PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial condition and operational results [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including income, balance sheets, cash flows, and equity, with detailed notes on business, revenue, and debt for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Statements of Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) The company reported a significant increase in net loss for both the three and six months ended June 30, 2025, primarily driven by a substantial impairment of long-lived assets and a decline in net sales Condensed Consolidated Statements of Income (Loss) (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Sales | $207,897 | $318,967 | $529,499 | $635,243 | | Gross Profit (Loss) | $(21,448) | $31,620 | $(5,348) | $52,766 | | Income (Loss) from Operations | $(113,215) | $10,244 | $(112,593) | $10,558 | | Net Income (Loss) | $(181,053) | $(11,124) | $(193,982) | $(43,873) | | EPS – Basic | $(6.66) | $(0.75) | $(7.63) | $(2.26) | | EPS – Diluted | $(6.66) | $(0.75) | $(7.63) | $(2.26) | - Impairment of long-lived assets was **$66,906 thousand** for both the three and six months ended June 30, 2025, compared to zero in the prior year periods[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) The company's comprehensive loss significantly increased in Q2 and H1 2025 compared to 2024, despite a positive foreign currency translation gain, due to the substantial net loss Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(181,053) | $(11,124) | $(193,982) | $(43,873) | | Foreign currency translation gain (loss), net of tax | $38,726 | $(18,247) | $48,924 | $(15,748) | | Change in unrecognized gains (losses) on derivative instruments, net of tax | $1,475 | $(15,976) | $5,405 | $(13,282) | | Other comprehensive income (loss), net of tax | $40,201 | $(34,220) | $54,329 | $(28,849) | | Comprehensive income (loss) | $(140,852) | $(45,344) | $(139,653) | $(72,722) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets decreased significantly compared to December 31, 2024, primarily due to reductions in property, plant and equipment, and deferred income tax assets, while long-term debt increased and equity remained in deficit Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $85,268 | $40,110 | | Total current assets | $320,683 | $308,761 | | Property, plant and equipment, net | $274,838 | $329,892 | | Deferred income tax assets, net | $0 | $39,046 | | Total assets | $630,321 | $740,129 | | Total current liabilities | $181,248 | $195,926 | | Long-term debt (less current portion) | $537,490 | $481,449 | | Total liabilities, mezzanine equity and shareholders' equity (deficit) | $630,321 | $740,129 | | Total shareholders' equity (deficit) | $(444,705) | $(276,218) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company generated positive cash flow from operating activities, a significant improvement from the prior year, primarily due to cash from early termination of derivative instruments and changes in working capital, with financing activities also providing substantial cash Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided (used) by operating activities | $6,033 | $(4,544) | | Net cash provided (used) by investing activities | $(11,911) | $(14,844) | | Net cash provided (used) by financing activities | $46,858 | $(8,094) | | Net changes in cash and cash equivalents | $45,158 | $(29,344) | | Cash and cash equivalents at the end of the period | $85,268 | $172,262 | - Cash proceeds from early termination of derivative instruments contributed **$37,537 thousand** to operating activities in H1 2025[14](index=14&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity (Deficit)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity%20%28Deficit%29) The company's total shareholders' equity deficit significantly widened during both the three and six months ended June 30, 2025, primarily due to substantial net losses and redeemable preferred 9% dividend and accretion Condensed Consolidated Statements of Shareholders' Equity (Deficit) (in thousands, except shares) | Metric (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Net income (loss) | $(181,053) | $(193,982) | $(11,124) | $(43,873) | | Change in accumulated other comprehensive income (loss), net of tax | $40,201 | $54,329 | $(34,220) | $(28,849) | | Stock-based compensation | $625 | $874 | $2,158 | $2,742 | | Redeemable preferred 9% dividend and accretion | $(15,811) | $(29,697) | $(10,353) | $(20,519) | | Total shareholders' equity (deficit) at period end | $(444,705) | $(444,705) | $(176,446) | $(176,446) | [NOTE 1 – DESCRIPTION OF THE BUSINESS](index=10&type=section&id=NOTE%201%20%E2%80%93%20DESCRIPTION%20OF%20THE%20BUSINESS) Superior Industries International, Inc. designs and manufactures aluminum wheels for OEMs and the European aftermarket, and recently entered a Merger Agreement to be acquired by affiliates of its existing lenders, expected to close in Q3 2025 - The principal business is the design and manufacture of aluminum wheels for OEMs in North America and Europe, and for the aftermarket in Europe under brands like ATS, RIAL, ALUTEC, and ANZIO[18](index=18&type=chunk) - On July 8, 2025, the Company entered into a Merger Agreement to be acquired by SUP Parent Holdings, LLC, an affiliate of its existing lenders, with the Company surviving as a wholly owned subsidiary of Parent[19](index=19&type=chunk) - Common Shares will be converted into the right to receive **$0.09 per share** in cash, while Series A Preferred Shares will receive a cash amount and **3.5%** of Parent's common equity[20](index=20&type=chunk)[21](index=21&type=chunk) - The merger is subject to conditions including stockholder adoption, governmental approvals, no Company Material Adverse Effect, and new credit facilities, with an expected closing in Q3 2025[22](index=22&type=chunk)[23](index=23&type=chunk) [NOTE 2 – BASIS OF PRESENTATION](index=12&type=section&id=NOTE%202%20%E2%80%93%20BASIS%20OF%20PRESENTATION) The financial statements are prepared under U.S. GAAP, utilizing estimates, and the company faces substantial doubt about its ability to continue as a going concern due to significant customer resourcing actions, severely impacting liquidity and leading to asset impairments - Customers in North America notified the Company of their intent to resource substantially all outstanding purchase orders, impacting approximately **33%** of projected consolidated net sales for fiscal year 2025[27](index=27&type=chunk) - The Company borrowed **$42.5 million** on its revolving credit facility and secured an incremental **$70.0 million** delayed draw term loan facility (**$10.0 million** funded) to address liquidity concerns[27](index=27&type=chunk)[28](index=28&type=chunk) - A limited waiver of financial covenants was obtained for the period ended June 30, 2025, but the Company does not expect to meet covenants as early as September 30, 2025, raising substantial doubt about its ability to continue as a going concern[30](index=30&type=chunk) [NOTE 3 – REVENUE](index=14&type=section&id=NOTE%203%20%E2%80%93%20REVENUE) Revenue is disaggregated by North America and Europe segments, with trade receivables increasing and contract liabilities decreasing, and a non-cash charge of $3.1 million recorded to write-down a customer trade receivable due to customer resourcing actions Revenue Metrics (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Trade receivables | $63,839 | $56,690 | | Contract liabilities—current | $4,454 | $6,819 | | Contract liabilities—noncurrent | $4,931 | $6,845 | - A non-cash charge of **$3.1 million** was recorded during Q2 and H1 2025 to write-down a customer trade receivable due to customer resourcing actions[36](index=36&type=chunk) [NOTE 4 - DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE](index=15&type=section&id=NOTE%204%20-%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE) The company uses derivative instruments to mitigate foreign currency, interest rate, and commodity price risks, but terminated all outstanding derivatives during Q2 2025, recognizing a significant non-cash impairment charge of $66.9 million on North America long-lived assets due to customer actions - The Company terminated all outstanding foreign exchange, commodity, and interest rate derivative instruments during the three months ended June 30, 2025[42](index=42&type=chunk) Notional Amount of Derivative Instruments (in thousands) | Notional Amount (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Foreign exchange contracts | $0 | $434,327 | | Interest rate contracts | $0 | $150,000 | - A non-cash impairment charge of **$66.9 million** was recorded to property, plant, and equipment during Q2 and H1 2025 for the North America asset group due to customer resourcing actions[51](index=51&type=chunk) [NOTE 5 - BUSINESS SEGMENTS](index=18&type=section&id=NOTE%205%20-%20BUSINESS%20SEGMENTS) The North America segment experienced a substantial decline in net sales and a significant operating loss in both Q2 and H1 2025, primarily due to customer resourcing and asset impairment, while the Europe segment saw a modest decrease in net sales and an increased operating loss in Q2, but a decreased operating loss in H1 Segment Performance (in thousands) | Metric (in thousands) | North America Q2 2025 | Europe Q2 2025 | Total Q2 2025 | North America Q2 2024 | Europe Q2 2024 | Total Q2 2024 | | :-------------------- | :-------------------- | :------------- | :------------ | :-------------------- | :------------- | :------------ | | Net Sales | $93,804 | $114,093 | $207,897 | $203,203 | $115,764 | $318,967 | | Income (loss) from operations | $(107,404) | $(5,811) | $(113,215) | $13,195 | $(2,951) | $10,244 | | Depreciation and amortization | $8,392 | $10,230 | $18,622 | $10,334 | $11,554 | $21,888 | | Capital expenditures | $2,070 | $3,877 | $5,947 | $4,013 | $4,213 | $8,226 | Segment Performance (in thousands) | Metric (in thousands) | North America H1 2025 | Europe H1 2025 | Total H1 2025 | North America H1 2024 | Europe H1 2024 | Total H1 2024 | | :-------------------- | :-------------------- | :------------- | :------------ | :-------------------- | :------------- | :------------ | | Net Sales | $297,512 | $231,987 | $529,499 | $396,711 | $238,532 | $635,243 | | Income (loss) from operations | $(102,469) | $(10,124) | $(112,593) | $21,277 | $(10,719) | $10,558 | | Depreciation and amortization | $17,048 | $21,116 | $38,164 | $20,677 | $23,157 | $43,834 | | Capital expenditures | $4,907 | $7,004 | $11,911 | $8,570 | $6,274 | $14,844 | Property, Plant and Equipment, net (in thousands) | Property, Plant and Equipment, net (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | U.S. | $1,332 | $1,505 | | Mexico | $102,329 | $172,674 | | Germany | $3,640 | $573 | | Poland | $167,537 | $155,140 | | Total | $274,838 | $329,892 | [NOTE 6 - INVENTORIES](index=19&type=section&id=NOTE%206%20-%20INVENTORIES) Total inventories decreased from December 31, 2024, to June 30, 2025, with a non-cash charge of $11.9 million (Q2) and $12.1 million (H1) recognized to write-down inventory due to customer resourcing actions Inventory Classification (in thousands) | Inventory Classification (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Raw materials | $31,842 | $34,339 | | Work in process | $31,200 | $34,449 | | Finished goods | $65,294 | $76,948 | | Inventories, net | $128,336 | $145,736 | - A non-cash charge of **$11.9 million** (Q2 2025) and **$12.1 million** (H1 2025) was recognized to write-down inventory to net realizable value due to customer resourcing actions[57](index=57&type=chunk) [NOTE 7 – INTANGIBLE ASSETS](index=19&type=section&id=NOTE%207%20%E2%80%93%20INTANGIBLE%20ASSETS) Amortization expense for intangible assets decreased in Q2 and