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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, 2023

 

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: 001-06615

 

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 27, 2023: 28,091,440

 

 


 

 

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

25

 

 

 

 

 

 

Item 3

-

Quantitative and Qualitative Disclosures about Market Risk

37

 

 

 

 

 

 

Item 4

-

Controls and Procedures

37

 

 

 

 

PART II

-

OTHER INFORMATION

 

 

 

 

 

 

 

Item 1

-

Legal Proceedings

39

 

 

 

 

 

 

 

 

Item 1A

-

Risk Factors

39

 

 

 

 

 

 

Item 2

-

Unregistered Sales of Equity Securities and Use of Proceeds

39

 

 

 

 

 

 

 

 

Item 3

-

Defaults upon Senior Securities

39

 

 

 

 

 

 

 

 

Item 4

-

Mine Safety Disclosures

39

 

 

 

 

 

 

 

 

Item 5

-

Other Information

39

 

 

 

 

 

 

Item 6

-

Exhibits

40

 

 

 

 

Signatures

41

 

 

 

 


 

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,
2023

 

 

September 30,
2022

 

 

September 30,
2023

 

 

September 30,
2022

 

NET SALES

 

$

323,077

 

 

$

405,725

 

 

$

1,076,646

 

 

$

1,237,783

 

Cost of sales

 

 

297,788

 

 

 

377,368

 

 

 

975,746

 

 

 

1,126,212

 

GROSS PROFIT

 

 

25,289

 

 

 

28,357

 

 

 

100,900

 

 

 

111,571

 

Selling, general and administrative expenses

 

 

16,857

 

 

 

16,097

 

 

 

53,315

 

 

 

49,768

 

Loss on deconsolidation of subsidiary

 

 

79,629

 

 

 

 

 

 

79,629

 

 

 

 

(LOSS) INCOME FROM OPERATIONS

 

 

(71,197

)

 

 

12,260

 

 

 

(32,044

)

 

 

61,803

 

Interest expense, net

 

 

(15,678

)

 

 

(10,406

)

 

 

(47,066

)

 

 

(30,706

)

Other income (expense), net

 

 

179

 

 

 

(239

)

 

 

(2,608

)

 

 

355

 

(LOSS) INCOME BEFORE INCOME TAXES

 

 

(86,696

)

 

 

1,615

 

 

 

(81,718

)

 

 

31,452

 

Income tax benefit (provision)

 

 

379

 

 

 

(1,966

)

 

 

(8,713

)

 

 

(10,889

)

NET (LOSS) INCOME

 

$

(86,317

)

 

$

(351

)

 

$

(90,431

)

 

$

20,563

 

(LOSS) EARNINGS PER SHARE – BASIC

 

$

(3.42

)

 

$

(0.35

)

 

$

(4.29

)

 

$

(0.25

)

(LOSS) EARNINGS PER SHARE – DILUTED

 

$

(3.42

)

 

$

(0.35

)

 

$

(4.29

)

 

$

(0.25

)

 

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,
2023

 

 

September 30,
2022

 

 

September 30,
2023

 

 

September 30,
2022

 

Net (loss) income

 

$

(86,317

)

 

$

(351

)

 

$

(90,431

)

 

$

20,563

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

 

(4,869

)

 

 

(8,335

)

 

 

18,304

 

 

 

(17,946

)

Change in unrecognized gains (losses) on derivative instruments:

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of derivatives

 

 

(14,673

)

 

 

4,688

 

 

 

38,375

 

 

 

6,034

 

Tax benefit (provision)

 

 

1,472

 

 

 

2,403

 

 

 

(3,112

)

 

 

2,295

 

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

 

 

(13,201

)

 

 

7,091

 

 

 

35,263

 

 

 

8,329

 

Defined benefit pension plan:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of actuarial losses on pension obligation

 

 

 

 

 

83

 

 

 

 

 

 

249

 

Tax provision

 

 

 

 

 

 

 

 

 

 

 

 

Pension changes, net of tax

 

 

 

 

 

83

 

 

 

 

 

 

249

 

Other comprehensive (loss) income, net of tax

 

 

(18,070

)

 

 

(1,161

)

 

 

53,567

 

 

 

(9,368

)

Comprehensive (loss) income

 

$

(104,387

)

 

$

(1,512

)

 

$

(36,864

)

 

$

11,195

 

 

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,
2023

 

 

December 31,
 2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

176,477

 

 

$

213,022

 

Accounts receivable, net

 

 

110,885

 

 

 

72,725

 

Inventories, net

 

 

162,003

 

 

 

178,688

 

Income taxes receivable

 

 

1,804

 

 

 

2,261

 

Other current assets

 

 

46,684

 

 

 

42,218

 

Total current assets

 

 

497,853

 

 

 

508,914

 

Property, plant and equipment, net

 

 

396,013

 

 

 

473,960

 

Deferred income tax assets, net

 

 

23,775

 

 

 

35,187

 

Intangibles, net

 

 

36,594

 

 

 

51,497

 

Other noncurrent assets

 

 

83,562

 

 

 

64,181

 

Total assets

 

$

1,037,797

 

 

$

1,133,739

 

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

145,415

 

 

$

158,049

 

Short-term debt

 

 

6,700

 

 

 

5,873

 

Accrued expenses

 

 

73,147

 

 

 

74,108

 

Income taxes payable

 

 

614

 

 

 

13,300

 

