SUP - Earnings call transcript Q4 2021 | Superior Industries International, Inc.

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Operator

Good day, and welcome to the Superior Industries Fourth Quarter and Year-End 2021 Earnings Teleconference. 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 conference fourth call. everyone, year and to earnings XXXX welcome morning, quarter our full Good

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

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

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

Majdi Abulaban

production teams marked the year demonstrated our everyone, delivering joining full review thanks, call and for XXXX quarter Clemens, a growth for progress in in agility Superior of year a as Thanks, XXXX challenging profitable today and environment. Thanks. great fourth significant results. as we

value-creation the execution against now road benefits of years of several realizing map. are We our

double-digit reduced profitability, consecutive strength our earnings material with substantially delivered production revenue, of continued the earnings is volumes. market. of an start earnings XXXX, on with year-on-year XXXX market. of above and terms increases our our in I In raw clearly growth In volatility X And and highlights. Slide operational levels we environment of in now in elevated are in costs. result despite terms year full industry This the declines pre-pandemic revenue, will year of and OEM at is our third growth this

by performance also us XX% to continued shift was Our XXXX, in further on to enabled products, unit X% the in EBITDA an enabling increase premium in increase impressive deliver shipments.

OEMs successfully meet are as COX growing demand premium lighter We secular for for reduction the seek larger to customization. capturing vehicle and trends electrification, products wheels and

positioned to technologies combined positioned a turn, production differentiated we continuing Further, growth our full in EBITDA our growth product the with to testament long-term the balance further prior significantly our decline cash macro well in levels. Slide of X were move in the we our are ample Superior in environment, for XXXX, EBITDA the us most and is drive XX% operating in of in our we X of drive In million, to performance support of combined despite capital expansion. business and operational how Superior deliver XXXX, impacted to turn, ability have face content and margins now requirements. which, XXXX Our have These addition line supported volumes This and results. by larger working increasing the provide to portfolio volatile liquidity have material year industry costs driven in margin growth achieved to pre-pandemic maintained well of normal to revolver focus automotive lower strong capture flow Slide cash $XXX the to once operations. environment. impressive in XXXX exceedingly than the our industry which return address differentiated market growth to Superior substantial figures XXXX, the for to across year volumes last content illustrates in technologies both is paid for pandemic. levels operating regions Slide over with to state encouraging. a years delivered manufacturing Despite of onset an current our trend this I’ll XXXX. growth the operations over both off of full our decline, how of last portfolio And also since how is enabling nearly earnings a Truly demonstrating beyond. X highlights make convey and year of Superior.

operations challenges Looking at will our continue that same and into left the of impacted the XXXX. many side XXXX tailwinds chart, during of the

As wheels also aftermarket seen footprint premium European which our have mix. the a solid I product we benefiting support to shift business, for on from addressed from strong continues demand, by localized Further, driven in last favorable performance is slide, our Europe. in demand

local look derisk we continues continue footprint As favorable being to expect long supply to another to for years. in to is This our for tailwind the the local our industry customers. of chains, continue benefit from that expect we to coming

fell As lingering what industry macroeconomic challenges. of right, to significantly, see effect productions the we you year expected the of on due earlier short XXXX can in the

be well We that the performance current predictions. during will current our production are industry for forecasting a recover taking year. a for our forecasts than conservative substantial our for industry of in and approach are Should XXXX, below upside there the our estimates, estimates faster IHS

XXXX of underlying on As we levels that chart, And in strong. historical shown remarks. such, further That XXXX. current remains expectations said, as below demand of remains that will on later the confident in right quite far I are consumer detail my production the our side provide

X. to Moving Slide on

to operating quality work by long-term industry road commercial compromising mitigate mitigate to drive in map. on and positioning of the supported market the growth. discipline of to Throughout year, Our operational continually costs, without growth XXXX consistent commercial manufacturing our has legacy improvements Germany impact costs at and we execution in enable of value headwinds, of been goal cost Actions included to flexing both and increasing Superior of enterprise-wide the product profitable inflationary our creation facilities recoveries and for with costs. taken enhancements of have Mexico ongoing costs

We have of Black Sigma and culture also utilizing training, during improvement Belts continuous on graduating development Six the by of Belts XXX year. our Green focused

we While not the that to business, focused we in on off us metrics to operating our products our have their right customers vehicles. ball manufacturing in have improving deliver the investment eye taken to enable been ensuring allow the continue differentiate to on capability

and have carbon execute and We and on machining our greener to products in in us further. paint premium electrification, Poland and XX-inch enable the that strategies. capabilities painting enable XX Mexico ESG makes lightweighting to enable to more invested ultra emissions wheel low footprint Slide with point more capabilities

cornerstone Our broad been market. portfolio the has our growth over of

these the in the of its to positioning margins way. technologies penetration We expect continue to expanding increase coming in the premium Superior while growing along further years, wheel each space,

leverage during and evolving We to our of are future the highlights to several continue in more growth into continued well year the Slide the OEMs will These the of the XX reflect larger, the to industry. product adopt in this trends launches to to technologies speed North adapting and seek premium product in showcases and lighter the customer continue growth our our as base, technologies continuing diversity content with our America increasing Europe. in success our OEMs of and launches continue premium wheels. which

with XX% XX% year, launches with technologies, lightweighting innovative During utilizing to over our we wheels the XX% larger premium continued over of electric incorporating diameter portfolio XX% over leverage for finishes, over and vehicles.