H1 2025 compared to the prior year, with total anticipated future amortization of $5.19 million Amortization Expense (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Amortization expense | $3,594 | $4,842 | $8,323 | $9,726 | Annual Anticipated Future Amortization (in thousands) | Annual Anticipated Future Amortization | Amount (in thousands) | | :------------------------------------- | :-------------------- | | Six Remaining Months of 2025 | $1,352 | | 2026 | $2,709 | | 2027 | $1,129 | | Total anticipated future amortization | $5,190 | [NOTE 8 – DEBT](index=20&type=section&id=NOTE%208%20%E2%80%93%20DEBT) The company's long-term debt increased significantly, primarily due to increased borrowings under its Revolving Credit Facility and the new Delayed Draw Term Loan Facility, with recent amendments providing additional liquidity and covenant waivers, though future compliance remains a concern Long-Term Obligations (in thousands) | Long-Term Obligations (in thousands) | June 30, 2025 Carrying Value | December 31, 2024 Carrying Value | | :----------------------------------- | :----------------------------- | :------------------------------- | | Revolving Credit Facility | $42,473 | $0 | | Term Loan Facility | $499,586 | $488,298 | | Delayed Draw Term Loan Facility | $10,025 | $0 | | Total long-term debt (less current portion) | $537,490 | $481,449 | - The company entered into a Second Amendment to its Term Loan Agreement, providing an incremental **$70.0 million** Delayed Draw Term Loan Facility, of which **$10.0 million** was funded on June 4, 2025, and an additional **$25.0 million** was drawn subsequent to June 30, 2025[65](index=65&type=chunk)[69](index=69&type=chunk) - Amendments to the Term Loan Agreement and Revolving Credit Agreement included a limited waiver of financial covenants for the test period ending June 30, 2025, and permission to unwind hedging arrangements[67](index=67&type=chunk)[68](index=68&type=chunk) - Factoring arrangements were temporarily suspended during Q2 2025 but reinstated prior to June 30, 2025, and the company was required to repurchase **$6.3 million** of accounts receivable[75](index=75&type=chunk) [NOTE 9 - SUPPLIER FINANCE PROGRAM](index=23&type=section&id=NOTE%209%20-%20SUPPLIER%20FINANCE%20PROGRAM) The company's supplier finance program was suspended during Q2 2025, with $15.2 million in obligations due to the financial institution as of June 30, 2025 - The supplier finance program was suspended during the three months ended June 30, 2025[76](index=76&type=chunk) - Obligations due under the program were **$15.2 million** as of June 30, 2025, down from **$26.0 million** at December 31, 2024[76](index=76&type=chunk) [NOTE 10 - REDEEMABLE SHARES](index=23&type=section&id=NOTE%2010%20-%20REDEEMABLE%20SHARES) Preferred stock dividends were paid-in-kind, increasing stated and carrying values, and in connection with the proposed merger, the preferred shareholder (TPG) agreed to waive certain dividend and redemption rights - Preferred stock dividends of **$3.7 million** (Q2 2025) and **$7.5 million** (H1 2025) were paid-in-kind, increasing the stated value[77](index=77&type=chunk) Redeemable Preferred Stock (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Stated value | $167,600 | $160,100 | | Carrying value | $318,162 | $288,465 | - TPG, the holder of Series A Preferred Shares, waived its right to receive dividends and certain redemption rights until the earlier of the merger's effective time or termination of the Preferred VSA[78](index=78&type=chunk)[80](index=80&type=chunk) [NOTE 11 – EARNINGS PER SHARE](index=25&type=section&id=NOTE%2011%20%E2%80%93%20EARNINGS%20PER%20SHARE) Basic and diluted earnings per share calculations reflect significant losses for both periods, with preferred dividends and noncontrolling redeemable equity dividends deducted from net income, and preferred shares excluded from diluted EPS due to anti-dilutive effects and lack of contractual obligation to share in losses Earnings Per Share (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common shareholders | $(181,053) | $(11,124) | $(193,982) | $(43,873) | | Redeemable preferred stock dividends and accretion | $(15,811) | $(10,353) | $(29,697) | $(20,519) | | Basic numerator | $(196,870) | $(21,477) | $(223,690) | $(64,399) | | Weighted average shares outstanding – Basic | 29,570 | 28,732 | 29,318 | 28,493 | | Basic earnings (loss) per share | $(6.66) | $(0.75) | $(7.63) | $(2.26) | | Diluted earnings (loss) per share | $(6.66) | $(0.75) | $(7.63) | $(2.26) | - Approximately **80.2 thousand** (Q2 2025) and **273.7 thousand** (H1 2025) stock-based compensation shares were anti-dilutive and excluded from diluted EPS[84](index=84&type=chunk)[85](index=85&type=chunk) - Redeemable preferred shares (convertible into ~**6.0 million shares**) were not included in diluted EPS because preferred shareholders do not have a contractual obligation to share in the Company's losses[86](index=86&type=chunk) [NOTE 12 - INCOME TAXES](index=25&type=section&id=NOTE%2012%20-%20INCOME%20TAXES) The company recorded significant income tax provisions on pre-tax losses for both Q2 and H1 2025, resulting in negative effective tax rates that differ from the statutory rate primarily due to valuation allowances and the mix of earnings across tax jurisdictions, with substantially all U.S., Mexico, Poland, and German deferred tax assets subject to valuation allowances Income Tax (Provision) Benefit (in thousands, except rate) | Metric (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Income tax (provision) benefit | $(45,470) | $(40,029) | $(6,420) | $(23,068) | | Income (loss) before income taxes | $(135,583) | $(153,953) | $(4,704) | $(20,805) | | Effective income tax rate | (33.5)% | (26.0)% | (136.5)% | (110.9)% | - The effective income tax rates differ from the statutory rate primarily due to valuation allowances and the mix of earnings among tax jurisdictions[89](index=89&type=chunk)[90](index=90&type=chunk) - Substantially all U.S., Mexico, Poland, and German deferred tax assets, net of deferred tax liabilities, were subject to valuation allowances as of June 30, 2025[91](index=91&type=chunk) [NOTE 13 - LEASES](index=27&type=section&id=NOTE%2013%20-%20LEASES) Total lease expense increased slightly in Q2 and H1 2025, with the company having both operating and finance leases for various assets, and corresponding assets and liabilities recorded on the balance sheet Lease Expenses and Cash Flows (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total lease expense | $1,019 | $941 | $2,055 | $1,908 | | Operating cash outflows from operating leases | $801 | $833 | $1,632 | $1,685 | | Financing cash outflows from finance leases | $237 | $144 | $456 | $293 | Balance Sheet Information (in thousands) | Balance Sheet Information (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Operating leases: Other noncurrent assets | $6,182 | $7,057 | | Operating leases: Total operating lease liabilities | $5,994 | $6,952 | | Finance leases: Property, plant and equipment, net | $1,595 | $1,559 | | Finance leases: Total finance lease liabilities | $1,182 | $1,090 | [NOTE 14 - STOCK-BASED COMPENSATION](index=28&type=section&id=NOTE%2014%20-%20STOCK-BASED%20COMPENSATION) The company's equity incentive plan has 3.3 million shares available for future grants, RSU and PSU activity saw significant settlements and forfeitures in H1 2025, and total stock-based compensation expense decreased in Q2 and H1 2025, with a benefit from cash-settled awards in Q2 - As of June 30, 2025, there were **3.3 million shares** available for future grants under the 2018 Equity Incentive Plan[96](index=96&type=chunk) RSU and PSU Activity (Shares) | RSU and PSU Activity (Shares) | Balance at Jan 1, 2025 | Settled | Forfeited or expired | Balance at June 30, 2025 | | :---------------------------- | :--------------------- | :------ | :------------------- | :----------------------- | | Restricted Stock Units | 1,048,973 | (609,850) | (62,291) | 376,832 | | Performance Shares | 1,476,920 | (644,823) | (97,440) | 753,666 | Stock-based Compensation Expense (in thousands) | Stock-based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cash-settled share-based compensation expense (benefit) | $(856) | $0 | $263 | $0 | | Share-settled share-based compensation expense (benefit) | $745 | $2,367 | $1,655 | $4,087 | | Total compensation expense | $(111) | $2,367 | $1,918 | $4,087 | [NOTE 15 – COMMITMENTS AND CONTINGENCIES](index=29&type=section&id=NOTE%2015%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company has purchase commitments for commodities and is involved in various legal proceedings, including a German Federal Cartel Office investigation and a Polish energy contract dispute where an adverse judgment is now probable, leading to a $1.5 million provision - The German Federal Cartel Office initiated an investigation related to European light alloy wheel manufacturers, including Superior Industries Europe AG, on suspicion of conduct restricting competition[104](index=104&type=chunk) - In a Polish energy contract dispute, the company concluded that an adverse judgment is probable and recognized a provision of **$1.5 million**, representing the low end of the estimated potential loss[107](index=107&type=chunk) [NOTE 16 – RESTRUCTURING](index=30&type=section&id=NOTE%2016%20%E2%80%93%20RESTRUCTURING) The restructuring reserve balance decreased to $2.065 million as of June 30, 2025, and the company plans a workforce reduction in North America in Q3 2025, expecting to incur $15.0 million to $20.0 million in severance and other restructuring costs due to customer resourcing actions Restructuring Reserve Balance (in thousands) | Restructuring Reserve Balance (in thousands) | 2025 | 2024 | | :------------------------------------------- | :------------ | :------------ | | Balance at beginning of period | $5,152 | $3,386 | | Provision | $4,399 | $(933) | | Cash payment | $(6,735) | $(907) | | Balance at March 31 | $2,956 | $1,469 | | Provision (Q2) | $1,329 | $1,014 | | Cash payment (Q2) | $(2,379) | $(45) | | Balance at June 30 | $2,065 | $2,427 | - The company plans to reduce its North America manufacturing workforce in Q3 2025, expecting **$15.0 million** to **$20.0 million** in severance and other restructuring costs due to customer resourcing actions[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and liquidity, highlighting the significant impact of customer resourcing actions, the proposed merger, and broader industry challenges, leading to substantial losses and a going concern warning [Forward-Looking Statements](index=31&type=section&id=Forward-Looking%20Statements) This section serves as a cautionary note, stating that the report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations, and readers are advised not to place undue reliance on these statements - Forward-looking statements are based on management's current expectations and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially[111](index=111&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise[112](index=112&type=chunk) [Executive Overview](index=31&type=section&id=Executive%20Overview) The Executive Overview details Superior's core business of aluminum wheel manufacturing and the significant challenges it faces, including a proposed merger, major customer resourcing actions leading to a going concern warning, and broader industry headwinds like supply chain disruptions, inflation, and declining light vehicle production [Overview of Superior](index=31&type=section&id=Overview%20of%20Superior) Superior Industries designs and manufactures aluminum wheels for OEMs in North America and Europe, and for the European aftermarket, with demand driven by light vehicle production and customer take rates, and