SUP Superior Industries International

Troy Ford Vice President of Finance and Treasurer
Don Stebbins President and Chief Executive Officer
Michael Elia Interim Leader of Global Finance and Accounting Team
Vahid Khorshand BWS Financial
Richard Phelan Deutsche Bank
Christopher Van Horn B. Riley FBR
Call transcript
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Good day and welcome to the Superior Industries’ second quarter 2018 earnings teleconference call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Troy Ford. Please go ahead, sir.

Troy Ford

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

of our be available which section will today, on website to Investors During we presentation, referring discussion our earnings the our at is

outlook. filings, factors you President to to Joining me today contained that of detail Elia, represent Executive noted in no slide forward-looking on call on will on Superior's year Mike I where remind global as discussion our ended events assume as from would statements. the any the interim accounting update are like company’s two XXXX and cause the XX-K risk team. start Stebbins, well I that are Officer, the Chief considered obligation Don in the our like leader finance complete I and XX, may are unknown materially Specific more may these on statements including XXXX. Form point on publicly evaluating conditions, presentation and or Safe SEC everyone provisions differ that today forward-looking factors that could Private slide. because of this commented on and uncertainties a Reform need subject Harbor actual differ to for any statements issues December in statements. Actual results for Act the to and forward-looking financial We forward-looking statements issues to to report annual be to forward-looking of Securities would of our the Litigation

of and GAAP. the to this of adjusted measures release tables presented directly XXXX financial accordance the financial be the sales or been included in found in appendix therefore, will accordance Reconciliations earnings presentation. data our press with with today, in quarter be non-GAAP of EBITDA. exclude certain including non-GAAP GAAP may with second measures have comparable and, these and discussing in not also These We items calculated financial measures the impact certain value-added providing most

I includes to like months. to that Superior's quarter President the operations note Stebbins, of for like I XXXX of Don financial CEO. consolidated one-month consolidated includes and second would Don? would over now European results turn quarter to three XXXX the call Finally, our the of the second while

Don Stebbins

Troy. and you joining Thanks, us for Good everyone, morning, thank today.

begin him me is for the Mike an current Mike, by and a functions advisor introducing C-suite and as Let here tested our continue executive, our and finance we search Superior. we permanent leader welcome director experienced and accounting at of CFO.

in presentation, starting sales our to quarter units of continue with million. Moving the we metrics. quarter, million records all-time the momentum year. of slide again we key $XX. quarter results wheel to for value-added shipped. this million for many our almost than three $XXX Net across per the reached We experienced the delivered sales Value-added with And more XX%, X% $XXX increased X.X increased sales the over first

$XX.X Additionally, a we EBITDA increase year-over-year. record adjusted reported XX% of million,

of have strong integration, also achieving progress driven $XX and results as substantially in primarily performance significant in on the annualized we objective To of regions. solid rate continue schedule. ahead the of operations, both operating shipment actioned make to million were quarter European our levels, Our our in our addition date, we unit an run XXXX by synergies

I outlook, half We view our of our on further upwards the have are during year, various aspects remainder XXXX our we a in to XXXX, efficiencies. optimistic performance about speak as Based which our well to overall moment. efforts revised current of our for as will improve ongoing of the first the

year-over-year. our second vehicle truck quarter North vehicle quarter for the increased shipments. compared same on the compared overall the as XXXX, models. X.X% Superior's was quarter Growth well quarter production support North operations of platforms, for performance which of to was outperform and production the participation The new Turning period America current was second second to market. strong in of Western year-over-year shipments Europe the volumes increased the slide X.X% terms delivered for overall driven second during X.X% launches, light X.X% last increased to by our the down driven by unit quarter our XXXX better-than-market higher XXXX four, OEM both outperformance a XXXX while market of year. light of in European roughly America for European regions on as shipments basis our vehicle of

increases continue above. to we XX and for growth Importantly, strong inches see SUV volume wheels and models premium on

Let thoughts global on me the some trade environment. provide quick

it NAFTA, as remain the relates fluid. to continues situation overall to know, First, as all you

We continue upon recent that to favorable And in that are changes place, to in form. based an monitor NAFTA continue we will updated under consideration. but comments, remain the believe relevant

final through China, Second, we the customers. is wheels. on tariffs import speculate the on aluminum reviewing includes which administration mechanisms our our customers tariffs outcome. these as it prices. products third, to on aluminum And in relates aluminum, point, generally price currently imposed it are have on to is passed to from based too changes adjustment early this Therefore, index with price At

increase of take were slide of an increase our this $XXX period. million Let's $XXX.X the for was from closer operations. a on the second prior look due addition sales five. $XXX Net for at quarter of sales XXXX to of European the million quarter the million,

impacted In both favorable an in addition, increase aluminum and mix net sales regions. were prices in by positively

