Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of ~~April 28,~~July 29, 2022: ~~26,853,292~~27,016,125

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31, 2022			March 31, 2021			June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
NET SALES	$	400,526		$	358,196		$	431,532		$	347,464		$	832,058		$	705,660
Cost of sales		359,939			315,156			388,905			314,844			748,844			630,000
GROSS PROFIT		40,587			43,040			42,627			32,620			83,214			75,660
Selling, general and administrative expenses		16,950			17,321			16,721			17,100			33,671			34,421
INCOME FROM OPERATIONS		23,637			25,719			25,906			15,520			49,543			41,239
Interest expense, net		(9,962	)		(10,273	)		(10,338	)		(10,486	)		(20,300	)		(20,759	)
Other expense, net		(87	)		(1,514	)
Other income (expense), net								681			(2,420	)		594			(3,934	)
INCOME BEFORE INCOME TAXES		13,588			13,932			16,249			2,614			29,837			16,546
Income tax provision		(3,518	)		(810	)		(5,405	)		(919	)		(8,923	)		(1,729	)
NET INCOME	$	10,070		$	13,122		$	10,844		$	1,695		$	20,914		$	14,817
EARNINGS PER SHARE – BASIC	$	0.04		$	0.19
EARNINGS PER SHARE – DILUTED	$	0.04		$	0.18
EARNINGS (LOSS) PER SHARE – BASIC							$	0.07		$	(0.26	)	$	0.11		$	(0.07	)
EARNINGS (LOSS) PER SHARE – DILUTED							$	0.07		$	(0.26	)	$	0.11		$	(0.07	)

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

Three Months Ended

March 31,
2022

March 31,
2021

Net income

$
10,070

$
13,122

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss)

2,043

(15,678
)
Change in unrecognized gains (losses) on derivative instruments:

Change in fair value of derivatives

17,252

(9,140
)
Tax (provision) benefit

(431
)

678

Change in unrecognized gains (losses) on derivative instruments, net of tax

16,821

(8,462
)
Defined benefit pension plan:

Amortization of actuarial losses on pension obligation

83

97

Tax (provision) benefit

—

(21
)
Pension changes, net of tax

83

76

Other comprehensive income (loss), net of tax

18,947

(24,064
)
Comprehensive income (loss)

$
29,017

$
(10,942
)

	Three Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Net income	$	10,844		$	1,695		$	20,914		$	14,817
Other comprehensive income (loss), net of tax:
Foreign currency translation (loss) gain		(11,654	)		8,410			(9,611	)		(7,268	)
Change in unrecognized (losses) gains on derivative instruments:
Change in fair value of derivatives		(15,906	)		17,165			1,346			8,025
Tax benefit (provision)		323			(1,718	)		(108	)		(1,040	)
Change in unrecognized (losses) gains on derivative instruments, net of tax		(15,583	)		15,447			1,238			6,985
Defined benefit pension plan:
Amortization of actuarial losses on pension obligation		83			97			166			194
Tax benefit		—			21			—			—
Pension changes, net of tax		83			118			166			194
Other comprehensive (loss) income, net of tax		(27,154	)		23,975			(8,207	)		(89	)
Comprehensive (loss) income	$	(16,310	)	$	25,670		$	12,707		$	14,728

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	133,681		$	113,473		$	122,258		$	113,473
Accounts receivable, net		124,507			83,447			115,832			83,447
Inventories, net		208,305			172,099			202,801			172,099
Income taxes receivable		5,508			4,957			4,748			4,957
Other current assets		40,248			30,279			28,613			30,279
Total current assets		512,249			404,255			474,252			404,255
Property, plant and equipment, net		491,847			494,401			471,826			494,401
Deferred income tax assets, net		25,843			27,715			24,138			27,715
Intangibles, net		69,533			76,870			59,625			76,870
Other non-current assets		55,446			50,906			53,230			50,906
Total assets	$	1,154,918		$	1,054,147		$	1,083,071		$	1,054,147
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	229,557		$	153,197		$	197,245		$	153,197
Short-term debt		5,971			6,081			5,556			6,081
Accrued expenses		76,974			71,525			69,960			71,525
Income taxes payable		1,170			1,076			1,714			1,076
Total current liabilities		313,672			231,879			274,475			231,879
Long-term debt (less current portion)		597,856			602,355			580,962			602,355
Non-current income tax liabilities		7,799			8,289			8,017			8,289
Deferred income tax liabilities, net		4,327			3,913			5,250			3,913
Other non-current liabilities		74,066			77,089			75,057			77,089
Commitments and contingent liabilities (Note 16)		—			—			—			—
Mezzanine equity:
Preferred stock, $0.01 par value
Authorized - 1,000,000 shares
Issued and outstanding – 150,000 shares outstanding at March 31, 2022 and December 31, 2021		205,381			199,897
Issued and outstanding – 150,000 shares outstanding at June 30, 2022 and December 31, 2021								211,016			199,897
European non-controlling redeemable equity		1,140			1,146			1,077			1,146
Shareholders’ deficit:
Common stock, $0.01 par value
Authorized - 100,000,000 shares
Issued and outstanding – 26,853,292 and 26,163,077 shares at March 31, 2022 and December 31, 2021		104,216			103,214
Issued and outstanding – 27,016,125 and 26,163,077 shares at June 30, 2022 and December 31, 2021								106,078			103,214
Accumulated other comprehensive loss		(107,027	)		(125,974	)		(134,181	)		(125,974	)
Retained earnings		(46,512	)		(47,661	)		(44,680	)		(47,661	)
Total shareholders’ deficit		(49,323	)		(70,421	)		(72,783	)		(70,421	)
Total liabilities, mezzanine equity and shareholders’ deficit	$	1,154,918		$	1,054,147		$	1,083,071		$	1,054,147

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

	Three Months Ended						Six Months Ended
	March 31, 2022			March 31, 2021			June 30, 2022			June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	10,070		$	13,122		$	20,914		$	14,817
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		24,082			25,361			47,208			50,970
Income tax, non-cash changes		1,979			(2,818	)		4,087			(2,927	)
Stock-based compensation		2,646			1,847			4,652			4,331
Amortization of debt issuance costs		1,231			870			2,465			2,731
Other non-cash items		319			(4,528	)		(1,044	)		(3,928	)
Changes in operating assets and liabilities:
Accounts receivable		(40,403	)		(36,981	)		(35,483	)		(37,231	)
Inventories		(36,578	)		(14,702	)		(38,739	)		(46,139	)
Other assets and liabilities		4,415			13,875			(1,266	)		15,894
Accounts payable		78,141			21,328			53,755			34,402
Income taxes		(901	)		779			664			(987	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		45,001			18,153			57,213			31,933
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment		(17,954	)		(10,479	)		(34,288	)		(20,551	)
Proceeds from sale of fixed assets		150			—			150			—
NET CASH USED IN INVESTING ACTIVITIES		(17,804	)		(10,479	)		(34,138	)		(20,551	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		—			1,658			—			1,658
Repayments of debt		(1,331	)		(830	)		(2,505	)		(2,129	)
Cash dividends paid		(3,426	)		(3,368	)		(6,792	)		(6,736	)
Financing costs paid and other		—			(9	)		—			(4,307	)
Payments related to tax withholdings for stock-based compensation		(1,644	)		(1,342	)		(1,788	)		(1,342	)
Finance lease payments		(304	)		(288	)		(547	)		(645	)
NET CASH USED IN FINANCING ACTIVITIES		(6,705	)		(4,179	)		(11,632	)		(13,501	)
Effect of exchange rate changes on cash		(284	)		(2,070	)		(2,658	)		(1,133	)
Net increase in cash and cash equivalents		20,208			1,425
Net increase (decrease) in cash and cash equivalents								8,785			(3,252	)
Cash and cash equivalents at the beginning of the period		113,473			152,423			113,473			152,423
Cash and cash equivalents at the end of the period	$	133,681		$	153,848		$	122,258		$	149,171

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

For the three months ended March 31, 2021
For the six months ended June 30, 2022
	Common Stock				Accumulated Other Comprehensive (Loss) Income															Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total			Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT DECEMBER 31, 2020		25,591,930	$	95,247	$	(1,738	)	$	(7,447	)	$	(90,261	)	$	(17,323	)	$	(21,522	)
BALANCE AT DECEMBER 31, 2021																					26,163,077	$	103,214	$	(9,051	)	$	(6,133	)	$	(110,790	)	$	(47,661	)	$	(70,421	)
Net income		—		—		—			—			—			13,122			13,122			—		—		—			—			—			20,914			20,914
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—		(8,462	)		—			—			—			(8,462	)		—		—		1,238			—			—			—			1,238
Change in defined benefit plans, net of taxes		—		—		—			76			—			—			76
Change in defined benefit plans, net of tax																					—		—		—			166			—			—			166
Net foreign currency translation adjustment		—		—		—			—			(15,678	)		—			(15,678	)		—		—		—			—			(9,611	)		—			(9,611	)
Common stock issued, net of shares withheld for employee taxes		355,532		—		—			—			—			—			—			853,048		—		—			—			—			—			—
Stock-based compensation		—		505		—			—			—			—			505			—		2,864		—			—			—			—			2,864
Redeemable preferred 9% dividend and accretion		—		—		—			—			—			(8,290	)		(8,290	)		—		—		—			—			—			(17,911	)		(17,911	)
European non-controlling redeemable equity dividend		—		—		—			—			—			(13	)		(13	)		—		—		—			—			—			(22	)		(22	)
BALANCE AT MARCH 31, 2021		25,947,462	$	95,752	$	(10,200	)	$	(7,371	)	$	(105,939	)	$	(12,504	)	$	(40,262	)
BALANCE AT JUNE 30, 2022																					27,016,125	$	106,078	$	(7,813	)	$	(5,967	)	$	(120,401	)	$	(44,680	)	$	(72,783	)

For the three months ended June 30, 2022
																				Common Stock				Accumulated Other Comprehensive (Loss) Income
																				Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT MARCH 31, 2022																					26,853,292	$	104,216	$	7,770		$	(6,050	)	$	(108,747	)	$	(46,512	)	$	(49,323	)
Net income																					—		—		—			—			—			10,844			10,844
Change in unrecognized gains (losses) on derivative instruments, net of tax																					—		—		(15,583	)		—			—			—			(15,583	)
Change in defined benefit plans, net of tax																					—		—		—			83			—			—			83
Net foreign currency translation adjustment																					—		—		—			—			(11,654	)		—			(11,654	)
Common stock issued, net of shares withheld for employee taxes																					162,833		—		—			—			—			—			—
Stock-based compensation																					—		1,862		—			—			—			—			1,862
Redeemable preferred 9% dividend and accretion																					—		—		—			—			—			(9,001	)		(9,001	)
European non-controlling redeemable equity dividend																					—		—		—			—			—			(11	)		(11	)
BALANCE AT JUNE 30, 2022																					27,016,125	$	106,078	$	(7,813	)	$	(5,967	)	$	(120,401	)	$	(44,680	)	$	(72,783	)

For the three months ended March 31, 2022

(Unaudited)

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
Gains (Losses)
on Derivative
Instruments

Pension
Obligations

Cumulative
Translation
Adjustment

Retained
Earnings

Total

BALANCE AT DECEMBER 31, 2021

26,163,077

$
103,214

$
(9,051
)

$
(6,133
)

$
(110,790
)

$
(47,661
)

$
(70,421
)

Net income

—

—

—

—

—

10,070

10,070

Change in unrecognized gains (losses) on
   derivative instruments, net of tax

—

—

16,821

—

—

—

16,821

Change in defined benefit plans, net of taxes

—

—

—

83

—

—

83

Net foreign currency translation adjustment

—

—

—

—

2,043

—

2,043

Common stock issued, net of shares withheld
   for employee taxes

690,215

—

—

—

—

—

—

Stock-based compensation

—

1,002

—

—

—

—

1,002

Redeemable preferred 9% dividend
    and accretion

—

—

—

—

—

(8,910
)

(8,910
)

European non-controlling redeemable equity
   dividend

—

—

—

—

—

(11
)

(11
)

BALANCE AT MARCH 31, 2022

26,853,292

$
104,216

$
7,770

$
(6,050
)

$
(108,747
)

$
(46,512
)

$
(49,323
)

For the six months ended June 30, 2021
	Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT DECEMBER 31, 2020		25,591,930	$	95,247	$	(1,738	)	$	(7,447	)	$	(90,261	)	$	(17,323	)	$	(21,522	)
Net income		—		—		—			—			—			14,817			14,817
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—		6,985			—			—			—			6,985
Change in defined benefit plans, net of tax		—		—		—			194			—			—			194
Net foreign currency translation adjustment		—		—		—			—			(7,268	)		—			(7,268	)
Common stock issued, net of shares withheld for employee taxes		515,532		—		—			—			—			—			—
Stock-based compensation		—		2,989		—			—			—			—			2,989
Redeemable preferred 9% dividend and accretion		—		—		—			—			—			(16,712	)		(16,712	)
European non-controlling redeemable equity dividend		—		—		—			—			—			(38	)		(38	)
BALANCE AT JUNE 30, 2021		26,107,462	$	98,236	$	5,247		$	(7,253	)	$	(97,529	)	$	(19,256	)	$	(20,555	)

