SUP - Earnings call transcript Q1 2022 | Superior Industries International, Inc.

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Operator

Good day, and welcome to the Superior Industries First Quarter 2022 Earnings Teleconference Call. Today's call is being recorded. And at this time, I'd like to turn the call over to Clemens Denks. Please go ahead, sir.

Clemens Denks

Thanks, Anna. welcome first and call. earnings everyone, morning, to quarter our conference Good

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

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

presentation. found over the in turn I'll also to update. discussing US US provide items business measures can Majdi GAAP of certain measures a the this most to directly call measures non-GAAP With not exclude to be these 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

with call highlights. for our will first everyone, today thanks, on results. and joining begin the review Clemens, X to I Thanks, quarter Slide our

environment lower been margins notable, pressures. This, on profit incredibly strong lower continuing levels, and solid is coupled while and volumes, pre-pandemic profitability on generation. with and generate production revenue cash able Most delivered that growth with achieving volatility volumes. operating EBITDA out with Our an have team navigating challenging par through we to market, strong and results, inflationary of

growth first declines, X market to reduction recoveries the saw ability mitigate ever-persistent inflationary Ukraine on Slide combined business. during our Slide as the increased details the collaborate both our slide, quarter, we pressures. declines our region, quarter from last resulted operations, on which extending mix and per year. Here, industry my quarter debt cash teams in environment. the demand of conflict. larger in Despite by we summarizes significant first these supported Europe, production for our market by compared in the flow suppliers premium X% trajectory the levels this wheel. underscore wheels, cost favorable fell of and production and operating a with invest basis. delivered industry X These to content adoption significant the growth specifically, another XX% to weighting our have Further, customers of decrease was continued with wheels impacted and performance as comments in enabled We strength and from by above technologies light our to results Reiterating finishes. solutions expanded to over well price continued current a quarter to industry on first million operational impact supporting $XXX capitalize us the net further premium continued of

of by shown many production the that that side on substantial further the expected, deliver supported once to performance and incredibly to same expanded profitability level. we earnings earlier XXXX, said, we have market upside positioned inflationary begin year. in Superior Actually, in begin -- of With our In see should begin over to volumes production well recover and and for industry the fact, the challenges the industry environment. exasperated our Ukraine tailwind growth growth this depressed chart left than to against anticipate is recovery continue impacted conflict heightened the strong

X. Slide to on Moving

stay to initiatives. on on creation continue our profitable map and value focused growth consistent through operational road our excellence execution We

in commercial team's increases through inflationary to customers by with price, cost discipline while reduction recover critical working identifying closely has cost been solutions. Our offsetting others

progress work our and pleased great procurement we ahead. I nature want our While cost. supply clearly the with same do in to of proud collaboration and been a aluminum the type manufacturing and I of relationship leveraged of nature us. and the time, asset more has use supply to the which have manage the At suppliers very team quarter, you entire recycled the team for on teams, am has you long-standing our how that customer regional across would our a the our supplier tell base base between good The our increased share of volatility responded. our processes. collaboration we is been and I our efforts with example Superior are have with has of diversified this in customers, manufacturing fronts enterprise,

operating our the diligently offsetting deal Another had war. have based on more in the aspect volatility to goal production with volumes is we challenging clearly continued ensuring behaviors planning is This a team last-minute and Europe the order the Ukraine buying of on with. focused From volatility heightened standpoint, have of that customer levels. quarter stable with

releases and engaging customers to disruption. suppliers for also are last-minute on We with cost with extreme recoveries mitigate production

excellence short- while through initiatives. operational and enacted also and internally, improvement both flexing longer-term costs, we driving labor structural strategies, continuous enhancements Finally, have

The of premium evident on Slide in with illustrated X. these X has growth, of demand and macro technologies our results This is In profitable is wheels actions the to finishes. growth on product weighting over market to consistent portfolio us terms for our of trends driving capitalize differentiated all for over technologies years. of continued last larger enable light the increased collective and capabilities

collective customers. which to previously, effort since sales, demonstrated a our are more I growth the per by and with maintained on in at contract wheel. meaningfully net stated have normalized These while a first industry growing decline shipments EBITDA XX%, supported despite execute growth results on in incredible to of we levels, pre-COVID terms accelerate ability us The double-digit XXXX, gives recoveries in quarter the the As also production environment. and margins reflect slide confidence in strong executing content XX% negotiating

