Market Overview

Superior Industries Reports Second Quarter 2018 Financial Results

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Second Quarter 2018 Highlights:

  • Record unit shipments of 5.6 million, up 46% year-over-year
  • Record net sales of $389.0 million and Value-Added Sales of $204.4
    million
  • Value-Added Sales per wheel of $36.81, up 7% year-over-year
  • Net income of $8.1 million; earnings per diluted share of $0.09,
    which includes acquisition-related items of $0.16 per diluted share
  • Record Adjusted EBITDA of $57.2 million, up 94% year-over-year
  • Increasing 2018 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 second quarter ended June 30, 2018.

"Our performance during the second quarter of 2018 reflects the
continued execution of our plan, as we reported record Value-Added Sales
and record Adjusted EBITDA driven by the addition of our European
operations, strong unit shipment levels, and solid operating performance
in both regions. While we are optimistic as we look forward to the
remainder of the year, there is significant work ahead of us as we
continue supporting our global customers with numerous product launches.
Our priority is best-in-class execution while realizing additional
efficiencies and capitalizing on the attractive tailwinds in our
business," commented Don Stebbins, President and Chief Executive Officer.

Second Quarter Results

On May 30, 2017, Superior closed the acquisition of its European
operations. As a result, the Company's reporting for the second quarter
and year-to-date 2017 includes one month of consolidated financials for
the month of June 2017. This compares to 2018, which includes
consolidated results with the European operations for the entire second
quarter and year-to-date periods.

Wheel unit shipments were 5.6 million in the second quarter of 2018, an
increase of 46.3%, compared to second quarter unit shipments of 3.8
million in the prior year period. The increase in unit shipments was
primarily due to the inclusion of two additional months of the European
operations, which drove 1.7 million units of improvement. Unit shipments
in North America were relatively flat.

Net sales for the second quarter of 2018 were $389.0 million, compared
to net sales of $240.6 million in the second quarter of 2017. The
increase was driven by the inclusion of an additional two months of our
European operations, an increase in aluminum prices, and favorable mix
in both regions.

Value-Added Sales, a non-GAAP financial measure defined as net sales
less pass-through charges, primarily for the value of aluminum, were
$204.4 million for the second quarter of 2018, a 56.8% increase compared
to the second quarter of 2017. The increase in Value-Added Sales was
primarily driven by the inclusion of an additional two months of the
European operations, which contributed $68.2 million, and favorable mix
in both regions. See "Non-GAAP Financial Information" below and the
reconciliation of consolidated net sales to Value-Added Sales in this
press release.

Gross profit for the second quarter of 2018 was $53.6 million, compared
to $20.1 million in the prior year period. Gross profit as a percentage
of Value-Added Sales was 26.2% compared to 15.4% in the prior year
period. The increase in gross profit as a percentage of Value-Added
Sales was due mainly to the non-recurring acquisition related items
incurred in the prior year period and outlined in the subsequent tables
in this press release, the inclusion of an additional two months of the
European operations, and improvement in Superior's North American
operations.

Selling, general and administrative expenses for the second quarter were
$22.3 million, or 10.9% of Value-Added Sales, compared to $22.1 million,
or 16.9% of Value-Added Sales in the prior year period. Excluding
acquisition-related items in both periods, selling, general and
administrative expenses increased year-over-year due primarily to the
selling, general and administrative expenses associated with the
inclusion of an additional two months of the European operations.

Income from operations for the second quarter of 2018 was $31.3 million,
or 15.3% of Value-Added Sales, compared to a loss from operations of
$2.0 million, or (1.5%) of Value-Added Sales in the prior year period.
The comparison was favorably impacted by the reduction in acquisition
related items from the prior year period, as well as the inclusion of an
additional two months of the European operations.

