Superior Industries International, Inc. (SUP) Bundle
Understanding Superior Industries International, Inc. (SUP) Revenue Streams
Understanding Superior Industries International, Inc.’s Revenue Streams
Superior Industries International, Inc. generates revenue primarily through its manufacturing and sale of aluminum wheels for automotive OEMs and aftermarket customers. The company operates in two main geographic segments: North America and Europe.
Breakdown of Primary Revenue Sources
For the first nine months of 2024, the net sales were broken down as follows:
| Segment | Net Sales (in thousands) | Year-over-Year Change |
|---|---|---|
| North America | $602,944 | Decreased by $11,752 (1.9%) |
| Europe | $354,056 | Decreased by $107,894 (23.4%) |
| Total | $957,000 | Decreased by $119,646 (11.1%) |
Year-over-Year Revenue Growth Rate
In 2024, the total net sales decreased to $957 million from $1,076.6 million in 2023, reflecting a decline of 11.1%. The decrease was primarily attributed to lower aluminum cost pass-throughs and reduced volumes in both segments.
Contribution of Different Business Segments to Overall Revenue
The contribution of each segment to total revenue for the first nine months of 2024 is summarized below:
| Segment | Revenue Contribution (in thousands) | Percentage of Total Revenue |
|---|---|---|
| North America | $602,944 | 63.0% |
| Europe | $354,056 | 37.0% |
Analysis of Significant Changes in Revenue Streams
In North America, the decline in revenue was primarily due to:
- Lower aluminum cost pass-throughs of $14.9 million
- A less favorable pricing and product mix contributing $6.2 million
- Partially offset by higher volumes of $9.0 million
In Europe, the significant drop in sales was due to:
- A decline in aluminum cost pass-throughs of $49.4 million
- Reduced volumes of $48.3 million
- A lower pricing and product mix of $10.6 million
- Key factors included the deconsolidation of a manufacturing facility in Germany and exiting an unprofitable contract
Overall, the shifts in the revenue streams indicate challenges in both segments, underscored by global market conditions and operational restructuring initiatives.
A Deep Dive into Superior Industries International, Inc. (SUP) Profitability
A Deep Dive into Superior Industries International, Inc.'s Profitability
Gross Profit Margin: The gross profit for the first nine months of 2024 was $81.4 million, representing a gross profit margin of 8.5%. In comparison, for the same period in 2023, gross profit was $100.9 million with a margin of 9.4%, indicating a decline of 0.9% percentage points.
Operating Profit: The income from operations for the first nine months of 2024 was $15.3 million, a significant recovery from an operating loss of $32.0 million in the same period of 2023. The operating income for the third quarter of 2024 was $4.7 million, compared to a loss of $71.2 million in the third quarter of 2023.
Net Profit Margin: The net loss for the first nine months of 2024 was $68.6 million, resulting in a net loss per diluted share of $3.50. This is an improvement from a net loss of $90.4 million and a loss per diluted share of $4.29 for the same period in 2023.
Trends in Profitability Over Time
Net sales for the first nine months of 2024 totaled $957 million, down from $1,076.6 million in the same period of 2023, representing a decrease of 11.1%. The decline in net sales was attributed to lower aluminum cost pass-throughs to OEM customers, lower volumes, and a less favorable pricing mix.
Comparison of Profitability Ratios with Industry Averages
| Metric | 2024 | 2023 | Industry Average | |
|---|---|---|---|---|
| Gross Profit Margin | 8.5% | 9.4% | 10.0% | |
| Operating Profit Margin | 1.6% | -3.0% | 5.0% | |
| Net Profit Margin | -7.2% | -8.4% | 2.0% |
Analysis of Operational Efficiency
In the first nine months of 2024, selling, general and administrative expenses amounted to $66.1 million, an increase from $53.3 million in 2023, primarily due to restructuring costs related to the European Transformation and debt refinancing.
The adjusted EBITDA for the first nine months of 2024 was $111.6 million, down from $136.1 million in 2023, reflecting a decrease in adjusted EBITDA as a percentage of net sales from 12.6% in 2023 to 11.7% in 2024.
Value-added sales adjusted for foreign exchange was $522.5 million for the first nine months of 2024, compared to $578.9 million in 2023, marking a 9.7% decrease.
Debt vs. Equity: How Superior Industries International, Inc. (SUP) Finances Its Growth
Debt vs. Equity: How Superior Industries International, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the company's long-term debt consists of:
| Debt Type | Principal Amount (in thousands) | Carrying Value (in thousands) |
|---|---|---|
| Term Loan Facility | $520,000 | $488,061 |
| Senior Notes | $0 | $0 |
| Finance Leases | $967 | $967 |
| Total Long-term Debt | $520,967 | $489,028 |
The short-term debt includes a current portion of long-term debt amounting to $5,773,000.
