SUP - Earnings call 1 2023 | Superior Industries International, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Superior Industries First Quarter 2023 Earnings Call.

We are joined this morning with Majdi Abulaban, President and CEO; and Tim Trenary, Executive Vice President and CFO. My name is Carolyn, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand over the call to your host, Tim Trenary to begin today's conference. you. Thank

C. Trenary

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

call morning, earnings Executive our Superior's by presentation, on During Majdi this Investor website. which, our referring the President on along earnings I to Abulaban, am with the section our Officer. our Relations release, joined available we is of will call be Chief and

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

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

Majdi Abulaban

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

enhance flexibility. We in maintain on generating focus with continue cash while are first and our environment growth a customer tough pleased financial our strong to We results. quarter recoveries delivered to

I'll was Further, one recovery we said, by constraints portion by North discuss and remains fleet declines to ease. said, winter X% and begin volatile, limited companies, Europe has in growth America we grew quarter, wheel factors as and to rental content sales driven significant we FX-adjusted modest in production due have industry by other in more aftermarket chain environment per America industry North a in Although year-on-year an in the to That sales in supply area of Europe have where seen seen later. our Superior content. value-added the XX%. That a

we stay performance and discipline to while our focused continuing execute continues commercial pleased progress made on I portfolio am what team we can to control, Our operational with the of have especially input to cost which [ in unfavorable ], sales supported align headwinds shifts and value-added has mix. in our product impact with ongoing continued real pricing while mitigating growth macro strategy. the

sales over despite months, levels, outgrown shipments. [ the the value-added result, near remains EBITDA the unit in lower larger XX $XX last have our of high markets. Adjusted a historically quarter As ] million first

year-over-year, margin first XXXX. in contracted a of percent due we to However, of quarter as largely recoveries the higher captured sales substantially the value-added

In actions addition, necessary to portfolio our enhance profitability. to to we take continue long-term support the

grown, XX differentiated Further, shipments. out. of with demand portfolio year-over-year grown play EVs. dialer lighter has as large to per continued for now XX% our up for secular consecutive to events for Here, that at of XX-XX and We to underperforming long-term capture we our our as are taking our those supporting and to our this secular are refer cultivate process. Further, book are wheels has over wheel by making Content growth. offerings wheels parts has the shift proven quarters business to a bolstered that close strategy look to

content lightweighting roughly XXXX. since XX% annually, increased Our has

net over strengthening in level debt the million, trends to operating QX, capitalize a management these $XXX taking to solid cash cash X we disciplined delivered our has to million working secular flow, generation, capital also turn, expenditures on while in $XX lowest profile. In financial translated to capital in Our and efforts years. approach reducing

concerned. see what In 'XX, remain remainder the we industry for we of the in of terms

lower with mixed the increasingly are Given challenges North macro in coupled we Europe in uncertain and an aftermarket America, environment. sales seeing

are We clarity within until more the prudent is we year our be trends conservative it full outlook. have believe on to We regions. narrowing our

sales As narrowing such, EBITDA we value-added are now ranges. adjusted expect limited vehicle and production markets our growth sales, our in and

remains disciplined lower working through this. which Our guidance management we Tim plan on cash spend. provide to unchanged, CapEx details flow maintain and more will capital

to on X. Moving Slide

is platforms Our the the finishes. sophisticated some as strong see on with launches chart. position towards on wheels premium of left consumer of has preference this premium recent moves continued larger, you more by This side evidenced

the growth on content pricing has with we aligning in see in been of improved product wheel. content have pricing, resulted per business. Importantly, with right substantial This the as customers input of in successful our chart, premium you in can combined with side cost growth

and content XXXX. and wheel Fundamentally, has continue portfolio of underpin compared by profitability improved our our growth expansions to content the discipline commercial per long-term XX% Specifically, business. contract and trajectory price to our of

perspective Moving some give on environment. X. to Slide the wanted on to We current operating

