UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: ~~1-6615~~001-06615

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware	95-2594729
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

26600 Telegraph Road, Suite 400
Southfield, Michigan	48033
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: ~~(248)~~ (248) 352-7300

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	SUP	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller Reporting Company	☒
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of July ~~29, 2022: 27,016,125~~28, 2023: 28,091,440

TABLE OF CONTENTS


					Page
PART I	-	FINANCIAL INFORMATION


	Item 1
		~~Item 1~~		Financial Statements (Unaudited)	1

				Condensed Consolidated Statements of Income (Loss)	1

				Condensed Consolidated Statements of Comprehensive Income (Loss)	2

				Condensed Consolidated Balance Sheets	3

				Condensed Consolidated Statements of Cash Flows	4

				Condensed Consolidated Statements of Shareholders’ Equity (Deficit)	5

				Notes to Condensed Consolidated Financial Statements	7

		Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2426

		Item 3	-	Quantitative and Qualitative Disclosures ~~About~~about Market Risk	3537

		Item 4	-	Controls and Procedures	3537

PART II	-	OTHER INFORMATION



		Item 1	-	Legal Proceedings	3638

		Item 1A	-	Risk Factors	3638

		Item 2	-	Unregistered Sales of Equity Securities and Use of Proceeds	3638

		Item 53	-	Defaults upon Senior Securities	38

		Item 4	-	Mine Safety Disclosures	38

		Item 5	-	Other Information	3638

		Item 6	-	Exhibits	3739

		Signatures			3840

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Dollars in thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021			June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
NET SALES	$	431,532		$	347,464		$	832,058		$	705,660		$	372,603		$	431,532		$	753,569		$	832,058
Cost of sales		388,905			314,844			748,844			630,000			331,570			388,905			677,958			748,844
GROSS PROFIT		42,627			32,620			83,214			75,660			41,033			42,627			75,611			83,214
Selling, general and administrative expenses		16,721			17,100			33,671			34,421			17,016			16,721			36,458			33,671
INCOME FROM OPERATIONS		25,906			15,520			49,543			41,239			24,017			25,906			39,153			49,543
Interest expense, net		(10,338	)		(10,486	)		(20,300	)		(20,759	)		(15,690	)		(10,338	)		(31,388	)		(20,300	)
Other income (expense), net		681			(2,420	)		594			(3,934	)
Other (expense) income, net														(2,600	)		681			(2,787	)		594
INCOME BEFORE INCOME TAXES		16,249			2,614			29,837			16,546			5,727			16,249			4,978			29,837
Income tax provision		(5,405	)		(919	)		(8,923	)		(1,729	)		(5,794	)		(5,405	)		(9,092	)		(8,923	)
NET INCOME	$	10,844		$	1,695		$	20,914		$	14,817
EARNINGS (LOSS) PER SHARE – BASIC	$	0.07		$	(0.26	)	$	0.11		$	(0.07	)
EARNINGS (LOSS) PER SHARE – DILUTED	$	0.07		$	(0.26	)	$	0.11		$	(0.07	)
NET (LOSS) INCOME													$	(67	)	$	10,844		$	(4,114	)	$	20,914
(LOSS) EARNINGS PER SHARE – BASIC													$	(0.35	)	$	0.07		$	(0.84	)	$	0.11
(LOSS) EARNINGS PER SHARE – DILUTED													$	(0.35	)	$	0.07		$	(0.84	)	$	0.11

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,
2022

June 30,
2021

June 30,
2022

June 30,
2021

Net income

$
10,844

$
1,695

$
20,914

$
14,817

Other comprehensive income (loss), net of tax:

Foreign currency translation (loss) gain

(11,654
)

8,410

(9,611
)

(7,268
)
Change in unrecognized (losses) gains on derivative instruments:

Change in fair value of derivatives

(15,906
)

17,165

1,346

8,025

Tax benefit (provision)

323

(1,718
)

(108
)

(1,040
)
Change in unrecognized (losses) gains on derivative instruments, net of tax

(15,583
)

15,447

1,238

6,985

Defined benefit pension plan:

Amortization of actuarial losses on pension obligation

83

97

166

194

Tax benefit

—

21

—

—

Pension changes, net of tax

83

118

166

194

Other comprehensive (loss) income, net of tax

(27,154
)

23,975

(8,207
)

(89
)
Comprehensive (loss) income

$
(16,310
)

$
25,670

$
12,707

$
14,728


	Three Months Ended						Six Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Net (loss) income	$	(67	)	$	10,844		$	(4,114	)	$	20,914
Other comprehensive income, net of tax:
Foreign currency translation gain (loss)		8,542			(11,654	)		23,173			(9,611	)
Change in unrecognized gains (losses) on derivative instruments:
Change in fair value of derivatives		33,595			(15,906	)		53,048			1,346
Tax (provision) benefit		(3,251	)		323			(4,584	)		(108	)
Change in unrecognized gains (losses) on derivative instruments, net of tax		30,344			(15,583	)		48,464			1,238
Defined benefit pension plan:
Amortization of actuarial losses on pension obligation		—			83			—			166
Tax provision		—			—			—			—
Pension changes, net of tax		—			83			—			166
Other comprehensive income (loss), net of tax		38,886			(27,154	)		71,637			(8,207	)
Comprehensive income (loss)	$	38,819		$	(16,310	)	$	67,523		$	12,707

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	June 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	122,258		$	113,473		$	181,115		$	213,022
Accounts receivable, net		115,832			83,447			101,017			72,725
Inventories, net		202,801			172,099			181,860			178,688
Income taxes receivable		4,748			4,957			1,959			2,261
Other current assets		28,613			30,279			58,421			42,218
Total current assets		474,252			404,255			524,372			508,914
Property, plant and equipment, net		471,826			494,401			476,834			473,960
Deferred income tax assets, net		24,138			27,715			22,408			35,187
Intangibles, net		59,625			76,870			42,492			51,497
Other non-current assets		53,230			50,906
Other noncurrent assets								94,106			64,181
Total assets	$	1,083,071		$	1,054,147		$	1,160,212		$	1,133,739
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	197,245		$	153,197		$	148,455		$	158,049
Short-term debt		5,556			6,081			7,236			5,873
Accrued expenses		69,960			71,525			73,616			74,108
Income taxes payable		1,714			1,076			1,568			13,300
Total current liabilities		274,475			231,879			230,875			251,330
Long-term debt (less current portion)		580,962			602,355			607,902			616,145
Non-current income tax liabilities		8,017			8,289
Noncurrent income tax liabilities								7,882			8,524
Deferred income tax liabilities, net		5,250			3,913			4,583			3,468
Other non-current liabilities		75,057			77,089
Commitments and contingent liabilities (Note 16)		—			—
Other noncurrent liabilities								49,923			55,733
Commitments and contingent liabilities (Note 17)								—			—
Mezzanine equity:
Preferred stock, $0.01 par value
Authorized - 1,000,000 shares
Issued and outstanding – 150,000 shares outstanding at June 30, 2022 and December 31, 2021		211,016			199,897
European non-controlling redeemable equity		1,077			1,146
Shareholders’ deficit:
Common stock, $0.01 par value
Authorized - 100,000,000 shares
Issued and outstanding – 27,016,125 and 26,163,077 shares at June 30, 2022 and December 31, 2021		106,078			103,214
Preferred stock, $0.01 par value
Authorized – 1,000,000 shares
Issued and outstanding – 150,000 shares outstanding at June 30, 2023 and December 31, 2022								235,143			222,753
European noncontrolling redeemable equity								1,087			1,083
Shareholders’ equity (deficit):
Common stock, $0.01 par value
Authorized – 100,000,000 shares
Issued and outstanding – 28,091,440 and 27,016,125 shares at June 30, 2023 and December 31, 2022								110,802			111,105
Accumulated other comprehensive loss		(134,181	)		(125,974	)		(17,632	)		(89,269	)
Retained earnings		(44,680	)		(47,661	)		(70,353	)		(47,133	)
Total shareholders’ deficit		(72,783	)		(70,421	)
Total liabilities, mezzanine equity and shareholders’ deficit	$	1,083,071		$	1,054,147
Total shareholders’ equity (deficit)								22,817			(25,297	)
Total liabilities, mezzanine equity and shareholders’ equity							$	1,160,212		$	1,133,739

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Six Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2023			June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	20,914		$	14,817
Net (loss) income							$	(4,114	)	$	20,914
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		47,208			50,970			46,308			47,208
Income tax, non-cash changes		4,087			(2,927	)
Income tax, noncash changes								11,316			4,087
Stock-based compensation		4,652			4,331			3,004			4,652
Amortization of debt issuance costs		2,465			2,731			2,383			2,465
Other non-cash items		(1,044	)		(3,928	)
Other noncash items								44			(1,044	)
Changes in operating assets and liabilities:
Accounts receivable		(35,483	)		(37,231	)		(24,847	)		(35,483	)
Inventories		(38,739	)		(46,139	)		1,392			(38,739	)
Other assets and liabilities		(1,266	)		15,894			796			(1,266	)
Accounts payable		53,755			34,402			(12,832	)		53,755
Income taxes		664			(987	)		(12,283	)		664
NET CASH PROVIDED BY OPERATING ACTIVITIES		57,213			31,933			11,167			57,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment		(34,288	)		(20,551	)		(21,751	)		(34,288	)
Proceeds from sale of fixed assets		150			—			—			150
NET CASH USED IN INVESTING ACTIVITIES		(34,138	)		(20,551	)		(21,751	)		(34,138	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		—			1,658
Repayments of debt		(2,505	)		(2,129	)		(12,414	)		(2,505	)
Cash dividends paid		(6,792	)		(6,736	)		(6,696	)		(6,792	)
Financing costs paid and other		—			(4,307	)		(31	)		—
Payments related to tax withholdings for stock-based compensation		(1,788	)		(1,342	)		(3,307	)		(1,788	)
Finance lease payments		(547	)		(645	)		(551	)		(547	)
NET CASH USED IN FINANCING ACTIVITIES		(11,632	)		(13,501	)		(22,999	)		(11,632	)
Effect of exchange rate changes on cash		(2,658	)		(1,133	)		1,676			(2,658	)
Net increase (decrease) in cash and cash equivalents		8,785			(3,252	)
Net changes in cash and cash equivalents								(31,907	)		8,785
Cash and cash equivalents at the beginning of the period		113,473			152,423			213,022			113,473
Cash and cash equivalents at the end of the period	$	122,258		$	149,171		$	181,115		$	122,258

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(Dollars in ~~thousands)~~thousands, except share amounts)

(Unaudited)

For the six months ended June 30, 2022

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
Gains (Losses)
on Derivative
Instruments

Pension
Obligations

Cumulative
Translation
Adjustment

Retained
Earnings

Total

BALANCE AT DECEMBER 31, 2021

26,163,077

$
103,214

$
(9,051
)

$
(6,133
)

$
(110,790
)

$
(47,661
)

$
(70,421
)

Net income

—

—

—

—

—

20,914

20,914

Change in unrecognized gains (losses) on
   derivative instruments, net of tax

—

—

1,238

—

—

—

1,238

Change in defined benefit plans, net of tax

—

—

—

166

—

—

166

Net foreign currency translation adjustment

—

—

—

—

(9,611
)

—

(9,611
)

Common stock issued, net of shares withheld
   for employee taxes

853,048

—

—

—

—

—

—

Stock-based compensation

—

2,864

—

—

—

—

2,864

Redeemable preferred 9% dividend
    and accretion

—

—

—

—

—

(17,911
)

(17,911
)

European non-controlling redeemable
    equity dividend

—

—

—

—

—

(22
)

(22
)

BALANCE AT JUNE 30, 2022

27,016,125

$
106,078

$
(7,813
)

$
(5,967
)

$
(120,401
)

$
(44,680
)

$
(72,783
)

For the three months ended June 30, 2022

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
Gains (Losses)
on Derivative
Instruments

Pension
Obligations

Cumulative
Translation
Adjustment

Retained
Earnings

Total

BALANCE AT MARCH 31, 2022

26,853,292

$
104,216

$
7,770

$
(6,050
)

$
(108,747
)

$
(46,512
)

$
(49,323
)

Net income

—

—

—

—

—

10,844

10,844

Change in unrecognized gains (losses) on
   derivative instruments, net of tax

—

—

(15,583
)

—

—

—

(15,583
)

Change in defined benefit plans, net of tax

—

—

—

83

—

—

83

Net foreign currency translation adjustment

—

—

—

—

(11,654
)

—

(11,654
)

Common stock issued, net of shares withheld
   for employee taxes

162,833

—

—

—

—

—

—

Stock-based compensation

—

1,862

—

—

—

—

1,862

Redeemable preferred 9% dividend
    and accretion

—

—

—

—

—

(9,001
)

(9,001
)

European non-controlling redeemable equity
   dividend

—

—

—

—

—

(11
)

(11
)

BALANCE AT JUNE 30, 2022

27,016,125

$
106,078

$
(7,813
)

$
(5,967
)

$
(120,401
)

$
(44,680
)

$
(72,783
)


For the six months ended June 30, 2023
	Common Stock					Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount			Unrecognized Gains (Losses) on Derivative Instruments		Pension Obligations		Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT JANUARY 1, 2023		27,016,125	$	111,105		$	19,844	$	1,591	$	(110,704	)	$	(47,133	)	$	(25,297	)
Net loss		—		—			—		—		—			(4,114	)		(4,114	)
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—			48,464		—		—			—			48,464
Change in defined benefit plans, net of taxes		—		—			—		—		—			—			—
Net foreign currency translation adjustment		—		—			—		—		23,173			—			23,173
Common stock issued, net of shares withheld for employee taxes		1,075,315		—			—		—		—			—			—
Stock-based compensation		—		(303	)		—		—		—			—			(303	)
Redeemable preferred 9% dividend and accretion		—		—			—		—		—			(19,085	)		(19,085	)
European noncontrolling redeemable equity dividend		—		—			—		—		—			(21	)		(21	)
BALANCE AT JUNE 30, 2023		28,091,440	$	110,802		$	68,308	$	1,591	$	(87,531	)	$	(70,353	)	$	22,817

For the three months ended June 30, 2023
	Common Stock					Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount			Unrecognized Gains (Losses) on Derivative Instruments		Pension Obligations		Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT APRIL 1, 2023		27,908,669	$	108,603		$	37,964	$	1,591	$	(96,073	)	$	(60,630	)	$	(8,545	)
Net loss		—		—			—		—		—			(67	)		(67	)
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—			30,344		—		—			—			30,344
Change in defined benefit plans, net of taxes		—		—			—		—		—			—			—
Net foreign currency translation adjustment		—		—			—		—		8,542			—			8,542
Common stock issued, net of shares withheld for employee taxes		182,771		—			—		—		—			—			—
Stock-based compensation		—		2,199			—		—		—			—			2,199
Redeemable preferred 9% dividend and accretion		—		—			—		—		—			(9,645	)		(9,645	)
European noncontrolling redeemable equity dividend		—		—			—		—		—			(11	)		(11	)
BALANCE AT JUNE 30, 2023		28,091,440	$	110,802		$	68,308	$	1,591	$	(87,531	)	$	(70,353	)	$	22,817

For the six months ended June 30, 2021

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
Gains (Losses)
on Derivative
Instruments

Pension
Obligations

Cumulative
Translation
Adjustment

Retained
Earnings

Total

BALANCE AT DECEMBER 31, 2020

25,591,930

$
95,247

$
(1,738
)

$
(7,447
)

$
(90,261
)

$
(17,323
)

$
(21,522
)

Net income

—

—

—

—

—

14,817

14,817

Change in unrecognized gains (losses) on
   derivative instruments, net of tax

—

—

6,985

—

—

—

6,985

Change in defined benefit plans, net of tax

—

—

—

194

—

—

194

Net foreign currency translation adjustment

—

—

—

—

(7,268
)

—

(7,268
)

Common stock issued, net of shares withheld
   for employee taxes

515,532

—

—

—

—

—

—

Stock-based compensation

—

2,989

—

—

—

—

2,989

Redeemable preferred 9% dividend
    and accretion

—

—

—

—

—

(16,712
)

(16,712
)

European non-controlling redeemable
    equity dividend

—

—

—

—

—

(38
)

(38
)

BALANCE AT JUNE 30, 2021

26,107,462

$
98,236

$
5,247

$
(7,253
)

$
(97,529
)

$
(19,256
)

$
(20,555
)

For the three months ended June 30, 2021

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
Gains (Losses)
on Derivative
Instruments

Pension
Obligations

Cumulative
Translation
Adjustment

Retained
Earnings

Total

BALANCE AT MARCH 31, 2021

25,947,462

$
95,752

$
(10,200
)

$
(7,371
)

$
(105,939
)

$
(12,504
)

$
(40,262
)

Net income

—

—

—

—

—

1,695

1,695

Change in unrecognized gains (losses) on
   derivative instruments, net of tax

—

—

15,447

—

—

—

15,447

Change in defined benefit plans, net of tax

—

—

—

118

—

—

118

Net foreign currency translation adjustment

—

—

—

—

8,410

—

8,410

Common stock issued, net of shares withheld
   for employee taxes

160,000

—

—

—

—

—

—

Stock-based compensation

—

2,484

—

—

—

—

2,484

Redeemable preferred 9% dividend
    and accretion

—

—

—

—

—

(8,422
)

(8,422
)

European non-controlling redeemable equity
   dividend

—

—

—

—

—

(25
)

(25
)

BALANCE AT JUNE 30, 2021

26,107,462

$
98,236

$
5,247

$
(7,253
)

$
(97,529
)

$
(19,256
)

$
(20,555
)


For the six months ended June 30, 2022
	Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT JANUARY 1, 2022		26,163,077	$	103,214	$	(9,051	)	$	(6,133	)	$	(110,790	)	$	(47,661	)	$	(70,421	)
Net income		—		—		—			—			—			20,914			20,914
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—		1,238			—			—			—			1,238
Change in defined benefit plans, net of taxes		—		—		—			166			—			—			166
Net foreign currency translation adjustment		—		—		—			—			(9,611	)		—			(9,611	)
Common stock issued, net of shares withheld for employee taxes		853,048		—		—			—			—			—			—
Stock-based compensation		—		2,864		—			—			—			—			2,864
Redeemable preferred 9% dividend and accretion		—		—		—			—			—			(17,911	)		(17,911	)
European noncontrolling redeemable equity dividend		—		—		—			—			—			(22	)		(22	)
BALANCE AT JUNE 30, 2022		27,016,125	$	106,078	$	(7,813	)	$	(5,967	)	$	(120,401	)	$	(44,680	)	$	(72,783	)

For the three months ended June 30, 2022
	Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT APRIL 1, 2022		26,853,292	$	104,216	$	7,770		$	(6,050	)	$	(108,747	)	$	(46,512	)	$	(49,323	)
Net income		—		—		—			—			—			10,844			10,844
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—		(15,583	)		—			—			—			(15,583	)
Change in defined benefit plans, net of taxes		—		—		—			83			—			—			83
Net foreign currency translation adjustment		—		—		—			—			(11,654	)		—			(11,654	)
Common stock issued, net of shares withheld for employee taxes		162,833		—		—			—			—			—			—
Stock-based compensation		—		1,862		—			—			—			—			1,862
Redeemable preferred 9% dividend and accretion		—		—		—			—			—			(9,001	)		(9,001	)
European noncontrolling redeemable equity dividend		—		—		—			—			—			(11	)		(11	)
BALANCE AT JUNE 30, 2022		27,016,125	$	106,078	$	(7,813	)	$	(5,967	)	$	(120,401	)	$	(44,680	)	$	(72,783	)

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

Superior Industries International, Inc.

