Superior Industries International (SUP) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $319M, down from $373M in Q2 2023, mainly due to lower aluminum prices, pass-throughs, and deconsolidation of German operations, resulting in a net loss of $11.1M compared to a $0.1M loss in Q2 2023.

• Adjusted EBITDA for Q2 2024 was $40M (22% margin), down from $52M (26% margin) in Q2 2023, with a >400bps sequential improvement.

• Completed exit from German manufacturing, ramping up in Poland, positioning for significant profitability uplift by year-end.

• In advanced discussions to retire Senior Unsecured Notes due June 2025, aiming to strengthen the balance sheet.

• Secured a record 1.7 million wheel program with Volvo and received an A-rating in R&D from Audi, underscoring momentum in Europe.

Financial highlights

• Q2 2024 net sales: $319M (Q2 2023: $372.6M); value-added sales: $180M (Q2 2023: $200M); adjusted EBITDA: $40M (Q2 2023: $52M); net loss: $11.1M.

• Unlevered free cash flow was $2M, a $19M improvement year-over-year due to better working capital management.

• Cash and short-term investments at quarter-end: $172M; total debt: $627M; net debt: $455M.

• Q2 2024 unit shipments: 3,469K, down from 3,781K in Q2 2023.

• Gross profit for Q2 2024 was $31.6M (Q2 2023: $41M); SG&A expenses: $21.4M (Q2 2023: $17M).

Outlook and guidance

• Full-year 2024 net sales expected at $1.35–$1.41B; value-added sales at $695–$725M, both reduced due to lower aluminum prices and OEM production.

• Adjusted EBITDA guidance lowered to $150–$165M, but unlevered free cash flow maintained at $110–$130M due to reduced capex.

• Capital expenditures outlook reduced to ~$40M for 2024.

• Management expects sufficient liquidity to meet obligations over the next 12 months, including repayment of senior notes due June 2025.

• 2024 industry production volumes in primary markets forecast to decline 2.5%, with a 5.6% drop in Western/Central Europe and a 0.6% increase in North America.