Earnings call transcript: Superior Industries reports Q4 2024 loss, stock jumps

Superior Industries International reported its fourth-quarter 2024 earnings, revealing a larger-than-expected loss. The company posted an EPS of -$0.75, significantly missing the forecasted EPS of -$0.04. Despite this, the company’s stock surged 19.16% in pre-market trading, reaching $1.99. The revenue for the quarter was $310 million, falling short of the expected $348.57 million. According to InvestingPro data, the company’s revenue has declined by 14.41% over the last twelve months, with analysts anticipating further sales decline in the current year.

Key Takeaways

• Superior Industries reported a greater-than-expected quarterly loss.
• The company’s stock rose 19.16% in pre-market trading despite the earnings miss.
• Full-year net sales decreased to $1.3 billion from $1.4 billion in 2023.
• Operational shifts included the consolidation of European manufacturing in Poland.
• The company forecasts challenging market conditions in early 2025.

Company Performance

Superior Industries experienced a challenging 2024, with net sales declining to $1.3 billion from $1.4 billion in the previous year. The company reported a net loss of $78 million for the year. InvestingPro analysis reveals the company’s weak financial health score of 1.46, primarily due to its struggling profitability metrics and declining revenue trends. Despite these setbacks, Superior Industries has made strategic moves to consolidate its manufacturing operations in Poland, closing its German facilities to optimize efficiency. The company continues to focus on innovation and premium product offerings, particularly in the larger, lighter vehicle segment. For deeper insights into Superior Industries’ financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Full Year 2024 Net Sales: $1.3 billion, down from $1.4 billion in 2023
• Full Year Adjusted EBITDA: $146 million with a 21% margin
• Net Loss: $78 million
• Cash on Balance Sheet: $40 million
• Total Debt: $520 million, reduced by $118 million from 2023

Earnings vs. Forecast

Superior Industries reported an EPS of -$0.75, missing the forecast of -$0.04 by a significant margin. Revenue for the quarter was $310 million, below the projected $348.57 million. This performance marks a notable deviation from expectations, reflecting ongoing challenges in the automotive sector.

Market Reaction

Despite the earnings miss, Superior Industries’ stock rose significantly in pre-market trading, up 19.16% to $1.99. This increase suggests investor optimism about the company’s strategic initiatives and future prospects, despite current financial challenges. The stock’s movement contrasts with its 52-week high of $4.569 and low of $1.5, indicating potential volatility. InvestingPro data shows the stock has a notably high beta of 3.47, confirming its volatile nature. Analyst price targets range from $5 to $7, suggesting potential upside despite the company’s current challenges. Get access to 10+ additional ProTips and comprehensive valuation metrics with an InvestingPro subscription.

Outlook & Guidance

Looking ahead, Superior Industries has provided guidance for 2025, with expected net sales between $1.3 billion and $1.4 billion and adjusted EBITDA ranging from $160 million to $180 million. The company anticipates an unlevered free cash flow of $110 million to $130 million and plans to invest strategically in automation to enhance its competitive position.

Executive Commentary

CEO Manji Abulapan emphasized the company’s competitive advantages, stating, "We have a business that is fundamentally competitively advantaged in many ways." CFO Dan Lee highlighted the focus on strengthening the financial profile, noting, "Our focus remains on further strengthening our financial profile." Additionally, Abulapan expressed confidence in the company’s capacity utilization: "We do have capacity and we think it’s going to turn out very well for us."

Risks and Challenges

• Global Auto Production Decline: Expected 4% decline in 2025 could impact demand.
• European Market Weakness: Projected 6% decline in Europe poses a regional challenge.
• Excess Manufacturing Capacity: Managing 20% excess capacity in Europe and Mexico.
• Debt Levels: Despite reductions, $520 million in total debt remains a concern.
• Macroeconomic Pressures: Global economic conditions could affect consumer spending.

Q&A

During the earnings call, analysts inquired about the company’s excess manufacturing capacity and potential business wins due to tariffs. Executives also clarified options for preferred stock redemption and detailed the covenant ratios within the new capital structure. These discussions highlighted the company’s strategic focus on optimizing operations and leveraging market opportunities.