Notes to Condensed Consolidated Financial Statements

June 30, ~~2022~~2023

(Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nature of Operations

Superior Industries International, Inc.’s (referred herein as the “Company,” “Superior,” or “we” and “our”) principal business is the design and manufacture of aluminum wheels for sale to original equipment manufacturers (“OEMs”) in North America and Europe and to the aftermarket in Europe. We employ approximately ~~7,800~~7,100 full-time employees, operating in 8eight manufacturing facilities in North America and Europe. We are one of the largest aluminum wheel suppliers to global OEMs and ~~we believe we are~~one of the #1leading European aluminum wheel aftermarket ~~manufacturer~~manufacturers and ~~supplier.~~suppliers. Our OEM aluminum wheels accounted for approximately 9496 percent of our sales in the first six months of ~~2022~~2023 and are primarily sold for factory installation on vehicle models manufactured by BMW (including Mini), Ford, GM, Honda, Jaguar-Land Rover, Lucid Motors, Mazda, Mercedes-Benz Group, Nissan, PSA, Renault, Stellantis, Subaru, Suzuki, Toyota, VW Group (Volkswagen, Audi, SEAT, Skoda, Porsche, Bentley) and Volvo. We sell aluminum wheels to the European aftermarket under the brands ATS, RIAL, ALUTEC and ANZIO. North America and Europe represent the principal markets for our products, but we have a diversified global customer base consisting of North American, European and Asian OEMs. We have determined that our North American and European operations should be treated as separate reportable segments as further described in Note 5, “Business Segments.”

Presentation of Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements, in our opinion, include all adjustments, of a normal and recurring nature, which are necessary for fair presentation of the financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes thereto filed with the SEC in our ~~2021~~2022 Annual Report on Form 10-K.

These unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions are eliminated in consolidation.

Interim financial reporting standards require us to make estimates that are based on assumptions regarding the outcome of future events and circumstances not known at that time. Inevitably, some assumptions will not materialize, unanticipated events or circumstances may occur which vary from those estimates and such variations may significantly affect our future results. Additionally, interim results may not be indicative of our results for future interim periods or our annual results.

Cash Paid for Interest and Taxes and ~~Non-Cash~~Noncash Investing Activities

Cash paid for interest was ~~$17.9~~$30.8 million and ~~$18.3~~$17.9 million for the six months ended June 30, ~~2022~~2023 and June 30, ~~2021,~~2022, respectively. Net cash paid for income taxes was ~~$4.1~~$10.0 million and ~~$5.9~~$4.1 million for the six months ended June 30, ~~2022~~2023 and June 30, ~~2021,~~2022, respectively. As of June 30, ~~2022~~2023 and June 30, ~~2021, $5.9~~2022, $1.7 million and ~~$7.8~~$5.9 million, respectively, of equipment had been purchased but not yet paid and was included in accounts payable in our condensed consolidated balance sheets.

Adoption of New Accounting Standards

ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.” As of January 1, 2022, we have adopted this standard on a prospective basis. The standard requires entities to disclose information about any transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. Disclosures under ASU 2021-10 include: information about the nature of the transactions and the related accounting policy used to account for the transactions, the financial statement line items affected by the transactions, the amounts applicable to each financial statement line item and significant terms and conditions of the transactions, including commitments and contingencies. The adoption of this accounting standard did not have a material effect on our financial statements or disclosures since we have not received any significant governmental assistance.

~~Accounting Standards Issued but Not Yet Adopted~~

Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ~~In June 2016,~~On January 1, 2023, the ~~Financial Accounting Standards Board issued~~Company adopted ASU 2016-13, ~~which requires entities~~using a modified retrospective approach. ASU 2016-13 amends several aspects of the measurement of credit losses related to ~~use a~~

~~new impairment~~certain financial instruments, including the replacement of the existing incurred credit loss model ~~based on~~with the current expected credit ~~losses (“CECL”) rather than incurred losses.~~loss model. Under ~~CECL, estimated~~ASU 2016-13, credit losses ~~would incorporate~~are estimated based on relevant information about past events, current conditions, and reasonable and supportable forecasts and ~~any~~associated assumptions. The Company did not recognize a cumulative adjustment to retained earnings upon adoption as the adjustment was immaterial.

The Company’s allowance for credit losses on accounts receivable represents management’s estimate of expected credit losses ~~would be recognized at~~over the ~~time~~expected term of ~~sale. As a smaller reporting company (as defined under SEC regulations),~~the receivables. In estimating current expected credit losses, the Company isapplies a loss rate to receivables aging categories by region and market, OEM or aftermarket, based on historical write-offs. Historical loss rates are adjusted for current conditions and reasonable and supportable forecasts, as necessary. Specific reserves are recognized for individual accounts whenever the Company becomes aware of circumstances indicating that a loss may be incurred on a particular customer account, such as in the event of a customer bankruptcy or significant deterioration in customer operating results or financial condition. Provision adjustments to the allowance for credit losses are recognized in selling, general and administrative expenses. As of June 30, 2023 and December 31, 2022, accounts receivable are reflected net of reserves (including the estimated allowance for credit losses) of $0.7 million and $0.6 million, respectively. Changes in expected credit losses were not ~~required to adopt~~significant during the ~~standard until~~three or six months ended June 30, 2023.

Accounting Standards Update (ASU) 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.”On January 1, ~~2023.~~ We2023, the Company adopted ASU 2022-04 which requires that a buyer in a supplier finance program disclose the key terms of the program, including a description of the payment terms. For the obligations that the buyer has confirmed as valid to the finance provider or intermediary, the buyer must disclose: the amount outstanding that remains unpaid by the buyer as of the end of each period, a description of where those obligations are ~~evaluating~~presented in the ~~impact this standard will~~balance sheet and a roll forward of those obligations during the period, including the amount of obligations confirmed and the amount of obligations subsequently paid. In adopting ASU 2022-04, disclosures which had previously been included in Management’s Discussion and Analysis of Financial Condition and Results of Operations of previous Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q regarding supply chain financing have ~~on our~~now been included as Note 10, “Supplier Finance Program” to the condensed consolidated financial statements along with disclosure of payment terms under the program and ~~disclosures.~~a roll forward of the amounts owed to the financial institution.

NOTE 2 – REVENUE

The Company disaggregates revenue from contracts with customers into our reportable segments, North America and Europe. Revenues by segment for the ~~three~~three- and six-month periods ended June 30, ~~2022~~2023 and June 30, ~~2021,~~2022, respectively, are summarized in Note 5, “Business Segments.”

The opening and closing balances of the Company’s customer receivables and current and long-term contract liabilities balances are as follows:


	June 30, 2023		December 31, 2022		Change
(Dollars in thousands)
Customer receivables	$	90,304	$	63,565	$	26,739
Contract liabilities—current		6,930		6,251		679
Contract liabilities—noncurrent		8,358		8,355		3

(Dollars in thousands)

June 30,
2022

December 31,
2021

Change

Customer receivables

$
108,994

$
74,887

$
34,107

Contract liabilities—current

5,543

6,887

(1,344
)
Contract liabilities—non-current

8,715

10,526

(1,811
)

NOTE 3 – FAIR VALUE MEASUREMENTS

The Company applies fair value accounting for all financial assets and liabilities and ~~non-financial~~nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis, while other assets and liabilities are measured at fair value on a nonrecurring basis, such as an asset impairment. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short period of time until maturity.

Derivative Financial Instruments

Our derivatives are over-the-counter customized derivative instruments and are not exchange traded. We estimate the fair value of these instruments using the income valuation approach. Under this approach, we project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates, foreign exchange rates, commodity prices and the contractual terms of the derivative instruments. The discount rate used is the relevant benchmark rate (e.g., ~~SOFR)~~the secured overnight financing rate, “SOFR”) plus an adjustment for ~~non-performance~~nonperformance risk.

The following tables categorize items measured at fair value as of June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

			Fair Value Measurement at Reporting Date Using
June 30, 2022			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
											Fair Value Measurement at Reporting Date Using
June 30, 2023											Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Assets
Derivative contracts	$	15,902	$	—	$	15,902	$	—	$	78,883	$	—	$	78,883	$	—
Total	$	15,902	$	—	$	15,902	$	—	$	78,883	$	—	$	78,883	$	—
Liabilities					.								.
Derivative contracts	$	21,587	$	—	$	21,587	$	—	$	2,456	$	—	$	2,456	$	—
Total	$	21,587	$	—	$	21,587	$	—	$	2,456	$	—	$	2,456	$	—

			Fair Value Measurement at Reporting Date Using
December 31, 2021			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
											Fair Value Measurement at Reporting Date Using
December 31, 2022											Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Assets
Derivative contracts	$	10,362	$	—	$	10,362	$	—	$	34,960	$	—	$	34,960	$	—
Total	$	10,362	$	—	$	10,362	$	—	$	34,960	$	—	$	34,960	$	—
Liabilities					.								.
Derivative contracts	$	19,711	$	—	$	19,711	$	—	$	11,780	$	—	$	11,780	$	—
Total	$	19,711	$	—	$	19,711	$	—	$	11,780	$	—	$	11,780	$	—

Debt Instruments

The carrying values of the Company’s debt instruments vary from their fair values. The fair values were determined by reference to transacted prices and quotes for these instruments (Level 2). The estimated fair value, as well as the carrying value, of the Company’s debt instruments are shown below:

June 30,
2022

December 31,
2021

(Dollars in thousands)

Estimated aggregate fair value

$
533,218

$
605,874

Aggregate carrying value ⁽¹⁾

592,907

616,215


	June 30, 2023		December 31, 2022
(Dollars in thousands)
Estimated aggregate fair value	$	611,565	$	615,394
Aggregate carrying value (1)		638,687		647,443

(1)

Total debt excluding the impact of unamortized debt issuance costs.⁽¹⁾

~~Total debt excluding the impact of unamortized debt issuance costs.~~

NOTE 4 - DERIVATIVE FINANCIAL INSTRUMENTS

We use derivatives to partially offset our exposure to foreign currency, interest rate, aluminum and other commodity price risks. We may enter into forward contracts, option contracts, swaps, collars or other derivative instruments to offset some of the risk on expected future cash flows and on certain existing assets and liabilities. However, we may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will fully offset the financial impact resulting from movements in foreign currency exchange rates, interest rates, and aluminum or other commodity prices.

To help mitigate gross margin and cash flow fluctuations due to changes in foreign currency exchange rates, certain of our subsidiaries, whose functional currency is the U.S. dollar or the Euro, hedge a portion of their forecasted foreign currency costs denominated in the Mexican Peso and Polish Zloty, respectively. We may hedge portions of our forecasted foreign currency exposure up to 48 months.

We account for our derivative instruments as either assets or liabilities and adjust them to fair value each period. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the gain or

loss on the derivative instrument is recorded in accumulated other comprehensive income (“AOCI”) or loss in shareholders’ equity or deficit until the hedged item is recognized in earnings, at which point accumulated gains or losses are recognized in earnings and classified with the underlying hedged ~~transaction.~~transactions. Derivatives that do not qualify or have not been designated as hedges are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.

The following tables display the fair value of derivatives by balance sheet line item at June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


	June 30, 2023
	Other Current Assets		Other Noncurrent Assets		Accrued Liabilities		Other Noncurrent Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	27,803	$	41,892	$	730	$	21
Foreign exchange forward contracts not designated as hedging instruments		1,339		—		76		—
Aluminum forward contracts designated as hedging instruments		—		—		521		—
Natural gas forward contracts designated as hedging instruments		390		433		494		614
Interest rate swap contracts designated as hedging instruments		4,736		2,290		—		—
Total derivative financial instruments	$	34,268	$	44,615	$	1,821	$	635


	December 31, 2022
	Other Current Assets		Other Noncurrent Assets		Accrued Liabilities		Other Noncurrent Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	11,210	$	15,890	$	2,873	$	5,212
Foreign exchange forward contracts not designated as hedging instruments		603		—		192		—
Aluminum forward contracts designated as hedging instruments		—		—		1,213		—
Natural gas forward contracts designated as hedging instruments		498		655		1,520		770
Interest rate swap contracts designated as hedging instruments		4,112		1,992		—		—
Total derivative financial instruments	$	16,423	$	18,537	$	5,798	$	5,982

June 30, 2022

Other
Current
Assets

Other
Non-current
Assets

Accrued
Liabilities

Other
Non-current
Liabilities

(Dollars in thousands)

Foreign exchange forward contracts designated as
   hedging instruments

$
6,824

$
4,688

$
3,672

$
13,581

Foreign exchange forward contracts not
   designated as hedging instruments

270

—

135

—

Aluminum forward contracts designated as
   hedging instruments

19

—

2,383

—

Natural gas forward contracts designated as
   hedging instruments

2,233

1,512

158

255

Interest rate swap contracts designated as hedging
   instruments

356

—

56

1,347

Total derivative financial instruments

$
9,702

$
6,200

$
6,404

$
15,183

December 31, 2021

Other
Current
Assets

Other
Non-current
Assets

Accrued
Liabilities

Other
Non-current
Liabilities

(Dollars in thousands)

Foreign exchange forward contracts designated as
   hedging instruments

$
3,161

$
2,194

$
1,845

$
13,565

Foreign exchange forward contracts not
   designated as hedging instruments

579

—

3

—

Aluminum forward contracts designated as
   hedging instruments

2,677

39

—

—

Natural gas forward contracts designated as
   hedging instruments

1,294

418

135

276

Interest rate swap contracts designated as hedging
   instruments

—

—

3,887

—

Total derivative financial instruments

$
7,711

$
2,651

$
5,870

$
13,841

The following table summarizes the notional amount and estimated fair value of our derivative financial instruments:


	June 30, 2022					December 31, 2021					June 30, 2023					December 31, 2022
	Notional U.S. Dollar Amount		Fair Value			Notional U.S. Dollar Amount		Fair Value			Notional U.S. Dollar Amount		Fair Value			Notional U.S. Dollar Amount		Fair Value
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	479,323	$	(5,741	)	$	458,769	$	(10,055	)	$	435,204	$	68,944		$	462,783	$	19,015
Foreign exchange forward contracts not designated as hedging instruments		36,098		135			24,419		576			39,447		1,263			39,726		411
Aluminum forward contracts designated as hedging instruments		23,477		(2,364	)		37,609		2,716			8,411		(521	)		9,495		(1,213	)
Natural gas forward contracts designated as hedging instruments		13,488		3,332			8,915		1,301			12,411		(285	)		13,500		(1,137	)
Interest rate swap contracts designated as hedging instruments		450,000		(1,047	)		200,000		(3,887	)		250,000		7,026			250,000		6,104
Total derivative financial instruments	$	1,002,386	$	(5,685	)	$	729,712	$	(9,349	)	$	745,473	$	76,427		$	775,504	$	23,180

Notional amounts are presented on a net basis. The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates or commodity prices.

The following tables summarize the gain or loss recognized in AOCI, the amounts reclassified from AOCI into earnings and the amounts recognized directly into earnings for the three and six months ended June 30, 2023 and June 30, 2022:


Three Months Ended June 30, 2023	Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative contracts	$	30,344	$	6,150	$	1,398

Six Months Ended June 30, 2023	Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative contracts	$	48,464	$	10,078	$	3,993


Three Months Ended June 30, 2022	Amount of Gain or (Loss) Recognized in AOCI on Derivatives			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative contracts	$	(15,583	)	$	4,558	$	(201	)

Six Months Ended June 30, 2022	Amount of Gain or (Loss) Recognized in AOCI on Derivatives			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative contracts	$	1,238		$	9,335	$	669

Hedge accounting gains reclassified from AOCI into earnings in the second quarter of 2023 included $4.9 million recognized as a credit to cost of sales and $1.2 million recognized as a credit to interest expense, net. Hedge accounting gains and (losses) reclassified from AOCI into earnings in the second quarter of 2022 included $5.5 million recognized as a credit to cost of sales and ~~2021:~~$(0.9) million recognized as a debit to interest expense, net. Gains on nondesignated hedges are recognized as a credit to other expense, net.

Three Months Ended June 30, 2022

Amount of Gain or
(Loss) Recognized in
AOCI on Derivatives

Amount of Pre-tax
Gain or (Loss) Reclassified
from AOCI into Income

Amount of Pre-tax
Gain or (Loss)
Recognized in Income
on Derivatives

(Dollars in thousands)

Derivative Contracts

$
(15,583
)

$
4,558

$
(201
)

Six Months Ended June 30, 2022

Amount of Gain or
(Loss) Recognized in
AOCI on Derivatives

Amount of Pre-tax
Gain or (Loss) Reclassified
from AOCI into Income

Amount of Pre-tax
Gain or (Loss)
Recognized in Income
on Derivatives

(Dollars in thousands)

Derivative Contracts

$
1,238

$
9,335

$
669

Three Months Ended June 30, 2021

Amount of Gain or
(Loss) Recognized in
AOCI on Derivatives

Amount of Pre-tax
Gain or (Loss) Reclassified
from AOCI into Income

Amount of Pre-tax
Gain or (Loss)
Recognized in Income
on Derivatives

(Dollars in thousands)

Derivative Contracts

$
15,447

$
758

$
1,638

Six Months Ended June 30, 2021

Amount of Gain or
(Loss) Recognized in
AOCI on Derivatives

Amount of Pre-tax
Gain or (Loss) Reclassified
from AOCI into Income

Amount of Pre-tax
Gain or (Loss)
Recognized in Income
on Derivatives

(Dollars in thousands)

Derivative Contracts

$
6,985

$
319

$
(1,266
)

Hedge accounting gains reclassified from AOCI into earnings in the first six months of 2023 included $8.0 million recognized as a credit to cost of sales and $2.1 million recognized as a credit to interest expense, net. Hedge accounting gains and (losses) reclassified from AOCI into earnings in the first six months of 2022 included $11.4 million recognized as a credit to cost of sales and $(2.1) million recognized as a debit to interest expense, net. Gains on nondesignated hedges are recognized as a credit to other expense, net.

NOTE 5 - BUSINESS SEGMENTS

The North American and European businesses represent separate operating segments in view of significantly different markets, customers and products in each of these regions. Within each of these regions, markets, customers, products, and production processes are similar. Moreover, our business within each region generally leverages common systems, processes and infrastructure. Accordingly, North America and Europe comprise the Company’s reportable segments.

	Net Sales				Income from Operations
(Dollars in thousands)									Net Sales				Income from Operations
Three Months Ended	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
(Dollars in thousands)
North America	$	259,677	$	176,990	$	24,679	$	7,542	$	208,205	$	259,677	$	21,504	$	24,679
Europe		171,855		170,474		1,227		7,978		164,398		171,855		2,513		1,227
	$	431,532	$	347,464	$	25,906	$	15,520	$	372,603	$	431,532	$	24,017	$	25,906

	Depreciation and Amortization				Capital Expenditures
(Dollars in thousands)									Depreciation and Amortization				Capital Expenditures
Three Months Ended	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
(Dollars in thousands)
North America	$	9,055	$	9,499	$	11,630	$	3,447	$	9,378	$	9,055	$	3,627	$	11,630
Europe		14,071		16,110		4,704		6,625		14,089		14,071		2,535		4,704
	$	23,126	$	25,609	$	16,334	$	10,072	$	23,467	$	23,126	$	6,162	$	16,334

	Net Sales				Income from Operations
(Dollars in thousands)									Net Sales				Income from Operations
Six Months Ended	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		June 30, 2023		June 30, 2022		June 30, 2023			June 30, 2022
(Dollars in thousands)
North America	$	486,875	$	368,961	$	44,246	$	25,383	$	419,823	$	486,875	$	43,219		$	44,246
Europe		345,183		336,699		5,297		15,856		333,746		345,183		(4,066	)		5,297
	$	832,058	$	705,660	$	49,543	$	41,239	$	753,569	$	832,058	$	39,153		$	49,543

	Depreciation and Amortization				Capital Expenditures
(Dollars in thousands)									Depreciation and Amortization				Capital Expenditures
Six Months Ended	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		June 30, 2023		June 30, 2022		June 30, 2023			June 30, 2022
(Dollars in thousands)
North America	$	18,014	$	18,720	$	24,142	$	8,107	$	18,425	$	18,014	$	15,070		$	24,142
Europe		29,194		32,250		10,146		12,444		27,883		29,194		6,681			10,146
	$	47,208	$	50,970	$	34,288	$	20,551	$	46,308	$	47,208	$	21,751		$	34,288

	Property, Plant and Equipment, net				Intangible Assets
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
(Dollars in thousands)									Property, Plant and Equipment, net				Intangible Assets
									June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
North America	$	217,686	$	214,331	$	—	$	—	$	230,448	$	220,321	$	—	$	—
Europe		254,140		280,070		59,625		76,870		246,386		253,639		42,492		51,497
	$	471,826	$	494,401	$	59,625	$	76,870	$	476,834	$	473,960	$	42,492	$	51,497

	Total Assets
	June 30, 2022		December 31, 2021
(Dollars in thousands)					Total Assets
					June 30, 2023		December 31, 2022
North America	$	547,148	$	499,988	$	615,661	$	582,339
Europe		535,923		554,159		544,551		551,400
	$	1,083,071	$	1,054,147	$	1,160,212	$	1,133,739

Geographic information

Net sales and ~~long-lived assets~~property, plant and equipment by location are as follows:


(Dollars in thousands)	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net sales:
U.S.	$	992	$	1,292	$	1,975	$	2,950
Mexico		207,213		258,385		417,848		483,925
Germany		48,434		48,035		91,292		102,123
Poland		115,964		123,820		242,454		243,060
Consolidated net sales	$	372,603	$	431,532	$	753,569	$	832,058

(Dollars in thousands)					Property, Plant and Equipment, net
					June 30, 2023		December 31, 2022
U.S.					$	1,382	$	1,476
Mexico						229,066		218,845
Germany						85,010		76,158
Poland						161,376		177,481
Property, plant and equipment, net					$	476,834	$	473,960

Three Months Ended

Six Months Ended

June 30,
2022

June 30,
2021

June 30,
2022

June 30,
2021

(Dollars in thousands)

Net sales:

U.S.

