Superior Industries International (SUP) 2 Mar 232022 Q4 Earnings call transcript

Hello, and welcome to the Superior Industries Fourth Quarter and Full Year 2022 Earnings Teleconference Call. My name is Caroline, and I'll be your coordinator for today's event.

We're joined this morning by Majdi Abulaban, President and CEO; Tim Trenary, Executive Vice President and CFO; and Joanne Finnorn, Senior Vice President, Investor Relations, Sustainability, Corporate Secretary.

Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only mode.

However, you will have the opportunity to ask questions at the end of the call. Instructions] [Operator

hand today's to conference. now Finnorn, host, the begin to Thank over will your call Joanne I you.

earnings Thank welcome you. year to and call. our fourth Good quarter and morning, everyone, full

along will call our to presentation, release, Relations the this available we section website. with During be of earnings our Superior's morning, our referring earnings on Investor is which

Executive I Officer. officer; and Executive President and am joined Chief Financial on Chief the Trenary, call Vice our by and Majdi Abulaban, our President Tim

Safe Majdi, to this I like Before on I Private over turn Reform of the forward-looking factors. and Safe filings, complete in Harbor call company's SEC everyone XXXX. a current Securities XX-K remind contained today statements company's the and statement the risk this Act any the presentation refer Please would that Slide full provisions to the to commented X to including of to report of forward-looking more of Harbor Litigation are for statements subject or on annual discussion Form the presentation to

also to U.S. discussing be of U.S. items measures certain in measures the non-GAAP not exclude directly be most presentation. these this various today. can the of non-GAAP therefore of measures in Reconciliations These accordance impact GAAP. are calculated GAAP with measures the comparable and appendix will found We

turn With update. a provide portfolio that, the and I'll call over to to business Majdi

year joining for everyone fourth today full call thanks and and our to Joanne, thanks, results. Hey, quarter our review

X Slide with year on Starting full highlights. the

excellence our executing out These the hard teams of am and truly volatility XXXX, and customer I related delivering combination the operational growth. solid challenging building of customers our challenges in efforts roadmap, including are the dialogues to During head-on, priorities in lower volumes, faced team and results work creation driving inflation, schedule the a on we Superior industry profitable our foundation, unprecedented delivered. results recoveries. of laid value proud with have

us enabled Demand outgrowth the for to row. play fourth for has our a Our year premium products continues out. to in deliver portfolio strategy content

demand In XXXX, wheel we delivered mix and X% growth by customer in by sales, for favorable driven value-added recoveries.

XX% year, in During premium realized demand and wheel we wheels. and the continued growth content for increase saw larger per

On our ever-increasing an negotiating exceptionally continuous on and improvement. lean responding successfully pressures recovery customer operating front, cost challenging environment, the to teams focus tackled profitability with and

Our multiyear adjusted margin, collective of [indiscernible] growth million XX% a in resulted efforts earnings significant in year-on-year a expansion. margin high strong EBITDA and and $XXX

capital cash team's flow. I million, to reduction am working our year. also reduced capital to our pleased than improved versus we million and in a $XX $XX expenditures, free cash in net debt more Through the with continued on million management cash the prior $XXX profitability, of results generated (ph) $XXX position prudence] focus improved million [and flow,

million our tackle attract position, the cash have These execute $XXX improved financial to term us our coming strengthened balance results extended capital with The our enabling industry us to refinance as we the and loan years flexibility maturity and strong confidence challenges. in provides of strategies loan. and our in term

heightened interest including and impact XXXX, industry cautious rates automotive factors, production. about of how costs, terms In input remain macroeconomic we will

the of woods abating, seeing are The not out is volatility. supply industry some While choppiness of continued chain we in are yet. still industry challenges the

little very we growth, In in fact, are anticipating markets. any, our if

improvements price (ph) cost flat a Europe continuous U.S. one and expect [affirmative] negotiated adjustments in a and tackling market through inflation, especially in be paramount. will energy, we Specifically, the declining Further,

team's production on environment, cost fourth our Now highlights. commercial volatile solid X the in quarter a the and with to performance discipline choppy delivered Slide and quarter. Despite

innovative way also the sales negotiations driving grew the expansion. growth choppy, tend be prior beginning versus continue (ph) actually drive customers in of wheel increasing with year. and by cost by while leverage [contribute] for call, content this volumes at XX% our to per prior While growth, the versus FX noted Successful for XX%, as to we prior our to the and the XX% recoveries these results. industry value-added Further, increased very earnings we substantial portfolio year, adjusted to I quarter, margin content periods which with

