SUP - Earnings call transcript Q1 2018 | Superior Industries International, Inc.

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Operator

Good day and welcome to the Superior Industries’ First Quarter 2018 Earnings Teleconference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Troy Ford. Please go ahead, sir.

Troy Ford

you. Thank and first everyone call. XXXX to welcome morning, quarter our earnings Good

of www.supind.com. our be available which section will today, on website to Investors During we presentation, referring discussion our earnings the our at is

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

financial I exclude in this measures the not in therefore tables and accordance as to these sales. adjusted items earnings appendix CEO. certain over Don? providing with Don call value-added a the EBITDA President EBITDA of GAAP. of impacts certain adjusted release found comparable accordance have turn also non-GAAP to financial measures or of and press presented would non-GAAP data the Reconciliations the financial sales, We like quarter value-added calculated will now including percentage with the These first most of been presentation. with including be and in discussing to and maybe in our GAAP our XXXX Stebbins, directly measures,

Don Stebbins

key with Good Troy. start over million Starting units Slide metrics. XX% us all reached the XXX% the time year presentation, with million a Value-added of sales nearly X for increased $XX.XX. thanks had today. wheel Net and joining we morning, to of shipped. many value-added sales records for Thanks, the sales million everyone $XXX to $XXX quarter to and strong with our increased per X.X across

$XX million, Additionally, we XX% adjusted reported of an and EBITDA year-over-year of a increase sequentially. XXX% increase

first the reaffirming solid solid results in quarter we driven our in operations as volume, our the a addition And our improved result North were of of primarily outlook. XXXX our by American business. European Our performance are and quarter,

diameters, the sophisticated better in towards attractive from light-weighting continue base. finishes. We importance including with make and capabilities we by believe move position and are to wheel we customer growing Europe America, for global Today, the to to Superior position differentiating innovative serve in than more progress our North benefit the better increasing of and a success ever business the and technologies tailwinds to designs

to know, our across address in and we designs actively various footprint. you developing are marketplace are those technologies As leveraging these the opportunities

to they we expect which later to durability are continuing those complete our testing, require work and of year. One technologies where customer be this of we new technologies their to finished with is PVD,

production ago. of fuel a to two in awarded our steel change market on in expand initial We the that leverage opportunities that recently had of Year-over-year, which quarter, to the all-electric we carry printing Europe, customer This that level electric start to many competitive crossover well edge including builds us Tesla years over will the program, Sentra for several and goals. XXXX. prior efficiency into performed and quarter, the need an vehicle, one Equinox, of the wheels which achieve our process in a competitive various their trim terms vehicles solutions program vehicle relationships were X our in continue by vehicle in we styling. as case wheel. also meet one to electric our our the providing also meet gives evolving such had programs We that entry needs first the to a standards include with In launches the in pad with the range leverages XXXX of win is premium longer new

light continue performance in have we Operationally, we moderate continue progress vehicle American year made regions improving North expectations we Europe as organization relatively production with and our launches expect in year. XXXX last for to to build growth both North class production significant the flat best America. the supporting in and in the compared For to

Although the we progress, of have work us. still are substantial ahead we with pleased

Ford volume In discontinuation and Today announced light the badge is terms of updates, recently approximately truck cars. crossover programs. XX% of Ford of passenger future other our Ford

less was the our Superior’s discontinued strategic more Explorer, the for prospects anticipate for For Escape, Ford, Superior continued are And in than number X% all our approximately total expected and that is strong global drop our to Overall, which ahead position or XXXX XXX,XXX of production. and Fusion, given of great F-XXX passenger to loss more brands units XXXX, to we or on X.X% the units small the of capabilities. expect we and about We first programs. vehicles importantly optimistic Fiesta than offset Taurus, XXXX market in wheel XXX,XXX strong participation the and expected will car the remain Focus represent expected XXX, of Edge production. the quarter do

well positioned focus would I and our the continue now to are With on we investments and Nadeem. drive through growth engagement for product shareholders. call will differentiating long-term and product ourselves turn quality sustainable We to that, further believe to in customer great profitability innovation,

