Achieved strong Adjusted EBITDA1 and Operating
Cash Flow Differentiated portfolio supporting Growth over
Market2
First Quarter 2022 Financial Highlights:
- Net Sales increased 12% to $401M; Value-Added Sales1
decreased 9% YoY to $189M
- Portfolio delivered Growth over Market of 5%2; 5% Content
per Wheel1 growth
- Net Income of $10M; Earnings per Share of $0.04
- Adjusted EBITDA1 of $49.2M; margin flat, at 26%3, despite
lower unit shipments
- Cash Flow from Operations of $45M
- Total Debt4 of $611M; Net Debt1 decreased to $477M
Superior Industries International, Inc. (“Superior” or the
“Company”) (NYSE:SUP) today reported financial results for the
first quarter ended March 31, 2022.
($ in millions and units in thousands)
Three Months
1Q 2022
1Q 2021
Units North America
2,291
2,453
Europe
1,793
2,062
Global
4,084
4,515
Net Sales North America
$
227.2
$
192.0
Europe
173.3
166.2
Global
$
400.5
$
358.2
Value-Added Sales (1) North America
$
97.9
$
101.7
Europe
91.5
105.6
Global
$
189.4
$
207.3
“Our team delivered solid results in the first quarter while
navigating through a very challenging environment, impacted by the
continued semiconductor shortage, supply chain disruption and cost
inflation, as well as the Ukraine Conflict. As we execute our value
creation roadmap, we have leveraged our innovative technologies and
operational strength to deliver Adjusted EBITDA and profit margin
levels at or above that of pre-pandemic levels against a backdrop
of historically low industry production. To mitigate inflationary
pressures, we actively engaged both our customers and suppliers to
recover material cost inflation and execute on cost reduction
opportunities. In addition, we generated strong cash flow from
operations, enabling us to reduce our Net Debt level while making
investments in our growing innovative capabilities,” commented
Majdi Abulaban, President and Chief Executive Officer of
Superior.
“Industry production levels have improved compared to the prior
quarter yet remain impacted by the aforementioned headwinds, which
we expect to continue through the remainder of 2022. Despite these
headwinds, we are confident in our ability to further capitalize on
secular trends and demand for premium content to further solidify
Superior’s competitive position. As the year progresses, we are
excited to continue enhancing our portfolio and make sustainable
improvements to our operations through our R4TM Strategy5 to create
long-term shareholder value,” concluded Mr. Abulaban.
First Quarter Results
Net sales for the first quarter of 2022 were $401 million,
compared to net sales of $358 million in the prior year period. The
increase in net sales was due to $61 million of higher aluminum and
other cost pass throughs to our customers, partially offset by
lower shipment volumes and effects from lower Euro exchange rates
relative to the US Dollar. Value-Added Sales, a non-GAAP financial
measure, were $189 million for the first quarter of 2022 compared
to $207 million in the prior year period. Content per Wheel, a
non-GAAP financial measure, was $48.04, up 5% compared to the
prior-year quarter, driven by the continued shift towards larger
wheels with more complex finishes. See “Non-GAAP Financial
Measures” and the reconciliation of consolidated net sales to
Value-Added Sales and Value-Added Sales Adjusted for Foreign
Exchange below.
Gross profit for the first quarter of 2022 was $41 million,
compared to $43 million in the prior year period. The decrease was
primarily driven by lower unit sales, higher raw material and
conversion costs, and manufacturing inefficiencies resulting from
depressed and volatile OEM production levels, partially offset by
the effects from a favorable product mix.
Selling, general, and administrative (“SG&A”) expenses for
the first quarter of 2022 were $17 million, relatively flat
compared to the prior year period.
Operating income for the first quarter of 2022 was $24 million,
compared to $26 million in the prior year period. The decrease is
primarily due to lower gross profit in the first quarter of
2022.
The income tax provision for the first quarter of 2022 was $4
million, primarily due to the recording of a non-cash valuation
reserve against certain deferred tax assets in Germany.
For the first quarter of 2022, the Company reported a net income
of $10 million, or earnings per diluted share of $0.04. This
compares to a net income of $13 million, or earnings per diluted
share of $0.18, in the first quarter of 2021. See “Impact of
Acquisition, Restructuring, and Other Items on EPS” in this press
release.