The income tax provision for the second quarter ended June 30, 2018 was
$4.8 million on pre-tax income of $12.9 million, representing an
effective income tax rate of 37.1%. The effective tax rate for the
second quarter ended June 30, 2018 was higher than the statutory rate
due to the U.S. taxation of foreign earnings under the U.S. Tax Cuts and
Jobs Act of 2017, including a $4.0 million impact from Section 951A of
the act, offset in part by earnings in countries with rates lower than
the U.S. statutory rate.

For the second quarter of 2018, the Company reported net income of $8.1
million, and earnings per diluted share of $0.09. This compares to a net
loss of $7.3 million, or $0.41 loss per diluted share, in the second
quarter of 2017.

Adjusted EBITDA, a non-GAAP financial measure, reached a record-level of
$57.2 million, or 28.0% of Value-Added Sales, for the second quarter of
2018. This compares to $29.5 million, or 22.6% of Value-Added Sales, for
the second quarter of 2017. The increase in Adjusted EBITDA was
primarily driven by the inclusion of an additional two months of the
European operations, as well as the positive impact of mix and favorable
operational performance. 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 provided by operating activities of $16.4
million in the second quarter of 2018 compared to cash used by operating
activities of $8.5 million during the second quarter of 2017. Cash used
for capital expenditures to support expansion and enhancement of the
Company's portfolio of products and technologies, as well as ongoing
maintenance totaled $15.3 million.

During the second quarter of 2018, the Company paid common dividends of
$2.2 million and preferred dividends of $3.9 million.

Subsequent to the second quarter of 2018, on August 7, 2018 Superior
acquired an additional 447,821 shares of Superior Industries Europe AG
(formerly known as Uniwheels AG), bringing Superior's total ownership
position to 97.8%.

Year-to-Date Results

Wheel unit shipments were 11.1 million for the first half of 2018, an
increase of 67%, compared to unit shipments of 6.6 million in the prior
year period. The increase in unit shipments was primarily due to the
inclusion of an additional five months of the European operation's
units, which drove 4.4 million units of improvement, as well as slightly
higher unit shipments in both regions.

Net sales for the first half of 2018 were $775.4 million, compared to
net sales of $414.8 million in the first half of 2017. The increase was
driven by the inclusion of an additional five months of our European
operations, an increase in aluminum prices, and favorable mix in both
regions.

Value-Added Sales were $411.8 million for the first half of 2018 versus
Value-Added Sales of $225.8 million in the prior year period. The
increase in Value-Added Sales was primarily driven by the inclusion of
an additional five months of the European operations, which contributed
$173.4 million of the increase, and favorable mix in both regions. See
"Non-GAAP Financial Information" below and the reconciliation of
consolidated net sales to Value-Added Sales in this press release.

Gross profit for the first half of 2018 was $103.6 million compared to
$39.3 million in the prior year period. Gross profit as a percentage of
Value-Added Sales was 25.1% compared to 17.4% in the prior year period.
The increase in gross profit was due mainly to the inclusion of an
additional five months of the European operations, the non-recurring
acquisition related items incurred in the prior year period and outlined
in the subsequent tables in this press release, and improvement in
Superior's North American operations.

Selling, general and administrative expenses for the first half of 2018
were $44.6 million, or 10.8% of Value-Added Sales, compared to $37.4
million, or 16.6% of Value-Added Sales in the prior year period.
Excluding acquisition related items in both periods, selling, general
and administrative expenses increased year-over-year due primarily to
the selling, general and administrative expenses associated with the
inclusion of an additional five months of the European operations.

Income from operations for the first half of 2018 was $59.0 million, or
14.3% of Value-Added Sales, compared to income from operations of $1.9
million in the prior year period, or 0.8% of Value-Added Sales. The
comparison was favorably impacted by the inclusion of an additional five
months of the European operations, as well as a reduction in acquisition
related items from the prior year period.

The provision for income taxes for the first half of 2018 was $8.2
million, resulting in an effective tax rate of 30.7%. This compares to
an income tax benefit for the first half of 2017 of $1.5 million and an
effective tax benefit of 25.6% in the prior year period.

