Superior Industries International, Inc. SUP reported fourth-quarter 2014 adjusted earnings of 21 cents per share, surpassing the Zacks Consensus Estimate of 15 cents. However, earnings per share decreased 8.7% from 23 cents recorded in the comparable quarter of 2013. Meanwhile, net income declined 10.9% to $5.7 million from $6.4 million in the year-ago quarter.
Including special items, Superior Industries reported net income of $1.4 million, or 5 cents per share, compared with $6.4 million, or 23 cents per share year ago. The company’s fourth-quarter 2014 results were affected by expenses associated with the closure of the Rogers, AR manufacturing facility, the sales of aircraft and impairment of an investment in an unconsolidated subsidiary located in India.
Revenues for the quarter decreased 3% year over year to $186.7 million, while surpassing the Zacks Consensus Estimate of $172 million. The decline resulted from lower volume and the adverse impact of product mix, partially offset by higher aluminum prices. Unit shipments decreased to 2.7 million from 2.9 million units recorded in the prior-year quarter.
Gross profit decreased 39.2% to $11.5 million (6% of sales) from $18.9 million (10% of sales) in the prior-year quarter. The decline was due to lower unit shipments and costs related to the closure of the Rogers facility, partially offset by decline in labor and benefit, maintenance and supply costs.
Selling, general and administrative expenses increased to $7.1 million (3.8% of sales) in the quarter from $6.9 million (3.6% of sales) in the prior-year quarter. The increase was due the 2013 recognition of a $700,000 gain from land contributed to the company by the Mexican government, partially offset by separation costs and the 2014 hike in depreciation and legal costs.
Operating loss was $4.4 million compared with operating income of $12 million a year ago. The decline was due to a decrease in gross profit.
2014 Performance
Superior Industries’ adjusted earnings decreased 21.7% to 65 cents per share for full-year 2014 from 83 cents in 2013, while exceeding the Zacks Consensus Estimate of 58 cents.
Revenues for full-year 2014 dropped 6% to $745.4 million from $789.6 million in 2013. However, revenues surpassed the Zacks Consensus Estimate of $731 million.
Capital Deployment
In early third-quarter 2014, Superior Industries completed the repurchase of $30 million worth of shares under its previously announced repurchase program. Subsequent to the closure of the third quarter on Oct 14, 2014, the company’s board of directors approved a new share repurchase program of up to $30 million worth of shares.
During the fourth quarter, Superior Industries announced the closing of a $100 million revolving credit facility. The proceeds will be used for general corporate purposes, including future investment opportunities.
Financial Details
As of Dec 28, 2014, Superior Industries had a working capital of $204 million, including cash, cash equivalents and short-term investments of $66.2 million. This compared unfavorably with a working capital of $284.8 million, including cash, cash equivalents and short-term investments of $203.1 million as of Dec 29, 2013.
Outlook
In 2015, Superior Industries expects to record better performance than 2014, based on increased production at the new facility in Mexico. It intends to achieve full capacity at the facility by the end of 2015. The company anticipates that shipment volumes will improve by the end of the year. Moreover, the company is focusing on operational excellence in order to enhance its competitive position.
In 2015, Superior Industries expects net sales to be in the range of $725–$800 million. Earnings before interest tax depreciation and amortization (EBITDA) margins are expected to increase by 100–200 basis points. Capital expenditures will be around $40 million, significantly lower than that incurred in 2014 as last year the company had invested in the new manufacturing plant in Mexico. Working capital will be around $10 million.
Superior Industries sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other well-ranked automobile stocks include Allison Transmission Holdings, Inc. ALSN, American Axle & Manufacturing Holdings Inc. AXL and Wabash National Corp. WNC, all sporting a Zacks Rank #1.
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