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SUP Superior Industries International

Participants
Troy Ford IR
Majdi Abulaban CEO, President & Director
Timothy Trenary EVP & CFO
Gary Prestopino Barrington Research Associates
Stephanie Vincent JPMorgan Chase & Co.
Call transcript
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Operator

Good day, and welcome to the Superior Industries Fourth Quarter and Year-End 2020 Earnings Teleconference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Troy Ford. Sir, please go ahead.

Troy Ford

you. Thank and call. fourth everyone, year and to earnings XXXX welcome morning, quarter our full Good

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

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

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

Majdi Abulaban

review Thanks, Troy, and fourth quarter our joining to full good you and results. today Thank morning, everyone. us year for

safe families staying your First, and and during I these do that hope times. are healthy challenging you

to we the few emerge excited have a for my industry at we perspective presentation, absolutely from business as Before From growth built I year, Superior, challenging start words recovers. on a a side. my profitable my very as are

and while our cash executing growth cost strategy, on and been have enabling portfolio delivering discipline. driving We

a third wheels. X, to and as say in of our a Beginning Fundamentally, that premium XXXX Slide the talk position So driving the take premium content marked with is enablers Superior's few are seeing this underscoring our of Superior, reviewing results. for I to acceleration growth on lighter we provider. consecutive am And wheel business. about for financial pleased market I before would minutes above growth our a year more solutions like trends secular that, to

some see XXXX. our in you exciting Here, launches of

wheels Full New and BMW's the Size Our GM the Bronco on Sport, the S Ford SUV, Mercedes XX Class.

on really technology our is as premium Our on platforms, offerings these other growth as driver. vehicles well

their did see OEMs consumers vehicle and coming all ever, can you not pages, technology than tremendous segments. on As our has too this and page solutions long exist that are vehicles More today to customize ago. a the opportunity enabling

to on enabling trends They driving Moving Slide and with electrification. consumer reductions preference differentiation. through to X. business The growth spot not COX lightweighting and secular our in do extend

styles As launching EV wheel platforms. to presence highlighted we in the various expand key on EV segment, high-profile this our slide, continue on

wheels our Mach see programs European iconic well-positioned you on Ford's OEMs. E Here, and and for leading

previously, As launches. electric now relevance discussed our we internal platforms continue and vehicle position we through programs through to engine and on and new new combustion both demonstrate

we've to expand our Throughout Slide continued portfolio. Moving on to XXXX, X. product

and have is we a unique Tech, in such several Deco technologies etching products. processes, the to technology. new lightweighting In example discussed launched such past, AluLite, exciting addition patent-pending One laser various as we

a a of Porsche process our expanding technologies our PVD launched more thin chrome enabler RIM our truly the also This previously in And marketplace. is We product, friendly portfolio lightweighting finish. environmentally on differentiator award-winning Cayenne Spyder. and announced to the last, alternative

year, on X you. efficiency. to pause on Before an effort thank on to on Thank would on outstanding our was I cost The and Slide like focus responding instrumental move to to clearly results, team. safety, our collective I individual unprecedented say you financial and and in

and financial Now will I X. other highlights. Slide moving our review to on operational

our about as excited As position I emerge we from we crisis. this earlier, are mentioned

a with We cycle in discipline recovery. of and executed for have the and the cash at built as We bottom the investing sheet growth cost technology. while into profitable move strengthened we business our balance

our value-added Improved acquisition XX% XXXX. we year substantially in increase and outperforming pandemic, performance we ahead our XXX flow quarter, previous of to the by fourth delivered free the sales than Further, XXXX entire more We the margins guidance. EBITDA in European a with reduced operations delivered market. million net in $XXX the COVID lowest level XXXX, basis This well restructuring calendar global is grew of and XX%, of in of expanded the net response XX% efforts ending our debt, and the points. debt cash our the team's a a the the pandemic. in combination During by adjusted of face since year and

earlier, premium our I discussed trends for the driving lightweighting are wheels As and secular and growth. accelerating

and wheel the growth sales XX%, increased During content quarter, our was in our per above XX%. market value-added

was of wheels Impressively, XX% and X%. over For larger total our XXXX, market above shipments. our the XX-inch represented full year growth