major customers including VW Group, Toyota, Ford, and GM - The principal business is the design and manufacture of aluminum wheels for OEMs in North America and Europe, and for the aftermarket in Europe[114](index=114&type=chunk) - Demand for products is mainly driven by light vehicle production levels in North America and Europe and customer take rates[115](index=115&type=chunk) Customer Sales Percentage | Customer | Q2 2025 Sales % | Q2 2024 Sales % | H1 2025 Sales % | H1 2024 Sales % | | :------- | :-------------- | :-------------- | :-------------- | :-------------- | | GM | 1% | 25% | 14% | 24% | | Ford | 7% | 16% | 14% | 16% | | VW Group | 25% | 13% | 19% | 12% | | Toyota | 24% | 11% | 17% | 11% | [Proposed Merger](index=33&type=section&id=Proposed%20Merger) The company entered into a Merger Agreement on July 8, 2025, to be acquired by affiliates of its existing lenders, with common shareholders receiving $0.09 per share in cash and preferred shareholders receiving cash and a 3.5% equity stake in the acquiring parent, expected to close in Q3 2025 - On July 8, 2025, the Company entered into a Merger Agreement to be acquired by SUP Parent Holdings, LLC, an affiliate of its existing Term Loan Agreement lenders[117](index=117&type=chunk) - Common Shares will be converted into the right to receive **$0.09 per Common Share** in cash[118](index=118&type=chunk)[121](index=121&type=chunk) - Series A Preferred Shares will receive a cash amount and **3.5%** of Parent's common equity[118](index=118&type=chunk)[121](index=121&type=chunk) - The merger is expected to close in the third quarter of 2025, contingent on stockholder approval, governmental consents, and other customary conditions[119](index=119&type=chunk)[120](index=120&type=chunk) [Recent Customer Resourcing Actions](index=35&type=section&id=Recent%20Customer%20Resourcing%20Actions) During Q2 2025, North American customers representing approximately 33% of projected 2025 net sales notified the company of their intent to switch suppliers, severely impacting liquidity, leading to asset impairments, and raising substantial doubt about the company's ability to continue as a going concern - Certain North American customers, representing approximately **33%** of projected consolidated net sales for fiscal year 2025, notified the company of their intent to resource to other suppliers[122](index=122&type=chunk) - These actions significantly affect the company's ability to generate cash from operating activities and have led to non-cash charges for inventory, accounts receivable, and long-lived asset impairments[123](index=123&type=chunk) - The adverse conditions raise substantial doubt about the company's ability to continue as a going concern, as it does not expect to meet financial covenants as early as September 30, 2025, and future liquidity is uncertain[124](index=124&type=chunk) [Industry Overview, Supply Chain Disruption, and the Ukraine Conflict](index=35&type=section&id=Industry%20Overview%2C%20Supply%20Chain%20Disruption%2C%20and%20the%20Ukraine%20Conflict) The automotive industry faces challenges from supply chain disruptions, cost inflation, and higher interest rates, all negatively impacting the company's earnings and cash flow, with OEM contracts adjusting for aluminum costs but aftermarket contracts generally not - The automotive industry has been affected by supply chain disruptions (e.g., semiconductor shortages) and cost inflation (raw materials, labor, energy)[126](index=126&type=chunk) - Higher interest rates have adversely affected, and will likely continue to affect, the company's earnings and cash flow from operations[126](index=126&type=chunk) - OEM contracts adjust for changes in aluminum and certain other costs, but aftermarket contracts generally do not[127](index=127&type=chunk) [Trade and Regulatory Uncertainty](index=35&type=section&id=Trade%20and%20Regulatory%20Uncertainty) The U.S. government's additional tariffs on imported goods and reciprocal tariffs from other countries create significant uncertainty and could materially affect the company and the automotive industry - In April 2025, the U.S. government announced additional tariffs on various imported goods, with other countries announcing reciprocal tariffs[128](index=128&type=chunk) - There is significant uncertainty regarding the duration and degree to which these tariffs and global trade disputes will affect the company and the automotive industry[128](index=128&type=chunk) [Light Vehicle Production Levels](index=37&type=section&id=Light%20Vehicle%20Production%20Levels) Light vehicle production volumes in North America and Western and Central Europe declined in both Q2 and H1 2025 compared to 2024, with forecasts projecting further declines in 2025, and the company expecting its North America volumes to decline more significantly due to customer resourcing Light Vehicle Production (Units in thousands) | Region | Q2 2025 Production (Units in thousands) | Q2 2024 Production (Units in thousands) | Q2 % Change | H1 2025 Production (Units in thousands) | H1 2024 Production (Units in thousands) | H1 % Change | | :----- | :-------------------------------------- | :-------------------------------------- | :---------- | :-------------------------------------- | :-------------------------------------- | :---------- | | North America | 3,976 | 4,100 | (3.0%) | 7,731 | 8,065 | (4.1%) | | Western and Central Europe | 3,701 | 3,809 | (2.8%) | 7,412 | 7,732 | (4.1%) | | Total | 7,677 | 7,909 | (2.9%) | 15,143 | 15,797 | (4.1%) | - IHS July 2025 forecast projects a **3.8%** decline in production volumes in primary markets for 2025[131](index=131&type=chunk) - Due to customer resourcing actions, the company expects its North America volumes to decline more than current IHS projections for the remainder of fiscal year 2025[131](index=131&type=chunk) [Overview of the Second Quarter of 2025](index=38&type=section&id=Overview%20of%20the%20Second%20Quarter%20of%202025) The second quarter of 2025 saw a substantial decline in net sales and a significant net loss, primarily driven by customer resourcing actions, a large impairment charge on North America long-lived assets, and increased interest and foreign exchange expenses, with both North America and Europe segments experiencing operational challenges [Results of Operations (Q2 2025 vs Q2 2024)](index=39&type=section&id=Results%20of%20Operations%20%28Q2%202025%20vs%20Q2%202024%29) The company experienced a significant decline in net sales and a substantial increase in net loss for Q2 2025 compared to Q2 2024, primarily due to a large impairment charge and reduced gross profit Results of Operations (in thousands, except per share) | Metric (in thousands, except per share) | Q2 2025 | Q2 2024 | Net Change | | :-------------------------------------- | :----------- | :----------- | :----------- | | Net sales | $207,897 | $318,967 | $(111,070) | | Gross profit (loss) | $(21,448) | $31,620 | $(53,068) | | Income (loss) from operations | $(113,215) | $10,244 | $(123,459) | | Net income (loss) | $(181,053) | $(11,124) | $(169,929) | | Diluted earnings (loss) per share | $(6.66) | $(0.75) | $(5.91) | | Value added sales | $112,315 | $180,300 | $(67,985) | | Adjusted EBITDA | $4,520 | $39,978 | $(35,458) | [Net Sales Drivers (Q2 2025 vs Q2 2024)](index=39&type=section&id=Net%20Sales%20Drivers%20%28Q2%202025%20vs%20Q2%202024%29) The **$111.1 million** decrease in net sales for Q2 2025 was primarily driven by lower volumes, reduced aluminum and other pass-through costs, and unfavorable product mix and pricing, partially offset by favorable foreign exchange Net Sales Drivers (in millions) | Driver | Amount (in millions) | | :-------------------------- | :------------------- | | Volume | $(52.7) | | Aluminum and other pass through costs | $(43.1) | | Product mix and pricing | $(18.7) | | Foreign exchange | $3.4 | [Cost of Sales Drivers (Q2 2025 vs Q2 2024)](index=40&type=section&id=Cost%20of%20Sales%20Drivers%20%28Q2%202025%20vs%20Q2%202024%29) Cost of sales decreased by **$58.0 million** in Q2 2025, mainly due to lower volumes and material/conversion costs, which included an **$11.9 million** non-cash inventory write-down related to customer resourcing Cost of Sales Drivers (in millions) | Driver | Amount (in millions) | | :-------------------------- | :------------------- | | Volume | $(32.6) | | Material and conversion costs | $(24.3) | | Mix | $(3.3) | | Foreign exchange | $2.2 | - Material and conversion costs include a non-cash charge of **$11.9 million** to write-down inventory due to customer resourcing actions[139](index=139&type=chunk) [Selling, General and Administrative Expenses (Q2 2025 vs Q2 2024)](index=40&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20%28Q2%202025%20vs%20Q2%202024%29) SG&A expenses increased by **$3.5 million** in Q2 2025, primarily due to a **$3.1 million** non-cash write-down of a customer trade receivable and higher professional services fees related to strategic initiatives - SG&A expenses increased by **$3.5 million** to **$24.9 million** in Q2 2025[140](index=140&type=chunk) - The increase was primarily due to a **$3.1 million** non-cash charge to write-down a customer trade receivable and higher professional services fees related to strategic initiatives[140](index=140&type=chunk) [Impairment of Long-Lived Assets (Q2 2025)](index=40&type=section&id=Impairment%20of%20Long-Lived%20Assets%20%28Q2%202025%29) A non-cash impairment charge of **$66.9 million** was recognized on the North America long-lived asset group during Q2 2025 - A non-cash impairment charge of **$66.9 million** was recognized for the North America long-lived asset group in Q2 2025[141](index=141&type=chunk) [Interest Expense, Net (Q2 2025 vs Q2 2024)](index=40&type=section&id=Interest%20Expense%2C%20Net%20%28Q2%202025%20vs%20Q2%202024%29) Net interest expense increased by **$2.3 million** in Q2 2025, driven by higher borrowings under the amended term loan and revolving credit facility, partially offset by reduced interest on redeemed senior notes - Net interest expense increased by **$2.31 million** to **$18.1 million** in Q2 2025[142](index=142&type=chunk) - The increase was primarily due to the upsizing of borrowings under the amended and restated term loan and an increase in interest expense on the Revolving Credit Facility[142](index=142&type=chunk) [Other Income (Expense), Net (Q2 2025 vs Q2 2024)](index=40&type=section&id=Other%20Income%20%28Expense%29%2C%20Net%20%28Q2%202025%20vs%20Q2%202024%29) Other income shifted to an expense of **$4.2 million** in Q2 2025, primarily due to a **$5.5 million** increase in foreign exchange loss - Other expense was **$4.2 million** in Q2 2025, compared to other income of **$0.9 million** in Q2 2024[143](index=143&type=chunk) - This increase in expense was primarily due to a **$5.5 million** increase in foreign exchange loss[143](index=143&type=chunk) [Income Tax (Provision) Benefit (Q2 2025 vs Q2 2024)](index=40&type=section&id=Income%20Tax%20%28Provision%29%20Benefit%20%28Q2%202025%20vs%20Q2%202024%29) The income tax provision for Q2 2025 was **$45.5 million** on a pre-tax loss of **$135.6 million**, resulting in a negative effective tax rate of **(33.5)%**, primarily due to valuation allowances and the mix of earnings among tax jurisdictions - The income tax provision for Q2 2025 was **$45.5 million** on a pre-tax loss of **$135.6 million**, with an effective income tax rate of **(33.5)%**[144](index=144&type=chunk) - The effective tax rate differs from the statutory rate primarily due to valuation allowances and the mix of earnings among tax jurisdictions[144](index=144&type=chunk) [Net Income (Loss) (Q2 2025 vs Q2 2024)](index=40&type=section&id=Net%20Income%20%28Loss%29%20%28Q2%202025%20vs%20Q2%202024%29) Net loss for