Superior Industries International (SUP) 7 Nov 242024 Q3 Earnings call transcript

Thank you for standing by, and welcome. My name is Albert, and I will be your conference operator today. At this time, I would like to welcome everyone to the Superior Industries Third Quarter 2024 Earnings Call.

We are joined this morning by Majdi Abulaban, President and CEO; Dan Lee, Senior Vice President and CFO. [Operator Instructions] I would now like to turn the call over to Dan Lee. ahead. go Please

welcome call. and third XXXX quarter Good to conference earnings morning, our

During be Abulaban, is we earnings morning, the Superior's our this call joined am will and Investor section along on Chief our website. Officer. I the by presentation, with referring President earnings on release, Majdi available call Relations of our which, our to Executive

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

measures most update. various accordance this I We impact with will in measures discussing a will Reconciliations directly found the items be can U.S. calculated measures of to to also turn Majdi over today. Majdi? GAAP. portfolio presentation. non-GAAP call of exclude therefore, not certain these the and are the Non-GAAP measures to business now appendix the and comparable provide GAAP in U.S. of be

earnings call. all, morning, XXXX our welcome and quarter Good third to

him CFO the in would refinancing. Officer. European Dan several leadership XX for XXXX Superior was also automotive I of would I business, strategic a transformation including begin, successful and and with the like an debt contributions Tenneco. he many in Trenary, over to execution Financial our like to the to Chief in our introduce instrumental and has of Officer, years. President played to best his I Superior Vice leader am key He Financial where Chief over prior our of that executive Before Tim thrilled leadership as role welcome in team. Finance wish recent to Lee, also thank the retirement. global Dan years our as of business. years experience, finance Dan I the We of his joined Aptiv new He

results of our team's quarter performance X. I in am environment. on results Moving on very quarter, solid to Slide challenging third our proud this a demand

to While we value-added continued delivered production strong key EBITDA and has soften, growth at sales, customers OEM strong margins. pressuring

Our our our the performance established this which through competitive of quarter we of transformation strength operations. highlights have the position, global

in maturities in all aerodynamic competitors a debt, through major combined Poland, consolidated Europe lightweighting Our distinct our locations our extending new wheels gives on advantage customer This America. debt in $XXX and and environment, high-cost with powerful portfolio this million technologies, a operating challenging and North milestone premium attracting the in of capital for wheels to Europe. larger premier supporting In China comprehensive imports our demand and combination we XXXX. a when or footprint, production achieved refinancing of low-cost in with production Mexico in now actually us over manufacturing who is rely from

industry declined We company our With Value-added production, standing, competitive Back adjusted to for and down sustainable deconsolidation by we growth. also strengthened was year-over-year, our X%. results. this foreign X% balance sheet outperforming, significantly debt which million. for completed, total have positioning and $XXX exchange reduced long-term our refinancing sales therefore,

costs Adjusted margins our to from was production year-over-year, inflation. make year. conversion cost in Polish the a continued the in including volumes America was rates year-over-year. also in to by margin basis in benefiting increased declines We've and North was $X EBITDA business adoption stronger price region. volume This primarily supported expanding performance, lower to lower by and by favorable lower compared X% the This OEMs European facility, that progress our XXX sequentially and quarter, million with Our recover at earlier key with customer with strong with prior offset Japanese America negotiations which, delivered offset way, expansion North increases in on production wins points business. benefit by customers customer volumes

have However, more now lower reoccurring go year, forward were our inflationary recover in Permanent into am contracts comparatively of recoveries price prior though, as included than onetime that negotiating for I customers pleased, with to prior increases increases price reflected are these in the recoveries which periods. successful we XXXX. costs. we been

volumes, from transformation production are We in action. our we benefits also execution of Despite seeing successful Europe. this pleased lower are the with

recognizing created have Our low-cost the localized our we customers are in improved footprint. strategic position

localized fact, with short-term accelerated low-cost discussions realized OEMs solutions. both and regions the several advanced aftermarket. wins In we We already are in in seeking customers with in

We have margin recent quarters despite sustained industry delivered improvement in softening demand.

