Superior Industries(SUP)2024-11-09 18:02Financial Data and Key Metrics Changes - Net sales for Q3 2024 were nearly flat at 323 million in the prior year period, with value-added sales decreasing to 176 million [29] - Adjusted EBITDA increased to 39 million and 22% in the prior year period [32] - The company reported a net loss of 61 million driven by the deconsolidation loss recorded in Q3 2023 [30] Business Line Data and Key Metrics Changes - Value-added sales adjusted for foreign exchange and deconsolidation declined 2% year-over-year, outperforming industry production which was down 6% [10] - North America business performed well, benefiting from earlier wins with Japanese OEMs, while European business faced lower production volumes [10][14] Market Data and Key Metrics Changes - Industry production is expected to decline by 6% in the second half of 2024, with North America down 3% and Europe down 11% [14][44] - The company expects to sustain improved margin levels despite the challenging market conditions [17] Company Strategy and Development Direction - The company has consolidated its manufacturing footprint in Mexico and Poland, providing a competitive advantage over competitors relying on higher-cost locations [8] - A targeted 15% reduction in SG&A and manufacturing overhead is expected to deliver 15 million in run rate savings by early 2025 [15][16] - The company is focusing on leveraging its local footprint and premium technologies to drive long-term growth [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging volume environment for Tier 1 suppliers, with a combined volume decline of 9% in the second half of 2024 [42] - The company is lowering its full-year financial guidance due to the challenging OEM production environment but expects to maintain improved margin levels [17][38] Other Important Information - The company successfully refinanced its debt, attracting 117 million [9][35] - The company has seen a 14% global headcount reduction to date, with ongoing efforts to improve operational efficiency [23] Q&A Session Summary Question: Issues with declining production in North America and Europe - Management indicated that the decline is split between both regions, with North America down 5% year-on-year and Europe down 6.5% [42][43] Question: Details on restructuring and potential savings - Management confirmed a restructuring aimed at global overhead, expecting 15 million in EBITDA improvement in 2025 [48] Question: Clarification on refinancing terms - The refinancing interest rate is SOFR plus 750, with an effective rate of 12.6% in Q3, and the $1.3 million quarterly payment is part of the principal payments [56] Question: Working capital timing and expectations - Management confirmed that the working capital increase is due to timing, with expectations for it to unwind in Q4 [58]