SUP - Earnings call transcript Q3 2017 | Superior Industries International, Inc.

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Operator

Good day and welcome to the Superior Industries Third Quarter 2017 Earnings Teleconference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Nadeem Moiz. Please go ahead.

Nadeem Moiz

morning call. welcome good quarter our and earnings XXXX you everyone to and third Thank

discussion I'll Section our is at During today, available presentation our www.supind.com. on which earnings the Investors of website be our referring to

Private the of or me subject any Securities Reform our the factors and Stebbins, in Safe We forward-looking on X, of statements Chief to obligation is to like could presentation in because start President where provisions XXXX. I'll contained assume on I'd the commented Officer. remind Joining of materially are that today considered to results outlook. issues Litigation Actual our Slide Don be Harbor Act on unknown call financial evaluating no need today Executive differ to everyone this update filings, that year-ended our point Specific forward-looking represent I'd statements issues, are factors the to statements. unknown the to in factors you quarter on statements. the our a like Form forward-looking for XXXX, and on XXXX, including slide. that December detail Annual these from actual complete and the discussion SEC on XX, June Report may noted cause events may statements more Form and XX-K to publicly any ended that forward-looking conditions, Company's XX-Q risk differ forward-looking for XX, for and

GAAP tables XXXX in with press data directly measures these in our third of the of in as the and percentage calculated and presented financial including excludes value-added today, financial certain Reconciliations to a items certain included accordance of sales. sales, found financial GAAP. measures in release also and Appendix presentation. not will with therefore accordance be non-GAAP most or this EBITDA, adjusted comparable may discussing been of the We EBITDA earnings quarter providing be These impact adjusted have measures the value-added non-GAAP with

quarter XX Due of calendar the the and would in In this addition, quarter resulting XXXX, in operation, year-end XXXX. which our additional weeks a European XX, our third quarter convention September integration fallen adjusted end our otherwise XXXX. to of fourth operation third North for in our American date X, the have from maintains quarter, was of with XX weeks XXXX, line week of quarters, to close, of October

Going forward, quarter we President and close. to Don the calendar our over like will now to year-end have and would a CEO. call I Don? Stebbins, turn

Don Stebbins

Thanks Starting the reported in of acquisition Nadeem. UNIWHEELS, and of presentation, our value-added today. result, unit increases X sales, everyone by net for with driven Good of significant EBITDA. we you third adjusted morning shipments, for as thank the us joining quarter Slide XXXX a and sales,

on establishing aluminum a of era Superior European wheels for a aftermarket. global the have new We for as supplier our and OEMs embarked organization

XX% remainder passenger generated geography but of vehicle also of revenues and XX% car vehicles trucks with significantly our the shipments cross-over XX% American for We and operations by from by third our segment light almost and our revenues supporting quarter have North diversified our segment. from the Europe, with

shift but driven wheel upward sales by has by its over top operations North our last our and XX%. increased not XX our as third of continued And in roughly the European continued in per XXXX addition diversity In prior acquisition, the customers of the of value-added importantly, three months over XXXX just momentum the revenue portfolio our addition, America. quarter we was customer the represented more to only XX% in product

just value our saw movements sales mentioned. million overall in an which respectively. in highlights as value-added by we year-over-year shipment five led of units net North For European of million year-over-year million and improvement the $XXX America, mix well reported the output the Despite softer sales levels and diversification I $XXX industry quarter, operations, shipped as in production we

addition North quarter $XX America. million sales in EBITDA European compared year-over-year adjusted the from EBITDA XX% period. as Third to EBITDA the as higher value-added or Adjusted our was prior benefited sales year value-added XX% in of of of operations adjusted well

result taken couple operations of a restructuring metrics of by our financial over the performance, as in seen levels. we've improvement months American North inventory of the wheel, per As weekly such initiatives past costs production, important levels team, and

on Turning of the to made days approximately ago. integration excellent progress we now organization XXX our Slide closing since X,

near-term and increased on in execution the opportunities. focused customer of scale. future relationships, Today expansion enhancements, defining synergy we on along and critical are three of a primary mode our and teams initiatives organization, state our the efforts areas: Our our operational focus with are our business integration leveraging