For the first half of 2018, the Company reported net income of $18.5
million, or $0.16 per diluted share. This compares to a net loss of $4.2
million, or $0.28 loss per diluted share, in the first half of 2017.

Adjusted EBITDA, a non-GAAP financial measure, was $109.4 million, or
26.6% of Value-Added Sales, for the first half of 2018, which compares
to $48.6 million, or 21.5% of Value-Added Sales, for the first half of
2017. The increase in Adjusted EBITDA was primarily driven by the
inclusion of an additional five months of the European operations and
the positive impact of higher volumes, favorable mix, and improved
year-over year operational performance. See "Non-GAAP Financial
Measures" below and the reconciliation of net income to adjusted EBITDA
in this press release.

2018 Outlook

Mr. Stebbins concluded, "Based on our performance during the first half
of 2018 and our view for the second half of the year, we are revising
our full year 2018 Outlook for net sales, Adjusted EBITDA and our
effective tax rate, while maintaining our Outlook for units, Value-Added
Sales, capital expenditures and cash flow."

  • Superior now expects net sales to be in the range of $1.52 billion to
    $1.56 billion, due primarily to higher aluminum prices. This compares
    to Superior's previously issued Outlook of $1.45 billion to $1.50
    billion of net sales. Superior continues to expect unit shipments to
    be in the range of 21.25 million to 21.60 million.
  • Value-Added Sales are expected to be in the range of $800 million to
    $835 million.
  • Adjusted EBITDA is now expected to be between $190 million and $205
    million, which compares to the previously issued Outlook of $185
    million and $200 million.
  • Capital expenditures are expected to be approximately $95 million.
  • Cash flow from operations is expected to be between $160 million and
    $180 million.
  • Effective Tax Rate is now expected to be between 25% to 29% compared
    to the previous Outlook of 10% to 15% due to provisions under the U.S.
    Tax Cuts and Job Act of 2017.

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 2018 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, August 8, 2018. The conference call may be accessed by
dialing 877-260-1479 for participants in the U.S./Canada or +1 (334)
323-0522 for participants outside the U.S./Canada using the required
conference ID 2647701. 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.
Superior's 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, acquisition and integration costs,
change in fair value of preferred derivative, plant closure costs, and
"Value-Added Sales," which Superior defines as net sales less
pass-through charges primarily for the value of aluminum.

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 2018 Outlook included herein, the Company's ability to
integrate European operations, and the Company's strategic and
operational initiatives, 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 31,
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 Six Months
2Q 2018 2Q 2017 YTD 2018 YTD 2017
Net Sales $ 389.0 $ 240.6 $ 775.4 $ 414.8
Cost of Sales   335.4     220.5     671.8     375.5  
Gross Profit $ 53.6 $ 20.1 $ 103.6 $ 39.3
 
SG&A   22.3     22.1     44.6     37.4  
Income From Operations $ 31.3 $ (2.0 ) $ 59.0 $ 1.9
 
Interest Expense, net (13.2 ) (14.7 ) (25.0 ) (15.0 )
Other (Expense) Income, net (0.6 ) 7.5 (3.6 ) 7.2
Change in Fair Value of Preferred Derivative   (4.6 )   -     (3.7 )   -  
Income Before Income Taxes $ 12.9 $ (9.2 ) $ 26.7 $ (5.9 )
 
Income Tax (Provision) Benefit   (4.8 )   1.7     (8.2 )   1.5  
CONSOLIDATED NET INCOME (LOSS) 8.1 (7.5 ) 18.5 (4.4 )
 
Less: Net Loss Attributable to Noncontrolling Interest   -     0.2     -     0.2  
 
Net Income (Loss) Attributable to Superior $ 8.1   $ (7.3 ) $ 18.5   $ (4.2 )
 
Earnings Per Share:
Basic $ 0.09 $ (0.41 ) $ 0.16 $ (0.28 )
Diluted $ 0.09 $ (0.41 ) $ 0.16 $ (0.28 )
 