Adjusted EBITDA, a non-GAAP financial measure, was $49 million
for the first quarter of 2022, or 26% of Value-Added Sales, which
compares to $55 million, or 27% of Value-Added Sales, in the prior
year period. The decrease in Adjusted EBITDA was primarily driven
by lower operating income. See “Non-GAAP Financial Measures” below
and the reconciliation of net income to Adjusted EBITDA in this
press release.
The Company reported net cash flow provided by operating
activities of $45 million in the first quarter of 2022, compared to
$18 million during the first quarter of 2021. Free Cash Flow, a
non-GAAP financial measure, for the first quarter was $22 million,
compared to $3 million in the prior year period. The Free Cash Flow
benefited from a lower use of cash for working capital during the
first quarter of 2022, partially offset by increased capital
expenditures. See “Non-GAAP Financial Measures” below and the
reconciliation of cash flow from operations to Free Cash Flow in
this press release.
Financial Position
As of March 31, 2022, Superior had funded debt of $611 million
and Net Debt, a non-GAAP financial measure, of $477 million,
compared to funded debt of $616 million and Net Debt of $503
million as of December 31, 2021. The improvement in Net Debt of
$26M was supported by cash flow generation as described above, and
a decrease related to Superior’s Euro-denominated debt as the Euro
weakened relative to the US Dollar. See “Non-GAAP Financial
Measures” below and the reconciliation of funded debt to Net Debt
in this press release.
2022 Outlook
The Company reconfirmed its full year 2022 guidance, which
assumes industry OEM production in its markets to grow at a mid- to
high single digit percentage rate during the year. Based on this
outlook for industry production, Superior’s full year 2022 outlook
is as follows:
FY 2022 Outlook Unit
Shipments 16.4 - 17.7 million
Net Sales $1.58 - $1.71
billion
Value-Added Sales $780 - $840 million
Adjusted
EBITDA $160 - $190 million
Cash Flow from Operations
$105 - $150 million
Capital Expenditures ~ $80 million
The industry production volume assumption reflects the supply
chain challenges impacting the OEMs stemming from the continued
semiconductor shortage. The expected impact from the Ukraine
Conflict, throughout the second quarter of this year, is included
in this outlook. Superior is positioned to benefit from additional
production volumes and the associated earnings in the event
industry volume develops better than assumed.
Value-Added Sales and Adjusted EBITDA are non-GAAP measures, as
defined below. In reliance on the safe harbor provided under
section 10(e) or Regulation S-K, Superior has not quantitatively
reconciled from net income, the most comparable GAAP measure, to
Adjusted EBITDA presented in the 2022 outlook, as Superior is
unable to quantify certain amounts 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 7:30 AM ET on
Wednesday, May 4, 2022. The conference call may be accessed by
dialing 888-394-8218 for participants in the U.S./Canada or +1
323-794-2588 for participants outside the U.S./Canada using the
required conference ID 5800793. The live conference call can also
be accessed by logging into the Company’s website at www.supind.com
or by clicking this link: earnings call webcast. 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 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
Southfield, Michigan, Superior is listed on the New York Stock
Exchange. For more information, please visit www.supind.com.
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 liability,
acquisition and integration and certain hiring and separation
related costs, proxy contest fees, gains associated with early debt
extinguishment and accounts receivable factoring fees. “Value-Added
Sales," defined as net sales less the value of aluminum, other
costs, and services provided by outsourced service providers 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. “Content per Wheel,”
defined as Value-Added Sales Adjusted for Foreign Exchange on a per
unit (wheel) shipment basis. “Free Cash Flow,” defined as the net
cash from operations, investing activities, and non-debt components
of financing activities. “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 2022 outlook included herein, the
impact of COVID-19 and the resulting supply chain disruptions, as
well as the Ukraine Conflict, on our future growth and earnings.
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 Superior's Securities and Exchange
Commission filings and reports, including Superior's current Annual
Report on Form 10-K, 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
Superior does not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this release.
1 See “Non-GAAP Financial Measures” below
for a definition and reconciliation to the most comparable GAAP
measure.