Turning on region market. of saw regions. XX% fourth over which quarter production for both of basis growth. X, normalizing to differentiated in a America CAGR our production growth highlights Europe, market year-over-year and notable by while portfolio on content In a industry growth outperformed North in technologies achieved and over is the we we the in three-year industry X% of both product and increases [Technical Combined, Slide quarter fourth how in driving we recoveries, XXXX, Difficulty]

Moving on Globally, industry further to production operating since for in looking XXXX, to remains pre-COVID environment. far Slide the started finally first levels. below our current yet has time X rebound and

said, on We noted later. headwind for a in of with continue That to I'll operating elevated constraints face slide, a marked benefit which substantial input supply of aging including remain, wheels on difficult manufacturing for disruption tailwinds footprint, this by the Europe. local costs semiconductor our solid local coupled premium demand notably, the and bit ongoing environment, and most touch

our for these We position will to to efforts long-term capture tailwinds Superior long-term growth. continue 'XX in

multiyear creation Moving progress on to to our roadmap. X Slide address value on

strategic for execute also on initiatives. operational Further, factor improvement our discipline laid our Our solid excellence on success here. discipline team margin a consistently cost us, an been focus priorities continuous expansion. supporting out and has multiyear key continued standpoint, continued commercial we to From our has

manufacturing Further, the to towards have enabling we We is with] wheels remains [dealers truly seek local tailwind benefit driving the footprint Beyond excellence, growth. finishes. from established operational believe and long a to local profitable lighter as broadest major premium the trends supply focus on customers with secular have industry, we for chains. in well (ph) our and continued maintained us larger portfolio

where to our in wheels key into local our regions are we key competitors imposed not to now proximity Europe legislation, facilities with advantage. resulting duties from [indiscernible], for wheels strategy, Morocco, In our a in in update EU and customer China line operate. and do recent manufacture Due two competitive on both substantial local imported

the we production. and value progress performance, a have and business XXXX. we to changes creation off first growth [indiscernible] quantifies Slide XX support Further, to adjustments back foundation delivering significant the roadmap financial decline in in recent have we since industry earnings achieved our our to This rolled the despite our enabled has is made structure right profitability. cost implemented

significant value-added debt Superior's industry decline of XX%, our to us has refinance sales XXX collectively This XX% an XXXX, basis FX structure. expanded EBITDA in increased per points, a Against has most has our expanded our wheel by of capital adjusted margin us challenging content the profitable faced, deliver enabling and since environment it's adjusted X%, remarkable and shipments ever performance, to great unit long-term $XXX reduce net to portion ability in growth. industry million, confidence gives one and operating by

our portfolio highlights XX of in content combination the manifesting since strategy XX% wheel. per Slide growth XXXX

We with have continued of to up and demand steadily each these deliver larger wheels technologies of making premium increasing that finishes, for a technologies lighter with portfolio. our share meet larger

see large diversity and 'XX of new Over the and of lighter technology base. how more continuing launches wheels diameter adoption our highlights and XX in continued launches to included our two-thirds on included of customer than you growing our have the premium reflect chart wheels. XX% this Slide

goal the sustainability our year. towards progress highlights for XX Slide

to benchmark. XX% XXXX, safety recordable Our reduce incident rate industry an on has us by since team's enabled focus

We XX% yielding our procured also electricity sustainability from strategy our through continued of is renewable using results. Further, on green on focus is renewable products energy. sources. now RX focus our

these sustainable (ph) XX% less [than] wheels make are average with for average. on has looking to areas industry OEMs us aluminium global COX attractive each deliver of actually in more partners Our global than to the operations. continued footprint that Progress

provide in sustainability our these plan we publish achievements are on We more upcoming this report, later to detail which year. to planning