previous year, recovery yet This the levels. We improved headwinds. supported below XX% remaining growing are industry volumes, seeing supply has global still the with production by easing over of pre-COVID chain QX been

operating X. the for local-for-local challenge Now aftermarket supply unfavorable having of said environment, chain along shorter continue decline persistent and that, secular volatility, with mix the volume industry leverage preference for in That premium Slide well Europe. in to to to the demand our we particularly North through inflation continue positioned said, footprint wheels. On uncertainty to be America and

wider you during key XX%, relation our to Here, XX%. almost with production quarter. grew where industry industry growth operate, global our production the customers growing see in among In regions can we the the

North main Europe, earlier, America and significant of growth declines where sales decline inventory, in noted been here. decline warm saw affordability a with unlined ] the right value-added a consumer In FX-adjusted quarter. summary, winter gains, mostly has as Further, post-COVID As driven mix largest aftermarket for the our North is higher production GM Superior quarter. customer, fleet In the seen we in has X% a side further growing by the America color our the driven trading currently mentioned [ chart, during issues. and content. aftermarket general has low by X% here, sales the I wholesaler drivers are on Adding

industry are recovery. Moving on betting X. not to Slide Generally, on we

action. taking are We

to several these We our plan both our macroeconomic execution expenses. laid launched of This and improvements response Through the initiatives that administrative overhead has our to priorities we portfolio chart, business. drive operations. overall have this begins impacted to out and on shifts reducing in with

Our and is we way. XX%, our well target here are on

further restructuring approach profitability. focus a taken XX-XX the continue have us portfolio we on take to the We charge prune quarter. Further, in to and our use

aggressively will expenditures capital working optimizing generation. to cash capital continue We to while manage strengthen

our to Europe aftermarket For in example, inventory. consolidating reduce warehouses we are

reaping ECI we offset the in to ] short of being periods. capabilities benefit Green our of In and implemented we matured in ]. and have terms voyage CapEx, initiatives with are are on business, focused Belt investment [ of impact GM inflation. investments [ improvement the are Light our payback continuous Bus

across Finally, plans flexibility to support business we the portfolio. in our driving are

plants all support the example, have X-inch our in continued am to manage how I teams production. In headwinds. we quality, now operating and of through started Mexico our wheel For year how can pleased with

on story content Our is are our progress we and making getting playing right. pricing out, great

create forward details call on our I strengthening pruning shifting to on is cash momentum better in to our the now to results. building Tim shareholder We will Tim? quarters. And our and portfolio costs, coming to focus value the ahead, provide turn on more over flow. this look optimize Moving to

C. Trenary

inflation XX% morning, automotive constraints higher recession has now perhaps good light conservatives. The you, and Majdi, somewhat. and new The chain endured pre-COVID consumer industry in our vehicle returning prices, everyone. the below is costs, significantly moderated the about and somewhat recent improved, financing production, higher still markets. to levels production, the although Thank barrier Vehicle is supply pre-COVID levels vehicle

have light to vehicle the adjust manufacturing and production. and level of to opportunities pursue We our continue will cost reduced administrative structures reflect to

$X.X force recognized payable This which of larger part million. overhead reduce million a from quarter, arising the to a by administrative $X.X manufacturing we in by throughout force costs This reduction in annually. reduce a and reduction annual $XX charge is will initiative the million company, approximately

$XXX quarter, wheels. of aftermarket X% standard which decline to XX, $XX in the with consumer prior because due the the prior for business, quarter With million to of and from unfavorable a per $X.XX million period diluted sold million the was million tires net quarter a quarter diluted North is financial inflation than first quarter to and year higher usual increased vehicles period. year-over-year have $X.XX to and fleet the first in period. order compared first X.X to summary. year of to prior Page production the and net sales units, concern. million $XXX marble look of Let's income the $XXX year of the in soft earnings to were value-added year units down in of America, an $X loss very decreased mix Wheels all-season share share loss have period, or cards is Net the million tend compared sales at respect for of for Europe, incurred In $XXX of or recession to weather, premium in compared prior use per the increased million a quarter