$
1,292

$
1,549

$
2,950

$
2,819

Mexico

258,385

175,441

483,925

366,142

Germany

48,035

62,511

102,123

123,398

Poland

123,820

107,963

243,060

213,301

Consolidated net sales

$
431,532

$
347,464

$
832,058

$
705,660

June 30,
2022

December 31,
2021

(Dollars in thousands)

Property, plant and equipment, net

U.S.

$
1,701

$
2,152

Mexico

215,985

212,179

Germany

75,173

76,849

Poland

178,967

203,221

Property, plant and equipment, net

$
471,826

$
494,401

NOTE 6 - INVENTORIES


	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
(Dollars in thousands)
Raw materials	$	49,757	$	47,392	$	53,663	$	62,639
Work in process		70,647		54,891		43,003		37,993
Finished goods		82,397		69,816		85,194		78,056
Inventories, net	$	202,801	$	172,099	$	181,860	$	178,688

Service wheel and supplies inventory included in other ~~non-current~~noncurrent assets in the condensed consolidated balance sheets totaled ~~$10.8~~$12.6 million and ~~$9.7~~$11.3 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT


	June 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
(Dollars in thousands)
Land and buildings	$	126,583		$	129,826		$	164,245		$	144,870
Machinery and equipment		865,237			861,097			950,453			887,222
Leasehold improvements and others		9,228			9,831			5,183			4,993
Construction in progress		69,978			67,529			68,567			80,263
		1,071,026			1,068,283			1,188,448			1,117,348
Accumulated depreciation		(599,200	)		(573,882	)		(711,614	)		(643,388	)
Property, plant and equipment, net	$	471,826		$	494,401		$	476,834		$	473,960

Depreciation expense for the three months ended June 30, 2023 and June 30, 2022 was $18.6 million and $17.6 million, respectively.

Depreciation expense for the six months ended June 30, 3023 and June 30, 2022 was ~~$17.6~~$36.6 million and ~~$35.4~~$35.4 million, respectively. ~~Depreciation expense for the three and six months ended June 30, 2021 was $18.9 million and $37.6 million, respectively.~~

NOTE 8 – INTANGIBLE ASSETS

The Company’s finite-lived intangible assets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are summarized in the following table.

As of June 30, 2022

Gross
Carrying
Amount

Accumulated
Amortization

Currency
Translation

Net Carrying Amount

Remaining
Weighted
Average
Amortization
Period

(Dollars in thousands)

Brand name

$
9,000

$
(9,231
)

$
231

$
—

—

Technology

15,000

(15,385
)

385

—

—

Customer relationships

167,000

(105,447
)

(1,928
)

59,625

1-6

Total finite-lived intangibles

$
191,000

$
(130,063
)

$
(1,312
)

$
59,625


As of June 30, 2023	Gross Carrying Amount		Accumulated Amortization			Currency Translation			Net Carrying Amount		Remaining Weighted Average Amortization Period
(Dollars in thousands)
Customer relationships	$	167,000	$	(124,335	)	$	(173	)	$	42,492	1-5


Year Ended December 31, 2022	Gross Carrying Amount		Accumulated Amortization			Currency Translation			Net Carrying Amount		Remaining Weighted Average Amortization Period
(Dollars in thousands)
Customer relationships	$	167,000	$	(114,595	)	$	(908	)	$	51,497	1-6

Year Ended December 31, 2021

Gross
Carrying
Amount

Accumulated
Amortization

Currency
Translation

Net Carrying Amount

Remaining
Weighted
Average
Amortization
Period
(Dollars in thousands)

Brand name

$
9,000

$
(8,503
)

$
258

$
755

1-2
Technology

15,000

(14,172
)

430

$
1,258

2
Customer relationships

167,000

(95,540
)

3,397

$
74,857

2-7
Total finite-lived intangibles

$
191,000

$
(118,215
)

$
4,085

$
76,870

Amortization expense for these intangible assets was ~~$5.6~~$4.9 million and ~~$6.7~~$5.6 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Amortization expense for these intangible assets was $9.7 million and $11.8 millionfor the six months ended June 30, ~~2022~~2023 and ~~2021 was $11.8 million and $13.4 million,~~2022, respectively. The anticipated annual amortization expense for these intangible assets is ~~$20.6 million for 2022, $18.8~~$19.5 million for 2023 and 2024, ~~$9.2~~$9.6 million for 2025, ~~and $2.4~~$2.5 million for ~~2026.~~ 2026, and $1.0 million for 2027.

NOTE 9 – DEBT

A summary of long-term debt and the related weighted average interest rates is shown below:


	June 30, 2023
Debt Instrument	Total Debt		Debt Discount and Issuance Costs (1)			Total Debt, Net			Weighted Average Interest Rate
(Dollars in thousands)
Term Loan Facility	$	398,000	$	(21,583	)	$	376,417			12.9	%
6.00% Senior Notes		235,825		(1,966	)		233,859			6.0	%
European CapEx loans		2,174		—			2,174			2.2	%
Finance leases		2,688		—			2,688			2.6	%
	$	638,687	$	(23,549	)		615,138
Less: Current portion							(7,236	)
Long-term debt						$	607,902


	December 31, 2022
Debt Instrument	Total Debt		Debt Discount and Issuance Costs (1)			Total Debt, Net			Weighted Average Interest Rate
(Dollars in thousands)
Term Loan Facility	$	400,000	$	(22,967	)	$	377,033			12.3	%
6.00% Senior Notes		232,352		(2,458	)		229,894			6.0	%
European CapEx loans		12,365		—			12,365			2.3	%
Finance leases		2,726		—			2,726			2.7	%
	$	647,443	$	(25,425	)		622,018
Less: Current portion							(5,873	)
Long-term debt						$	616,145

June 30, 2022

Debt Instrument

Total
Debt

Debt
Issuance
Costs ⁽¹⁾

Total
Debt, Net

Weighted
Average
Interest
Rate

(Dollars in thousands)

Term Loan Facility

$
349,200

$
(3,439
)

$
345,761

5.7
%
6.00% Senior Notes

226,644

(2,950
)

223,694

6.0
%
European CapEx loans

14,794

—

14,794

2.3
%
Finance leases

2,269

—

2,269

2.9
%

$
592,907

$
(6,389
)

586,518

Less: Current portion

(5,556
)

Long-term debt

$
580,962

(1)

Unamortized portion

December 31, 2021

Debt Instrument

Total
Debt

Debt
Issuance
Costs ⁽¹⁾

Total
Debt, Net

Weighted
Average
Interest
Rate

(Dollars in thousands)

Term Loan Facility

$
349,200

$
(4,338
)

$
344,862

4.1
%
6.00% Senior Notes

245,809

(3,441
)

242,368

6.0
%
European CapEx loans

18,595

—

18,595

2.3
%
Finance leases

2,611

—

2,611

2.8
%

$
616,215

$
(7,779
)

608,436

Less: Current portion

(6,081
)

Long-term debt

$
602,355

~~(1)~~

~~Unamortized portion~~

Senior Notes

On June 15, 2017, the Company issued ~~€250~~€250 million aggregate principal amount of ~~6 percent~~6.00% Senior Notes (“Notes”) due June 15, 2025. Interest on the Notes is payable semiannually, on June 15 and December 15. The Company may redeem the Notes, in whole or in part, at a redemption price of 100 percent, plus any accrued and unpaid interest to, but not including, the applicable redemption date. If we experience a change of control or sell certain assets, the Company may be required to offer to purchase the Notes from the holders. The Notes are senior unsecured obligations ranking equally in right of payment with all of its existing and future senior indebtedness and senior in right of payment to any subordinated indebtedness. The Notes are effectively subordinated in right of payment to the existing and future secured indebtedness of the Company, including the ~~USD~~ Senior Secured Credit Facilities (as defined below), to the extent of the assets securing such indebtedness.

Guarantee

The Notes are unconditionally guaranteed by all material ~~wholly-owned~~wholly owned direct and indirect domestic restricted subsidiaries of the Company (the ~~“Subsidiary~~“Notes Subsidiary Guarantors”), with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract, or would result in adverse tax consequences.

Covenants

Subject to certain exceptions, the indenture governing the Notes contains restrictive covenants that, among other things, limit the ability of the Company and the Notes Subsidiary Guarantors to: (i) incur additional indebtedness or issue certain preferred stock; (ii) pay dividends on, or make distributions in respect of, their capital stock; (iii) make certain investments or other restricted payments; (iv) sell certain assets or issue capital stock of restricted subsidiaries; (v) create liens; (vi) merge, consolidate, transfer or dispose of substantially all of their assets; and (vii) engage in certain transactions with affiliates. These covenants are subject to several important limitations and exceptions that are described in the indenture.

The indenture provides for customary events of default that include, among other things (subject in certain cases to customary grace and cure periods): (i) nonpayment of principal, premium, if any, and interest, when due; (ii) failure for 60 days to comply with any obligations, covenants or agreements in the indenture after receipt of written notice from the Bank of New York Mellon, London Branch ~~(“the Trustee”~~(the “Trustee”) or holders of at least 30 percent in principal amount of the then outstanding Notes of such failure (other than defaults referred to in the foregoing clause (i)); (iii) default under any mortgage, indenture or instrument for money borrowed by the Company or certain of its ~~subsidiaries,~~subsidiaries; (iv) a failure to pay certain judgments; and ~~(iv)~~(v) certain events of bankruptcy and insolvency. If an event of default occurs and is continuing, the Trustee or holders of at least 30 percent in principal amount of the then outstanding Notes may declare the principal, premium, if any, and accrued and unpaid interest on all the Notes to be due and payable. These events of default are subject to several important qualifications, limitations and exceptions that are described in the indenture. As of June 30, ~~2022,~~2023, the Company was in compliance with all covenants under the indenture governing the Notes.

Senior Secured Credit Facilities

On ~~March 22, 2017,~~December 15, 2022, the Company entered into a ~~senior secured~~$400.0 million term loan facility (the “Term Loan Facility”) pursuant to a credit agreement (“(the “Term Loan Credit Agreement”) with ~~certain banks~~Oaktree Fund Administration L.L.C., in its capacity as the administrative agent, JPMorgan Chase Bank, N.A., in its capacity as collateral agent, and other ~~lenders. The Credit Agreement consisted~~lenders party thereto. Concurrent with the execution of ~~a $400.0 million senior secured term loan facility (“~~the Term Loan ~~Facility”), which matures on May 23, 2024, and~~Facility, the Company entered into a ~~$160.0~~$60.0 million revolving credit facility ~~originally maturing on May 23, 2022~~ (the “Revolving Credit

Facility”), and, together with the Term Loan Facility, the ~~USD Senior~~“Senior Secured Credit ~~Facilities (“USD SSCF”~~Facilities” or “SSCF”). pursuant to a credit agreement (the “Revolving Credit Agreement” and, together with the Term Loan Credit Agreement, the “Credit Agreements”) with JPMorgan Chase Bank, N.A., in its capacity as administrative agent, collateral agent and issuing bank, and other lenders and issuing banks thereunder. The previously outstanding $107.5 ~~On May 3, 2021,~~million U.S. revolving credit facility and €60.0 million European revolving credit facility were terminated.

The Revolving Credit Facility and the Term Loan Facility are scheduled to mature on December 15, 2027 and December 15, 2028, respectively. However, in the event the Company has not repaid, refinanced or otherwise extended the maturity date of the Notes beyond the maturity date of the Term Loan Facility by the date 91 days prior to June 15, 2025, the Term Loan Facility and Revolving Credit Facility would mature 91 days prior to June 15, 2025. Similarly, in the event the Company has not redeemed, refinanced or otherwise extended the unconditional redemption date of the redeemable preferred stock beyond the maturity date of the Term Loan Facility by the date 91 days prior to September 14, 2025, the Term Loan Facility and Revolving Credit Facility would mature 91 days prior to September 14, 2025. The Term Loan Facility requires quarterly principal payments of $1.0 million. Additional principal payments may be due with respect to asset sales, debt issuances and as a percentage of cash flow in excess of a specified threshold.

The $388.0 million of proceeds from the Term Loan Facility (consisting of the $400.0 million aggregate principal less the original issuance discount of $12.0 million) were used to repay $349.2 million in borrowings under the previously outstanding term loan and pay debt issuance costs and expenses incurred in connection with the Term Loan Facility and Revolving Credit Facility. Debt issuance costs associated with the Term Loan Facility of $11.1 million are being amortized over the six-year term. Debt issuance costs and expenses associated with the Revolving Credit Facility ~~under its USD SSCF and reduced the commitment under the facility from $160.0 million to $132.5 million, with $25.0 million~~ of ~~the commitment maturing May 23, 2022 and the remaining $107.5 million maturing October 31, 2023.~~$3.2 ~~The commitment remaining under the USD SSCF was $107.5~~ million ~~as of June 30, 2022 following the $25.0 million maturity on May 23, 2022. The extension~~ ~~was treated as a modification of the revolving credit facility and the related debt issuance costs~~ have been recognized as a deferred charge ~~in other non-current assets~~ and are being amortized ~~ratably~~ over the ~~remaining term~~five-year term. In connection with the termination of the ~~extended facility.~~previously outstanding term loan and revolving credit facilities, unamortized debt issuance costs of $3.7 million were written off and charged to interest expense.

The Company may at any time request one or more increases in the amount of (i) commitments under the Term Loan Facility, up to an unlimited additional amount if, on a pro forma basis after the incurrence of such amount, the First Lien Net Leverage Ratio (as defined in the Term Loan Credit Agreement) does not exceed 2.00 to 1.00 and (ii) commitments under the Revolving Credit Facility, up to an aggregate maximum additional amount of $50.0 million, in each case, subject to certain conditions (including the agreement of a lender to provide such commitment increase). Amounts borrowed under the Term Loan Facility may be voluntarily prepaid at any time subject to a prepayment premium of 2.00 percent of the loan principal plus the net present value of any unpaid post redemption interest in the first year and 2.00 percent and 1.00 percent of the loan principal during second and third years, respectively. After the third anniversary of the closing date, there is no prepayment premium.

Borrowings under the Term Loan Credit Facility ~~will~~ bear interest at a rate equal to, at the Company’s option, either ~~(a) LIBOR for~~(i) the ~~relevant interest period, adjusted for statutory requirements, subject to~~secured overnight financing rate (“SOFR”), with a floor of ~~0.00~~1.50 percent per annum, ~~plus an applicable rate of 4.00 percent~~ or ~~(b)~~(ii) a base rate ~~subject to~~(“Term Base Rate”), with a floor of ~~2.00~~1.50 percent per annum, equal to the highest of (1) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (2) the ~~federal funds~~New York Federal Reserve Bank (the “NYFRB”) rate plus 0.50 percent and (3) ~~LIBOR~~SOFR for an interest period of one month plus 1.00 percent, in each case, plus anthe applicable rate. The applicable rate is determined by reference to the Company’s Secured Net Leverage Ratio (as defined in the Term Loan Credit Agreement) and will range between 7.50 percent and 8.00 percent for SOFR loans (7.75 percent for the current fiscal quarter), and between 6.50 percent and 7.00 percent for Term Base Rate loans (6.75 percent for the current fiscal quarter). In the event of a payment default under the Term Loan Credit Agreement, past due amounts shall be subject to an additional default interest rate of ~~3.00~~ 2.00 percent.

Borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company’s option, either ~~(a) LIBOR for~~(i) SOFR plus 0.10 percent (or, with respect to any borrowings denominated in euros, the ~~relevant interest period,~~adjusted Euro Interbank Offered Rate, “EURIBOR”), with a floor of 0.00 percent per annum ~~plus the applicable rate~~ or ~~(b)~~(ii) a base rate (“Revolving Loan Base Rate”), with a floor of ~~0.00~~1.00 percent per annum, equal to the highest of (1) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (2) the ~~federal funds effective~~NYFRB rate plus 0.50 percent and (3) ~~LIBOR~~SOFR for an interest period of one month plus 1.00 percent, in each case, plus the applicable rate. The applicable ~~rates for borrowings under~~rate is determined by reference to the Company’s Secured Net Leverage Ratio (as defined in the Revolving Credit ~~Facility are based upon the First Lien Net Leverage Ratio effective~~Agreement) and ranges between 3.50 percent and 4.50 percent for SOFR and EURIBOR loans (3.50 percent for the ~~preceding quarter, with LIBOR applicable rates ranging~~current fiscal quarter), and between ~~3.50~~2.50 percent and ~~3.00~~3.50 percent ~~currently 3.00~~for Revolving Base Rate loans (2.50 percent ~~and base rate applicable rates ranging between 2.50 percent and 2.00 percent, currently 2.00 percent. Commitment fees~~for the current fiscal quarter). The commitment fee for the unused commitment under the Revolving Credit Facility ~~are also based upon~~varies between 0.50 percent and 0.625 percent depending on the ~~First Lien~~Company’s Secured Net Leverage Ratio ~~effective for the preceding quarter, and range between~~ (0.50 ~~percent and 0.25~~ percent for the ~~commitment maturing May 23, 2022, currently 0.25 percent, and between 0.625 percent and 0.375 percent for the remaining commitment maturing October 31, 2023, currently 0.375 percent.~~current fiscal quarter). Commitment fees are included in interest expense.

As In the event of ~~June 30, 2022, the Company had repaid $50.8 million under the Term Loan Facility resulting in~~ a ~~balance of $349.2 million. In addition, the Company had 0 borrowings outstanding~~payment default under the Revolving Credit ~~Facility, outstanding letters~~Agreement, past due amounts shall be subject to an additional default interest rate of ~~credit of $4.8 million and available unused commitments under this facility of $102.7 million as of June 30, 2022.~~2.00 percent.

Guarantees and Collateral Security

Our obligations under the Credit ~~Agreement~~Agreements are unconditionally guaranteed by the Notes Subsidiary Guarantors and certain other domestic and foreign subsidiaries of the Company (collectively, the “SSCF Subsidiary Guarantors”), with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in adverse tax consequences. The guarantees of such obligations, ~~will be~~are secured, subject to permitted liens and other exceptions, by substantially all of our assets and the SSCF Subsidiary Guarantors’ assets, including but not limited to: (i) a perfected pledge of all of the capital stock issued by each of the SSCF Subsidiary ~~Guarantors (subject to certain exceptions) and up to 65 percent of the capital stock issued by each direct wholly-owned foreign restricted subsidiary of the Company~~Guarantors’ (subject to certain exceptions) and (ii) perfected security interests in and mortgages on substantially all tangible and intangible personal property and material fee-owned real property of the Company and the SSCF Subsidiary Guarantors (subject to certain exceptions and exclusions). The Company’s obligations under the Revolving Credit Facility are secured by liens on a super-priority basis ranking ahead of the liens securing the Term Loan Facility.

