
from the acquisition of UNIWHEELS.
- Superior expects net sales to be in the
range of $730 million to $750 million driven by unit shipments of
12.0 million to 12.25 million
- Value-added sales are expected to be in
the range of $400 million to $410 million. Value-added sales are
defined as net sales less pass-through charges, primarily for the
value of aluminum
- Adjusted EBITDA is expected to be in
the range of $97 million to $105 million
- Working capital is expected to be a net
use of funds
- Capital expenditures are expected to be
approximately $50 million
- The effective tax rate is expected to
be in the range of 25% to 28%
The Company expects North American light vehicle production to
decrease 1.4% to 17.6 million units in 2017 and the Company’s
resulting market share to remain stable compared to 2017.
Mr. Stebbins concluded, “Our outlook for 2017 remains relatively
unchanged and reflects reasonably strong overall North American
light vehicle production, albeit slightly softer than 2016. Looking
forward, we are excited about the opportunities that will come from
the combination of Superior and UNIWHEELS and believe it will yield
positive results for all stakeholders including customers,
employees, and shareholders.”
Value-added sales and adjusted EBITDA are non-GAAP financial
measures. See “Non-GAAP Financial Information”. In reliance on the
safe harbor provided under section 10(e) or Regulation S-K,
Superior has not quantitatively reconciled differences between
adjusted EBITDA presented in the 2017 outlook to net income, the
most comparable GAAP measure, as Superior is unable to quantify
certain amounts that would be required to be included in net income
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 8:00 AM ET on
Wednesday, April 26th, 2017. The conference call may be accessed by
dialing (877) 419-6593 for participants in the U.S./Canada or (719)
325-4799 for participants outside the U.S./Canada using the
required conference ID 5892517. The live conference call can also
be accessed by logging into the Company’s website at
www.supind.com. A replay of the webcast will be available on the
Company’s website immediately following the conclusion of the
call.
During the conference call, the Company's management plans to
review operating results and discuss other financial and operating
matters. In addition, management may disclose material information
in response to questions posed by participants during the call.
About Superior Industries
Headquartered in Southfield, Michigan, Superior is the largest
manufacturer of aluminum wheels for passenger cars and light-duty
vehicles in North America. From its plants in the U.S. and Mexico,
the Company supplies aluminum wheels to the original equipment
market. Major customers include BMW, FCA, Ford, General Motors,
Mazda, Nissan, Subaru, Tesla, Toyota and Volkswagen. Superior is
listed on the New York Stock Exchange and is a component of
Standard & Poor’s Small Cap 600 and Russell 2000 Indices. For
more information, visit www.supind.com.
Non-GAAP Financial Information
In addition to the results reported in accordance with GAAP
included throughout this earnings release, this release refers to
“adjusted EBITDA,” which Superior has defined as earnings before
interest, income taxes, depreciation, amortization, restructuring
charges, plant closure costs and impairments of long-lived assets
and investments and “value-added sales,” which Superior defines as
net sales less pass-through charges primarily for the value of
aluminum. Adjusted EBITDA as a percentage of value-added sales is a
key measure that is not calculated according to GAAP. Adjusted
EBITDA as a percentage of value-added sales is defined as adjusted
EBITDA divided by value-added sales. See the Non-GAAP Financial
Measures section of this press release for a reconciliation of
adjusted EBITDA and value-added sales.
Management believes the non-GAAP financial measures used in this
press release are useful to management and may be useful to
investors in their analysis of the Company’s financial position and
results of operations. Further, management uses these non-GAAP
financial measures for planning and forecasting future periods.
This non-GAAP financial information is provided as additional
information for investors and is not in accordance with or an
alternative to GAAP. These non-GAAP measures may be different from
similar measures used by other companies.
For reconciliations of adjusted EBITDA and value-added sales to
the most directly comparable financial measures calculated and
presented in accordance with GAAP, see the attached supplemental
data pages which, together with this press release, have been
posted on the Company’s website through the “Investors” link at
www.supind.com.
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 "may," "should," "could," "will," "expects," "seeks to,"
"anticipates," "plans," "believes," "estimates," "intends,"
"predicts," "projects," "potential" or "continue" or the negative
of such terms and other comparable terminology. These statements
also include, but are not limited to, the 2017 outlook included
herein, the Company’s ability to consummate the acquisition of
UNIWHEELS, and the Company’s strategic and operational initiatives,
including the resolution of operating inefficiencies, product mix
and overall cost improvement and are based on current expectations,
estimates, and projections about the Company's business based, in
part, on assumptions made by management. These statements are not
guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecasted in such forward-looking statements due to numerous
factors, risks, and uncertainties discussed in the Company's
Securities and Exchange Commission filings and reports, including
the Company's Annual Report on Form 10-K for the year-ended
December 25, 2016, Quarterly Reports on Form 10-Q and other reports
from time to time filed with the Securities and Exchange
Commission. You are cautioned not to unduly rely on such forward
looking statements when evaluating the information presented in
this press release. Such forward-looking statements speak only as
of the date on which they are made and the Company does not
undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this release.
