SUP - Earnings call transcript Q2 2021 | Superior Industries International, Inc.

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Operator

Good day, and welcome to the Superior Industries Second Quarter 2021 Earnings Teleconference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Clemens Denks. Please go ahead, sir.

Clemens Denks

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

today, referring our our available and will presentation, our call Tim website. we During discussion Trenary, on today be Chief Relations of with Financial the Chief Executive earnings I'm and joined Investor Majdi which the President to and release, Executive the is Abulaban, Vice on by section Officer. Superior's President along earnings our Officer;

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

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

Majdi Abulaban

for to joining and the on call our with you Clemens, quarter everyone. will our highlights. Thank results. begin X Thanks, Slide good morning, second review I

the pleased with are results for quarter. We our

substantial growth deliver to and and responded over performance to team Our instability operating continue industry-wide market. solid

by XXX% has sales performance. million our to for quarter, cost value Our the growth by prior of EBITDA well us driven the focus enabled ahead increasing year, board increased and Adjusted deliver with market. on creation volume road $XX across against map value-added versus executing

increasingly the capitalize enabling product alike. Our our by and secular and industry, including differentiated top demanded of each to consistently has growth our us portfolio trends electrification, consumers reduction on by line technologies, driving differentiation, OEMs COX been supported vehicle

OEM challenges During sequential us, impacted in significantly the quarter, especially semiconductor schedules, America, shortages XX%. North for where presenting volumes production declined operating

Here, shortages resulted the to premium supported mix in drove in for focus a growth which partially, to OEMs Furthermore, shift wheel these also our well. very continued teams vehicles, portfolio with disciplined us. segment. combined way, has strategy responded by our larger favorable our This

reflected our XX% OEMs, Here, growth almost and XX% of year-over-year. XX-inch both lightweighting in premium the finishes. and Collectively, wheels is to of growing and larger actually The markets. sequentially top represented shipments adoption growth over line trend our delivered same portfolio

we of further continue to technologies cultivate our capture solidify portfolio and long-term we and sustainable to premium portfolio growth. strategy, our our expect position on leadership execute As

have year just that I have on rates admirably. QX severe words XXXX marked Despite has of variant and X more flooring right well portfolio as representing of driven growth. in increased XX% period our been in challenging operating increasing A the vehicles. Slide double-digits January highlights the it some these how foresee during production team sales commodity detail about the few costs performance, context expect as environment in compared on in Across demand, shifted as to North maintain the we delta profitable partial focus others, in semiconductor the impact XXX% schedules. over operating over event rising production fallen pronounced to Europe, Further, throughout slower and value-added market able prior site in delivering say our and recovery mentioned this Slide shift America X. as forecasted production will quarter. to for persisting due other of environment, the trend to this this The premium by OEM the shows We manufacturing we year. results short from strong shortages more dropped to disruptions initially Turning was our I both that been quarter. add growth impact side earlier current overall of well our market. in industry growth while the responded German for adjusted quarter chain our initial by July. FX both the to with actually This to manufacturing our favorable strong challenges the levels regions, has mix to expectations. there shutdown slide OEMs further as including continued third supply of and premium affected concerns year, unstable remainder has the

customer EGT, very are, wheel low Mach-E we the sustainability that. aluminum superior advance course, proud Superior. EQE, Touareg as and footprint Lucid We're both having same of and Slide all-electric above X, a of the name of Now, efforts. bottom And market trend, VW to Mustang you now the and since on quarter chart, we the Europe, the have in the a and really growth for Compass. as we the of from electrification welcoming is on the comments Mach-E our consumer my see second Macan said content our The content the about Cayenne, highlights will new growth. carbon launches of our just early Mach to launched for XXXX. excited left of I move are a North continuation Lucid Daimler that, and we product forward the about on -- Jeep In exceptionally few. underpins Mustang tailwind America, global and driving Porsche made which In launched prior and secular the preference seen

statistics apply XX-inches few or out vehicles; a X technologies. X interesting of our lightweighting use are out wheels electric of X support here another this finishes slide. Now, from X and X premium greater, our are X launches

is You our accelerating. can portfolio of proliferation see the fundamentally

remain strategy We value. X. executing Slide committed to shareholder deliver to to on Moving our

of excellence this on deliver Our slide. focus to on driving we executing across all units are on all and the business strategies progress this our growth. In making now highlighted is strategies regard, on profitable our operational

our terms teams especially operational and an global gross and exceptional globally, before procurement, America. North launch. in discipline but efficiencies, leveraging improving job margins In driving This quality our excellence, done after is instilling of commercial in have reflected