We continue expect as content. meet on increased opportunities customer execute these new wheel to for we demand to trends

of operations. In terms

pleased work, respect success but COVID also to ensuring only safe our general safety. not very at are have with We with been facilities the places to

In fact, the we best-in-class year, industry a TRIR, key an safety during achieved metric.

we enabled have volatile delivering There, on customers operations. closures manufacturing of very our COVID in in to support us we customer successfully mandated capacity and XX% successfully market leverage efforts execute continue also due through global our conditions. and to know-how America. to QX, We These navigated improved our North we our our to managed restrictions strategy Mexico. European in Europe support through margins. to In while Further, customers

Our for and few. programs just to VW continuing BMW, and Volvo, launch operations name for are deliver Audi a to for in Mexico

pleased these are priorities. operating our XX. very current Slide the I we on along on with achieved now our outlook XXXX progress address will We with environment,

the the the of underway. noted for automotive chart, is broader well As on recovery industry left side

levels to anticipate be are production more While down in overall Europe, production levels rebounding North in we from than XXXX. America quickly still

still So does recovery opportunity more exist.

inventories challenges tailwinds low in including America, supported financial all We That impact premium Mexico. of of of our quarter, was out ongoing Texas to outage we our customers operations serve North the weather were cognizant are cold Mexico power impacted North that and able still finished customers expect by our product we've the discussed in pandemic temporarily disrupted We vaccine. shipments limited We that by the and our date at XXXX, missed Tim the that some customers shift very also in our to said, favorable widespread and mix the our provide guidance. the as semiconductor first inventory. when towards distribution several he shipped the during will note, goods very, are industry including the of of reviews be the on ongoing exist, of some Also impact shortages. background additional out. to COVID

continue on enhancing will flow. driving to With these in expectations profitability cash mind, focus and we

$XXX year with For adjusted we to $XXX in million mentioned to flow EBITDA, These million of full the previously from deliver expect a impact. XXXX, $XXX the operations. ranges along of cash to range million million $XXX contemplate

Slide our ahead road map on value Moving XX. to creation

to long-term growth. the continue are priorities make our places, revenue progress excellence on into We and on well operational and third second our and way

the With XXXX, to business road that, and over deliver competitive along will call from on expanding our portfolio lean around map in focused turn while continuous revenue We base to of of solidifying continue are customer and this and our beyond. position I'll momentum the improvement XXXX Tim? culture Tim. These moving transformation the our growth. and efforts us

Timothy Trenary

Thank morning, growth year XXXX above you, everyone. was market Majdi, Superior. and good another for of

period, Slide year quarter on for the whereas reflected compared prior up FX sales was value-added As the in XX, to grew X%. the fourth we adjusted by XX% industry

versus XX% year FX the grew prior For but XXXX, market. full value-added adjusted declined above the sales X% year, for

OEM above the in industry in our million wheel regional and the part units, In content XXXX to and fourth diameter by COVID-XX essentially as premium year unit sales Our to our shipments, the vehicles. Slide And breakdown recently, an the shift with mix sales production compared in towards levels. to prior fourth of full tilted compared year wheels quarter, market the year premium period line our ongoing unit wheels the outlines sales prior has more shipments the flat portfolio as quarter a and period. larger were X.X consequence value-added for with growth net premium pandemic, portfolio. exaggerated been mix XX driven in in increase of as

shipments decrease production was For This XX.X $XXX the dollar Net larger the to million prior million year, in shutdowns largely which OEM million compared driven $XXX rate. with were sales the year, units shift in wheel as unit to industry due stronger well to was to prior year. driven the as was by content more premium a portfolio diameter compared ongoing quarter, pandemic production in wheels primarily Euro-U.S. with the and increased full for by levels. overall the units XX.X million to line