Q2 2025 significantly increased to **$181.1 million**, or a **$6.66 loss per diluted share**, compared to a net loss of **$11.1 million**, or a **$0.75 loss per diluted share**, in Q2 2024 - Net loss for Q2 2025 was **$181.1 million**, or a **$6.66 loss per diluted share**, compared to a net loss of **$11.1 million**, or a **$0.75 loss per diluted share**, for Q2 2024[145](index=145&type=chunk) [Segment Sales and Income from Operations (Q2 2025 vs Q2 2024)](index=41&type=section&id=Segment%20Sales%20and%20Income%20from%20Operations%20%28Q2%202025%20vs%20Q2%202024%29) North America segment sales decreased by **53.8%** and operating income declined by **$120.6 million**, primarily due to customer resourcing and a **$66.9 million** asset impairment, while Europe segment sales decreased by **1.4%**, and its operating loss increased by **$2.86 million** Segment Sales and Income from Operations (in thousands) | Segment (in thousands) | Q2 2025 Net Sales | Q2 2024 Net Sales | Net Change Net Sales | Q2 2025 Income (loss) from operations | Q2 2024 Income (loss) from operations | Net Change Income (loss) from operations | | :--------------------- | :---------------- | :---------------- | :------------------- | :------------------------------------ | :------------------------------------ | :--------------------------------------- | | North America | $93,804 | $203,203 | $(109,399) | $(107,404) | $13,195 | $(120,599) | | Europe | $114,093 | $115,764 | $(1,671) | $(5,811) | $(2,951) | $(2,860) | - North America net sales decreased **53.8%** due to lower aluminum pass-through costs (**$50.6 million**), lower volumes (**$49.3 million**), and lower product mix and pricing (**$9.5 million**)[148](index=148&type=chunk) - North America operating income decreased by **$120.6 million**, primarily due to a **$66.9 million** asset impairment charge, lower volumes (**$19.8 million**), and higher material/conversion costs (**$17.7 million**, including **$11.9 million** inventory write-down)[149](index=149&type=chunk) - Europe net sales decreased **1.4%** due to lower product mix/pricing (**$9.2 million**) and volumes (**$3.4 million**), partially offset by higher aluminum pass-through costs (**$7.5 million**) and favorable foreign exchange (**$3.4 million**)[150](index=150&type=chunk) [Overview of the First Half of 2025](index=42&type=section&id=Overview%20of%20the%20First%20Half%20of%202025) The first half of 2025 was marked by a significant decline in net sales and a substantial net loss, primarily driven by customer resourcing actions, a large impairment charge on North America long-lived assets, and increased interest and foreign exchange expenses, with the North America segment seeing a sharp decline, while the Europe segment experienced a modest sales decrease but a reduced operating loss [Results of Operations (H1 2025 vs H1 2024)](index=43&type=section&id=Results%20of%20Operations%20%28H1%202025%20vs%20H1%202024%29) The company reported a significant decrease in net sales and a substantial increase in net loss for H1 2025 compared to H1 2024, primarily due to a large impairment charge and reduced gross profit Results of Operations (in thousands, except per share) | Metric (in thousands, except per share) | H1 2025 | H1 2024 | Net Change | | :-------------------------------------- | :----------- | :----------- | :----------- | | Net sales | $529,499 | $635,243 | $(105,744) | | Gross profit (loss) | $(5,348) | $52,766 | $(58,114) | | Income (loss) from operations | $(112,593) | $10,558 | $(123,151) | | Net income (loss) | $(193,982) | $(43,873) | $(150,109) | | Diluted earnings (loss) per share | $(7.63) | $(2.26) | $(5.37) | | Value added sales | $280,852 | $352,498 | $(71,646) | | Adjusted EBITDA | $29,608 | $70,827 | $(41,219) | [Net Sales Drivers (H1 2025 vs H1 2024)](index=43&type=section&id=Net%20Sales%20Drivers%20%28H1%202025%20vs%20H1%202024%29) The **$105.7 million** decrease in net sales for H1 2025 was primarily driven by lower volumes, reduced aluminum and other pass-through costs, and unfavorable product mix and pricing Net Sales Drivers (in millions) | Driver | Amount (in millions) | | :-------------------------- | :------------------- | | Volume | $(59.6) | | Aluminum and other pass through costs | $(34.1) | | Product mix and pricing | $(13.2) | | Foreign exchange | $1.2 | [Cost of Sales Drivers (H1 2025 vs H1 2024)](index=44&type=section&id=Cost%20of%20Sales%20Drivers%20%28H1%202025%20vs%20H1%202024%29) Cost of sales decreased by **$47.6 million** in H1 2025, mainly due to lower volumes, material and conversion costs (including a **$12.1 million** non-cash inventory write-down), and mix, partially offset by foreign exchange Cost of Sales Drivers (in millions) | Driver | Amount (in millions) | | :-------------------------- | :------------------- | | Volume | $(37.7) | | Material and conversion costs | $(1.9) | | Mix | $(4.8) | | Foreign exchange | $(3.3) | - Material and conversion costs include a non-cash charge of **$12.1 million** to write-down inventory due to customer resourcing actions[159](index=159&type=chunk) [Selling, General and Administrative Expenses (H1 2025 vs H1 2024)](index=44&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20%28H1%202025%20vs%20H1%202024%29) SG&A expenses decreased by **$1.9 million** in H1 2025, primarily due to lower incentive compensation expense, partially offset by increased professional services fees related to strategic initiatives - SG&A expenses decreased by **$1.9 million** to **$40.3 million** in H1 2025[160](index=160&type=chunk) - This decrease was primarily due to lower incentive compensation expense, partially offset by increased professional services fees related to strategic initiatives[160](index=160&type=chunk) [Impairment of Long-Lived Assets (H1 2025)](index=44&type=section&id=Impairment%20of%20Long-Lived%20Assets%20%28H1%202025%29) A non-cash impairment charge of **$66.9 million** was recognized on the North America long-lived asset group during H1 2025 - A non-cash impairment charge of **$66.9 million** was recognized for the North America long-lived asset group in H1 2025[161](index=161&type=chunk) [Interest Expense, Net (H1 2025 vs H1 2024)](index=44&type=section&id=Interest%20Expense%2C%20Net%20%28H1%202025%20vs%20H1%202024%29) Net interest expense increased by **$3.5 million** in H1 2025, driven by higher borrowings under the amended term loan and revolving credit facility, partially offset by reduced interest on redeemed senior notes - Net interest expense increased by **$3.46 million** to **$35.2 million** in H1 2025[162](index=162&type=chunk) - The increase was primarily due to the upsizing of borrowings under the amended and restated term loan and an increase in interest expense on the Revolving Credit Facility[162](index=162&type=chunk) [Other Income (Expense), Net (H1 2025 vs H1 2024)](index=44&type=section&id=Other%20Income%20%28Expense%29%2C%20Net%20%28H1%202025%20vs%20H1%202024%29) Other income shifted to an expense of **$6.2 million** in H1 2025, primarily due to a **$6.3 million** increase in foreign exchange loss - Other expense was **$6.2 million** in H1 2025, compared to other income of **$0.3 million** in H1 2024[163](index=163&type=chunk) - This increase in expense was primarily due to a **$6.3 million** increase in foreign exchange loss[163](index=163&type=chunk) [Income Tax (Provision) Benefit (H1 2025 vs H1 2024)](index=44&type=section&id=Income%20Tax%20%28Provision%29%20Benefit%20%28H1%202025%20vs%20H1%202024%29) The income tax provision for H1 2025 was **$40.0 million** on a pre-tax loss of **$154.0 million**, resulting in a negative effective tax rate of **(26.0)%**, primarily due to valuation allowances and the mix of earnings among tax jurisdictions - The income tax provision for H1 2025 was **$40.0 million** on a pre-tax loss of **$154.0 million**, with an effective income tax rate of **(26.0)%**[164](index=164&type=chunk) - The effective tax rate differs from the statutory rate primarily due to valuation allowances, the reversal of an uncertain tax position, and the mix of earnings among tax jurisdictions[164](index=164&type=chunk) [Net Income (Loss) (H1 2025 vs H1 2024)](index=44&type=section&id=Net%20Income%20%28Loss%29%20%28H1%202025%20vs%20H1%202024%29) Net loss for H1 2025 significantly increased to **$194.0 million**, or a **$7.63 loss per diluted share**, compared to a net loss of **$43.9 million**, or a **$2.26 loss per diluted share**, in H1 2024 - Net loss for H1 2025 was **$194.0 million**, or a **$7.63 loss per diluted share**, compared to a net loss of **$43.9 million**, or a **$2.26 loss per diluted share**, for H1 2024[165](index=165&type=chunk) [Segment Sales and Income from Operations (H1 2025 vs H1 2024)](index=45&type=section&id=Segment%20Sales%20and%20Income%20from%20Operations%20%28H1%202025%20vs%20H1%202024%29) North America segment sales decreased by **25.0%** and operating income declined by **$123.7 million**, primarily due to customer resourcing and a **$66.9 million** asset impairment, while Europe segment sales decreased by **2.7%**, but its operating loss decreased by **$0.6 million** due to lower SG&A Segment Sales and Income from Operations (in thousands) | Segment (in thousands) | H1 2025 Net Sales | H1 2024 Net Sales | Net Change Net Sales | H1 2025 Income (loss) from operations | H1 2024 Income (loss) from operations | Net Change Income (loss) from operations | | :--------------------- | :---------------- | :---------------- | :------------------- | :------------------------------------ | :------------------------------------ | :--------------------------------------- | | North America | $297,512 | $396,711 | $(99,199) | $(102,469) | $21,277 | $(123,746) | | Europe | $231,987 | $238,532 | $(6,545) | $(10,124) | $(10,719) | $595 | - North America net sales decreased **25.0%** due to lower volumes (**$51.3 million**), lower aluminum cost pass-throughs (**$41.1 million**), and lower product mix and pricing (**$6.6 million**)[167](index=167&type=chunk) - North America operating income decreased by **$123.7 million**, primarily due to a **$66.9 million** asset impairment charge, higher material/conversion costs (**$23.6 million**, including **$12.1 million** inventory write-down), and lower volumes (**$20.9 million**)[168](index=168&type=chunk) - Europe net sales decreased **2.7%** due to lower volumes (**$8.3 million**) and product mix/pricing (**$6.6 million**), partially offset by higher aluminum cost pass-throughs (**$7.0 million**)[169](index=169&type=chunk) - Europe operating loss decreased by **$0.6 million**, primarily due to lower SG&A expenses (**$8.5 million**) associated with the European Transformation[170](index=170&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=45&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company's liquidity is severely impacted by recent customer resourcing actions, leading to substantial doubt about its ability to continue as a going concern, and despite securing additional debt and covenant waivers, future liquidity and covenant compliance remain uncertain - Customer resourcing actions are expected to significantly affect the company's ability to generate cash from operating activities or from the sale of trade receivables[172](index=172&type=chunk) - The company borrowed **$42.5 million** on its revolving credit facility and secured an incremental **$70.0 million** delayed draw term loan facility, with **$10.0 million** funded in June 2025 and an additional **$25.0 million** drawn post-June 30, 2025[172](index=172&type=chunk) - A limited waiver of financial covenants was obtained for Q2 2025, but the company does not expect to meet covenants as early as September 30, 2025, raising substantial doubt about its ability to continue as a going concern[173](index=173&type=chunk) - As