Consolidated Third Quarter 2017 Highlights:
- Unit shipments of 5.0
million
- Net sales of $331.4 million;
value-added sales of $187.4 million
- Value-added sales per wheel of
$37.43 during the quarter
- Net income of $2.6 million,
including the impact from acquisition costs of $5.1
million
- Adjusted EBITDA of $43.0
million
- Reaffirming 2017 net sales,
value-added sales, and adjusted EBITDA outlook
Superior Industries International, Inc. (“Superior” or the
“Company”) (NYSE:SUP), one of the world’s leading aluminum
wheel suppliers for OEMs and the European aftermarket, today
reported financial results for the third quarter ended October 1,
2017.
(Dollars in Millions, Units in Thousands)
Units Net Sales
3Q 2017 3Q 2016 3Q 2017 3Q 2016 North
America 2,792 2,912 $ 180.1 $ 175.6 Europe 2,216 -
151.3 -
Consolidated 5,008 2,912 $ 331.4 $
175.6
Valued-added Sales(1)
Adjusted EBITDA(1)
3Q 2017 3Q 2016 3Q 2017 3Q 2016 North
America $ 97.0 $ 98.8 $ 18.3 $ 13.8 Europe 90.4 -
24.7 -
Consolidated $ 187.4 $ 98.8 $ 43.0 $
13.8
(1) See “Non-GAAP Financial Measures” below for a definition and
reconciliation to the most comparable GAAP measure.
“As a result of our acquisition of UNIWHEELS, the third quarter
marked the first full quarter with our European operations included
in our results. Since the closing on May 30th, we have made
excellent progress bringing our organization together, and while we
have a lot of work ahead, we are focused on leveraging the
strengths of our teams, technologies, processes, and customer
relationships to enhance the overall performance of our business,”
commented Don Stebbins, President and Chief Executive Officer.
Mr. Stebbins continued, “Compared to last year, the addition of
our European business offset softer industry production in North
America during the third quarter. Importantly, value-added sales
per wheel over the last twelve months has continued its upward
momentum and adjusted EBITDA in our North American business was
positive year-over-year despite unit softness. We remain diligent
in executing our strategic priorities to drive improved performance
across our business and bring innovative technologies to our
customers.”
Third Quarter Results
As of October 1, 2017, Superior owned approximately 93.5% of
UNIWHEELS’ outstanding shares of common stock. The Company’s
results for the quarter and year-to-date 2017 are presented in
accordance with GAAP and include UNIWHEELS’ operations since June
1, 2017. The minority interest for the remaining approximately 6.5%
of UNIWHEELS’ shares outstanding is deducted in determining Net
Income (Loss) Attributable to Superior.
Consistent with Superior’s efforts to integrate its European
operation, which maintains a calendar quarter and year-end close,
the third quarter-end date of Superior’s North American operations
was adjusted to October 1, 2017 from September 24, 2017, resulting
in fourteen weeks for the third quarter of 2017. Due to Superior’s
convention of 13-week quarters, this additional week otherwise
would have fallen in the fourth quarter of 2017. Going forward, the
Company will have a calendar quarter and year-end close.
Wheel unit shipments were 5.0 million in the third quarter of
2017 versus 2.9 million units in the third quarter 2016. The
increase was driven by the addition of the Company’s European
operations, partially offset by softness in the North American
market.
Net sales for the third quarter of 2017 were $331.4 million,
compared to net sales of $175.6 million in the third 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 $187.4 million for the third quarter of 2017 versus
value-added sales of $98.8 million in the third quarter of 2016.
Value-added sales were favorably impacted by mix in North America
and the addition of Superior’s European operations, partially
offset by lower unit volumes in North America. In addition,
value-added sales per wheel increased to $37.43 for the quarter.
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 third quarter of 2017 was $23.9 million, or
7.2% of net sales, compared to $11.0 million, or 6.3% of net sales
in the prior year period. The increase in gross profit was driven
by the addition of the Company’s European operations. In addition,
gross profit for the quarter was negatively impacted by the effects
of non-recurring purchase accounting of $4.7 million related to the
acquisition of UNIWHEELS.
Selling, general and administrative expenses for the third
quarter were $18.1 million compared to $5.7 million in the prior
year period. The increase is due to the inclusion of three months
of Superior’s European operations as well as costs related to the
acquisition and integration totaling $5.4 million. Excluding the
acquisition and integration costs, selling, general and
administrative expenses would have been 3.8% of net sales, which
compares to 3.3% in the prior year.