XX. Turning to Slide

the and Further, we involved Inclusion multifaceted. the XXXX the dedicated on that initiatives neutral Global XXXX, outlook, been announce progress Superior have address has the Stewardship recently made our our and of Initiative, of I to would establishment to together Before to by help I and within This am goal highlights to of sourcing social chain responsible a value organization launch Slide and and includes XX focus environment, be governance report. the XXXX. inaugural in to particularly implementation to Council Equity the the pleased aluminum Compact UN bringing ESG like shareholders and industry. joined Diversity, our Sustainability Aluminum moving towards aluminum our production environmental, the the that of our global carbon drive stakeholders fact global throughout

are XX% sources, the lower the strategy, enhance we’re our and will clean by front. manufacturing far COX to coupled With processes. the of with RX focus launching our roughly the than actually ahead of deliver achieve Superior process our is of energy local-for-local produced reduction excited our on further sustainability operations about of footprint, a footprint manufacturing and that, utilization which with initiatives We We further XXXX. on wheels diminish aim average in global in the currently emissions competitors global emissions

us to makes further the In year XX. sustainability footprint supply addition reduce address operations, to of looking are on our an OEMs partner in full XXXX carbon will outlook this driving in also to that major efforts us to We chains. of attractive Slide advance sustainability our XXXX. look I now forward our the their progress progress helping

due regarding of and the production uncertainties for chain levels, supply seeing OEM are we remains some year visibility stabilization to Although full pressures. limited inflationary headwinds cost

levels – continues is the automotive industry factors, the year, disruption impact industry to once unknown assumptions we into associated recover level to accelerates, anticipate do once recovery conflict, space. wider high approach our demand which guidance. these have the with growth is as a the of and full of pent-up situation both Superior consumer the reflected Given some we for the conservative for currently Further, Russia-Ukraine evolve. our materialize taken of in will Regardless, substantial the the industry which

over am to potential look that expect progress flow XXXX, be That of accelerate single-digit $XXX I recovery in million. closing, I see EBITDA and to Heading forward volumes with opportunities expected year, about vehicle from XXXX rebounds continued team mitigate between continuous operations into Superior stronger in and to global our the and and many million proud further Tim? upside growth. $XXX the call and the am $XXX our that, in includes return ahead, range, from industry excited earnings the we $XXX the benefits In light anticipated. for Tim. to inflationary lie as accelerating industry I is industry incredibly recovery to achieved the said, over high will cost production. I position flow further million cash XXXX. the turn headwinds. cash production with improvement than With we substantial million mid- to This the we For Adjusted to should growth anticipated efforts the

Tim Trenary

good per and operating content company. our year. so the improvement enterprise programs. of the reflects Superior environment, cost ended growth portfolio, supporting XX cost and line product business for the More a XXXX, in Thank Majdi, especially can in you, challenging specifically, put everyone. XXXX reflects year the back our financial improvement in over of XXXX X% discipline and benefit the market year. top XX, the a months morning, was improvement of improvements structure half for up Superior of June informs and wheel growth the the The performance XX% considering Interestingly, continuous

This our were power even XXXX. the a XX%. the notwithstanding the markets more supply sold X% down and earnings testament June vehicle million For of months did pandemic, ended value-added in adjusted XX, disruptions, was for wheels production of to normalcy, $XXX pre-pandemic a times. the normal was XX%. of period down that Superior of $XXX semiconductor And light XX This million of from margin EBITDA relative is XXXX, chain in sales on a levels, accomplished other though Superior is

to Page sales, contrast, the wheel back fourth Net million $XXX first units fairly down the year. increased shipments $XXX the a quarter of environments half on million and In the of for But prior full compared the fourth quarter with to year, and as year, tale the full unit shipments period. robust the to period. a the for year rather versus the the in XX.X up XX% earnings quarter, X% from year net reflects were begin compared year year. unit X.X were sales wheel to XXXX units, million unit Let’s This the prior XXXX, of miserable prior a half million year. full XX, prior for the regional compared value-added two quarter in business the sales and fourth year shipments,