have needs those have their and that leverage fuel as North address the and particular, American style OEMs North our can them customers, requirements work our and UNIWHEELS, developed global the well, by unique customers in support to meeting closely relationships opportunity long-term have that their about excited differentiated I emission help our with and carbon European in while new allow we a also to through We America. technologies market, established to bring are our as teams innovations. objectives We're customers efficiency the been with and marketplace in European real our to believe wheel

in distribution exploring our for Additionally, we European America. brands are North also channels aftermarket

combining development and their processes European the and implement best-in-class operations North across and continue engineering manufacturing resources. American also while business, evaluate research our to our to businesses Second, identify and

North and basis, million will our made throughout ability $X goal in a million continue have synergies Our corporate combined in continuous should opportunities. And run and improvement across activities to XXXX. rate as leverage in have rate drive we expertise organization scale and that a operations. drive and and chain progress actually To-date identifying supply European share we the us remain synergies, we more to increased on run confident of result, is annual by synergy than $XX achieve to our to the finally, excellence allow operational and American our

priorities a success. drive to X, clearly we on that key to Slide positioned Moving long-term number to of have are

marketplace and with customers in production has America last a the substantially of significantly broader compared overall in range our our North year, is to company providing softened more innovative the products. stronger today, While diversified,

have As the number Superior. are as wheels for trends in our expansion move finishes as conversations providing opportunity of partnerships. weight continue and driving larger secular with a The create differentiated lighter to discussed fuel with designs well diameter past, are to there opportunities for and we customers efficient more that

customers to excited been Our North product see been technologies, our have excited see American while our to European North customers offerings. American European our have

ahead enhanced of these staying and investments new in are technologies. We with trends possible

in-house. budget continues capability will of interested on of been and bring establish state-of-the-art XXXX to technology all the which update, European our be facility This expect to and been suite in the in to supplier shown As launch learn first also this more. an customers many PVD our this we and to our has track on have markets capability wheel

to only margin growth in capital technologies. place enhancing further on mission and new win is a on for in optimizing right and critical to growth over note our having mentioned driving operations earnings support deliver foundation I As Superior innovative enhanced expansion, to team These but our also and to centered long-term. wheels the our ensuring the strong important investment new our are the not business activities of is programs. structure and focus Also

flow As such, cash key and are generation priorities. debt reduction

potential and an position as call profitability, organization. With our tremendous now in Nadeem. I'll are to hand the to we growth believe long-term, on sustainable I over excellent drive the we capitalize transforming for that, ahead, Looking

Nadeem Moiz

shipments last Superior's of I'll X, quarter Don. of to American X shipments financial market comparing The North for you, million from XXXX. up up Slide share. million and favorably X.X down Poland X% in-line and resulting our Slide our units year detailed American European in last were more year-over-year Thank the Europe quarter for the North America were now On Starting increased to a during approximately production with levels you with in total increased third quarter Europe third can the provide facility quarter with were summary; over due overview financial million year the North performance X.X XXXX ramp level. contributing see respectively. X.X shipments production million, units newest X, our in unit

$XXX.X sales in last same third the increased with sales quarter of compared XXXX million of $XXX.X net in For period. year Value-added third million the increased period prior $XX.X million to the the $XXX.X from quarter for year. to XXXX million

the after For or the per option. per $X.XX the $X.XX expenses third XXXX for and of dividends share income value shares, in million accretion quarter and option of diluted accounting equity on included for a conversion we related of preferred to $X.X Net was the of XXXX, quarterly the revalued change income third will quarter basis. loss net a diluted be had preferred share. This fair $X.X conversion of million acquisition-related

$XXX.X by of look to to negative increase of The America of Net $XXX.X for closer in $X.X for primarily increase Slide North this in million million. sales million was America. pricing $X.X addition our were aluminum XXXX came a XXXX, compared quarter European increase by of North $XXX.X at third the take operations mix Now let's million third sales the $XXX.X offset higher from of on and was volume the due million driven quarter and quarter million. the of an X. sales of net

North increased; value-added in-line per down Our were with American wheel the favorable volumes as our however was mix sales industry.