I XX. outlook remarks our addressing will Slide conclude my full on year XXXX by

of beginning factors, As how costs, I cautious rate will heightened industry we automotive remain about including production noted macroeconomic the levels. input call, at and interest impact the

chain continued volatility. of we seeing choppiness abating, still challenges are industry supply some While in are the

expect any, mentioned little declining earlier, we any a as market We U.S. are the if anticipating markets, I very one -- in our and in growth in flat in Europe a specifically,

million in $XXX flow range of cash to we million. year, adjusted $XXX and million, expect million $XXX the operations $XXX of the For EBITDA in to from the range

historical will provide Tim and EBITDA while be will generation, this more customer XXXX. adjusted Our above impacted still levels, color later. primarily cash versus on by recovery lower

member I of for generate very to challenges. our closing, work. In impressive every our as team this our like of We face XXXX in team delivered am pleased forward results the Superior with and year shareholders. long-term our thank look to to continuing progress we I hard value efforts their would the unprecedented in

call over the And now, I to will Tim? Tim. turn

good and everyone. morning, Majdi, you, Thank

a chain company. including our depressed for XX% a the markets By down row, for any build year significant third volatility. year production disruptions, availability, XXXX measure, in to was vehicle pre-COVID from in our levels. rise OEM Supply vehicle remained gave challenging almost semiconductor Light

is the deflating of business sales wheels ramped inflation, back of of the inflation General continued the profits. cost capital including in the in and XXXX. to wage wheels, low finally, in to of thereby, The $X.XX, as did still Europe. year, became during the the crashed half XX dropping as and skyrocket, European in half throughout aluminum in About of are. coatings, years, euro The year and XXXX our especially And Europe. during the the lowest cost markets wheel resins choppy our as manufacturing the and up energy cost in

organizations, Superior Notwithstanding efforts of procurement and part, margins. these management protected our the extraordinary the commercial the company's large headwinds, through team, in

by and Oaktree to a value. senior shareholder $XXX As our provided Capital drive growth strategy extending the capital a L.P. loan, momentum Management, our managed funds secured consequence, million term advancing for

financially at year in be sold, of XXXX financial company aforementioned Let's how full for and fourth sales environment. the have quarter number found and a wheels profit on The Page performs XX, can business summary. look XXXX the

down quarter, In were year sold the compared wheels X.X prior the to million, X% period. fourth

about of wheel XX% XXXX winter, were sold The of business attributable European inflation aftermarket the aftermarket the were sold in XXXX aftermarket of on logistics the XX% in aftermarket than a all the for sales to Because Europe, aftermarket For primarily wheels of aftermarket wheels sales European in the supply manufacturers. the of million, exporters logistics constraints, down [XX.X] expected about and experienced in expected. orders, by year, Asian worries wheels. Europe, business. in of Conversely, the the afford lower is wheels recession problematic decline prior XXXX impact XXXX, because full to ability the higher from improved primarily winter benefited the than from More company's wheels consumer than were X% the because year. company's warmer aftermarket the (ph) consumers

million to the $XXX prior year. quarter to the compared increased in sales million Net for $XXX

in in billion to $X.X For prior increase of on the to is to the full [weaker year, billion sales higher primarily were $X.X (ph) sales the in XXXX. due weighed XXXX, especially net net year. sales our net customers, pass-through euro] costs The compared in earlier aluminum

Value-added million XX% sales the increased to compared in $XXX $XXX to the million increase. prior year, a quarter for

$XXX year, to the to fourth a in inflation prior our from increase. For customers, compared were sales and quarter of benefited pass-through million million value-added higher in XXXX the premium in cost the sales full $XXX Value-added year, the [indiscernible]. X% especially

