Superior Industries International Inc. has reported financial results for the first quarter ended March 31, 2018.
“Our first quarter of 2018 represented a record start to the year, extending our momentum from the end of 2017. Driven by the combination of solid volume, improved performance in our North American operations, and the addition of our European business, value-added sales increased 117 percent and Adjusted EBITDA grew 173 percent,” said Don Stebbins, president and CEO. “The combination of our European and North American teams into one global organization is benefitting our performance. While we are pleased with our first-quarter results, we have substantial opportunities to gain additional efficiencies as we continue to capitalize on the secular changes in the market.”
Wheel unit shipments were 5.5 million in the first quarter of 2018, an increase of 94.8 percent, compared to first quarter unit shipments of 2.8 million in the prior-year period. The increase in unit shipments was primarily due to the inclusion of the company’s European operations, as well as higher unit shipments in North America.
Net sales for the first quarter of 2018 were $386.4 million, compared to net sales of $174.2 million in the first quarter of 2017. Value-added sales, a non-GAAP financial measure defined as net sales less pass-through charges, primarily for the value of aluminum, were $207.4 million for the first quarter of 2018, a 117 percent increase compared to the first quarter of 2017.
Gross profit for the first quarter of 2018 was $50 million, compared to $19.2 million in the prior-year period. Gross profit as a percentage of value-added sales was 24.1 percent compared to 20.1 percent in the prior-year period. The increase in gross profit was due mainly to an overall strong sales performance, increased operational efficiency in North America, and the addition of the European business unit.
Selling, general and administrative expenses for the first quarter were $22.4 million, or 5.8 percent of net sales, compared to $15.3 million, or 8.8 percent of net sales in the prior-year period. The increased expense was largely driven by the inclusion of Superior’s European operations.
Income from operations for the first quarter of 2018 was $27.6 million, compared to income from operations of $3.9 million in the prior-year period. Income from operations as a percentage of value-added sales was 13.3 percent for the first quarter of 2018 compared to 4.1 percent of value-added sales in the prior-year period. Income from operations in the prior-year period was negatively impacted by transaction expenses incurred as a result of the acquisition of the European operations.
The provision for income taxes for the first quarter of 2018 was $3.4 million, resulting in an effective tax rate of 24.6 percent. This compares to an income tax provision in the first quarter of 2017 of $0.2 million and an effective tax rate of 6 percent. The higher tax rate was the result of the mix of earnings among tax jurisdictions now incorporating European operations and a discrete tax expense of $1.7 million based on an adjustment to provisional amounts related to tax reform.
For the first quarter of 2018, the company reported net income of $10.3 million, and earnings per diluted share of 7 cents, including the impact from acquisition-related items of ($2.0) million, or (8 cents) per diluted share. This compares to $3.1 million of net income, or 12 cents per diluted share, in the first quarter of 2017.
Adjusted EBITDA, a non-GAAP financial measure, reached a record-level of $52.2 million, or 13.5 percent of net sales, for the first quarter of 2018. This compares to $19.1 million, or 11 percent of net sales, for the first quarter of 2017. Adjusted EBITDA as a percentage of value-added sales was 25.2 percent compared to 20 percent in the prior-year period.
Financial Position and Cash Flow
The Company reported net cash provided by operating activities of $14.4 million in the first quarter of 2018 compared to cash used by operating activities of $1.6 million during the first quarter of 2017. Cash used for capital expenditures to support the ongoing maintenance, as well as expansion and enhancement of the product portfolio of products and technologies amounted to $22.7 million.
During the first quarter of 2018, the company paid common dividends of $2.3 milllion and preferred dividends of $7.2 million.
Based on the current outlook for the year, Superior is reaffirming its full-year 2018 outlook provided on Jan. 17, 2018, as follows:
- Superior expects net sales to be in the range of $1.45 billion to $1.50 billion, driven by unit shipments of 21.25 million to 21.6 million
- Value-added sales are expected to be in the range of $800 million to $835 million
- Adjusted EBITDA is expected to be between $185 million and $200 million
- Capital expenditures are expected to be approximately $95 million
- Cash flow from operations is expected to be between $160 million and $180 million
- Effective tax rate is expected to be between 10 percent to 15 percent
Stebbins concluded, “Today, we are reaffirming our 2018 outlook, which reflects stable North American light truck and vehicle production as compared to last year and moderate production growth in Europe. We are pleased that the initiatives we are implementing to drive improvement in our North American operations are yielding results; however, there is more work to be done. We remain tremendously optimistic and excited about the prospects ahead of Superior, our strategic position in the market and our capabilities. We will continue to focus on further differentiating ourselves through investments in product innovation, product quality and exceptional customer engagement, and are confident that we are well-positioned to drive long-term sustainable growth and profitability for our shareholders.”