net $XXX loss wheel. due product we million $XXX loss fourth were per period. $X.X associated net of year, a a approximate in higher favorable increase year. the In For prior million and compared incurred cost were in XXXX sales foreign pandemic-induced compared year. sales billion in the we the restructuring million But In million relative share and prior year. per a higher to of shipments million primarily charge in higher the in helped. manufacturing exchange, aluminum million compared increase primarily with year, prior diluted the the diluted compared quarter, sales $XXX mix prior euro year $X quarter, decreased for because the of of the the net shipments, an higher full loss shutdowns year, Favorable full cost to quarter of the $X.X pass-through during of year, strength a to facility reflects for our manufacturing of to the value-added a $X.XX or Germany. reported the during billion million costs content per of for aluminum to also the loss $XXX $X.XX $XX $X.X the share Value-added the the net of The because in fourth in sales to or XX%

we reported of $X.XX to net accretion our million, performance. because due mitigate share our $XX.XX. income on and or difficult impairment of $XXX business improve year $X period from diluted stock. some resulting dividends a impact For year The net income charge more sales. XXXX share the of of largely prior throughout to financial the operating million of the the in Page XX but a The per the higher of XXXX was XXXX, a the on in diluted executed loss net to and per is in actions full of business environment in income highlights million improvement loss XXXX, $XXX preferred and loss

because to these of. timing improvement examples. in quarter prior year might of continuous the vehicle spoke Sigma contributed $XX reflected program but expect, enterprise are actions and compared product million disciplined and you of many Noteworthy cash the map our cost century-led value road procurement, primarily capabilities in that compared adjusted reflection Effective The creation company’s making are the the Majdi to a improved are Lean overview wheel To our acceleration the Six actions As period, the in improvement million year-over-year Value-added year, Adjusted large more the implemented in million in XX% cost the we favorable appropriately production all business increased currency XX% decline higher our temporary light the XX. of helped layoffs production $XX manufacturing effect Page third markets is beginning flow to timing XXXX. on in almost quarter the quarter size for adjusted year, back address half vehicle of are environment. An $XXX the of in structure only The XX% our our on a Mexican full can $XXX bridge volumes, the of wheel for in giving by before fourth of in in sales per a this XX% year-over-year the X%. offset bridge vehicle was decreased mix manufacturing The bridge. $X year-over-year portfolio. Value-added vehicle much on year-over-year and Improved the mix, content markets. X%. million facilities XX. aluminum sales EBITDA Page and markets. giving effect higher year XX. before the Page XXXX impact metal Metal full in XXXX of Page government-funded markets performance, to by light sales XX. XX% XXXX business of to $XX Higher the Germany. Fourth compared short-time On year to about favorable wheel production increase. and declined by a company’s content Page or in and XXXX difficult currency, year-over-year to to utilized year offset per to EBITDA content our wheel in program production our to labor we quarter pass-through. is rose to million million premium environment. mix in light of increase XX, production in part, prior a delivered million cost our EBITDA decline decline and light up down per currency, end. in Again, full in despite $XX found Note year or being thanks sales aluminum be the higher

full Although free cash the XXXX $XX $XX very million million. flow was was flow free satisfying year quarter, cash negative fourth in a of

capital bit than this This higher but higher a historical specifically cost Page still come $XXX may was and of year. this depreciation end the dollar the may overview our the back to attributed aluminum on payments in An year-end All million weakening and Euro be below $XX the of structure debt more XXXX. to cost decrease Capital will last the as XXXX depicted capital, the million were because XXXX $XX $XXX Page plan. investment at working at of the Funded the trends financial million once normalizes. of found to XX. XX. reflects Euro-denominated aluminum be the us normal end $XX year expenditures below of debt on The company’s of more U.S. year, of against million of million the principal compared towards of

and including XXXX, is all profile company’s As The in XXXX debt. end on credit credit of is depicted debt the we liquidity, with compliance facilities, remain of million. $XXX Page funded The undrawn were and of on outlook Page no covenants facilities under was have near-term XX. XX. maturities loan the maturity availability revolving Revolving

continue value-added the in XXXX. evolves. be a $XXX For model a million expect range operations which the to is to million to sales of XXXX cost over from flow to aluminum in of our higher the These increase single focus from cost result million, we especially to strategically evolution XX% from million growth the sales $X.X invest will substantial conflict Further, as during be The spend the to resulting in we This XXXX of of the be elevated volumes the carryover in figures to not the digits. finishing to to XXXX, outlook the impact tax capabilities. business, the amount plan conflict, and capital in estimates to environment vehicle million, EBITDA are and be these however, increasing sales of do the in to from the monitoring expected moderate. in the rate continued in respect of to is We pressures business of we light market business these moment. $XXX range $XX range, to And part year. we Back in some value-added depend, effective With XXXX. XXXX XX% cost $XXX assumes production adjusted adjusted reflect to net low $XXX reflect high to in over million Cash the assume closely XXXX. The million. EBITDA stranded in we P&L Russia-Ukraine in for $XXX inflationary as $X.X including a The we generation. billion as expect for operations this and to markets and mid- the our million on ranges unit on in some year, production assess shipments expenditures, of expected range to growth continue sales cash $XX.X in aluminum. the flow net in $XX.X $XXX billion, will million to cash increase end of in invest