Weighted Average and Equivalent Shares Outstanding for EPS (in
Thousands):
Basic 25,001 24,908 24,969 24,961
Diluted 25,053 24,908 25,008 24,961
                 
 
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in Millions)
 
6/30/2018 12/31/2017
Current Assets $ 426.8 $ 417.4
Property, Plant and Equip, net 531.3 536.7
Investments and Other Assets   571.8     597.2  
Total Assets $ 1,529.9   $ 1,551.3  
 
Current Liabilities $ 182.9 $ 195.1
Long-Term Liabilities 771.8 765.8
Redeemable Preferred Shares 153.2 144.7
European Noncontrolling Redeemable Equity 52.6 -
Shareholders' Equity 369.4 393.8
Noncontrolling Interest   -     51.9  
Total Liabilities and Shareholders' Equity $ 1,529.9   $ 1,551.3  
 
 
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Millions)
       
Three Months Ended Six Months Ended
2Q18 2Q17 YTD 2018 YTD 2017
Cash Flow Provided (Used) by Operating Activities $16.4 ($8.5) $30.8 ($10.1)
 
Capital Expenditures (15.3) (13.2) (38.0) (30.0)
Acquisition of UNIWHEELS, net of cash acquired (0.1) (690.7) (0.1) (690.7)
Proceeds from Sale of Property, Plant and Equipment - - - -
Cash Flow (Used) by Investing Activities ($15.4) ($703.9) ($38.1) ($720.7)
 
Proceeds from the Issuance of Long-term Debt - 975.6 - 975.6
Proceeds from the Issuance of Redeemable Preferred Shares - 150.0 - 150.0
Debt Repayment (1.8) (282.3) (3.6) (282.3)
Cash Dividends (6.1) (4.5) (15.6) (9.0)
Stock Repurchase - - - (5.0)
Payments Related to Tax Withholdings for Stock-Based Compensation - (0.5) (0.6) (1.5)
Proceeds from Exercise of Stock Options 0.1 - 0.1 -
Preferred Stock Issuance Costs - (3.7) - (3.7)
Deferred Financing Costs Paid - (30.5) - (30.5)
Cash Flow (Used) Provided by Financing Activities ($7.8) $804.1 ($19.7) $793.6
 
Effect of Exchange Rate on Cash 2.6 0.7 (0.3) 0.6
Net Change in Cash ($4.2) $92.4 ($27.3) $63.4
 
Cash - Beginning 23.3 28.8 46.4 57.8
Cash - Ending $19.1 $121.2 $19.1 $121.2
 
       
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Earnings Per Share Calculation (Unaudited)
(Dollars and Shares in Millions)
 
Three Months Six Months
2Q 2018 2Q 2017 YTD 2018 YTD 2017

Basic EPS Calculation

Net Income (Loss) Attributable to Superior $ 8.1 $ (7.3 ) $ 18.5 $ (4.2 )
Less: Accretion of Preferred Stock (4.3 ) $ (2.9 ) (8.5 ) $ (2.9 )
Less: Redeemable Preferred Stock Dividends (3.9 ) - (7.7 ) -
Less: European Noncontrolling Redeemable Equity
Dividends (0.5 ) - (1.1 ) -
Add: European Noncontrolling Redeemable Equity
Translation Adjustment   2.9     -     2.9     -  
Numerator $ 2.3 $ (10.2 ) $ 4.1 $ (7.1 )
 
Denominator: Weighted Avg. Shares Outstanding   25.0     24.9     25.0     25.0  
 
Basic Earnings Per Share $ 0.09   $ (0.41 ) $ 0.16   $ (0.28 )
 