For the three months ended June 30, 2021
	Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT MARCH 31, 2021		25,947,462	$	95,752	$	(10,200	)	$	(7,371	)	$	(105,939	)	$	(12,504	)	$	(40,262	)
Net income		—		—		—			—			—			1,695			1,695
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—		15,447			—			—			—			15,447
Change in defined benefit plans, net of tax		—		—		—			118			—			—			118
Net foreign currency translation adjustment		—		—		—			—			8,410			—			8,410
Common stock issued, net of shares withheld for employee taxes		160,000		—		—			—			—			—			—
Stock-based compensation		—		2,484		—			—			—			—			2,484
Redeemable preferred 9% dividend and accretion		—		—		—			—			—			(8,422	)		(8,422	)
European non-controlling redeemable equity dividend		—		—		—			—			—			(25	)		(25	)
BALANCE AT JUNE 30, 2021		26,107,462	$	98,236	$	5,247		$	(7,253	)	$	(97,529	)	$	(19,256	)	$	(20,555	)

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

NOTE 1 – NATURE OF OPERATIONS AND PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Superior Industries International, Inc.’s (referred herein as the “Company,” “Superior,” or “we” and “our”) principal business is the design and manufacture of aluminum wheels for sale to original equipment manufacturers (“OEMs”) in North America and Europe and to the aftermarket in Europe. We employ approximately 7,800 full-time employees, operating in 8 manufacturing facilities in North America and Europe. We are one of the largest aluminum wheel suppliers to global OEMs and we believe we are the #1 European aluminum wheel aftermarket manufacturer and supplier. Our OEM aluminum wheels accounted for approximately 94 percent of our sales in the first ~~three~~six months of 2022 and are primarily sold for factory installation on vehicle models manufactured by BMW (including Mini), Ford, GM, Honda, Jaguar-Land Rover, Lucid Motors, Mazda, Mercedes-Benz Group, Nissan, PSA, Renault, Stellantis, Subaru, Suzuki, Toyota, VW Group (Volkswagen, Audi, SEAT, Skoda, Porsche, Bentley) and Volvo. We sell aluminum wheels to the European aftermarket under the brands ATS, RIAL, ALUTEC and ANZIO. North America and Europe represent the principal markets for our products, but we have a diversified global customer base consisting of North American, European and Asian OEMs. We have determined that our North American and European operations should be treated as separate reportable segments as further described in Note 5, “Business Segments.”

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements, in our opinion, include all adjustments, of a normal and recurring nature, which are necessary for fair presentation of the financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes thereto filed with the SEC in our 2021 Annual Report on Form 10-K.

Interim financial reporting standards require us to make estimates that are based on assumptions regarding the outcome of future events and circumstances not known at that time. Inevitably, some assumptions will not materialize, unanticipated events or circumstances may occur which vary from those estimates and such variations may significantly affect our future results. Additionally, interim results may not be indicative of our results for future interim periods or our annual results.

Cash paid for interest was ~~$5.2 million for each of the three months ended March 31, 2022 and March 31, 2021. Net cash income taxes paid was $2.4~~$17.9 million and ~~$2.8~~$18.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, respectively. Net cash paid for income taxes was $4.1 million and $5.9 million for the six months ended June 30, 2022 and June 30, 2021, respectively. As of ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, ~~$6.1~~$5.9 million and ~~$4.3~~$7.8 million, respectively, of equipment had been purchased but not yet paid and was included in accounts payable in our condensed consolidated balance sheets.

ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.” As of January 1, 2022, we have adopted this standard on a prospective basis. The standard requires entities to disclose information about any transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. Disclosures under ASU 2021-10 include: information about the nature of the transactions and the related accounting policy used to account for the transactions, the financial statement line items affected by the transactions, the amounts applicable to each financial statement line item and significant terms and conditions of the transactions, including commitments and contingencies. The adoption of this accounting standard did not have a material effect on our financial statements or disclosures since we have not received any significant governmental assistance.

Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” In June 2016, the Financial Accounting Standards Board issued ASU 2016-13 which requires entities to use a

new impairment model based on current expected credit losses (“CECL”) rather than incurred losses. Under CECL, estimated credit losses would incorporate relevant information about past events, current conditions and reasonable and supportable forecasts and any expected credit losses would be recognized at the time of sale. As a smaller reporting company (as defined under SEC regulations), the Company is not required to adopt the standard until January 1, 2023. We are evaluating the impact this standard will have on our financial statements and disclosures.

The Company disaggregates revenue from contracts with customers into our reportable segments, North America and Europe. Revenues by segment for the ~~three-month~~three and six-month periods ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, respectively, are summarized in Note 5, “Business Segments.”

The opening and closing balances of the Company’s customer receivables and current and long-term contract liabilities balances are as follows:

(Dollars in thousands)	March 31, 2022		December 31, 2021		Change			June 30, 2022		December 31, 2021		Change
Customer receivables	$	114,234	$	74,887	$	39,347		$	108,994	$	74,887	$	34,107
Contract liabilities—current		6,156		6,887		(731	)		5,543		6,887		(1,344	)
Contract liabilities—noncurrent		9,453		10,526		(1,073	)
Contract liabilities—non-current									8,715		10,526		(1,811	)

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis, while other assets and liabilities are measured at fair value on a nonrecurring basis, such as an asset impairment. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short period of time until maturity.

Our derivatives are over-the-counter customized derivative instruments and are not exchange traded. We estimate the fair value of these instruments using the income valuation approach. Under this approach, we project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates, foreign exchange rates, commodity prices and the contractual terms of the derivative instruments. The discount rate used is the relevant benchmark rate (e.g., SOFR) plus an adjustment for non-performance risk.

The following tables categorize items measured at fair value as of ~~March 31,~~June 30, 2022 and December 31, 2021:

			Fair Value Measurement at Reporting Date Using								Fair Value Measurement at Reporting Date Using
March 31, 2022			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2022											Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Assets
Derivative contracts	$	26,154	$	—	$	26,154	$	—	$	15,902	$	—	$	15,902	$	—
Total	$	26,154	$	—	$	26,154	$	—	$	15,902	$	—	$	15,902	$	—
Liabilities					.								.
Derivative contracts	$	17,002	$	—	$	17,002	$	—	$	21,587	$	—	$	21,587	$	—
Total	$	17,002	$	—	$	17,002	$	—	$	21,587	$	—	$	21,587	$	—

The carrying values of the Company’s debt instruments vary from their fair values. The fair values were determined by reference to transacted prices and quotes for these instruments (Level 2). The estimated fair value, as well as the carrying value, of the Company’s debt instruments are shown below:

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
(Dollars in thousands)
Estimated aggregate fair value	$	594,746	$	605,874	$	533,218	$	605,874
Aggregate carrying value ⁽¹⁾		610,913		616,215		592,907		616,215

We use derivatives to partially offset our exposure to foreign currency, interest rate, aluminum and other commodity price risks. We may enter into forward contracts, option contracts, swaps, collars or other derivative instruments to offset some of the risk on expected future cash flows and on certain existing assets and liabilities. However, we may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will fully offset the financial impact resulting from movements in foreign currency exchange rates, interest rates, and aluminum or other commodity prices.

To help mitigate gross margin fluctuations due to changes in foreign currency exchange rates, certain of our subsidiaries, whose functional currency is the U.S. dollar or the Euro, hedge a portion of their forecasted foreign currency costs denominated in the Mexican Peso and Polish Zloty, respectively. We may hedge portions of our forecasted foreign currency exposure up to 48 months.

We account for our derivative instruments as either assets or liabilities and adjust them to fair value each period. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the gain or

loss on the derivative instrument is recorded in accumulated other comprehensive income (“AOCI”) or loss in shareholders’ equity or deficit until the hedged item is recognized in earnings, at which point accumulated gains or losses are recognized in earnings and classified with the underlying hedged transaction. Derivatives that do not qualify or have not been designated as hedges are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.

The following tables display the fair value of derivatives by balance sheet line item at ~~March 31,~~June 30, 2022 and December 31, 2021:

	March 31, 2022								June 30, 2022
	Other Current Assets		Other Non-current Assets		Accrued Liabilities		Other Non-current Liabilities		Other Current Assets		Other Non-current Assets		Accrued Liabilities		Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	7,105	$	6,673	$	2,682	$	12,007	$	6,824	$	4,688	$	3,672	$	13,581
Foreign exchange forward contracts not designated as hedging instruments		1,136		—		502		—		270		—		135		—
Aluminum forward contracts designated as hedging instruments		7,406		—		—		—		19		—		2,383		—
Natural gas forward contracts designated as hedging instruments		3,234		600		32		282		2,233		1,512		158		255
Interest rate swap contracts designated as hedging instruments		—		—		1,497		—		356		—		56		1,347
Total derivative financial instruments	$	18,881	$	7,273	$	4,713	$	12,289	$	9,702	$	6,200	$	6,404	$	15,183

The following table summarizes the notional amount and estimated fair value of our derivative financial instruments:

	March 31, 2022					December 31, 2021					June 30, 2022					December 31, 2021
	Notional U.S. Dollar Amount		Fair Value			Notional U.S. Dollar Amount		Fair Value			Notional U.S. Dollar Amount		Fair Value			Notional U.S. Dollar Amount		Fair Value
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	465,599	$	(911	)	$	458,769	$	(10,055	)	$	479,323	$	(5,741	)	$	458,769	$	(10,055	)
Foreign exchange forward contracts not designated as hedging instruments		35,572		634			24,419		576			36,098		135			24,419		576
Aluminum forward contracts designated as hedging instruments		26,706		7,406			37,609		2,716			23,477		(2,364	)		37,609		2,716
Natural gas forward contracts designated as hedging instruments		12,087		3,520			8,915		1,301			13,488		3,332			8,915		1,301
Interest rate swap contracts designated as hedging instruments		200,000		(1,497	)		200,000		(3,887	)		450,000		(1,047	)		200,000		(3,887	)
Total derivative financial instruments	$	739,964	$	9,152		$	729,712	$	(9,349	)	$	1,002,386	$	(5,685	)	$	729,712	$	(9,349	)

Notional amounts are presented on a net basis. The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates or commodity prices.

The following tables summarize the gain or loss recognized in AOCI, the amounts reclassified from AOCI into earnings and the amounts recognized directly into earnings for the three and six months ended ~~March 31,~~June 30, 2022 and 2021:

Three Months Ended March 31, 2022	Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
Three Months Ended June 30, 2022							Amount of Gain or (Loss) Recognized in AOCI on Derivatives			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts	$	16,821	$	4,777	$	870	$	(15,583	)	$	4,558	$	(201	)
Total	$	16,821	$	4,777	$	870


Six Months Ended June 30, 2022							Amount of Gain or (Loss) Recognized in AOCI on Derivatives			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts							$	1,238		$	9,335	$	669

Three Months Ended March 31, 2021	Amount of Gain or (Loss) Recognized in AOCI on Derivatives			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income			Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
Three Months Ended June 30, 2021										Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts	$	(8,462	)	$	(439	)	$	(2,904	)	$	15,447	$	758	$	1,638
Total	$	(8,462	)	$	(439	)	$	(2,904	)

Six Months Ended June 30, 2021										Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts										$	6,985	$	319	$	(1,266	)

The North American and European businesses represent separate operating segments in view of significantly different markets, customers and products in each of these regions. Within each of these regions, markets, customers, products, and production processes are similar. Moreover, our business within each region generally leverages common systems, processes and infrastructure. Accordingly, North America and Europe comprise the Company’s reportable segments.

									Net Sales				Income from Operations
Three Months Ended									June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
(Dollars in thousands)	Net Sales				Income from Operations
Three months ended	March 31, 2022		March 31, 2021		March 31, 2022		March 31, 2021
North America	$	227,198	$	191,971	$	19,567	$	17,841	$	259,677	$	176,990	$	24,679	$	7,542
Europe		173,328		166,225		4,070		7,878		171,855		170,474		1,227		7,978
	$	400,526	$	358,196	$	23,637	$	25,719	$	431,532	$	347,464	$	25,906	$	15,520

									Depreciation and Amortization				Capital Expenditures
Three Months Ended									June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
(Dollars in thousands)
North America									$	9,055	$	9,499	$	11,630	$	3,447
Europe										14,071		16,110		4,704		6,625
									$	23,126	$	25,609	$	16,334	$	10,072

					Three Months Ended				Six Months Ended
					June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
(Dollars in thousands)	Net Sales
Three months ended	March 31, 2022		March 31, 2021
Net sales:
U.S.	$	1,658	$	1,270	$	1,292	$	1,549	$	2,950	$	2,819
Mexico		225,540		190,701		258,385		175,441		483,925		366,142
Germany		54,088		60,887		48,035		62,511		102,123		123,398
Poland		119,240		105,338		123,820		107,963		243,060		213,301
Consolidated net sales	$	400,526	$	358,196	$	431,532	$	347,464	$	832,058	$	705,660


									June 30, 2022		December 31, 2021
(Dollars in thousands)	Property, Plant and Equipment, net
	March 31, 2022		December 31, 2021
Property, plant and equipment, net
U.S.	$	1,899	$	2,152					$	1,701	$	2,152
Mexico		216,502		212,179						215,985		212,179
Germany		77,542		76,849						75,173		76,849
Poland		195,904		203,221						178,967		203,221
Property, plant and equipment, net	$	491,847	$	494,401					$	471,826	$	494,401

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
(Dollars in thousands)
Raw materials	$	54,107	$	47,392	$	49,757	$	47,392
Work in process		72,192		54,891		70,647		54,891
Finished goods		82,006		69,816		82,397		69,816
Inventories, net	$	208,305	$	172,099	$	202,801	$	172,099

Service wheel and supplies inventory included in other non-current assets in the condensed consolidated balance sheets totaled $10.8 million and $9.7 million at ~~March 31,~~June 30, 2022 and December 31, ~~2021.~~2021, respectively.