an prior $X.X a the per diluted production net of million to For benefit noncash the arose the $X.XX in does $XX these affect the $XX allowance fourth prior in or reported In loss billion ability by primarily quarter period. net utilize year, assets, fourth taxable The million of share quarter, to compared provision, loss the from million loss the volumes, the decreased period. by a driven of compared $XX share net to assets deferred $X.X charge a to or of per $X.XX income which year, of offset we full billion not tax million partially loss year mix. of were loss $XX sales offset for diluted tax our included future in

on million. year Slide million, assets. of XXXX, taxes increased Value-added million loss year approximated tax the despite impairment compared diluted XXXX pretax due quarter. loss $X.XX $XXX net of and primarily nondeductible change of in the period. $XX is $XXX loss the tax share and loss provision, $XX.XX to impact per a diluted a in included loss noncash prior million year-over-year we sales A This the previously million compared sales $XXX for full the a the was allowance or XX per net to income or reported the of year sales to $X a net share valuation loss prior of million. in year an $XX the deferred mentioned net provision in value-added For fourth a for goodwill of to noncash period. the Cash in

The and The benefited $XX to sales, the stronger cash was million. costs quarter. million of from prior was $X was prior decrease shares quarter to down operating primarily improvement fourth activities the with million XXXX by $XX million preferred fourth million. by XXXX driven On compared to shift continued to during $XX by managing diameter cash for We acquisition costs. ahead million favorable portfolio and by flow, of managing working improvements by extending used of operating increase year cash the the the adjusted year quarter strong compared extending to minority by partially million $X from capital. to to activities is free full working partially the a down offset decrease in the was more Slide this company lower compared other for a the lower million This the by million sales Net the year overview pass-through $XX sale This earnings expenditures, the production $XXX at quarter, projects in for Slide compared of to and financing capital our the finish period. period. million. $XXX to These in timing equipment primarily prior XXXX. investing this increased in Net In year. On COVID-XX improved generated suspension protective as dividends. $XX incremental the This of of in year activities Starting financing were the for disruptions non-debt million year expenditures personal and capital was our benefits the by operating of $XX were provided assets rates. in resulted for earnings activities taxes offset by fourth in prior of prior well partially cash XXXX. the of of the higher of to acquisition compared on previously, EBITDA result as driven decreased million from benefited $XX and activities to by third adjusted $XX in Net primarily extending noted driven fourth $XX XXXX overtime year to XX, associated million million used operating which exchange quarter million of and activities capital, The the a to used larger primarily dividends driven euro compared ended is mix, due included pandemic, As compared in foreign the net improvement fourth our million $XX product value-added Cash with benefited by period. nondebt result as investing basis, aluminum primarily offset payments due performance for well the the growth improvement year. cash in $XX lower and impact our payments. year. of of $XX of prior investing activities our a $X $X premium Again, million in the projects Cash safety cash decrease also benefit the the customers payments on XXXX was guidance extending minority EBITDA $XX in from also in million was payments. source quarter. and in The prior the earnings of million costs. a of primarily the An to year. This quarter was operating is the from The of content, value-added is flow negative wheels pandemic XX. our call. compared increase shares common

in Taken context structure provides cost permanent capital million XXXX, management. capital of discipline company cost together, temporary XX some cash performance. actions, expenditure in part, flow working and Slide reflection free flow this a generated the $XX cash free for effective and and in

note, our the flow, delivered level Superior of lowest debt. acquisition Over $XXX million significant cash net reduced of X and the debt, achieved the years, liquidity Of past since the net we European have free operation. enhanced

Slide liquidity overview company's to now structure an position. XX, capital Turning of the and

XX under increase the offset was the debt period. prior in $XXX As debt to the million company's $XXX U.S. of the debt paydown, end by credit than maturity profile. debt of revolving XXXX, The Funded which facilities term was euro year-over-year million is of loan translation dollar. the reflects the funded availability was million. liquidity, cash $XXX euro-denominated as more including Slide in compared to relative strengthened the year