Covenants

The Credit ~~Agreement contains~~Agreements contain a number of restrictive covenants that, among other things, restrict, subject to certain exceptions, our ability to incur additional indebtedness and guarantee indebtedness, create or incur liens, engage in mergers or consolidations, sell, transfer or otherwise dispose of assets, make investments, acquisitions, loans or advances, pay dividends, distributions or other restricted payments, or repurchase our capital stock. The Credit ~~Agreement~~Agreements also ~~restricts~~restrict our ability to prepay, redeem or repurchase any subordinated indebtedness, enter into agreements which limit our ability to incur liens on our assets or that restrict the ability of restricted subsidiaries to pay dividends or make other restricted payments to us, and enter into certain transactions with our affiliates. ~~Solely~~

~~with respect~~

The Term Loan Credit Agreement requires the Company to maintain (i) a quarterly Secured Net Leverage Ratio (as defined in the Term Loan Credit Agreement) of no more than 3.50:1.00 and (ii) Liquidity (defined as the sum of unrestricted cash and cash equivalent balances and unborrowed commitments under the Revolving Credit Facility) of at least $37.5 million (subject to adjustments up to $50.0 million following any increase in the commitment under the Revolving Credit Facility). The Revolving Credit Agreement requires the Company to maintain (i) a quarterly Total Net Leverage Ratio (as defined in the Revolving Credit Agreement) of no more than 4.50:1.00; (ii) a quarterly Secured Net Leverage Ratio (as defined in the Revolving Credit Agreement) of no more than 3.50:1.00; and (iii) Liquidity of at least $37.5 million (subject to adjustments up to $50.0 million following any increase in the commitment under the Revolving Credit Facility) but only so long as loans under the Term Loan Facility are outstanding. In the event unrestricted cash and cash equivalent balances fall below $37.5 million at any quarter end (or up to a maximum of $50.0 million following any increase in borrowings available under the Revolving Credit Facility), the available commitment under the Revolving Credit Facility would be reduced by the amount of any shortfall.

The Credit ~~Agreement also requires a Total Net Leverage Ratio (calculated as defined~~Agreements contain customary default provisions that include among other things: nonpayment of principal or interest when due, failure to comply with obligations, covenants or other provisions in the Credit ~~Agreement)~~Agreements, any failure of ~~not more than 4.5~~representations and warranties, cross-default under other debt agreements for obligations in excess of $20.0 million, insolvency, failure to ~~1.0 as~~pay judgments in excess of ~~each fiscal quarter-end.~~$20.0 million within 60 days of the judicial award, failure to pay any material plan withdrawal obligations under ERISA, invalidity of the loan agreement, invalidity of any security interest in the loan collateral, change of control and failure to maintain the financial covenants. In the event a default occurs, all commitments under the Senior Secured Credit Facilities would be terminated and the lenders would be entitled to declare the principal, premium, if any, and accrued and unpaid interest on all borrowings outstanding to be due and payable.

In addition, the Credit ~~Agreement contains~~Agreements contain customary ~~default provisions,~~ representations and warranties and other covenants. ~~The Credit Agreement also contains a provision permitting the Lenders to accelerate the repayment of all loans outstanding under the USD SSCF during an event of default.~~ As of June 30, ~~2022,~~2023, the Company was in compliance with all covenants under the Credit ~~Agreement.~~Agreements.

Available Unused Commitments under the Revolving Credit Facility

As of June 30, 2023, the Company had no outstanding borrowings under the Revolving Credit Facility, had outstanding letters of credit of $4.8 million and had available unused commitments under the Revolving Credit Facility of $55.2 million.

European Debt

In connection with the acquisition of UNIWHEELS AG in 2017, the Company assumed ~~$70.7~~$70.7 million of outstanding debt. AtAs of June 30, ~~2022, $4.9~~2023, $2.2 million of the assumed debt remained outstanding. ~~This~~The debt matures March 31, 2024, and is collateralized by the financed equipment, guaranteed by Superior and bears interest at a rate of 2.2 percent. Covenants under the loan agreement include a default provision for ~~non-payment,~~nonpayment, as well as a material adverse change default provision pursuant to which the lender could accelerate the loan maturity. As of June 30, ~~2022,~~2023, the Company was in compliance with all covenants under the loan agreement.

During the second quarter of 2021, the Company amended its European Revolving Credit Facility (“EUR SSCF”), extending the term to May 22, 2023 and increasing the applicable margin and commitment fees, while maintaining the €60.0 million commitment. All other terms of the EUR SSCF remained unchanged. At June 30, 2022, the Company had 0 borrowings outstanding, outstanding letters of credit of $0.4 million (€0.4 million) and available unused commitments under this facility of $62.2 million (€59.6 million). The EUR SSCF bears interest at Euribor (with a floor of 0.00 percent) plus a margin (ranging from 2.05 percent to 3.50 percent based on the net debt leverage ratio of Superior Industries Europe AG and its wholly owned subsidiaries, collectively “Superior Europe AG”), currently 2.05 percent. The annual commitment fee for unused commitments (ranging from 0.625 percent to 1.225 percent based on the net debt leverage ratio of Superior Europe AG) is currently 0.625 percent per annum. In addition, a management fee is assessed equal to 0.07 percent of borrowings outstanding at each month end. The commitment fee is included in interest expense. Superior Europe AG has pledged substantially all of its assets, including land and buildings, receivables, inventory, and other moveable assets (other than collateral associated with equipment loans) as collateral under the EUR SSCF.

The EUR SSCF is subject to a number of restrictive covenants that, among other things, restrict, subject to certain exceptions, the ability of Superior Europe AG to incur additional indebtedness and guarantee indebtedness, create or incur liens, engage in mergers or consolidations, sell, transfer or otherwise dispose of assets, make investments, acquisitions, loans or advances, pay dividends or distributions, or repurchase our capital stock, prepay, redeem, or repurchase any subordinated indebtedness, and enter into agreements which limit our ability to incur liens on our assets. In addition, the EUR SSCF includes an annual pay down provision requiring outstanding balances to be repaid but not reborrowed for a period of three business days and a material adverse change default provision pursuant to which the lender could accelerate the loan maturity. At June 30, 2022, Superior Europe AG was in compliance with all covenants under the EUR SSCF.

The balance of certain post-acquisition equipment loans was $9.9 million as of June 30, 2022. The loans bear interest at 2.3 percent, mature September 30, 2027 and require quarterly principal and interest payments. The loans are secured with liens on the financed equipment and are subject to covenants that, among other things, ~~include a material adverse change default provision pursuant to which the lender could accelerate the loan maturity, as well as a provision that~~ ~~restricts the ability of Superior Europe AG to reduce its ownership interest in Superior Industries Production Germany GmbH, its wholly owned subsidiary, and the borrower under the loan.~~ ~~The Company drew down €10.6 million on these equipment loans in the first quarter of 2020 and drew the remaining €1.4~~ ~~million in the first quarter of 2021.~~ ~~Quarterly installment payments of $0.5 million (€0.4 million) under the loan agreements began in~~ ~~June of 2021. At June 30, 2022, the Company was in compliance with all covenants under the loans.~~

Debt maturities as of June 30, ~~2022,~~2023, which are due in the next five years and thereafter are as follows:


Debt Maturities	Amount
(Dollars in thousands)
Six remaining months of 2023	$	4,511
2024		5,452
2025		240,417
2026		4,190
2027		4,106
Thereafter		380,011
Total debt liabilities	$	638,687

Debt Maturities

Amount

(Dollars in thousands)

Six remaining months of 2022

$
3,206

2023

5,372

2024

352,099

2025

228,722

2026

1,970

Thereafter

1,538

Total debt liabilities

$
592,907

NOTE 10 - SUPPLIER FINANCE PROGRAM

The Company receives extended payment terms for a portion of our purchases (90 days rather than 60 days) with one of our principal aluminum suppliers in exchange for a nominal adjustment to the product pricing. The payment terms provided to us are consistent with aluminum industry norms, as well as those offered to the supplier’s other customers. The supplier factors receivables due from us with a financial institution. We are not a party to the supplier’s factoring agreement with the financial institution. We remit payments directly to our supplier, except with respect to product purchased under extended terms which have been factored by the supplier. These payments are remitted directly to the financial institution in accordance with the payment terms originally negotiated with our supplier. These payments are included in cash flows from operations within the condensed consolidated statements of cash flows. The following table summarizes activity in the amounts owed to the financial institution for the six months ended June 30, 2023 and June 30, 2022:


	Six Months Ended
	June 30, 2023			June 30, 2022
(Dollars in thousands)
Outstanding at the beginning of the period		14,371			17,638
Added during the period		65,341			69,385
Settled during the period		(56,197	)		(75,751	)
Outstanding at the end of the period		23,515			11,272

NOTE 1011 - REDEEMABLE PREFERRED STOCK

During 2017, we issued 150,000 shares of Series A ~~(140,202~~(140,202 shares) and Series B ~~(9,798~~(9,798 shares) Perpetual Convertible Preferred Stock, par value ~~$0.01~~$0.01 per share for ~~$150.0~~$150.0 million. On August 30, 2017, the Series B shares were converted into Series A redeemable preferred stock ~~the~~(the “redeemable preferred ~~stock,”~~stock”) after approval by our shareholders. The redeemable preferred stock has an initial stated value of ~~$1,000~~$1,000 per share, par value of ~~$0.01~~$0.01 per share and liquidation preference over common stock.

The redeemable preferred stock is convertible into shares of our common stock equal to the number of shares determined by dividing the sum of the stated value and any accrued and unpaid dividends by the conversion price of ~~$28.162.~~$28.162. The redeemable preferred stock accrues dividends at a rate of ~~9.0~~9 percent per annum, payable at our election either in-kind or in cash and is also entitled to participate in dividends on common stock in an amount equal to that which would have been due had the shares been converted into common stock.

We may mandate conversion of the redeemable preferred stock if the price of the common stock exceeds ~~$84.49.~~$84.49. The holder may redeem the shares upon the occurrence of any of the following events (referred to as a “redemption event”): a change in control, recapitalization, merger, sale of substantially all of the Company’s assets, liquidation or delisting of the Company’s common stock. In addition, the holder ~~has the right, at its option, to~~may unconditionally redeem the shares at any time on or after September 14, ~~2025.~~2025. We may, at our option, redeem in whole at any time all of the shares of redeemable preferred stock outstanding. At redemption by either party, the redemption value will be the greater of two times the initial face value ($150.0 million) and any accrued unpaid dividends or dividends paid-in-kind, currently ~~$300.0~~$300.0 million, or the product of the number of common shares into which the redeemable preferred stock could be converted ~~(5.3~~(5.3 million shares currently) and the then current market price of the common stock. Under Delaware law, any redemption payment would be limited to the “surplus” that our Board determines is available to fund a full or partial redemption without rendering us insolvent.

We have determined that the conversion option and the redemption option exercisable upon the occurrence of a “redemption event” which are embedded in the redeemable preferred stock must be accounted for separately from the redeemable preferred stock as a derivative liability.

Since the redeemable preferred stock may be redeemed at the option of the holder, but is not mandatorily redeemable, the redeemable preferred stock ~~has been~~was classified as mezzanine equity and initially recognized at fair value of ~~$150.0~~$150.0 million (the proceeds on the date of issuance), less issuance costs of ~~$3.7~~$3.7 million and ~~$10.9~~$10.9 million assigned to the embedded derivative liability at date of issuance, resulting in an adjusted initial value of ~~$135.5~~$135.5 million.

The difference between the redemption value of the redeemable preferred stock and the carrying value (the “premium”) is being accreted over the period from the date of issuance through September 14, 2025 using the effective interest method. The accretion is treated as a deemed dividend, recorded as a charge to retained earnings and deducted in computing earnings per share (analogous to the treatment for stated and participating dividends paid on the redeemable preferred ~~stock)~~shares). The cumulative premium accretion as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$75.5~~$99.6 million and ~~$64.4~~$87.3 million, respectively, resulting in adjusted redeemable preferred stock balances of ~~$211.0~~$235.1 million and ~~$199.9~~$222.8 million, respectively.

NOTE 1112 – EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income (loss), after deducting preferred dividends and accretion and European ~~non-controlling~~noncontrolling redeemable equity dividends, by the weighted average number of common shares outstanding. For purposes of calculating diluted earnings per share, the weighted average shares outstanding includes the dilutive effect of outstanding stock options and time and performance based restricted stock units under the treasury stock method. The redeemable preferred shares discussed in Note ~~10,~~11, “Redeemable Preferred Stock” (convertible into 5,326 thousand shares) have not been included in the diluted earnings per share because the inclusion of such shares on an as converted basis would be anti-dilutive for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021			June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
(Dollars in thousands, except per share amounts)
Basic Earnings Per Share:
Net income	$	10,844		$	1,695		$	20,914		$	14,817
Net (loss) income													$	(67	)	$	10,844		$	(4,114	)	$	20,914
Less: Redeemable preferred stock dividends and accretion		(9,001	)		(8,422	)		(17,911	)		(16,712	)		(9,645	)		(9,001	)		(19,085	)		(17,911	)
Less: European non-controlling redeemable equity dividend		(11	)		(25	)		(22	)		(38	)
Less: European noncontrolling redeemable equity dividend														(11	)		(11	)		(21	)		(22	)
Basic numerator	$	1,832		$	(6,752	)	$	2,981		$	(1,933	)	$	(9,723	)	$	1,832		$	(23,220	)	$	2,981
Basic earnings (loss) per share	$	0.07		$	(0.26	)	$	0.11		$	(0.07	)
Basic (loss) earnings per share													$	(0.35	)	$	0.07		$	(0.84	)	$	0.11
Weighted average shares outstanding – Basic		26,918			25,974			26,659			25,841			28,035			26,918			27,669			26,659
Diluted Earnings Per Share:
Net income	$	10,844		$	1,695		$	20,914		$	14,817
Net (loss) income													$	(67	)	$	10,844		$	(4,114	)	$	20,914
Less: Redeemable preferred stock dividends and accretion		(9,001	)		(8,422	)		(17,911	)		(16,712	)		(9,645	)		(9,001	)		(19,085	)		(17,911	)
Less: European non-controlling redeemable equity dividend		(11	)		(25	)		(22	)		(38	)
Less: European noncontrolling redeemable equity dividend														(11	)		(11	)		(21	)		(22	)
Diluted numerator	$	1,832		$	(6,752	)	$	2,981		$	(1,933	)	$	(9,723	)	$	1,832		$	(23,220	)	$	2,981
Diluted earnings (loss) per share	$	0.07		$	(0.26	)	$	0.11		$	(0.07	)
Diluted (loss) earnings per share													$	(0.35	)	$	0.07		$	(0.84	)	$	0.11
Weighted average shares outstanding – Basic		26,918			25,974			26,659			25,841			28,035			26,918			27,669			26,659
Dilutive effect of common share equivalents		504			—			677			—			—			504			—			677
Weighted average shares outstanding – Diluted		27,422			25,974			27,336			25,841			28,035			27,422			27,669			27,336

NOTE 1213 - INCOME TAXES

The estimated annual effective tax rate is forecasted quarterly using actual historical information and forward-looking estimates and applied to year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances, settlements with taxing authorities and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

The income tax provision for the three and six months ended June 30, 2023 was $5.8 million and $9.1 million, respectively, on pre-tax income of $5.7 million and $5.0 million, resulting in an effective income tax rate of 101.2 percent and 182.6 percent, respectively. The effective income tax rate for the three months ended June 30, 2023 differs from the statutory rate primarily due to valuation allowances and the mix of earnings among tax jurisdictions. The effective income tax rate for the six months ended June 30, 2023 differs from the statutory rate primarily due to valuation allowances, the reversal of an uncertain tax position and the mix of earnings among tax jurisdictions.

The income tax provision for the three and six months ended June 30, 2022 was ~~$5.4~~$5.4 million and ~~$8.9~~$8.9 million, respectively, on pre-tax income of ~~$16.2~~$16.2 million and ~~$29.8~~$29.8 million, resulting in an effective income tax ~~rates~~rate of 33.3 percent and 29.9 percent, respectively. The effective income tax rate for the three months ended June 30, 2022 differs from the statutory rate primarily due to valuation allowances and the mix of earnings among tax jurisdictions. The effective income tax rate for the six months ended June 30, 2022 differs from the statutory rate primarily due to valuation allowances, the reversal of an uncertain tax position and the mix of earnings among tax jurisdictions.

The Company continuously evaluates the realizability of our net deferred tax assets. As of June 30, 2023, substantially all our U.S. and certain German deferred tax assets, net of deferred tax liabilities, were subject to valuation allowances. If our financial results improve, our assessment of the realization of our net deferred tax assets could result in the release of some or all of the valuation allowances. Such a release would result in a material noncash income tax ~~provision for~~benefit in the ~~three~~period of release and ~~six~~the recording of additional deferred tax assets. There is a reasonable possibility that, within the next twelve months, ~~ended June 30, 2021 was $0.9 million and $1.7 million, respectively, on pre-tax income~~sufficient positive evidence becomes available to reach a conclusion that all or a significant portion of ~~$2.6 million and $16.5 million, resulting in effective income tax rates of 35.2 percent and 10.4 percent, respectively. The effective income tax rate for~~ the ~~three months ended June 30, 2021 differed from the statutory rate primarily due to U.S.~~ valuation allowances ~~and the mix of earnings among~~against our U.S. net deferred tax jurisdictions, partially offset by a favorable adjustment to a tax credit. The effective income tax rate for the six months ended June 30, 2021 differs from the statutory rate primarily due to a favorable adjustment to a tax credit and the reversal of an uncertain tax position, partially offset by the mix of earnings among tax jurisdictions and U.S. valuation allowances.assets would no longer be required.

NOTE 1314 - LEASES

The Company determines whether an arrangement is or contains a lease at the inception of the arrangement. Operating leases are included in other ~~non-current~~noncurrent assets, accrued expenses and other ~~non-current~~noncurrent liabilities in our condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, net, short-term debt and long-term debt (less current portion) in our condensed consolidated balance sheets.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Finance and operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. Since we generally do not have access to the interest rate implicit in the lease, the Company uses our incremental borrowing rate (for fully collateralized debt) at the inception of the lease in determining the present value of the lease payments. The implicit rate is, however, used where readily available. Lease expense under operating leases is recognized on a straight-line basis over the term of the lease. Certain of our leases contain both lease and ~~non-lease~~nonlease components, which are accounted for separately.

The Company has operating and finance leases for office facilities, a data center and certain equipment. The remaining terms of our leases range from over one year to ~~seven years.~~ six years. Certain leases include options to extend the lease term for up to ten years, as well as options to terminate, both of which have been excluded from the term of the lease since exercise of these options is not reasonably certain.

