Superior Industries International, one of the world’s leading light vehicle aluminum wheel suppliers for OEMs and the European aftermarket, has reported financial results for the fourth quarter and fiscal year ended Dec. 31, 2020. 

“2020 proved to be an inflection point for Superior,” said Majdi Abulaban, president and CEO of Superior. “Despite the immense operational challenges due to the pandemic, we remained committed to executing on our key initiatives while following our COVID-19 playbook. During the year we delivered substantial cash flow, operating performance improvement, and enhanced margins after the COVID-19-related shutdowns. We captured tailwinds from the portfolio shift towards premium, larger diameter wheels, which supported our growth above market in 2020. Further, we realized the benefits of the structural cost improvements and working capital initiatives implemented throughout the year, leading to the second consecutive year of substantial Free Cash Flow generation.” 

Abulaban continued, “Overall, I am pleased with our results and our progress in achieving our long-term value-creation initiatives. We look forward to continuing this momentum throughout 2021 as we leverage our differentiated technology portfolio to further position Superior for growth and deliver value to our shareholders, customers, and other stakeholders.”

Fourth Quarter Results

Net sales for the fourth quarter of 2020 were $338 million, compared to net sales of $310 million in the prior year period. 

Gross profit for the fourth quarter of 2020 was $33 million, compared to $27 million in the prior year period. The increase in gross profit for the quarter was due to stronger product mix, which resulted in higher sales, and structural cost improvements, partially offset by operating costs associated with the virus of approximately $3 million.

Selling, general, and administrative (“SG&A”) expenses for the fourth quarter of 2020 were $16 million, compared to $17 million in the prior year period. The decrease in SG&A was driven by lower hiring and separation costs and other cost reduction initiatives.

Operating income for the fourth quarter of 2020 was $18 million, compared to a loss from operations of $92 million in the prior year period. The increase in operating income for the quarter was driven by the goodwill and indefinite-lived intangible asset impairment incurred in the prior year period totaling $102 million, as well as higher gross profit and lower SG&A expenses in the fourth quarter of 2020 as discussed above.

For the fourth quarter of 2020, the company reported a net loss of $21 million, or a loss per diluted share of $1.16 including the impact of $0.19 per share loss from restructuring, change in fair value of preferred derivative, and net other items and the impact of $0.92 per share related to the valuation allowance on deferred tax assets as described above. This compares to a net loss of $99 million, or loss per diluted share of $4.25, in the fourth quarter of 2019. 

Adjusted EBITDA, a non-GAAP financial measure, was $47 million for the fourth quarter of 2020, or 23.2% of Value-Added Sales, which compares to $38 million, or 21.6% of Value-Added Sales, in the prior year period. The increase in Adjusted EBITDA was driven by stronger product mix, which resulted in higher sales, and structural cost improvements

Full Year 2020 Results 

Net sales for 2020 were $1,101 million, compared to net sales of $1,372 million in 2019. Value-Added Sales, a non-GAAP financial measure, were $648 million for 2020, compared to $755 million in the prior year. The decrease was driven by lower unit shipments, partially offset by stronger product mix. See “Non-GAAP Financial Measures” below and the reconciliation of consolidated net sales to Value-Added Sales in this press release.

Gross profit for 2020 was $66 million, compared to $116 million in the prior year. The decrease in gross profit was due to lower sales driven by COVID-19, partially offset by temporarily closing manufacturing facilities, reducing personnel and other operating expenses, reducing structural costs, as well as stronger mix, which supported higher sales.

SG&A expenses for 2020 were $52 million, compared to $64 million in the prior year. The decrease in SG&A was primarily due to temporary initiatives including reduced compensation, discretionary spending, and travel expenses, in addition to permanent cost actions.

The loss from operations for 2020 was $180 million, compared to a loss of $50 million in the prior year, reflecting lower gross profit as previously described and higher non-cash impairments of goodwill and indefinite-lived intangible assets, partially offset by lower SG&A expenses.

For 2020, the company reported a net loss of $244 million, or loss per diluted share of $10.81, including the impact of $8.13 per share from restructuring, change in fair value of preferred derivative, impairment, and net other items. This compares to net loss of $97 million, or loss per diluted share of $5.10, in 2019. 

Adjusted EBITDA, a non-GAAP financial measure, was $129 million, or 20.0% of Value-Added Sales, in 2020, which compares to $169 million, or 22.3% of Value-Added Sales, in 2019. The decrease in Adjusted EBITDA was driven by lower volumes due to COVID-19, partially offset by improved product mix and the cost saving initiatives previously listed. See “Non-GAAP Financial Measures” below and the reconciliation of net income to Adjusted EBITDA in this press release.

The Company reported cash provided by operating activities of $150 million for the full year 2020, compared to cash provided by operating activities of $163 million in 2019. For the full year, Free Cash Flow, a non-GAAP financial measure, was $87 million, compared to $79 million in the prior year period. The improvement in Free Cash Flow compared to the prior year period was driven by a higher source of working capital, lower capital expenditures, and lower dividends partially offset by lower earnings.

Financial Position

As of Dec. 31, 2020, Superior had funded debt of $643 million and Net Debt, a non-GAAP financial measure, of $491 million, compared to funded debt of $631 million and Net Debt of $553 million as of the end of the prior year period. The improvement in Net Debt of $62 million during the full year was supported by cash flow generation as described above, partially offset by an increase related to Superior’s Euro-denominated debt as the Euro strengthened relative to the US Dollar.