Total current liabilities

 

 

225,876

 

 

 

251,330

 

Long-term debt (less current portion)

 

 

600,629

 

 

 

616,145

 

Noncurrent income tax liabilities

 

 

8,040

 

 

 

8,524

 

Deferred income tax liabilities, net

 

 

3,748

 

 

 

3,468

 

Other noncurrent liabilities

 

 

47,047

 

 

 

55,733

 

Commitments and contingent liabilities (Note 17)

 

 

 

 

 

 

Mezzanine equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value

 

 

 

 

 

 

Authorized – 1,000,000 shares

 

 

 

 

 

 

Issued and outstanding – 150,000 shares outstanding at
   September 30, 2023 and December 31, 2022

 

 

241,594

 

 

 

222,753

 

European noncontrolling redeemable equity

 

 

939

 

 

 

1,083

 

Shareholders’ equity (deficit):

 

 

 

 

 

 

Common stock, $0.01 par value

 

 

 

 

 

 

Authorized – 100,000,000 shares

 

 

 

 

 

 

Issued and outstanding – 28,091,440 and 27,016,125 shares at
   September 30, 2023 and December 31, 2022

 

 

112,157

 

 

 

111,105

 

Accumulated other comprehensive loss

 

 

(35,702

)

 

 

(89,269

)

Retained earnings

 

 

(166,531

)

 

 

(47,133

)

Total shareholders’ equity (deficit)

 

 

(90,076

)

 

 

(25,297

)

Total liabilities, mezzanine equity and shareholders’ equity

 

$

1,037,797

 

 

$

1,133,739

 

 

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,
2023

 

 

September 30,
2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net (loss) income

 

$

(90,431

)

 

$

20,563

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

69,934

 

 

 

69,068

 

Income tax, noncash changes

 

 

9,258

 

 

 

3,637

 

Stock-based compensation

 

 

4,359

 

 

 

6,542

 

Amortization of debt issuance costs

 

 

3,609

 

 

 

3,702

 

Loss on deconsolidation of subsidiary

 

 

79,629

 

 

 

 

Other noncash items

 

 

(4,690

)

 

 

(1,727

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(37,969

)

 

 

(57,430

)

Inventories

 

 

(8,195

)

 

 

(37,054

)

Other assets and liabilities

 

 

12,651

 

 

 

1,883

 

Accounts payable

 

 

(5,141

)

 

 

64,131

 

Income taxes

 

 

(12,921

)

 

 

1,116

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

20,093

 

 

 

74,431

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Additions to property, plant, and equipment

 

 

(29,483

)

 

 

(45,710

)

Deconsolidation of subsidiary cash

 

 

(4,447

)

 

 

 

 Other investing activities

 

 

 

 

 

150

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(33,930

)

 

 

(45,560

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Repayments of debt

 

 

(14,016

)

 

 

(3,572

)

Cash dividends paid

 

 

(6,751

)

 

 

(10,245

)

Financing costs paid and other

 

 

(104

)

 

 

 

Payments related to tax withholdings for stock-based compensation

 

 

(3,307

)

 

 

(1,788

)

Finance lease payments

 

 

(580

)

 

 

(805

)

NET CASH USED IN FINANCING ACTIVITIES

 

 

(24,758

)

 

 

(16,410

)

Effect of exchange rate changes on cash

 

 

2,050

 

 

 

(4,093

)

Net changes in cash and cash equivalents

 

 

(36,545

)

 

 

8,368

 

Cash and cash equivalents at the beginning of the period

 

 

213,022

 

 

 

113,473

 

Cash and cash equivalents at the end of the period

 

$

176,477

 

 

$

121,841

 

 

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, except share amounts)

(Unaudited)

 

For the nine months ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 JANUARY 1, 2023

 

 

27,016,125

 

 

$

111,105

 

 

$

19,844

 

 

$

1,591

 

 

$

(110,704

)

 

$

(47,133

)

 

$

(25,297

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(90,431

)

 

 

(90,431

)

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

 

 

 

 

 

 

 

 

35,263

 

 

 

 

 

 

 

 

 

 

 

 

35,263

 

Change in defined benefit plans, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,304

 

 

 

 

 

 

18,304

 

Common stock issued, net of shares withheld
   for employee taxes

 

 

1,075,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

1,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,052

 

Redeemable preferred 9% dividend
    and accretion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,938

)

 

 

(28,938

)

European noncontrolling redeemable equity
   dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29

)

 

 

(29

)

BALANCE AT SEPTEMBER 30, 2023

 

 

28,091,440

 

 

$

112,157

 

 

$

55,107

 

 

$

1,591

 

 

$

(92,400

)

 

$

(166,531

)

 

$

(90,076

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 JULY 1, 2023

 

 

28,091,440

 

 

$

110,802

 

 

$

68,308

 

 

$

1,591

 

 

$

(87,531

)

 

$

(70,353

)

 

$

22,817

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(86,317

)

 

 

(86,317

)

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

 

 

 

 

 

 

 

 

(13,201

)

 

 

 

 

 

 

 

 

 

 

 

(13,201

)

Change in defined benefit plans, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,869

)

 

 

 

 

 

(4,869

)

Common stock issued, net of shares withheld
   for employee taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

1,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,355

 

Redeemable preferred 9% dividend
    and accretion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,853

)

 

 

(9,853

)

European noncontrolling redeemable equity
   dividend