Income from operations for the third quarter of 2017 was $5.8
million, which compares to income from operations of $5.3 million
in the prior year period. Excluding the previously mentioned
impacts, third quarter 2017 income from operations would have been
$15.9 million.
The provision for income taxes for the third quarter of 2017 was
a benefit of $3.4 million, which compares to a benefit in the third
quarter of 2016 of $1.1 million. The income tax benefit in the
third quarter of 2017 reflects the impact of the
acquisition-related costs, blend of earnings and losses in various
jurisdictions, and income in lower taxable jurisdictions.
For the third quarter of 2017, the Company reported net income
of $2.6 million. Including the impact of preferred dividends and
the ongoing accretion of the preferred shares, the loss per diluted
share was $0.22. Net income for the quarter includes after-tax
expense of $5.1 million, or $0.20 per diluted share related to the
acquisition. Included in this impact is the change in fair value of
an embedded option related to the preferred shares. This embedded
option will be revalued on a quarterly basis and the change in
value will impact net income. The impact on the third quarter was a
favorable $4.1 million. These results compare to $6.0 million of
net income, or $0.23 per diluted share, in the third quarter of
2016. The decrease in net income is primarily due to increased
interest expense and transaction and integration related costs.
Adjusted EBITDA, a non-GAAP financial measure, was $43.0
million, or 22.9% of value-added sales, for the third quarter of
2017. This compares to $13.8 million, or 13.9% of value-added sales
for the third quarter of 2016. The improvement was driven by
year-over-year improvement in North America, as well as the
addition of the Company’s European operations in 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 cash generated from operating activities of
$27.2 million in the third quarter of 2017 compared to $14.7
million during the third quarter of 2016. The increase was
primarily driven by working capital improvements and the addition
of the Company’s European operations, partially offset by costs
related to the acquisition.
During the third quarter of 2017, Superior acquired additional
UNIWHEELS shares for $10.5 million, increasing the Company’s
ownership of UNIWHEELS to 93.5%.
Also during the quarter, the Company paid cash dividends
totaling $4.4 million, which includes a $0.09 per share common
dividend and dividends to the preferred shareholder.
Year-to-Date Results
Wheel unit shipments were 11.6 million for the first nine months
of 2017, compared to unit shipments of 9.2 million in the prior
year period.
Net sales for the first nine months of 2017 were $746.3 million,
compared to net sales of $544.4 million in the first nine months of
2016. Value-added sales were $413.3 million for the first nine
months of 2017 versus value-added sales of $302.3 million in the
first nine months of 2016. 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 nine months of 2017 was $63.2 million
compared to $68.2 million in the prior year period. In addition,
gross profit for the first nine months of the year was negatively
impacted by the effects of non-recurring purchase accounting of
$10.8 million related to the acquisition of UNIWHEELS.
Selling, general and administrative expenses for the first nine
months of 2017 were $55.5 million compared to $24.7 million in the
prior year period. The increase is due to $25.0 million in costs
related to the acquisition and integration of UNIWHEELS and $11.4
million related to the addition of four months of UNIWHEELS’
operations.
Income from operations for the first nine months of 2017 was
$7.7 million compared to income from operations of $43.5 million in
the prior year period. Excluding the previously mentioned
acquisition-related impacts on gross profit and selling, general,
and administrative expense, income from operations for the first
nine months 2017 would have been $43.5 million.
The income tax benefit for the first nine months of 2017 was
$4.8 million. This compares to a provision for income taxes of $9.6
million for the prior year period.
For the first nine months of 2017, the Company reported a net
loss of $1.6 million. Including the impact of preferred dividends
and the ongoing accretion of the preferred shares, the loss per
diluted share amounted to $0.50. Net income for the quarter
includes after-tax expense of $30.8 million, or $1.23 per diluted
share, related to the acquisition. These results compare to $33.6
million of net income, or $1.31 per diluted share, in the first
nine months of 2016.
Adjusted EBITDA, a non-GAAP financial measure, was $91.4
million, or 22.1% of value-added sales, for the first nine months
of 2017, which compares to $69.8 million, or 23.1% of value-added
sales, for the first nine months of 2016. See “Non-GAAP Financial
Measures” below and the reconciliation of net income to adjusted
EBITDA in this press release.