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
(Dollars in thousands)
Land and buildings	$	131,489		$	129,826		$	126,583		$	129,826
Machinery and equipment		884,009			861,097			865,237			861,097
Leasehold improvements and others		9,741			9,831			9,228			9,831
Construction in progress		62,250			67,529			69,978			67,529
		1,087,489			1,068,283			1,071,026			1,068,283
Accumulated depreciation		(595,642	)		(573,882	)		(599,200	)		(573,882	)
Property, plant and equipment, net	$	491,847		$	494,401		$	471,826		$	494,401

Depreciation expense for the three and six months ended ~~March 31,~~June 30, 2022 was $17.6 million and $35.4 million, respectively. Depreciation expense for the three and six months ended June 30, 2021 was ~~$17.8~~$18.9 million and ~~$18.7~~$37.6 million, respectively.

The Company’s finite-lived intangible assets as of ~~March 31,~~June 30, 2022 and December 31, 2021 are summarized in the following table.

As of March 31, 2022	Gross Carrying Amount		Accumulated Amortization			Currency Translation		Net Carrying Amount		Remaining Weighted Average Amortization Period
As of June 30, 2022											Gross Carrying Amount		Accumulated Amortization			Currency Translation			Net Carrying Amount		Remaining Weighted Average Amortization Period
(Dollars in thousands)
Brand name	$	9,000	$	(8,954	)	$	252	$	298	1-2	$	9,000	$	(9,231	)	$	231		$	—		—
Technology		15,000		(14,924	)		420		496	2		15,000		(15,385	)		385			—		—
Customer relationships		167,000		(100,610	)		2,349		68,739	2-7		167,000		(105,447	)		(1,928	)		59,625	1-6
Total finite-lived intangibles	$	191,000	$	(124,488	)	$	3,021	$	69,533		$	191,000	$	(130,063	)	$	(1,312	)	$	59,625

Amortization expense for these intangible assets was ~~$6.2~~$5.6 million and $6.7 millionfor the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively. Amortization expense for the six months ended June 30, 2022 and 2021 was $11.8 million and $13.4 million, respectively. The anticipated annual amortization expense for these intangible assets is ~~$22.1~~$20.6 million for 2022, ~~$20.1~~$18.8 million for 2023 and 2024, ~~$9.9~~$9.2 million for 2025, and ~~$2.6~~$2.4 million for 2026.

A summary of long-term debt and the related weighted average interest rates is shown below:

	March 31, 2022 (Dollars in Thousands)											June 30, 2022
Debt Instrument	Total Debt		Debt Issuance Costs ⁽¹⁾			Total Debt, Net			Weighted Average Interest Rate			Total Debt		Debt Issuance Costs ⁽¹⁾			Total Debt, Net			Weighted Average Interest Rate
(Dollars in thousands)
Term Loan Facility	$	349,200	$	(3,891	)	$	345,309			4.2	%	$	349,200	$	(3,439	)	$	345,761			5.7	%
6.00% Senior Notes		242,206		(3,195	)		239,011			6.0	%		226,644		(2,950	)		223,694			6.0	%
European CapEx loans		17,066		—			17,066			2.3	%		14,794		—			14,794			2.3	%
Finance leases		2,441		—			2,441			2.8	%		2,269		—			2,269			2.9	%
	$	610,913	$	(7,086	)		603,827					$	592,907	$	(6,389	)		586,518
Less: Current portion							(5,971	)										(5,556	)
Long-term debt						$	597,856										$	580,962

On June 15, 2017, the Company issued ~~€250.0~~€250 million aggregate principal amount of ~~6.00~~6 percent Senior Notes (“Notes”) due June 15, 2025. Interest on the Notes is payable semiannually, on June 15 and December 15. The Company may redeem the Notes, in whole or in part, ~~on or after June 15, 2021 at a redemption price of 101.5 percent and on or after June 15, 2022~~ at a redemption price of 100 percent, ~~in each case~~ plus any accrued and unpaid interest to, but not including, the applicable redemption date. If we experience a change of control or sell certain assets, the Company may be required to offer to purchase the Notes from the holders. The Notes are senior unsecured obligations ranking equally in right of payment with all of its existing and future senior indebtedness and senior in right of payment to any subordinated indebtedness. The Notes are effectively subordinated in right of payment to the existing and future secured indebtedness of the Company, including the USD Senior Secured Credit Facilities (as defined below), to the extent of the assets securing such indebtedness.

The Notes are unconditionally guaranteed by all material wholly-owned direct and indirect domestic restricted subsidiaries of the Company (the “Subsidiary Guarantors”), with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract, or would result in adverse tax consequences.

Subject to certain exceptions, the indenture governing the Notes contains restrictive covenants that, among other things, limit the ability of the Company and the Subsidiary Guarantors to: (i) incur additional indebtedness or issue certain preferred stock; (ii) pay dividends on, or make distributions in respect of, their capital stock; (iii) make certain investments or other restricted payments; (iv) sell certain assets or issue capital stock of restricted subsidiaries; (v) create liens; (vi) merge, consolidate, transfer or dispose of substantially all of their assets; and (vii) engage in certain transactions with affiliates. These covenants are subject to several important limitations and exceptions that are described in the indenture.

The indenture provides for customary events of default that include, among other things (subject in certain cases to customary grace and cure periods): (i) nonpayment of principal, premium, if any, and interest, when due; (ii) failure for 60 days to comply with any obligations, covenants or agreements in the indenture after receipt of written notice from the Bank of New York Mellon, London Branch (“the Trustee”) or holders of at least 30 percent in principal amount of the then outstanding Notes of such failure (other than defaults referred to in the foregoing clause (i)); (iii) default under any mortgage, indenture or instrument for money borrowed by the Company or certain of its subsidiaries, (iv) a failure to pay certain judgments; and (iv) certain events of bankruptcy and insolvency. If an event of default occurs and is continuing, the Trustee or holders of at least 30 percent in principal amount of the then outstanding Notes may declare the principal, premium, if any, and accrued and unpaid interest on all the Notes to be due and payable. These events of default are subject to several important qualifications, limitations and exceptions that are described in the indenture. As of ~~March 31,~~June 30, 2022, the Company was in compliance with all covenants under the indenture governing the Notes.

On March 22, 2017, the Company entered into a senior secured credit agreement (“Credit Agreement”) with certain banks and other lenders. The Credit Agreement consisted of a $400.0 million senior secured term loan facility (“Term Loan Facility”), which matures on May 23, 2024, and a $160.0 million revolving credit facility originally maturing on May 23, 2022 (the “Revolving Credit

Facility”), together with the Term Loan Facility, the USD Senior Secured Credit Facilities (“USD SSCF”). On May 3, 2021, the Company extended the term of the Revolving Credit Facility under its USD SSCF and reduced the commitment under the facility from $160.0 million to $132.5 million, with $25.0 million of the commitment maturing May 23, 2022 and the remaining $107.5 million maturing October 31, 2023.The commitment remaining under the USD SSCF was $107.5 million as of June 30, 2022 following the $25.0 million maturity on May 23, 2022. The extension was treated as a modification of the revolving credit facility and the related debt issuance costs have been recognized as a deferred charge in other non-current assets and are being amortized ratably over the remaining term of the extended facility.

Borrowings under the Term Loan Facility will bear interest at a rate equal to, at the Company’s option, either (a) LIBOR for the relevant interest period, adjusted for statutory requirements, subject to a floor of 0.00 percent per annum, plus an applicable rate of 4.00 percent or (b) a base rate, subject to a floor of 2.00 percent per annum, equal to the highest of (1) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (2) the federal funds rate plus 0.50 percent and (3) LIBOR for an interest period of one month plus 1.00 percent, in each case, plus an applicable rate of 3.00 percent.

Borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company’s option, either (a) LIBOR for the relevant interest period, with a floor of 0.00 percent per annum, plus the applicable rate or (b) a base rate, with a floor of 0.00 percent, equal to the highest of (1) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (2) the federal funds effective rate plus 0.50 percent and (3) LIBOR for an interest period of one month plus 1.00 percent, in each case, plus the applicable rate. The applicable rates for borrowings under the Revolving Credit Facility are based upon the First Lien Net Leverage Ratio effective for the preceding quarter, with LIBOR applicable rates ranging between 3.50 percent and 3.00 percent, currently 3.00 percent, and base rate applicable rates ranging between 2.50 percent and 2.00 percent, currently 2.00 percent. Commitment fees for the unused commitment under the Revolving Credit Facility are also based upon the First Lien Net Leverage Ratio, effective for the preceding quarter, and range between 0.50 percent and 0.25 percent for the commitment maturing May 23, 2022, currently 0.25 percent, and between 0.625 percent and 0.375 percent for the remaining commitment maturing October 31, 2023, currently 0.375 percent. Commitment fees are included in interest expense.

As of ~~March 31,~~June 30, 2022, the Company had repaid $50.8 million under the Term Loan Facility resulting in a balance of $349.2 million. In addition, the Company had 0 borrowings outstanding under the Revolving Credit Facility, outstanding letters of credit of $4.8 million and available unused commitments under this facility of ~~$127.7~~$102.7 million as of ~~March 31,~~June 30, 2022.

Our obligations under the Credit Agreement are unconditionally guaranteed by the Subsidiary Guarantors, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in adverse tax consequences. The guarantees of such obligations, will be secured, subject to permitted liens and other exceptions, by substantially all of our assets and the Subsidiary Guarantors’ assets, including but not limited to: (i) a perfected pledge of all of the capital stock issued by each of the Subsidiary Guarantors (subject to certain exceptions) and up to 65 percent of the capital stock issued by each direct wholly-owned foreign restricted subsidiary of the Company (subject to certain exceptions) and (ii) perfected security interests in and mortgages on substantially all tangible and intangible personal property and material fee-owned real property of the Company and the Subsidiary Guarantors (subject to certain exceptions and exclusions).

The Credit Agreement contains a number of restrictive covenants that, among other things, restrict, subject to certain exceptions, our ability to incur additional indebtedness and guarantee indebtedness, create or incur liens, engage in mergers or consolidations, sell, transfer or otherwise dispose of assets, make investments, acquisitions, loans or advances, pay dividends, distributions or other restricted payments, or repurchase our capital stock. The Credit Agreement also restricts our ability to prepay, redeem, or repurchase any subordinated indebtedness, enter into agreements which limit our ability to incur liens on our assets or that restrict the ability of restricted subsidiaries to pay dividends or make other restricted payments to us, and enter into certain transactions with our affiliates. Solely with respect to the Revolving Credit Facility, the Credit Agreement also requires a Total Net Leverage Ratio (calculated as defined in the Credit Agreement) of not more than 4.5 to 1.0 as of each fiscal quarter-end.

In addition, the Credit Agreement contains customary default provisions, representations and warranties and other covenants. The Credit Agreement also contains a provision permitting the Lenders to accelerate the repayment of all loans outstanding under the USD SSCF during an event of default. As of ~~March 31,~~June 30, 2022, the Company was in compliance with all covenants under the Credit Agreement.

In connection with the acquisition of UNIWHEELS AG, the Company assumed $70.7 million of outstanding debt. At ~~March 31,~~June 30, 2022, ~~$6.0~~$4.9 million of the assumed debt remained outstanding. This debt matures March 31, 2024 and is collateralized by financed equipment, guaranteed by Superior and bears interest at 2.2 percent. Covenants under the loan agreement include a default provision for non-payment, as well as a material adverse change default provision pursuant to which the lender could accelerate the loan maturity. As of ~~March 31,~~June 30, 2022, the Company was in compliance with all covenants under the loan agreement.