Full transcript - Superior Industries International (SUP) Q4 2024:

Audrey, Conference Operator: Thank you for standing by and good day everyone. My name is Audrey and I will be your conference operator today. At this time, I would like to welcome everyone to the Superior Industries Fourth Quarter and Full Year twenty twenty four Earnings Call. We are joined this morning by Maji Abulapan, President and CEO Denley, Senior Vice President and CFO. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question and answer session. Session. Thank you. I would now like to turn the call over to Dan Lee. Please go ahead.

Dan Lee, Senior Vice President and CFO, Superior Industries: Good morning, and welcome to our fourth quarter and full year twenty twenty four earnings conference call. During our call this morning, we will be referring to our earnings presentation, which along with our earnings release is available on the Investor Relations section of Superior’s website. I’m joined on the call today by Manji Bolivan, our President and Chief Executive Officer. Before I turn the call over to Manshi, I remind everyone that any forward looking statements contained in this presentation or commented on today are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to Slide two of this presentation for the full Safe Harbor statement and to the company’s SEC filings, including the company’s current annual report on Form 10 K for more complete discussions of forward looking statements and risk factors.

We will also be discussing various non GAAP measures today. Non GAAP measures

: exclude the impact of certain items

Dan Lee, Senior Vice President and CFO, Superior Industries: and therefore are not exclude the impact of certain items and therefore are not calculated in accordance with U. S. GAAP. Reconciliations of these measures to the most directly comparable U. S.

GAAP measure can be found in the appendix of this presentation. I now turn the call over to Manji to provide a full business and portfolio update. Manji?

Manji Abulapan, President and CEO, Superior Industries: Thanks, Dan. Good morning, and welcome to our fourth quarter and full year twenty twenty four earnings call. Let’s begin with an overview of the year on Slide four. I am incredibly proud of our team’s achievement in 2024. We have positioned our company for success like no other time in recent history.

Our business is fully restructured, well invested and successfully refinanced. We are now the global technology and cost leader in the wheel industry. In a geopolitical environment that favors local aviation manufacturing, superior standouts among its peers. In a challenging industry environment, we executed major restructuring initiatives, successfully negotiated price adjustments with customers and transport our footprint. Despite industry production decline, we delivered strong EBITDA margins in line with the prior year, a testament to our team’s solid execution.

Our value added sales were in line with the overall industry as toughening OEM production continued to pressure growth. We completed our European manufacturing transformation in 2024 and with that all production has been consolidated in our low cost highly automated operations in Poland. Our low cost local for local manufacturing footprint in Mexico and in Poland is now a competitive advantage and positioned superior to capture demand from OEM customers, seeking shorter derisk supply chains. Late last year, we attracted $520,000,000 in new capital and refinanced all of our debt, extending all maturities to 2028. This significant milestone strengthens our financial foundation and providing flexibility for future growth.

With the refinancing behind us, we are now more than ever focused on generating cash, accelerating debt reduction and optimizing our equity base to enhance long term shareholder value. Turning to our results for the full year. Adjusted value added sales declined 4% year over year, which was in line with the overall industry decline. Adjusted EBITDA margins was 21%, in line with the prior year despite softer industry production. This margin stability highlights partial benefits from the solid execution of our restructuring and transformation actions as well as the successful negotiations for customer price recoveries.

Looking ahead to 2025, we anticipate a 4% decline in industry production based on recent IHS estimates. Despite this, we expect to outperform the market and achieve substantial margin expansion in the back half of 2025. I would add that our 2025 industry production volume and EBITDA assumptions do not reflect the impact of recent tariffs. I will shortly discuss the multifaceted impacts of these tariffs on our company. We are monitoring the situation closely and as we have more visibility, we will update our outlook.