is The business are inflationary these on recoveries recover be pursue margins. no we will preserve able will in cost to to to be there We the customer lumpy, continue timing of costs. and and our assurance of pressures may impact recovery these completely vigorously order of

this leverage. business hand, good other a the with operating On is

our semiconductor our operating business in more portfolio, return capabilities vehicle handsomely shortage. our the could our wheel and, a levels in disciplined light premium result making markets, and to product teams normal recovering Our very from with coupled therefore, production

back million adjusted this As a business million $XXX for EBITDA sales at is June in XX, I XXXX, XX relative of a margin the that mentioned on to $XXX months you. the of ended period normalcy of a XX%. value-added outset, Majdi, did for

Majdi Abulaban

further like performance call like shareholder value strong our to and closing, would back in In Operator, look to to you turn driving our Q&A. thank their over for year. Thanks, for momentum forward to Thanks. We the our would I XXXX. Tim. I this teams contribution to continuing

Operator

Instructions] [Operator Gary from comes you. Thank first at Our question Research. Prestopino Barrington

Your go line Please open. ahead. is

Gary Prestopino

morning, Good everyone.

Majdi Abulaban

Gary. Good morning,

Tim Trenary

Hi,

Gary Prestopino

correct? I all, facilities European a that you for of issue there, of series supplying with components Ukraine, guess, of the lot the Ukraine. first your whole questions had don’t but in here. that of that wheels produced any assume Is OEMs I A are recall I kind of you’re to this in would kind

Majdi Abulaban

not components Ukraine. life, in specifically quite my harnesses wiring Yes, us. is in concentrated But prior from

Gary Prestopino

Right.

Okay. the And facilities? are production country, the of Western in of part these most these

Majdi Abulaban

They’re spread over, actually. harness are are others but West. the the of they and Aptiv, wiring the especially Yes, the in Leoni with employment, bulk business in

Gary Prestopino

is incorrect? what shut And I’ve right these that of from lot production? have now, read, a things down Or

Majdi Abulaban

Partially. lot, I say. Not a would

Gary Prestopino

Okay.

Majdi Abulaban

remains the So of of Porsche is The seen. harnesses that Ukraine VW because of largely the and Ukraine. concentration plant, highly has because be of that’s commodity. the announced wiring out to on closure industry it their dependent Gary, automotive European of

Gary Prestopino

Right. Right.

Majdi Abulaban

understand, again, have are able continue to some remote production, what From have been plants I in But locations. not. located some

thing it out. watching this we’re plays is So it as closely –

on plans making doing on Our to sure to inventories from customers. teams exposure comes Gary. – putting XX% our one we derisk job have is of raw good Russia. hand aluminum in our place and continue a And buy support to And in our right are we the supplier material, really

Gary Prestopino

or Okay. inflationary was, to from maybe costs Tim, really had the time And I deal an We're how works? is something become guess, like And you your it's then this years. customers. we've evident. inflation environment. I very comments with recapturing almost your in for Could this now that mean, of XX first explain one

Tim Trenary

Sure, Gary.

fourth of company’s manifested by back the evidenced year, pressures in very half resulting inflationary that the thing of from XXXX, little note, in most financial the first we the would had Europe. as compression The margin and really performance itself I and and quarter until in

energy consequence pressure. in of which as the our the a cost year. increase coatings, go out in This increases during the year, was But little of and So some resin, transportation impact inflationary some very coming costs in total and costs. primarily of

We all the whereby tell the customers process cost cost and customers, or this around customers think, year, that and mechanisms the with for on the to the changing arrangements the in with have, pass the are reflect we alloying actually alloying with with as aluminum. associated has you discussions With customers. compute will. the those I have our paying XXXX, would cost majority agreements those customers the we have, And risen, aluminum. of costs having in adjusting of that handful aluminum that, I mechanisms our respect to agreements the to of for the of with today, the ground of we the run do hand to responsible and our commercial to certainly whereby are are we agreements principle at of we in

practices, the the that Absent pricing know, we some those adjustments. we on productivity, what pressures extent that, So continue you I resins which the them, believe this cost as the cost with are let’s to well arrive aluminum customers, to from, that agreement extent we there’s the have or the allowing, to say, great. in we as to our pass to price share customers we And downs. we we our productivity have utilities, way called to of be productivity And with industry, on then improve an can form our – and addressing. will at in savings of the

that flexibility. We lever have that and

can’t their we to pricing that way through – don’t to have have the So share, see the pressures customers lever. inflationary extent we the