During the second quarter of 2021, the Company amended its European Revolving Credit Facility (“EUR SSCF”), extending the term to May 22, 2023 and increasing the applicable margin and commitment fees, while maintaining the €60.0 million commitment. All other terms of the EUR SSCF remained unchanged. At ~~March 31,~~June 30, 2022, the Company had 0 borrowings outstanding, outstanding letters of credit of $0.4 million (€~~0.4million)~~0.4 million) and available unused commitments under this facility of ~~$66.5~~$62.2 million (€59.6 million). The EUR SSCF bears interest at Euribor (with a floor of 0.00 percent) plus a margin (ranging from 2.05 percent to 3.50 percent based on the net debt leverage ratio of Superior Industries Europe AG and its wholly owned subsidiaries, collectively “Superior Europe AG”), currently 2.05 percent. The annual commitment fee for unused commitments (ranging from 0.625 percent to 1.225 percent based on the net debt leverage ratio of Superior Europe AG) is currently 0.625 percent per annum. In addition, a management fee is assessed equal to 0.07 percent of borrowings outstanding at each month end. The commitment fee is included in interest expense. Superior Europe AG has pledged substantially all of its assets, including land and buildings, receivables, inventory, and other moveable assets (other than collateral associated with equipment loans) as collateral under the EUR SSCF.

The EUR SSCF is subject to a number of restrictive covenants that, among other things, restrict, subject to certain exceptions, the ability of Superior Europe AG to incur additional indebtedness and guarantee indebtedness, create or incur liens, engage in mergers or consolidations, sell, transfer or otherwise dispose of assets, make investments, acquisitions, loans or advances, pay dividends or distributions, or repurchase our capital stock, prepay, redeem, or repurchase any subordinated indebtedness, and enter into agreements which limit our ability to incur liens on our assets. In addition, the EUR SSCF includes an annual pay down provision requiring outstanding balances to be repaid but not reborrowed for a period of three business days and a material adverse change default provision pursuant to which the lender could accelerate the loan maturity. At ~~March 31,~~June 30, 2022, Superior Europe AG was in compliance with all covenants under the EUR SSCF.

The balance of certain post-acquisition equipment loans was ~~$11.1~~$9.9 million as of ~~March 31,~~June 30, 2022. The loans bear interest at 2.3 percent, mature September 30, 2027 and require quarterly principal and interest payments. The loans are secured with liens on the financed equipment and are subject to covenants that, among other things, include a material adverse change default provision pursuant to which the lender could accelerate the loan maturity, as well as a provision that restricts the ability of Superior Europe AG to reduce its ownership interest in Superior Industries Production Germany GmbH, its ~~wholly-owned~~wholly owned subsidiary, and the borrower under the loan. The Company drew down ~~€10.6~~€10.6 million on these equipment loans in the first quarter of 2020 and drew the remaining €1.4 million in the first quarter of 2021. Quarterly installment payments of $0.5 million (€0.4 million) under the loan agreements began in June of 2021. At ~~March 31,~~June 30, 2022, the Company was in compliance with all covenants under the loans.

Debt maturities as of ~~March 31,~~June 30, 2022, which are due in the next five years and thereafter, are as follows:



Debt Maturities			Amount
(Dollars in thousands)
Debt Maturities	Amount
Nine remaining months of 2022	$	4,715
Six remaining months of 2022			$	3,206
2023		5,720		5,372
2024		352,277		352,099
2025		244,407		228,722
2026		2,095		1,970
Thereafter		1,699		1,538
Total debt liabilities	$	610,913	$	592,907

During 2017, we issued 150,000 shares of Series A (140,202 shares) and Series B (9,798 shares) Perpetual Convertible Preferred Stock, par value $0.01 per share for $150.0 million. On August 30, 2017, the Series B shares were converted into Series A redeemable preferred stock, the “redeemable preferred stock,” after approval by our shareholders. The redeemable preferred stock has an initial stated value of $1,000 per share, par value of $0.01 per share and liquidation preference over common stock.

The redeemable preferred stock is convertible into shares of our common stock equal to the number of shares determined by dividing the sum of the stated value and any accrued and unpaid dividends by the conversion price of $28.162. The redeemable preferred stock accrues dividends at a rate of 9.0 percent per annum, payable at our election either in-kind or in cash and is also entitled to participate in dividends on common stock in an amount equal to that which would have been due had the shares been converted into common stock.

We may mandate conversion of the redeemable preferred stock if the price of the common stock exceeds $84.49. The holder may redeem the shares upon the occurrence of any of the following events (referred to as a “redemption event”): a change in control, recapitalization, merger, sale of substantially all of the Company’s assets, liquidation or delisting of the Company’s common stock. In addition, the holder has the right, at its option, to unconditionally redeem the shares at any time after September 14, 2025. We may, at our option, redeem in whole at any time all of the shares of redeemable preferred stock outstanding. At redemption by either party, the redemption value will be the greater of two times the initial face value ($150.0 million) and any accrued unpaid dividends or dividends paid-in-kind, currently $300.0 million, or the product of the number of common shares into which the redeemable preferred stock could be converted (5.3 million shares currently) and the then current market price of the common stock. We have determined that the conversion option and the redemption option exercisable upon occurrence of a “redemption event” which are embedded in the redeemable preferred stock must be accounted for separately from the redeemable preferred stock as a derivative liability.

Since the redeemable preferred stock may be redeemed at the option of the holder, but is not mandatorily redeemable, the redeemable preferred stock has been classified as mezzanine equity and initially recognized at fair value of $150.0 million (the proceeds on the date of issuance) less issuance costs of $3.7 million and $10.9 million assigned to the embedded derivative liability at date of issuance, resulting in an initial value of $135.5 million.

The difference between the redemption value of the redeemable preferred stock and the carrying value (the “premium”) is being accreted over the period from the date of issuance through September 14, 2025 using the effective interest method. The accretion is treated as a deemed dividend, recorded as a charge to retained earnings and deducted in computing earnings per share (analogous to the treatment for stated and participating dividends paid on the redeemable preferred stock). The cumulative premium accretion as of ~~March 31,~~June 30, 2022 and December 31, 2021 was ~~$69.9~~$75.5 million and $64.4 million, respectively, resulting in adjusted redeemable preferred stock balances of ~~$205.4~~$211.0 million and $199.9 million, respectively.

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 discussed in Note 10, “Redeemable Preferred Stock” have not been included in the diluted earnings per share because the inclusion of such shares on an as converted basis would be anti-dilutive for the three and six months ended ~~March 31,~~June 30, 2022 and 2021.


	Three Months Ended						Three Months Ended						Six Months Ended
	March 31, 2022			March 31, 2021			June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
(Dollars in thousands, except per share amounts)
Basic Earnings Per Share:
Net income	$	10,070		$	13,122		$	10,844		$	1,695		$	20,914		$	14,817
Less: Redeemable preferred stock dividends and accretion		(8,910	)		(8,290	)		(9,001	)		(8,422	)		(17,911	)		(16,712	)
Less: European non-controlling redeemable equity dividend		(11	)		(13	)		(11	)		(25	)		(22	)		(38	)
Basic numerator	$	1,149		$	4,819		$	1,832		$	(6,752	)	$	2,981		$	(1,933	)
Basic earnings per share	$	0.04		$	0.19
Basic earnings (loss) per share							$	0.07		$	(0.26	)	$	0.11		$	(0.07	)
Weighted average shares outstanding – Basic		26,397			25,707			26,918			25,974			26,659			25,841
Diluted Earnings Per Share:
Net income	$	10,070		$	13,122		$	10,844		$	1,695		$	20,914		$	14,817
Less: Redeemable preferred stock dividends and accretion		(8,910	)		(8,290	)		(9,001	)		(8,422	)		(17,911	)		(16,712	)
Less: European non-controlling redeemable equity dividend		(11	)		(13	)		(11	)		(25	)		(22	)		(38	)
Diluted numerator	$	1,149		$	4,819		$	1,832		$	(6,752	)	$	2,981		$	(1,933	)
Diluted earnings per share	$	0.04		$	0.18
Diluted earnings (loss) per share							$	0.07		$	(0.26	)	$	0.11		$	(0.07	)
Weighted average shares outstanding – Basic		26,397			25,707			26,918			25,974			26,659			25,841
Dilutive effect of common share equivalents		1,017			980			504			—			677			—
Weighted average shares outstanding – Diluted		27,414			26,687			27,422			25,974			27,336			25,841

The estimated annual effective tax rate is forecasted quarterly using actual historical information and forward-looking estimates and applied to year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances, settlements with taxing authorities and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

The income tax provision for the three and six months ended ~~March 31,~~June 30, 2022 was ~~$3.5~~$5.4 million and $8.9 million, respectively, on a pre-tax income of ~~$13.6~~$16.2 million and $29.8 million, resulting in an effective income tax ~~rate~~rates of ~~25.9 percent.~~33.3 percent and 29.9 percent, respectively. The effective income tax rate for the three and six months ended ~~March 31,~~June 30, 2022 differs from the statutory rate primarily due to ~~U.S. and Germany~~ valuation allowances, the reversal of an uncertain tax position and the mix of earnings among tax jurisdictions.

The income tax provision for the three and six months ended ~~March 31,~~June 30, 2021 was ~~$0.8~~$0.9 million and $1.7 million, respectively, on pre-tax ~~earnings~~income of ~~$13.9~~$2.6 million and $16.5 million, resulting in an effective income tax ~~rate~~rates of ~~5.8 percent.~~35.2 percent and 10.4 percent, respectively. The effective income tax rate for the three months ended ~~March 31,~~June 30, 2021 differed from the statutory rate primarily due to U.S. valuation allowances and the mix of earnings among tax jurisdictions, partially offset by a favorable adjustment to a tax credit. The effective income tax rate for the six months ended June 30, 2021 differs from the statutory rate primarily due to a favorable adjustment to a tax credit and the reversal of an uncertain tax position, ~~and~~partially offset by the mix of earnings among tax ~~jurisdictions.~~jurisdictions and U.S. valuation allowances.

The Company determines whether an arrangement is or contains a lease at the inception of the arrangement. Operating leases are included in other non-current assets, accrued expenses and other non-current liabilities in our condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, net, short-term debt and long-term debt (less current portion) in our condensed consolidated balance sheets.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Finance and operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. Since we generally do not have access to the interest rate implicit in the lease, the Company uses our incremental borrowing rate (for fully collateralized debt) at the inception of the lease in determining the present value of the lease payments. The implicit rate is, however, used where readily available. Lease expense under operating leases is recognized on a straight-line basis over the term of the lease. Certain of our leases contain both lease and non-lease components, which are accounted for separately.

The Company has operating and finance leases for office facilities, a data center and certain equipment. The remaining terms of our leases range from over one year to seven years. Certain leases include options to extend the lease term for up to ten years, as well as options to terminate, both of which have been excluded from the term of the lease since exercise of these options is not reasonably certain.

Lease expense and cash flow for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 and operating and finance lease assets and liabilities, average lease term and average discount rate as of ~~March 31,~~June 30, 2022 and December 31, 2021 are as follows:

	Three Months Ended						Three Months Ended				Six Months Ended
	March 31, 2022			March 31, 2021			June 30, 2022		June 30, 2021		June 30, 2022			June 30, 2021
Lease Expense
(Dollars in thousands)
Lease Expense
Finance lease expense:
Amortization of right-of-use assets	$	314		$	321		$	259	$	350	$	573		$	671
Interest on lease liabilities		15			22			14		23		29			45
Operating lease expense		686			857			659		791		1,345			1,648
Total lease expense	$	1,015		$	1,200		$	932	$	1,164	$	1,947		$	2,364


Cash Flow Components
(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from finance leases	$	15		$	22		$	14	$	23	$	29		$	45
Operating cash outflows from operating leases		758			932			711		871		1,469			1,803
Financing cash outflows from finance leases		304			288			243		357		547			645
Right-of-use assets obtained in exchange for finance lease liabilities, net of terminations and disposals		124			756			212		79		335			835
Right-of-use assets obtained in exchange for operating lease liabilities, net of terminations and disposals		171			152			61		56		232			208


	March 31, 2022			December 31, 2021							June 30, 2022			December 31, 2021
Balance Sheet Information
(Dollars in thousands, except lease term and discount rate)
Balance Sheet Information
Operating leases:
Other non-current assets	$	10,230		$	10,772						$	9,195		$	10,772
Accrued liabilities	$	(2,308	)	$	(2,371	)					$	(2,128	)	$	(2,371	)
Other non-current liabilities		(8,318	)		(8,860	)						(7,402	)		(8,860	)
Total operating lease liabilities	$	(10,626	)	$	(11,231	)					$	(9,530	)	$	(11,231	)

Finance leases:
Property, plant and equipment gross	$	6,743		$	6,603						$	7,098		$	6,603
Accumulated depreciation		(4,958	)		(4,644	)						(4,071	)		(4,644	)
Property, plant and equipment, net	$	1,785		$	1,959						$	3,027		$	1,959
Current portion of long-term debt	$	(947	)	$	(982	)					$	(855	)	$	(982	)
Long-term debt (less current portion)		(1,494	)		(1,629	)						(1,414	)		(1,629	)
Total finance lease liabilities	$	(2,441	)	$	(2,611	)					$	(2,269	)	$	(2,611	)

Lease Term and Discount Rates
Weighted-average remaining lease term - finance leases (years)		3.4			3.4							3.4			3.4
Weighted-average remaining lease term - operating leases (years)		5.0			5.0							5.0			5.0
Weighted-average discount rate - finance leases		2.8	%		2.8	%						2.9	%		2.8	%
Weighted-average discount rate - operating leases		3.6	%		3.6	%						3.6	%		3.6	%

Future minimum payments under our leases as of ~~March 31,~~June 30, 2022 are as follows:

	Amount						Amount
Lease Maturities							Finance Leases			Operating Leases
(Dollars in thousands)
Lease Maturities	Finance Leases			Operating Leases
Nine remaining months of 2022	$	947		$	2,066
Six remaining months of 2022							$	855		$	1,506
2023		696			2,484			671			2,388
2024		285			2,227			286			2,134
2025		152			2,080			162			1,983
2026		127			1,951			128			1,848
Thereafter		340			731			262			487
Total		2,547			11,539			2,364			10,346
Less: Imputed interest		(106	)		(913	)		(95	)		(816	)
Total lease liabilities, net of interest	$	2,441		$	10,626		$	2,269		$	9,530

We have an unfunded salary continuation plan covering certain directors, officers and other key members of management. Subject to certain vesting requirements, the plan provides for a benefit based on final average compensation, which becomes payable on the employee’s death or upon attaining age 65, if retired. The plan was closed to new participants effective February 3, 2011.