Lease expense and cash flow for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~June 30, 2022 and operating and finance lease assets and liabilities, average lease term and average discount rate as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are as follows:


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023			June 30, 2022
(Dollars in thousands)
Lease Expense
Finance lease expense:
Amortization of right-of-use assets	$	251	$	259	$	496		$	573
Interest on lease liabilities		15		14		31			29
Operating lease expense		738		659		1,361			1,345
Total lease expense	$	1,004	$	932	$	1,888		$	1,947

Cash Flow Components
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from finance leases	$	15	$	14	$	31		$	29
Operating cash outflows from operating leases		766		711		1,402			1,469
Financing cash outflows from finance leases		263		243		551			547
Right-of-use assets obtained in exchange for finance lease liabilities, net of terminations and disposals		142		212		538			335
Right-of-use assets obtained in exchange for operating lease liabilities, net of terminations and disposals		651		61		651			232

					June 30, 2023			December 31, 2022
(Dollars in thousands, except lease term and discount rate)
Balance Sheet Information
Operating leases:
Other noncurrent assets					$	8,145		$	8,325
Accrued liabilities					$	(2,471	)	$	(2,137	)
Other noncurrent liabilities						(5,698	)		(6,516	)
Total operating lease liabilities					$	(8,169	)	$	(8,653	)

Finance leases:
Property, plant and equipment gross					$	8,460		$	7,899
Accumulated depreciation						(6,180	)		(5,684	)
Property, plant and equipment, net					$	2,280		$	2,215
Current portion of long-term debt					$	(1,062	)	$	(1,053	)
Long-term debt (less current portion)						(1,626	)		(1,673	)
Total finance lease liabilities					$	(2,688	)	$	(2,726	)

Lease Term and Discount Rates
Weighted-average remaining lease term - finance leases (years)						2.9			3.2
Weighted-average remaining lease term - operating leases (years)						3.6			4.2
Weighted-average discount rate - finance leases						2.6	%		2.7	%
Weighted-average discount rate - operating leases						3.8	%		3.6	%

Three Months Ended

Six Months Ended

June 30,
2022

June 30,
2021

June 30,
2022

June 30,
2021

Lease Expense

(Dollars in thousands)

Finance lease expense:

     Amortization of right-of-use assets

$
259

$
350

$
573

$
671

     Interest on lease liabilities

14

23

29

45

Operating lease expense

659

791

1,345

1,648

     Total lease expense

$
932

$
1,164

$
1,947

$
2,364

Cash Flow Components

(Dollars in thousands)

Cash paid for amounts included in the measurement of lease
     liabilities:

     Operating cash outflows from finance leases

$
14

$
23

$
29

$
45

     Operating cash outflows from operating leases

711

871

1,469

1,803

     Financing cash outflows from finance leases

243

357

547

645

Right-of-use assets obtained in exchange for finance lease
     liabilities, net of terminations and disposals

212

79

335

835

Right-of-use assets obtained in exchange for operating lease
     liabilities, net of terminations and disposals

61

56

232

208

June 30,
2022

December 31,
2021

Balance Sheet Information

(Dollars in thousands, except lease term and discount rate)

Operating leases:

     Other non-current assets

$
9,195

$
10,772

     Accrued liabilities

$
(2,128
)

$
(2,371
)
     Other non-current liabilities

(7,402
)

(8,860
)
          Total operating lease liabilities

$
(9,530
)

$
(11,231
)

Finance leases:

     Property, plant and equipment gross

$
7,098

$
6,603

     Accumulated depreciation

(4,071
)

(4,644
)
     Property, plant and equipment, net

$
3,027

$
1,959

     Current portion of long-term debt

$
(855
)

$
(982
)
     Long-term debt (less current portion)

(1,414
)

(1,629
)
          Total finance lease liabilities

$
(2,269
)

$
(2,611
)

Lease Term and Discount Rates

Weighted-average remaining lease term - finance leases (years)

3.4

3.4

Weighted-average remaining lease term - operating leases (years)

5.0

5.0

Weighted-average discount rate - finance leases

2.9
%

2.8
%
Weighted-average discount rate - operating leases

3.6
%

3.6
%

Future minimum payments under our leases as of June 30, ~~2022~~2023 are as follows:


	Amount
(Dollars in thousands)
Lease Maturities	Finance Leases			Operating Leases
Six remaining months of 2023	$	1,062		$	1,263
2024		727			2,449
2025		592			2,099
2026		190			1,941
2027		106			915
Thereafter		103			43
Total		2,780			8,710
Less: Imputed interest		(92	)		(541	)
Total lease liabilities, net of interest	$	2,688		$	8,169

Amount

Lease Maturities

Finance Leases

Operating Leases

(Dollars in thousands)

Six remaining months of 2022

$
855

$
1,506

2023

671

2,388

2024

286

2,134

2025

162

1,983

2026

128

1,848

Thereafter

262

487

Total

2,364

10,346

Less: Imputed interest

(95
)

(816
)
Total lease liabilities, net of interest

$
2,269

$
9,530

NOTE 1415 – RETIREMENT PLANS

We have an unfunded salary continuation plan covering certain directors, officers and other key members of management. Subject to certain vesting requirements, the plan provides for a benefit based on final average compensation, which becomes payable on the employee’s death or upon attaining age 65, if retired. The plan was closed to new participants effective February 3, 2011.

For the six months ended June 30, ~~2022,~~2023 payments to retirees or their beneficiaries totaled approximately ~~$0.7~~$0.7 million. We presently anticipate benefit payments in ~~2022~~2023 to total ~~$1.4~~$1.4 million. The following table summarizes the components of net periodic pension cost for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~

June 30, 2022.

Three Months Ended

Six Months Ended

June 30,
2022

June 30,
2021

June 30,
2022

June 30,
2021

(Dollars in thousands)

Interest cost

$
218

$
206

$
436

$
412

Net amortization

83

97

166

194

Net periodic pension cost

$
301

$
303

$
602

$
606


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
(Dollars in thousands)
Interest cost	$	304	$	218	$	608	$	436
Net amortization		—		83		—		166
Net periodic pension cost	$	304	$	301	$	608	$	602

NOTE 1516 - STOCK-BASED COMPENSATION

Equity Incentive Plan

Our 2018 Equity Incentive Plan (the “Plan”) was approved by stockholders in May 2018, authorizing us to issue up to 4.35 million shares of common stock, along with ~~non-qualified~~nonqualified stock options, stock appreciation rights, restricted stock units and performance restricted stock units to our officers, key employees, ~~non-employee~~nonemployee directors and consultants. In May 2021, the stockholders approved an amendment to the Plan that, among other things, increased the authorized shares by 2 million. In May 2023, the stockholders approved an amendment to the Plan that, among other things, increased the authorized shares by 3.4 million. At June 30, ~~2022,~~2023, there were ~~0.2~~2.0 million shares available for future grants under this Plan. It is our policy to issue shares from authorized but not issued shares upon the exercise of stock options.

Under the terms of the Plan, each year eligible participants are granted time value restricted stock units (“RSUs”), vesting ratably over a three-year period, and performance restricted stock units (“PSUs”), with three-year cliff vesting. Upon vesting, each restricted stock award is exchangeable for one share of the Company’s common stock, with accrued dividends.

RSU, PSU and option activity for the six months ended June 30, 2023 and June 30, 2022 is summarized in the following table:

	Equity Incentive Awards
	Restricted Stock Units			Weighted Average Grant Date Fair Value		Performance Shares			Weighted Average Grant Date Fair Value		Options			Weighted Average Exercise Price		Equity Incentive Awards
Balance at December 31, 2021		966,429		$	4.62		2,484,581		$	6.67		9,000		$	16.76
																Restricted Stock Units			Weighted Average Grant Date Fair Value		Performance Shares			Weighted Average Grant Date Fair Value		Options		Weighted Average Exercise Price
Balance at January 1, 2023																	896,799		$	4.16		2,323,101		$	6.26		—	$	—
Granted		515,491			3.93		667,345			5.33		—			—		687,781			4.23		920,264			4.80		—		—
Settled		(580,551	)		4.73		(719,659	)		6.68		—			—		(553,093	)		3.80		(1,016,574	)		5.13		—		—
Forfeited or expired		(4,570	)		3.77		(109,166	)		7.24		(9,000	)		16.76		(29,853	)		5.80		(34,037	)		8.50		—		—
Balance at June 30, 2022		896,799		$	4.16		2,323,101		$	6.26		—		$	—
Balance at June 30, 2023																	1,001,634		$	4.39		2,192,754		$	5.98		—	$	—

Awards estimated to vest in the future		896,799		$	4.16		2,097,894		$	6.28		—		$	—		1,001,634		$	4.39		2,362,196		$	5.97		—	$	—


	Equity Incentive Awards
	Restricted Stock Units			Weighted Average Grant Date Fair Value		Performance Shares			Weighted Average Grant Date Fair Value		Options			Weighted Average Exercise Price
Balance at January 1, 2022		966,429		$	4.62		2,484,581		$	6.67		9,000		$	16.76
Granted		515,491			3.93		667,345			5.33		—			—
Settled		(580,551	)		4.73		(719,659	)		6.68		—			—
Forfeited or expired		(4,570	)		3.77		(109,166	)		7.24		(9,000	)		16.76
Balance at June 30, 2022		896,799		$	4.16		2,323,101		$	6.26		—		$	—

Awards estimated to vest in the future		896,799		$	4.16		2,097,894		$	6.28		—		$	—

Stock-based compensation expense for the three months ended June 30, 2023 and 2022 ~~and 2021~~ was ~~$2.0~~$2.2 million and ~~$2.5~~$2.0 million, respectively. Stock-based compensation for the six months ended June 30, 2023 and 2022 ~~and 2021~~ was ~~$4.7~~$3.0 million and ~~$4.3~~$4.7 million, respectively. Unrecognized stock-based compensation expense related to ~~non-vested~~nonvested awards of ~~$11.0~~$11.5 million is expected to be recognized over a weighted average period of approximately ~~1.9~~2.0 years as of June 30, ~~2022.~~ 2023.

NOTE 1617 – COMMITMENTS AND CONTINGENCIES

Purchase Commitments

When market conditions warrant, we may enter into purchase commitments to secure the supply of certain commodities used in the manufacture of our products, such as aluminum, natural gas and other raw materials. Prices under our aluminum contracts are based on a market index and regional premiums for processing, transportation and alloy components which are adjusted quarterly for purchases in the ensuing quarter. Certain of our purchase agreements include volume ~~commitments;~~commitments, however any excess commitments are generally negotiated with suppliers and those which have occurred in the past have been carried over to future periods.

Contingencies

In March 2022, the German Federal Cartel Office initiated an investigation related to European light alloy wheel manufacturers, including Superior Industries Europe AG (a wholly owned subsidiary of the Company), on suspicion of conduct restricting competition. The Company is cooperating fully with the German Federal Cartel Office. In the event Superior Industries Europe AG is deemed to have violated the applicable statutes, the Company could be subject to a fine or civil proceedings. At this point, we are unable to predict the duration or the outcome of the investigation.

The Company purchases electricity and natural gas requirements for its manufacturing operations in Poland from a single energy distributor. Superior and its energy distributor, as well as the parent company of the energy distributor, have filed various claims against one another. These claims generally request the court to determine whether Superior’s energy contracts with the energy distributor were valid during the period December 2021 through May 2022.In December 2021, the Company’s energy distributor informed the Company it would no longer supply energy, notwithstanding its contractual obligation to continue supply. Following a request from the Company, the court enjoined the energy distributor from terminating supply to the Company. The energy distributor’s parent filed a suit against the Company asserting that the Company’s energy contracts were no longer valid and asserting that the Company owed additional amounts for its purchases equal to the excess of market prices over prices set forth in the energy contracts. If the court concludes that the energy contracts were not valid during this period, Superior could be required to pay up to an additional $14.1 million for its energy purchases plus interest. Any such adverse judgment would be appealed by the Company. A final conclusion in this matter is anticipated to take 18-24 months. We have concluded that an unfavorable ruling is not probable and, therefore, we have not recognized any provision for this contingent loss as of June 30, 2023.

NOTE 1718 – RECEIVABLES FACTORING

The Company sells certain customer trade receivables on a non-recourse basis under factoring arrangements with designated financial institutions. These transactions are accounted for as sales and cash proceeds are included in cash provided by operating activities. Factoring arrangements incorporate customary representations and warranties, including representations as to validity of amounts due, completeness of performance obligations and absence of commercial disputes. During the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the Company sold trade receivables totaling ~~$246.0~~$198.1 million and ~~$197.3~~$246.0 million, respectively, and incurred factoring fees of ~~$0.8~~$1.0 million and ~~$0.5~~$0.8 million, respectively. During the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the Company sold trade receivables totaling ~~$454.7~~$423.4 million and ~~$384.0~~$454.7 million, respectively, and incurred factoring fees of ~~$1.4~~$2.0 million and ~~$1.0~~$1.4 million, respectively. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, receivables of ~~$117.6~~$102.3 million and ~~$97.6~~$97.2 million, respectively, had been factored and had not yet been paid by customers to the respective financial institutions. The collective limit under our factoring arrangements ~~increased from $125.1~~was $165.6 million ~~as of December 31, 2021 to $136.9~~and $150.0 million as of June 30, 2023 and December 31, 2022 ~~due to the permanent increase in the North American factoring limit that occurred in March 2022.~~ respectively.

NOTE 1819 – RESTRUCTURING

During the ~~fourth~~first quarter of ~~2021,~~2023, the Company ~~announced~~initiated a reduction in its global workforce ~~at Werdohl, Germany.~~to better align our cost structure with lower automotive industry production levels. As a result, the Company recognized a restructuring charge of ~~$4.5~~$5.3 million of separation costs, $2.8 million of which was charged to selling, general and administrative expenses and $2.5 million which was charged to cost of sales. During the second quarter of 2023, the Company incurred an additional charge of $2.5 million for separation costs which was charged to cost of sales. As of June 30, 2023, the Company had paid $1.9 million in ~~cost~~separation costs, resulting in a remaining accrual of ~~sales, principally comprised of termination and related benefits. During the six months ended June 30, 2022, the Company paid severance and other costs of $0.5~~$5.9 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. We have included or incorporated by reference in this Quarterly Report on Form 10-Q (including in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), and from time to time our management may make, statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based upon management’s current expectations, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, the impact of COVID-19 and the resulting supply chain disruptions, energy costs and semiconductor chip shortages, and rising interest rates as well as the Russian military invasion of Ukraine ~~Conflict,~~(the “Ukraine Conflict”), on our future growth and earnings. Any statement that is not historical in nature is a forward-looking statement and may be identified using words and phrases such as ~~“expects”, “anticipates”, “believes”, “will”,~~“expects,” “anticipates,” “believes,” “will,” “will likely ~~result”,~~result,” “will ~~continue”,~~continue,” “plans ~~to”, “could”, “continue”, “estimates”~~to,” “could,” “continue,” “estimates,” and similar expressions. These statements include our belief regarding general automotive industry and market conditions and growth rates, as well as general domestic and international economic conditions.

Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements and from the Company’s historical results and experience. These risks, uncertainties and other factors include, but are not limited to, those described in Part I—I, Item ~~1A—“Risk~~1A, “Risk Factors” and Part ~~II—~~II, Item ~~7—“Management’s~~7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 and Part I—I, Item ~~2—“Management’s~~2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part II, – Item 1A, – “Risk Factors” and elsewhere in this Quarterly Report and those described from time to time in our other reports filed with the Securities and Exchange Commission.

Readers are cautioned that it is not possible to predict or identify all the risks, uncertainties and other factors that may affect future results and that the risks described herein should not be considered to be a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto and with the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Executive Overview

Overview of Superior

Superior Industries International, Inc.’s (referred to herein as the ~~“Company”, “Superior”,~~“Company,” “Superior,” or “we” and “our”) principal business is the design and manufacture of aluminum wheels for sale to original equipment manufacturers (“OEMs”) in North America and Europe and to the aftermarket in Europe. We employ approximately ~~7,800~~7,100 full-time employees, operating in eight manufacturing facilities in North America and Europe. We are one of the largest aluminum wheel suppliers to global OEMs and ~~we believe we are~~one of the #1leading European aluminum wheel aftermarket ~~manufacturer~~manufacturers and ~~supplier.~~suppliers. Our OEM aluminum wheels accounted for approximately 9496 percent of our sales in the first six months of ~~2022~~2023 and are primarily sold for factory installation on vehicle models manufactured by BMW (including Mini), Ford, GM, Honda, Jaguar-Land Rover, Lucid Motors, Mazda, Mercedes-Benz Group, Nissan, PSA, Renault, Stellantis, Subaru, Suzuki, Toyota, VW Group (Volkswagen, Audi, SEAT, Skoda, Porsche, Bentley) and Volvo. We sell aluminum wheels to the European aftermarket under the brands ATS, RIAL, ALUTEC and ANZIO. North America and Europe represent the principal markets for our products, but we have a diversified global customer base consisting of North American, European and Asian OEMs.

Demand for our products is ~~primarily~~mainly driven by ~~the~~light vehicle production ~~of light vehicles~~levels in North America and Europe and customer take rates on specific vehicle platforms that we serve and wheel SKUs that we produce. The majority of our customers’ wheel programs are awarded two to four years ~~in advance.~~before actual production is expected to begin. Our purchase orders with OEMs are typically specific to a particular vehicle model.

GM, VW Group, Ford and ~~VW Group~~Toyota each individually accounted for 10 percent or more of our consolidated sales for the three and six months ended June 30, ~~2022 and June 30, 2021. Our sales to these customers for~~2023. For the three and six months ended June 30, 2022, GM, VW Group, and ~~2021~~Ford each individually accounted for 10 percent or more of our consolidated sales and Toyota accounted for 9 percent of our consolidated sales.Our sales to these customers were as follows:

Three Months Ended

June 30, 2022

June 30, 2021

(Dollars in millions)

Percent of
Sales

Dollars

Percent of
Sales

Dollars

GM

30%

$
127.4

27%

$
93.4

Ford

17%

$
71.6

10%

$
30.9

VW Group

13%

$
56.4

16%

$
53.8

Six Months Ended

June 30, 2022

June 30, 2021

(Dollars in millions)

Percent of
Sales

Dollars

Percent of
Sales

Dollars

GM

28%

$
233.7

27%

$
187.5

Ford

15%

$
129.4

11%

$
80.0

VW Group

13%

$
110.5

15%

$
108.0


Three Months Ended	June 30, 2023			June 30, 2022
(Dollars in millions)	Percent of Sales	Dollars		Percent of Sales	Dollars
GM	20%	$	72.7	30%	$	127.4
VW Group	17%	$	63.2	13%	$	56.4
Ford	17%	$	64.2	17%	$	71.6
Toyota	10%	$	38.4	9%	$	37.2

Six Months Ended	June 30, 2023			June 30, 2022
(Dollars in millions)	Percent of Sales	Dollars		Percent of Sales	Dollars
GM	21%	$	155.7	28%	$	233.7
VW Group	17%	$	129.6	13%	$	110.5
Ford	15%	$	110.6	15%	$	129.4
Toyota	11%	$	82.0	9%	$	78.2

Industry Overview, Supply Chain Disruption and Ukraine Conflict

There is a broad range of factors which impact automotive industry sales and production volumes, including consumer demand and preferences, dealer inventory levels, labor relations issues, trade agreements, cost and availability of raw materials and components, fuel prices, regulatory requirements, government initiatives, availability and cost of credit, changing consumer attitudes toward vehicle ownership and other factors. Our sales are driven generally by overall automotive industry production volumes and, more specifically, by the volumes of the vehicles for which we supply wheels. In addition, larger diameter wheels and premium finishes command higher unit prices. Larger cars and light trucks, as well as premium vehicle platforms, such as luxury, sport utility and crossover vehicles, typically employ larger diameter wheels and premium finishes.

The automotive industry continues to be impacted by the supply chain disruption which emerged as OEM vehicle production resumed and began to scale following the shutdown because of the COVID-19 pandemic. The supply chain disruption includes shortages of semiconductor chips, electric vehicle batteries, shipping containers, steel, resin and foam. ~~In the first half of 2022, the~~The semiconductor chip shortage has continued to constrain OEM vehicle ~~production.~~production although there was improvement in the first and second quarter of 2023. Rising costs experienced in 2021, 2022 and the first six months of 2023 are expected to continue. In addition, the Ukraine Conflict ~~has~~which resulted in ~~OEM announcements of~~ temporary shutdowns at certain OEM production facilities ~~which~~in early 2022, began to affect our production volume in March ~~2022.~~ ~~Our critical commodity costs, particularly~~2022 and continues to contribute to order volatility and inflationary cost pressures. Although the cost of ~~aluminum and~~ energy ~~which increased significantly throughout 2021, continued to rise~~has moderated in the first ~~half~~six months of ~~2022. Rising commodity~~2023, energy costs ~~have been~~remain higher in Europe than prices prevailing prior to the pandemic and ~~likely will continue to be exacerbated by~~ the Ukraine Conflict. While the prices under our OEM contracts are adjusted for changes in the cost of aluminum and certain other costs, our aftermarket contracts do not provide such pass through of aluminum ~~cost. Additionally, certain of our OEM contracts are also adjusted for changes~~or other costs. Future increases in ~~the cost of other metals. Rising~~ raw material costs and OEM production volatility ~~have caused~~may cause our inventory levels to increase, negatively impacting our cash flows.