During we of period. $X.XX $X earnings a reported diluted loss of the in share a to million $X.XX per net income fourth the of or million prior-year net quarter, or share diluted per loss $XX compared

to diluted accretion full $X.XX in arises net prior-year loss per share XXXX, we or per in income the earnings of The year of paid preferred diluted the dividends on equity. net $XX income value $X share XXXX from per million compared of reported the For of million period. and share $X.XX of loss diluted or

quarter fourth the sales sales notwithstanding increased million XX, increase of period. from million, $XXX wheels Value-added year-over-year prior-year than Page bridge. XX%, $XXX of an sales fewer in

to up currency, sales the were aluminum, premium and and cost our of weighed content. inflation by million, effect from passed million, benefited higher was Volume/price/mix, of million on $XX to XX%. giving of impact the customers. our The value-added $X customers wheel pass-through $X through Before to cost value-added higher euro sales weaker

year-over-year million, X%, fewer up bridge -- period sales Page from The sales $XXX prior-year wheel sales Value-added prior-year the were full is period. year XXXX XX. on in notwithstanding the

higher on million currency, Before benefited value-added X%. by compared $XX [giving] costs our to wheel customers Higher $XX The Volume/price/mix, through and passed inflation to customers. XXXX pass-through premium cost $XXX our the weighed of million, to euro sales weaker (ph) of content. impact up were aluminum of million. value-added effect sales from XXXX to in

sales by margin, comprised performance, $X On expressed margin $XX Page a compared adjusted metal improvement associated margin of of offset quarter XX, of to is year-over-year timing. XX% in $XX [XX%] EBITDA the the quarter in Adjusted unfavorable prior-year EBITDA period. million as fourth in the in and percent million unfavorable XXXX $XX volume/price/mix bridge. value-added (ph) a a part expansion million increased and million, EBITDA the to The adjusted of in $X million,

aluminum and volume/price/mix costs, reflects in in tends amount this changing over of this The in $X of mismatch XXXX, to timing In declined wheels. periods Superior mismatch wheel aftermarket dramatically. instance, of quarter, through primarily and, reflects the in and of XXXX In will XXXX, the cost $X million aluminum to metal unfavorable time. the was occur XXXX. customers. the of in that Metal that net the The million a fewer favorable sales metal rose cost unfavorable dramatically in to passed rapidly cost the cost timing quarter

the does cost favorable production performance, of cost lower build. lower inflation, the of match to and necessarily on timing increased of light our pass-through schedule cost OEM vehicle fixed not cost to absorption the customers With the volatility respect

of performance this that cost ramp back in began of XXXX to schedule half the XXXX. up is Some production recovery and in volatility OEM of inflation the

currency. XX. in year-over-year of metal million offset XX% and expansion of of $XX part adjusted on of improvement to margin $XXX in as expressed $XXX $X is a This XX% prior-year of volume/price/mix, in million, period. increased unfavorable year the million XXXX of to the or million adjusted full is EBITDA margin unfavorable bridge by unfavorable percent $XX and associated million EBITDA compared Adjusted million The $XX a timing EBITDA sales margin value-added comprised in performance, Page

but volume/price/mix years, XXXX. was XXXX, so in aftermarket net two $X sales in wheel and XXXX, favorable Metal unfavorable XXXX, unfavorable XXXX unfavorable The wheels. million fewer $X reflects again, over primarily million million timing $XX in

is inflation that As these ramp performance volatility OEM recovery favorable production in half XXXX. began cost and previously to the described, back up the some of schedule of of

more with quarter the cash $XX reducing the compared on operating to XXXX full fourth company's from $XX the working significantly cash and XXXX Free capital than but business higher full Cash and, free Page of capital year is higher by the activities In respect the with of lower XXXX an Cash and used nutshell, flow for virus because year million focus because in run in improved continues overview significantly million to lower of in higher capital capital XXXX pre-COVID An XX. run is and performance flow similar have in in XXXX. therefore, XXXX, capital is activities for improved 'XX, a also Since year, earnings elevated working and management fourth XXXX, of investing XXXX. XXXX full to onset the fewer improved in than the we earnings, intensity free and expenditures. on cash of quarter flow effective expenditures. of flow levels.