For the ~~three~~six months ended ~~March 31,~~June 30, 2022, payments to retirees or their beneficiaries totaled ~~$0.3~~approximately $0.7 million. We presently anticipate benefit payments in 2022 to total $1.4 million. The following table summarizes the components of net periodic pension cost for the three and six months ended ~~March 31,~~June 30, 2022 and 2021.

	Three Months Ended				Three Months Ended				Six Months Ended
	March 31, 2022		March 31, 2021		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
(Dollars in thousands)
Interest cost	$	218	$	206	$	218	$	206	$	436	$	412
Net amortization		83		97		83		97		166		194
Net periodic pension cost	$	301	$	303	$	301	$	303	$	602	$	606

Our 2018 Equity Incentive Plan (the “Plan”) was approved by stockholders in May 2018, authorizing us to issue up to 4.35 million shares of common stock, along with non-qualified stock options, stock appreciation rights, restricted stock ~~units~~ and performance restricted stock units to our officers, key employees, non-employee directors and consultants. In May 2021, the stockholders approved an amendment to the Plan that, among other things, increased the authorized shares by 2 million. At ~~March 31,~~June 30, 2022, there were ~~0.3~~0.2 million shares available for future grants under this Plan. It is our policy to issue shares from authorized but not issued shares upon the exercise of stock options.

Under the terms of the Plan, each year eligible participants are granted time value restricted stock units (“RSUs”), vesting ratably over a three-year period, and performance restricted stock units (“PSUs”), with a three-year cliff vesting. Upon vesting, each restricted stock award is exchangeable for one share of the Company’s common stock, with accrued dividends.

RSU, PSU and option activity for the ~~three~~six months ended ~~March 31,~~June 30, 2022 is summarized in the following table:

	Equity Incentive Awards														Equity Incentive Awards
	Restricted Stock Units			Weighted Average Grant Date Fair Value		Performance Shares			Weighted Average Grant Date Fair Value		Options		Weighted Average Exercise Price		Restricted Stock Units			Weighted Average Grant Date Fair Value		Performance Shares			Weighted Average Grant Date Fair Value		Options			Weighted Average Exercise Price
Balance at December 31, 2021		966,429		$	4.62		2,484,581		$	6.67		9,000	$	16.76		966,429		$	4.62		2,484,581		$	6.67		9,000		$	16.76
Granted		333,673			4.28		667,345			5.33		—		—		515,491			3.93		667,345			5.33		—			—
Settled		(381,743	)		4.02		(719,659	)		6.68		—		—		(580,551	)		4.73		(719,659	)		6.68		—			—
Forfeited or expired		(4,570	)		3.77		(109,166	)		7.24		—		—		(4,570	)		3.77		(109,166	)		7.24		(9,000	)		16.76
Balance at March 31, 2022		913,789		$	4.75		2,323,101		$	6.26		9,000	$	16.76
Balance at June 30, 2022																896,799		$	4.16		2,323,101		$	6.26		—		$	—

Awards estimated to vest in the future		897,734		$	4.79		2,056,141		$	6.31		9,000	$	16.76		896,799		$	4.16		2,097,894		$	6.28		—		$	—

Stock-based compensation expense for the three months ended ~~March 31,~~June 30, 2022 and 2021 was ~~$2.6~~$2.0 million and ~~$1.8~~$2.5 million, ~~respectively.Unrecognized~~respectively. Stock-based compensation for the six months ended June 30, 2022 and 2021 was $4.7 million and $4.3 million, respectively. Unrecognized stock-based compensation expense related to non-vested awards of ~~$12.2~~$11.0 million is expected to be recognized over a weighted average period of approximately ~~2.1~~1.9 years as of ~~March 31,~~June 30, 2022.

When market conditions warrant, we may enter into purchase commitments to secure the supply of certain commodities used in the manufacture of our products, such as aluminum, natural gas and other raw materials. Prices under our aluminum contracts are based on a market index and regional premiums for processing, transportation and alloy components which are adjusted quarterly for purchases in the ensuing quarter. Certain of our purchase agreements include volume commitments; however, any excess commitments are generally negotiated with suppliers and those which have occurred in the past have been carried over to future periods.

We are party to various legal and environmental proceedings incidental to our business. Certain claims, suits and complaints arising in the ordinary course of business have been filed or are pending against us. Based on facts now known, except as provided below, we believe all such matters are adequately provided for, covered by insurance, are without merit and/or involve such amounts that would not materially adversely affect our consolidated results of operations, cash flows or financial position.

In March 2022, the German Federal Cartel Office initiated an investigation related to European light alloy wheel manufacturers, including Superior Industries Europe AG (a wholly owned subsidiary of the Company), on suspicion of conduct restricting competition. The Company is cooperating fully with the German Federal Cartel Office. In the event Superior Industries Europe AG is deemed to have violated the applicable statutes, the Company could be subject to a fine or civil proceedings. At this point, we are unable to predict the duration or outcome of the investigation.

The Company sells certain customer trade receivables on a non-recourse basis under factoring arrangements with designated financial institutions. These transactions are accounted for as sales and cash proceeds are included in cash provided by operating activities. Factoring arrangements incorporate customary representations and warranties, including representations as to validity of amounts due, completeness of performance obligations and absence of commercial disputes. During the three months ended ~~March 31,~~June 30, 2022 and 2021, the Company sold trade receivables totaling ~~$208.7~~$246.0 million and ~~$186.7~~$197.3 million, respectively, and incurred factoring fees of ~~$0.6~~$0.8 million and $0.5 million, respectively. During the six months ended June 30, 2022 and 2021, the Company sold trade receivables totaling $454.7 million and $384.0 million, respectively, and incurred factoring fees of $1.4 million and $1.0 million, respectively. As of ~~March 31,~~June 30, 2022 and December 31, 2021, receivables of ~~$92.2~~$117.6 million and $97.6 million, respectively, had been factored and had not yet been paid by customers to the respective financial institutions. The collective limit under our factoring arrangements increased from $125.1 million as of December 31, 2021 to ~~$140.1~~$136.9 million as of ~~March 31,~~June 30, 2022 due to the permanent increase in the North American factoring limit that occurred in March 2022.

During the fourth quarter of 2021, the Company announced a reduction in its workforce at Werdohl, Germany. As a result, the Company recognized a restructuring charge of $4.5 million in cost of sales, principally comprised of termination and related benefits.

During the six months ended June 30, 2022, the Company paid severance and other costs of $0.5 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. We have included or incorporated by reference in this Quarterly Report on Form 10-Q (including in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), and from time to time our management may make, statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based upon management’s current expectations, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, the impact of COVID-19 and the resulting supply chain ~~disruption,~~disruptions, as well as the Ukraine Conflict, on our future growth and earnings. Any statement that is not historical in nature is a forward-looking statement and may be identified using words and phrases such as “expects”, “anticipates”, “believes”, “will”, “will likely result”, “will continue”, “plans to”, “could”, ~~“continue��~~“continue”, “estimates” and similar expressions. These statements include our belief regarding general automotive industry and market conditions and growth rates, as well as general domestic and international economic conditions.

Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements and from the Company’s historical results and experience. These risks, uncertainties and other factors include, but are not limited to, those described in Part I—Item 1A—“Risk Factors” and Part II—Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021 and Part I—Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part II – Item 1A – “Risk Factors” and elsewhere in this Quarterly Report and those described from time to time in our other reports filed with the Securities and Exchange Commission.

Readers are cautioned that it is not possible to predict or identify all the risks, uncertainties and other factors that may affect future results and that the risks described herein should not be considered to be a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto and with the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Superior Industries International, Inc.’s (referred to herein as the “Company”, “Superior”, or “we” and “our”) principal business is the design and manufacture of aluminum wheels for sale to original equipment manufacturers (“OEMs”) in North America and Europe and to the aftermarket in Europe. We employ approximately 7,800 full-time employees, operating in eight manufacturing facilities in North America and Europe. We are one of the largest aluminum wheel suppliers to global OEMs and we believe we are the #1 European aluminum wheel aftermarket manufacturer and supplier. Our OEM aluminum wheels accounted for approximately 94 percent of our sales in the first ~~three~~six months of 2022 and are primarily sold for factory installation on vehicle models manufactured by BMW (including Mini), Ford, GM, Honda, Jaguar-Land Rover, Lucid Motors, Mazda, Mercedes-Benz Group, Nissan, PSA, Renault, Stellantis, Subaru, Suzuki, Toyota, VW Group (Volkswagen, Audi, SEAT, Skoda, Porsche, Bentley) and Volvo. We sell aluminum wheels to the European aftermarket under the brands ATS, RIAL, ALUTEC and ANZIO. North America and Europe represent the principal markets for our products, but we have a diversified global customer base consisting of North American, European and Asian OEMs.

Demand for our products is primarily driven by the production of light vehicles in North America and Europe and customer take rates on specific vehicle platforms that we serve and wheel SKUs that we produce. The majority of our customers’ wheel programs are awarded two to four years in advance. Our purchase orders with OEMs are typically specific to a particular vehicle model.

GM, Ford and VW Group ~~and Toyota~~ each individually accounted for 10 percent or more of our consolidated sales for the three and six months ended ~~March 31,~~June 30, 2022 ~~while only GM, Ford~~ and ~~VW Group individually represented 10 percent or more of our consolidated sales for the three months ended March 31,~~June 30, 2021. Our sales to these customers for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 were as follows:

Three months ended	March 31, 2022			March 31, 2021
Three Months Ended							June 30, 2022			June 30, 2021
(Dollars in millions)	Percent of Sales	Dollars		Percent of Sales	Dollars		Percent of Sales	Dollars		Percent of Sales	Dollars
GM	26%	$	106.3	26%	$	94.1	30%	$	127.4	27%	$	93.4
Ford	14%	$	57.8	14%	$	49.1	17%	$	71.6	10%	$	30.9
VW Group	13%	$	54.0	15%	$	54.2	13%	$	56.4	16%	$	53.8
Toyota	10%	$	41.0	7%	$	26.1


Six Months Ended							June 30, 2022			June 30, 2021
(Dollars in millions)							Percent of Sales	Dollars		Percent of Sales	Dollars
GM							28%	$	233.7	27%	$	187.5
Ford							15%	$	129.4	11%	$	80.0
VW Group							13%	$	110.5	15%	$	108.0

There is a broad range of factors which impact automotive industry sales and production volumes, including consumer demand and preferences, dealer inventory levels, labor relations issues, trade agreements, cost and availability of raw materials and components, fuel prices, regulatory requirements, government initiatives, availability and cost of credit, changing consumer attitudes toward vehicle ownership and other factors. Our sales are driven generally by overall automotive industry production volumes and, more specifically, by the volumes of the vehicles for which we supply wheels. In addition, larger diameter wheels and premium finishes command higher unit prices. Larger cars and light trucks, as well as premium vehicle platforms, such as luxury, sport utility and crossover vehicles, typically employ larger diameter wheels and premium finishes.

The automotive industry ~~has been, and likely will continue~~continues to be impacted by the supply chain disruption which emerged as OEM vehicle production resumed and began to scale following the shutdown because of the COVID-19 pandemic. The supply chain disruption includes shortages of semiconductor chips, electric vehicle batteries, shipping containers, steel, resin and foam. In the first ~~quarter~~half of 2022, the semiconductor chip shortage continued to constrain OEM vehicle production. In addition, the Ukraine Conflict has resulted in OEM announcements of temporary shutdowns at certain production facilities, which began to affect our production volume in March 2022. Our critical commodity costs, particularly the cost of aluminum and energy, which increased significantly throughout 2021, continued to rise in the first ~~quarter~~half of ~~2022, particularly the cost of aluminum and energy.~~2022. Rising commodity costs have been and likely will continue to be ~~further~~ exacerbated by the Ukraine Conflict. While the prices under our OEM contracts are adjusted for changes in the cost of aluminum, our aftermarket contracts do not provide such pass through of aluminum cost. Additionally, certain of our OEM contracts are also adjusted for changes in the cost of other metals. Rising raw material costs and OEM production volatility have caused our inventory levels to increase, negatively impacting our cash flows.