for year inflation million This XXXX declined Cash by quarter end prior reflects from net flow lower payments activities for of financing to is $XX by XX% year-over-year far was decrease is to year million. quarter XX% to Cash March operating $XX $XXX Page was XX. the the margin compared period. to contributed in quarter sales EBITDA of the More $XX declined Page the first margin was bridge. period. XX. decline of is this of at X% sales performance debt quarter from quarter XX, The of XXXX. real of compared or million to as in company's million on Fewer Page cash Page the is period. for $XX structure the Cash adjusted to since EBITDA be the a bridge million year net period. compared quarter Funded by free in Adjusted and compared to million. sales metal the year $XXX compared first for overview $XX The costs weaker a decline. An overview therefore the $XX $XXX the of year earnings adjusted notes XX, increase in prior $X $X EBITDA balance prior euro-denominated was on compared cost non-debt Free million a first $XX wheel due boosted million. An the lowest of on by of to year found from the increased to increase the year. the was the million passed capital down to company's all the impact in cost the The prior quarter prior to $XX million flow the and quarter capital $XX used aluminum the was partially period million. On prior to and XX% year-over-year customer million from compared at higher quarter and content. has the may The customers million, premium in of decrease to attributable Value-added investing The compared to prior The ago. $XX recovery improved increased sales year to debt XXXX, significantly million first was year cash on right, end, $XX euro. flow through aluminum on timing was from the quarter or decreased the million, prior last an To working XX. was year than activities activities $X Cash period. decrease timing prior million of recoveries. year period. million sheet the currency net the of

first the credit XXXX, under liquidity, As XX, is the on debt XX. as Page revolving maturity $XXX March quarter, was including of facility of profile end the of depicted million. Superior's availability

at Our revolving quarter credit undrawn was facility end.

the lower with otherwise in of $X Annual about anticipation swaps are near-term therefore, cost the to refinancing past be. The Fed's of million last have of outlook loan debt. of financial build. loan the and full we year because significant in the hikes. money These December The fixed no all and of it cost Page interest would appropriate pivoted funded than is, We in offset on XX. SOFR-based cost is late rate million entered OEM recovering price on $XXX covenants XXXX to volatility We compliance company's a in and negotiating enjoyed lower vehicle expense success ongoing. of this interest term year are in inflation, rate ago cost schedule XXXX inflation are less increases negotiations the maturities production year absorption into considerable light

While given the of vehicle North gas anticipated seeing in aftermarket softer adverse of come energy does we cost on The Conversely, America has America, is North participation Europe the far negative remain wheel energy, in cost our and dramatically, down normalized. in an it elevated we are has sales. electricity in platforms, than impact on Europe.

are recovery We in markets, and $XXX continue respect backdrop, with higher sales million to new vehicle our XXXX million million billion of to economic and of narrowing $XXX wheels, significantly XX.X because value-added to we natural concern ranges higher consumer sales part to be of uncertainty. increasing light million and of $XXX of inflation vehicle to in to somewhat our $XXX pessimistic costs, to adjusted guidance net million for XX EBITDA $X.XX $X.XX production Against financing million. billion, this prices, recessionary

to [ lowering million. flow expect to million to $XXX capital continue We expected million, approximately expenditures $XXX $XX operations ] of while from cash

to We questions. year. In macroeconomic your the we remarks, wary Majdi This rate are solid uncertainty tax closing, a happy in of I and the to for effective take delivered half continue quarter to our and of prepared XX% the are a XX% year. concludes but back model Carolyn? increasing

Operator

first We Barrington from line Prestopino question Instructions] Gary take Research. will [Operator the from

Gary Prestopino

the Couple you just that you to out to when you're portfolio, could wheel And understand lower-margin wondering, back, more here. be overhead of point? said into that would step just put us doing just maybe what you're believe I'm some mix willing what production while pruning a this some #X, questions Majdi, about the there. up talking you looking or capacity. lower to help Or you're had prune at I is

Majdi Abulaban

It's an excellent question.