Nadeem Moiz

you, the XXXX. everyone. first for I will our Thank of financial good and Don performance more provide a quarter detailed of morning now overview

for to was Moving to levels for performance first was American first year-over-year basis due production driven flat. the and launches X.X% production well that XXXX Slide Europe of down roughly started Europe last on calendar XX. from better quarter quarter by of ramping this driven increased of volume platforms early shipment first and by OEM levels favorable strong These up market to our March the X, shipments was the January our of XXXX. production as shipments newest our through X roughly America the in were that product XXXX record comparison X.X% than XXXX Europe Western slide for declined quarter the North shipments note The demand to in mid-XXXX in the supplied. in light Poland increased quarter represent Superior’s period X.X% still performance facility launch first while Please new light to of for year. as vehicle customers is the from compared compared we quarterly vehicle for in North XXXX

highest in recorded aftermarket also the quarter. the ever first sales unit We

region. to the trend diameters see expected towards the continue As in wheel we larger

were first to X.X year. to the Net shipments Total quarter X.X sales added compared Slide of $XXX.X the XXXX financial million sales million X, unit in see $XXX.X year. for first quarter were from summary. last were last up Value $XXX.X $XX.X million Moving million our year. period same you the compared million, quarter can units million last to

per diluted first for $X.XX we per For of XXXX. net compares income of of share. share quarter $XX.X share This diluted the million related XXXX the to first or and per acquisition $X.X net million $X.XX after $X.XX items. impact income tax million of for reported quarter or includes an of diluted This $X

Moving of cover the sales on sales will due for was The units of million million, in the driven million of the of $XXX increase quarter. year. an last $XX $XXX to XXX,XXX were by Slide addition quarter bridge. from from our America the of increased X, came net this increase which volume, $XX to Net was XXXX $XXX.X first price North up and operations America. increase aluminum North in million higher was and I mainly European million

impact supply customer as aluminum constraints experienced to U.S. suppliers, ability These given toward in constraints any as did Europe not North by that have primarily contracts sanctions and aluminum aluminum minimal. supply financial QX of XXXX multi-sourcing we impact cost have and remaining in our on America of pricing, in on our a driven elevated the Further, pricing were we the Russian market. terms certain have customer result, constraints provisions demand. strategy result and as a In is a pass-through meet

first the we $XX.X the $XX.X impact driven Turning million adjusted quarter volumes, scrap first to increase quarter million favorable rates the European an EBITDA of XXXX, million In $XX of had cost operations. Slide was million higher X, to from $XX.X America, North lower of in EBITDA performance. and adjusted XXXX our year-over-year of primarily by positive compared of for

to on let you through Slide flow. Moving me the cash X, walk

used last cash $X.X $XX.X by million was activities operating operating quarter generated For first to of compared activities XXXX, by the million cash year. of

management We have planning and initiatives. efforts continued the to was supported in growth million XXXX. and XXXX, generation and which opportunities have during effective enhance both first these from working of proven CapEx quarter tax both far cash $XX.X so identify capital initiatives to maintenance

dividend and million $X.X During the first million quarter, in $X.X we dividends. common preferred paid in

we management, borrowing have borrowing European capacity U.S. had revolvers quarter the available $XXX million. into total liquidity ample and we end terms available In and of first of of our at capacity

in increase in debt to euro-denominated saw net debt. an As the coupled that an typical in capital. first increase an we in This increase is with quarter, working led

by the Our be of ratio debt the will to repayment cash priorities target continued EBITDA forward Xx, and for debt top investment use net and of XXXX excess our in balancing flow. is going our leverage business adjusted

right growth the for We company, a achieve the stronger, platform steps and balanced future. the provide diversified while better balance are when confident the of to more value achieving together these taken in

quarter, North year in light expectations America result the and outlook we Western some and launches Moving on of a we exchange to important while in not particularly is still the appropriate, production coming very movements we for have the performance months. Slide pleased our are underlying and in have as changed first with levels full believe Europe, our rate X,

net in of sales a million XX.XX the sales up Poland year the and be volume we to growth Turning shipments for billion in European to in our in to our The full full relative billion. range operations increase have continued to of XX.X to and XXXX $X.XX facility to outlook, of Europe XXXX. $X.X of units expect includes million ramp

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

operations EBITDA is be includes CapEx is million, and be million, adjusted We $XXX of to $XXX maintenance to to million of from which in expected in Cash expected in growth. $XXX million. million $XX to expect $XXX the be flow range range the approximately

effective also We between anticipate be and our tax XX% XX%. rate will

our Finally, that, and percent to highlight Xx. of would I like goals. margin achieve And XXXX, approximately questions. net would the turn of as value-added with long-term XX% sales to the again of call our to value-added is operator for goal $XXX a million, once back adjusted EBITDA sales leverage By like of I to

Operator

Van will Instructions] [Operator first Please go Christopher B. Horn with Riley We our ahead. take FBR. question from

Christopher Van Horn

Good call and morning. taking for Thanks the congratulations.

Don Stebbins

Chris. morning, Good Thanks.