million, position, the compared came driven was increased America for was $X.X North EBITDA costs. in third mix, freight, to labor, America SG&A, Slide from $X.X of million $X $XX.X lower XXXX of lower and FX million offset expenses and in America. volumes cost corporate approximately positive increase Again XXXX, Europe utility million. Turning of X, partially initiatives. the large third from quarter EBITDA million due came of by by adjusted $XX.X by to North elevated for quarter increase million higher an of North maintenance, to of partially $XX.X in expedited part offset million adjusted $XX was improved a lower and The

portfolio As transformation larger, has to we impacted last sophisticated the efficiency. quarter, operating continued overall designs of wheel more product our our discussed

me costs make we the XX, cash highlighted, as continue addressing However improvements. flow. actively you and have through been operational Don Slide On to these let walk

million operations third third by CapEx of operating related XXXX quarter XXXX one-time $XX.X were which quarter European costs includes third acquisition includes $XX.X the the activities million. to quarter. generated the during our was interest cash the Capital for For for and expenditures expenses. This

we shares through that of the shareholders is during million and our for a quarter the purchase European dividends. loan. this total term of to additional year, $XX.X third XX.X% we During cash note completed returned quarter Important to bringing the to million ownership $X.X repaid UNIWHEELS

management, our of U.S. currently we and have borrowing ample revolvers. European terms available liquidity capacity In under

had third As $X less our million available $XXX roughly of the U.S. than the on credit the of quarter, drawn end lines. under European we million and

XXXX. by EBITDA leverage ratio target two times long-term net to Our approximately is debt

repayment in forward, investment debt free be for the top our Going of and of business balancing priorities flow. continued use will our the cash

achieve a walk are when the full-year the balance through of value these the a on while let future. confident today. more platform XXXX balanced, taken steps to provides XX, moment and guidance take stronger, which together right better for lastly Slide growth We in diversified we And company to me our achieving a you reaffirm

As accordance a in December a as European includes on our through as basis outlook operations our this consolidated North expectations American well with for reminder, operations. our GAAP current for June

year. production net million overhaul American million million. driven unit implies production million of assumption relative This Europe to of to $X,XXX continued range growth sales We be the $XX.X shipments in to expect lower last in $XX.X $X,XXX and North to by

In terms $XXX of of sales, million. a to $XXX we value-added anticipate range million

We in a a in to over transaction to for $XX back the is expected be would of And capability. expected $XX turn also portion of Interest up for which questions. to our taxable. range Capital million the finishing tax approximately for operator And adjusted expenditures is call $XXX expected now jurisdictions near to source to benefit the income of XXXX $XXX will with be this the like absolutely Working XXXX. open net be effective net to million. expense in million is due a we EBITDA to relates to I be rate to cost capital be million anticipate expect that, our XXXX are fund. to

Operator

Horn Instructions]. we'll Van with FBR. [Operator Chris go Please the ahead. you. first Thank take the B. question And Riley from line of

Chris Van Horn

Thanks call. guys. morning taking Good for my

Don Stebbins

Good morning, Chris.

Nadeem Moiz

How morning, Good are you? Chris.

Chris Van Horn

Good.

volumes to in really primary looks additional on or color question was margins good or and a there. cuttings America you're additional of just hoping cost expansion some was or North some that I So like the there. maybe get it seeing some just both mix color the

Nadeem Moiz

Yes, absolutely.

So above. bit it's all look little a the of

continued the favorable transition to bridge to and EBITDA As increased diameter you saw wheels. we and on Bridge -- mix the finishes was the in product portfolio bigger

very you obviously mix is of big saw and translating was plan structure on positive FX the And bridge the a that our quarter place, fully to the a that's covered. progress make one-time there so we part part that favorable. Part that there. I this into the hedging And of of transaction, FX part but in that's of is, so on progress. yet, in a definitely put making not costs continue we bit that's

Chris Van Horn

growth Thanks on that Okay, you but a question the the would give there sales And I you any category, during that to side? see color. be for then the in aftermarket like if the commentary just have some some can about quarter, revenues great. good aftermarket did color would just you breakout great

Nadeem Moiz

Yes.