and (ph), balance at [$XXX $XX focus a at the $XXX of million as end year-end on may debt capital balance availability XX. the liquidity, An year. sheet. million. of of the on Page sheet XXXX, Cash million, credit an million] the intend XXXX deleveraging debt the was end prior increase company's $XXX overview of Funded decrease on from to We continue found including was year-end was million. million After structure net under the revolving be facility, $XXX of the to of $XXX

December Page depicted XX, of as on profile maturity debt XX. Superior's XXXX is

year-end. all Our loan and facility We of was no significant made near-term with revolving had covenants debt. at funded credit undrawn a maturities compliance

spoke than and Almost our markets in specifically in Vehicle recovered expect levels vehicle so at to production remain headwinds foreseeable chain you'll historical has below were volatility earlier a XXXX. and well Europe, XX, expected OEM associated in supply of the I inflation, our diminished, XXXX production outlook. markets company's light we full is to return future, somewhat the energy some, vehicle disruptions cost is lows. still $X.XX especially the the Page build but recent Euro flat year find challenge. not in pre-COVID

recovering cost have successfully. and production build. cost able the now inflation, XXXX to no is there success the from are lower increases inflation light ongoing, negotiations We OEM complete offset negotiating of of them be we'll in absorption to customers enjoyed assurance volatility in lower and on appropriate scheduled to cost and fixed cost vehicle considerable price pivoted These

resulting With to expressed and $XXX expect value-added as sell this EBITDA million percent to $X.X XX% of $XXX XX%. XX [XX.X] the we to to billion, be EBITDA XXXX. of a backdrop, to $XXX expected adjusted value-added million million in wheels million million, $X.X $XXX adjusted to a in to billion (ph) margin be sales to of The sales are range in sales million. as the Net associated expected in range

be flow because of million higher operations from Cash in a XXXX, to the is debt from $XXX expected service million costs. $XXX decrease primarily to range,

respect however, to year, in capital some part amount invest including million ability plan reduce from as business the capabilities. especially in of spend, carryover to we and our capital on This we to be environment in strategically finishing XXXX, our the during With evolution of intensity to expenditures, business, spent therefore continue invest expenditures. $XX capital will and to business continue our year the this

tax We for model XX% rate to effective XXXX. a XX%

Enterprise are closing, to mature $XXX conditions, business cost capital and notwithstanding and extremely attracted In improvement in improvement solid challenging million cost reductions. results delivered contiguous we and to very programs financial XXXX, delivering of our Superior increasingly company. continue

who volatility. managed commercial the our cost increases, protected margins production procurement effectively the women men and organizations and make from Our and wheels the company's OEM

future, the especially vehicle teams taken leverage recovers. therefore this our well position business, and capabilities wheel-making of operating Our if product and our the together for production premium disciplined with us operating portfolio, light

are Majdi questions. your to most take happy and Caroline? I

Ward The will from line Instructions] ahead. now. Please from Mike Sure. go Benchmark. first is We line the take the Thank open [Operator of question you.

morning, very start Thanks much. Maybe off... Good everyone. to

Good Mike. morning,

Good morning.

for. margin something I'm is is America hearing Your to in that what be IHS conservative that below just well assumptions on North customers, part? looking you're your your seem is curious, or Europe and just And being from

to your is not related think I question Mike, margins.

I correct? think growth to outlook, it's related

say? Margin? I meant sorry. -- I did environment production. market What I'm industry your industry --

in we predicting year. the using of is years, IHS IHS plans have for Mike, in listen, place. sources put one multiple last three off. just, is And they for them. to X% So, are our been fact,

our high a customer close about talking I in is I call-off. are conviction talk So, And, this tell up I'm to industry leaders see of the as lot there we there at how attention in recession to third prices the them call industry. the Core no tend play now to schedules. is mean, We What level no a about production industry, today are personally -- XX%. third at demand. pay you, -- would we out. will Mike, And automotive the recession. year then, I we year level point,

So, affordability pay $XXX, versus you factor. got XX% a that's The what payment is not people long up massive too ago. average to used

would I XX a you're but that say and Yes, of argue looking these weigh factors [car] at on macro that people million up. types inventory So, up, there, demand right? in will is demand would some Inventory is mean is (ph).