Moving Superior the highlight supporting to tailwinds capture growth. secular success how products our on our to position for innovative XX and Slide help

We the increased we technologies right the portfolio meet industry and have of seeing of comprehensive have show one we and in to our mix the offerings the are demand customer needs. most for premium breadth

utilized further LYRIQ point highlights launch the for of a the Cadillac with this Our being and both capabilities Silverado quarter our platforms. range on illustrate

provide to on to an Moving update XX our sustainability initiatives. Slide recent on

trend carbon goal manufacturing progress in able as alone, further strategy to front, by environmental footprint making our we to capabilities. RX In XXXX through were neutral achieve XXXX. a carbon of our we development be on and X% continue the are to we On expect enhancements environmentally-sustainable towards work our and this reduction

team. multiple On held well guest by and and Superior the we recent social as focused and interactive sessions the breakout and successful front, on highlight across entire locations of diversity workplace speakers fostering as Understanding the attended event within our featured event training This Day inclusion sessions.

a Day outlook our homes Ukraine. I many humanitarian their to In of address proud Slide hearts in Ukrainian our migrants. the for they support addition contributions of I from migrants on launched conflict year team and to suffered for now XX. very our are Understanding, you Poland will XXXX we as will matching in open campaign with company that relief tell fundraising the who of we full

our benefit of with from based million, recovery be high America to flow maintaining mid-single-digit in million. $XXX are for year. to cash efforts XXX mitigate to anticipated growth mid- million $XXX continuous inflationary on single-digit is accelerating of further headwinds. We range cost guidance $XXX North and the operations the between includes in and expected Europe improvement from to current This the EBITDA the and growth in assumption Adjusted

year. our teams very visibility second that, into currently production the Tim. continue XXXX. over we with delivering of of results In quarter. momentum Tim? increase expect as turn the head this has we been plan And will and work fairly to recovery While solid I to further of easing begin half closing, We to I for am hard the headwinds in call the towards proud to in limited, industry the

Tim Trenary

fluctuating margins, we Thank our operations on global general pressure aluminum exacerbated that, of to very be Having you, Majdi, make business. is year a of for vehicle morning, a delivered cost schedules. Superior demand recover Good recoveries lumpy vigorously cost margin, alloy the and and the by diminished procurement continue of reflection and have margin cost our constraints the these environment. cost company's preserve energy, to Commodity and by light extraordinary chain we will and cost With a operating especially increases, EBITDA is no the pursue build may said supply these X% customer as difficult costs. inflation a ago. same from and assurance ago, value-added nearly to sales discipline. everyone. recovery completely respect This timing This there The declined to will to inflation, the commercial, customer and that a able notwithstanding of inflation the XX% is be and year