Automotive industry production volumes in the North American and Western and Central European regions in the first ~~three~~six months of 2022, as compared to the corresponding periods of 2021 and 2020, are shown below:

Automotive Industry Production (North America and Western and Central Europe)	Automotive Industry Production (North America and Western and Central Europe)													Automotive Industry Production (North America and Western and Central Europe)
Three months ended		March 31,						2022 vs 2021			2022 vs 2020
Six Months Ended															June 30,						2022 vs 2021			2021 vs 2020
		2022		2021		2020		% Change			% Change				2022		2021		2020		% Change			% Change
(Units in thousands)
North America			3,551		3,615		3,780		(1.8	%)		(6.1	%)			7,121		6,800		5,156		4.7	%		31.9	%
Western and Central Europe			3,229		3,950		3,940		(18.3	%)		(18.0	%)			6,715		7,317		5,730		(8.2	%)		27.7	%
Total			6,780		7,565		7,720		(10.4	%)		(12.2	%)			13,836		14,117		10,886		(2.0	%)		29.7	%

Automotive industry production volumes in our markets declined slightly in the first ~~quarter~~half of 2022 as compared to 2021 ~~and 2020~~ primarily due to continuing semiconductor chip supply shortages, ~~and, to a lesser extent,~~as well as the Ukraine Conflict. While North American production volumes increased 4.7%, Western and Central European production volumes declined 8.2%. The Ukraine Conflict may continue to have ~~a more significant~~an impact on future automotive production volumes and, therefore, Superior production volumes.In the second quarter of 2022, automotive industry production volumes in our markets increased 7.2% over the same period in the prior year (11.7 percent in North America and 2.9 percent in Western and Central Europe).

In February 2022 prior to the Ukraine Conflict, the forecast by IHS, an independent automotive industry analyst firm, projected that full year 2022 automotive passenger and light truck vehicle production in North America and Western and Central Europe would increase 24.5 percent (17.9 percent in North America and 31.4 percent in Western and Central Europe) over 2021 but would lag 2019 pre-pandemic production volumes by 9.7 percent. The ~~April~~July 2022 IHS forecast now projects that the 2022 production will be ~~11.7~~11.2 percent higher than 2021 ~~(13.0~~(12.7 percent in North America and ~~10.3~~9.7 percent in Western and Central Europe) and ~~15.2~~15.6 percent lower than 2019. While semiconductor manufacturers have announced plans to expand capacity over the next several years, it is unclear when automotive industry semiconductor chip shortages will ~~begin to~~ subside.

Superior conducted ~~an assessment~~outreach in 2021 to identify the sustainability interests of our stakeholders ~~and~~to inform our sustainability strategy. Superior is committed to reducing natural gas, electricity, and water consumption, solid waste and air emissions at our ~~facilities globally.~~facilities. All Superior manufacturing plants have implemented Environmental Management Systems that are ISO14001 certified and are subject to annual audits by an independent third party. In 2021, we assessed the carbon footprint ~~for each~~ of our operations globally in connection with our Communication on Progress report to the UN Global Compact published in June 2021. ~~These assessments are~~This assessment is helping us identify potential opportunities to:

In 2022, Superior ~~has~~ established a goal to be carbon neutral by 2039 and we anticipate that by 2025 we will have reduced our greenhouse gas emissions by 40% from the level generated in 2020. Furthermore, our research and development team is developing light weighting solutions, such as our patented Alulite™ technology, and aerodynamic solutions that will assist in reducing our customers’ carbon footprint. We continue to collaborate with our customers and suppliers regarding sustainability practices throughout their supply chains.

The following charts show the operational performance in the quarter ended ~~March 31,~~June 30, 2022 in comparison to the quarter ended ~~March 31,~~June 30, 2021 ($ in millions):

SALES AND PROFITABILITY FOR THE 3RD QUARTER OF 2019 AND 2018 ($ in millions) Sales for 3rd Quarter 2019 & 2018 $352.0 $347.6 2019 2019 Income from Operations 3rd Quarter 2019 & 2018$(0.2) $7.7 2019 218 Net Income & Adjusted EBITDA* for 3rd Quarter 2019 & 2018 Net Income Adjusted EBITDA $38.9 $30.6 $(6.6) 2019 2018 * See the Non-GAAP Financial Measures section of this quarterly report for a reconciliation of our Adjusted EBITDA to Net Income (Loss).

	Three Months Ended									Three Months Ended
	March 31, 2022			March 31, 2021			Net Change			June 30, 2022			June 30, 2021			Net Change
(Dollars in thousands, except per share amounts)
(Dollars in thousands, except per share data)
Net sales
North America	$	227,198		$	191,971		$	35,227		$	259,677		$	176,990		$	82,687
Europe		173,328			166,225			7,103			171,855			170,474			1,381
Net sales		400,526			358,196			42,330			431,532			347,464			84,068
Cost of sales		359,939			315,156			(44,783	)		388,905			314,844			(74,061	)
Gross profit		40,587			43,040			(2,453	)		42,627			32,620			10,007
Percentage of net sales		10.1	%		12.0	%		(1.9	)%		9.9	%		9.4	%		0.5	%
Selling, general and administrative expenses		16,950			17,321			371			16,721			17,100			379
Income from operations		23,637			25,719			(2,082	)		25,906			15,520			10,386
Percentage of net sales		5.9	%		7.2	%		(1.3	)%		6.0	%		4.5	%		1.5	%
Interest expense, net		(9,962	)		(10,273	)		311			(10,338	)		(10,486	)		148
Other expense, net		(87	)		(1,514	)		1,427
Other income (expense), net											681			(2,420	)		3,101
Income tax provision		(3,518	)		(810	)		(2,708	)		(5,405	)		(919	)		(4,486	)
Net income	$	10,070		$	13,122		$	(3,052	)	$	10,844		$	1,695		$	9,149
Percentage of net sales		2.5	%		3.7	%		(1.2	)%		2.5	%		0.5	%		2.0	%
Diluted earnings per share	$	0.04		$	0.18		$	(0.14	)
Diluted earnings (loss) per share										$	0.07		$	(0.26	)	$	0.33
Value added sales (1)	$	189,395		$	207,259		$	(17,864	)	$	185,532		$	195,474		$	(9,942	)
Value added sales adjusted for foreign exchange⁽¹⁾										$	197,260		$	195,474		$	1,786
Adjusted EBITDA (2)	$	49,210		$	54,923		$	(5,713	)	$	51,346		$	44,645		$	6,701
Percentage of net sales		12.3	%		15.3	%		(3.0	)%		11.9	%		12.8	%		(0.9	)%
Percentage of value added sales		26.0	%		26.5	%		(0.5	)%		27.7	%		22.8	%		4.9	%
Unit shipments in thousands		4,084			4,515			(431	)		4,004			4,178			(174	)

Wheel unit shipments were ~~4.1~~4.0 million for the ~~first~~second quarter of 2022 compared to unit ~~shipments~~shipment volumes of ~~4.5~~4.2 million for the same period in 2021, a decrease of ~~9.5~~4.2 percent. The decrease was ~~attributable to~~driven by a ~~6.6 percent decrease in North America and a 13.1~~13.4 percent decrease in European shipment volume ~~and was~~as the volumes on the vehicles we supply declined primarily due to the semiconductor ~~shortage.~~shortage, as well as the Ukraine Conflict. The decrease in European volume was partially offset by the 4.9 percent increase in shipment volumes in North America.

Net sales for the ~~first~~second quarter of 2022 were ~~$400.5~~$431.5 million, compared to net sales of ~~$358.2~~$347.5 million for the same period in ~~2021.~~2021, an increase of 24.2 percent. The increase in revenue was primarily due to ~~$60.5~~$94.1 million of higher aluminum and other cost pass throughs to our OEM customers as well as favorable product mix, offset by $19.8 million of unfavorable Euro foreign exchange and lower shipment ~~volumes and $11.4 million of lower Euro exchange rates.~~volumes.

Cost of sales was ~~$359.9~~$388.9 million for the ~~first~~second quarter of 2022 compared to cost of sales of ~~$315.2~~$314.8 million for the same period in 2021. The $74.1 million increase in cost of sales was primarily due to ~~$60.0 million of~~ higher raw material costs of $88.9 million as well as product mix. This increase was offset by ~~$10.7~~$19.3 million due to lower Euro foreign exchange rates and ~~$4.0 million primarily due to~~ lower ~~net~~ shipment volumes.

Selling, general and administrative (“SG&A”) expenses of ~~$17.0~~$16.7 million for the ~~first~~second quarter of 2022 were relatively flat as compared to SG&A expense of ~~$17.3~~$17.1 million for the same period in 2021.

Net interest expense for the ~~first~~second quarter of 2022 was ~~$10.0~~$10.3 million and was relatively flat as compared to net interest expense of ~~$10.3~~$10.5 million for the same period in 2021.

Other ~~expense,~~income, net, was ~~$0.1~~$0.7 million for the ~~first~~second quarter of 2022 compared to ~~$1.5~~$2.4 million of other expense for the same period in 2021. The ~~majority of the decrease, $1.3 million, is~~2021 expense was primarily attributable to ~~the prior year expense which included an~~a $2.1 million increase in the preferred stock embedded derivative liability due to the increase in the Company’s stock ~~price in the first quarter of 2021.~~price.

The income tax provision for the ~~first~~second quarter of 2022 was ~~$3.5~~$5.4 million on a pre-tax income of ~~$13.6~~$16.2 million, representing an effective income tax rate of ~~25.9~~33.3 percent. This differs from the statutory rate primarily due to ~~U.S. and Germany~~ valuation allowances, the reversal of an uncertain tax position and the mix of earnings among tax jurisdictions. The income tax provision for the ~~first~~second quarter of 2021 was ~~$0.8~~$0.9 million on a pre-tax income of ~~$13.9~~$2.6 million, representing an effective income tax rate of ~~5.8~~35.2 percent. This differs from the statutory rate primarily due to U.S. valuation allowances ~~reversal of an uncertain tax position~~ and the mix of earnings among tax ~~jurisdictions.~~jurisdictions, partially offset by a favorable adjustment to a tax credit.

Net income for the ~~first~~second quarter of 2022 was $~~10.1~~10.8 million, or ~~$0.04~~earnings of $0.07 per diluted share, compared to net income of ~~$13.1~~$1.7 million, or ~~$0.18~~a loss of $0.26 per diluted share, for the same period in 2021.

	Three Months Ended							Three Months Ended
	March 31, 2022		March 31, 2021		Change			June 30, 2022		June 30, 2021		Change
(Dollars in thousands)
Selected data
Net sales
North America	$	227,198	$	191,971	$	35,227		$	259,677	$	176,990	$	82,687
Europe		173,328		166,225		7,103			171,855		170,474		1,381
Total net sales	$	400,526	$	358,196	$	42,330		$	431,532	$	347,464	$	84,068
Income from operations
North America	$	19,567	$	17,841	$	1,726		$	24,679	$	7,542	$	17,137
Europe		4,070		7,878		(3,808	)		1,227		7,978		(6,751	)
Total income from operations	$	23,637	$	25,719	$	(2,082	)	$	25,906	$	15,520	$	10,386

Net sales for our North American segment for the ~~first~~second quarter of 2022 increased ~~18.4~~46.7 percent ~~despite a 6.6~~while unit shipment volumes increased 4.9 percent, ~~decline in unit volume,~~ compared to the same period in 2021. The ~~$35.2~~$82.7 million increase in net sales was primarily due to ~~$39.2~~$75.1 million in higher aluminum and other cost pass throughs to our OEM customers. ~~Despite lower shipment volumes resulting from the semiconductor shortage,~~ North American segment income from operations for the ~~first~~second quarter of 2022 ~~was relatively flat with~~increased by $17.1 million, as compared to the ~~first~~second quarter of 2021, primarily due to ~~favorable pricing~~increased shipment volumes and ~~Peso foreign exchange.~~the timing of aluminum and other cost pass throughs.

Net sales for our European segment for the ~~first~~second quarter of 2022 ~~increased~~were flat ~~4.3 percent~~ despite a ~~13.1~~13.4 percent decline in unit ~~volume~~shipment volumes, compared to the same period in 2021. H~~The increase in net sales of $7.1 million was primarily due to $21.3 million in higher~~igher aluminum and other cost pass throughs ~~to our OEM customers, partially~~of $19.0 million and favorable product mix were almost entirely offset by unfavorable Euro foreign exchange of ~~$11.4~~$19.8 million and lower shipment volumes. The decline in shipment volumes was due to the continuing semiconductor chip shortage, as well as ~~OEM plant shutdowns due to~~ the Ukraine Conflict which began to impact our sales in March 2022. The Ukraine Conflict may continue to impact future OEM automotive production volumes and, therefore, our shipment volumes. European segment income from operations for the second quarter of 2022 was $6.8 million lower than same period in the prior year primarily due to inflationary cost increases in labor, utilities and other manufacturing costs, as well as unabsorbed fixed costs due to lower production volumes.