A pay and pursuing say expect So our issue share. of suffice of an costs little not issue, into XXXX. these coming vigorously, the fair of recovery to bit that we we in an to are customers much their XXXX but

Majdi Abulaban

something call said, add as resiliency commercially, light So team to me I would a exceptional And that let to question our on of the profile ability of what we our the think hedged on aluminum. right? I relative of as it’s this Tim the naturally as well. and execute, are – helpful company which would Gary, on kind be XXXX, shed

hedged. We have the we to portion. naturally But in address amylin XXXX, are

pressures. energy. described. me have a We of we improvement same all while very would I teams and And to is established And the or team indexing negotiating compression But on little other XXXX our margin result offset the to the pushing this fixing positions not that. these is, of movements the is net done commodities, of a I for resilient of any why either have our prices, would see the think on did well, six reason the time, you I back, at very mean, And driving that execute. company of in what profile all inflationary takeaway that ability as call continuous

Gary Prestopino

Okay. will let thank somebody else go you. and I

Operator

our from take Mike question next We’ll at Benchmark. Ward

ahead. open. is line Your Please go

Mike Ward

Thanks. everyone. Good morning,

Majdi Abulaban

Mike. morning, Good

Mike Ward

above XX%, about. between there XX look Majdi, wheels, you’re says The percentage that as is Page lot. when curious the Page a basically level North in Europe? difference a America And growing XX a – I’m the I the at of that, couple – XX-inch things versus of

Majdi Abulaban

profile actually, But trend in America, the give But been the call. end – of at has we’ll directionally, just I’ll consistently you the same. has growth the be and than the maybe tend to been the North larger Well, Europe. data in directionally,

Mike Ward

And in the two consistent? the between regions? premium they any differences Or lightweighting finishes, pretty technologies, the are

Majdi Abulaban

characteristics the So the of two Mike. reasons,

So very lightweighting tends very think, of has German these performance slight say would started content you car technologies, adder. and I of on vehicles. it. I fast which have more makers the trend. North all and the as I you a know, say that explains with that America, North revenues – that I Europe wheels, and And finishes. on reason with that be our catching carmakers that for – is up And is really it’s big right? slightly is lightweighting larger would us to to lot premium SUVs, heavy technology say consider a on would XX% variety North premium because America America

sizing So technologies lightweighting premium on finishes the U.S. European side, side. on the

Mike Ward

Okay. the side... on And then EV

Majdi Abulaban

found XXs Europe, high I the number. in low in I in it. It’s the very the XXs in America. have close just North

Mike Ward

EV the Europe on the is And All side, Okay. ahead right. U.S. of

of wins, wheels. assume I’ve you’re Is a content got at look both? there. much between that like seen and every bigger you how a you’re some type EV there is content lot XX% I they’re heavy... I it that the When wheels? has added growth this So growth, is breakdown with getting getting with mean of or

Majdi Abulaban

exactly. no, No,

is So that today electrified what receive and say, in terms the to vehicles next go and that growth, And the you inserts, intended XX% count the we dynamic right? where purely growing that applications, that, if are the XX% that and within auto at the three the Mike. years, see quite look on content wheels is XX% is the wheels finishes of lightweighting is to we significant, to of but four is aerodynamic really technologies in

Mike Ward

is. It

Okay. say assuming, the look page, full-sized you the that’s when F-XXX And vehicles are you’re have, more of pickup Page Can electrified on or trucks? I’m – not if some launches new there that XX of at you XX, the GM the next you EVs there. the global lightning on

Majdi Abulaban

going, share-wise, on number is company share. our America, share in is wins XX with where XX you as step two standing this it, on winning of with we’re market our in had if at look you we’ve that industry right? Ford. of mean, in GM, away standpoint of with with from what customers. we’re one capitalizing fair – the a terms OEMs the So going number terms from I of Market look them those electric And vehicles. launches, North about you We at the Mike,

and we’re them in very of North And We’re two one, three. number two number top Daimler, one Audi, in with with America. carmakers the a German Toyota BMW, maybe of think were Volvo, position one,

could argue wheels. the right go producer premium going three, global segment, hands are we’re in we technology And the you larger to that number we down. one global we top the with market of are share-wise, for company, – of as leader while ride. take the think So along are premium a just leader with a wheels premium just we a When finishes, actually

a great with story. us grow going, So as position they’re where and it’s that it’s industry with you to carmakers the think of going, carmakers how where the our enables and that them,

