Superior Industries International has reported financial results for the fourth quarter ended Dec. 31, 2021.

“We delivered impressive results in 2021 underscoring the agility and operational strength of our teams in the face of a weak and volatile OEM production environment. Our performance was supported by the strong execution against our value creation roadmap, enabling us to grow profitability to pre-pandemic levels while managing through immense operational challenges. Importantly, these improvements have been realized despite a 24% decrease in industry volumes since the end of 2019,” said Majdi Abulaban, president and CEO of Superior. 

“We continue to leverage our robust portfolio to meet strong industry demand for premium, larger diameter, and light weighted wheels, supporting the expansion of Value-Added Sales and a consistent track record of Growth over Market,” Abulaban added.

He continued, “Looking ahead, we anticipate continuing disruption throughout at least the first half of 2022 stemming from the ongoing semiconductor shortage and inflationary pressures. We also anticipate some level of disruption associated with the Russia/Ukraine conflict. The extent of this disruption and impact on the company cannot be predicted at this time. Setting aside the semiconductor shortage, inflationary pressures, and Russia / Ukraine conflict, we remain confident in the long-term health of underlying consumer demand and expect an extended period of above-average industry production levels upon resolution of the semiconductor supply challenges. I am excited to extend the momentum we saw over the last year as we bring our portfolio of differentiated technologies to our customers while positioning Superior for profitable growth.”

Fourth Quarter Results

Net sales for the fourth quarter of 2021 were $368 million, compared to net sales of $338 million in the prior year period. Value-Added Sales, a non-GAAP financial measure, were $189 million for the fourth quarter of 2021 compared to $202 million in the prior year period. 

Gross profit for the fourth quarter of 2021 was $21 million, compared to $33 million in the prior year period. The decrease was primarily driven by lower unit sales and manufacturing inefficiencies resulting from depressed and volatile OEM production levels, partially offset by the effects from a favorable product mix.

Selling, general, and administrative (“SG&A”) expenses for the fourth quarter of 2021 were $14 million, compared to $16 million in the prior year period. The reduction in SG&A was driven by lower usage of external service providers and decreased compensation and benefits accruals.

Operating income for the fourth quarter of 2021 was $7 million, compared to $18 million in the prior year period. The decrease is primarily due to lower gross profit in the fourth quarter of 2021.

Adjusted EBITDA, a non-GAAP financial measure, was $37 million for the fourth quarter of 2021, or 19.8% of Value-Added Sales, which compares to $47 million, or 23.2% of Value-Added Sales, in the prior year period. The decrease in Adjusted EBITDA was primarily driven by lower operating income. 

The company reported net cash provided by operating activities of $60 million in the fourth quarter of 2021, compared to cash provided by operating activities of $58 million during the fourth quarter of 2020. Free Cash Flow, a non-GAAP financial measure, for the fourth quarter was $40 million, compared to $42 million in the prior year period. The Free Cash Flow in both periods benefited from working capital reduction initiatives. 

Full Year 2021 Results

Net sales for 2021 were $1,385 million, compared to net sales of $1,101 million in 2020. Value-Added Sales, a non-GAAP financial measure, were $754 million for 2021, compared to $648 million in the prior year. The main drivers of the $284 million revenue increase were $178 million attributable to higher pass through of aluminum to OEMs, $88 million due to favorable product mix and higher shipment volumes and $18 million in favorable foreign exchange, primarily related to the Euro.

Gross profit for 2021 was $115 million, compared to $66 million in the prior year. The increase in gross profit was primarily due to higher shipment volumes and favorable product mix.

SG&A expenses for 2021 were $59 million, compared to $52 million in the prior year. The main drivers of the $7 million increase were $11 million related to lower prior period compensation and benefit expense as a result of temporary cost saving actions taken in response to the COVID-19 pandemic and the return of compensation expense to more normalized levels in 2021, partially offset by a $4.4 million gain on the sale of the company’s Fayetteville, Arkansas facility in 2021.

For 2021, the company reported net income of $4 million, or loss per diluted share of $1.17, including the impact of $0.46 per share from costs associated with restructuring, certain hiring and separation costs and a flood loss. The loss per diluted share includes the effects from the accretion of, and dividends on, the preferred stock which are not included in net income. This compares to net loss of $244 million, or loss per diluted share of $10.81, in 2020. 

Adjusted EBITDA, a non-GAAP financial measure, was $167 million, or 22.1% of Value-Added Sales in 2021, which compares to $129 million, or 20.0% of Value-Added Sales in 2020. The increase in Adjusted EBITDA was primarily due to improved performance associated with favorable product mix, higher production volumes and favorable foreign exchange rates. 

The company reported cash provided by operating activities of $45 million for the full year 2021, compared to cash provided by operating activities of $150 million in 2020. The decrease was a result of higher working capital requirements due to increased cost of aluminum during 2021, while the company benefited from working capital reductions in 2020. For the full year, Free Cash Flow, a non-GAAP financial measure, was a use of cash of $28 million, compared to positive free cash flow of $87 million in the prior year period, primarily driven by the decreased operating cash flow. 

Financial Position

As of Dec. 31, 2021, Superior had funded debt of $616 million and Net Debt, a non-GAAP financial measure, of $503 million, compared to funded debt of $643 million and Net Debt of $491 million as of the end of the prior year period. The increase in net debt of $12 million was a result of the negative free cash flow in 2021, partially offset by the depreciation of  Euro-denominated debt resulting from the Euro weakening against the US-Dollar. 

2022 Outlook

Superior management assumes full year 2022 industry OEM production in its markets to grow at a mid- to high single digit percentage rate. As a result, Superior’s full year 2022 outlook is as follows:

		FY 2022 Outlook
Unit Shipments		16.4 – 17.7 million
Net Sales		$1.58 – $1.71 billion
Value-Added Sales		$780 – $840 million
Adjusted EBITDA		$160 – $190 million
Cash Flow from Operations		$105 – $150 million
Capital Expenditures		~ $80 million

The industry production volume assumption reflects the supply chain challenges impacting the OEMs stemming from the continued semiconductor shortage. The impact of the Russia / Ukraine conflict is unknown at this time and therefore not reflected in the company’s 2022 outlook. Superior is positioned to benefit from additional production volumes and the associated earnings in the event industry volume develops better than assumed.