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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 1-6615

 

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

95-2594729

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

26600 Telegraph Road, Suite 400

 

Southfield, Michigan

48033

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (248) 352-7300

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

Title of Each Class

 

Trading Symbol

 

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value

 

SUP

 

New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

Accelerated Filer

 ☒

Non-Accelerated Filer

Smaller Reporting Company

 

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Number of shares of common stock outstanding as of October 28, 2022: 27,016,125

 

 


 

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

PART I

-

FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

Item 1

 

Financial Statements (Unaudited)

1

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income (Loss)

1

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

2

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

3

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

4

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity (Deficit)

5

 

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

 

 

 

 

 

Item 2

-

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

 

 

 

 

 

 

 

Item 3

-

Quantitative and Qualitative Disclosures About Market Risk

35

 

 

 

 

 

 

 

 

Item 4

-

Controls and Procedures

35

 

 

 

 

PART II

-

OTHER INFORMATION

 

 

 

 

 

 

 

 

 

Item 1

-

Legal Proceedings

36

 

 

 

 

 

 

 

 

Item 1A

-

Risk Factors

36

 

 

 

 

 

 

 

 

Item 2

-

Unregistered Sales of Equity Securities and Use of Proceeds

36

 

 

 

 

 

 

 

 

Item 5

-

Other Information

36

 

 

 

 

 

 

 

 

Item 6

-

Exhibits

37

 

 

 

 

 

 

Signatures

38

 

 

 

 

 

 


 

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Dollars in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,
2022

 

 

September 30,
2021

 

 

September 30,
2022

 

 

September 30,
2021

 

NET SALES

 

$

405,725

 

 

$

310,780

 

 

$

1,237,783

 

 

$

1,016,440

 

Cost of sales

 

 

377,368

 

 

 

292,637

 

 

 

1,126,212

 

 

 

922,637

 

GROSS PROFIT

 

 

28,357

 

 

 

18,143

 

 

 

111,571

 

 

 

93,803

 

Selling, general and administrative expenses

 

 

16,097

 

 

 

10,769

 

 

 

49,768

 

 

 

45,190

 

INCOME FROM OPERATIONS

 

 

12,260

 

 

 

7,374

 

 

 

61,803

 

 

 

48,613

 

Interest expense, net

 

 

(10,406

)

 

 

(10,619

)

 

 

(30,706

)

 

 

(31,378

)

Other (expense) income, net

 

 

(239

)

 

 

(2,094

)

 

 

355

 

 

 

(6,028

)

INCOME (LOSS) BEFORE INCOME TAXES

 

 

1,615

 

 

 

(5,339

)

 

 

31,452

 

 

 

11,207

 

Income tax provision

 

 

(1,966

)

 

 

(1,841

)

 

 

(10,889

)

 

 

(3,570

)

NET (LOSS) INCOME

 

$

(351

)

 

$

(7,180

)

 

$

20,563

 

 

$

7,637

 

LOSS PER SHARE – BASIC

 

$

(0.35

)

 

$

(0.61

)

 

$

(0.25

)

 

$

(0.69

)

LOSS PER SHARE – DILUTED

 

$

(0.35

)

 

$

(0.61

)

 

$

(0.25

)

 

$

(0.69

)

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

 

1


 

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,
2022

 

 

September 30,
2021

 

 

September 30,
2022

 

 

September 30,
2021

 

Net (loss) income

 

$

(351

)

 

$

(7,180

)

 

$

20,563

 

 

$

7,637

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

(8,335

)

 

 

(9,068

)

 

 

(17,946

)

 

 

(16,336

)

Change in unrecognized gains (losses) on derivative instruments:

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of derivatives

 

 

4,688

 

 

 

(7,735

)

 

 

6,034

 

 

 

290

 

Tax benefit (provision)

 

 

2,403

 

 

 

851

 

 

 

2,295

 

 

 

(189

)

Change in unrecognized gains (losses) on derivative instruments, net of tax

 

 

7,091

 

 

 

(6,884

)

 

 

8,329

 

 

 

101

 

Defined benefit pension plan:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of actuarial losses on pension obligation

 

 

83

 

 

 

96

 

 

 

249

 

 

 

290

 

Tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

Pension changes, net of tax

 

 

83

 

 

 

96

 

 

 

249

 

 

 

290

 

Other comprehensive loss, net of tax

 

 

(1,161

)

 

 

(15,856

)

 

 

(9,368

)

 

 

(15,945

)

Comprehensive (loss) income

 

$

(1,512

)

 

$

(23,036

)

 

$

11,195

 

 

$

(8,308

)

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

 

2


 

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

 

 

 

September 30,
2022

 

 

December 31,
 2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

121,841

 

 

$

113,473

 

Accounts receivable, net

 

 

135,038

 

 

 

83,447

 

Inventories, net

 

 

194,298

 

 

 

172,099

 

Income taxes receivable

 

 

4,525

 

 

 

4,957

 

Other current assets

 

 

32,880

 

 

 

30,279

 

Total current assets

 

 

488,582

 

 

 

404,255

 

Property, plant and equipment, net

 

 

450,869

 

 

 

494,401

 

Deferred income tax assets, net

 

 

25,896

 

 

 

27,715

 

Intangibles, net

 

 

51,630

 

 

 

76,870

 

Other non-current assets

 

 

55,861

 

 

 

50,906

 

Total assets

 

$

1,072,838

 

 

$

1,054,147

 