SUPERIOR INDUSTRIES INTERNATIONAL, INC. Condensed
Consolidated Statements of Operations (Unaudited) (Dollars
in Millions, Except Per Share Amounts) Three
Months Ended Mar. 26, 2017 Mar. 27, 2016
Net Sales $ 174.2 $ 186.1 Cost of Sales
154.8 158.3 Restructuring costs
0.2 0.1
Gross Profit 19.2 27.7 Selling, General and
Administrative Expenses
15.3 9.0
Income
From Operations 3.9 18.7 Interest Income
(Expense), net
(0.3) 0.0 Other Expense, net
(0.3) 0.2
Income Before Income Taxes
3.3 19.0 Income Tax Provision
(0.2)
(4.5)
Net Income $ 3.1 $ 14.5
Earnings Per Share: Basic
$ 0.12 $ 0.56
Diluted
$ 0.12 $ 0.56
Weighted Average and
Equivalent Shares Outstanding for Earnings Per Share (in
Thousands): Basic
25,030 25,603 Diluted
25,135
25,644
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in Millions) Mar. 26, 2017
Dec. 25, 2016
Current Assets $ 255.2
$
254.1
Property, Plant and Equipment, net 243.1
227.4
Investments and Other Assets 68.0
61.3
Total Assets $ 566.2
$
542.8
Current Liabilities $ 96.0
$
86.0
Long-Term Liabilities 51.8
58.6
Shareholders’ Equity 418.4
398.2
Total Liabilities and Shareholders' Equity $
566.2
$
542.8
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Non-GAAP Financial Measures (Dollars in Millions)
Value-Added
Sales
Three Months Ended Mar. 26, 2017
Mar. 27, 2016
Net Sales $ 174.2 $ 186.1
Less: Aluminum Value and Outside Service Provider
Costs (78.7) (83.8)
Value-added
sales $ 95.5 $ 102.3
Value-added sales is a key measure that is not calculated
according to GAAP. Value-added sales represent net sales less the
value of aluminum and services provided by outside service
providers (OSP's) that are included in net sales. Arrangements with
our customers allow us to pass on changes in aluminum prices and
OSP costs; therefore, fluctuations in the underlying aluminum price
and the use of OSP's generally do not directly impact our
profitability. Accordingly, value-added sales is worthy of being
highlighted for the benefit of users of our financial statements.
Our intent is to allow users of the financial statements to
consider our net sales information both with and without the
aluminum and OSP cost components thereof.
Adjusted
EBITDA
Three Months Ended Mar. 26, 2017 Mar.
27, 2016
Net Income $ 3.1 $ 14.5
Adjusting
Items: - Interest Expense (Income), net 0.3 (0.0)
- Income Tax Provision (Benefit) 0.2 4.5
-
Depreciation 8.4 8.6
- Acquisition Support Costs
7.0 -
- Closure Costs (Excluding Accelerated
Depreciation) 0.2 0.5
16.0
13.6
Adjusted EBITDA $ 19.1 $ 28.1
Adjusted EBITDA is a key measure that is not calculated
according to GAAP. Adjusted EBITDA is 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. We use adjusted
EBITDA as an important indicator of the operating performance of
our business. Adjusted EBITDA is used in our internal forecasts and
models when establishing internal operating budgets, supplementing
the financial results and forecasts reported to our Board of
Directors and evaluating short-term and long-term operating trends
in our operations. We believe the adjusted EBITDA financial measure
assists in providing a more complete understanding of our
underlying operational measures to manage our business, to evaluate
our performance compared to prior periods and the marketplace, and
to establish operational goals. Adjusted EBITDA is a non-GAAP
financial measure and should not be considered in isolation or as a
substitute for financial information provided in accordance with
GAAP. This non-GAAP financial measure may not be computed in the
same manner as similarly titled measures used by other
companies.
SUPERIOR INDUSTRIES INTERNATIONAL, INC. Non-GAAP
Financial Measures (Dollars in Millions)
Outlook for Full
Year 2017 Value-Added Sales
Outlook Range Net Sales Outlook $ 730.0
$ 750.0 Less: Aluminum Value and Outside
Service Provider Costs 330.0 340.0
Value-Added Sales Outlook $ 400.0 $
410.0
Value-added sales is a key measure that is not calculated
according to GAAP. Value-added sales represent net sales less the
value of aluminum and services provided by outside service
providers (OSP's) that are included in net sales. Arrangements with
our customers allow us to pass on changes in aluminum prices and
OSP costs; therefore, fluctuations in the underlying aluminum price
and the use of OSP's generally do not directly impact our
profitability. Accordingly, value-added sales is worthy of being
highlighted for the benefit of users of our financial statements.
Our intent is to allow users of the financial statements to
consider our net sales information both with and without the
aluminum and OSP cost components thereof.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426005505/en/
Superior Industries International, Inc.Investor Relations:Troy
Ford, 248-234-7104www.supind.comorClermont PartnersVictoria
Sivrais, 312-690-6004vsivrais@clermontpartners.com
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