of June 30, 2025, the company had approximately **$48.4 million** of accounts payable past due, including a **$15.2 million** obligation under its supply chain financing program[178](index=178&type=chunk) [Senior Secured Credit Facilities](index=48&type=section&id=Senior%20Secured%20Credit%20Facilities) The company's Senior Secured Credit Facilities include a **$60.0 million** Revolving Credit Facility and a Term Loan Facility, which was amended to include a **$70.0 million** Delayed Draw Term Loan Facility, with recent amendments increasing liquidity thresholds, permitting paid-in-kind interest, and waiving financial covenants for Q2 2025 Senior Secured Credit Facilities (in thousands) | Senior Secured Credit Facilities (in thousands) | June 30, 2025 Principal | June 30, 2025 Carrying Value | | :---------------------------------------------- | :---------------------- | :--------------------------- | | Revolving Credit Facility | $42,473 | $42,473 | | Term Loan Facility | $527,016 | $499,586 | | Delayed Draw Term Loan Facility | $10,300 | $10,025 | - The Term Loan Agreement was amended to provide an incremental **$70.0 million** Delayed Draw Term Loan Facility, with **$10.0 million** funded on June 4, 2025, and an additional **$25.0 million** drawn subsequent to June 30, 2025[183](index=183&type=chunk)[187](index=187&type=chunk) - Amendments included permitting paid-in-kind interest on the Term Loan Facility and a limited waiver of financial covenants for the test period ending June 30, 2025[185](index=185&type=chunk)[186](index=186&type=chunk) - As of June 30, 2025, interest rates were **11.8%** for the Term Loan Facility, **12.3%** for the Delayed Draw Term Loan Facility, and **11.0%** for the Revolving Credit Facility[189](index=189&type=chunk) [Available Unused Commitments under the Revolving Credit Facility](index=50&type=section&id=Available%20Unused%20Commitments%20under%20the%20Revolving%20Credit%20Facility) As of June 30, 2025, the company had **$7.2 million** in unused commitments under its Revolving Credit Facility, after accounting for outstanding borrowings and letters of credit - As of June 30, 2025, the company had **$42.5 million** in outstanding borrowings and **$7.2 million** in unused commitments under the Revolving Credit Facility, reduced by **$10.3 million** in outstanding letters of credit[192](index=192&type=chunk) [Redeemable Preferred Stock](index=50&type=section&id=Redeemable%20Preferred%20Stock) Preferred stock dividends were paid-in-kind, increasing the stated value, and in connection with the proposed merger, the preferred shareholder (TPG) waived certain dividend and redemption rights, with the redemption value being the greater of two times the stated value or the common stock conversion value - Preferred stock dividends of **$3.7 million** (Q2 2025) and **$7.5 million** (H1 2025) were paid-in-kind, increasing the stated value[193](index=193&type=chunk) - The stated value of preferred stock was **$167.6 million** (June 30, 2025) and the carrying value was **$318.2 million**[193](index=193&type=chunk) - TPG, the preferred shareholder, waived its right to receive dividends and certain redemption rights under the Preferred VSA in connection with the merger[194](index=194&type=chunk)[196](index=196&type=chunk) [Factoring Arrangements](index=50&type=section&id=Factoring%20Arrangements) Factoring arrangements were temporarily suspended by financial institutions during Q2 2025 but were reinstated, and the company was required to repurchase **$6.3 million** of accounts receivable - Factoring arrangements were temporarily suspended by financial institutions during Q2 2025 but were reinstated prior to June 30, 2025[198](index=198&type=chunk) - As of June 30, 2025, the company was required to repurchase **$6.3 million** of accounts receivable from one of its factoring institutions[198](index=198&type=chunk) [Supplier Finance Program](index=50&type=section&id=Supplier%20Finance%20Program) The supplier finance program was suspended during Q2 2025, with **$15.2 million** in obligations due to the financial institution as of June 30, 2025 - The supplier finance program was suspended during the three months ended June 30, 2025[199](index=199&type=chunk) - Obligations due to the financial institution under the program were **$15.2 million** as of June 30, 2025[199](index=199&type=chunk) [Cash Flows](index=52&type=section&id=Cash%20Flows) For the first half of 2025, net cash provided by operating activities significantly improved due to hedging termination proceeds and working capital changes, while net cash provided by financing activities also increased substantially due to net borrowings and paid-in-kind preferred dividends Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | H1 2025 | H1 2024 | | :-------------------------------- | :----------- | :----------- | | Net cash provided (used)

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the unaudited quarterly financial statements, management's analysis, and market risk disclosures [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited statements reveal a net loss and a going concern warning due to the subsequent loss of major customers [Condensed Consolidated Statements of Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) The company's Q1 2025 net loss improved year-over-year despite a decline in gross profit on slightly higher sales Condensed Consolidated Statements of Income (Loss) (in thousands, except per share amounts) | Financial Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **NET SALES** | $321,602 | $316,276 | | **GROSS PROFIT** | $16,100 | $21,146 | | **INCOME (LOSS) FROM OPERATIONS** | $622 | $314 | | **NET INCOME (LOSS)** | $(12,929) | $(32,749) | | **EARNINGS (LOSS) PER SHARE – DILUTED** | $(0.92) | $(1.52) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities increased as of March 31, 2025, while the shareholders' deficit continued to widen Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $54,458 | $40,110 | | Total current assets | $335,086 | $308,761 | | Total assets | $763,779 | $740,129 | | Total current liabilities | $224,513 | $195,926 | | Long-term debt | $481,763 | $481,449 | | Total shareholders' equity (deficit) | $(288,661) | $(276,218) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations improved significantly in Q1 2025, driven by favorable working capital changes Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $23,507 | $3,470 | | Net cash used by investing activities | $(5,964) | $(6,618) | | Net cash used by financing activities | $(4,357) | $(6,548) | | Net change in cash and cash equivalents | $14,348 | $(10,535) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key disclosures include a going concern warning, segment performance details, and expected future asset impairments - **Going Concern Warning:** Subsequent to March 31, 2025, the company was notified by certain North American customers of their intent to resource substantially all purchase orders to other suppliers[20](index=20&type=chunk)[21](index=21&type=chunk) - These customers represented approximately **40% of 2024 consolidated net sales**, which, combined with the suspension of factoring arrangements, raises substantial doubt about the Company's ability to continue as a going concern[20](index=20&type=chunk)[21](index=21&type=chunk) - **Subsequent Events:** The company expects to record **material asset impairment charges** in the second quarter of 2025 related to inventory, deferred tax assets, and property, plant, and equipment in North America due to the loss of business[87](index=87&type=chunk)[88](index=88&type=chunk)[90](index=90&type=chunk) - The company has a **$520.0 million Term Loan Facility** and a **$60.0 million Revolving Credit Facility**, and it expects it will not be able to meet financial covenants as early as June 30, 2025[21](index=21&type=chunk)[46](index=46&type=chunk)[50](index=50&type=chunk) Segment Performance - Q1 2025 vs Q1 2024 (in thousands) | Segment | Net Sales (Q1 2025) | Net Sales (Q1 2024) | Income (Loss) from Operations (Q1 2025) | Income (Loss) from Operations (Q1 2024) | | :--- | :--- | :--- | :--- | :--- | | North America | $203,708 | $193,508 | $4,935 | $8,082 | | Europe | $117,894 | $122,768 | $(4,313) | $(7,768) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management highlights severe liquidity challenges and going concern doubts following the loss of key customers - Subsequent to Q1 2025, certain North American customers, representing **~33% of projected 2025 sales** and **40% of 2024 sales**, notified the company of their intent to resource all business to other suppliers[98](index=98&type=chunk) - Due to customer losses and suspension of factoring programs, management does not expect to have sufficient liquidity to fund operations over the next twelve months and anticipates **breaching debt covenants as early as June 30, 2025**, raising substantial doubt about its ability to continue as a going concern[99](index=99&type=chunk)[125](index=125&type=chunk) - The company has engaged financial advisors to **explore strategic alternatives**, including new debt/equity financing, asset sales, and is in discussions with lenders for potential new financing and covenant relief[126](index=126&type=chunk) Q1 2025 vs Q1 2024 Key Metrics (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Sales | $321,602 | $316,276 | | Gross Profit | $16,100 | $21,146 | | Net Loss | $(12,929) | $(32,749) | | Adjusted EBITDA | $25,088 | $30,849 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exempt from this disclosure requirement as a smaller reporting company - As a smaller reporting company, the Company is not required to provide the information required by this item[153](index=153&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2025, the **Company's disclosure controls and procedures were effective**[155](index=155&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[156](index=156&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part covers legal proceedings, updated risk factors, and other required corporate disclosures [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company discloses an ongoing anti-competitive conduct investigation by German authorities with an unknown outcome - In March 2022, the **German Federal Cartel Office began an investigation** into European light alloy wheel manufacturers, including a subsidiary of the Company, on suspicion of anti-competitive conduct[160](index=160&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) A critical new risk factor regarding the company's ability to continue as a going concern has been added - A new significant risk factor has been added: The company's current cash and liquidity projections raise **substantial doubt about its ability to continue as a going concern**[162](index=162&type=chunk) - The going concern issue stems from the **loss of customers representing 40% of 2024 net sales** and the suspension of factoring programs, which will significantly affect cash generation[162](index=162&type=chunk) - The company expects it will **not be able to meet financial covenants** under its Credit Agreements as early as June 30, 2025, without new funding or waivers[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[164](index=164&type=chunk) [Item 3. Defaults upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[165](index=165&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure requirement is not applicable to the company's operations - Not applicable[166](index=166&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No other material information was required to be reported during the period - None[167](index=167&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including credit agreement amendments and SOX certifications - Key exhibits include the First Amendment to the Amended and Restated Credit Agreement and CEO/CFO certifications[169](index=169&type=chunk)