Dan will provide more details on our 2025 guidance in his comments. With regard to our preferred shares, we are engaged in advanced constructive discussions to address the preferred equity in a manner that benefits all of our stakeholders. Turning to Slide five. The midpoint of our 2025 adjusted EBITDA is $170,000,000 This represents a 16% earnings growth versus 2024 on a relatively flat value added sales. This improvement is driven by the additional benefit of the remaining wheels being transferred from Germany to Poland, improved capacity utilization in Europe and structural cost initiatives that we announced in the fourth quarter last year.

The results of these initiatives represent a step change improvement in our cost structure and profitability. Slide six highlights our progress on the initiative we announced since 2023, closing the margin gap between our two regions, North America and Europe. I am pleased to share with you that we have now achieved this goal despite lower industry production. With our European manufacturing operations now consolidated in Poland, margins in Europe are now relatively in line with those in North America. I will also add that on a consolidated basis, adjusted EBITDA margin was in line with last year even with lower production volumes.

Turning to Slide seven, which highlights the multifaceted impact of tariffs on our business, favorable and unfavorable. First, the recent U. S. Tariffs on aluminum will have a neutral impact on Superior due to the past due arrangements we have with customers on all aluminum we purchase. Next, incremental tariffs on Chinese imports to The U.

S. As well as the potential tariffs on Chinese imports into Mexico both have a favorable impact on Superior as this action accelerates demand for U. S. MTA localized production, another advantage of our local for local footprint. Further, as for the two tariffs related to Europe, tariffs on European imports into The U.

S. Have a similar favorable impact on Superior as they accelerate European OEM efforts to localize wheel imports utilizing our local wheel production in North America. Further, the EU Commission announcement this week of increasing tariffs to almost 50% on Chinese wheels imported from Morocco into The EU have a similar favorable impact on Superior, making production at our Poland facilities more attractive for OEMs. This localized production in Europe and in North America positions us favorably compared to other suppliers. I will also note that our readily available production capacity in both regions position us to benefit from short term localization efforts.

Moving down the slide. The Trump administration’s announcement this week of duties on imports from Mexico has a far reaching impact on the entire automotive industry in North America given the integration between the two countries. The industry, suppliers and OEMs will not be able to bear these costs and ultimately will pass these on to the consumer. The impact of this on industry vehicle production remains unclear. I will note that the Mexico tariffs could potentially have an impact on less than 20% of our North America production.

Here, our expectation is that these costs will be passed on to our customers. In summary, recent tariff actions in both regions have a multifaceted impact on Superior, potentially favorable and unfavorable. We are closely monitoring this fluid situation and will update our financial outlook accordingly as we gain more clarity. Moving on to Slide eight, which highlights our company’s performance since 2019. The key takeaway here, the superior team has delivered exceptional, consistent execution despite the many curveballs we face, including declining industry volumes, COVID, microchips and exponential inflationary pressures.

Our focus on our differentiated technology and delivering lighter and larger renewable premium finishes has consistently enabled us to outgrow the market. At the same time, our team responded to industry disruptions in the past few years with absolute focus on cost discipline, executing strategic restructuring initiatives and successfully addressing product pricing. The consistent adjusted EBITDA margins despite the challenging production environment is a testament to this effort. Slide nine highlights our key launches in 2024, which continue to drive growth. Larger and lighter vehicle premium finishes continue to make up a larger proportion of our launches.

Our continued focus on delivering differentiated technologies is a key driver in the 33% content per wheel growth since 2019. Turning to Slide 10. Looking ahead, we remain focused on our value creation roadmap, which we laid out several years ago. We now have a differentiated foundation, the powerful combination of our 100% low cost manufacturing footprint and our comprehensive portfolio of premier technologies. Both are unmatched in industry, giving superior a significant competitive edge.

With our footprint transformation from fleet, we are focused on operational excellence and leveraging our differentiated portfolio to drive long term profitable growth. Moving on to Slide 11, which highlights our outlook for the year. As the industry continues to face production headwinds and rising input costs, we expect global auto production to decline approximately 4% in 2025 compared to 2024. Our financial outlook, by the way, does not include assumptions on the net cost of tariffs. For the full year, we are guiding adjusted EBITDA in the range of $160,000,000 to $180,000,000 reflecting the benefits of our European transformation and other cost saving actions.