The following chart shows the operational performance in the six months ended June 30, 2022 in comparison to the six months ended June 30, 2021 ($ in millions):

	Six Months Ended
	June 30, 2022			June 30, 2021			Net Change
(Dollars in thousands, except per share data)
Net sales
North America	$	486,875		$	368,961		$	117,914
Europe		345,183			336,699			8,484
Net sales		832,058			705,660			126,398
Cost of sales		748,844			630,000			118,844
Gross profit		83,214			75,660			7,554
Percentage of net sales		10.0	%		10.7	%		(0.7	)%
Selling, general and administrative expenses		33,671			34,421			750
Income from operations		49,543			41,239			8,304
Percentage of net sales		6.0	%		5.8	%		0.2	%
Interest expense, net		(20,300	)		(20,759	)		459
Other income (expense), net		594			(3,934	)		4,528
Income tax provision		(8,923	)		(1,729	)		(7,194	)
Net income	$	20,914		$	14,817		$	6,097
Percentage of net sales		2.5	%		2.1	%		0.4	%
Diluted earnings (loss) per share	$	0.11		$	(0.07	)	$	0.18
Value added sales⁽¹⁾	$	374,927		$	402,733		$	(27,806	)
Value added sales adjusted for foreign exchange⁽¹⁾	$	393,442		$	402,733		$	(9,291	)
Adjusted EBITDA⁽²⁾	$	100,556		$	99,568		$	988
Percentage of net sales		12.1	%		14.1	%		(2.0	)%
Percentage of value added sales		26.8	%		24.7	%		2.1	%
Unit shipments in thousands		8,088			8,693			(605	)

Wheel unit shipments were 8.1 million for the first half of 2022 compared to shipment volumes of 8.7 million in the prior year period, a decrease of 7.0 percent. The decrease was driven by a 13.2 percent decrease in European shipment volumes primarily due to the semiconductor shortage and the Ukraine Conflict, as well as a 1.3 percent decrease in shipment volumes in North America.

Net salesfor the first half of 2022 were $832.1 million, compared to net sales of $705.7 million for the same period in 2021, an increase of 17.9 percent. The increase in net sales was primarily due to $154.2 million of higher aluminum and other cost pass throughs to our OEM customers as well as favorable product mix, offset by $30.4 million of unfavorable Euro foreign exchange and lower shipment volumes.

Cost of sales were $748.8 million for the first half of 2022 compared to cost of sales of $630.0 million for the same period in 2021. The increase in cost of sales was primarily due to $146.7 million of higher raw material and conversion costs as well as product mix, offset by unfavorable Euro foreign exchange of $31.0 million and lower shipment volumes.

Selling, general and administrative (“SG&A”) expenses for the first half of 2022 of $33.7 million were relatively flat compared to SG&A expense of $34.4 million for same period in 2021.

Net interest expense for the first half of 2022 was $20.3 million which was relatively flat compared to net interest expense of $20.8 million for same period in 2021.

Other income, net, was $0.6 million for the first half of 2022 compared to other expense of $3.9 million for same period in 2021. The 2021 expense was primarily attributable to a $3.5 million increase in the preferred stock embedded derivative liability due to the increase in the Company’s stock price in the first half of 2021.

The income tax provision for the six months ended June 30, 2022 was $8.9 million on a pre-tax income of $29.8 million, representing an effective rate of 29.9 percent. The effective income tax rate for the six months ended June 30, 2022 differs from the statutory rate primarily due to valuation allowances, the reversal of an uncertain tax position and the mix of earnings among tax jurisdictions. The income tax provision for the six months ended June 30, 2021 was $1.7 million on a pre-tax income of $16.5 million, representing an effective rate of 10.4 percent. The effective income tax rate for the six months ended June 30, 2021 differs from the statutory rate primarily due to a favorable adjustment to a tax credit and the reversal of an uncertain tax position, partially offset by the mix of earnings among tax jurisdictions and U.S. valuation allowances.

Net income for the first half of 2022 was $20.9 million, or earnings of $0.11 per diluted share, compared to net income of $14.8 million, or a loss of $0.07 per diluted share, for the same period in 2021.

Net sales for our North American segment for the first half of 2022 increased 32.0 percent, while the unit shipment volumes remained relatively flat compared to the same period in 2021. The $117.9 million increase in net sales was primarily due to $114.0 million in higher aluminum and other cost pass throughs to our OEM customers. North American segment income from operations for the first half of 2022 increased by $18.9 million compared to the first half of 2021, primarily due to the timing of aluminum and other cost pass throughs.

Net sales for our European segment for the first half of 2022 increased 2.5 percent despite a 13.2 percent decline in unit shipment volumes, compared to the same period in 2021. The increase in net sales of $8.5 million was primarily due to $40.4 million in higher aluminum and other cost pass throughs and favorable product mix, offset by unfavorable foreign exchange of $30.4 million and lower shipment volumes. The decline in shipment volumes was due to the continuing semiconductor chip shortage, as well as the Ukraine Conflict which began to impact our sales in March 2022. The Ukraine Conflict may continue to have an impact on future automotive production volumes and, therefore, our shipment volumes. European segment income from operations for the first ~~quarter~~half of 2022 was ~~$3.8~~$10.6 million lower than the prior year primarily due to ~~higher~~inflationary cost increases in labor, utilities and other manufacturing costs, ~~and unfavorable manufacturing cost performance.~~ ~~The Ukraine Conflict may have a more significant impact on future automotive~~as well as unabsorbed fixed costs due to lower production ~~volumes and, therefore, Superior shipment~~ volumes.

As of ~~March 31,~~June 30, 2022, our cash and cash equivalents totaled ~~$133.7~~$122.3 million compared to ~~$153.8~~$149.2 million and $113.5 million at ~~March 31,~~June 30, 2021 and December 31, 2021, respectively. Our sources of liquidity primarily include cash and cash equivalents, cash provided by operating activities, borrowings under available debt facilities, and factoring arrangements for trade ~~receivables and, from time to time, other external sources of funds.~~receivables. Working capital (current assets minus current liabilities) and our current ratio (current assets divided by current liabilities) were ~~$198.6~~$199.8 million and ~~1.6:~~1.7:1.0, respectively, at ~~March 31,~~June 30, 2022, versus $172.4 million and 1.7:1.0 at December 31, 2021. ~~While~~Although the Company continues to effectively manage all elements of working capital, receivables and inventories have increased in 2022 largely due to higher raw material costs.

Our working capital requirements, investing activities and cash dividend payments have historically been funded from internally generated funds, debt facilities, cash and cash equivalents, and we believe these sources will continue to meet our future requirements. Capital expenditures ~~are~~consist of expenditures to improve production quality and efficiency, to extend the useful lives of existing property and ~~expenditures for~~support new product offerings, as well as ~~expanded~~to expand capacity for existing products. During 2022 we expect that our capital expenditures will be approximately ~~$80.0~~$75.0 million.

In connection with the acquisition of our European operations, we entered into several debt and equity financing arrangements during 2017. On March 22, 2017, we entered into a USD Senior Secured Credit facility (“USD SSCF”) consisting of a $400.0 million Senior Secured Term Loan Facility (“Term Loan Facility”) and a $160.0 million Revolving Credit Facility (“Revolving Credit Facility”). On May 22, 2017, we issued 150,000 shares of redeemable preferred stock for an aggregate purchase price of $150.0 million. On June 15, 2017, we issued €250.0 million aggregate principal amount of 6.00% Senior Notes ~~due June 15, 2025~~ (“the Notes”). Finally, as part of the European business acquisition, we also assumed $70.7 million of outstanding debt, including a €30.0 million European Revolving Credit Facility (“EUR SSCF”) (subsequently increased to €60.0 million on January 31, 2020). In addition, the European business entered into equipment loan agreements totaling $13.4 million (€12.0 million) in the fourth quarter of 2019.

Balances outstanding under the Term Loan Facility, Notes and equipment loans as of ~~March 31,~~June 30, 2022 were $349.2 million, ~~$242.2~~$226.6 million and ~~$17.1~~$14.8 million, respectively. The redeemable preferred stock ~~amounted to $205.4~~balance was $211.0 million as of ~~March 31,~~June 30, 2022. The Term Loan Facility matures May 23, 2024 and the Notes mature June 15, 2025. ~~In addition, the~~The redeemable preferred stock may be unconditionally redeemed on or after September 14, 2025 at the redemption amount, currently $300 million, provided the Company has sufficient available funds. Under Delaware law, any redemption payment would be limited to the “surplus” that our Board determines is available to fund a full or partial redemption without rendering us insolvent. The shares of preferred stock that have not been redeemed would continue to receive an annual dividend of 9 percent on the original stated value per share, plus any accrued and unpaid dividends, which would be paid quarterly. The Board would have to evaluate on an ongoing basis the ability of the Company to make any further redemption payments until the full redemption amount has been paid. The Company intends to refinance ~~a portion or all of~~ its debt obligations, including the Term Loan Facility and Notes, prior to maturity. As a part of any refinancing, the Company will review its overall capital structure and may evaluate other sources of capital which could include issuance of common stock or restructuring of the preferred stock.

On May 3, 2021, the Company extended the term of the Revolving Credit Facility under its USD SSCF. The commitment under the facility was reduced from $160.0 million to $132.5 million, with $25.0 million of the commitment maturing May 23, 2022 and the remaining $107.5 million maturing October 31, 2023. The commitment remaining under the USD SSCF was $107.5 million as of June 30, 2022 following the $25.0 million maturity on May 23, 2022. During the second quarter of 2021, the Company amended the EUR SSCF, extending the term to May 22, 2023 and increasing the applicable margins and commitment fees, while maintaining the €60.0 million commitment. Our liquidity totaled ~~$327.9~~$287.2 million at ~~March 31,~~June 30, 2022, including cash on hand of ~~$133.7~~$122.3 million and available unused commitments under credit facilities of ~~$194.2~~$164.9 million.

As part of our ongoing efforts to improve our cash flow and related liquidity, we negotiate with suppliers to optimize our terms and conditions, including extended payment terms. Beginning in 2021, the Company receives extended payment terms for a portion of our

purchases with one of our principal aluminum suppliers in exchange for a nominal adjustment to the product pricing. The payment terms provided to us are consistent with aluminum industry norms, as well as those offered to the supplier’s other customers. The supplier intends to finance these extended terms by factoring receivables due from us with a financial institution. We are not a party to the supplier’s factoring agreement with the financial institution. We remit payments directly to our supplier, except with respect to product purchased under extended terms which have been factored by the supplier. These payments are remitted directly to the financial institution in accordance with the payment terms originally negotiated with our supplier. As of ~~March 31,~~June 30, 2022, the Company owed ~~$27.8~~$11.3 million to the financial institution which is included in accounts payable in the Company’s condensed consolidated balance sheets. The Company made ~~$29.0~~$75.8 million in payments to the financial institution pursuant to the supplier’s factoring arrangement for the ~~three~~six months ended ~~March 31,~~June 30, 2022. These payments are included in cash flows from operations within the condensed consolidated statements of cash flows.

As of ~~March 31,~~June 30, 2022, we had no significant off-balance sheet arrangements other than factoring of ~~$92.2~~$117.6 million of our trade receivables.

The following table summarizes the cash flows from operating, investing and financing activities as reflected in the condensed consolidated statements of cash flows.

	Three Months Ended						Six Months Ended
	March 31, 2022			March 31, 2021			June 30, 2022			June 30, 2021
(Dollars in thousands)
Net cash provided by operating activities	$	45,001		$	18,153		$	57,213		$	31,933
Net cash used in investing activities		(17,804	)		(10,479	)		(34,138	)		(20,551	)
Net cash used in financing activities		(6,705	)		(4,179	)		(11,632	)		(13,501	)
Effect of exchange rate changes on cash		(284	)		(2,070	)		(2,658	)		(1,133	)
Net increase in cash and cash equivalents	$	20,208		$	1,425
Net increase (decrease) in cash and cash equivalents							$	8,785		$	(3,252	)

Net cash provided by operating activities was ~~$45.0~~$57.2 million for the first ~~three months~~half of 2022 compared to net cash provided by operating activities of ~~$18.2~~$31.9 million for the same period in 2021. The increase in cash flow provided by operating activities was primarily ~~due to~~driven by lower use of cash for working capital ~~in the first quarter of 2022~~ ~~than in the prior year period, partially offset by decreased~~and increased profitability.