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $322 million, compared to $316 million in the prior year period, indicating a slight increase [15] - Adjusted EBITDA for Q1 2025 was $25 million, with a margin of 15%, down from $31 million and 18% in the prior year [16] - The net loss for Q1 2025 was $13 million, which is a $20 million improvement compared to the same period last year [16] - Unlevered free cash flow increased to $33 million from $8 million in the prior year, driven by lower working capital [18] - Total cash on the balance sheet as of March 31, 2025, was $54 million, with no amounts drawn on the $60 million revolving credit facility [18] Business Line Data and Key Metrics Changes - Value-added sales decreased by approximately $3 million compared to the prior year, primarily due to lower unit sales and negative FX impact, partially offset by favorable pricing [16] - The company experienced a setback in April when certain North American customers notified them of a shift in sourcing, representing 33% of expected revenue for 2025 [6] Market Data and Key Metrics Changes - The company noted an unprecedented level of quoting activity, with over 53 million lifetime views year-to-date, which is double the level compared to the same time last year [5][11] - Tariff dynamics in Europe and North America are creating significant opportunities, with tariffs on Chinese imports exceeding 100% and Moroccan imports into Europe nearly 50% [10] Company Strategy and Development Direction - The company is focusing on a recapitalization transaction to significantly deleverage the balance sheet and improve financial strength [8][21] - The strategy includes enhancing the local manufacturing footprint in Mexico and Poland to support existing and new customers [5][11] - The company aims to recover recent contract losses through short-term opportunities and is committed to pursuing recovery of these customers [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment but expressed confidence in the company's ability to navigate through it [4][13] - The company is suspending its full-year 2025 guidance due to uncertainties stemming from recent events and ongoing discussions with lenders [21] Other Important Information - The company is actively engaged in discussions with lenders for covenant relief and additional term loans to secure short-term liquidity [6][20] - A successful recapitalization transaction is expected to provide financial stability and improve the long-term capital structure [21] Q&A Session Summary - No questions were taken during the call, as the company focused on providing updates regarding its financial situation and strategic direction [22]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $322 million, compared to $316 million in the prior year period, showing a slight increase [15] - Adjusted EBITDA for Q1 2025 was $25 million, with a margin of 15%, down from $31 million and 18% in the prior year [16] - The net loss for Q1 2025 was $13 million, which is a $20 million improvement compared to the same period last year [16] - Unlevered free cash flow increased to $33 million from $8 million in the prior year, driven by lower working capital [18] - Total cash on the balance sheet as of March 31, 2025, was $54 million, with no amounts drawn on the $60 million revolving credit facility [18] Business Line Data and Key Metrics Changes - Value-added sales decreased by approximately $3 million compared to the prior year, primarily due to lower unit sales and negative FX impact, partially offset by favorable pricing [16] - The company experienced a setback in April when certain North American customers notified them of a shift in sourcing, representing 33% of expected revenue for 2025 [6] Market Data and Key Metrics Changes - The company noted an unprecedented level of quoting activity, with over 53 million lifetime views year-to-date, which is double the level compared to the same time last year [5][11] - Tariff dynamics in Europe and North America are creating significant opportunities, with tariffs on Chinese imports exceeding 100% and Moroccan imports into Europe nearing 50% [10] Company Strategy and Development Direction - The company is focusing on a recapitalization transaction to significantly deleverage the balance sheet and improve financial strength [8][21] - The strategy includes enhancing the local manufacturing footprint in Mexico and Poland to support existing and new customers [5][11] - The company aims to recover recent contract losses through short-term opportunities and is committed to pursuing recovery of these customers [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment but expressed confidence in the company's ability to navigate through hardships [13] - The company is suspending its full-year 2025 guidance due to uncertainties stemming from recent events and ongoing discussions with lenders [21] Other Important Information - The company is actively engaged in discussions with lenders for covenant relief and additional term loans to secure short-term liquidity [6][20] - The company has made progress in reducing total debt, with net debt at $462 million, down $18 million from the end of 2024 [19] Summary of Q&A Session - There were no questions taken during this earnings call, as the company focused on providing updates and expressing gratitude for the team's efforts [22]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $322 million, compared to $316 million in the prior year period, indicating a slight increase [15] - Adjusted EBITDA for Q1 2025 was $25 million, with a margin of 15%, down from $31 million and 18% in the prior year [16] - The net loss for Q1 2025 was $13 million, which is a $20 million improvement compared to the same period last year [16] - Unlevered free cash flow increased to $33 million from $8 million in the prior year, driven by lower working capital [19] Business Line Data and Key Metrics Changes - Value-added sales decreased by approximately $3 million compared to the prior year, primarily due to lower unit sales and negative FX impact, partially offset by favorable pricing [16] - The adjusted EBITDA margin decreased due to unfavorable cost absorption from lower production volumes and metal timing [17] Market Data and Key Metrics Changes - The company experienced a significant increase in quoting activity, with over 53 million lifetime views year-to-date, double the level compared to the same time last year [5][11] - Tariff dynamics have created a favorable environment for localization in North America and Europe, with tariffs on Chinese imports exceeding 100% and Moroccan imports nearly 50% [10] Company Strategy and Development Direction - The company is focusing on securing short-term liquidity and is in discussions for a broader recapitalization transaction to deleverage the balance sheet [7][21] - The strategy includes enhancing the local manufacturing footprint in Mexico and Poland to capitalize on localization trends [5][11] - The company aims to position itself as a premier wheel solutions provider with a strong capital structure [7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macroeconomic environment but highlighted the company's competitive advantages and opportunities arising from tariff pressures [4][5] - The company is suspending its full-year 2025 guidance due to uncertainties stemming from recent events and ongoing discussions with lenders [22] Other Important Information - The company has received a commitment letter from term loan lenders for up to $70 million in additional term loans, subject to certain conditions [21] - Total cash on the balance sheet as of March 31, 2025, was $54 million, with no amounts drawn on the $60 million revolving credit facility [20] Q&A Session Summary - There were no questions taken during the call, as management focused on providing updates and expressing gratitude for the team's efforts in a challenging environment [23]

Financial Performance - Net sales increased by 2% year-over-year to $322 million in Q1 2025[11] - Value-Added Sales adjusted for FX & Deconsolidation decreased by 1% year-over-year to $171 million in Q1 2025[11] - Adjusted EBITDA was $25 million with a 15% Value-Added Sales margin in Q1 2025[11] - Content per wheel increased by 33% since 2019, reaching $49.90 in Q1 2025[11] - Total debt decreased by $113 million year-over-year to $517 million in Q1 2025[11] - Net loss was $12.9 million in Q1 2025, compared to a net loss of $32.7 million in Q1 2024[29] Strategic Actions and Outlook - The company is in advanced discussions to recapitalize its balance sheet, aiming to reduce net leverage to below 2.5x[13] - Term lenders are providing a $70 million commitment to support working capital and liquidity[13] - The company is suspending its 2025 guidance due to a challenging macro environment and recent volume losses in North America[12, 13] Tariff Impact and Quote Activity - Customers in the EU and North America are seeking localization due to China and Morocco tariffs[13] - The company has seen a record year-to-date quotation activity for > 60 million wheels, which is 2x compared to 2024[13]

Financial Performance - Net Sales for Q1 2025 were $322 million, an increase from $316 million in Q1 2024, primarily driven by higher aluminum costs and product pricing[11] - Value-Added Sales for Q1 2025 were $169 million, down from $172 million in Q1 2024, with Value-Added Sales Adjusted for Foreign Exchange at $171 million, relatively flat year-over-year[11] - The Company reported a Net Loss of $13 million for Q1 2025, improving from a Net Loss of $33 million in Q1 2024, resulting in a Loss per Diluted Share of $0.92 compared to $1.52 in the prior year[14] - Adjusted EBITDA for Q1 2025 was $25 million, representing 15% of Value-Added Sales, down from $31 million or 18% in Q1 2024[15] - Net income improved to a loss of $12.9 million in Q1 2025, compared to a loss of $32.7 million in Q1 2024, reflecting a reduction in losses by 60.5%[35] - The company reported an adjusted EBITDA of $25.1 million for Q1 2025, down from $30.8 million in Q1 2024, a decline of 18.5%[38] Cash Flow and Debt Management - Cash Flow Provided by Operating Activities increased to $24 million in Q1 2025, compared to $3 million in Q1 2024, primarily due to changes in working capital[16] - Unlevered Free Cash Flow for Q1 2025 was $33 million, an increase of $25 million compared to the prior period[17] - Free cash flow for Q1 2025 was $16.8 million, a significant improvement compared to a negative free cash flow of $7.5 million in Q1 2024[39] - Total Debt as of March 31, 2025, was $516 million, with Net Debt at $462 million, a decrease from $520 million and $480 million respectively at the end of 2024[18][19] - Net debt decreased to $462.0 million as of March 31, 2025, down from $479.7 million on December 31, 2024, a reduction of 3.6%[39] Operational Metrics - The company shipped 3,419 wheels in Q1 2025, a decrease of 5.6% from 3,623 wheels in Q1 2024[38] - The content per wheel increased to $49.90 in Q1 2025, compared to $47.53 in Q1 2024, reflecting a growth of 4.9%[38] Guidance and Strategic Initiatives - The Company is withdrawing its 2025 fiscal year guidance due to macroeconomic uncertainties and recent customer volume losses[20] - Superior is engaged in discussions for a recapitalization transaction aimed at reducing debt and enhancing financial flexibility[8] Market Trends and Asset Management - The Company is experiencing unprecedented RFQ levels driven by localization trends among OEM customers in response to tariffs[9] - Total assets increased to $763.8 million as of March 31, 2025, up from $740.1 million on December 31, 2024, representing a growth of 3.0%[33] - Total current liabilities rose to $224.5 million as of March 31, 2025, compared to $195.9 million on December 31, 2024, an increase of 14.6%[33]