America quarter, as seasonal North business, Chris fourth It look in is Europe it's an third you is know. a So aftermarket a in piece and -- and business of the important sure in things we particular quarter the exchange seasons, Europe. and fourth like and where in selling highest third sales higher aftermarket are winter that, see that's increased the as for the,

a it's seasonal. So bit

similar So in was -- saw fourth would quarter quarter. in sort see of definitely pattern it strong expect we and we to some third

Chris Van Horn

in talked your Okay, it there, your great. And -- be thought distribution it from people, me, side aftermarket is from the may more how on final hiring U.S. distribution on plan about the sales what's possibly initial UNIWHEELS, business, is then that? more acquiring your what's you

Don Stebbins

Yes, this haven't that under Chris, yet, review are those of still all at decided stage. options

Chris Van Horn

Thanks Great. for Okay, time guys. okay. the

Don Stebbins

Perfect.

Operator

Vahid next the question Khorshand line go We'll BWS with Please Financial. of from the ahead. take now

Vahid Khorshand

Hi thanks the taking question. for

though, question you an PVD I so I on that? First give you you update can if don't plan, give us heard mind think update the don't an on

Don Stebbins

to plan in budget, on launch track, On XXXX. Yes.

trial doing launch track, the good So in this on -- at stage mid-XXXX. XXXX to we're run so a forward again look

Vahid Khorshand

the seeing then softness second the the you. regards in American some are any on market, pricing? thank North you're you And getting in shipments Okay, to question if pushback

Don Stebbins

normal way the here again is negotiating those -- the we're would have the so traditionally I our what's balance I say for We productivity commitments think market happened. in works XXXX. are

through marketplace, get the So months, no. tie don't I to in the that go in that so we softness will progress it few certainly that settled, next

Vahid Khorshand

before Okay. those? about And could these my then, last spoken you American manufacturers updates on in question some land any of contracts any you've North and European markets

Don Stebbins

Not not yet. quite yet, quite

their still we're them process, with mentioned in bidding So and in my bidding working North in remarks of closely operations a American we process still the we're the -- I as very number to support on programs.

the to here So the January I update -- conference Conference market would at on expect us Michigan. Auto in in the that

Operator

take We'll Gabelli. now Please Paige the from Matthew line the with ahead. go next of question

Matthew Paige

sell mix trend Good similar speak in towards morning. Europe, of products that terms is to mix there? you the higher they a of there a product to moving Could

Don Stebbins

new the year up we've of talked ramped more this a about that of and brand Yes, larger designs, one in got UNIWHEELS wheel now facility absolutely are has trends same, is it's terms launched state-of-the-art diameters, a advantages more line. being paint And finishes the past as the complex that that absolutely. significant they've sophisticated that

you of combination our paint UNIWHEELS essentially when in have line then two-years-old and paint line two here companies, is at which So one-year-old. which Mexico look the the we the is

region, paint So in facilities. we both have state-of-the-art

Matthew Paige

in any regards interest, remaining then ownership squeeze have there? minority to out do And you to the plans UNIWHEELS Great. the

Don Stebbins

Yes.

point and at in the process that have in minority of we we squeeze by of evaluate we're is then by to out in transfer time shares. to that the where domination So have then end will January. we shares delisted profit/loss the place mid-December, expect And the expect the agreement

Matthew Paige

if U.S.? then, can you NOLs your that there's position, regards federal state remind no just have us the current NOL currently you And there, in to Great. in

Nadeem Moiz

in credit around to that sheet are Yes, economic and and it's in. post-tax million that's that and balance $XX referring facilities have that the you'll approximately you're to the yes the there we that see all you're referring zone NOLs are Europe what and in so around the goes our Q really it's on

Matthew Paige

much have maybe do from scenario obviously the NAFTA is your to progressed just relationships And customers but you trade dictates in question me, Mexico how Mexican right. I plant locations? future view current All curious negotiations on of envision any last sold your was to get production or

Don Stebbins

definitively of Yes the what really given to them. I discussions out it's we solidity think and say hard of the hear

of to little the important end with the other it's settle way moved level tax months a redoing kind think I NAFTA. now significant We've of in bit we nine started that. discussion all NAFTA eight, to and tweaking ago the of border and

So have see out. wait comes we and that think I exactly how to

the in where also from wheels dynamic think used that Asia. facilities significant of the important Mexico market outside U.S. come I it's from majority of either the to assembly or understand U.S. are

the we to through to have work that need customers getting we absolutely through on NAFTA on So decisions decision. to with whatever our work expect are come that

Matthew Paige

I appreciate Well Right. questions thanks color. for and you taking my the

Don Stebbins

You bet.

