VAN NUYS, Calif. — Superior Industries International has reported a sharp improvement in financial results for the year and fourth quarter ended Dec. 31, 2010.
Net income for the year advanced to $51.6 million, or $1.93 per diluted share, from a net loss of $94.1 million, or $3.53 per share, for 2009. Net sales increased 72 percent to $719.5 million from $418.8 million for 2009.
“Strong demand from virtually all of our customers throughout the year reflected the recovery in the automotive sector and positively impacted our performance,” said Steven Borick, chairman, CEO and president. “We were able to outpace the general industry recovery, with production of passenger cars and light-duty vehicles in North America increasing nearly 40 percent in 2010, versus our 54 percent increase in unit sales volume. Moreover, our operational response to the rapid recovery was exceptional, as we were able to achieve the volume growth despite closing facilities in late 2008 and 2009 in reaction to the difficult market conditions at the time.
“As 2011 unfolds, strong industry momentum is continuing. We are actively evaluating a number of options to increase production levels, while maintaining cost controls,” Borick added.
Net sales for 2010 were $719.5 million, compared with $418.8 million in the prior year. A 54 percent improvement in unit sales volume contributed $218.8 million of the increase in net sales. Higher prices for aluminum, passed through to customers, added $63 million to the increase. The balance of net sales growth was due primarily to a change in sales mix, the company said. Wheel program development revenues were approximately $10 million in both years.
Gross profit for 2010 was $89.2 million, or 12 percent of net sales, compared to a loss of $10.2 million, or 2 percent of net sales in 2009. The company said this favorable increase reflects the impact of higher sales volume, as well as improved operating cost leverage resulting from plant closures in 2009 and late 2008. Gross profit for 2010 included plant closure and related costs of $2.1 million, which were offset by gains on forward natural gas contracts of $1.9 million. Gross loss in 2009, however, included $18.8 million of expense associated with plant closures, including costs for severance, equipment dismantling and other shutdown activities, and $2.5 million in losses on forward natural gas contracts that were marked to market in 2009.
In June 2010, Superior sold its 50-percent ownership in the joint venture in Hungary, which resulted in a $4.1 million pretax loss. The company’s equity share of the joint venture’s 2010 losses was $2.8 million through the date of sale in June, which compares to a $24.8 million equity loss recorded for the full year 2009. The 2009 loss included a $14.4 million impairment charge.
For the 2010 fourth quarter, net income rose significantly to $22.3 million, or 82 cents per diluted share, compared with a net loss of $3.9 million, or 15 cents per share, for the fourth quarter of 2009.
Consolidated net sales for the 2010 fourth quarter increased 32 percent to $191 million from $145 million the fourth quarter of 2009. Sales volume increased 18 percent during the 2010 quarter and contributed $24.8 million to net sales growth. The average selling price of wheels increased approximately 13 percent over the prior year, due principally to higher aluminum prices, which added $14.5 million to net sales. During the fourth quarter of 2010, wheel program development revenues decreased to $3 million from $3.6 million in the same period a year ago. The remainder of 2010 sales improvement resulted primarily from changes in sales mix, Superior noted.
The 18 percent increase in sales volume for the fourth quarter of 2010 compares to 7 percent growth in production of passenger cars and light-duty vehicles in North America, the principal market for Superior’s products. The 2010 sales volume increase also reflects higher shipments to all customers when compared with the fourth quarter a year ago. Unit shipments increased by 20 percent to Ford, by 8 percent to General Motors, by 5 percent to Chrysler and by 40 percent to international customers.
Gross profit for the fourth quarter of 2010 was $29 million, or 15 percent of net sales, compared with $12.2 million, or 8 percent of net sales, for the fourth quarter of 2009. The improvement in gross profit in the current quarter resulted from increased sales volume and the favorable impact of increased plant utilization in the 2010 fourth quarter, as the company’s operations ran at high utilization rates in order to meet the increased customer demand. The current quarter’s gross profit was also impacted favorably by an $859,000 gain from the settlement of forward natural gas contracts. The 2009 quarter included severance and other non-impairment costs associated with plant closures and other workforce reductions, totaling approximately $4.8 million, offset partially by a mark to market gain of $484,000 on forward natural gas contracts.
The company’s share of the equity loss from its 50-percent joint venture ownership in Hungary during the fourth quarter of 2009 was $17.6 million. During that quarter, an impairment charge of $14.4 million was recorded to reduce the joint venture’s net assets to estimated fair value due to weakening market and business conditions. Superior’s ownership stake in the joint venture was sold in June 2010.