PART I [Business](index=5&type=section&id=Item%201.%20Business) Superior Industries designs and manufactures aluminum wheels for OEMs in North America and Europe, with 92% of 2024 sales from OEMs, consolidating European manufacturing in Poland after a 2023 German subsidiary deconsolidation - The company's principal business is designing and manufacturing aluminum wheels for OEMs, which accounted for about **92% of sales in 2024**[16](index=16&type=chunk)[18](index=18&type=chunk) - The company operates and reports in two segments: North America (manufacturing primarily in Mexico) and Europe (production now concentrated in Poland following the deconsolidation of its German subsidiary)[19](index=19&type=chunk)[28](index=28&type=chunk) - On August 31, 2023, the German subsidiary, Superior Industries Production Germany GmbH (SPG), filed for insolvency and was deconsolidated from the company's financial statements[17](index=17&type=chunk) Customer Concentration (% of Consolidated Net Sales) | Customer | 2024 | 2023 | | :--- | :--- | :--- | | GM | 24% | 21% | | Ford | 16% | 15% | | VW Group | 12% | 15% | | Toyota | 12% | 11% | - Aluminum is the primary raw material, with price adjustment clauses with OEM customers to mitigate aluminum price risk, and derivatives used to hedge this risk for its aftermarket business[30](index=30&type=chunk)[31](index=31&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from automotive industry cyclicality, intense competition, high customer concentration, a highly leveraged capital structure, raw material cost fluctuations, trade tariffs, and cybersecurity threats - The business is exposed to the cyclicality of the automotive industry and operates in a highly competitive global market, facing pricing pressure from competitors in low-cost countries[41](index=41&type=chunk)[42](index=42&type=chunk) - A limited number of customers, including GM, Ford, VW Group, and Toyota, represent a large percentage of sales (**77% in 2024**), making the company vulnerable to shifts in their demand or purchasing decisions[47](index=47&type=chunk) - The company is exposed to cost fluctuations for raw materials like aluminum, silicon, and energy, with OEM contracts allowing for pass-through of aluminum costs, but the aftermarket business not similarly protected[49](index=49&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - The company has a heavily leveraged capital structure and does not expect to generate sufficient cash to repay all its indebtedness by maturity, making it dependent on accessing capital markets for refinancing[71](index=71&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) - International operations, particularly manufacturing in Mexico and Poland, expose the company to risks from trade agreements, tariffs, and foreign currency fluctuations, with recently announced U.S. tariffs on imports from Mexico, Canada, and China posing a significant risk[62](index=62&type=chunk)[64](index=64&type=chunk)[67](index=67&type=chunk) [Unresolved Staff Comments](index=27&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[114](index=114&type=chunk) [Cybersecurity](index=27&type=section&id=Item%201C.%20Cybersecurity) Superior's cybersecurity strategy focuses on cyber-resilience using the NIST framework, with Board oversight and CIO management, addressing threats like BEC and legacy system vulnerabilities - The cybersecurity strategy focuses on cyber-resilience, aiming for a zero-trust architecture, and is based on the National Institute of Standards and Technology (NIST) framework[115](index=115&type=chunk)[116](index=116&type=chunk) - Oversight is provided by the Board of Directors and the Audit Committee, with the Chief Information Officer (CIO) having primary management responsibility[120](index=120&type=chunk)[122](index=122&type=chunk) - **Business Email Compromise (BEC)** is identified as a top cybersecurity threat, alongside potential vulnerabilities in business systems and infrastructure[117](index=117&type=chunk) [Properties](index=29&type=section&id=Item%202.%20Properties) The company owns four manufacturing facilities in Mexico and three in Poland for its North American and European operations, while its headquarters and other key facilities are leased - The company owns all its primary manufacturing facilities: **four in Chihuahua, Mexico**, and **three in Stalowa Wola, Poland**[126](index=126&type=chunk)[127](index=127&type=chunk) - Leased properties include the worldwide headquarters in Southfield, Michigan, the European headquarters in Bad Dürkheim, Germany, and shared service centers in Mexico and Poland[126](index=126&type=chunk)[127](index=127&type=chunk) [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, including a March 2022 German Federal Cartel Office investigation into suspected anti-competitive conduct among European wheel manufacturers - The company is cooperating with an investigation by the German Federal Cartel Office initiated in March 2022 regarding suspected anti-competitive conduct among European wheel manufacturers, with the duration and outcome currently unknown[130](index=130&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[131](index=131&type=chunk) [Information about Our Executive Officers](index=30&type=section&id=Item%204A.%20Information%20about%20Our%20Executive%20Officers) This section provides biographical information for the company's executive officers, who are appointed annually by the Board of Directors Executive Officers as of December 31, 2024 | Name | Age | Position | | :--- | :--- | :--- | | Majdi B. Abulaban | 61 | President and Chief Executive Officer | | Kevin Burke | 56 | Senior Vice President, Chief Human Resources and Sustainability Officer | | Michael Dorah | 59 | Executive Vice President and Chief Operating Officer | | Parveen Kakar | 58 | Senior Vice President, Chief Commercial and Technology Officer | | David Sherbin | 65 | Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary | | Daniel D. Lee | 54 | Senior Vice President, Chief Financial Officer | | Stacie R. Schulz | 45 | Vice President, Chief Accounting Officer | PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=33&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Superior Industries' common stock is traded on the New York Stock Exchange (NYSE) under the ticker symbol "SUP", with approximately 264 holders of record as of February 28, 2025 - The company's common stock is listed on the New York Stock Exchange (NYSE) with the trading symbol "**SUP**"[139](index=139&type=chunk) - As of February 28, 2025, there were approximately **264 holders of record** of the common stock[139](index=139&type=chunk) [Reserved](index=33&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This section is intentionally left blank[140](index=140&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2024, net sales decreased to $1.27 billion, with a net loss of $78.2 million, an improvement from 2023, while Adjusted EBITDA declined and the company refinanced its debt with a new $520 million term loan [Results of Operations](index=36&type=section&id=7.1%20Results%20of%20Operations) In 2024, net sales decreased by 8.5% to $1.27 billion due to lower pass-through costs and volume, while income from operations improved significantly to $29.3 million, resulting in a net loss of $78.2 million Consolidated Results of Operations (in thousands) | Fiscal Year Ended Dec 31, | 2024 | 2023 | Net Change | | :--- | :--- | :--- | :--- | | Net sales | $1,267,344 | $1,385,283 | $(117,939) | | Gross profit | $110,534 | $115,748 | $(5,214) | | Income (loss) from operations | $29,252 | $(51,448) | $80,700 | | Net income (loss) | $(78,182) | $(92,852) | $14,670 | | Diluted earnings (loss) per share | $(4.25) | $(4.73) | $0.48 | | Adjusted EBITDA | $146,279 | $159,150 | $(12,871) | - The decrease in net sales was primarily driven by lower aluminum and other pass-through costs (**$61.4 million**), reduced volume (**$44.3 million**), and unfavorable product mix and pricing (**$11.7 million**)[154](index=154&type=chunk) - The improvement in income from operations was mainly due to the absence of the **$79.6 million** loss on deconsolidation of a subsidiary that was recorded in 2023[153](index=153&type=chunk)[158](index=158&type=chunk) - Net interest expense increased by **8.0%** to **$67.1 million** in 2024, primarily due to the upsizing of borrowings under the amended term loan[159](index=159&type=chunk) [Segment Analysis](index=39&type=section&id=7.2%20Segment%20Analysis) In 2024, North America's net sales slightly decreased with lower operating income, while Europe's net sales significantly dropped, but its operating loss narrowed due to the absence of a prior-year deconsolidation loss Segment Sales and Income from Operations (in thousands) | Segment | Net Sales 2024 | Net Sales 2023 | Income (Loss) from Ops 2024 | Income (Loss) from Ops 2023 | | :--- | :--- | :--- | :--- | :--- | | North America | $786,124 | $794,386 | $43,010 | $51,791 | | Europe | $481,220 | $590,897 | $(13,758) | $(103,239) | | **Total** | **$1,267,344** | **$1,385,283** | **$29,252** | **$(51,448)** | - North America's operating income decreased by **$8.8 million** due to lower product mix/pricing and higher costs, partially offset by higher volumes[166](index=166&type=chunk) - Europe's operating loss decreased by **$89.5 million**, primarily due to the **$79.6 million** loss on deconsolidation of SPG in 2023 and lower material and conversion costs in 2024[168](index=168&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=40&type=section&id=7.3%20Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) As of December 31, 2024, the company had $44.7 million in liquidity, having refinanced its debt with a new $520.0 million term loan in August 2024, and faces significant obligations from redeemable preferred stock Available Liquidity as of Dec 31, 2024 (in millions) | Source | Amount | | :--- | :--- | | Cash and cash equivalents | $39.7 | | Unused commitments on revolving credit facility | $42.5 | | Minimum contractual liquidity per Credit Agreement | ($37.5) | | **Total available liquidity** | **$44.7** | - On August 14, 2024, the company refinanced its debt, incurring a new **$520.0 million** Term Loan Facility maturing December 15, 2028, and redeeming its **6.000%** Senior Notes due 2025[175](index=175&type=chunk)[189](index=189&type=chunk) - The company's redeemable preferred stock had a carrying value of **$288.5 million** as of Dec 31, 2024, with a potential redemption value of **$320.3 million**, and holders can redeem on or after September 14, 2025[191](index=191&type=chunk)[192](index=192&type=chunk) - Net cash provided by operating activities decreased to **$18.3 million** in 2024 from **$64.4 million** in 2023, primarily due to lower earnings (after adjusting for non-cash items) and changes in working capital[199](index=199&type=chunk)[200](index=200&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Superior Industries is not required to provide the information for this item - The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company[219](index=219&type=chunk) [Financial Statements and Supplementary Data](index=53&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2024 and 2023, with an unqualified auditor's opinion, highlighting a critical audit matter regarding U.S. deferred tax assets and reporting a 2024 net loss of $78.2 million - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the financial statements and identified the realizability of U.S. deferred tax assets as a critical audit matter due to the significant judgments involved[223](index=223&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $308,761 | $459,929 | | Total Assets | $740,129 | $1,030,571 | | Long-term Debt | $481,449 | $610,632 | | Total Liabilities | $721,702 | $878,216 | | Total Shareholders' Equity (Deficit) | $(276,218) | $(85,940) | Consolidated Statement of Cash Flows Highlights (in thousands) | | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $18,313 | $64,431 | | Net cash used by investing activities | $(28,283) | $(45,607) | | Net cash used by financing activities | $(148,339) | $(34,230) | | Net change in cash and cash equivalents | $(161,496) | $(11,416) | - On August 31, 2023, the company's German subsidiary, SPG, filed for insolvency and was deconsolidated, resulting in a loss of **$79.6 million** in 2023[373](index=373&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=95&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - None[377](index=377&type=chunk) [Controls and Procedures](index=95&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, 2024, management concluded that disclosure controls and internal control over financial reporting were effective, with the latter assessment audited by Deloitte & Touche LLP - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[378](index=378&type=chunk) - Management determined that internal control over financial reporting was effective as of December 31, 2024, based on the COSO framework, and this was audited by Deloitte & Touche LLP[381](index=381&type=chunk)[382](index=382&type=chunk) [Other Information](index=95&type=section&id=Item%209B.