$XX operations as the million driven of from our the increase from and be adjusted Net quarter of our adjusted both million impacts of in period million European sales to operating an were half European well the $XX.X slide, million this Net driven Year-to-date quarter seen for mix in performance. $XXX can favorable of aluminum regions. sales $XX.X was XXXX, by were the of by prices favorable of inclusion year. to in compared second for and mix impacted Again, same XXXX seven. addition an EBITDA Turning $XX.X was first of operations. million by increases positive as the performance on sales increase $XXX of second the for XXXX million primarily XXXX, the last EBITDA slide approximately of increase also

As slide by EBITDA million addition you of impact compared volumes, mix see on in largely as adjusted period year-over-year $XXX.X favorable was improved XXXX, million eight, performance. driven the the $XX.X our operational European for to positive year-to-date of can the as XXXX same well operations, higher and

on Turning slide to nine. cash flow

year. second was the For cash million $X.X used cash operating compared generated for last of activities million activities from XXXX, operating period by $XX.X the same to of quarter

initiatives, to effective the XXXX. so maintenance from have the Superior's tax supported quarter second expenditures. were Capital $XX.X these proven far and efforts opportunities We including million and continued as of continue cash working of expenditures portfolio and global of generation both in well technologies identify enhance initiatives to which capital products enhancement planning during as XXXX, growth management

quarter, million million and dividends $X.X in preferred During paid the $X.X common dividends. second in we

our borrowing In liquidity the available capacity. and terms quarter, our second borrowing remain of At of revolvers capacity European we end management, total have was million. the US significant undrawn and $XXX

known X.X% ownership with purchase bringing AG, the annual completed amendment Also, XX spread revolving million. term $X of by also rate to is as our rate Uniwheels The as which purchased interest from the borrowings interest an note, points. to reduced as consummated reduce credit expected interest the €XX.X loan, We million underneath ownership our in cash was total additional our we basis hand, to yesterday, for minority Superior $XXX The by XX.X%. the resulting of lower million, Industries well formally facility. on expense repricing approximately our Europe

the Now, half provide value-added tax net sales, performance while first we maintaining XX. let outlook me a unit are of slide capital our of year, our this rate, our revised the adjusted for and full-year revising outlook our during outlook review cash on expenditures EBITDA flow. XXXX and volume, sales, Based on effective for

from items For be vehicle XXXX, is couple IHS' XX.X a second America year Europe. million in moderate American volumes. to units units our latest growth expectations of This expect for production I to of and slightly a Western million light note North for like production make Europe. regarding on and XX.X last Western based we half for would North forecast down

First, including a This driven the programs, customer we roll-off certain of of be volumes is first half anticipate factors, impact the by from rates. take seasonality, to down the unit few normal and of XXXX.

the our momentum experience continue volumes which in XXXX. to into strong continue launch regions We both should quarter, last that discussed we

Additionally, with be currently to respect quarter, we fourth towards weighted the third to quarter. normal, is and expect, volume fourth the as

range XXXX, to the unit of XX.XX we be For full million to the in units units. million XX.X year shipments to expect continue

$X.XX expect driven in $X.X by sales billion, be the billion to higher prices. aluminum to billion We to range primarily $X.X to net compared billion of $X.XX

the range to expect to million continue sales value-added We $XXX of be in million. $XXX to

$XXX $XXX QX throughout of be to be in expectations $XXX our have the up third of significant Again, EBITDA million. XXXX million number seasonality, given sequentially adjusted with quarter versus expect and step as the We down a EBITDA typical to to late in in million to $XXX adjusted as we increased would in well range the million QX launches QX.