Overall, is production than lower estimates. industry in our has fact, this overhead. and a expected worse supported action we due vehicle of customer conditions, recent a XX% targeted and have In and decline global production are align in IHS inventories environment dealer declined in second production by taking half we structure SG&A response XXXX, cost issues. X% and reduction operating to industry-wide previously challenging manufacturing to In with industry shutdowns, the key expect affordability higher the to

will be of and savings expansion $XX the quarter. run once the technology through will our continued Superior of rate advantages expect in actions position competitive XXXX. the built actions, in XXXX. million with These which a have localized deliver margin $X.X solid in footprint into will fourth we $XX and leading portfolio recorded approximately these This to early approximately million, restructuring million result We in completed to charge combined for performance

our with for financial volume value-added full our year and EBITDA. including this expectations outlook, guidance, are declining Now we lowering sales adjusted

details will deliver in expect our margin Dan I guidance on is The no to have is debt environment. comments. to However, we in more more to confidence do our feat address quarter the sustain this bit improved our on updated detail Slide long-term levels. X. ranges a will his now of ability provide community's refinancing It our a investment completed such this the refinancing challenging a growth. testament small transaction in successful to in

our We to have of $XXX end maturities the extending financial significantly and million XXXX. by reducing profile, debt total our strengthened debt

improved a financial is global the in advanced credit improvements European sight through business with leading actually supplier and OEMs our Our our extensive footprint. wins North their from In chain supply standing unmatched that new through fact, line solidify major in our with And our competitive relationships we These we're with this to to we combined and localization have actions, position have OEMs are achieved to X footprint global need European as of an accelerated reinforced OEMs the able operational rating portfolio transformation. low-cost transformation with customers. deliver dialogues in savings recognize the that several that of America, industry.

one America North Japanese in win on localizing a production supply annually a is A of recent case expected our With with localization with fully production accelerating increasingly geopolitical point beginning for long prior create highlights this platforms we the refinancing now footprint are Slide North This its new of wheels the America. of of advantage customer face momentum the business. able our behind around for leverage in momentum in chain localized in the slide, competitive OEM customer in highlighting highlighted top challenges. mid-XXXX. us, to and XXX,XXX we their to calls. we in supply are X tailwinds chain

we in a in to addition, production expecting In anticipating produce win in major similar the had have again and success with wheels. to start aftermarket, XXXX Europe XXX,XXX

to Moving Slide on X.

declining year improving momentum the EBITDA of highlight despite this adjusted we industry margin Here, volumes.

margins While our improved the global production the European declined this XXX business, of of expanded margin sales functions points. improvement cost nearly expansion business, including X% the consolidation EBITDA is across administrative of beginning our has basis have value-added manufacturing since absorption driven performance. This and transformation fixed and by by year,

global In we and in efficiencies addition, year. XX.X discussed which resulted a run $XXX not run full the an we and to to these overhead initially our operations, improved million this earlier wheels. Mexico date. the utilization XX% Overall, necessary headcount of have have rate $XXX EBITDA restructuring. of have volume The production Polish from rate adjusted combined is reached underlying that production million assumes said, in achieve efforts approximately manufacturing million reduction SG&A in we That seen global savings

customer are million delivering XX.X we to more volumes, at wheels. production closer something However, current

still despite transformation we these profitability throughout our will So volumes, sustain delivered lower improved significantly of stands the underlying European as behind heading XXXX. the assumption which year, value we into have the

These which was content in on premium of adoption is since our our highlights in to closing, programs highlight exciting in continued Moving XXXX. quarter. technology some larger iconic challenging technologies, our adoption Audi Opti EV and Cadillac per for exciting AX growth quarter. lightweighting, growth and the accelerating the accelerating premium the the are Boxer, few the evidenced Porsche finishes. of quarter a X, Slide this The wheel, wheels In a launches highlights this our content by premium XX% entire industry. The of

focus has been Our can control. we what on along all

have footprint. We manufacturing transformed our

we We for we gained have our flexibility and attracted financial success. well structure, have capital future. positioned the rightsized cost have our and into Fundamentally, business

both delivering are and driving our We customers Europe North by new wins. encouraged in financial solid accelerated business America performance momentum with and in are