%20Other%20Information) CEO Majdi Abulaban adopted a Rule 10b5-1 trading plan on September 9, 2024, for the potential sale of up to 500,000 shares, expiring June 30, 2025 - CEO Majdi Abulaban adopted a Rule 10b5-1 trading arrangement on September 9, 2024, which provides for the sale of up to **500,000 shares** of common stock and expires on June 30, 2025[385](index=385&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=97&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[387](index=387&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=98&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item, including details about directors, executive officers, and corporate governance matters, is incorporated by reference from the company's 2025 Proxy Statement - Information required by this item is incorporated by reference from the company's 2025 Proxy Statement[389](index=389&type=chunk) [Executive Compensation](index=98&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item, relating to director and executive compensation, is incorporated by reference from the company's 2025 Proxy Statement - Information regarding executive compensation is incorporated by reference from the company's 2025 Proxy Statement[393](index=393&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=98&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item, concerning security ownership by beneficial owners and management, is incorporated by reference from the company's 2025 Proxy Statement - Information regarding security ownership is incorporated by reference from the company's 2025 Proxy Statement[394](index=394&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=98&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The information required for this item, regarding related party transactions and director independence, is incorporated by reference from the company's 2025 Proxy Statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2025 Proxy Statement[395](index=395&type=chunk) [Principal Accountant Fees and Services](index=98&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The information required for this item, detailing fees paid to and services provided by the principal accountant, is incorporated by reference from the company's 2025 Proxy Statement - Information regarding principal accountant fees and services is incorporated by reference from the company's 2025 Proxy Statement[396](index=396&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=99&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Form 10-K, including financial statements, Schedule II, and a comprehensive list of exhibits - This section contains the index of financial statements, Schedule II (Valuation and Qualifying Accounts), and all exhibits filed with the annual report[399](index=399&type=chunk) Schedule II - Valuation and Qualifying Accounts (in thousands) | Description | Balance at Beg. of 2024 | Additions | Deductions | Balance at End of 2024 | | :--- | :--- | :--- | :--- | :--- | | Allowance for doubtful accounts receivable | $718 | $— | $(655) | $63 | | Allowance on long term receivable | $14,779 | $— | $(14,779) | $— | | Valuation allowances for deferred tax assets | $60,387 | $29,951 | $(2,464) | $87,874 | [Form 10-K Summary](index=107&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary in this section of the Form 10-K - None[413](index=413&type=chunk)

Financial Data and Key Metrics Changes - For Q4 2024, net sales were $310 million, slightly up from $309 million in the prior year, while full-year net sales decreased to $1.3 billion from $1.4 billion [28] - Adjusted EBITDA for Q4 was $35 million with a margin of 21%, compared to $23 million and 14% in the prior year [31] - Full-year adjusted EBITDA was $146 million, maintaining a margin of 21%, despite a $13 million decline from the previous year [33] Business Line Data and Key Metrics Changes - Adjusted value-added sales declined 4% year-over-year, consistent with the overall industry decline, with a full-year decrease of $57 million primarily due to lower unit sales [10][30] - The company achieved a stable adjusted EBITDA margin of 21% despite lower production volumes, reflecting effective restructuring and cost optimization efforts [33][16] Market Data and Key Metrics Changes - The company anticipates a 4% decline in industry production for 2025, with Europe expected to face a 6% decline and North America a 2% decline [11][53] - The company expects to outperform the market due to new business wins and a strong aftermarket segment [55] Company Strategy and Development Direction - The company has positioned itself as a global technology and cost leader in the wheel industry, focusing on local manufacturing to meet customer demands [7][9] - The company aims to generate cash, accelerate debt reduction, and optimize its equity base to enhance long-term shareholder value [10][40] - The focus remains on operational excellence and leveraging a differentiated portfolio for long-term profitable growth [24][25] Management's Comments on Operating Environment and Future Outlook - Management highlighted the successful completion of restructuring initiatives and the consolidation of European manufacturing in Poland as key achievements [8][9] - The company is closely monitoring the impact of recent tariffs and expects to update its financial outlook as more clarity emerges [20][42] - Management expressed confidence in the company's competitive advantages and the potential for growth despite industry challenges [89] Other Important Information - The company completed a significant refinancing, attracting $520 million in new capital and extending debt maturities to 2028, strengthening its financial foundation [9][38] - Unlevered free cash flow for 2025 is expected to be between $110 million and $130 million, driven by improved profitability and working capital management [40] Q&A Session Summary Question: Implications of capacity in Europe and North America - Management indicated that there is currently about 20% excess capacity in both regions, allowing for potential short-term business opportunities [46][48] Question: Guidance based on market predictions - Management confirmed that the guidance reflects a slight outperformance against the market, driven by new business wins and a strong aftermarket segment [55][56] Question: Cash flow and preferred dividends - Management clarified that preferred dividends are being picked, and the redemption is contingent on the company's ability to fund the payment [64][66] Question: Exposure to Mexico tariffs - Management explained that less than 20% of production is exposed to tariffs, with most customers being the importers of record [72][74] Question: Covenant numbers with new capital structure - Management provided details on the covenant ratio, which is set at 3.75% for Q4 and Q1, dropping to 3.5% at the end of Q2 [82][84]

Financial Data and Key Metrics Changes - For Q4 2024, net sales were $310 million, slightly up from $309 million in the prior year, while full-year net sales decreased to $1.3 billion from $1.4 billion [28] - Adjusted EBITDA for Q4 was $35 million with a margin of 21%, compared to $23 million and a margin of 14% in the prior year [31] - Full-year adjusted EBITDA was $146 million, maintaining a margin of 21%, despite a $13 million decline from the previous year [33] Business Line Data and Key Metrics Changes - Adjusted value-added sales declined 4% year-over-year, consistent with the overall industry decline, with a full-year decrease of $57 million primarily due to lower unit sales [10][30] - The company achieved a stable adjusted EBITDA margin of 21% despite lower production volumes, reflecting effective restructuring and cost optimization efforts [33][16] Market Data and Key Metrics Changes - The company anticipates a 4% decline in industry production for 2025, with Europe expected to face a 6% decline and North America a 2% decline [11][53] - The company expects to outperform the market due to new business wins and a strong aftermarket segment [55] Company Strategy and Development Direction - The company has positioned itself as a global technology and cost leader in the wheel industry, focusing on local-for-local manufacturing to capture demand from OEM customers [7][9] - The company aims to generate cash, accelerate debt reduction, and optimize its equity base to enhance long-term shareholder value [10] Management's Comments on Operating Environment and Future Outlook - Management highlighted the successful completion of restructuring initiatives and the consolidation of European manufacturing in Poland as key drivers for future growth [8][14] - The company is closely monitoring the impact of recent tariffs and expects to update its financial outlook as more clarity emerges [20][42] Other Important Information - The company attracted $520 million in new capital and refinanced all debt, extending maturities to 2028, which strengthens its financial foundation [9][38] - The company expects adjusted EBITDA for 2025 to be in the range of $160 million to $180 million, reflecting a 16% growth compared to 2024 [26][40] Q&A Session Summary Question: Implications of capacity in Europe and North America - Management indicated that there is currently about 20% excess capacity in both regions, allowing for potential short-term business absorption [46][48] Question: Guidance based on market predictions - Management confirmed that the market is expected to decline about 4%, but the company anticipates performing slightly ahead of the market due to new business wins and a strong aftermarket segment [53][55] Question: Cash flow and preferred dividends - Management clarified that preferred dividends are being picked up and that the redemption is contingent on the company's ability to fund the payment [64][66] Question: Exposure to tariffs and customer pickup - Management explained that less than 20% of production is exposed to tariffs, as most customers pick up wheels from the plants [72][74] Question: Covenant numbers with new capital structure - Management provided details on the covenant ratio, which is set at 3.75% for Q4 and Q1, dropping to 3.5% at the end of Q2 [82]