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

201,697

 

 

$

153,197

 

Short-term debt

 

 

5,335

 

 

 

6,081

 

Accrued expenses

 

 

77,653

 

 

 

71,525

 

Income taxes payable

 

 

1,645

 

 

 

1,076

 

Total current liabilities

 

 

286,330

 

 

 

231,879

 

Long-term debt (less current portion)

 

 

566,416

 

 

 

602,355

 

Non-current income tax liabilities

 

 

8,280

 

 

 

8,289

 

Deferred income tax liabilities, net

 

 

4,851

 

 

 

3,913

 

Other non-current liabilities

 

 

70,790

 

 

 

77,089

 

Commitments and contingent liabilities (Note 16)

 

 

 

 

 

 

Mezzanine equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value

 

 

 

 

 

 

Authorized - 1,000,000 shares

 

 

 

 

 

 

Issued and outstanding – 150,000 shares outstanding at
   September 30, 2022 and December 31, 2021

 

 

216,805

 

 

 

199,897

 

European non-controlling redeemable equity

 

 

983

 

 

 

1,146

 

Shareholders’ deficit:

 

 

 

 

 

 

Common stock, $0.01 par value

 

 

 

 

 

 

Authorized - 100,000,000 shares

 

 

 

 

 

 

Issued and outstanding – 27,016,125 and 26,163,077 shares at
   September 30, 2022 and December 31, 2021

 

 

107,968

 

 

 

103,214

 

Accumulated other comprehensive loss

 

 

(135,342

)

 

 

(125,974

)

Retained earnings

 

 

(54,243

)

 

 

(47,661

)

Total shareholders’ deficit

 

 

(81,617

)

 

 

(70,421

)

Total liabilities, mezzanine equity and shareholders’ deficit

 

$

1,072,838

 

 

$

1,054,147

 

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

 

3


 

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,
2022

 

 

September 30,
2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

20,563

 

 

$

7,637

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

69,068

 

 

 

75,446

 

Income tax, non-cash changes

 

 

3,637

 

 

 

(4,198

)

Stock-based compensation

 

 

6,542

 

 

 

6,844

 

Amortization of debt issuance costs

 

 

3,702

 

 

 

3,195

 

Other non-cash items

 

 

(1,727

)

 

 

(10,710

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(57,430

)

 

 

(47,899

)

Inventories

 

 

(37,054

)

 

 

(66,513

)

Other assets and liabilities

 

 

1,883

 

 

 

14,538

 

Accounts payable

 

 

64,131

 

 

 

7,181

 

Income taxes

 

 

1,116

 

 

 

(99

)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

 

74,431

 

 

 

(14,578

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Additions to property, plant, and equipment

 

 

(45,710

)

 

 

(47,571

)

Proceeds from sale of fixed assets

 

 

150

 

 

 

6,589

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(45,560

)

 

 

(40,982

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 

 

 

1,658

 

Repayments of debt

 

 

(3,572

)

 

 

(3,569

)

Cash dividends paid

 

 

(10,245

)

 

 

(10,140

)

Financing costs paid and other

 

 

 

 

 

(4,339

)

Payments related to tax withholdings for stock-based compensation

 

 

(1,788

)

 

 

(1,473

)

Finance lease payments

 

 

(805

)

 

 

(1,012

)

NET CASH USED IN FINANCING ACTIVITIES

 

 

(16,410

)

 

 

(18,875

)

Effect of exchange rate changes on cash

 

 

(4,093

)

 

 

(1,871

)

Net increase (decrease) in cash and cash equivalents

 

 

8,368

 

 

 

(76,306

)

Cash and cash equivalents at the beginning of the period

 

 

113,473

 

 

 

152,423

 

Cash and cash equivalents at the end of the period

 

$

121,841

 

 

$

76,117

 

 

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

 

4


 

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(Dollars in thousands)

(Unaudited)

 

For the nine months ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Accumulated Other Comprehensive (Loss)
Income

 

 

 

 

 

 

 

 

Number of
Shares

 

 

Amount

 

 

Unrecognized
Gains (Losses)
on Derivative
Instruments

 

 

Pension
Obligations

 

 

Cumulative
Translation
Adjustment

 

 

Retained
Earnings

 

 

Total

 

BALANCE AT DECEMBER 31, 2021

 

26,163,077

 

 

$

103,214

 

 

$

(9,051

)

 

$

(6,133

)

 

$

(110,790

)

 

$

(47,661

)

 

$

(70,421

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,563

 

 

 

20,563

 

Change in unrecognized gains (losses) on
   derivative instruments, net of tax

 

 

 

 

 

 

 

8,329

 

 

 

 

 

 

 

 

 

 

 

 

8,329

 

Change in defined benefit plans, net of tax

 

 

 

 

 

 

 

 

 

 

249

 

 

 

 

 

 

 

 

 

249

 

Net foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,946

)

 

 

 

 

 

(17,946

)

Common stock issued, net of shares withheld
   for employee taxes

 

853,048

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

4,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,754

 

Redeemable preferred 9% dividend
    and accretion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,103

)

 

 

(27,103

)

European non-controlling redeemable
    equity dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(42

)

 

 

(42

)

BALANCE AT SEPTEMBER 30, 2022

 

27,016,125

 

 

$

107,968

 

 

$

(722

)

 

$

(5,884

)

 

$

(128,736

)

 

$

(54,243

)

 

$

(81,617

)