Mike Ward

think the said? XX, talked as are And is it Yes, transitory pass-through, items. you on it timing Tim, the that’s about is. I’m that the that certainly that’s out assuming called one of things Page you what you I

Tim Trenary

Yes, way At it capital into aluminum. value the our is therefore, finds balance our here, sheet. Mike. into the items transitory and its working large, This of and year-end, by really,

here make the the debt of aluminum. absent million environment, cost So a we’re part here to is that plural to levels. inventory the But obliged We want elevated to aluminum to this lower. make the because the investment I cost, that is of higher would in investment at level, I that $XX And refer share inventory as and manufacturing little been is, bit think least the modestly lion’s I of transitory addition point have in the items. that. guess them the

Mike Ward

The near-term so forward as term you – – look the fully B no have issues, outstanding. XX and then Page you you and look maturity and at as some is Loan

you due guess, I only and So you the You haven’t term, then have that at preferred right? near come That’s notes the have that redemption, senior it? right? potentially tapped all,

Tim Trenary

million years, we plus two notes. maturities of the of have two the $XXX redemption be you would are three there half the the and out. That are undrawn, plus sheet. back on so debt they’re of away. the XXXX, balance preferred term years and cash course, All at equity, why senior the undrawn. revolvers, of And That’s plus mentioned date Yes. years the the loan is The funded

Mike Ward

cash far as what as work? exactly And that how would And your options impact? are

Tim Trenary

equity? to respect preferred with the Options

Mike Ward

Yes.

Tim Trenary

to it’s the – stock, Should option so at stock, event. obligation the in be an has it the that It’s it’s wherewithal it holder, optional a the redemption financial so. do in preferred is the TPG. the company, has an extent point all, at triggered, we’ll redeem the option that transpires the years see redeemable to the to X.X Well, first the what time, is paper of of away,

of and However, the to the that fully could whereby obligated provisions portion the not which company that be have its stock jeopardizing financial redeem only condition. do debt, without redeem equity wherewithal there’s would did certain financial since not that we at the to we company’s time

think this is and gets that equity an it’s there’s if potentially the important be I here ever to So thing redemption not issue is it a debt. is but – there,

wherewithal the pay full off does So do it’s company to actually financial so. value a the contractual not to have obligation the if not

Mike Ward

Okay.

would then? what to have pay them then continue so the happen Or would You would issue And equity? on? to dividend you

Tim Trenary

we cash. pay the that be were on. we cash, in if pay continue whatever portion So that will is dividends redeemable case, would to It’s okay? that And my recollection not to redeemed, would be

Mike Ward

right. All

the question one on Just aftermarket. last

that business mentioned you in that aftermarket correct? think, some good I pretty had XQ. Majdi, the Is performance

Majdi Abulaban

performance. good Very Yes.

Mike Ward

it rest And with are or digits? you’re was it the line the that above up we Is growth of double up market in place? Or seeing coming?

Majdi Abulaban

Very Gary. strong,

the the the me far freight we industry, America, growth, have problematic. supply year, especially Mike, Long They’re Let always is exposed chains of evidently don’t say sense. in this you’ve for chains you and China, trend all XX% And kinds Listen, disruptive, this geopolitics, north have wheel supply North on. continues. availability. the things and year-on-year And especially been costs, east you to from container – said, make long very has now entire of got right? have going becoming you have

of the So faster you’re the out except right? you same their the region wheels what the big thing a the vehicles. Europe. can turn localizing guys The aftermarket into see aftermarket side, where for get going Thailand, in couldn’t are And on And make than push of OEM down China to the that’s carmakers a out seeing.

frankly, in they tailwind with the we Our that working finally, continuing technology, with the customers us year with even very with and believe see get. temporarily now. you’re comfortable earlier just it in They’re – in Superior, to very going service And see and to the aftermarket much. then continuation I shifted

we’re it’s OEM a I a it’s chains to with of as geopolitics. and begin long to and manifestation And side for think think hold business stay supply going I in take Mike. is it’s what aftermarket our the well, to going seeing that tailwind

Mike Ward

North – of turn that well? market into the magic American that some can some as aftermarket of Can

Majdi Abulaban

much what That’s the in I mean. do I in mean, aftermarket North remember, we America. don’t

Mike Ward

exports, Because the all of right?

Majdi Abulaban

Yes.

for if region, for is customers. in point you Superior point for U.S. our my being customers? benefit to a reference, look local We’re our what the the in for of of to So local is want

for We’re Europe. region in in

but see to trend chain going American couple of in maybe is of You that, North that years the and point footprint going risk. in carmakers supply ship the My as their you’re today, a not that begin coming aftermarket. to see to localize

Mike Ward

wheels finishes? Just there of these premium have of they larger China. for some know manufacturers and curiosity, out there dozens Do the I wheel these in of capabilities diameter were

Majdi Abulaban

job no. a entered – – Chinese mainly mean Mike, market, good And the in the No, okay? wheels, U.S. only beachhead I in it’s did it’s I in recently base a the of building the they America, North think

Mike Ward

Right. Right.