Net cash used in investing activities was ~~$17.8~~$34.1 million for the first ~~three months~~half of 2022 compared to ~~$10.5~~$20.6 million for the same period in 2021. The increase in cash used in investing activities is driven by investments in capital projects to support increased production and paint line and finishing capabilities in both ~~regions.~~regions as well as lower capital expenditures in the first half of 2021 due to certain projects deferred to the second half of the year.

Net cash used in financing activities was ~~$6.7~~$11.6 million for the first ~~three months~~half of 2022 compared to net cash used in financing activities of ~~$4.2~~$13.5 million for the same period in 2021. This change was primarily due to 2021 proceeds from ~~the~~ new European equipment loans.

In this quarterly report, we discuss ~~two~~three financial measures that are not calculated according to U.S. ~~GAAP,~~GAAP: value added sales, value added sales adjusted for foreign exchange and adjusted EBITDA.

~~In the discussion of operating results, we provide information regarding value added sales.~~ Value added sales represents net sales less the value of aluminum and other costs, as well as services provided by outsourced service providers (“OSPs”), that are included in net sales. Contractual arrangements with our customers allow us to pass on changes in aluminum and certain other costs. Value added sales ~~is worthy of being highlighted~~adjusted for foreign exchange represents value added sales on a constant currency basis. For entities reporting in currencies other than the ~~benefit of users of our financial statements as it~~US dollar, the current period amounts are translated using the prior year comparative period exchange rates, rather than the actual exchange rates in effect during the current period. Value added sales adjusted for foreign exchange allows users of the financial statements to consider our net sales information both with and without the aluminum, other costs and OSP ~~costs.~~costs and fluctuations in foreign exchange rates. Management utilizes value added sales adjusted for foreign exchange as a key metric ~~to determine~~in measuring and evaluating the growth of the Company because it eliminates the volatility of the

cost of ~~aluminum.~~aluminum and changes in foreign exchange rates. Management utilizes value added sales in calculating adjusted EBITDA margin to eliminate volatility of the cost of aluminum in evaluating year-over-year margin growth.

Adjusted EBITDA is 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 the redeemable preferred stock embedded derivative, acquisition and integration, ~~and~~ certain hiring and separation related costs, proxy contest fees, gains associated with early debt extinguishment and accounts receivable factoring fees. We use adjusted EBITDA as an important indicator of the operating performance of our business. Adjusted EBITDA is used in our internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors and evaluating short-term and long-term operating trends in our operations. We believe the adjusted EBITDA financial measure assists in providing a more complete understanding of our underlying operational measures to manage our business, to evaluate our performance compared to prior periods and the marketplace and to establish operational goals. Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies.

The following table reconciles our net sales, the most directly comparable U.S. GAAP financial measure, to our value added ~~sales:~~sales and value added sales adjusted for foreign exchange:

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31, 2022			March 31, 2021			June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
(Dollars in thousands)
Net sales	$	400,526		$	358,196		$	431,532		$	347,464		$	832,058		$	705,660
Less: aluminum, other costs, and outside service provider costs		(211,131	)		(150,937	)		(246,000	)		(151,990	)		(457,131	)		(302,927	)
Value added sales	$	189,395		$	207,259		$	185,532		$	195,474		$	374,927		$	402,733
Currency impact on current period value added sales								11,728			—			18,515			—
Value added sales adjusted for foreign exchange							$	197,260		$	195,474		$	393,442		$	402,733

The following table reconciles our net income, the most directly comparable U.S. GAAP financial measure, to our adjusted EBITDA:

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31, 2022			March 31, 2021			June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
(Dollars in thousands)
Net income	$	10,070		$	13,122		$	10,844		$	1,695		$	20,914		$	14,817
Interest expense, net		9,962			10,273			10,338			10,486			20,300			20,759
Income tax provision (benefit)		3,518			810
Income tax provision								5,405			919			8,923			1,729
Depreciation		17,834			18,650			17,571			18,905			35,405			37,555
Amortization		6,248			6,711			5,555			6,704			11,803			13,415
Integration, restructuring, factoring fees and other ⁽¹⁾⁽²⁾		1,578			4,042
Change in fair value or redeemable preferred stock embedded derivative liability ⁽³⁾		—			1,315
Integration, restructuring, factoring fees and other ^{(1) (2) (3) (4)}								1,633			3,791			3,211			7,833
Change in fair value or redeemable preferred stock embedded derivative liability ⁽⁵⁾								—			2,145			—			3,460
Adjusted EBITDA	$	49,210		$	54,923		$	51,346		$	44,645		$	100,556		$	99,568
Adjusted EBITDA as a percentage of net sales		12.3	%		15.3	%		11.9	%		12.8	%		12.1	%		14.1	%
Adjusted EBITDA as a percentage of value added sales		26.0	%		26.5	%		27.7	%		22.8	%		26.8	%		24.7	%

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to apply significant judgment in making estimates and assumptions that affect amounts reported therein, as well as financial information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. These estimates and assumptions, which are based upon historical experience, industry trends, terms of various past and present agreements and contracts, and information available from other sources that are believed to be reasonable under the circumstances, form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent through other sources. We believe the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in developing estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Critical accounting estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described in the management’s discussion and analysis in our 2021 Form 10-K (refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our Annual Report on Form 10-K for the year ended December 31, 2021).

As a smaller reporting company, as defined in Rule 10(f)(1) of Regulation S-K under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), the Company is not required to provide the information required by this item.

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~March 31,~~June 30, 2022. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~March 31,~~June 30, 2022 our disclosure controls and procedures were effective.

There has been no change in our internal control over financial reporting during the three months ended ~~March 31,~~June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are party to various legal and environmental proceedings incidental to our business. Certain claims, suits and complaints arising in the ordinary course of business have been filed or are pending against us. Based on facts now known, except as provided below, we believe all such matters are adequately provided for, covered by insurance, are without merit, and/or involve such amounts that would not materially adversely affect our consolidated results of operations, cash flows or financial position.

See also under Item 1A, “Risk Factors - We are from time to time subject to litigation, which could adversely impact our financial condition or results of operations” of our Annual Report on Form 10-K for the year ended December 31, 2021.

In ~~light of~~our Quarterly Report on Form 10-Q for the ~~recent events surrounding~~quarter ended March 31, 2022, we added the ~~Ukraine Conflict, we are adding the below~~following risk factor entitled “~~The~~“The Ukraine Conflict may have a material adverse effect on our business, financial condition, results of operations and cash ~~flows.”~~flows” to the risk factors as previously disclosed in “Item 1A Risk Factors” of our Form 10-K for the year ended December 31, 2021. Other than as set forth below, there have been no material changes to the risk factors set forth in “Item 1A Risk Factors” of our Form 10-K for the year ended December 31, 2021. However, many of the risk factors set forth in our Form 10-K for the year ended December 31, 2021 may be exacerbated by the Ukraine Conflict and any resulting worsening of the economic environment.

The Ukraine Conflict may have a material adverse effect on our business, financial condition, results of operations and cash flows.

On February 24, 2022, Russia launched a military invasion of Ukraine. In response to the Russian invasion, the United States, the United Kingdom and the European Union governments, among others, have developed comprehensive and coordinated sanctions and export restrictions on Russia and certain Russian individuals. The United States and other countries could impose wider sanctions and take other actions should the conflict escalate.

The Ukraine Conflict has given rise to macroeconomic risks which could lead to significant declines in global and regional economic growth, particularly in Europe. These risks may not only reduce global demand and automotive production volumes but also cause further supply chain disruption and drive higher energy and commodity prices, including further increases in aluminum and silicon prices, as well as inflation and higher interest rates. Our OEM customers have announced temporary production shutdowns as a result of supply disruption.

The impact of the Ukraine Conflict including economic sanctions and export controls such as restrictions on energy exports, or additional war or military conflict as well as potential responses to such actions by Russia, is currently unknown. It could lead to further increases of our costs, affect our supply chain and customers, and reduce our sales, earnings and cash flows. In addition, the continuation of the Ukraine Conflict could lead to other disruptions, instability and volatility in global markets that could adversely impact our operations.

On April 28, 2022, the Board of Directors of the Company approved the Superior Industries International, Inc. Executive Severance Plan (the “Severance Plan”), which provides certain payments and benefits to the Company’s Senior Vice Presidents and Vice Presidents (“Participants”) whose employment is terminated under certain circumstances. The Severance Plan does not apply to Participants whose employment is terminated in connection with a Change in Control (as defined in the Severance Plan) and who are entitled to severance benefits under the Company’s Executive Change in Control Severance Plan. Not applicable.

Specifically, the Severance Plan provides the following benefits to Participants whose employment is terminated by the Company without “Cause” or who terminates his or her employment for “Good Reason” (other than due to death, “Disability” or circumstances under which he or she would be entitled to “Change in Control” severance benefits under the terms of the Company’s Executive Change in Control Severance Plan (as such terms are defined in the Severance Plan):

The Severance Plan also provides the following benefits to Participants who (a) separate from service without Cause and not in connection with a Change of Control, (b) have attained age 60; (c) have been in continuous service with the Company and its affiliates for at least five years; and (d) provide at least three months’ advance notice of his or her intent to retire:

~~Participants are required to execute a Separation Agreement and General Release in order to receive payments under the Severance Plan.~~

The foregoing description is qualified in its entirety by reference to the full text of the Severance Plan, a copy of which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and incorporated by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware	95-2594729
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

26600 Telegraph Road, Suite 400
Southfield, Michigan	48033
(Address of Principal Executive Offices)	(Zip Code)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	SUP	New York Stock Exchange

					Page
PART I	-	FINANCIAL INFORMATION

		Item 1		Financial Statements (Unaudited)	1

				Condensed Consolidated Statements of Income (Loss)	1

				Condensed Consolidated Statements of Comprehensive Income (Loss)	2

				Condensed Consolidated Balance Sheets	3

				Condensed Consolidated Statements of Cash Flows	4

				Condensed Consolidated Statements of Shareholders’ Equity (Deficit)	5

				Notes to Condensed Consolidated Financial Statements	67

		Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2224

		Item 3	-	Quantitative and Qualitative Disclosures About Market Risk	3035

		Item 4	-	Controls and Procedures	3035

PART II	-	OTHER INFORMATION			31

		Item 1	-	Legal Proceedings	3136

		Item 1A	-	Risk Factors	3136

		Item 2	-	Unregistered Sales of Equity Securities and Use of Proceeds	3136

		Item 5	-	Other Information	3136

		Item 6	-	Exhibits	3337

		Signatures			3438

For the three months ended March 31, 2022
(Unaudited)	Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT DECEMBER 31, 2021		26,163,077	$	103,214	$	(9,051	)	$	(6,133	)	$	(110,790	)	$	(47,661	)	$	(70,421	)
Net income		—		—		—			—			—			10,070			10,070
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—		16,821			—			—			—			16,821
Change in defined benefit plans, net of taxes		—		—		—			83			—			—			83
Net foreign currency translation adjustment		—		—		—			—			2,043			—			2,043
Common stock issued, net of shares withheld for employee taxes		690,215		—		—			—			—			—			—
Stock-based compensation		—		1,002		—			—			—			—			1,002
Redeemable preferred 9% dividend and accretion		—		—		—			—			—			(8,910	)		(8,910	)
European non-controlling redeemable equity dividend		—		—		—			—			—			(11	)		(11	)
BALANCE AT MARCH 31, 2022		26,853,292	$	104,216	$	7,770		$	(6,050	)	$	(108,747	)	$	(46,512	)	$	(49,323	)

	Property, Plant and Equipment, net				Intangible Assets
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
(Dollars in thousands)
North America	$	217,686	$	214,331	$	—	$	—
Europe		254,140		280,070		59,625		76,870
	$	471,826	$	494,401	$	59,625	$	76,870

Year Ended December 31, 2021	Gross Carrying Amount		Accumulated Amortization			Currency Translation		Net Carrying Amount		Remaining Weighted Average Amortization Period
(Dollars in thousands)
Brand name	$	9,000	$	(8,503	)	$	258	$	755	1-2
Technology		15,000		(14,172	)		430	$	1,258	2
Customer relationships		167,000		(95,540	)		3,397	$	74,857	2-7
Total finite-lived intangibles	$	191,000	$	(118,215	)	$	4,085	$	76,870

	December 31, 2021 (Dollars in Thousands)
Debt Instrument	Total Debt		Debt Issuance Costs ⁽¹⁾			Total Debt, Net			Weighted Average Interest Rate
Term Loan Facility	$	349,200	$	(4,338	)	$	344,862			4.1	%
6.00% Senior Notes		245,809		(3,441	)		242,368			6.0	%
European CapEx loans		18,595		—			18,595			2.3	%
Finance leases		2,611		—			2,611			2.8	%
	$	616,215	$	(7,779	)		608,436
Less: Current portion							(6,081	)
Long-term debt						$	602,355



~~10.1~~		~~Superior Industries International, Inc. Executive Severance Plan dated April 28, 2022~~. **

31.1		Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.**

31.2		Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.**

32.1		Certification of Majdi B. Abulaban, President and Chief Executive Officer, and C. Timothy Trenary, Executive Vice President and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ****

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