2 Based on Value-Added Sales Adjusted for
Foreign Exchange1; comparison vs. Q1 2022 North American and
Western and Central European industry production per April 19th,
2022, as reported by IHS.
3 Adjusted EBITDA1 as % of Value-Added
Sales1
4 Excluding Debt Issuance Cost
5 For more information on Superior’s R4TM
Strategy, please refer to slide 13 of Superior’s Fourth Quarter
2021 earnings presentation available on
https://www.supind.com/cm/dpl/downloads/content/6137/Q4.2021_SUP_Earnings_Presentation_3.3.2022.pdf
SUPERIOR INDUSTRIES INTERNATIONAL, INC. Condensed
Consolidated Statements of Operations (Unaudited) (Dollars
in Millions, Except Per Share Amounts)
Three Months
1Q 2022
1Q 2021
Net Sales
$
400.5
$
358.2
Cost of Sales
359.9
315.2
Gross Profit
$
40.6
$
43.0
SG&A Expenses
17.0
17.3
Impairment of Goodwill and Indefinite-Lived Intangibles
-
-
Income From Operations
$
23.6
$
25.7
Interest Expense, net
(10.0
)
(10.3
)
Other Expense, net
(0.1
)
(1.5
)
Income Before Income Taxes
$
13.6
$
13.9
Income Tax Provision
(3.5
)
(0.8
)
Net Income
$
10.1
$
13.1
Earnings Per Share: Basic
$
0.04
$
0.19
Diluted
$
0.04
$
0.18
Weighted Average and Equivalent SharesOutstanding for EPS
(in Thousands): Basic
26,397
25,707
Diluted
27,414
26,687
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in Millions) 3/31/2022
12/31/2021 Current Assets
$
512.2
$
404.3
Property, Plant and Equipment, net
491.8
494.4
Intangibles and Other Assets
150.7
155.5
Total Assets
$
1,154.9
$
1,054.1
Current Liabilities
$
313.7
$
231.9
Long-Term Liabilities
684.1
691.7
Redeemable Preferred Shares
205.4
199.9
European Non-controlling Redeemable Equity
1.1
1.1
Shareholders’ Deficit
(49.3
)
(70.4
)
Total Liabilities and Shareholders’ Deficit
$
1,154.9
$
1,054.1
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Millions) Three Months
1Q 2022
1Q 2021
Net Income
$
10.1
$
13.1
Depreciation and Amortization
24.1
25.4
Income tax, Non-cash Changes
2.0
(2.8
)
Stock-based Compensation
2.6
1.8
Amortization of Debt Issuance Costs
1.2
0.9
Other Non-cash Items
0.3
(4.5
)
Changes in Operating Assets and Liabilities: Accounts Receivable
(40.4
)
(37.0
)
Inventories
(36.6
)
(14.7
)
Other Assets and Liabilities
4.4
13.9
Accounts Payable
78.1
21.3
Income Taxes
(0.9
)
0.8
Cash Flow Provided By Operating Activities
$
45.0
$
18.2
Capital Expenditures
(18.0
)
(10.5
)
Proceeds from Sale of Property, Plant and Equipment
0.2
-
Net Cash Used In Investing Activities
$
(17.8
)
$
(10.5
)
Proceeds from the Issuance of Long-term Debt
-
1.7
Debt Repayment
(1.3
)
(0.8
)
Cash Dividends
(3.4
)
(3.4
)
Payments Related to Tax Withholdings for Stock-Based Compensation
(1.6
)
(1.3
)
Finance Lease Payments
(0.3
)
(0.3
)
Cash Flow Used In Financing Activities
$
(6.7
)
$
(4.2
)
Effect of Exchange Rate on Cash
(0.3
)
(2.1
)
Net Change in Cash
$
20.2
$
1.4
Cash - Beginning
113.5
152.4
Cash - Ending
$
133.7
$
153.8
SUPERIOR INDUSTRIES INTERNATIONAL, INC. Earnings Per
Share Calculation (Unaudited) (Dollars and Outstanding
Shares in Millions, Except Per Share Amounts)
Three Months
1Q 2022
1Q 2021
Basic EPS Calculation(1) Net
Income
$
10.1
$
13.1
Less: Accretion of Preferred Stock
(5.5
)
(4.9
)
Less: Redeemable Preferred Stock Dividends
(3.4
)
(3.4
)
Numerator
$
1.2
$
4.8
Denominator: Weighted Avg. Shares Outstanding
26.4
25.7
Basic Earnings Per Share
$
0.04
$
0.19
Diluted EPS
Calculation(1) Net Income
$
10.1
$
13.1
Less: Accretion of Preferred Stock
(5.5
)
(4.9
)
Less: Redeemable Preferred Stock Dividends
(3.4
)
(3.4
)
Numerator
$
1.2
$
4.8
Weighted Avg. Shares Outstanding-Basic
26.4
25.7
Dilutive Stock Options and Restricted Stock Units
1.0
1.0
Denominator: Weighted Avg. Shares Outstanding
27.4
26.7
Diluted Earnings Per Share
$
0.04
$
0.18
(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, 2022 and 2021.