Nadeem Moiz

Thank you.

Operator

next from Bo go now will Eaton question of We the ahead. Hunt with Please Vance. take line the

Bo Hunt

guys. Hi

you Just developed scrap what how one for third quarter? it me, rates if addressed and North That's rates The quarter question is thanks. far were your the so at American apologize this. facilities, already in the in that scrap fourth

Don Stebbins

Yes.

other still scrap So cost, we out every increased that's it's walked a that's material labor result that costs, Nadeem would of and higher I energy rates. don’t say a through report remain past increased quarter, they driver significant high quarter. costs certainly and scrap rates this increased

long on in are would and say scrap the but So the launching rates. products base in have existing seeing better we I launch products rate. way of go a both terms we we're improvement new scrap to

Bo Hunt

Okay.

big European pretty with still buying In improving rates, to the the towards trend of your facilities? delta feed, but scrap terms is close

Don Stebbins

visit And our been some program guys to we developed will America here, has significant go significant team from visits difference. in see in America. to our where then and and absolutely North guys how European in importantly are of absolutely, North things have hold processes difference, an Yes, taking they to Europe exchange make them do here learn that reciprocal the sure there

Operator

next Nordhagen line Please with take question Alex We'll of from JPMorgan. the ahead. go our

Alex Nordhagen

questions. for my taking right, All thanks

two EBITDA from really American that from? on Just me, is FX your is coming the exactly North adjustment, what one on impact

Don Stebbins

place level you put that to to can put need have and Two pieces. two, two ago to Nadeem give a and high One hedge to But starting now -- benefit And you peso-dollar the probably zloty-euro. in of years more it's it. in go nature in program million transaction a $X UNIWHEELS represents and then the started less terms continue bit is do a I'll if a little couple there place in is we're of buying place half really and we hedge of deeper, And had hedge terms then of the -- than delta that. the that in we've in structural issue than that we remainder on little the of quarter.

So a as I that nature. of one-time more would think of in

Alex Nordhagen

the to clear and year Okay, weeks weeks, the North thanks. this QX numbers XX of -- weeks great I'm And calendar XX last in got XX so this XX then on that accounting is year; you've American your right? difference for

Don Stebbins

That's correct. correct. That's

Alex Nordhagen

the XX% week unit the X% in if you America factored your if or were at you like in like numbers shipments you if extra are reported weren't looking down more like-for-like. doing Then North they're down were in

Nadeem Moiz

Yes.

what numbers we've production put number the showed North one. through adjusted we X slides as so we American it's And Slide on went the in

it of same adjust to sort if the it's So is roughly down. North were America X.X% normalize you

X.X% and relatively you market the down with it's If adjust in-line down. we're that so

about the we're that's it. so And thinking way

Alex Nordhagen

see that. I I missed one. all that Apologizes Okay, right

Nadeem Moiz

Yes.

Alex Nordhagen

going QX do the will in to do going restate to you the we're effect. again? or have -- then adjustment you can just then you offset And them Are

Nadeem Moiz

XXXX should the that should in always it's way had the that be ended just QX up week QX. fine be this Yes, just our and calendars extra so through we coming work, -- year an

so be some here in fine. should that of normalize QX And we've tried but effect to we

Alex Nordhagen

great. a lot. Thanks Okay,

Nadeem Moiz

Europe lines really duration our now. And and with up all up is line activity, U.S. this everything

Operator

you gentlemen and for your lines. now conclude today's disconnect as your will may Ladies Thanks well as participation Q&A this and call. the conference

Nadeem Moiz

Thank you.

Don Stebbins

Thank you.

Superior Industries International (SUP) 9 Nov 172017 Q3 Earnings call transcript