and Act and provisions our million capital be still of lastly, outlook be of US Tax tax under to to to flow million. expected to effective anticipate million. XX% XX% between outlook and the be expected between we for compared And Our Job XX% due and rate to previous XX% the unchanged XXXX. $XXX Cuts expenditures is Cash $XX from $XXX remains is approximately to operations

evaluating by to conclusion, which not taxes are XXXX, globally. currently second than rate. do to were reduce In for our strategies continue to quarter. impact to anticipate we be encouraged less this We our We million $X this we cash overall, change expect

from the position for global are We towards technologies and finishes. America, We through differentiating North attractive to and our customer increasing business diameters, move benefit designs the more in wheel the continue sophisticated tailwinds better ourselves to and including we capabilities to believe position growing of base. and light-weighting Europe our by importance innovative in success serve

realize forward as we is there the remainder we work While we are for of ahead. significant year, the look optimistic

our and back we long-term additional with are to that, we continued Our And of operations. our Brittany believe for questions. profitability our growth for drive remains throughout turn well-positioned to while portfolio, shareholders. And priority capturing it I'll execution efficiencies sustainable


Instructions]. you. Thank [Operator

Our BWS Vahid Khorshand Financial. comes first with from question

Vahid Khorshand

Good morning.

in And trends First like of some unit per if us question, America means you give that and what what on could kind kind you on details of Europe? seeing a basis? North are

Don Stebbins

value-added the unit, sales is of terms in down. North per America So,

sales value a very two Avalon us, the large has had we've have value-added different would been they an new take very, past as America. at launch And the forward, quarter, would Malibu, A quarter, TXXX, then on North the we'll products some too increase expect and models. Mercedes we and going look of lower that a Edge. adding in XX-inch the wheel but stable as and and the consecutive I wheel. through Europe, wheel, that would AX has Sentra, take Suzuki year wheels And is and all in certainly to per I more Audi QX phase quarters, rates, primarily change class this PSA say We wheel number range. the to down rates This on out for of Equinox AMG successful been based the Mercedes wheels. of some be –

somewhere QX, So, increase the as at look to In be we'll overall, even XXXX, there'll year-over-year, we're I And we then, range. the to that ramp products launching. think fully than volumes. of to year, value-added greater because X% X% be of this sales be going is QX that in

Vahid Khorshand

sorry of about Okay, then, that. thank you. – And terms in

in – in believe or your terms tariffs impact wheel presentation, of productions I In North Does on the tariffs were of you Chinese. aluminum in European the the plan tariffs, European on aluminum America? about sort talking that prior

Don Stebbins


coming we But from because into a there's a tariff into North China wheels play America issue, of say meaningfully North do context. but So, ship wheels not because would from not in capacity Does America, tariff that a capability and some Europe. any EU on issue. Europe of I

Vahid Khorshand

you X final Okay. still last on launches you in QX said then And that then, QX. track? my Is in have the and question, call, on launches XX

Don Stebbins

when I would Yeah, America have those – everybody absolutely that's going the the is. and launch caution North start been of the those are numbers through

their launches and October Some volume hit peak of those November. in

that So, yes, are [ph]. are absolutely. and push we Those the on stated track numbers to it

Vahid Khorshand

you. thank Okay,

Don Stebbins



from comes Bank. Deutsche question with Our next Phelan Richard

Richard Phelan

the Hi. Phelan is Deutsche Bank. on two One Actually, follow-up at It's questions. a launches. Richard

were both were and if completed launches some that the group just North Europe, there was earlier stronger-than-expected level, which to compared so the the in what into America I'm QX guidance, Just launched to – wondering QX? performance total might contributed in have deferrals QX. maybe the at

Don Stebbins

close a QX launch Europe, in majority something are the North launches to important as a to in the started in early so to even reflects though be for I peak. that think dragged can Again, I the many these the think XX% guidance but piece, America, it's note that launching, may of expected that that to June, these equivalent have XX October of out, may at of XX% in speak. And at somewhere be is attained it's really level We peak August, total volume launches. September, our

just a begin. the So, ramp as It's deferral. they it's not up

Richard Phelan

of does the a the transfer drawdown and question change the And domination Uniwheel requirement implementing the related Got was completed profit way period the I Does or of purchase far revolver. shares purchase that the is it. as just €XX.X then, the after to And of funded second share around for more presume the purchase with any in a size? trigger million as it close. because that strategy loss anything agreement.