still The not of volatility. still industry in from we're seeing concerned. rest seeing very choppiness. our customers. the We're is So, We're leadership We're it the seeing skeptical. very the the

same before thing. we're and the to to guidance, approach, taken doing this year have the did, time year's we always we going a We did, last cautious continue

what going Speakers] this a for comes, [indiscernible] hey, business, continue Europe business have to we and Our challenged to it planning do. make our if guidance Mike, thinking [Multiple don't does flat. Maybe, We money. we're you But right? we year. really be North about fantastic America is will is be get So,

X% talking and the end that high will pass. the is to come guide hopeful are we of So, about that IHS that

if then, were is the aftermarket? underperformance the negative -- And manufacturers is basis you fourth market? unit Okay. to the what the relative why the Is saw vehicle unit in Or at we the the that on -- to it... a to your shipments look European business quarter, that positive and

fantastic right? Look year in Yes, is we with aftermarket. last story last the year, Europe the cloudy, year, had unit a

XX%, these of Our chain largely, up aftermarket and business you because supply know, that China. and was as logistics and Thailand issues all from

other the So, it's this year, around. way reversed

persistent products. we you, XX, If certain XX% the It's -- is you tell in sales, right, this would does following in I from content the with strategy. how we [indiscernible] go standpoint, phenomenal, very The content. to growth think company I Mike, certain our our our Now, in content business year, that like of to a and growth at right? chart macro in story have larger every we've of wheels value-added look numbers. terms lightweighting, trends, We're our been about sales,

we're XX%. to If use you use company over per up versus content market, you wheel, in growth what at want don't this look was 'XX,

we You growth the year whole the still we're growth 'XX, year above this even XX% alone, look at year, in excluding growth just 'XX, a had fantastic though in market company.

the our and So, company cloudy over narrative It clear than basis. needs on quarterly. the more a very not market is for a is unit quarterly growth

Yes.

-- the wheel on lower the assume in side per -- Now, aftermarket is than the value-added content OE. the content I

Slightly.

you you one And the on Okay. you last the things with there bridge on had -- question. look, EBITDA, were your charts two Tim, just When mentioned.

like the recoveries volume/price/mix can lower put say out $X -- recoveries in a million million, is assume customer metal the that recoveries. quarter, so, way are you around on that is there -- I that? the when fourth numbers be XXXX, that? any what $X mentioned where you against the lower the netted You And Is timing will

(ph) know, performance the again] so you the customer So, category, just recovery. the okay, in recoveries, Mike, [are

Okay.

you some here and [thoughtfulness] me this. color let on (ph) And give

our with for which specificity subject evolve the recoveries pertain which to is way in are The with to costs which they period. time really the the frankly, For negotiations are into cost to the specific believe up they that the isn't is that an we any least amount customers there we respect commercial which and, period with we those negotiation. recovery ended to not seeking not that and respect reasons, and and other the of negotiations is have time

we costs incurred recoveries the of XXXX were actually in some XXXX. relate So, that experienced in that to

our not which the But recoveries period is they in mismatch performance lot, a somewhat of in the because 'XX, this in sure, XXXX. versus in year, that's Now, cost for was [lion's boosted (ph) occur. share] this in

structure, Now Majdi] now in mentioned, efficient, discussions of into (ph) to to your in amount, an have [as reflects with especially fewer the an we vehicles. about frankly, wheels appropriate material, our cost pivoted point the in that our one-off increased XXXX, have labor, cost amount costs fact inherent pricing with -- XX% the that energy, incorporating of we customers XX% the the instead respect to to Europe, recoveries and building they're

price, So, of guidance you suggest all for barometer dialogues the get to handle on that respect our is on the as way a with of are inflation. sort the of we dialogue I to that use measurement. and end wheel -- where will would both cost a rest ongoing that the best to up energy And the those to that's think

margin that sales, continue XX% at to So, $XXX to we expect of between, our value-added activities, $XXX to let's million a respect commercial would million assuming XX%. say, we and with of success be

having from completed. are quarter-to-quarter Now, to as we're that, do lumpiness some I that these see negotiations going said expect

have some quarter-to-quarter. expect, from I we'll So, variation,

Okay. Thank appreciate Really much. very you that, Thank helpful. you. That's very Tim.