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Shareholders' Equity
Total Debt = $520,967,000
Total Shareholders' Equity = ($231,849,000)
Debt-to-Equity Ratio = -2.25
This indicates that the company has a negative equity position, which is below the industry average of approximately 1.5.
Recent Debt Issuances and Refinancing Activity
In 2024, the company executed a significant refinancing of its debt. The notable activities included:
- Prepayment of the term loan facility resulting in a loss on extinguishment of debt of $13.1 million.
- Issuance of long-term debt totaling $337.3 million.
- Redemption of senior notes that amounted to $239.6 million.
Credit Ratings
The company’s credit rating has been under pressure, reflecting its financial losses. The most recent credit rating, as of 2024, remains at a speculative grade.
Balancing Debt Financing and Equity Funding
The company has strategically balanced its funding through a mix of debt and equity financing. Key aspects include:
- Utilization of debt for expansion and operational needs while managing interest expenses.
- Equity financing through stock compensation and capital raises during favorable market conditions.
Overall, the company continues to navigate its financial strategy amid a challenging landscape, focusing on maintaining liquidity while addressing its debt obligations.
Assessing Superior Industries International, Inc. (SUP) Liquidity
Assessing Superior Industries International, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 0.75, calculated as total current assets of $322.6 million divided by total current liabilities of $428.0 million.
Quick Ratio: The quick ratio is 0.50, derived from current assets excluding inventories ($176.9 million) over current liabilities ($428.0 million).
Analysis of Working Capital Trends
As of September 30, 2024, total working capital is negative at ($105.4 million), compared to positive working capital of $31.2 million as of December 31, 2023. This change indicates a declining liquidity position.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $322.6 | $428.0 | ($105.4) |
| December 31, 2023 | $459.9 | $428.7 | $31.2 |
Cash Flow Statements Overview
Net Cash Used in Operating Activities: For the nine months ended September 30, 2024, net cash used in operating activities was ($7.9 million), a significant decline from $20.1 million in the same period of 2023.
Net Cash Used in Investing Activities: Net cash used in investing activities was ($21.0 million) for the first nine months of 2024, down from ($33.9 million) for the same period in 2023.
Net Cash Used in Financing Activities: Net cash used in financing activities totaled ($146.8 million) for the first nine months of 2024, compared to ($24.8 million) in 2023.
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | ($7.9) | $20.1 |
| Investing Activities | ($21.0) | ($33.9) |
| Financing Activities | ($146.8) | ($24.8) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total available liquidity stands at $39.3 million, consisting of $24.3 million in cash and cash equivalents and $52.5 million from unused commitments on the revolving credit facility, minus $37.5 million in contractual liquidity requirements.
Debt Obligations: The company has a term loan facility of $520.0 million with a carrying value of $488.1 million as of September 30, 2024.
| Liquidity Metrics | Amount (in millions) |
|---|---|
| Cash and Cash Equivalents | $24.3 |
| Unused Revolving Credit Facility | $52.5 |
| Contractual Liquidity Requirement | ($37.5) |
| Total Available Liquidity | $39.3 |
| Term Loan Facility | $520.0 |
| Carrying Value of Term Loan | $488.1 |
Is Superior Industries International, Inc. (SUP) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The P/E ratio as of September 30, 2024, is calculated based on a diluted loss per share of $1.24. The stock price averaged around $3.00 during this period, resulting in a P/E ratio of approximately (2.42), indicating a negative valuation due to the losses incurred.
Price-to-Book (P/B) Ratio
The book value per share is calculated from total shareholders' equity of $(231.8 million) divided by the number of shares outstanding, which is 28.9 million. This results in a book value per share of approximately $(8.01). The P/B ratio, therefore, is (0.37), reflecting the current market price compared to the book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value, which includes market capitalization, debt, and cash, is calculated as follows:
- Market Cap: $86.67 million (based on stock price of $3.00)
- Total Debt: $520 million
- Cash and Equivalents: $24.28 million
- Enterprise Value = Market Cap + Total Debt - Cash = $582.39 million
Adjusted EBITDA for the last twelve months is $111.63 million, leading to an EV/EBITDA ratio of approximately 5.22.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated as follows:
- Highest Price: $5.50
- Lowest Price: $1.80
- Current Price: $3.00
This reflects a 45% decline from its high, indicating volatility and investor caution.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also 0% due to the lack of earnings to distribute.