Automotive industry production volumes in the North American and Western and Central European regions in the first six months of ~~2022,~~2023, as compared to the corresponding periods of ~~2021~~2022 and ~~2020,~~2021, are shown below:


Automotive Industry Production (North America and Western and Central Europe)	Automotive Industry Production (North America and Western and Central Europe)													Automotive Industry Production (North America and Western and Central Europe)
Six Months Ended		June 30,						2022 vs 2021			2021 vs 2020				June 30,						2023 vs 2022			2022 vs 2021
		2022		2021		2020		% Change			% Change				2023		2022		2021		% Change			% Change
(Units in thousands)
North America			7,121		6,800		5,156		4.7	%		31.9	%			7,966		7,121		6,800		11.9	%		4.7	%
Western and Central Europe			6,715		7,317		5,730		(8.2	%)		27.7	%			8,036		6,715		7,317		19.7	%		(8.2	%)
Total			13,836		14,117		10,886		(2.0	%)		29.7	%			16,002		13,836		14,117		15.7	%		(2.0	%)

Automotive industry production volumes in our markets ~~declined slightly~~increased 15.7 percent in the first ~~half~~six months of ~~2022~~2023 as compared to ~~2021 primarily due to continuing semiconductor chip supply shortages, as well as the Ukraine Conflict. While~~2022. North American production volumes increased ~~4.7%,~~11.9 percent and Western and Central European production volumes ~~declined 8.2%. The~~increased 19.7 percent primarily due to easing supply chain constraints. However, the Ukraine Conflict may continue to ~~have an impact~~be a constraint on future European automotive production volumes and, therefore, Superior production volumes.In

The July 2023 IHS forecast projects that the ~~second quarter of~~2023 production will be 9.9 percent higher than 2022 ~~automotive industry production volumes in our markets increased 7.2% over the same period in the prior year (11.7~~(8.2 percent in North America and ~~2.9 percent in Western and Central Europe).~~

In February 2022 prior to the Ukraine Conflict, the forecast by IHS, an independent automotive industry analyst firm, projected that full year 2022 automotive passenger and light truck vehicle production in North America and Western and Central Europe would increase 24.5 percent (17.9 percent in North America and 31.411.7 percent in Western and Central Europe) ~~over 2021~~ but ~~would lag 2019 pre-pandemic production volumes by~~ ~~9.7~~ ~~percent.~~ ~~The July 2022 IHS forecast now projects that the 2022 production will be 11.2 percent higher than 2021 (12.7 percent in North America and 9.7 percent in Western and Central Europe) and 15.6~~10.3 percent lower than ~~2019.~~ 2019 pre-pandemic levels. Elevated vehicle cost, higher financing costs, and consumer inflation and recession concerns are likely affecting vehicle demand in our principal markets.~~While semiconductor manufacturers have announced plans to expand capacity over the next several years, it is unclear when automotive industry semiconductor chip shortages will subside.~~

Sustainability

We published our 2022 Sustainability

~~Superior~~ Report on August 31, 2022. That report reflected the results of the materiality assessment we conducted ~~outreach~~ in 2021 to identify the sustainability interests of our stakeholders to ~~inform~~develop our sustainability strategy. ~~Superior is~~We remain committed to reducing natural gas, electricity, and water consumption, solid waste and air emissions at our facilities. All Superior manufacturing plants have implemented Environmental Management Systems that are ISO14001 certified and are subject to annual audits by an independent third party. ~~In 2021, we assessed the carbon footprint of~~

The 2022 Sustainability Report confirmed our ~~operations globally in connection with our Communication on Progress report to the UN Global Compact published in June 2021. This assessment is helping us identify potential opportunities to:~~

•

~~reduce fuel consumption and greenhouse gas emissions and~~

•

~~offer low or zero carbon wheels to our customers.~~

~~In 2022, Superior established a~~ goal to be carbon neutral by 2039 and reported the carbon footprint of our global operations. Through 2022, we ~~anticipate that by 2025 we will have~~ reduced our carbon footprint by approximately 12% and our emissions per pound of aluminum shipped by 21% versus our baseline 2020 levels. We continue to explore opportunities to:

•

reduce fuel consumption and greenhouse gas emissions ~~by 40% from the level generated in 2020.~~ and

•

offer low or zero carbon wheels to our customers.

Furthermore, our research and development team ~~is developing~~continues to develop light weighting solutions, such as our patented Alulite™ technology, and aerodynamic solutions that will assist in reducing our customers’ carbon footprint. We ~~continue to~~also collaborate with our customers and suppliers regarding sustainability practices throughout their supply chains. We expect to publish our 2023 Sustainability Report in the third quarter of 2023.

Overview of the Second Quarter of ~~2022~~2023

The following charts show the operational performance in the quarter ended June 30, ~~2022~~2023 in comparison to the quarter ended June 30, ~~2021 ($~~2022 (dollars in millions):

SALES AND PROFITABILITY FOR THE 3RD QUARTER OF 2019 AND 2018 ($ in millions) Sales for 3rd Quarter 2019 & 2018 $352.0 $347.6 2019 2019 Income from Operations 3rd Quarter 2019 & 2018$(0.2) $7.7 2019 218 Net Income & Adjusted EBITDA* for 3rd Quarter 2019 & 2018 Net Income Adjusted EBITDA $38.9 $30.6 $(6.6) 2019 2018 * See the Non-GAAP Financial Measures section of this quarterly report for a reconciliation of our Adjusted EBITDA to Net Income (Loss).

Results of Operations


	Three Months Ended
	June 30, 2023			June 30, 2022			Net Change
(Dollars in thousands, except per share data)
Net sales
North America	$	208,205		$	259,677		$	(51,472	)
Europe		164,398			171,855			(7,457	)
Net sales		372,603			431,532			(58,929	)
Cost of sales		331,570			388,905			57,335
Gross profit		41,033			42,627			(1,594	)
Percentage of net sales		11.0	%		9.9	%		1.1	%
Selling, general and administrative expenses		17,016			16,721			(295	)
Income from operations		24,017			25,906			(1,889	)
Percentage of net sales		6.4	%		6.0	%		0.4	%
Interest expense, net		(15,690	)		(10,338	)		(5,352	)
Other (expense) income, net		(2,600	)		681			(3,281	)
Income tax provision		(5,794	)		(5,405	)		(389	)
Net (loss) income	$	(67	)	$	10,844		$	(10,911	)
Percentage of net sales		—			2.5	%		(2.5	)%
Diluted (loss) earnings per share	$	(0.35	)	$	0.07		$	(0.42	)
Value added sales (1)	$	200,243		$	185,532		$	14,711
Value added sales adjusted for foreign exchange (1)	$	198,216		$	185,532		$	12,684
Adjusted EBITDA (2)	$	52,018		$	51,346		$	672
Percentage of net sales		14.0	%		11.9	%		2.1	%
Percentage of value added sales		26.0	%		27.7	%		(1.7	)%
Unit shipments in thousands		3,781			4,004			(223	)

Three Months Ended

June 30,
2022

June 30,
2021

Net
Change

(Dollars in thousands, except per share data)

Net sales

North America

$
259,677

$
176,990

$
82,687

Europe

171,855

170,474

1,381

Net sales

431,532

347,464

84,068

Cost of sales

388,905

314,844

(74,061
)
Gross profit

42,627

32,620

10,007

Percentage of net sales

9.9
%

9.4
%

0.5
%
Selling, general and administrative expenses

16,721

17,100

379

Income from operations

25,906

15,520

10,386

Percentage of net sales

6.0
%

4.5
%

1.5
%
Interest expense, net

(10,338
)

(10,486
)

148

Other income (expense), net

681

(2,420
)

3,101

Income tax provision

(5,405
)

(919
)

(4,486
)
Net income

$
10,844

$
1,695

$
9,149

Percentage of net sales

2.5
%

0.5
%

2.0
%
Diluted earnings (loss) per share

$
0.07

$
(0.26
)

$
0.33

Value added sales⁽¹⁾

$
185,532

$
195,474

$
(9,942
)
Value added sales adjusted for foreign exchange⁽¹⁾

$
197,260

$
195,474

$
1,786

Adjusted EBITDA⁽²⁾

$
51,346

$
44,645

$
6,701

Percentage of net sales

11.9
%

12.8
%

(0.9
)%
Percentage of value added sales

27.7
%

22.8
%

4.9
%
Unit shipments in thousands

4,004

4,178

(174
)
(1)

Value added sales and value added sales adjusted for foreign exchange are key measures that are not calculated according to U.S. GAAP. Refer to “Non-GAAP Financial Measures” for a definition of value added sales and value added sales adjusted for foreign exchange and a reconciliation of value added sales and value added sales adjusted for foreign exchange to net sales, the most comparable U.S. GAAP measure.

(2)

Adjusted EBITDA is a key measure that is not calculated according to U.S. GAAP. Refer to “Non-GAAP Financial Measures” for a definition of adjusted EBITDA and a reconciliation of our adjusted EBITDA to net income, the most comparable U.S. GAAP measure.

Shipments

~~(1)~~

Value added sales and value added sales adjusted for foreign exchange are key measures that are not calculated according to U.S. GAAP. Refer to “Non-U.S. GAAP Financial Measures” for a definition of value added sales and value added sales adjusted for foreign exchange and a reconciliation of value added sales and value added sales adjusted for foreign exchange to net sales, the most comparable U.S. GAAP measure.

~~(2)~~

Adjusted EBITDA is a key measure that is not calculated according to U.S. GAAP. Refer to “Non-U.S. GAAP Financial Measures” for a definition of adjusted EBITDA and a reconciliation of our adjusted EBITDA to net income, the most comparable U.S. GAAP measure.

~~Shipments~~

Wheel unit shipments were ~~4.0~~3.8 million for the second quarter of ~~2022~~2023 compared to unit ~~shipment volumes~~shipments of ~~4.2~~4.0 million for the same period in ~~2021,~~2022, a decrease of ~~4.2~~5.6 percent. ~~The decrease was driven by a 13.4~~Our North American unit shipments were relatively flat as compared to the second quarter of 2022 despite the 14.9 percent ~~decrease~~increase in ~~European shipment volume as the~~automotive production volumes ~~on the vehicles we supply declined~~in North America primarily due to a temporary disruption in production at one of our customer’s facilities which has now resumed operations. European unit shipments declined 12.1 percent as compared to the ~~semiconductor shortage, as well as~~second quarter of 2022 despite the ~~Ukraine Conflict. The decrease in European volume was partially offset by the 4.9~~14.2 percent increase in ~~shipment~~automotive production volumes in ~~North America.~~Western and Central Europe. The majority of this decrease was attributable to the decrease in the European aftermarket unit shipments which were down 50.0 percent in the second quarter of 2023 as compared to the second quarter in 2022. This decrease was a result of soft aftermarket demand due to a slowdown of the European economy, which has negatively impacted consumer discretionary income, and high aftermarket wheel inventory levels. In addition, we exited an unprofitable contract with one of our European customers and have not yet replaced those volumes with new business.

Net Sales

Net sales for the second quarter of ~~2022~~2023 were ~~$431.5~~$372.6 million, compared to net sales of ~~$347.5~~$431.5 million for the same period in ~~2021, an increase~~2022, a decrease of ~~24.2~~13.7 percent. The ~~increase~~decrease in ~~revenue~~net sales was primarily due to ~~$94.1 million of higher~~lower aluminum ~~and other cost~~ pass throughs to our OEM customers ~~as well as~~of $73.6 million and $11.5 million of lower unit shipments, partially offset by favorable product mix ~~offset by $19.8 million~~and pricing of ~~unfavorable Euro~~$23.5 million.

Value Added Sales Adjusted for Foreign Exchange

Value added sales adjusted for foreign exchange is a key metric in evaluating the growth of the Company excluding the volatility resulting from fluctuating aluminum costs and ~~lower shipment volumes.~~

~~Cost of Sales~~

~~Cost of~~foreign exchange rates. Our aluminum wheel target market is heavily contented wheels; that is, large diameter wheels, wheels with lightweighting and aerodynamic technologies, and wheels with premium finishes. Value added sales adjusted for foreign exchange was ~~$388.9~~$198.2 million for the second quarter of 2023 compared to value added sales

adjusted for foreign exchange of $185.5 million for the same period in 2022, an increase of 6.8 percent. This increase was primarily due to heavily contented wheels, favorable product mix and product pricing.

Cost of Sales

Cost of sales was $331.6 million for the second quarter of 2023 compared to cost of sales of ~~$314.8~~$388.9 million for the same period in ~~2021.~~2022. The ~~$74.1 million increase~~decrease in cost of sales was primarily due to ~~higher raw material~~$65.2 million of lower aluminum costs and $6.2 million lower shipment volumes, partially offset by a $7.4 million increase due to product mix and a restructuring charge of ~~$88.9~~$2.5 million (refer to Note 19 “Restructuring” in the Notes to the Condensed Consolidated Financial Statements in Item 1, “Financial Statements”), as well as ~~product mix. This~~an increase ~~was offset by $19.3 million~~in conversion costs due to unfavorable cost absorption on lower ~~Euro foreign exchange rates and lower shipment~~production volumes.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) ~~expenses~~expense of ~~$16.7~~$17.0 million for the second quarter of ~~2022 were relatively~~2023 was flat as compared to ~~SG&A expense of $17.1~~$16.7 million for the same period in ~~2021.~~2022.

Net Interest Expense

Net interest expense for the second quarter of ~~2022~~2023 was ~~$10.3~~$15.7 million ~~and was relatively flat as~~ compared to net interest expense of ~~$10.5~~$10.3 million for the same period in ~~2021~~2022, a $5.4 million increase. The increase is due to a $50.8 million increase in the principal amount of term loan debt as a result of the refinancing in December 2022, rising interest rates and a higher credit spread on the new term loan (refer to Note 9 “Debt” in the Notes to the Condensed Consolidated Financial Statements in Item 1, “Financial Statements”)..

Other Income (Expense)

Other ~~income, net,~~ ~~was $0.7 million~~expense for the second quarter of ~~2022~~2023 was $2.6 million compared to ~~$2.4~~other income of $0.7 million ~~of other expense~~ for the same period in ~~2021.~~2022. The ~~2021~~majority of the expense ~~was primarily~~in the second quarter of 2023 is attributable to ~~a $2.1~~the additional $1.4 million ~~increase~~casualty loss arising from the Werdohl flood. The remaining variance in ~~the preferred stock embedded derivative liability due to the increase in the Company’s stock price.~~other income (expense) is mainly driven by unfavorable foreign exchange.

Income Tax (Provision) Benefit

The income tax provision for the second quarter of 2023 was $5.8 million on pre-tax income of 5.7 million, representing an effective income tax rate of 101.2 percent. This differs from the statutory rate primarily due to valuation allowances and the mix of earnings among tax jurisdictions. The income tax provision for the second quarter of 2022 was $5.4 million on a pre-tax income of $16.2 million, representing an effective income tax rate of 33.3 percent. This differs from the statutory rate primarily due to valuation allowances and the mix of earnings among tax jurisdictions.

Net Income (Loss)

Net loss for the second quarter of 2023 was $0.1 million, or a $0.35 loss per diluted share, compared to net income of $10.8 million, or $0.07 per diluted share, for the same period in 2022.

Segment Sales and Income from Operations


	Three Months Ended
	June 30, 2023		June 30, 2022		Change
(Dollars in thousands)
Selected data
Net sales
North America	$	208,205	$	259,677	$	(51,472	)
Europe		164,398		171,855		(7,457	)
Total net sales	$	372,603	$	431,532	$	(58,929	)
Income from operations
North America	$	21,504	$	24,679	$	(3,175	)
Europe		2,513		1,227		1,286
Total income from operations	$	24,017	$	25,906	$	(1,889	)

North America

Net sales for our North American segment for the second quarter of 2023 decreased 19.8 percent while unit shipments remained flat, compared to the same period in 2022. The $51.5 million decrease in net sales was primarily due to lower aluminum cost pass throughs to our OEM customers of $59.6 million, partially offset by favorable product mix and pricing. North American segment income from operations for the second quarter of 2023 decreased by $3.2 million, as compared to the same period in 2022, primarily due to higher non-aluminum raw material costs of $8.5 million partially offset by favorable product mix and pricing.

Europe

Net sales for our European segment for the second quarter of 2023 decreased 4.3 percent while unit shipments decreased 12.1 percent, compared to the same period in 2022. Net sales were lower primarily due to $14.0 million of lower aluminum pass throughs and $11.0 million due to lower unit shipments, partially offset by favorable product mix and pricing. European segment income from operations for the second quarter of 2023 was $1.3 million higher primarily due to favorable product mix and pricing of $9.8 million. Favorable product mix and pricing were largely offset by a decrease of $5.0 million due to lower unit shipments, a $2.5 million restructuring charge and higher conversion costs of $1.0 million due to unfavorable cost absorption as a result of lower production volumes (refer to Note 19 “Restructuring” in the Notes to the Condensed Consolidated Financial Statements in Item 1, “Financial Statements”).

Overview of the First Half of 2023

The following chart shows the operational performance in the six months ended June 30, 2023 in comparison to the six months ended June 30, 2022 ($ in millions):

Results of Operations


	Six Months Ended
	June 30, 2023			June 30, 2022			Net Change
(Dollars in thousands, except per share data)
Net sales
North America	$	419,823		$	486,875		$	(67,052	)
Europe		333,746			345,183			(11,437	)
Net sales		753,569			832,058			(78,489	)
Cost of sales		677,958			748,844			70,886
Gross profit		75,611			83,214			(7,603	)
Percentage of net sales		10.0	%		10.0	%		—
Selling, general and administrative expenses		36,458			33,671			(2,787	)
Income from operations		39,153			49,543			(10,390	)
Percentage of net sales		5.2	%		6.0	%		(0.8	)%
Interest expense, net		(31,388	)		(20,300	)		(11,088	)
Other (expense) income, net		(2,787	)		594			(3,381	)
Income tax provision		(9,092	)		(8,923	)		(169	)
Net (loss) income	$	(4,114	)	$	20,914		$	(25,028	)
Percentage of net sales		(0.5	)%		2.5	%		(3.0	)%
Diluted (loss) earnings per share	$	(0.84	)	$	0.11		$	(0.95	)
Value added sales (1)	$	402,905		$	374,927		$	27,978
Value added sales adjusted for foreign exchange (1)	$	405,251		$	374,927		$	30,324
Adjusted EBITDA (2)	$	97,506		$	100,556		$	(3,050	)
Percentage of net sales		12.9	%		12.1	%		0.8	%
Percentage of value added sales		24.2	%		26.8	%		(2.6	)%
Unit shipments in thousands		7,639			8,088			(449	)

(1)

(2)

Shipments

Wheel unit shipments were 7.6 million for the first half of 2023 compared to unit shipments of 8.1 million for the same period in 2022, a decrease of 5.6 percent. Our North American unit shipments decreased 2.2 percent despite the 11.9 percent increase in automotive production volumes in North America primarily due to a temporary disruption in production at one of our customer’s facilities which has now resumed operations. European unit shipments declined 9.7 percent as compared to the first half of 2022 despite the 19.7 percent increase in automotive production volumes in Western and Central Europe. The majority of this decrease was attributable to the 48.0 percent decrease in the aftermarket unit shipments as a result of soft aftermarket demand due to a slowdown of the European economy, which has negatively impacted consumer discretionary income, and high aftermarket wheel inventory levels. In addition, we exited an unprofitable contract with one of our European customers and have not yet replaced those volumes with new business.

Net Sales

Net sales for the first half of 2023 were $753.6 million, compared to net sales of $832.1 million for the same period in 2022, a decrease of 9.4 percent. The decrease in revenue was primarily due to lower aluminum pass throughs to our OEM customers of $106.5 million and lower shipment volumes of $22.1 million, partially offset by favorable pricing and product mix of $50.9 million.