Mike. Thanks,

you. Thank

Gary line now. Please next ahead. line is question We Prestopino open The Research. go Barrington the will from from the take

good Hey, morning, everyone.

Good Gary. morning,

annualized What to facility? your Can out] us the with (ph)? [ring expense you going interest give is idea new some

plus (ph) SOFR, is is basis points. points, basis Gary, pricing, [XXX] about today XXX which The Sure.

that's So, XX.X%.

foresight Now, into million XXX. year rate to importantly, XXX swaps at we a of ago, $XXX interest SOFR the -- had enter

year on million So, we some those million. today basis about from XXX -- million points of $XXX swaps, getting are directionally $XXX benefit benefit a $X

$XXX -- the So, swaps. of million

wanted if rate would you -- I'd number, XX%. Fed increases, use to future aside So, take a I say setting XX

what a mean, at the is, mean, -- the I On all really debt? I I -- that's on [indiscernible] are mean, I'm year-over-year? lot looking looking there. total we on XX% for

right. All

in at the can on because So, $XX about about of be it but are swaps absent would million, current $XX place term you the the SOFR, two-zero. million, loan think swaps

Okay.

well, total So, increase amount that that's That's year-over-year? a an incremental. in kind not be of -- expense just interest of would

incremental. million $XX

Fed any raise no further rate, Now, is Powell of it a little bit which the the insulated that of increase the doesn't up of itself in $XXX SOFR, again, million Jerome $XXX good only in is swaps assumption. element debt. news Fed assumes the funds $XXX the impact assumes of probably an ends would manifesting rate, -- is But fund million it which million from

then, questions couple And Okay. a here. more of

you're sales? side, pretty far moving are of up, so on industry saying got the terms sanguine outlook fully I in But of challenges. generating to they're units speak retail is is for improvement, takes inventories and a puts kind -- mean, are and You've I still I a your in what your least or coming QX, everybody and in the year, understand in very the sales and good. this at sanguine the outlook is that seeing up to betterment play

affordability customers. in Gary, your tough Gary, the there's it's noise production, vehicles actually, lot impact and I of a understand right? we -- talked call. and of variation in with pull. vehicle There about variation do really There's what It's a the just -- is

You schedules, at Ford look facing. what they're

a in Mexico, of chain The Nissan plant because Wayne of heard GM Wayne plant their inventory. plant. supply shutdown because Fort announce so You've GM public. presumably shutdown shutdown, but issues. of Corvette their Fort shutdown plant

got are very issues that Ford public.

how will is I there So, everybody about It's out, at no the and great. very very and said, highest talked fun. conviction the you this talk I to play it's industry my level, in colleagues to

problematic. that variation about We're level between as it's but customers. And So, taking XX approach. the It's conservative the it was is in we're still seeing it schedule. a a lot same of the months ago, what's not unique choppiness

the growth hopeful specific it base. are much I'm But and our on very that again, year guide on the we is is customer base, showing So, this supplier depends wrong. a customer

bottomed Well, we guidance really higher. I based industry just you're the betterment so, a hope and of that financials too. slow and XXXX I probably giving not kind starting your it in movement -- mean, in appears mean, that on any you're looking at the

All right.

handle I'm cost let just these me ask a trying another here. thing. recoveries to get So, on

where ongoing, You're that there going? input obviously the you your are to the of saying or how out negotiations XXXX, just going has XXXX are appear guess, I and you're inflation peak and these whatever whole in users? get costs but it your client, issue in trying cost been to-date, then, from this into end with well affect it's the margins, would again, levels could help And mirror. that as to and you're recoveries rear-view And us going

this, So, first make imagine, with okay? multifaceted, points story, you okay? Tim two speak Number recovery the with can it's complex, cost to Gary, is, I as everybody, it's you. want and pick Really up, to one let the level, me So, in normalized recoveries what XX%. back level, And at were company's -- years. Tim XX% is you highest from into highest prior what is in the margin okay, were the mentioned, at what year, the to recoveries there, can can

