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Superior Industries Reports Third Quarter 2018 Financial Results

Net sales for the third quarter of 2018 were $347.6 million, compared to net sales of $331.4 million in the third quarter of 2017. Superior said the increase during the quarter was driven by higher aluminum prices, offset by lower volume in the third quarter of 2018.

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Superior Industries International has reported financial results for the third quarter ended Sept. 30, 2018.

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“Our results during the third quarter compared to last year were impacted by a number of factors, including temporarily reduced European OEM production levels associated with the Worldwide Harmonized Light Vehicle Test Procedure (WLTP) emission standards, softer production schedules from our OEM customers in the United Kingdom, lower aftermarket volumes and higher energy prices in Mexico. In addition, slightly higher launch costs year-over-year associated with our new designs and finishes in North America and Europe further reduced EBITDA in the quarter,” said Don Stebbins, president and CEO. “While we anticipate these factors will continue to impact our results in the fourth quarter, we believe Superior remains well-positioned to advance its strategies to capitalize on the secular trends benefitting the demand for our innovative wheel designs.”

Comparative results for the third quarter and year-to-date periods were impacted by the inclusion of one additional calendar week of North America operations in the third quarter of 2017 as a result of the realignment of the fiscal periods to calendar quarters in 2017. Comparative results for year-to-date 2018 were also impacted by the inclusion of an additional five months of Superior’s European operations compared to year-to-date 2017 prior to the closing of the acquisition.

Third Quarter Results

Wheel unit shipments were 4.7 million in the third quarter of 2018, a decrease of 5.5 percent, compared to unit shipments of 5 million in the prior year period. The decrease in unit shipments was primarily due to reduced OEM production throughout Europe as a result of the impact of the WLTP emission standards, softer volumes from OEM customers in the United Kingdom, lower aftermarket volumes and the additional week in the third quarter of 2017 in North America.

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Net sales for the third quarter of 2018 were $347.6 million, compared to net sales of $331.4 million in the third quarter of 2017. Superior said the increase during the quarter was driven by higher aluminum prices, offset by lower volume in the third quarter of 2018.

Gross profit for the third quarter of 2018 was $23.7 million, compared to $23.9 million in the prior year period. Selling, general and administrative expenses for the third quarter were $16.0 million, or 4.6% of net sales, compared to $18.1 million, or 5.5 percent of net sales in the prior year period. Selling, general and administrative expenses were lower for the third quarter of 2018 due to reduced acquisition and integration-related expenses.

Income from operations for the third quarter of 2018 was $7.7 million, or 4.3 percent of Value-Added Sales, compared to income from operations of $5.8 million, or 3.1 percent of Value-Added Sales in the prior year period. The comparison was favorably impacted by lower acquisition and integration-related costs compared to the prior year period.

The income tax benefit for the third quarter ended September 30, 2018 was $7.1 million on a pre-tax loss of $7.7 million. The tax benefit was primarily due to a revision to the estimated U.S. tax related to provisions of the Tax Cuts and Jobs Act.

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For the third quarter of 2018, the Company reported a net loss of $0.7 million, a loss per diluted share of 37 cents. This compares to net income of $2.6 million, or 22 cents loss per diluted share, reported in the third quarter of 2017.

Adjusted EBITDA, a non-GAAP financial measure, was $30.6 million, or 17.1 percent of Value-Added Sales, for the third quarter of 2018. This compares to $43 million, or 22.9 percent of Value-Added Sales, for the third quarter of 2017. The decrease in Adjusted EBITDA was primarily driven by lower volume in North America and Europe, higher energy costs in Mexico and higher launch costs.

Year-to-Date Results

Wheel unit shipments were 15.8 million for the first nine months of 2018, an increase of 35.9 percent, compared to unit shipments of 11.6 million in the prior year period. The increase in unit shipments was primarily due to the inclusion of the aforementioned additional five months of Superior’s European operations in 2018, which drove 7.2 million units of improvement, as well as slightly higher shipments during the first half of 2018, offset by lower volumes in the third quarter 2018.

Net sales for the first nine months of 2018 were $1.1 billion, compared to net sales of $746.3 million in the first nine months of 2017. The company said this increase was driven by higher aluminum prices and the inclusion of the additional five months of Superior’s European operations in 2018. Value-Added Sales were $590.9 million for the first nine months of 2018 versus Value-Added Sales of $413.3 million in the prior year period.

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Gross profit for the first nine months of 2018 was $127.2 million compared to $63.2 million in the prior year period. Gross profit as a percentage of Value-Added Sales was 21.5 percent compared to 15.3 percent in the prior year period. The increase in gross profit was due mainly to the inclusion of an additional five months of Superior’s European operations in 2018 and the non-recurring acquisition related items incurred in the prior year period.

The provision for income taxes for the first nine months of 2018 was $1.1 million. This compares to an income tax benefit for the first nine months of 2017 of $4.8 million.

For the first nine months of 2018, the company reported net income of $17.8 million, or a loss per diluted share of 21 cents, which includes an additional five months of Superior’s European operations in 2018. This compares to a net loss of $1.6 million, or a loss per diluted share of 50 cents, in the first nine months of 2017.

Adjusted EBITDA, a non-GAAP financial measure, was $140 million, or 23.7 percent of Value-Added Sales, for the first nine months of 2018, which compares to $91.4 million, or 22.1 percent of Value-Added Sales, for the first nine months of 2017. The increase in Adjusted EBITDA was primarily driven by the inclusion of an additional five months of the European operations in 2018, partially offset by higher energy prices in Mexico and higher launch costs in the third quarter of 2018.

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2018 Outlook

The company has reaffirmed its 2018 0utlook provided on Oct. 24. Superior continues to expect:

  • Unit shipments to be in the range of 20.85 million to 21.05 million.
  • Net sales to be in the range of $1.48 billion to $1.51 billion.
  • Value-Added Sales to be in the range of $790 million to $805 million.
  • Adjusted EBITDA to be in the range of $175 million and $180 million.
  • Capital expenditures are projected to be approximately $85 million.
  • Cash flow from operations is anticipated to be between $130 million and $145 million.
  • The effective tax rate to be at or below 0 percent.

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