Don Stebbins

DPLTA funded had on trigger our doesn't we've does that purchase that does at does use not as the yet. as us provide remaining choose. not anything to all, it squeeze revolver. the the we impact the under made where So, out revolver well mandatory if the we And perspective. was cash not hand funding shares opportunity under we It decision from The trigger,

Richard Phelan

purchase, would the on at roughly million so. based be in that share terms calculate that which €X.XX, So, about the per the same July/August or I price, price of same out squeeze remaining at $XX.X €X.XX

shares, in which you And per rather $XXX,XXX the so, right that XXXX. Is to for preferred analysis beginning pay year decision point than in about spend the this the is is think that the term about? near at money to

Don Stebbins

dividend of that The dollar we you're correct, that $XX-$XX correct those US is use €XX.XX is translate it When will somewhere in math paid range. for a you And to the in et a that shares. buy be business? absolutely million versus the to capital. then, Do have et paying Do shares, we options more these to want invest the shares. whatever mandatory want to have we we on minority the we cetera, cetera, that that

Richard Phelan

clear, have than at Okay. remaining smaller you be out secondary all of the the for once But at least option rather to – sort purchases? squeeze the of affecting balance

Don Stebbins

the option threshold us. tender is have has that going we What changed shareholders XX% by out. Correct. option squeeze over the to the always that to now The have to shares

Michael Elia

plus of required €XX.XX the to thing was those on it Richard, the the acquisition that note, accrued And dividends. the just shares, price – one per share

per until future squeeze-out price, And would dividends It it plus so, the at point accrued the tender if up same. we be be looked in would share, price that time. of minority €XX.XX

Richard Phelan

Thank Great. clarification. for you the


comes The next question Horn from B. Riley FBR. with Christopher Van

Christopher Van Horn

Thanks call. the the taking quarter. And for congrats morning. Good on

Don Stebbins

you. Thank

Christopher Van Horn

the think it a to when during wheels? you're was I mix? Was hoping it the I that Anything a Was new product could standout mentioned we was wheels? bit. little about as hoping technologies break putting contributor and you larger you quarter, mix the that down – maybe on aftermarket it mix? the Was

Don Stebbins

It was Yeah. not aftermarket related.

terms moving – about. finishes is more about these are launched wheels, the towards and we in in That's milled axes for internal Avalon, that more five and we've sophisticated this instance, got Europe that printing it's talked we a so selling in now. well. We've very So, on pad wheel talked of

it see the may strong, but in the value-added you see So, finishes. those combined that. you I the reflect also, as the And, especially lower to – start sales, America the you with larger the at the you'll because has third North been quite not types quarter, things, think when fourth and driving look wheels, that again, into move changes of are of

Christopher Van Horn

of do sizes? of but in kind hand? given larger with is when launch be might it's assume launch XX-inch in got update you cost mostly have you've the or an of wheel you've great. anything to seen the these some fair you launch costs about you you're guess you launch kind you And of you headwind feel confident rim launches, sure cadence, that think what – the new the sizes. do in the foresee on do half first adoption somewhat And I'm then, seeing I is have, Okay, – that schedule pretty these plus the of of a of

Don Stebbins


always there way That's just the about through. is concerned all launches are. we we're until the think – the I you're way

to And so, fine. had launches, the seems going concern changes a although the for everything around is that them. launches be majority of The some late few on

not So, time as prepare. to much

So, through we're that. going

guidance. those captured our I in of types think we've things

I again, would yes, quarter. them in we're don't So, fourth some until comfortable. Again, those but, reach launches America, that, we've we of the XX North peak kicked in say many think volumes off

in we of one and vigilant watching remain, each a of the terms the say, on So, launch daily each shall those of one wheels. basis of managing we production

Christopher Van Horn

just Got it. to on for get and in hoping the seeing And for Obviously, beat expectations. maybe levers looking XXXX in operational what you're then, improvement I update other the half to progress? maybe was that me. North American final you're some just continues there that back status continue to a

Don Stebbins

Yeah. I would of say, again, statistics. a couple

at has look XX% XX%, full-year of improved basis XXX first X%, per XXXX, you XXXX versus scrap If is points, hours improved. the up PPM wheels half

standard that's as at, better. narrowed we doing well. wheels it, let's every day, the dramatically clearly, So, call the deviation look made of When

environment us. it's more for stable So, a

say All to better of those we financial would expect What to is contribute performance. continue. that I

I based guidance. normal numbers think our of impressive in built launches, quarter will ramps think we into I as again, not the that's the upon the have third but, and

And companies well. would we generate as continue to expect In to terms further of further that savings upside, two the I integrate together.

Christopher Van Horn

Thanks time. the much for so Great.

Don Stebbins

Chris. Thanks,


teleconference. earnings Thank second gentlemen. Superior today's and you, XXXX ladies This Industries quarter concludes

now disconnect. may You

Don Stebbins

you, Brittany. Thank Okay.


You're very welcome.