This represents a 16% growth in earnings. We also expect to generate approximately $110,000,000 to $130,000,000 of unlevered free cash flow. Dan will provide more details on our outlook in a moment. I will now turn the call over to Dan to review our financial results in more detail. Dan?

Dan Lee, Senior Vice President and CFO, Superior Industries: Thank you, Manji. Beginning on Slide thirteen, fourth quarter and full year ’20 ’20 ’4 financial summary. Net sales for the fourth quarter was $310,000,000 compared to the March in the prior year period. For the full year, net sales were $1,300,000,000 compared to $1,400,000,000 last year. Fourth quarter adjusted EBITDA was $35,000,000 The associated margin expressed as a percentage of value added sales was 21.

And for the full year, adjusted EBITDA was $146,000,000 with a margin of 21%. I will provide color on this in the upcoming pages. Net loss was $10,000,000 for the fourth quarter and $78,000,000 for the year. The fourth quarter twenty twenty four year over year sales bridge is on Slide 14. Value added sales were down approximately $1,000,000 compared to the prior year quarter, primarily driven by lower unit sales, partially offset by favorable inflation, recoveries and mix.

On Slide 15, we have the full 2024 year over year sales bridge. As you can see for the year, value added sales were down $57,000,000 which was largely due to lower unit sales and lumpy price recoveries, partially offset by a favorable product mix. In addition, the lower cost of aluminum led to a $61,000,000 decrease in net sales as aluminum costs were passed through to customers. On Slide 16 is the fourth quarter twenty twenty four year over year adjusted EBITDA bridge. Adjusted EBITDA for the quarter increased to $35,000,000 compared to $23,000,000 in the prior year period.

The adjusted EBITDA margin for the quarter was 21% compared to 14% in the prior year period. This increase was mostly due to enhanced cost performance from both regions representing both operational and structural improvements. The impact of metal timing and product mix partially offset by lower unit sales. Slide 17 shows the full year 2024 year over year adjusted EBITDA bridge. Adjusted EBITDA for the year was down $13,000,000 to $146,000,000 Importantly, despite lower full year sales, we delivered adjusted EBITDA margin of 21%, which was in line with the prior year.

The year over year adjusted EBITDA decline and This was partially offset by favorable product mix, the impact of metal timing, as well as enhanced productivity and lower cost structure as a result of our cost optimization efforts. An overview of the company’s fourth quarter and full year 2024 unlevered free cash flow is on Slide 18. Cash provided by operating activities was $26,000,000 for the quarter compared to $44,000,000 in the prior year period. The decrease in cash provided by operating activities was driven by higher working capital, partially offset by improved operating performance in the fourth quarter. Capital expenditure in the fourth quarter was $7,000,000 compared to the $12,000,000 in the prior year period, reflecting our successful efforts to reduce capital intensity of the business.

There were no cash payments to non net financing activities for the fourth quarter compared to $7,000,000 in the prior year due to timing of dividend payments. Unlevered free cash flow in the quarter was $36,000,000 compared to the $50,000,000 in the prior year period. The decrease in unlevered free cash flow was primarily driven by higher working capital, partially offset by improving operating profitability and lower capital expenditures. For the full year, cash provided by operating activities was $18,000,000 compared to $64,000,000 in the prior year. Higher working capital and lower operating profitability were the primary driver for the full year variance.

Net cash used in investing activities in 2024 was down $18,000,000 compared to the full year 2023, driven largely by our successful efforts to reduce the capital intensity of the business. For the full year, cash payment for non debt financing activities totaled $5,000,000 a decrease of $12,000,000 for 2023, due primarily to timing of dividend payments. For the full year, unlevered free cash flow was $55,000,000 including $7,000,000 of refinancing fees compared to unlevered free cash flow of $80,000,000 in the prior period. The variance was primarily driven by higher working capital, lower operating profitability and refinancing fees, partially offset by lower capital expenditures. An overview of the company’s capital structure as of 12/31/2024, can be found on Slide 19.