Majdi Abulaban

you a It’s do the And in presence get interestingly, technology but XX Mike, in has have supplier play view, of all in is much all finishes suppliers our in acquired in when so price, – still a capability world. I within more presence price. larger reason really There’s actually, north now, supplies that, the close couple wheel the price, but – the view saw that Europe. America. for you aftermarket that there’s have acquiring aftermarket new wheels to have driven them actually, North of more of technology – not Chinese Only even the wheels, recently the the in lower only XX, of aftermarket Their capability. come of and the that than wheel down any say in our the nature aftermarket, performance. premium best by in listen, hands Superior

Mike Ward

Thank Interesting. much. very you all Yes.

Majdi Abulaban

Like down, We good a is down. be we about to our feel – going footprint. competitive hands hands advantage, footprint this

Mike Ward

as the And capabilities to XX, Page on sounds continue part technology grow well? that all it the of because and like

Majdi Abulaban

we’re our technology. now. We dialogue the have always been sharing with you shifting And how we view

enabler more is of as that, In that more to competitive an advantage and well. actually addition a and footprint

it’s So both.

Mike Ward

Well, Thank you you. Absolutely. thank much. very

Majdi Abulaban

Thank Thank you. you.

Operator

We’ll Deutsche to Richard Phelan next go Bank. at

line open. Your Please is go ahead.

Richard Phelan

morning good Hey, guys.

Majdi Abulaban

Richard. morning, Good

Richard Phelan

sort that’s my Two terms the rates get year-on-year? to just useful would be respect employee turnover an made to you’ve side. progress of questions and issues been on update operations, Good that of the sort It had. Mexican retention scrap in What morning. with of

Majdi Abulaban

Yes.

January. north year So right, was We Omicron, a I had earlier of would us for with the XXX in tell in you cases. a it challenge

volumes supplement. actually, Our to to team impact in XXX%, stay – where bring had had vaccinated vaccinated. people rate, really we months up. Mexico have We a a have seen in The whereby only home. couple We higher biggest to of is is were – XX% infection we to almost people had

consistently of rate performance itself. in operations turnover at actually overall was XXXX, Mexico And you the years, in in – turnover couple declined. years. But had four rate surprisingly, has lowest and our was have a if actually our disruption last So that look the we

to tends right? Now recall, tend higher than workforce minimum pay to in Mexico, be way we skilled. wage, Our

as So people turnover is wiring in be harness not of prior problem and in have would as big a for wire X,XXX plant. you harnesses, it where life my a

focus improved So to continue it. It improve not is to problem it’s a still. but has and it’s huge, our

at look finishes, and in overall the impressive. of you in if to our product Now premium Richard, mean, line, they’ve I really team what proud what complexity last monumental. Mexico terms at reducing is accomplish. deliver the time operations, size to is as of the to and in evolution Listen, couple at – look I’m that you of the we been the Mexico of quality our had undertake complexity, very while same And product, absolutely scrap, deliver able very, years

So we with are turnover. good

Xx, operations. progress We out we’re importantly, x, on are And making most scrap. those complexity of delivering Xx

Richard Phelan

Understood. Understood. of of where be the best… as rate, would it And sort at turnover end sort that it where stands a of percentage XXXX

Majdi Abulaban

north for year, the year, is XX% entire the turnover the including… of For

Richard Phelan

XX%. of North

on you the Okay. sourced the of a I supplier. is, your I through. all say fully thought second heard XX% of price are call, earlier Russian I aluminum needs And question from sort the that I’ve had understand

Majdi Abulaban

No, XX%, XX%. Richard.

Richard Phelan

XX%.

XX%. Okay.

significant that all have mechanisms you in factoring the exposure. price-through in, still it’s a even So built

address how do to supplier, because… you of in that, guess, that intend I So absence the

Tim Trenary

Richard?

Richard Phelan

be would also Yes, for other competitors materials. same the looking

Tim Trenary

XX% matters. to number tell probably America them to XX%. of Point is But other with Tim. today, need officer full this XX% production, spend levels And away capacity of it’s I normal source arrangements the that North sort may with morning, sort our And the right. Russia. has to XX% you made our from is source one to even having to at just Majdi At that we’re XX%. would experiencing absolutely closer still smelters procurement it’s with status. the Richard, the spoken Russian supplier He to respect we here’s to whatever is

these think buy the May, that North the same America. of with it America the in to delivery satisfy taken the has And through needs. alternative Europe and we’ve aluminum aluminum he our process in that metal I done ports Europe, element aluminum out is of with North with with in So providers to making The arrangements needs enough providers. Russian made arrangements respect of European our of he other is

really So as of that got that this comfortable morning, reasonably I’m we’ve covered.