notwithstanding in the XX. the on compared year right, the higher from earnings per million $X.XX first XX, year-over-year by the a period. $XX period. primarily cost net of favorable the the for Net XX.X% in of X% offset We year euro, of vehicle compared share or summary. Slide quite year Slide diluted period. per prior to prior activities million, to management. prior adjusted normalized for earnings all sold $XXX period. compared $X.XX period, period. the be up To million light left, primarily $XXX aluminum million, compared quarter. therefore, to first debt the sheet about diluted in $XX far To provided to in flow. Free compared and first increased weaker increased million prior capital XX, prior That's than overview the balance up was our sized year is The XX% Liquidity compared Net at from million million the decrease this believe down the quarter the or to is $XXX capital vehicle this this to greater period. in An of $XX and for We EBITDA at compared at incremental the financial year in the debt in aluminum mix. by therefore prior sales end was sales somewhat million, At the million prior a quarter million impact and, markets. take depreciation for at is on million us incremental period. company prior to year the the for compared prior Were income in XX, the decline On to Funded end in used in million for on was million or sales as prior cost million not payments $XX come $XX Slide is the aluminum period $XX recent of at value-added about of to declined prior period. $XXX year the on can X.X% investing We end The activities the product Let's activities quarter cost $XXX prior is accomplishment in an year is environment. as Cash million quarter partially financing quarter to sales. the year year-over-year to decreased build fewer decreased period. Slide elevated look in net $XXX the $XXX in aluminum, prior at structure as $XX was of to net history. $XXX in working in year $XX end. quarter euro sales non-debt sales to pass-through, million spending less been euro-denominated Improved debt found share more, company's was XX%, net $XX aluminum million The The cost million Slide the period. the to capital in aluminum due the larger in depicted EBITDA normalizes. Superior's cash was reported profile income compared pass-through $XX year $XX prior debt maturity investment investment results first million million flow sold the operating year-end quarter the million period. XXXX. investment a bridge offset a wheels flat Light than debt. quarter normal. a substantially will million from Value-added quarter year $XX year XX% the this in at aluminum, quarter quarter cost level X.X XX. that lowest Cash compared the improvement Wheels weaker to by same the flow lower back $XX compared ago. to of the markets cash Substantially down The million increase present margin XX. of year were the partially would from year in our quarter of cash Slide about net by was primarily have $XX period, the has production the was mix to

agreements into company May leveraged swap in are million which capital markets, no is credit compliance market. anticipation have revolving maturities near-term a covenants. the recently The interest undrawn. loan entered of of The October mature in facilities, in rate all finance refinancing. We were funded with especially however, of choppy, debt, $XXX and XXXX We

isn't of performance. and the the expect Slide refinancing company to out to we anything the stay this expect time is banking pursue right. close company the We our financial XXXX therefore, do with at prove XX. is The to to when and, continue Fortunately, to outlook And the of on compelled time. improve a operating financial company's partners time, model passage

are we noted, Majdi reaffirming As guidance.

sell to wheels. XX.X XXXX, we to million expect XX.X For million

This be We to $XXX range the to are from in from and $XXX to $XXX about expect sales the strategically our technologies second advance up and $XX to million of of million capabilities included the expected $X.X $XXX as up net to $XXX the throughout in this in of adjusted from sales $XXX expected expenditures to be million. $X.X expected tomorrow. we to million conflict flow in and EBITDA, invest billion impact to cash million Ukraine to million the trends value-added The portfolio million. of billion in operations, quarter range secular of continue capture outlook. our be year is results this finishing Capital

the We XX% it the for year. was To XX% to work done. is continue model to not a rate good tax quarter, sum up, it but effective a all

cover inflation Our customer costs continuing objective is to with recoveries. extraordinary

with I to our and company's said recoveries enterprise our discussions the continue improvement the expect cost to year. We extend supplement customers taken recoveries together We ability the earlier, from may discipline with operations position Superior to cost and a may commercial, remarks. throughout improvement programs. significantly intend making continuous lumpy. to demonstrated operating as and should be to the questions And maintain these light This, prepared evolving technologies address This you leverage wheel procurement when benefit to vehicle put We're build have. the our in company's and from also portfolio. concludes in our business the happy any recovers with product

operator. the to back call the Anna? Turning

Operator

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

Gary Prestopino

Several questions.

greater, wheels, moving in categories? of us year-over-year if that in categories, some percentage your all, we of XX-inch these idea of to especially each electrification, diameter of and or large those Majdi, the Slide portfolio weighting, First ships could you are could each XX, X light premium finishes, to give refer

Majdi Abulaban

Large Gary, laid wheels if XX% the growth seeing of more less you to is finishes or look inches XX larger. now in rates, It that was continues these make or prevalent, emerging are inches to to that's technologies. you specifically each current wheels. exact in the actually of be the diameter technology. customers is as thing XXXX, adds Gary, now lot where our but also forming inserts use than strong, only the even very quoting not larger. aerodynamic. -- earnings the wheel, XX% you now also more flow we're a and of call back This growth quarter. XX I'll requiring we're content growth north projected businesses you wheels of an give is When we on lightweighting numbers, last premium One our out The recall, of lot of technology. I are the that very but strong, tell actually, would XX% year-on-year. well. in a