2017 Outlook
Superior is reaffirming its previously issued outlook for full
year 2017 for net sales, value-added sales, Adjusted EBITDA,
capital expenditures, and working capital. UNIWHEELS’ financials
are assumed to be translated at an exchange rate of 1.16 EUR/USD
for the fourth quarter of 2017.
- Superior expects net sales to be in the
range of $1,095 million to $1,115 million driven by unit shipments
of 16.9 million to 17.2 million.
- Superior expects value-added sales to
be in the range of $595 million to $615 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 $135 million to $145 million.
- Capital expenditures are expected to be
approximately $85 million.
- Working capital is expected to be a
slight source of funds.
- Taxes are expected to be a net benefit
for the year.
- Interest expense will be approximately
$40 million for the year.
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 material.
Conference Call
Superior will host a conference call beginning at 8:00 AM ET on
Thursday, November 9th, 2017. The conference call may be accessed
by dialing (888) 394-8218 for participants in the U.S./Canada or
(323) 701-0225 for participants outside the U.S./Canada using the
required conference ID 2460994. 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
Superior is one of the world’s leading aluminum wheel suppliers.
Its team collaborates and partners with customers to design,
engineer and manufacture a wide variety of innovative and high
quality products utilizing the latest lightweighting and finishing
technologies. Superior also maintains leading aftermarket brands
including ATS, RIAL, ALUTEC, and ANZIO. Headquartered in
Southfield, Michigan, 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, please 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, acquisition and integration 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 the financial tables in 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 consolidate its operations with
UNIWHEELS AG, 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 Report on Form 10-Q for the
quarter ended June 25, 2017 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 Nine Months
3Q 2017 3Q 2016 3Q 2017 3Q 2016 Net
Sales
$ 331.4 $ 175.6
$ 746.3 $ 544.4
Cost of Sales
307.5 164.6
683.1 476.2
Gross Profit
$ 23.9 $ 11.0
$ 63.2 $ 68.2
SG&A
18.1 5.7
55.5 24.7
Income From Operations
$ 5.8 $ 5.3
$ 7.7 $ 43.5
Interest Income (Expense), net
(13.5 ) 0.0
(28.4 ) 0.2 Other income (Expense), net
3.0
(0.4 )
10.2 (0.5 ) Change in Fair Value of Preferred
Derivative
4.1 0.0
4.1 0.0
Income (Loss) Before Income
Taxes $ (0.5 ) $ 4.9
$ (6.4
) $ 43.2 Income Tax Provision
3.4
1.1
4.8 (9.6 )
Consolidated Net Income (Loss) $ 2.9 $
6.0
$ (1.6 ) $ 33.6 Less:
Net loss attributable to non-controlling interest
(0.3 ) -
0.0
-
Net Income (Loss) Attributable to
Superior $ 2.6 $ 6.0
$
(1.6 ) $ 33.6
Earnings Per
Share: Basic
$ (0.22 ) $ 0.24
$
(0.50 ) $ 1.32 Diluted
$ (0.22 )
$ 0.23
$ (0.50 ) $ 1.31
Weighted
Average and Equivalent Shares Outstanding for EPS (in
Thousands): Basic
24,905 25,424
24,963 25,482
Diluted
24,905 25,570
24,963 25,579
SUPERIOR INDUSTRIES INTERNATIONAL, INC. Condensed
Consolidated Balance Sheets (Unaudited) (Dollars in
Millions) 3Q 2017 4Q 2016 Current
Assets $ 410.8 $ 254.1
Property, Plant and
Equip, net 518.3 227.4
Investments and Other
Assets 634.3 61.3
Total
Assets $ 1,563.4 $ 542.8
Current Liabilities $ 174.3 $ 86.0
Long-Term Liabilities 764.5 58.6
Redeemable
Preferred Shares 140.6 -
Shareholders’ Equity
484.0 398.2
