VAN NUYS, Calif. – Superior Industries International has announced financial results for the fiscal year and fourth quarter ended Dec. 30, 2012, along with plans to build a new manufacturing facility in Mexico to expand capacity and meet anticipated growth in product demand.
Net income for the full 2012 year amounted to $30.9 million, or $1.13 per diluted share, compared with $67.2 million, or $2.46 per diluted share, in 2011. The company said the net income decline largely reflected a swing to income tax expense of $3.6 million in 2012 from a $25.2 million income tax benefit in 2011.
Net sales for 2012 declined slightly to $821.5 million from $822.2 million in 2011. A 7 percent increase in unit sales volume for 2012 was offset by a reduction in average selling price, primarily due to a decline in aluminum prices. Unit shipments rose to 12.5 million in 2012 from 11.7 million units shipped in the prior year.
Gross profit for 2012 declined to $60.6 million, or 7 percent of net sales, from $67.1 million, or 8 percent of net sales, in 2011. The 2012 gross profit included a $3.5 million non-cash benefit from resolution of a foreign consumption tax issue. The company said the decline in gross profit and margin percentage reflected the impact of higher levels of manufacturing costs, principally labor and maintenance. The increase in manufacturing cost resulted from higher sales volume, as well as equipment reliability and other challenges that reduced operating efficiencies, especially in the older U.S. facilities. The company continued to operate its factories at high utilization rates throughout the year.
“The opportunities and challenges in our business have clarified the next steps to improve our operating returns,” said Steven Borick, chairman, CEO and president. “Superior remains the premier aluminum wheel manufacturer in a healthy and growing North American automotive market. While our operations in Mexico consistently have performed at class-leading levels, it has been evident we are not currently positioned to participate fully in North American market growth. Accordingly, after a thorough evaluation of ways to deploy our capital, we have decided to expand our manufacturing footprint by constructing a new manufacturing facility in Mexico, where significant light vehicle assembly expansion has been announced or already is underway.”
Borick said Superior intends to invest approximately $125 million to $135 million to construct and equip the new manufacturing facility, which will have an initial capacity to produce between 2 million and 2.5 million wheels a year. The company currently produces approximately 12.5 million wheels annually. He said a specific site within Mexico still is being identified, with groundbreaking targeted for mid-2013 and completion of construction anticipated about two years later. Architectural plans currently are underway. Borick said existing liquidity is adequate to fund the project, but the company also is evaluating credit options.
Superior plans to make further enhancements to its existing operations in both the U.S. and Mexico. Capital expenditures amounted to $23 million in 2012, which was more than a one-third increase over the prior year. The company expects to increase the pace of reinvestment in current factories in 2013 with a goal to improve process capability and operating efficiency, especially in the U.S. More than two-thirds of capital expenditures in 2012, or nearly $16 million, were invested in the company’s older manufacturing facilities in the U.S., which supported just under 40 percent of total unit sales volume for the past year.
Fourth Quarter Results
Consolidated net sales for the 2012 fourth quarter declined 3 percent to $210 million from $216.8 million in the previous year. The decline principally reflected flat sales volume and a reduction in average selling price due to lower aluminum prices. Unit shipments were 3.2 million in the fourth quarter of both 2012 and the prior year.
Gross profit for the 2012 fourth quarter declined to $12.8 million, or 6 percent of sales, from $18.1 million, or 8 percent of sales, for the fourth quarter of 2011. Higher cost for the current year was incurred for maintenance and labor, partially offset by lower aluminum prices, which generally are passed through to customers.