Let you're you it. and intimately has I on to you been team has me this team executing the the What last backlog what give X focused just back the think pruning, maybe it's familiar if first go practice, So do with this. and and color fundamentally more Gary, of best for on been what this right? years,

We have obviously, getting right. base, cost the get the price to right. been right. portfolio the working hard and working been hard get to and footprint We've get the to hard to customer And working

competitive not don't my maybe is very, to view now in more the learning fruit. have granular products are view, our we we we deliver in in no We've very things we because about, the in I see what call in of industry. well. the that done industry all the an We hanging times, Poland many my So those footprint is get talk the said that I've best you believe of the know. and opportunity And I most we're -- with we production as business. Mexico.

has -- right price the business. pay has on to return to So deliver our

delivers XX% level looking your SKU one portfolio backdrop, that's what more at So of your with with right? XX-XX the the closely Now XX-XX, is granularity XX% and of profit.

about time, We're we and about concerned returning this, to at visibility right? pre-COVID Now about while same the are concern volumes not visibility, levels. concerned

improve customers to underperforming. we get without as see that detail, we don't And [ And where on have right. ] with going right into when things had an done go this products as visibility. see also the this opportunity we opportunity an well to we margins dragon is Does help? have So that

Gary Prestopino

it I granular does. But go into I Yes, you mean, know detail. all can't right. much

look is looking of as the to that ended? going you [ savings numbers? $X.X are in $XX $XX that as something be annual payroll more -- million So your as the show target, more like back does took, back will that's that an impact of year ] being million half Or cost we start well would reduction million -- this to QX in immediately annualize or in that up that

C. Trenary

in exception. reduction immediately million without starts $X.X costs payroll here almost The

already So benefiting extent some that. from we're to

starting that. as we're basically benefit reduce in. a being objective, to getting So, now, million our outlined, of $X.X That $XX part administer manufacturing is the of The burden. layered million, broader this is Majdi a

to in I payroll the first some $X.X reduce million over just So the above we actions, even of a and already have quarter expenses and mentioned. nonpayroll number expenses taken that incremental

the strive layer little to while it's there. $XX the So be get during And going to quarter, million, tough second achieve in in this we to full will a year. the frankly,

quickly, basis running annualized on get reasonably will an immediately. We but there won't be we

Gary Prestopino

Okay. that? to mentioned jump. of is what on or got start level, thought of the your think process, North much you I'm with the just that I'm America, company. to that that profitable I've to needs and the be spot But And XX.X up impact vehicles kind at at That's wrong, production, with at to there's mean, EBITDA? don't there putting OEMs production, sweet idea in pre-COVID I kind get comment, that an to a out back you Throughout I scarcity consistent helpful. reading more of they're a I America that levels least least because are seeing about guys possibly then get of them. of narrative, it having concur finding one is vehicle unit more start positive cars to I producing growth fact start maybe you in think for I'm million do what -- I million, just North mean the to would going highly XX trying mean in the in

Majdi Abulaban

some about third the piece the being Depends described. is vehicles been believe it so which there. them, to this is the the demand where lost? here impact have is solid we so that out, tough frankly, has environment have more eventually I I narratively expensive had get actually, pricing volumes Is in seeing for still was on Gary, us. you will our fleet extremely Mix these it business fact well vehicle up. that grow Eventually, a But back We these all the talking that it very America. just fleet cohort are will a a Europe our surprisingly X aftermarket is North do in the dimensions X% discipline is the we emerged pent-up to recent friend. from do on it quarter, growth And Or play from assuming in and eventually, levels, about North did will the mean, mean, still standpoint America standpoint. time. Gary, question friend. I not subscribe at will The we're content old what take it in not old is months immediately, demand business the to. industry. And we're in OEMs connection clearly was catching buy people right? sales normally on on that an when

is So we'll us what what hearing from see. you're

are and action best. so the prepare for go and cost take We worst in our conservative we the guide can hope on being that and ahead for