It's So prior these call. numbers -- our the all on segments. exact earnings but X in I'll give you

Gary Prestopino

be this to a if explain really I'm That knowledge here. the chart, little it And of then X trouble our on and I'd that Total but market chart, over Page here? growth I'm having just you how down appears just understand between would go helpful to like understanding with data we growth the for bit market. it over -- that X%, in North and supply trying was America to that break does base Europe

Majdi Abulaban

this So north you market, growth units But see last the issue America and North you'll at have that North that. a North about sales. both XX% if comp substantial actually year, above delivered in Last with growth above quarter, you you'll Europe generated onion of America that value-added was market, year. and on peel market, see regions, on the America

on there the America, So was a is in the the and pull weighted big direction. content opposite North in comp

If look is our the best at our which year-to-date market, measure. of growth you

of when our look accurate. look is the market more at you is think I always growth data, Gary, look the annual always is lumpy, quarterly

very our North at in So That's our over market. this north it's best if in XX%. strong at anomaly, year. quarter you of is LTM, really just But reality, in coming growth the an of look is X off comp market quarter it's quarters America The measure. the last a last very,

Gary Prestopino

that then impacted some being And us of the you in you're by could conflict give the specifically just ways Ukraine? maybe

Majdi Abulaban

it's don't with impact a have any -- Ukraine. on Russia little had We contracts directly. it's directly Actually, us been or

those contracts either don't We in have countries. presence manufacturing of no locations. have with those suppliers We in

really seen, only as the we've Europe sudden XX% of those last from customers March you The in the -- standpoint can a are X dropped contracts us drop supply weeks. in our outside not the for is imagine, and impact our countries. All change, are

So see impact a where is impact. from that but easing Gary, Europe would going bit the to a second seen remains be in from second be our that the overall We It half the limited standpoint. growth quarter, standpoint. in

Operator

will next Deutsche Richard Bank. take We Phelan our from question from now

Richard Phelan

the Good industry quarter considering circumstances.

working entered detail second First bit you've recently of factor that payable. then in just And accounts question, in could some improvement balance item? relative big what a terms specifically was now I a on was just of for changed that strong there free agreements the that's is wondering it payable just that in business days? The like anticipation you I'm means sheet big what and quarter. of flow capital it was into jump you going exactly more a a mentioned refinancing. was looks something little there? permanently cash wondering provide obviously, Is and if swap good a there plans question, in in terms on, the

Tim Trenary

to were payables unusually question, respect equal rhythm year-end the did the low. at With They of sort XXXX last not the of business. the

That because manage recall that? to that you year may we some the started in of was Now experienced fourth QX. last why we was down in build quarter inventory

course doesn't of buy. it company inventory a as down product managing So buy build, much in as would otherwise the

payables around in the way when unusually turned saying past low of what first X So about there. on were we that's year. okay, And back that transpired buy there's at quarter, is year-end, the dynamics the this then

of payables also of quarter build a is aluminum. much now that have buy in We and the

nothing quarter to compared you flow of than answer first is payables if 'XX. provided that. quarter-over-quarter other at Does first look the going in unusual on the of the the questions? in the by So outsized 'XX growth There's your that results, cash quarter

Richard Phelan

clear. very that's Absolutely,

Tim Trenary

respect do not any rate question, With have impending your maturities. to we swap interest

so XXXX the a interest of going rate behaves. is in would date has how any time and and between future, see and it into impact more rate luxury of company the whatever have of the in I mitigate increase that do interest and we in rates capital doing a we'll further the when interest luxury, how light the of markets series agreements we In increasing refinancing. environment, industry it deemed the accessing of the Clemens the behaves in anticipation our out to is But appropriate today. anticipation swap of so now might to market not-too-distant doing So enter than optimal the

the move, a was it any refinancing interest So of burden if refinancing. sort and preemptive to a will, you to after company's reduce facilitate

Richard Phelan

the And you XXXX interest on those swaps? maturity that's -- said rate is

Tim Trenary

down. stepped they Well,

So and $XXX at I we started to $XXX steps down million it million, believe, XXXX.