Value Added Sales Adjusted for Foreign Exchange

Value added sales adjusted for foreign exchange was $405.3 million for the first half of 2023 compared to value added sales adjusted for foreign exchange of $374.9 million for the same period in 2022, an increase of 8.1 percent. This increase was primarily due to heavily contented wheels, favorable product mix and product pricing.

Cost of Sales

Cost of sales was $678.0 million for the first half of 2023 compared to cost of sales of $748.8 million for the same period in 2022, a decrease of 9.5 percent. The decrease in cost of sales was primarily due to $87.2 million lower aluminum costs and $10.4 million of lower shipment volumes, partially offset by an increase in conversion costs of $13.0 million due to unfavorable cost absorption resulting from lower production volumes, an increase of $12.3 million due to product mix and a restructuring charge of $5.0 million recognized in the first half of 2023 (refer to Note 19 “Restructuring” in the Notes to the Condensed Consolidated Financial Statements in Item 1, “Financial Statements”).

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expense was $36.5 million for the first half of 2023 as compared to $33.7 million for the same period in 2022. The increase in SG&A expense is attributable to the $2.8 million restructuring charge recognized in the first half of 2023 related to the Company's reduction in its global workforce (refer to Note 19 “Restructuring” in the Notes to the Condensed Consolidated Financial Statements in Item 1, “Financial Statements”).

Net Interest Expense

Net interest expense for the first half of 2023 was $31.4 million compared to net interest expense of $20.3 million in the same period in 2022, a $11.1 million increase. The increase is due to a $50.8 million increase in the principal amount of term loan debt as a result of the refinancing in December 2022, rising interest rates and a higher credit spread on the new term loan (refer to Note 9 “Debt” in the Notes to the Condensed Consolidated Financial Statements in Item 1, “Financial Statements”).

Other Income (Expense)

Other expense for the first half of 2023 was $2.8 million compared to other income of $0.6 million for the same period in 2022. The majority of the expense in the first half of 2023 is attributable to the additional $1.4 million casualty loss arising from the Werdohl flood and unfavorable foreign exchange.

Income Tax (Provision) Benefit

The income tax provision for the first half of 2023 was $9.1 million on pre-tax income of $5.0 million, representing an effective income tax rate of 182.6 percent. This differs from the statutory rate primarily due to valuation allowances, the reversal of an uncertain tax position and the mix of earnings among tax ~~jurisdictions~~.jurisdictions. The income tax provision for the second quarter of 2021 was $0.9 million on a pre-tax income of $2.6 million, representing an effective income tax rate of 35.2 percent. This differs from the statutory rate primarily due to U.S. valuation allowances and the mix of earnings among tax jurisdictions, partially offset by a favorable adjustment to a tax credit.

~~Net Income (Loss)~~

~~Net income for the second quarter of 2022 was~~ ~~$10.8 million, or earnings of $0.07 per diluted share, compared to net income of $1.7 million, or a loss of $0.26 per diluted share, for the same period in 2021.~~

~~Segment Sales and Income from Operations~~

Three Months Ended

June 30,
2022

June 30,
2021

Change

(Dollars in thousands)

Selected data

Net sales

North America

$
259,677

$
176,990

$
82,687

Europe

171,855

170,474

1,381

Total net sales

$
431,532

$
347,464

$
84,068

Income from operations

North America

$
24,679

$
7,542

$
17,137

Europe

1,227

7,978

(6,751
)
Total income from operations

$
25,906

$
15,520

$
10,386

~~North America~~

~~Net sales for our North American segment for the second quarter of 2022~~ increased 46.7 percent while unit shipment volumes increased 4.9 percent, compared to the same period in 2021. The $82.7 million increase in net sales was primarily due to $75.1 million in higher aluminum and other cost pass throughs to our OEM customers. North American segment income from operations for the second quarter of 2022 increased by $17.1 million, as compared to the second quarter of 2021, primarily due to increased shipment volumes and the timing of aluminum and other cost pass throughs.

~~Europe~~

~~Net sales for our European segment for the second quarter of 2022 were flat~~ ~~despite a 13.4 percent decline in unit shipment volumes, compared to the same period in 2021. H~~igher aluminum and other cost pass throughs of $19.0 million and favorable product mix were almost entirely offset by unfavorable Euro foreign exchange of $19.8 million and lower shipment volumes. The decline in shipment volumes was due to the continuing semiconductor chip shortage, as well as the Ukraine Conflict which began to impact our sales in March 2022. ~~The Ukraine Conflict may continue to impact future OEM automotive production volumes and, therefore, our shipment volumes~~. European segment income from operations for the second quarter of 2022 was $6.8 million lower than same period in the prior year primarily due to inflationary cost increases in labor, utilities and other manufacturing costs, as well as unabsorbed fixed costs due to lower production volumes.

~~Overview of the First Half of 2022~~

~~The following chart shows the operational performance in the six months ended June 30, 2022 in comparison to the six months ended June 30, 2021~~ ~~($ in millions):~~

~~Results of Operations~~

Six Months Ended

June 30,
2022

June 30,
2021

Net
Change

(Dollars in thousands, except per share data)

Net sales

North America

$
486,875

$
368,961

$
117,914

Europe

345,183

336,699

8,484

Net sales

832,058

705,660

126,398

Cost of sales

748,844

630,000

118,844

Gross profit

83,214

75,660

7,554

Percentage of net sales

10.0
%

10.7
%

(0.7
)%
Selling, general and administrative expenses

33,671

34,421

750

Income from operations

49,543

41,239

8,304

Percentage of net sales

6.0
%

5.8
%

0.2
%
Interest expense, net

(20,300
)

(20,759
)

459

Other income (expense), net

594

(3,934
)

4,528

Income tax provision

(8,923
)

(1,729
)

(7,194
)
Net income

$
20,914

$
14,817

$
6,097

Percentage of net sales

2.5
%

2.1
%

0.4
%
Diluted earnings (loss) per share

$
0.11

$
(0.07
)

$
0.18

Value added sales⁽¹⁾

$
374,927

$
402,733

$
(27,806
)
Value added sales adjusted for foreign exchange⁽¹⁾

$
393,442

$
402,733

$
(9,291
)
Adjusted EBITDA⁽²⁾

$
100,556

$
99,568

$
988

Percentage of net sales

12.1
%

14.1
%

(2.0
)%
Percentage of value added sales

26.8
%

24.7
%

2.1
%
Unit shipments in thousands

8,088

8,693

(605
)

~~(1)~~

~~(2)~~

~~Shipments~~

~~Wheel unit shipments were~~ ~~8.1 million~~ ~~for the~~ first half of ~~2022 compared to shipment volumes of 8.7 million in the prior year period, a decrease of~~ ~~7.0~~ ~~percent.~~ The decrease was driven by a 13.2 percent decrease in European shipment volumes primarily due to the semiconductor shortage and the Ukraine Conflict, as well as a 1.3 percent decrease in shipment volumes in North America.

~~Net Sales~~

~~Net salesfor the first half of 2022 were $832.1 million, compared to net sales of $705.7 million for the same period in 2021, an increase of 17.9 percent. The increase in net sales was primarily~~ due to $154.2 million of higher aluminum and other cost pass throughs to our OEM customers as well as favorable product mix, offset by $30.4 million of unfavorable Euro foreign exchange and lower shipment volumes.

~~Cost of Sales~~

Cost of sales were $748.8 million for the first half of 2022 compared to cost of sales of $630.0 million for the same period in 2021. The increase in cost of sales was primarily due to $146.7 million of higher raw material and conversion costs as well as product mix, offset by unfavorable Euro foreign exchange of $31.0 million and lower shipment volumes.

~~Selling, General and Administrative Expenses~~

~~Selling, general and administrative (“SG&A”) expenses for the first half of 2022 of~~ ~~$33.7~~ ~~million were relatively flat compared to SG&A expense of $34.4 million for same period in 2021.~~

~~Net Interest Expense~~

~~Net interest expense for the first half of 2022 was $20.3~~ ~~million which was relatively flat compared to net interest expense of $20.8 million for same period in 2021.~~

~~Other Income (Expense)~~

~~Other income, net,~~ ~~was $0.6~~ ~~million for the first half of 2022 compared to other expense of $3.9 million for same period in 2021.~~ ~~The 2021 expense was primarily attributable to a $3.5 million increase in the preferred stock embedded derivative liability due to the increase in the Company’s stock price in the first half of 2021~~.

~~Income Tax (Provision) Benefit~~

~~The income tax provision for the six months ended June 30,~~ 2022 was $8.9 million on a pre-tax income of $29.8 million, representing an effective income tax rate of 29.9 percent. ~~The effective income tax rate for the six months ended June 30, 2022~~This differs from the statutory rate primarily due to valuation allowances, the reversal of an uncertain tax position and the mix of earnings among tax ~~jurisdictions~~jurisdictions.. ~~The income tax provision for the six months ended June 30, 2021 was $1.7 million on a pre-tax income of $16.5 million, representing an effective rate of 10.4 percent.~~ The effective income tax rate for the six months ended June 30, 2021 differs from the statutory rate primarily due to a favorable adjustment to a tax credit and the reversal of an uncertain tax position, partially offset by the mix of earnings among tax jurisdictions and U.S. valuation allowances.

Net Income (Loss)

Net ~~income~~loss for the first half of ~~2022~~2023 was ~~$20.9~~$4.1 million, or ~~earnings of $0.11~~a $0.84 loss per diluted share, compared to net income of ~~$14.8~~$20.9 million, or ~~a loss of $0.07~~$0.11 per diluted share, for the same period in ~~2021.~~2022.

Segment Sales and Income from Operations

Six Months Ended

June 30,
2022

June 30,
2021

Change

(Dollars in thousands)

Selected data

Net sales

North America

$
486,875

$
368,961

$
117,914

Europe

345,183

336,699

8,484

Total net sales

$
832,058

$
705,660

$
126,398

Income from operations

North America

$
44,246

$
25,383

$
18,863

Europe

5,297

15,856

(10,559
)
Total income from operations

$
49,543

$
41,239

$
8,304


	Six Months Ended
	June 30, 2023			June 30, 2022		Change
(Dollars in thousands)
Selected data
Net sales
North America	$	419,823		$	486,875	$	(67,052	)
Europe		333,746			345,183		(11,437	)
Total net sales	$	753,569		$	832,058	$	(78,489	)
Income from operations
North America	$	43,219		$	44,246	$	(1,027	)
Europe		(4,066	)		5,297		(9,363	)
Total income from operations	$	39,153		$	49,543	$	(10,390	)

North America

Net sales for our North American segment for the first half of ~~2022 increased 32.0~~2023 decreased 13.8 percent while ~~the~~ unit ~~shipment volumes remained relatively flat~~shipments decreased 2.2 percent, compared to the same period in ~~2021.~~2022. The ~~$117.9~~$67.1 million ~~increase~~decrease in net sales was primarily due to ~~$114.0 million in higher~~lower aluminum ~~and other~~ cost pass throughs to our OEM ~~customers.~~customers of $83.0 million and $4.7 million due to lower unit shipments, partially offset by favorable pricing and product mix of $19.6 million. North American segment income from operations for the first half of ~~2022 increased by $18.9~~2023 was $1.0 million ~~compared to~~lower than the first half of ~~2021,~~2022, primarily due to higher non-aluminum raw material costs of $13.6 million, higher conversion costs of $2.4 million attributable to unfavorable cost absorption on lower production volumes and a restructuring charge of $1.5 million recognized in the ~~timing~~first half of ~~aluminum~~2023 (refer to Note 19 “Restructuring” in the Notes to the Condensed Consolidated Financial Statements in Item 1, “Financial Statements”), largely offset by favorable pricing and ~~other cost pass throughs.~~product mix of $17.3 million.

Europe

~~Europe~~

Net sales for our European segment for the first half of ~~2022 increased 2.5~~2023 decreased 3.3 percent ~~despite a 13.2~~while unit shipments decreased 9.7 percent, ~~decline in unit shipment volumes,~~ compared to the same period in ~~2021.~~2022. The ~~increase~~decline in ~~net sales of $8.5 million~~unit shipments was primarily due to ~~$40.4~~a 48.0 percent decrease in aftermarket unit shipments. Net sales were lower by $11.4 million ~~in higher~~primarily due to $23.4 million of lower aluminum ~~and other cost~~ pass throughs and $17.4 million due to lower unit shipments, partially offset by favorable product mix ~~offset by unfavorable foreign exchange~~and pricing of $30.4 million and lower shipment volumes. The decline in shipment volumes was due to the continuing semiconductor chip shortage, as well as the Ukraine Conflict which began to impact our sales in March 2022. The Ukraine Conflict may continue to have an impact on future automotive production volumes and, therefore, our shipment volumes.$31.3 million. European segment income from operations for the first half of ~~2022~~2023 was ~~$10.6~~$9.4 million lower than the ~~prior year~~first half of 2022 primarily due to ~~inflationary cost increases~~lower unit shipments of $9.9 million, higher conversion costs of $7.8 million and a $6.3 million restructuring charge recognized in ~~labor, utilities~~the first half of 2023 (refer to Note 19 “Restructuring” in the Notes to the Condensed Consolidated Financial Statements in Item 1, “Financial Statements”), partially offset by favorable pricing and ~~other manufacturing costs, as well as unabsorbed fixed costs due to lower production volumes.~~product mix of $20.4 million.

Financial Condition, Liquidity and Capital Resources

As of June 30, ~~2022,~~2023, our cash and cash equivalents totaled ~~$122.3~~$181.1 million compared to ~~$149.2~~$122.3 million and ~~$113.5~~$213.0 million at June 30, ~~2021~~2022 and December 31, ~~2021,~~2022, respectively. Our sources of liquidity primarily include cash and cash equivalents, cash provided by operating activities, borrowings under available debt facilities, and factoring arrangements for trade receivables. Working capital (current assets minus current liabilities) and our current ratio (current assets divided by current liabilities) were ~~$199.8~~$293.5 million and ~~1.7:~~2.3:1.0, respectively, at June 30, ~~2022,~~2023, versus ~~$172.4~~$257.6 million and ~~1.7:~~2.0:1.0 at December 31, ~~2021.~~2022. Although the Company continues to effectively manage all elements of working capital, ~~receivables and inventories have increased~~payables declined significantly as of June 30, 2023 due primarily to a decline in ~~2022 largely due to higher raw material costs.~~aluminum orders in the back half of the quarter.

Our working capital requirements, investing activities and cash dividend payments have historically been funded from internally generated funds, debt facilities, cash and cash equivalents, and we believe these sources will continue to meet our future requirements. Capital expenditures ~~consist of expenditures~~relate to ~~improve~~improving production quality and efficiency ~~extend~~and extending the useful lives of existing property and ~~support~~expenditures for new product offerings, as well as ~~to expand~~expanded capacity for existing products. During ~~2022~~2023, we expect that ~~our~~ capital expenditures will be approximately ~~$75.0~~$65.0 million.

In connection with the acquisition of our European operations, we entered into several debt and equity financing arrangements during 2017. On March 22, 2017, we entered into a ~~USD Senior Secured Credit~~senior secured credit facility ~~(“USD SSCF”)~~ consisting of a $400.0 million ~~Senior Secured Term Loan Facility (“~~term loan facility (the “Acquisition Term Loan Facility”) and a $160.0 million ~~Revolving Credit Facility (“~~revolving credit facility (the “U.S. Revolving Credit Facility”)., subsequently reduced to $107.5 million by May 2022. On May 22, 2017, we issued 150,000 shares of redeemable preferred stock for an aggregate purchase price of $150.0 million. On June 15, 2017, we issued €250.0 million aggregate principal amount of 6.00% Senior Notes ~~(“the Notes”~~due June 15, 2025 (the “Notes”). Finally, as part of the European business acquisition, we also assumed $70.7 million of outstanding debt, including a €30.0 million European revolving credit facility (the “European Revolving Credit Facility”) which was subsequently increased to €60.0 million.

On December 15, 2022, the Company entered into a $400.0 million term loan facility (the “Term Loan Facility”) with Oaktree Fund Administration L.L.C., in its capacity as the administrative agent, JPMorgan Chase Bank, N.A., in its capacity as collateral agent, and other lenders party thereto. The Term Loan Facility requires quarterly principal payments of $1.0 million. Additional principal payments may be due with respect to asset sales, debt issuances and as a percentage of cash flow in excess of a specified threshold. Concurrent with the issuance of the Term Loan Facility, the Company entered into a $60.0 million revolving credit facility (the “Revolving Credit Facility”) and terminated the previously outstanding $107.5 million U.S. Revolving Credit Facility ~~(“EUR SSCF”) (subsequently increased to~~and €60.0 million European Revolving Credit Facility. The $388.0 million proceeds of the borrowings under the Term Loan Facility (consisting of the $400.0 million aggregate principal less the original issuance discount of $12.0 million) were used to repay the $349.2 million balance outstanding under the Acquisition Term Loan Facility and to pay debt issuance costs and expenses incurred in connection with the Term Loan Facility and Revolving Credit Facility. As a result of the refinancing, our annual interest expense on ~~January 31, 2020). In addition,~~ the ~~European business entered into equipment loan agreements totaling $13.4~~Term Loan Facility is expected to increase by approximately $20.0 million ~~(€12.0 million)~~ in ~~the fourth quarter of 2019.~~2023.

Balances outstanding under the Term Loan Facility, Notes, and equipment loans as of June 30, ~~2022~~2023 were ~~$349.2~~$398.0 million, ~~$226.6~~$235.8 million, and ~~$14.8~~$2.2 million, respectively. The balance of the redeemable preferred stock ~~balance~~ was ~~$211.0~~$235.1 million as of June 30, ~~2022.~~2023. The Revolving Credit Facility and the Term Loan Facility ~~matures May 23, 2024~~mature on December 15, 2027 and December 15, 2028, respectively. However, in the event the Company has not repaid, refinanced or otherwise extended the maturity of the Notes beyond the maturity date of the Term Loan Facility by the date 91 days prior to June 15, 2025, the Term Loan Facility and Revolving Credit Facility will mature 91 days prior to June 15, 2025. Similarly, in the event the Company has not redeemed, refinanced or otherwise extended the unconditional redemption date of the redeemable preferred stock beyond the maturity date of the Term Loan Facility by the date 91 days prior to September 14, 2025, the Term Loan Facility and Revolving Credit Facility will mature 91 days prior to September 14, 2025.

The redeemable preferred stock may be unconditionally redeemed at the holder’s election on or after September 14, 2025 at the redemption amount, ~~currently~~ $300 million, provided the Company has sufficient available funds. Under Delaware law, any redemption payment would be limited to the “surplus” that our Board of Directors determines is available to fund a full or partial redemption without rendering us insolvent. The shares of preferred stock ~~that have~~ not ~~been~~ redeemed would continue to receive an annual dividend of 9 percent on the original stated value, ~~per share,~~ plus any accrued and unpaid dividends, which would be paid quarterly. The Board of Directors would have to evaluate on an ongoing basis the ability of the Company to make any further redemption payments until the full redemption amount has been paid. The Company currently intends to repay, refinance ~~its debt obligations, including~~or otherwise extend the ~~Term Loan Facility and~~ Notes prior to ~~maturity.~~ their maturity and to redeem, refinance or otherwise extend the unconditional redemption date of the redeemable preferred stock.

As ~~a part~~ of ~~any refinancing,~~June 30, 2023, the Company ~~will review its overall capital structure and may evaluate other sources of capital which could include issuance of common stock or restructuring of the preferred stock.~~

~~On May 3, 2021, the Company extended the term of~~had no outstanding borrowings under the Revolving Credit Facility, ~~under its USD SSCF. The commitment under the facility was reduced from $160.0 million to $132.5 million, with $25.0 million~~outstanding letters of ~~the commitment maturing May 23, 2022 and the remaining $107.5 million maturing October 31, 2023. The commitment remaining under the USD SSCF was $107.5 million as~~credit of ~~June 30, 2022 following the $25.0 million maturity on May 23, 2022.~~ During the second quarter of 2021, the Company amended the EUR SSCF, extending the term to May 22, 2023 and increasing the applicable margins and commitment fees, while maintaining the €60.0 million commitment. ~~Our liquidity totaled $287.2 million at June 30, 2022, including cash on hand of $122.3~~$4.8 million and available unused commitments under ~~credit facilities~~the Revolving Credit Facility of ~~$164.9~~$55.2 million. As a result, our liquidity totaled $198.8 million at June 30, 2023, consisting of cash and cash equivalents of $143.6 million ($181.1 million less the $37.5 million contractual liquidity required pursuant to the Term Loan Facility and Revolving Credit Facility) and available and unused commitments under the Revolving Credit Facility of $55.2 million.