But the second is point, clear. more I think,

details, multipronged. the you, bridges look look So, at the recoveries are Tim of cost recovery for us, XX% is to year-on-year you But the you showed Gary, at XX% commodities.

that. to between into all million anywhere Gary. You put $XXX That's that million, $XXX

good a way, bit is hedged. And has either Tim well job in very other bridges, call obviously and we because and We energy. last Tim's we is aluminum labor which gives (ph) in been in customers additives XXXX. maybe, a -- consistent it, we and there with [XX%] few silicone, have of with costs. hedging the see energy (ph), recoveries you] or inflation, fared what's or by in XX% And the are energy dialogue then, with the non-commodity little balance, manufacturing more calls, the rest, that's including paint is left did [that you aluminum a of As our the have on

of to third piece And the that is and volatility XX% cancellation. the XX%

So, what is was we're been XX% telling you It's indexed. indexed.

work Our on was customers XX%. We with fared the well.

saying shift that from [piece We 'XX. carryover putting yes, are one-time from to not some into it carried there And of focus price] (ph). have we're to 'XX the in some is now recoveries that

reference is which go would and vis-a-vis companies. the So, in can't moment, compares I XXXX how back I other guide you on to the like may, but to, previous to your Gary, for certain really I made think Majdi, question, in I that, XXXX, improve to it if just company's performance a

really As we've customer boosted somewhat was recoveries XXXX said, that with XXXX. were our by performance associated in

year most I last company's customer compared our you of to compared peers, recoveries. that XXXX, the and compare as you'll you think find for we, because the if that -- mismatches, the performance go to those outperformed back XXXX part,

comp I very we better to still that a our see compared in vis-a-vis that is think compare So, and peers, regard. really reasonably you'll 'XX 'XX

So a unusual. I'm XXXX what round that's about a was saying little

thinking so of portfolio high of you're you way producing wheels have Okay. I guess, the your to. your modicum you else technologies specialized, in of what where some because recoveries, because amount that cost is that and of you're OEMs the and in success these technology, would in should my that getting have turn

that That Gary, advantaged point. competitively a many as is in -- ways. ourselves great is see we

We technology. the have

We have the portfolio.

believe what, to have footprint We we cylinders, unique team what executing industry. And most we have competitive, a on be the that frankly. the in guess all is

you in industry at with a of remember China North you just from if the from XX% argue XX% the all Gary, capacity look that duties. low-cost of this wheels America, could comes standpoint,

wheel of at in in look you the capacity capacity we metal, only Mexico. XX% have If the

a could look when that's America, customers trying localize. at to North XX%. advantage competitive are You That's

and shift Commission month, last China. addition out but that out if I don't comments, duties you imposed duties I of recall you coming were -- coming know Now, the of Morocco wheels in wheels to over my on to EU on Europe,

was a concern pricing from for a right, Morocco obviously, standpoint. So, us,

we So, in XX% of Europe ago, that Poland. is we're it's my now to just years low-cost, capacity in so happens three it were back in what

we low-cost Czech Turkey, in Europe. low XX% of capacity and Poland Republic and assume have the cost, are you If

have the we So, product.

technology. the have We

have We to that. competitive cost. the a differentiated we And footprint then much have where tailwind the we expect now very

we you're can. dialogues with we and that And demonstrate they're collaborative that value dialogues But what customers, our have customers much, have with they dialogues. also supplier right [indiscernible] that very to we to

clearly, have very encouraged our very I'm constructive prospects with -- I'm for how and the XXXX. been dialogues So,

you. Thank Okay.

welcome, You're Gary.

no further questions. There's Thank you.

to conclude it today's Abulaban I Majdi So, back you. will hand host, conference. over to Thank

Thank call you our for everyone today. joining

We and strategic forward our In to this the very by results to on profitable priorities, execute am I throughout growth. encouraged long-term look closing, continuing delivering our quarter year.

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