I'll Superior for year. long-term We forward turn business portfolio to look team detail. to work call would now Dan like to growth. further technologies footprint review over support progress hard local, heading will Dan? to their local I leverage the results and our the new premium and this the and thank our to into advance in continue more financial our of for to quarter

Majdi. Thank you,

it and is over short it. for since great today. with my it of been go how with aligned few be to company. is have part our I XXXX, clear role, the weeks in but team. July I'd with vision the the the also excited and to for like on that Before financial partner closely be the dedicated, Superior of is in is our the executing rest long-term I great new updates quarter, hardworking It to leadership to Majdi a say the call I'm team here

XX. at on look the quarter Let's Page

Third quarter XXXX financial summary.

decreased the to for of Net compared pages. unit color to compared prior lumpy lumpy will compared in period. offset timing call nearly flat the what favorable price as recoveries I for to margin the lower XX%. account unit $XXX year sales to $XXX million was expressed cost to at changes on period. we As year the million a sales the year prior in solid provide associated $XX million upcoming percentage a and $XXX was period. $XXX EBITDA The the period. quarter was Again, prior the volume lower million. value-added recoveries aluminum for recoveries, million decline prior price compared the Majdi or Value-added Adjusted this for by stated, Lower quarter year of in quarter. pass-through QX the were primary the sales sales,

quarter, For the to of million. the refinancing the improvement net offset our capital related million structure. $XX loss was was recorded in $XX by QX million driven deconsolidation The by loss $XX of XXXX, costs

year-over-year XXXX quarter sales third bridge Page is The XX. on

of XX period. As XX% the by lower on metal the EBITDA impact the aluminum exchange in a with increase free the in million million of investment to provided quarter of with degree, compared as of foreign in driven passed slightly the to for impact $XX operating Page just tailwinds EBITDA mentioned, and cash $X fees higher was adjusted well in to to working overview would to quarter debt to third prior is activities $X our a refinancing the unlevered An favorable million period. prior flow overview right, aluminum this to by timing company's were increase year-over-year the structure compared compared declined for price. $X the year can quarter. XXXX, compared to by Slide offset compared the $XX XXXX the value-added prior Capital was cash sales the million in sales. million the lesser through million The was quarter provided higher quarter favorable for been million and third price quarter to is in lumpy the increased expenditures in costs to company's and to the compared XX, An as sales Slide of unit activities cost million for year million, the decrease cash year This quarter period, period. due found by impact related of a $X activities bridge. $XX mix, $X timing be operations the prior adjusted million the lower million led in year on period. Adjusted other the prior for year the was Cash performance, $XX payments adjusted sheet year the for was third XX. $X financing million of cash period, capital $X year flow the as $X quarter, partially of working increased to to September along used the capital million customers. the Cash margin EBITDA capital quarter compared On the million reflecting year. balance $X recoveries, the by due primarily Unlevered to far fees, flow XXXX a $X of of for unit To prior quarter refinancing decrease free product the XX. have XX% prior in items. and of operating When

new allowing the attract in we us refinancing, in third Majdi completed mentioned debt As comments opening by our million quarter, to successfully capital. $XXX in his

term bolstered our our at This refinancing strategic to balance December sheet, liquidity end enabling quarter financial million. facility Total financial for long-term loan standing, positions sheet enhanced in now This has improved operations success. our new $XX cash Our and was us the action matures on us balance and debt XXXX. flexibility. enhances optimize

represents is completion million $XXX million long-term $XXX new our $XX effectively maturity as million to that debt Net the increase the XX, is million on by decrease in term due primarily end, of our notes loan in addition was Total used quarter for impact profile XXXX. capital. sheet, positions refinancing working strengthens balance part increase XX, $XXX increased to of XXXX since debt driven September Again, XXXX. unsecured was at maturities in of XXXX. in was and of paid million This for senior proceeds $XX December costs end $XXX our to marking retire us were With Superior's since refinancing extends the debt the Slide a growth. debt and the a XXXX, debt refinancing, million XX. of

term part of towards on is paying will a full payments outlook XXXX XX. we Page quarterly our beginning QX financial begin in loan refinancing secured million senior agreement, As in The $X.X XXXX. year our

the year lowering OEM XXXX noted, full we production Majdi As to due environment, our outlook. are challenging