Richard Phelan

very Okay. Thank That's helpful. much. you luck with that. Good

Majdi Abulaban

you. Thank

Operator

to go JPMorgan. Stephanie next Vincent We’ll with

Your line is open. ahead. Please go

Stephanie Vincent

Hi.

Majdi Abulaban

Hi, Stephanie.

Stephanie Vincent

great so hi, year, and going that’s every thing much for on. Thank given single –

comments. point if the on I Just the buy. I’m Rich your sorry get that made about this in aluminum didn’t

European global? your about spend? is You that that to XX%. it’s XX% said Is just Or

Tim Trenary

Global. That’s global, Stephanie.

Stephanie Vincent

percentage percentage be my helpful. what would very now energy? on And next That get aluminum? your is Okay. all And is question is then these because we COGS, what just is things time, the asked

Tim Trenary

inclusive Well, sense you of of of we will, get report is that as both we element metal you value because a know, aluminum. net sales, you gross then also… And which if the the our can certainly the are sales,

Stephanie Vincent

added… value The

Tim Trenary

right. sales, Value-added

substantially that value true-up. think But of the delta as all, just business a there’s so of And piece of being small and aluminum.

I So to have honest of to frankly, through respect energy, right now, cost that be at flows that with you. throws With metric, sales. don’t hand

Stephanie Vincent

zero know of but their got Okay. quick for X% had a I think disclosed it’s for. example. And cost I and for comp, American energy. they Axle, a search not between just great I

that ballpark? of know the was in view sort didn’t I So your

Tim Trenary

what? is Axle again? it say Sorry,

Stephanie Vincent

They CDP. said the zero, than greater to X less than

didn’t I know of So ballpark? if the was kind that in

Tim Trenary

that at moment. this fingertips don’t Yes. – my have sorry, I just I at metric just I’m

Stephanie Vincent

articles in to given some of X the then more this But And X, lot I which not things you stress of surprising savings, terms pass-throughs course a Jan – at Tier as have you late see X people about a suppliers suppliers, are and the bit maybe about for that next through were Sure. a Sure. February, OEMs vehicles? suppliers And beginning even question back environment, that asking were and other my is asking of harsher about some only Tier some news for actually of Tier with the well. accelerating do has some that’s the the the the going February, bit which part pricing been cost doing cost the in there recognize do the given throughout and under business. on of industry, is

Majdi Abulaban

– a personally Tier what standpoint. you’re last – are probably at X you, tell XX Tier from in Stephanie, level on versed the And well personal would supplier all more Xs the all we are years. seeing suppliers spending I their time base experience, are just cost from with they very

adjusting indexes serious on have These all negotiations, We but constructive they us, very, including need very having be. are tough stepping suppliers, in dialogues to where and are negotiations. with they

be are progress. this tell very any price environment, reductions I LTAs you, difficult dialogues going In and We making supplier. very, are to about would for

Stephanie Vincent

And right. about All my the last question Polish is Right. facility. then

Right seeing, realize Germany. you I’d some guess, include Poland well a in further disruption. as for facilities XXXX doesn’t of expectation your I Is of – have now, lot fluctuation. obviously obviously, You that part said

your... on of You’re there sort Is far it disruption any taking comes. each day as thus

Majdi Abulaban

the of the question the that’s month Stephanie, of week now. the or day

specific No. aluminum we to But shut a down last of believe the because You operations of us, any customers? Friday. our date from issues seen I announcement Porsche, For has had our because saw Have we on you some if disrupted? ask from wiring been in disruption question, in trucking Poland. they listen, harnesses, Poland

be really Stephanie, remains So plays it this out. how to seen

more because But I the of limited very impact, of gets and see on you’re obviously, makers, first the be on in now, as are entrenched, if parts foremost, be as really then it logistics the would think concerned will business. the And to Ukraine. other you on and first, going impact, for we car OEMs dependence their it well.

Operator

now for any today’s to And ladies and back remarks. gentlemen, session. conference Majdi turn that to I’d will Q&A the conclude like closing

Majdi Abulaban

be May. first of ask we the hesitate and might quarter do a participating comments to on forward XXXX today’s in good, questions day, Have out you Thanks, In Please results in earnings everyone, our reach you everyone. to not have. call. or look safe to for early please for updating safe, meantime,

Operator

Ladies and thank your that participation. gentlemen, you will conclude conference. for We today’s

You at this may disconnect time.

Superior Industries International (SUP) 3 Mar 222021 Q4 Earnings call transcript