Total Liabilities
and Shareholders' Equity $ 1,563.4 $ 542.8
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Non-GAAP Financial Measures (Unaudited) (Dollars in
Millions)
Value-Added
Sales
Three Months Nine Months 3Q 2017 3Q
2016 3Q 2017 3Q 2016 Net Sales $
331.4 $ 175.6
$ 746.3 $ 544.4
Less:
Aluminum Value and Outside Service Provider Costs
(144.0 ) (76.8 )
(333.0 )
(242.1 )
Value-added sales $ 187.4
$ 98.8
$ 413.3 $ 302.3
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 Nine Months 3Q 2017 3Q
2016 3Q 2017 3Q 2016 Consolidated Net Income
(Loss) $ 2.9 $ 6.0
$ (1.6 )
$ 33.6
Adjusting Items: - Interest Expense (Income),
net 13.4 (0.0 )
28.4 (0.2 )
- Income Tax
Provision (Benefit) (3.4 ) (1.1 )
(4.9
) 9.6
- Depreciation 17.4 8.6
36.8 25.9
- Amortization 6.7 -
9.1 -
- Inventory
Step-up 4.7 -
10.8 -
- M&A and Integration
Costs 5.4 -
25.0 -
- Foreign Exchange M&A
Gains - -
(8.2 ) -
- Change in Fair Value of
Preferred Derivative (4.1 ) -
(4.1
) -
- Closure Costs (Excluding Accelerated
Depreciation) 0.0 0.3
0.1 0.9
$ 40.1 $
7.8
$ 93.0 $ 36.2
Adjusted
EBITDA $ 43.0 $ 13.8
$
91.4 $ 69.8
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, acquisition support costs, integration costs, 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 (Unaudited) (Dollars in Millions)
Outlook for Full
Year 2017 Value-Added Sales
Outlook Range Net Sales Outlook $
1,095.0 $ 1,115.0 Less: Aluminum
Value and Outside Service Provider Costs (500.0
) (500.0 ) Value-Added Sales
Outlook $ 595.0 $ 615.0
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.
SUPERIOR INDUSTRIES
INTERNATIONAL, INC. Earnings Per Share Calculation
(Unaudited) (Dollars and Shares in Millions)
Three Months Nine Months 3Q 2017 3Q
2016 3Q 2017 3Q 2016
Basic EPS
Calculation
Net Income (Loss) Attributable to Superior
$ 2.6 $
6.0
$ (1.6 ) $ 33.6 Less: Accretion of
preferred stock
(4.0 ) -
(5.2 ) - Less:
Redeemable preferred stock dividends
(4.1 )
-
(5.8 ) -
Numerator
$ (5.5 ) $ 6.0
$ (12.6 )
$ 33.6
Denominator: Weighted avg shares outstanding
24.9 25.4
25.0
25.5
Basic (loss) income per share $
(0.22 ) $ 0.24
$ (0.50 ) $ 1.32
Diluted EPS
Calculation
Net Income (Loss) Attributable to Superior
$ 2.6 $
6.0
$ (1.6 ) $ 33.6 Less: Accretion of
preferred stock
(4.0 ) -
(5.2 ) - Less:
Redeemable preferred stock dividends
(4.1 )
-
(5.8 ) -
Numerator
$ (5.5 ) $ 6.0
$ (12.6 )
$ 33.6 Weighted avg shares outstanding-Basic
24.9
25.4
25.0 25.5 Dilutive stock options and restricted stock
units
- 0.2
-
0.1
Denominator: Weighted avg shares outstanding
24.9 25.6
25.0 25.6
Diluted (loss) income
per share $ (0.22 ) $ 0.23
$
(0.50 ) $ 1.31
SUPERIOR INDUSTRIES
INTERNATIONAL, INC. Impact of Acquisition-related Costs on
EPS (Unaudited) (Dollars in Millions, except EPS
amounts) Nine
Months Before Q3 Before Tax Net Tax Net Income
Location on Income Income Impact Impact
Statement Inventory Step-up $ (4.7 ) $ (10.8 ) Cost of Sales
M&A and Integration Costs (5.4 ) (25.0 ) SG&A
Impact on Income from Operations $ (10.1 ) $ (35.8 )
Non-recurring Interest $ - $ (12.2 ) Interest Foreign Exchange
M&A Gains - 8.2 Other Income Change in Fair Value of Preferred
Derivative 4.1 4.1 Other Income
Total Impact $ (6.0 ) $ (35.7 )
After Tax Net
Income Impact $ (5.1 ) $ (30.8 )
EPS Impact $
(0.20 ) $ (1.23 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171109005284/en/
Superior Investor RelationsTroy Ford(248)
234-7104Investor.Relations@supind.comorClermont PartnersVictoria
Sivrais(312) 690-6004vsivrais@clermontpartners.com
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