We certifications fully initiated regions, driving finishes lean with eliminating improvement. process and have with of also started most to size invested experts Black underway waste. are in continuous Six in we manufacturing cultural both improvements improving our across organization this the Lean larger to wheels. recently, transformation journey deployment This opportunity of and and many the in a staffed problem-solving support capabilities in premium And regions, both and We well Belt and driving belt much Sigma see business. Green a

strategies on executing to growth. deliver long-term focused We profitable are also our

have and this Here, and that this for aerodynamic to our products growth long-term respond In of we larger itself in book which now that carbon positioned electrification business wheels. believe coming years, most and trends portfolio premium manifested well we above reduction the driving driving environmental, in green is highlights have technologies the accelerating, in most offering low front macro advancements This governance creation. point, consumer segment growth are a the the preference continued portfolio initiatives, recently, Slide products, value sustainable our are of finally, XX To and with lightweighting we the through the industry. solid market electrification, finishes our we comprehensive consistent now and to furthering in the has our of for industry, of and regard, progress growth made footprint. critical social towards our on COX

our reducing sorry, standards safety through focused and employees. footprint, efforts, Our these we on the of environmental health are protecting initiatives, our increasing

full our June. Global enhance practices reporting Sustainability We with realize progress commitments our on look forward published advancement our full further in the on efforts our I'll Report Our date as XX. efforts are captured well now outlook into our our now year stewardship corporate in in Slide and future. the of Compact address swing we sustainability UN to to

anticipated, the the than albeit are recovery continue, maintaining we slower our at to industry pace a for While year. expect guidance originally we

flow. and driving profitability on enhanced Our focus cash remains

For unwavering our Tim. deliver value With our will continues. the commitment momentum during and growth their above of hard that to call range we our said, deliver cash shareholders. continue as despite $XXX to to to for in am thank year expansion With confident continue like we Tim? will I very million headwinds, $XXX for we range $XXX current million the closing, and flow In second the and that million. expect margin turn the as that, cash results adjusted I work to market, of over quarter pleased superior with to the the to $XXX industry million flow from for the team the would in the entire remain full year, EBITDA of operations quarter I generation

Tim Trenary

everyone. Thank good and you, Majdi, morning,

and the of quarter XXX%, increase Premium million, year of structure of $X.XX, financial stock. cost sales, in on second loss another for value-added quarter to preferred vehicle sales aluminum. per of the sales growth shipments reflect $XX.X of XX.X%. was XXXX Superior XXX% quarter in $XXX.X prior mix Net second million value-added The accretion income financial wheels. the but a production on value-added XX% adjusted This delivered diluted net an year-over-year period. by in a reported production share in improvements per second contented America in $X.X supported a increased the of of results. sequential of quarter shift the results sales, increased $X the reflecting a of premium a by a of unstable induced pandemic or performance face share is These above of to continuing of decline million margin vehicle EBITDA XXX% in XX loss the run-up the market environment loss and and dividends net North in of million are of of reflection year-over-year collapse and of Unit We $XX.X the and diluted shipments. because last cost XXX% the year. compares up Slide XXXX enterprise Superior.

significant vehicles, costs. short to XX% schedules, which period frequent on such in Further capitalizing decline extent shipments results in stranded premium turn labor, in America in regards is equipment in and specifically, impacting the the production inefficiencies. scrap quarter to to OEM More the this gave practicable the and mold instability North of manufacturing changeovers, sequential limited continue to the the elevated decline which in semiconductors. in results other manufacturing their the OEMs shift availability As to production more rise the quarter, a

capacity, Our OEMs put operators the process product constraints some mix have concert certain manufacturing the which managed shifts well. in on with and has

be of must a performance. with Slide subside the benefit second that the richer thereby and QX will and temporary Importantly, resolution is inventories the improvements of resulting Slide We comes, quarter the outsized exchange mix and XXXX XX. bridge the premium pent-up product recovery production, production. customer the both believe day structure associated these favorable demand shortage. in There's supporting financial challenges, vehicle currency some offset adjusted some to reflect of on The on enterprise year-over-year from XX, the satisfied When premium year-over-year. shift these challenges are from semiconductor collapse vehicle bridges foreign industry likely of replenished, wheels from mix XXXX bridge sales EBITDA cost