Analyst Consensus on Stock Valuation
Analyst ratings as of October 2024 show:
- Buy: 2
- Hold: 5
- Sell: 3
The consensus indicates a cautious outlook, with a majority recommending a hold position.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | (2.42) |
| P/B Ratio | (0.37) |
| EV/EBITDA Ratio | 5.22 |
| Highest Stock Price (12 months) | $5.50 |
| Lowest Stock Price (12 months) | $1.80 |
| Current Stock Price | $3.00 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 2/5/3 |
Key Risks Facing Superior Industries International, Inc. (SUP)
Key Risks Facing Superior Industries International, Inc.
Superior Industries International, Inc. faces several internal and external risks that can significantly impact its financial health. Understanding these risks is crucial for investors looking to assess the company's future performance.
Industry Competition
The automotive manufacturing industry is highly competitive. The company competes with numerous manufacturers globally, which can lead to pricing pressures and reduced margins. In the third quarter of 2024, the company reported net sales of $321.8 million, a slight decrease from $323.1 million in the same period of 2023.
Market Conditions
Market fluctuations, particularly in the demand for aluminum and automotive parts, pose a risk. The company experienced a decline in net sales for its European segment, which decreased by 23.4%, amounting to $354.1 million in the first nine months of 2024 compared to $461.9 million in 2023.
Regulatory Changes
Changes in regulations regarding environmental standards and manufacturing practices could impact operational costs. In 2024, the company's selling, general, and administrative expenses rose to $66.1 million from $53.3 million in the previous year, partly due to restructuring and related costs associated with regulatory compliance.
Operational Risks
Operational challenges, including production inefficiencies and supply chain disruptions, can adversely affect performance. The company reported a loss on deconsolidation of a subsidiary amounting to $79.6 million during the nine months ended September 30, 2023, which highlights the potential impact of operational issues.
Financial Risks
Financial risks include high levels of debt and interest expenses. The net interest expense for the first nine months of 2024 reached $49.6 million, up from $47.1 million in 2023. Additionally, the company reported a net loss of $68.6 million for the first nine months of 2024.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Cost Management: Focus on reducing overhead costs and improving operational efficiencies.
- Diversification: Expanding into new markets to reduce dependency on specific regions.
- Debt Management: Refinancing existing debt to lower interest costs and improve liquidity.
| Risk Factor | Impact | Recent Financial Data |
|---|---|---|
| Industry Competition | Pricing Pressure | Net Sales Q3 2024: $321.8M |
| Market Conditions | Demand Fluctuation | European Net Sales Decrease: 23.4% |
| Regulatory Changes | Increased Compliance Costs | SG&A Expenses: $66.1M (2024) |
| Operational Risks | Production Inefficiencies | Loss on Deconsolidation: $79.6M |
| Financial Risks | High Debt Levels | Net Interest Expense: $49.6M (2024) |
Future Growth Prospects for Superior Industries International, Inc. (SUP)
Future Growth Prospects for Superior Industries International, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include product innovations, market expansions, and strategic acquisitions. The company is focusing on enhancing its product offerings with advanced aluminum wheel technologies and lightweight solutions that meet evolving customer demands.
Future Revenue Growth Projections and Earnings Estimates
For the first nine months of 2024, the company reported net sales of $957 million, a decrease from $1.076 billion in the same period in 2023, reflecting an 11.1% decline. The earnings estimate for 2024 suggests continued challenges, with a projected net loss of $68.6 million, or $3.50 loss per diluted share, compared to a loss of $90.4 million, or $4.29 loss per diluted share in 2023.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company is expected to pursue strategic partnerships to enhance its market presence. Recent initiatives include a focus on expanding its manufacturing capabilities and exploring joint ventures in emerging markets to capture new customer segments.
Competitive Advantages that Position the Company for Growth
Competitive advantages include a robust supply chain, established relationships with OEMs, and a strong brand reputation in the automotive industry. The ability to provide customized solutions and quick turnaround times also enhances its competitive positioning.
| Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Sales | $321.8 million | $323.1 million | -0.4% |
| Net Income (Loss) | $(24.8 million) | $(86.3 million) | Improvement of 71.2% |
| Adjusted EBITDA | $40.8 million | $38.6 million | 5.7% |
| SG&A Expenses | $23.9 million | $16.9 million | Increase of 41.7% |
| Interest Expense, Net | $17.9 million | $15.7 million | Increase of 13.9% |
Looking ahead, the company anticipates capital expenditures between $30 million and $40 million for 2024, aimed at improving production quality and expanding capacity.
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Resources:
- Superior Industries International, Inc. (SUP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Superior Industries International, Inc. (SUP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Superior Industries International, Inc. (SUP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.