XXXX reduction lower net costs expect to sales range lower $X.XX aluminum the For the of value-added We anticipated $X.XX in lowered $XXX the volumes. production OEM $XXX and million expected year production volume $XXX million. to full $XXX to to EBITDA be year, now This million. range OEMs. global of now we in expect was sales billion in the million billion full adjusted range This also lower of due against to reflects range and

to to million revision cash free higher our additional $XX The capital costs. range unlevered of restructuring impact the of working $XX flow related deliver to in million. expect We and to guide is the

our modified items, these free new of the unlevered to flow to has management term addition In requirements liquidity our of been cash loan. reflect

the intensity free approximately enable liquidity expected In while million, continue requirements the we $X want closing, maximization expenditures the cash Capital work our loan term to on for million unlevered hard prior lower investments of outlook to new to for With completion of financial capital thank than growth. refinancing, with quarter. business now this entire reduce making their team Superior strategic as our our I are flexibility. the $XX for flow we the to focused be are of debt balancing the

our and progress growth Majdi take make on joining This us our thank our are happy I for to I We wheel environment today. to to footprint I team to to challenging concludes new executing a remarks. everyone unmatched questions. portfolio forward are prepared to well to and look want priorities. growth and work continuing competitive operational continuing operating the use are within with opportunities. capture and

comes Instructions] [Operator from from of Gary the first Research. Our Prestopino line question Barrington

between Could the American we the Or European mostly is with being that split drill and Are European expected, North down both market? on production or really less that both regions? issues phenomenon? a than your is declining real

mean, different environment split If suppliers. you right? for Tier you, is rest, It's the Gary. very when a guided stats a it down are regions at actually, for in actually, to challenging I both versus Gary, both of we're regions. couple where go between A volume X%. And all the than volumes no year-over-year the back if second now down half, basis, in everyone volume standpoint, from look on they're you X%. regions we're the combined a X in

So North America was was X.X%. down year-on-year, down X% and Europe

we're some outperformed. But Now America line points market. adjustments in we're well. right add very Europe, that in highlighted make It of the our if done those ahead market. And has the you presentation, we collectively, together, with X and deconsolidation North actually, our XXX for if business minor you in basis ramp-up,

look outlook got and you down further, both significant, Gary, combined the which peel is as Europe if quite And they but just the at industry. that I North the being fourth Now is X%. X%. America you IHS being for quarter, declining challenging regions XX%, got quite

look market a overhead. you you QX, think, like us for the will environment, in North here be line. The and at I Europe market. points Mexico market. key we doing especially well from We in to X.X%. North We America the like outperform the of productivity and we're back actually, is America. probably the we're the up America, America development into cost execution. the is, the at ahead ahead Europe. looking the be of right QX industry shared ahead in on entire in volume margin down Production you, We reduction standpoint. in several guide year. profile. QX, continue like SG&A be with what North Dan that If will North We'll of for will

see. you expansions margin these on converged what that's So

on the [indiscernible] little continue same XXXX, into extrapolate level we on higher are level -- can a bit QX go and XX% is to north in XX%. And end as with this expect high and on the of even of doing we in you margin this improving margins. we So which QX,

And terms units will of have wheels? Or Q? in then Dan, your shipped in that put the do you you

Gary, Gary, normally include margin But don't because content. you disclose on on a quarter have the the well, shows sales Centra is the several just X. but the look side, units a unit, cited if It's I it examples where clients Slide wheel. we in has focus, wheel development of suburban we Xx Q, on We at the it. value-added on the units. and our to the Nissan units, removed price been you chose

analytics noise. the can strategy and executing on unit using problematic for be So cause unnecessary

So from that's why we away backed it.

to lastly, then trying that going down, another potential do mentioned RIF to you have to said I expenses. was And to did $XX write the - this $XX million capture is of you million restructuring you that

