• Net Sales (Q4 2024): $310 million, compared to $309 million in Q4 2023.
• Net Sales (Full Year 2024): $1.3 billion, compared to $1.4 billion in 2023.
• Adjusted EBITDA (Q4 2024): $35 million with a margin of 21%.
• Adjusted EBITDA (Full Year 2024): $146 million with a margin of 21%.
• Net Loss (Q4 2024): $10 million.
• Net Loss (Full Year 2024): $78 million.
• Unlevered Free Cash Flow (Q4 2024): $36 million.
• Unlevered Free Cash Flow (Full Year 2024): $55 million.
• Total Debt (End of 2024): $520 million, down $118 million from 2023.
• Cash on Balance Sheet (End of 2024): $40 million.
• 2025 Net Sales Guidance: $1.3 billion to $1.4 billion.
• 2025 Adjusted EBITDA Guidance: $160 million to $180 million.
• 2025 Unlevered Free Cash Flow Guidance: $110 million to $130 million.
• 2025 Capital Expenditures Guidance: $35 million.

• Warning! GuruFocus has detected 4 Warning Signs with SUP.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Superior Industries International Inc (NYSE:SUP) successfully completed a major restructuring, consolidating European manufacturing operations in Poland, which is expected to enhance cost efficiency.
• The company attracted $520 million in new capital and refinanced all of its debt, extending maturities to 2028, which strengthens its financial foundation.
• SUP achieved a consistent adjusted EBITDA margin of 21% despite industry production declines, highlighting effective cost management and restructuring efforts.
• The company's local-for-local manufacturing footprint in Mexico and Poland positions it favorably to capture demand from OEM customers seeking shorter, de-risked supply chains.
• SUP anticipates outperforming the market in 2025 with substantial margin expansion, driven by improved capacity utilization and structural cost initiatives.

Negative Points

• Adjusted value-added sales declined by 4% year-over-year, in line with the overall industry decline, indicating pressure on growth.
• The company faces potential impacts from recent tariffs, which could affect industry vehicle production and SUP's operations.
• Net sales for the full year decreased from $1.4 billion to $1.3 billion, reflecting challenges in maintaining sales volume.
• Net loss for the year was $78 million, indicating financial challenges despite operational improvements.
• The geopolitical environment, including tariffs, presents uncertainties that could impact SUP's financial outlook and operations.

Q & A Highlights

Q: Majdi, what implications does the capacity situation have for Superior Industries in Europe and North America? How much flexibility do you have to increase capacity if needed? A: Majdi Abulaban, President and CEO, explained that Superior Industries has about 20% excess capacity in both Europe and Mexico. This flexibility is turning out to be a great asset, allowing the company to quickly absorb short-term business opportunities, especially in light of geopolitical headwinds on tariffs.

Q: Can you clarify the discrepancy in your guidance versus IHS's 4% decline in unit production for 2025? A: Majdi Abulaban noted that while IHS forecasts a 4% decline, Superior Industries expects to perform slightly ahead of the market due to good mix, aftermarket growth, and recent short-term business wins. The company is in advanced discussions for additional localization business, which could further enhance performance.

Q: Regarding short-term business wins, how long are the contracts for these opportunities? A: Majdi Abulaban clarified that while these wins are termed "short-term" due to the quick production start, the contracts themselves are long-term, typically lasting over five years.

Q: Can you provide details on the preferred dividends and any potential agreements related to them? A: Dan Lee, CFO, stated that the preferred dividends are being paid, and any redemption is optional and contingent on the company's ability to fund the payment. This is detailed in Note 10 of their financial statements.

Q: Could you explain the leverage ratios under the new capital structure? A: Dan Lee mentioned that the covenant ratio is 3.75 for Q4 and Q1, dropping to 3.5 at the end of Q2. This ratio is based on adjusted EBITDA plus stock compensation, and the debt is separate from the preferred stock.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.