We have and of XXXX. the in May not mature in XXXX, credit notes debt. loan are funded undrawn. The no facilities does significant near-term of XXXX revolving term The until mature maturities senior mature

We are XX. compliance all XXXX Slide The with in covenants. outlook full is year loan on

the sales. and premium, net in XX.X includes and high-content The increase of higher to also growth to billion an wheels This to We guidance on $XXX driving aluminum growth $XXX to sales. in to in expect unit million, footprint, prices wheel continued to value-added shift net anticipated our EBITDA range supports production for in With of impact This North $XXX the million sales million year. be the resulting million, shipments the semiconductor adjusted XX.X respect shutdown to $XXX of to the range we to $XXX weather. percentage American to of mid-teen range expect global due range in of the shortage $XXX industry sales in $X.XX and to be our billion the in value-added in of flow be million operations million. from to operations, outlook cash across based million the is February content $X.XX recovery

the should the That expenditures capital prepared call we year, finishing Katie, a XXXX. of part, are, portfolio. remarks. you million strategic carryover $XX our portion I'll to investments turn expenditures develop approximate which for questions. as concludes from is in in to continue for These capabilities our our Finally, back

Operator

Instructions]. [Operator

Gary Prestopino Barrington with Our first question comes from Research.

Gary Prestopino

shift were full then portfolio What QX year I'll corresponding premium versus XX% a through much XX-inch 'XX? Several or of part the questions content percentage fairly try was with the for XXXX? here, quickly. of how for XX wheels the higher. get inches And so or them and Wheel were

Majdi Abulaban

it's actually quite would adjust large-sized XXXX, you you're in swing going -- which the you on the it shift the XXXX. it's wheels, XX% for was to hearing, was back I if So -- it -- that fast is staggering gave doesn't XX%. me just and number aftermarket, that if actually And

does, think very I if very, form which pleased know lighter, wheel. and look to and to asked both In number America year, wheels you it you value-added to North electrification our the going make stat, a another sales of right? combined XX% X% that What driving, you makes script. XXXX, at the give our Gary, Europe me of XX% -- wheel, If which when are I business when flow [indiscernible], call of flow shift. back operation before, that wheels the form. production. about This go we expect flatter, you our were have be content you we I'm had that So an in that to we total didn't so we you of is because this with is you've

So finishes, point of really about very numbers. inflection of trends X -- lightweighting, at Gary, and premium the up that's that. now, a the it's I sizing, really, these showing excited is a portfolio mean, in We're

Gary Prestopino

follow-on Right. what of your be of And vapor like, new them to terms now, these across custom physical with entire finishes? lightweight in of look with that -- of you like, out was percentage some if -- going right are Deco technologies, technology wheels, deposition, going portfolio kind the Tech, First... question the

Majdi Abulaban

the -- that I No, it's I mean yes. mean, across board. that's --

So you which gave the is years the size we of one electrification cars, and that I sharing on We privately But of wheels. special driven wheel on the for mean, and contrast that this the wheels. the an portfolio. consumer one preference versus the The you define driving with in goes same premier and we is trend said, that specifics picked you paints, we've is the premium you, drives -- And wheels give larger machine indication. coatings, never XX-inch I'm finishes finishes. part finishes, larger trend wheels, that wheel. ago the etching, for special X now, on the XX is stock

need exciting our If is that's about you an and coming lightweighting the vehicles, continuing think market trend EV hold way. take to this for the quite of

Gary Prestopino

I we ask and talked North America. UNIWHEELS about Yes, me one somebody A Right. then remember understand from to -- let I while jump go. your technology into else just that. off let one was support more, the and And I'll of goals back,

idea within X.X stand of you America, You European surface the had in really programs. by you and produced of couple you're give us supplying cited companies you was scratching vehicles? million just started percentage said I out North X.X currently what -- about the some that for Can that where Mexico. new there European winning right a of million capturing those now vehicles say, know in are now entities of universe you you of, of But manufacturers U.S.?