Total cash on the balance sheet as of year end was $40,000,000 and we had zero drawn on our $60,000,000 revolver credit facility. Total debt at year end was $520,000,000 down $118,000,000 compared to 12/31/2023. Superior’s debt maturity profile as of 12/31/2024 is on Slide 20. As previously announced, we successfully completed our debt refinancing in 2024, attracting five twenty million dollars in new capital and extending our new term loan facility maturity to 2028. This strategic move strengthens our balance sheet and improves our financial flexibility, positioning us for long term growth.

The full year 2025 financial outlook is on Page 21. For the full year 2025, we expect net sales to be in the range of $1,300,000,000 to $1,400,000,000 and value added sales in the range of $650,000,000 to $700,000,000 The sales reflects the realization of the full impact of the transferred wheel from Germany to Poland and light vehicle production in our markets generally consistent with IHS forecast. We expect adjusted EBITDA of $160,000,000 to $180,000,000 The improved EBITDA midpoint in 2025 is driven by realizing the benefit of the additional remaining wheel that transferred from Germany to Poland and the cost reduction initiatives that were announced in Q4. ’20 ’20 ’5 unlevered free cash flow is expected to be in the range of $110,000,000 to $130,000,000 highlighting the cash generating power of our enterprise driven by improved profitability, improved working capital and lower cash costs related to restructuring. This range considers the advanced discussions we are currently having regarding liquidity with our lenders.

Finally, we expect $35,000,000 in capital expenditures as we strategically invest in our business, specifically targeting additional automation to drive additional cost reduction. We model a 20% to 30% effective tax rate to 2025. Note that the outlook that we are providing today does not represent the impact of the dynamic geopolitical environment regarding tariffs, which as described by Magy, could represent both headwinds and tailwinds as all the details unfold. In conclusion, I want to thank the Superior team for their hard work and commitment in 2024. We achieved several critical milestones this year, positioning us strongly for future growth and cash generation.

Our focus remains on further strengthening our financial profile and leveraging our unmatched portfolio brands and local for local footprint to deliver sustained growth and enhance shareholder value. This concludes our prepared remarks. I want to thank everyone for joining us today. Manji and I are happy to take questions.

Audrey, Conference Operator: Your first question comes from the line of Michael Ward of Freedom Capital. Please go ahead.

Michael Ward, Analyst, Freedom Capital: Majdi, on that chart on Page seven, what implications that have for capacity both in Europe and in North America? I thought you’re pretty tight on capacity given like kind of the business you have in place. How much flexibility do you have with capacity as far as bumping it up if you had opportunities to pick up some share?

Manji Abulapan, President and CEO, Superior Industries: Good morning, Mike. Thanks for joining. Yes, So listen, I think you may be referring to the period when we were making the transfer of those wheels, and when we exited our German operations and we transferred the wheels to Poland. Where we’re at today, Mike, we have excess capacity in both regions and we’re highlighting that because it’s really turning out to be a great asset. We’ve made certain investments that improve bottlenecks.

So right now, we have about 20% excess capacity, both in Europe and in Mexico. And maybe in a bit, I’ll tell you about some recent developments where because of all these geopolitical headwinds on tariffs, we’re in advanced discussions with many customers, both in Europe and in North America and Mexico as well to absorb short term business. If you recall last time, we talked about a very quick win with the Japanese OEM back in November that is going in production actually as we speak. And we have a recent win here a couple of weeks ago with a customer that is totally dependent on China imports where they want us to start production in a couple of months. So you asked a very important question.

We do have capacity and we think it’s going to turn out very well for us.

Audrey, Conference Operator: Your next question comes from the line of Gary Prestopino of Barrington Research. Please go ahead.

: Good morning, Dan and Magi. How are you guys doing? Good. Good. I just want to say given what you guys have been facing here and what you’ve done with the company, you’ve just done sensational work and hopefully this is going to start getting reflected in the value of the stock.