Diluted EPS Calculation

Net Income (Loss) Attributable to Superior $ 8.1 $ (7.3 ) $ 18.5 $ (4.2 )
Less: Accretion of Preferred Stock (4.3 ) $ (2.9 ) (8.5 ) (2.9 )
Less: Redeemable Preferred Stock Dividends (3.9 ) - (7.7 ) -
Less: European Noncontrolling Redeemable Equity
Dividends (0.5 ) - (1.1 ) -
Add: European Noncontrolling Redeemable Equity
Translation Adjustment   2.9       2.9    
Numerator $ 2.3 $ (10.2 ) $ 4.1 $ (7.1 )
 
Weighted Avg. Shares Outstanding-Basic 25.0 24.9 25.0 25.0
Dilutive Stock Options and Restricted Stock Units   0.1     0.0     0.0     0.0  
Denominator: Weighted Avg. Shares Outstanding   25.1     24.9     25.0     25.0  
 
Diluted Earnings Per Share $ 0.09   $ (0.41 ) $ 0.16   $ (0.28 )
 
         
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Impact of Acquisition-related Items on EPS (Unaudited)
(Dollars in Millions, except EPS amounts)
 
Three Months Six Months
Before Tax Impact on Net Income 2Q 2018 2Q 2017 YTD 2018 YTD 2017

Location on Income
Statement

Inventory Step-up $ - $ (6.1 ) $ - $ (6.1 ) Cost of Sales
M&A and Integration Costs (2.5 ) (12.9 ) (5.8 ) (19.8 ) SG&A
Non-Recurring Interest - (11.9 ) - (12.2 ) Interest
Foreign Exchange M&A Gains - 8.5 - 8.5 Other Income
Change in Fair Value of Preferred Derivative   (4.6 )   -     (3.7 )   -   Other Income
Total Before Tax Impact on Net Income $ (7.1 ) $ (22.4 ) $ (9.5 ) $ (29.6 )
 
After Tax Impact on Net Income $ (6.8 ) $ (19.6 ) $ (8.8 ) $ (25.9 )
European Noncontrolling Redeemable Equity 2.9 2.9 Earnings Per Share Only
Translation Adjustment     -       -  
Total Impact on Numerator for Earnings Per Share $ (3.9 ) $ (19.6 ) $ (5.9 ) $ (25.9 )
 
Impact on Earnings Per Share $ (0.16 ) $ (0.78 ) $ (0.24 ) $ (1.03 )
 
       
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Non-GAAP Financial Measures (Unaudited)
(Dollars in Millions)
 

Value-Added Sales

Three Months Six Months
2Q 2018 2Q 2017 YTD 2018 YTD 2017
Net Sales $ 389.0 $ 240.6 $ 775.4 $ 414.8
Less:
Aluminum Value and Outside Service Provider Costs   (184.6 )   (110.2 )   (363.6 )   (189.0 )
Value-Added Sales $ 204.4   $ 130.4   $ 411.8   $ 225.8  
 
     

Adjusted EBITDA

Three Months Six Months
2Q 2018   2Q 2017 YTD 2018 YTD 2017
Net Income (Loss) Attributable to Superior $ 8.1 $ (7.3 ) $ 18.5 $ (4.2 )
Adjusting Items:
- Interest Expense, net 13.2 14.7 25.0 15.0
- Income Tax Provision 4.8 (1.7 ) 8.2 (1.5 )
- Depreciation 17.4 11.1 34.9 19.5
- Amortization 6.6 2.2 13.3 2.2
- M&A and Integration Related Items 2.5 10.5 5.8 17.5
- Change in Fair Value of Preferred Derivative 4.6 - 3.7 -
- Closure Costs (Excluding Accelerated Depreciation)   -   -     -   0.1  
$ 49.1 $ 36.8   $ 90.9 $ 52.8  
Adjusted EBITDA $ 57.2 $ 29.5   $ 109.4 $ 48.6  
 
           

Outlook for Full Year 2018 Value-Added
Sales

Outlook Range
Net Sales Outlook $ 1,520.0 $ 1,560.0
Less:
Aluminum Value and Outside Service Provider Costs   (720.0 )   (725.0 )
Value-Added Sales Outlook $ 800.0   $ 835.0  

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