That is the which, fully that the baked way, as that Europe, have above we completed more. I we to in results the and QX emphasize not we're QX is QX to want going the Gary. in execution go correct, benefit into by see and of It's even beyond 'XX.

savings more the this overhead expected really And It the This we volume said will EBITDA it's year, are bottom we volumes is really environment it, Gary. your to into significantly -- we're end really a the industry. we restructuring it more to early than my more recall nature. 'XX, restructuring To in we just is global Actually, and result feel transformation. numbers really good. happen guided, of XXXX. But want see company. ahead 'XX. of overhead improvement as in of go By $XX in $XX highlighting, million get line the we the now question, to million of down Europe we anyone here. You'll to is challenging the in and see expect

now question Ward. Michael line comes of from next Our the

on those the that Majdi, XQ. you charges actions maybe the in Where centered? Europe, or guess, I just follow-up North additional savings? is announced America that for, Is a

maybe it's in on a say actually add Europe. North both America And Dan, That's more towards little more global that. and weighted the I bit structure. can would But operating you

globally. happening is restructuring all actually execution in actual facilities The

the for adjust globally. really attempt to So we're the to and this volume an activity that is volume organization resize our us challenged to seeing

that new to So company our environment. fit trying into we're

a normalized with Europe, in new along And basis on XX% restructuring, so with the then, normalized to margin correctly a XX% actions I'm reading rate in somewhere if run the we is this range. when more get this the

it have. on think on depends assuming assumptions I Well, quo you volumes. Yes. No, volume status would what

I'm of year. margin go getting excellent as ahead next really Listen, it's profile it. we into

half. not second yet. guidance for we're the providing 'XX saying We're So

I get XX%, to of Is understand. idea the an I'm capabilities. just out XX%, of trying things if is question well? your that go

well, If Mike. But make it's materialize, XXXX. these at volumes not the you are volumes well works year-on-year go then IHS, Yes, be are with if to don't recall, more If at going down declines we question look wheels, even on, when versus we of things out your counts wheels. right make all. us

the you a can you provide more million And Perfect. $X.X the that? quarter refi. Dan, addition to a term term the talk loan? that the are terms I wonder in in the is of were What about thinking bit what color for interest if when is the of rate on and loan, costs? this What paydown

payments. So on the plus rate. SOFR I is you'll the our our addition is QX, XX.X%. interest the X.X% And And think part -- the refi principal is was that in then in rate see of effective is the Q to in XXX terms

think we the that look way the I see. capital, flow, numbers was as cash working -- at And $XX it I I your million -- about

your You in about are in you're what hung looks it's $XX Is that what like assuming? timing. Is got just assumptions QX? million and that working it capital, that unwind up assuming? Should

flexibility new cash gave the unlevered you manage we with cash loan coming terms lower free a exception, cash range because those If would provide unlevered what towards quarter, we're noticing off we're is a breadth speak. the the The high be be the term into the what range. on there range you're the and our we it we of range. And for of are. as end quarter requirements the liquidity to there if closer end, need cash we'll then of free trying that in Yes, low the of saw is we are our on maximize liquidity flow QX towards the cash on flow, if additional high complex end through that to high guidance that

we're But the about sorry, the up, is loan. So We of requirements your receivables but pretty had liquidity answer whether which of in to and expect revenue those your unwind expectation capital, managing we and the term on working yes, it in the question -- -- is through question the to specifically new sizable direct timing. drove month September, some in QX.

And the any Q be filed? timing will when on

It of should day be filed later -- at the today. the end

any will time. We turn don't have to on ahead, at for call Majdi. remarks. the the Go closing questions this line I over now our Majdi back

our our joining thank call environment. for consistent teams their to I execution in very again challenging today. for a Thanks want

have our for and sharing the updates forward drive do around our portfolio, relationships, to and we our look to very I joining. growth customer created. the for in on much in it's long-term year our Thank have our further capabilities fourth We footprint next call. place strategy our with progress right business, you strengthened all centered and you other quarter

concludes that you joining. Thank and for call. Ladies conference gentlemen, today's

now may You disconnect.