Christopher Van Horn

impressive is the taking than was was I bit is what’s helping growing expected going you are key little aftermarket in more what the the wondering very you and mix it – could on you is there just was just if the just a share, originally volume the on comment were? quarter? wondering drivers I a side, performance in it

Don Stebbins

the been choppy. Europe, America relatively and month. would The in the Yes, been here say I been have in changing there. terms market question, your think – The has mix I North volumes of has every

This it’s so or pin it’s choppy. speak in so end at, terms where it don’t And line it’s end. – of difficult is to I through higher a been relatively to lower

yes terms In but quarter. in aftermarket terms Europe, of its a quarter the of had again we one in sales, good aftermarket

and stabilized Europe, quarter. takeaway a expected, long important the here has so performance, go performance been that’s is it still quarter to American for first operations North certainly think year. improved way it have in but as is the solid I first

Christopher Van Horn

just they going a Okay, increase think F-XXX, have in And looking you got programs. at got comment wheel wondering optionality wheel And program, with program the is in on, the year if could are seeing Explorer, your some I then on that commentary I heading key out? I the big X one other you how that you half on those call big that the programs it. into think X year likely years you on this changeover those customers next playing it redesigns had like to and mentioned and around you are see to am for you costs model options maybe significantly, Ford potential the of key similar more launch of back are

Don Stebbins

in the content we as on business also see. of side increasing only the per not styles increased So has wheel number but look that is quoting the we each of wheel the platform,

the of the to wheels quotes. etcetera, continue different in terms So out that lighter articulate bigger weight in trends we wheels, play finishes,

So nothing XXXX, for change narrative. would that we that XXXX see XXXX,

Christopher Van Horn

Okay. cost And then side just there…? upcoming launches, on the the of is

Don Stebbins

Yes.

into guidance. our We have built that

absolutely are right. You

We in in America quarter launches XX we second have the XX XX which in are Europe. for are which here got got of company, have the North and

puzzle year, so guidance our certainly and important and that we we full – important the of have of the launch give. an the So schedule piece of piece that’s an in remainder a

Christopher Van Horn

for great. taking Okay, Thanks the time.

Don Stebbins

you. Thank

Operator

We our BWS Please Instructions] Vahid Financial. from will question go next with take ahead. Khorshand [Operator

Vahid Khorshand

America looks is your EBITDA where so a America, morning, first sales improvement, margin in QX, the playing that’s quarter on me question good Hey, wheel? based, a walk quarter-over-quarter value how it your but on improving, little on added wheel was added like you on per same just in – out sales performance the drag based, from whether per QX value EBITDA North bit could and the that if North it it’s but are through seeing you volume declined

Don Stebbins

Right.

North XXXX were our So our America underperforming certainly have on before, for expectation. I been performance, facilities we had the think that the as talked view

we we is wheel, hour which we these mentioned That at do being from smooth very, per in that up our better launch again fourth plants, as good of metric Mexico is performance facilities. today solid than but may I our production, scrap, every the very a in some been position four wheels it ever As caution the of change in sequentially terms in said, we in I almost would parts defective Be coming of metrics, have the are look Mexico plants stable per performance million, quarter, improving. production, cost out have per launches.

good a expect year. we So

Nadeem Moiz

really these quarters sales mix that have impact. And programs on value-added that��s America, that by per the a want North and make that than and I so comment that it’s lower smaller quarters to correct, the do few QX vehicles QX, has so a unit referenced, is produced of you of we is driven on so couple in as an

and thing full forward The accretion a important is as we think look XXXX we basis. about there year on is

noise So, quarterly change. the there way the because change which platforms is it, the I some typical, characterize volumes is mixed is like and to

on Don is year at EBITDA side, full of out So, and the margins some And impact, have you pointed correctly XXXX, end day trending it’s margins. higher but will profit for then as the performance improved the higher. the cost yielding

Vahid Khorshand

change about – as also to or think go have wheels that would output quarter reduce it you output I bigger that wheels, least Got right production that volume at reduces well? just on your to if before prior the it. be we up, I mistaken the line the would talked that in you would because of volume when of total pick calls, are size and that but will they in Ford pickup this And to that have on not you question, am then you be positioned the going can

Don Stebbins

that’s think the generally offset I EPS will be it by speaking correct.

increase are that in don’t plants that. would other one to efficiency then are continuous plant secondly, making and it to the our And plants we in of and the a by see improvement then things size the efficiency investments plants our wheel the increase diameter increase the efficiencies the to one, to think – offset two two that the in we – I be achieving inside plant. stop

So, go continued in we the to making alongside are investments efficiency. improvement process

that the So, think change number to of we don’t over wheels substantial do I time. can will a be that

Vahid Khorshand

Great. Thank you.

Operator

there at questions this that further time. no appears It are

Don Stebbins

Well, have a very thank good it Appreciate and day. much. you

Nadeem Moiz

Great. Thank you.

Don Stebbins

Bye-bye.

Operator

today’s gentlemen, thank conference participation. call. you This concludes your for Ladies and

lines. may disconnect You your now

Superior Industries International (SUP) 9 May 182018 Q1 Earnings call transcript