I have several questions and I don’t know if I’m going to be able to ask them without getting half to get back in the queue. But first of all, you’re talking about your guidance really on based on slightly negative to flat units in North America and Europe, slightly negative units. And I believe there was a slide there, you must have said may have said something that IHS is predicting 4% decline in unit production. I assume that’s in your markets for 2025. So is some of that discrepancy, if I’m correct in that assumption, due to the fact of new business wins and then what you’re anticipating in Europe from the tariffs on wheels from Morocco to Europe?

Can you just explain that?

Manji Abulapan, President and CEO, Superior Industries: Yes. Let me answer the market part of your question. So the view is the market combined in North America and Europe will be down about 4%, Gary. Europe is going to have a tough year, so Europe is about 6%. I’m giving you IHS numbers.

And North America is going to be down 2%. Actually, the first quarter is going to be very challenging. Europe is going to be down double digits, Gary. Now from our perspective, we’re guiding slightly ahead of market and you really nailed it. So we have a couple of things going on in Europe.

We have good mix and we also have a segment of our business, which is in the aftermarket. Recall we talked about it last year that continues to deliver solid growth. And in North America, we finished the year North America quite strong, significantly ahead of market.

: So as

Manji Abulapan, President and CEO, Superior Industries: we go into 2025, we will steady state with some of these programs. But we do have a couple of, I call it, short term wins here. And the one that I mentioned when I was talking to Mike, they are going to be in production. So we expect, in the guide, we expect both regions because of what I just described to perform ahead of market. But what we don’t have, Gary, in the guide is what I talked about earlier, very early in my remarks, whereby because of our local footprint, because of our immediately available capacity, we are in advanced dialogues with a lot of customers for additional localization business and that is short term.

So we could be looking at additional business that would go to production even in 2025 that is not expected and all that.

Dan Lee, Senior Vice President and CFO, Superior Industries: Yes. Gary, good morning. There’s please remember in our comments that there’s some volume related to the transfer of wheels from Germany to Poland. We only saw a portion of that in 2024. We expect to see the balance of that in 2025, which also is offsetting some of the IHS volume decline.

: Okay. So then and then just a follow on on that. When you’re talking about the short term business wins, is that when you sign up someone like that, that maybe had been, let’s just say hypothetically using a Chinese manufacturer and they come to you and say, okay, we want you to start producing wheels. I mean, how long is that how long are you making them or requiring them to sign a contract for? This tariff that you’re doing

Manji Abulapan, President and CEO, Superior Industries: I’m sorry. Gary, yes, Gary, it’s a good question. And I need to define my use of the word short term win. What I’m referring to is in the automotive industry, as you know, we work on a three year cycle, right? So we will do something today, we launch it in two point five years.

I’m referring to short term that we have to go into SOB very quickly, all hands on deck. Normally, you are not able to do that in three to four months. But because we have the existing capacity and frankly, our team has done a few of these now, they know how to turn on a dime and start production in six months. To your question, all these contracts, you can disregard the word use of short term. All these contracts are long term contracts, they’re north of five years, each one of them.

: Okay, great. All right, I’ll just get back in the queue.

Manji Abulapan, President and CEO, Superior Industries: Thank you.

Audrey, Conference Operator: Your next question comes from the line of Michael Ward of Freedom Capital. Please go ahead.

Michael Ward, Analyst, Freedom Capital: Thanks again everyone. Dan, I wonder if we could focus a little bit on the moving items on the cash flow side. The timing of the preferred dividends you mentioned working capital is an item I think that comes back in 1Q. And then as it relates to the preferreds, is there the stop that date in September, can that be extended? And can you give us any color on what’s happening with the potential agreement on that side?

Dan Lee, Senior Vice President and CFO, Superior Industries: So for the preferred, number one, the dividends, we are picking the dividends, as you know already. That’s what the timing is related to that. In terms of September, and obviously it’s in our note in Note 11 in the K. But what we’re planning on doing clearly it’s one, it’s an optional redemption. That’s number one.

And number two, that redemption is contingent on the company’s ability to pay the proceeds.

Michael Ward, Analyst, Freedom Capital: Can you repeat that? I didn’t quite follow that.