Operator

question -- next question our from take follow-up Research. Barrington Gary now will from Prestopino We

Gary Prestopino

yourself of recycled to quick versus differential just I much question have a the aluminum Is in cost a recycled or aluminum. on of the there non-recycled? client

Majdi Abulaban

It's as does of depends -- time depends has And a really with goes an on is There been discipline. it lot around. been this delta. process by, It require It Gary. initiative. a always what happens commodities, always

bang big for a it's the buck. Sometimes

being of In marginal. Sometimes ingredients think aluminum and all north it on as the opportunity for a it's this you about in It us metric work, some aluminum takes it's go big case, takes collaboration. $X,XXX, some and that per actually. work ton

it So right us. now, stands where it's benefit a for significant

Tim Trenary

Well, environmentally also conscious to might that is Gary, I thing an do. add it

footprint. an to to to the it's a reducing for So opportunity carbon contribute the company continue bit

Operator

will from We next take Benchmark. Mike now our Ward, question

Mike Ward

this. apologize missed what business about talk quantum I doing per it's that does if aftermarket the in that does European on you And the impact have? of have How what business? and impact I on unit Europe? the Can

Majdi Abulaban

been good know, the supply in is has from a market, the market Mike. us, chain volatility for dependent on highly has business imports that in and the Far a of East, the balancer as aftermarket challenge. the you general So And been

us, if look was at you as us, strong last at ahead quarter, us, for Both year look on higher business. of been it's From very fairly for in of OEM content wheel positive. have volume, solid. side OEM per for terms the you it's to the standpoint, year content our of be been a last big, year year a this tends that So But the big side. your is the much question, a

Mike Ward

-- a than we that content of the actually little is is because performing bit So a the relative understated aftermarket the... see on better basis

Majdi Abulaban

basis, the much European on it's the side, basis content content on a No. the performance higher as side [Indiscernible] better on market On volume well. the no, OEM a aftermarket

Mike Ward

the in did unit basis, relative a quarter? on aftermarket volume outperform the OEM the So business

Majdi Abulaban

Yes.

Mike Ward

down drives the is unit we actually because the business. relative content that the in the understated per strength of see, to per So aftermarket OEM unit business the blended content

Majdi Abulaban

always yes. It this question. It always a at good is, is It's point.

Mike Ward

but can tell, don't, I margin what the in you -- to the your American from the from the based I you had out, contribution your EBITDA used it it gross since in know Now probably North operations, break looks America the was quarter performance you've best just North on like XXXX.

Majdi Abulaban

That is performance correct. I'll would has let are the Tim Mexico. best years we're Mexican add know, to this. had focus X on America the us quality in our The progress. and North for multiple But very a we've fronts. in that with tell as very, performance pleased operations you delivering I best been you

record Mike, of the each general, commercial on side, team, side cylinders. enterprise on X the executing [Indiscernible] have plants, both The are level procurement level, delivering side scrap. the and We in manufacturing the

very situation team. obviously volume quarter. Europe -- numbers Tim, something? that Europe want add challenged the are proud of to very with very the in very, Just you challenged the do

Tim Trenary

on Majdi very has what Majdi execution Well, be to say to been region at down Mike's that that Michael and company executed joining able about done of comparatively performance. started the American started region. levels picking to a on, that activities to satisfying. Majdi path up the the really of say improving a I'd underperforming. I'd the North the has the of ago attract, was -- this all brought also collection nice point company job company the President prior was the year Dora, really of Michael Mike,

Operator

in questions at further time. queue the no are There this

Majdi Abulaban

earnings in our persist, quarter. the by in wonderful confident and value. Thank to generate performance and have again ability encouraged a you We're you. while participation We appreciate shareholder operating are challenges And extremely joining today's your day. first call. headwinds our for we overcome Thank in

Operator

conference. will that gentlemen, conclude and Ladies today's

You may disconnect. now all

Superior Industries International (SUP) 7 May 222022 Q1 Earnings call transcript