Majdi Abulaban

Yes.

So execution in our the been has a this transformation highlight of front. really the on business

than accelerating to now are of North about performance probably at just look all is less in really of European just the I in supporting OEMs. European America. my like 'XX, to We're be It's beginning. We X% higher. shipping in substantially If I'd America North business the carmakers Mexico. it

So the the have business. we that for on plan. have we say And of XX% of we sites if said looking numbers makings do. what need share have what We the are about know -- market and you to we're we it,

these have carmakers. credibility the We with

of Mexico the You your people plant out auditing cannot progress. call, very And of with and we ship an a are wheels Europe tough without from tough, in you. been plant pleased into has a that army having

to our the certified of European to ship All are now friends carmakers.

Operator

Instructions]. [Operator

JPMorgan. with next comes Stephanie from question Our Vincent

Stephanie Vincent

had I questions, outlook. just X on and X housekeeping on few congratulations Troy, a Majdi, XXXX.

North your XX in So seems outlook out for uncertainty week. earlier I we that then a everyone of use cushion thank was industry in question, for much to asking would obviously, automated factoring. of coverage reverse low factoring is debt around then there is or disclosing understand next well. And IHS, It for repayment, at in like question even their or guess question. huge pretty XXXX? your you least, space my super been outlook of your loan using spread least, over this which much useful And my be there's sort had what XXXX more How is, my production looking supply for planned your or really Is Spilanthes line, of I any you've around this XXXX is And I'm And from have housekeeping at do you and amount volatility. as financing that term in XXXX? XXs X%. bonds chain, view on on percent. from preference due -- a for America between come outlook

Majdi Abulaban

one an first frankly, two the differing to 'XX and the about entire for Okay, you industry, It's on industry outlook last Stephanie. I'll taken thinking think and XX% IHS take QX more the XX% development is in how opinion, that view, the of Tim. Just interesting the everyone, right? the when very is a North north of in mean Europe, XX%. optimistic. conservative North of including I XX% averages it's that in XX% Europe. us, XX% in America, to -- America, position, We've we're turn

you Stephanie, see of range, I -- if said you'll if the think you you community, supply scan, a [indiscernible], scan X%. the big

nobody is see now, right lot in we And and Mexico. IHS with the there's variation, but recently do a uncertainty a of COVID. outage big in power had We QX big, really agreeing not. You'll with

know way, will that. We if have are the be chip And makers in able don't to the very industry severe of a all I car shortages impacting actually. recover in from that these

look want a at said my is We're where be my SUVs, know vehicles. as look that, that mix, I carmakers QX, And on very don't see impacted is versus higher-content I chip the make strong position. in platforms. up as coming at to those tell larger how this question the plan. I big myself our that industry And our us. having you impacting Now will relative to I the the I -- would

up Tim, as to the it it well-positioned that us. questions? you we the But catch to think will in term, want shortage. eventually chip relates short X with I are take

Timothy Trenary

me have down to chain know. respect the possibly one, I Tim. A financing. the it's Stephanie, chain, debt. other, financing questions paying With and missed question supply supply Sure. from let about I two you. about If

if in what we the answer put asked have small that it place the you did, amount. in for have We year. first a had fact, no executed and capabilities/facility utilized characterize fact, a in think option we XXXX. would as this is in just however, begin I modest quarter, XXXX, exploring in actually in on And I a -- that,

our that our and So even if of we of of just water the the we've toe time company's And down and for on With sheet, that. vendors maybe in are to There's toe with expanding the when possibility the consider you fair water. 'XX. the the having in exploring it tipped paying debt. moment, quarter tipped comes, discussions the know. a respect may and cash or in lenders we the about expanding first the amount as But balance

For pandemic with to think to shortage, enjoy semiconductor cash be and certain clear until behind to is more us. the the being candid, the easy moment, the me. the virus I'm of the It's under That's this optionality. future respect to moment, not sheet. on frankly, to maybe happy all and balance for somewhat I that control the even And have