SUPERIOR INDUSTRIES INTERNATIONAL, INC. Impact of
Acquisition, Restructuring and Other Items on EPS (Unaudited)
(Dollars in Millions, Except Per Share Amounts)
Three Months Before Tax Impact on Net Income
1Q 2022
1Q 2021
Location on Inc. Stat. Integration, Certain Hiring &
Separation Costs
$
(1.0
)
$
(3.4
)
SG&A / COGS Restructuring Costs
-
(0.1
)
COGS / SG&A Change in Fair Value of Preferred Derivative
-
(1.3
)
Other Income/Expense
Total Before Tax Impact on Net Income
$
(1.0
)
$
(4.8
)
After Tax Impact on Net Income
$
(0.9
)
$
(4.4
)
Impact on Earnings Per Share
$
(0.04
)
$
(0.17
)
SUPERIOR INDUSTRIES
INTERNATIONAL, INC.
Non-GAAP Financial Measures
(Unaudited)
(Dollars in Millions and Units
in Thousands, Except Per Wheel)
Value-Added Sales; Value-Added Sales
Adjusted for Foreign Exchange; and Content per Wheel
Three Months
1Q 2022
1Q 2021
Net Sales
$
400.5
$
358.2
Less: Aluminum, Other Costs, and Outside Service Provider Costs
(211.1
)
(150.9
)
Value-Added Sales
$
189.4
$
207.3
Impact of Foreign Exchange Translation on Value-Added Sales
6.8
-
Value-Added Sales Adjusted for Foreign Exchange
$
196.2
$
207.3
Wheels Shipped
4,084
4,515
Content per Wheel
$
48.04
$
45.91
Free Cash Flow Three
Months
1Q 2022
1Q 2021
Cash Flow Provided By Operating Activities
$
45.0
$
18.2
Net Cash Used In Investing Activities
(17.8
)
(10.5
)
Less: Cash Payments for Non-debt Financing Activities
(5.0
)
(4.7
)
Free Cash Flow
$
22.2
$
3.0
Adjusted EBITDA Three
Months
1Q 2022
1Q 2021
Net Income
$
10.1
$
13.1
Adjusting Items: - Interest Expense,
net
10.0
10.3
- Income Tax Provision
3.5
0.8
- Depreciation
17.8
18.7
- Amortization
6.2
6.7
- Integration, Restructuring, and Other
1.0
4.8
- Factoring Fees
0.6
0.5
$
39.1
$
41.8
Adjusted EBITDA
$
49.2
$
54.9
Net Debt
3/31/2022 12/31/2021 Long Term Debt
(Less Current Portion) (1)
$
605.0
$
610.2
Short Term Debt
6.0
6.1
Total Debt (1)
611.0
616.3
Less: Cash and Cash Equivalents
(133.7
)
(113.5
)
Net Debt
$
477.3
$
502.8
(1) Excluding Debt Issuance Cost
Outlook for Full Year 2022 Value-Added
Sales Outlook Range Net Sales Outlook
$
1,580.0
$
1,710.0
Less: Aluminum, Other Costs, and Outside Service Provider
Costs
(800.0
)
(870.0
)
Value-Added Sales Outlook
$
780.0
$
840.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504005247/en/
Superior Investor Relations Clemens Denks (248) 234-7104
Investor.Relations@supind.com
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