Additionally, the for favorable environment reflects million XX. inventory hand Slide $XXX the remains in Net the expenditure cash neutral. on structure on quarter. benefiting capital million. the by debt payables improved aluminum. from objective flow cost sales Superior. outlined timing company's the therefore Deleveraging Funded $XXX depicted debt Free million. quarter was quarter, was of on of production a was The the sheet balance capital key bridge build $XXX at and Burdened resulting Slide is end, from but somewhat cash XX rising

available credit As Slide our including company's cash on of revolving facilities is June was XXXX, XX, liquidity, maturity committed million. $XXX debt and profile The amounts depicted under XX.

maturity dates matures the There no and of maturities. senior revolvers. The European the U.S. XXXX near-term extended in loan notes term our have XXXX. and We are in

are with compliant covenants. all We loan

in the XXXX to prior guidance, we adverse recover Slide the aluminum impact recovery increase the is ongoing pre-COVID larger production we to $XXX to million, $XX.X to diameter continuing million semiconductor our $XXX in million. in We More year. temporary reaffirming continue levels wheel our across shortage production, outlook recent million sales on adjusted outlook EBITDA previously effective impact unit the sales and $XXX for of on also prices of value-added including XX% single-digit $XX.X on net XXXX Europe. industry year to Notwithstanding sales footprint, shipments million an to percentage therefore, our increasingly the of believe be high of range in the The $X.XX our in shutdown the and volumes XX. assumes the impact guidance. full the are an industry vehicle premium billion includes $XXX estimate to range over will, in described billion resulting global of of expect in a time to million, specifically, to production $X.X shortage a wheels range and shift our Our the operations content. rate range the business of XX% model flooding of in addition to the because tax This of German semiconductor of with

our finishing of capabilities be We to of is $XX continued expect is $XXX some of capital spend operations portfolio cash in A million, we from million in develop the expenditures which this million to should wheels. investments to $XXX flow as from for XXXX. wheel carryover portion premium range, our approximate

heard Moody's Superior pleased that, to both agencies back Poor's, now both the I'll that from questions. we agencies, Sergey turn ratings With Standard a stable the of I'm have upgraded operator Finally, for have our call & report back outlook. and to to

Operator

now our question from Instructions] from Barrington take Research. [Operator Gary first Prestopino We'll

Gary Prestopino

you up is or that running post flooding direst are there? the now under and still German In factory, the

Majdi Abulaban

right August. We couple shutdown now a in in a weeks period for are of

Fortunately, it was planned.

We expect Right and in I of would is the now, in XX% equipment plant running up will by and to the fully running mid-August. preparation be say, have running mid-August.

Gary Prestopino

normal that which Europe, happens So right? was summer shutdown, a in

Majdi Abulaban

Yes.

Gary Prestopino

XX-inch, XX-inch how going add you your But changed And you And those the the XX-inch then finishes, besides wheels portfolio, good have greater. percentage characteristics? statistics units that percentage lightweighting out across your if on look what premium or of of if year-over-year? has

Majdi Abulaban

Gary we our providing It talked about stats we talked X% when our of be XXXX. of more XX% shipments. We'll in lightweighting. of now on It's Recall all those. shipments last, was

of is shipments. which non-existent aerodynamics, new, XXXX. our It's about in X% talk fairly You almost very, now

shipments in expect years. X both that the similar actually in between But plan It's trends been growth those all couple size. I a while. For followed stats, ongoing our grow next XX%. see overall forward-looking larger the about them, to to accelerating, and average a about all rate to for of the at look to finishes very as we our has top these next trend XX% of years at of XX% and Premium line, wheel I X

Gary Prestopino

in, a guidance, environment hit shutdowns can the whatever. months to worse in guys top the anticipating and terms that it's and getting of it of you would like number? I from guidance, the further. able the lastly, low-end, even guidance, more adjusted EBITDA. And going And be the company obviously, on the then -- of looks are the have But shortages you X appreciate hit the much the down things working your that high-end you at down in then are you're given based you adjusted if to mean, EBITDA end not obviously, here