As part of our ongoing efforts to improve our cash flow and related liquidity, we negotiate with suppliers to optimize our terms and conditions, including extended payment terms. Beginning in 2021, the Company receives extended payment terms for a portion of our

purchases with one of our principal aluminum suppliers in exchange for a nominal adjustment to the product pricing. The payment terms provided to us are consistent with aluminum industry norms, as well as those offered to the supplier’s other customers. The supplier intends to finance these extended terms by factoring receivables due from us with a financial institution. We are not a party to the supplier’s factoring agreement with the financial institution. We remit payments directly to our supplier, except with respect to product purchased under extended terms which have been factored by the supplier. These payments are remitted directly to the financial institution in accordance with the payment terms originally negotiated with our supplier. As of June 30, 2022, the Company owed $11.3 million to the financial institution which is included in accounts payable in the Company’s condensed consolidated balance sheets. The Company made $75.8 million in payments to the financial institution pursuant to the supplier’s factoring arrangement for the six months ended June 30, 2022. These payments are included in cash flows from operations within the condensed consolidated statements of cash flows.

~~As of June 30, 2022,~~2023, we had no significant off-balance sheet arrangements other than factoring of ~~$117.6~~$102.3 million of our trade receivables.

The Company operates a manufacturing facility in Germany that accounts for less than 10% of the Company’s assets and annual revenues but is in a relatively high-cost region. This manufacturing facility, within our European reportable segment and European long-live asset group, has experienced and continues to experience operational and financial challenges. The Company is taking steps to mitigate the impact of these challenges. There can be no assurance that our risk mitigation actions taken to date will adequately address these operational and financial challenges. Should this be the case, the Company may consider other actions, including restructuring actions, to address the matter.

The following table summarizes the cash flows from operating, investing and financing activities as reflected in the condensed consolidated statements of cash flows.


	Six Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2023			June 30, 2022
(Dollars in thousands)
Net cash provided by operating activities	$	57,213		$	31,933			11,167			57,213
Net cash used in investing activities		(34,138	)		(20,551	)		(21,751	)		(34,138	)
Net cash used in financing activities		(11,632	)		(13,501	)		(22,999	)		(11,632	)
Effect of exchange rate changes on cash		(2,658	)		(1,133	)		1,676			(2,658	)
Net increase (decrease) in cash and cash equivalents	$	8,785		$	(3,252	)
Net changes in cash and cash equivalents							$	(31,907	)	$	8,785

Operating Activities

Net cash provided by operating activities was ~~$57.2~~$11.2 million for the first half of ~~2022~~2023 compared to net cash provided by operating activities of ~~$31.9~~$57.2 million for the same period in ~~2021.~~2022. The ~~increase~~decrease in cash flow provided by operating activities was primarily driven by lower profitability of $25.0 million and higher use of cash for working capital (accounts receivable, inventory and ~~increased profitability~~accounts payable) of $15.8 million..

Investing Activities

Net cash used in investing activities ~~was $34.1~~of $21.8 million for the first half of ~~2022 compared to $20.6~~2023 was lower than the $34.1 million for the same period in ~~2021.~~2022. The ~~increase in cash used in investing activities is driven by investments~~decrease in capital expenditures was primarily due to the completion of certain capital projects related to ~~support increased production and~~ paint line and ~~finishing capabilities in both regions as well as lower capital expenditures in the first half of 2021 due to certain projects deferred to the second half of the year.~~refinishing capabilities.

Financing Activities

Net cash used in financing activities was ~~$11.6~~$23.0 million for the first half of ~~2022~~2023 compared to net cash used in financing activities of ~~$13.5~~$11.6 million for the same period in ~~2021.~~2022. This ~~change~~increase was primarily due to ~~2021 proceeds from new European~~an $8.5 million repayment of certain capital equipment ~~loans.~~loans and a $1.5 million increase in tax withholding for stock-based compensation.

Non-GAAP Financial Measures

In this ~~quarterly report,~~Quarterly Report, we discuss three ~~financial~~important measures that are not calculated according to U.S. ~~GAAP:~~GAAP, value added sales, value added sales adjusted for foreign exchange and adjusted EBITDA.

Value added sales represents net sales less the value of aluminum and other costs, as well as ~~services provided by~~ outsourced service ~~providers~~provider (“~~OSPs”~~OSP”) costs that are included in net sales. Contractual arrangements with our customers allow us to pass on changes in aluminum and certain other costs. Value added sales adjusted for foreign exchange represents value added sales on a constant currency basis. For entities reporting in currencies other than the USU.S. dollar, the current period amounts are translated using the prior year comparative period exchange rates, rather than the actual exchange rates in effect during the current period. Value added sales adjusted for foreign exchange allows users of the financial statements to consider our net sales information both with and without the aluminum, other costs and OSP costs and fluctuations in foreign exchange rates. Management utilizes value added sales adjusted for foreign exchange as a key metric in measuring and evaluating the growth of the Company because it eliminates the volatility of the

cost of aluminum and changes in foreign exchange rates. Management utilizes value added sales in calculating adjusted EBITDA margin to eliminate volatility of the cost of aluminum in evaluating year-over-year margin ~~growth~~growth.

. The following table reconciles our net sales, the most directly comparable U.S. GAAP financial measure, to our value added sales and value added sales adjusted for foreign exchange:


	Three Months Ended						Six Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
(Dollars in thousands)
Net sales	$	372,603		$	431,532		$	753,570		$	832,058
Less: aluminum, other costs, and outside service provider costs		(172,360	)		(246,000	)		(350,665	)		(457,131	)
Value added sales	$	200,243		$	185,532		$	402,905		$	374,927
Currency impact on current period value added sales		(2,027	)		—			2,346			—
Value added sales adjusted for foreign exchange	$	198,216		$	185,532		$	405,251		$	374,927

Adjusted EBITDA is defined as earnings before interest income and expense, income taxes, depreciation, amortization, restructuring charges and other closure costs and impairments of long-lived assets and investments, changes in fair value of the redeemable preferred stock embedded derivative, acquisition and integration, certain hiring and separation related costs, proxy contest fees, gains associated with early debt extinguishment and accounts receivable factoring fees. We use adjusted EBITDA as an important indicator of the operating performance of our business. Adjusted EBITDA is used in our internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors and evaluating short-term and long-term operating trends in our operations. We believe the adjusted EBITDA financial measure assists in providing a more complete understanding of our underlying operational measures to manage our business, to evaluate our performance compared to prior periods and the marketplace and to establish operational goals. Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies.

The following table reconciles our net ~~sales, the most directly comparable U.S. GAAP financial measure, to our value added sales and value added sales adjusted for foreign exchange:~~

Three Months Ended

Six Months Ended

June 30,
2022

June 30,
2021

June 30,
2022

June 30,
2021

(Dollars in thousands)

Net sales

$
431,532

$
347,464

$
832,058

$
705,660

Less: aluminum, other costs, and outside service provider costs

(246,000
)

(151,990
)

(457,131
)

(302,927
)
Value added sales

$
185,532

$
195,474

$
374,927

$
402,733

Currency impact on current period value added sales

11,728

—

18,515

—

Value added sales adjusted for foreign exchange

$
197,260

$
195,474

$
393,442

$
402,733

~~The following table reconciles our net~~(loss) income, the most directly comparable U.S. GAAP financial measure, to our adjusted EBITDA:


	Three Months Ended						Six Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
(Dollars in thousands)
Net (loss) income	$	(67	)	$	10,844		$	(4,114	)	$	20,914
Interest expense, net		15,690			10,338			31,388			20,300
Income tax provision		5,794			5,405			9,092			8,923
Depreciation		18,567			17,571			36,584			35,405
Amortization		4,900			5,555			9,724			11,803
Restructuring, factoring fees and other (1) (2) (3) (4)		7,134			1,633			14,832			3,211
Adjusted EBITDA	$	52,018		$	51,346		$	97,506		$	100,556
Adjusted EBITDA as a percentage of net sales		14.0	%		11.9	%		12.9	%		12.1	%
Adjusted EBITDA as a percentage of value added sales		26.0	%		27.7	%		24.2	%		26.8	%

Three Months Ended

Six Months Ended

June 30,
2022

June 30,
2021

June 30,
2022

June 30,
2021

(Dollars in thousands)

Net income

$
10,844

$
1,695

$
20,914

$
14,817

Interest expense, net

10,338

10,486

20,300

20,759

Income tax provision

5,405

919

8,923

1,729

Depreciation

17,571

18,905

35,405

37,555

Amortization

5,555

6,704

11,803

13,415

Integration, restructuring, factoring fees and other ^{(1) (2) (3) (4)}

1,633

3,791

3,211

7,833

Change in fair value or redeemable preferred stock
embedded derivative liability ⁽⁵⁾

—

2,145

—

3,460

Adjusted EBITDA

$
51,346

$
44,645

$
100,556

$
99,568

Adjusted EBITDA as a percentage of net sales

11.9
%

12.8
%

12.1
%

14.1
%
Adjusted EBITDA as a percentage of value added sales

27.7
%

22.8
%

26.8
%

24.7
%
(1)

In the second quarter of 2023, we incurred $2.5 million of restructuring costs, a casualty loss of $1.4 million, $0.9 million of accounts receivable factoring fees and $2.3 million of other costs.

(2)

In the first half of 2023, we incurred $7.8 million of restructuring costs, $2.0 million of accounts receivable factoring fees, a casualty loss of $1.4 million and $3.6 million of other costs.

(3)

In the second quarter of 2022, we incurred $0.8 million of accounts receivable factoring fees, $0.2 million of separation costs and $0.6 million of other costs.

(4)

In the first half of 2022, we incurred $1.4 million of accounts receivable factoring fees, $0.7 million of certain hiring and separation costs and $1.1 million of other costs.

~~(1)~~

~~In the second quarter of 2022, we incurred $0.2 million of certain hiring and separation costs, $0.8 million of accounts receivable factoring fees and $0.6 million of other costs.~~

~~(2)~~

~~In the first half of 2022, we incurred $0.7 million of certain hiring and separation costs, $1.4 million of accounts receivable factoring fees and $1.1 million of other costs.~~

~~(3)~~

In the second quarter of 2021, we incurred approximately $2.4 million of restructuring costs comprised of on-going fixed costs associated with our Fayetteville, Arkansas facility, relocation and installation costs of repurposed machinery and costs of site preparation activities associated with the sale of the facility. Additionally, we incurred $0.6 million of certain hiring and separation costs, $0.5 million of accounts receivable factoring fees and $0.3 million of other costs.

~~(4)~~

In the first half of 2021, we incurred approximately $3.3 million of restructuring costs comprised of on-going fixed costs associated with our Fayetteville, Arkansas facility, relocation, and installation costs of repurposed machinery and $1.0 million relating to site preparation activities associated with the sale of the facility. Additionally, we incurred $2.9 million of certain hiring and separation costs, $1.0 million of accounts receivable factoring fees, and $0.6 million of other costs.

~~(5)~~

~~The change in the fair value is mainly driven by the change in our stock price during the respective periods.~~

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to apply significant judgment in making estimates and assumptions that affect amounts reported therein, as well as financial information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. These estimates and assumptions, which are based upon historical experience, industry trends, terms of various past and present agreements and contracts, and information available from other sources that are believed to be reasonable under the circumstances, form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent through other sources. We believe the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in developing estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Critical accounting estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described in the management’s discussion and analysis in our ~~2021~~2022 Form 10-K (refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2021)~~2022).

Item 3. Quantitative and Qualitative Disclosures ~~About~~about Market Risk

As a smaller reporting company, as defined in Rule 10(f)(1) of Regulation S-K under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), the Company is not required to provide the information required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, ~~2022.~~2023. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, ~~2022~~2023 our disclosure controls and procedures were effective.

Changes in Internal Control ~~Over~~over Financial Reporting

There has been no change in our internal control over financial reporting during the three months ended June 30, ~~2022~~2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We are party to various legal and environmental proceedings incidental to our business. Certain claims, suits and complaints arising in the ordinary course of business have been filed or are pending against us. Based on facts now known, except as provided below and as set forth in Note 17 “Commitments and Contingencies” in the Notes to the Condensed Consolidated Financial Statements regarding a contractual dispute with the parent company of our energy supplier in Poland, we believe all such matters are adequately provided for, covered by insurance, are without merit, and/or involve such amounts that would not materially adversely affect our consolidated results of operations, cash flows or financial position.

~~See~~Refer also ~~under~~to Item 1A, “Risk ~~Factors - We~~Factors” “We are from time to time subject to litigation, which could adversely ~~impact~~affect our results of operations, financial condition or ~~results of operations”~~cash flows” in Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 1A. Risk Factors

In our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, we added the following risk factor entitled “The Ukraine Conflict may have a material adverse effect on our business, financial condition, results of operations and cash flows” to the risk factors as previously disclosed in “Item 1A Risk Factors” of our Form 10-K for the year ended December 31, 2021. Other than as set forth below, thereThere have been no material changes to the risk factors set forth in “Item 1A, Risk Factors” of our Form 10-K for the year ended December 31, 2021. However, many of the risk factors set forth in our Form 10-K for the year ended December 31, 2021 may be exacerbated by the Ukraine Conflict and any resulting worsening of the economic environment.2022.

~~The Ukraine Conflict may have a material adverse effect on our business, financial condition, results of operations and cash flows.~~

On February 24, 2022, Russia launched a military invasion of Ukraine. In response to the Russian invasion, the United States, the United Kingdom and the European Union governments, among others, have developed comprehensive and coordinated sanctions and export restrictions on Russia and certain Russian individuals. The United States and other countries could impose wider sanctions and take other actions should the conflict escalate.

The Ukraine Conflict has given rise to macroeconomic risks which could lead to significant declines in global and regional economic growth, particularly in Europe. These risks may not only reduce global demand and automotive production volumes but also cause further supply chain disruption and drive higher energy and commodity prices, including further increases in aluminum and silicon prices, as well as inflation and higher interest rates. Our OEM customers have announced temporary production shutdowns as a result of supply disruption.

The impact of the Ukraine Conflict including economic sanctions and export controls such as restrictions on energy exports, or additional war or military conflict as well as potential responses to such actions by Russia, is currently unknown. It could lead to further increases of our costs, affect our supply chain and customers, and reduce our sales, earnings and cash flows. In addition, the continuation of the Ukraine Conflict could lead to other disruptions, instability and volatility in global markets that could adversely impact our operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Not applicable.~~None.

Item 6. Exhibits



31.1		Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.**

31.2		Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.**

32.1
~~32.1~~		Certification of Majdi B. Abulaban, President and Chief Executive Officer, and C. Timothy Trenary, Executive Vice President and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**†

101.INS		Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document ****

101.SCH		Inline XBRL Taxonomy Extension Schema Document ****

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document ****

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document ****

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document ****

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document ****

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101) ******

** Filed herewith.

**** Submitted electronically with the report.

†These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

~~Filed herewith.~~

~~****~~

~~Submitted electronically with the report.~~

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

(Registrant)

Date: August ~~4, 2022~~3, 2023

/s/ Majdi B. Abulaban

Majdi B. Abulaban

President and Chief Executive Officer

Date: August ~~4, 2022~~3, 2023

/s/ C. Timothy Trenary

C. Timothy Trenary

Executive Vice President and Chief Financial Officer

3840

For the six months ended June 30, 2021
	Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT DECEMBER 31, 2020		25,591,930	$	95,247	$	(1,738	)	$	(7,447	)	$	(90,261	)	$	(17,323	)	$	(21,522	)
Net income		—		—		—			—			—			14,817			14,817
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—		6,985			—			—			—			6,985
Change in defined benefit plans, net of tax		—		—		—			194			—			—			194
Net foreign currency translation adjustment		—		—		—			—			(7,268	)		—			(7,268	)
Common stock issued, net of shares withheld for employee taxes		515,532		—		—			—			—			—			—
Stock-based compensation		—		2,989		—			—			—			—			2,989
Redeemable preferred 9% dividend and accretion		—		—		—			—			—			(16,712	)		(16,712	)
European non-controlling redeemable equity dividend		—		—		—			—			—			(38	)		(38	)
BALANCE AT JUNE 30, 2021		26,107,462	$	98,236	$	5,247		$	(7,253	)	$	(97,529	)	$	(19,256	)	$	(20,555	)

For the three months ended June 30, 2021
	Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT MARCH 31, 2021		25,947,462	$	95,752	$	(10,200	)	$	(7,371	)	$	(105,939	)	$	(12,504	)	$	(40,262	)
Net income		—		—		—			—			—			1,695			1,695
Change in unrecognized gains (losses) on derivative instruments, net of tax		—		—		15,447			—			—			—			15,447
Change in defined benefit plans, net of tax		—		—		—			118			—			—			118
Net foreign currency translation adjustment		—		—		—			—			8,410			—			8,410
Common stock issued, net of shares withheld for employee taxes		160,000		—		—			—			—			—			—
Stock-based compensation		—		2,484		—			—			—			—			2,484
Redeemable preferred 9% dividend and accretion		—		—		—			—			—			(8,422	)		(8,422	)
European non-controlling redeemable equity dividend		—		—		—			—			—			(25	)		(25	)
BALANCE AT JUNE 30, 2021		26,107,462	$	98,236	$	5,247		$	(7,253	)	$	(97,529	)	$	(19,256	)	$	(20,555	)

	June 30, 2022
	Other Current Assets		Other Non-current Assets		Accrued Liabilities		Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	6,824	$	4,688	$	3,672	$	13,581
Foreign exchange forward contracts not designated as hedging instruments		270		—		135		—
Aluminum forward contracts designated as hedging instruments		19		—		2,383		—
Natural gas forward contracts designated as hedging instruments		2,233		1,512		158		255
Interest rate swap contracts designated as hedging instruments		356		—		56		1,347
Total derivative financial instruments	$	9,702	$	6,200	$	6,404	$	15,183

Three Months Ended June 30, 2021	Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts	$	15,447	$	758	$	1,638

Six Months Ended June 30, 2021	Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts	$	6,985	$	319	$	(1,266	)

As of June 30, 2022	Gross Carrying Amount		Accumulated Amortization			Currency Translation			Net Carrying Amount		Remaining Weighted Average Amortization Period
(Dollars in thousands)
Brand name	$	9,000	$	(9,231	)	$	231		$	—		—
Technology		15,000		(15,385	)		385			—		—
Customer relationships		167,000		(105,447	)		(1,928	)		59,625	1-6
Total finite-lived intangibles	$	191,000	$	(130,063	)	$	(1,312	)	$	59,625

Year Ended December 31, 2021	Gross Carrying Amount		Accumulated Amortization			Currency Translation		Net Carrying Amount		Remaining Weighted Average Amortization Period
(Dollars in thousands)
Brand name	$	9,000	$	(8,503	)	$	258	$	755	1-2
Technology		15,000		(14,172	)		430	$	1,258	2
Customer relationships		167,000		(95,540	)		3,397	$	74,857	2-7
Total finite-lived intangibles	$	191,000	$	(118,215	)	$	4,085	$	76,870

Three Months Ended	June 30, 2022			June 30, 2021
(Dollars in millions)	Percent of Sales	Dollars		Percent of Sales	Dollars
GM	30%	$	127.4	27%	$	93.4
Ford	17%	$	71.6	10%	$	30.9
VW Group	13%	$	56.4	16%	$	53.8


Six Months Ended	June 30, 2022			June 30, 2021
(Dollars in millions)	Percent of Sales	Dollars		Percent of Sales	Dollars
GM	28%	$	233.7	27%	$	187.5
Ford	15%	$	129.4	11%	$	80.0
VW Group	13%	$	110.5	15%	$	108.0