Gary Prestopino

Look, jump. got later. Okay. I you All I look right. speaking to to guys forward with

Operator

Mike will Ward next We question Benchmark. take from line the the from

Michael Ward

things. X

-- quarter you bad First depend it there and does Europe, off, part there on trends. then Germany And there's the in is fleet. was in the of about big fleet. seeing first I'm in what or some especially I of America vehicle? any Is difference fleet for A in North just nonfleet, you're fleet growth and content any for or the curious good thing, second the fleet know difference the

Majdi Abulaban

Yes.

larger premium. lower So on to to be there less SUVs. big much content, fleets premium, difference, passenger less an overarching just cars Gary. They tend or is be a tend more statement, Generally, actually, less wheels

significant is QX, of We came I IHS mean, look what north we're obviously, north in strong. in of a Listen, XX%. So yes, XX%. in mean, Europe Europe, at came seeing difference. there numbers, you I

one in And is as at that mean, affordability was these reasons have segment these reason so year a as a more really closed for and issues to that maybe it has price. had inventory the on impact of wheels surprisingly the we we winter, out And us. that wholesalers our the high significant sales the of where aftermarket. I is it's warm is So both case, a the

in at you see And right And that, is look the So ]. market would for North overall in Europe, okay, we we X% America, the X% X%. because have we I the and see do not if Gary, don't Europe offering combined say mean year, mix recovery. the actual IHS if forecast [

for guiding very, single we're low very So a digits.

Michael Ward

looks in Okay. -- Germany, out they started And strong the like that And that's first is in just… incredibly it quarter.

Majdi Abulaban

It says correct.

Michael Ward

that's continue Okay. you're the half or... going in to And now confident not as second

Majdi Abulaban

] it's extent. XX% to QX was of half let's to [ going to back in on of is flat year and think I'll some IHS, up stronger. balance I -- continue last Again, second was because the be terms year say, the to fairly the QX IHS quoting No, directly. go numbers Europe -- is and going my average, X%, in the to just But outlook, was

types units of numbers? to So going these the quarters. are similar a units, terms you see from coming standpoint gross No, of in of in

Michael Ward

as you with Yes. change And forward. looking are manufacturers, their behavior seeing any far as

things shelf. continue And been have last that the that pushback Or content the take manufacturers at content. on want is of on and go higher backing to to the much. might some over components Are they vehicle premium-type the it the One that's in of X the intriguing still book they as work didn't the because Or is their to years of far the ATPs? all to envelope push been side? are they technology wheels? continuing to as systems X past, envelope where down as all products, to to me push push They

Majdi Abulaban

with we see Actually, in all some well EVs, towards share. push And the where When accelerating think We gain premium. you of launches very that's of see Europe, are [Technical they're no. we actually. and presentation to are now EV can think continuing our Difficulty] in And segment. you positioned. in Europe. it we're the the the Yes, No, started

on same lightweight to gaining light are content, premium -- be significantly technology wheels We tend the at those weighted the share. higher and time. And

Michael Ward

you BMW Do Yes, see the I can't that. the are, I even imagine have didn't content. they iX, what

Majdi Abulaban

Sorry?

Michael Ward

of one that Is iX. yours? BMW The

Majdi Abulaban

are, we are, have check think that. I on Yes, I I think we to

Operator

It further appears there's no question. Instructions] [Operator

passing call Thank now Abulaban comments. the to Majdi for are you. closing We

Majdi Abulaban

business for also Superior their We deliver all work drive to a of today. execute strategic priorities to our our I'd us everyone. to Thanks for growth. long-term hard like day, continuing again Have you on to forward. great forward to continuing joining team thank look to our and

Operator

Thank you for today's joining call.

You may now disconnect.

Superior Industries International (SUP) 4 May 232023 Q1 Earnings call transcript