Majdi Abulaban

with bit add this, to stats Gary. back just and step me a let some can So, Tim

backed significantly the outlook if their ask business. right they've for now, So, IHS, off you

second half, they're X%, QX is flat. the saying for down So, QX is

a Gary, you on our down view that's work top numbers. can company line, We're -- really collectively, that grows market. a X%. you So, above can Listen, the my

So, to if deliver we're cars, going content they market. going of deliver ahead make wheels. to we're And

cautious would a I look year in IHS outlook. concerned half. more plan the would at at around year. are tell flagged, expected QX now, I recall January, whole thing XX%. right we that are entire industry. entire has numbers And for tell the concerned We’ve our the microchip QX, second about our at by Back at you come the for if We we you really we in that IHS. level. So, No you, to built the were XX% been XXXX was with underestimated one that

even if entire there. Now, resolved, Overall, saying for the concerned we’re higher tell I we is the but the are beating more issues like half, range, are we’re you XX%. it, hitting I microchip X% about second the year, would

Operator

question Ward from Instructions] next Our Benchmark. Mike [Operator from comes

Mike Ward

X European you with the what's aftermarket can going an business? on things, give update on

Majdi Abulaban

always business, XX% spot quarter. diversification grew element in been aftermarket it's year-on-year. a us Mark, our of business Business a the it's and of bright sure. the for really Yes, European north

we far talked have our faced of the that keep container customers There have brought We're our recall, very, issues, there as out been about progress in coming you in quarters a that -- our East And shipment issues upside As very frankly, pleased the this the with like would QX. in of more have and the business to growth. doing and well. direction. best we're lot

Mike Ward

about when there's wheels Page EVs, more some citing know -- just on on new of X, XD are so EVS? the talking you technologies Second do or and are thing higher chart EV you there's Because or were the weight on that heavier the I that were the in they content impact higher...

Majdi Abulaban

definitely XX% should our adds XX% EVs, are they and use yes. I to Again, mentioned definitely, premium technology. to technology that, I of are content wheel. stronger. through is earlier, Further, No, lightweighting finishes. they go forming They the of tend a They driving to average the Mike. higher that, lot Mike, flow larger also consumer in the several driving preference They're explain They ways. content are lightweighting wheels.

side, So, strength on out math lightweighting, to EV of across board, the has technology as well more lot in wheel. average an the content of take to the drive the size a on and finish to terms as bring side

Mike Ward

the boxes X checks it So, board. across all

Majdi Abulaban

Yes.

Mike Ward

right? of you in So, wheels value-added second that if $XX, closer content North about EV $XX the looking if had a at the are we're in wheel, quarter, America, roughly is so to

Majdi Abulaban

of size directionally vehicle, the correct. the on depends It But, right?

Operator

Research. question follow-up Prestopino Gary a from have we Barrington from And

Gary Prestopino

all look product you, of launches if us didn't XX-inch X mentioned of kind -- you etcetera, etcetera. X but you gave some electrification, of X X statistics with greater, here, Slide I this X Majdi, the just you maybe and to at I write down, ask want of were

So, vehicles but counting that -- there, as I'm XX I were launched. count

So, at am here that going I just OEM you are missing point? by or something

Majdi Abulaban

good a That's Gary. catch,

Let me look here.

Gary Prestopino

X all and I'm we just correctly Skoda models. That's have correct. Mercedes -- wondering is statistics so our have

Tim Trenary

It's to for Skoda, of both. In applies, the case example, the this it largest.

Gary Prestopino

count would So, that is what launch saying, you're as right? one

Tim Trenary

we as one Yes. launch. consider Yes, that

Gary Prestopino

fact the various within models the is it's proliferating But across of the manufacturers. matter

Tim Trenary

is correct. That

Operator

hand to to As I'd there over in call or speakers are questions further no closing additional for like remarks. back queue, the the any our

Majdi Abulaban

much Thank call. participation. your earnings forward in and participation look XXXX you. early Thank very you our thanks your the for you give All update for In QX QX to stay in right. November. safe, meantime, please conference We XXXX our

Operator

This call. for gentlemen, your may you. today's disconnect. you concludes Thank Thank Ladies conference now and participation. you

Superior Industries International (SUP) 4 Aug 212021 Q2 Earnings call transcript