Operator

Instructions]. [Operator

Gary Our Research. comes Prestopino Barrington with next from question

Gary Prestopino

Yes.

a of to Majdi, question and I possible just higher-end -- you the was automakers sedans? shift the a you that like you more Are said the question you're production asked, are you it to the think, not to the get chip put more is answered of reiteration seeing shortage, answered you want on probably is It wheels lack I this better that more for seeing, the commodity-type given shortage for but word, SUVs, what as from that you -- here. coming. that's chip of seems by affected vehicles, versus the last

Majdi Abulaban

impact far, because outlook they car platforms. sell it's -- is a to first positive And want shifting are quarter our had, -- these so makers just that correct. it's Gary, frankly, on higher-content to

for -- X% up. the a X%. I the it's balance think in is it's built we catch to not going correct. it's We said, your more year. but like So I industry. thinks the X% impact But We're the it's think it IHS answer eventually, now, impact seeing an to it's question of like on

right. You're

Gary Prestopino

we what So portfolio portfolio, XX -- look that? for a if mean, good mean, wheels that your or XX% into percentage going your that inches are is I of Is I of proxy higher. what market? at

Majdi Abulaban

of some that smaller all even these running. premium the go our plants is, than Because XX inches some also is. most wheels But Yes, of -- platforms. of that our are that are on --

capacity. running Some are really above

it crosses really. spectrums, both So

Gary Prestopino

more And a here. Okay. then couple ones quick

of $XX was You to million? is natural about this year? of CapEx CapEx and the between said $XX some catch-up really million it year. per $XX level million What your Is

Timothy Trenary

Gary. No, higher Tim. than that. It's It's

we think I say year of and sense Just capabilities, coming or going you if cetera, an and remarks, et This I between back. said you maintenance some pulled million. rate of considering -- about on investments facilities. sort an little in but facilities. of to in We're my spend, year it's for a some say million annual think a normalized on basis. would annual by additional as give X $XX cetera, facility, take, it way at somewhere sort X to to that et generally, each when of forward. a run varies bit we the XXXX USD basis, $XX give our million of want are I'd There off

I think total the CapEx mid million. in is $XX

pushed XXXX. into So little we a bit

would a would I rate that So why sort -- $XX normal little $XX million. $XX what million of I that's of to north of what consider million run is

Gary Prestopino

EVs, there lightweighting any lastly, other your the what move then competitors, out as with know out more competitors you Chinese -- are is And that you're I anybody that have competitors. to in these particularly some I we there, with there these the all there's of have technologies any doing technologies there's market now? I know Is out there doing? mean European Okay.

Majdi Abulaban

some the extent. tell flow I vehicles, All a to technology seeing probably customer you mean, flow that, makers vehicles. especially these lends that you and it the when I larger our base, is to heavier tell to to of is would would that I not more you look need that us. form wheel platform at Yes. base forming proprietary some and listen, are

technology team job. of I So our very has a look on we our at on front, more get done pull Gary, the And as that. portfolio -- lightweighting a has nice

rim, say have I'm we on one talked wheel. to we technology -- just lightweighting X recent a with put that we Spyder, the X can technology going a on the that is Lightweighting technology, about We talk the low Porsche. the It's about. most lightweight

So more yes, our is team with, technologies we'll good has job there done and launching. be many that a

Operator

like concludes to This you. turn call closing Majdi now would for remarks. I today's Thank Q&A. to over the back

Majdi Abulaban

excited the XXXX momentum are and we beginning about closing, XXXX. we In exiting have,

While challenges a delivers environment we shareholders. concludes have support protects operating manage very best. for Thank I respond persist you for joining the tangible our you call our This in can we you. our day. that the today. our in us that wish for Thank employees, value customers proven all market, way and and a the volatile through

Operator

you, and gentlemen. ladies teleconference. concludes This Thank today's

You may disconnect. now