Dan Lee, Senior Vice President and CFO, Superior Industries: It’s an optional redemption, but that redemption is at the discretion of the Board. To approve the payment and to approve the payment, we have to be able to fund the payment.

Michael Ward, Analyst, Freedom Capital: Okay.

Dan Lee, Senior Vice President and CFO, Superior Industries: Does that make sense?

Michael Ward, Analyst, Freedom Capital: I think so.

Dan Lee, Senior Vice President and CFO, Superior Industries: We have to have the ability to pay.

Michael Ward, Analyst, Freedom Capital: It’s in the K. Okay. You have to have the ability to pay it. Okay. And that’s in the K at node 11 is what you’re referring to?

Dan Lee, Senior Vice President and CFO, Superior Industries: Yes.

Michael Ward, Analyst, Freedom Capital: Okay.

Manji Abulapan, President and CEO, Superior Industries: Perfect.

Michael Ward, Analyst, Freedom Capital: Are they going to shut me off or do I have another question?

Manji Abulapan, President and CEO, Superior Industries: Go ahead, Mike.

Michael Ward, Analyst, Freedom Capital: Okay. Go ahead. On the Majd, you mentioned something about 20% exposure with the Mexico. Can you define that? I mean, how was that?

If you’re exporting wheels.

Manji Abulapan, President and CEO, Superior Industries: I’m happy to do that. What I was referring to is our INCOTERMS on our North America production, which as you know, all the wheels we produce in North America are done in our Porsche well plants. On 80% of the production, the encoderms are such that our customers pick up the wheels from our plants and they are the importer of records. That’s what I mean by that. Okay.

Oh, I see. Okay. Okay. And how will customers, which is less than 20% of my production, actually far less than that, but we want to be conservative, where we have we’re having dialogues, we’ll engage with them. Everybody in the industry, as you know, is engaged with customers.

The industry does not absorb this. But our exposure is kind of unique. It’s far less than the usual, I would say.

Michael Ward, Analyst, Freedom Capital: Yes. I think is it unusual that the customer would pick the wheels up from your plant

Manji Abulapan, President and CEO, Superior Industries: rather than you deliver them? I think it depends on the commodity area. I think it is less common. I would say it’s less common, yes.

Michael Ward, Analyst, Freedom Capital: Okay, very good. Thank you very much.

Dan Lee, Senior Vice President and CFO, Superior Industries: Hey, Mike, sorry, the correction, it’s Note 10. Note 10,

Michael Ward, Analyst, Freedom Capital: great. Okay, and that will be out later today? Yes. Awesome. Thank you.

Audrey, Conference Operator: Your next question comes from the line of Guarrestupino of Barrington Research. Please go ahead.

: Thanks guys. Hey Dan, could you maybe just go over some of the covenant numbers in terms of leverage ratios that you have with the new capital structure?

Dan Lee, Senior Vice President and CFO, Superior Industries: Sure. The covenant ratio is 3.75 Q4 and in Q1, and then the ratio drops to 3.5 at the end of Q2, and then it cold and flat.

: Right. And then that’s on adjusted EBITDA plus stock comp. So you’re adding back stock comp in there?

Michael Ward, Analyst, Freedom Capital: Yes.

: Okay. And there’s nothing in there that deals with the preferred in any way, shape or form. So it’s the debts been delinquent from the preferred, correct?

Michael Ward, Analyst, Freedom Capital: Correct.

: Okay. All right. Thank you.

Audrey, Conference Operator: That ends our Q and A session. We appreciate your participation. I will now turn the call back over to Majdi Abulaban for closing remarks. Please go ahead.

Manji Abulapan, President and CEO, Superior Industries: Thank you, Arjun. Before we conclude today’s call, I want to emphasize that we’re absolutely excited about where we’re at. We have a business that is fundamentally competitively advantaged in many ways and now geopolitical localization tailwinds are in our direction. All the restructuring and all the heavy lifting is behind us. We expect our team’s hard work to pay dividend as we highlighted in our guide.

I do want to thank the entire Superior team for putting our company in this position. Thank you for joining our call today.

Audrey, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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