First Quarter 2016 Highlights:
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Q1 EPS of $0.56, a 250.0% increase year-over-year
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Q1 wheel shipments of 3.2 million, a 25.3% increase year-over-year
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Q1 value-added sales of $102.3 million, a 24.4% increase
year-over-year
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Q1 adjusted EBITDA of $28.1 million, a 110.2% increase
year-over-year
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Q1 adjusted EBITDA as a percentage of value-added sales of 27.5%, a
1121 basis point improvement year-over-year
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$16.6 million of capital returned to shareholders through dividends
and stock repurchases during Q1
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2016 outlook reaffirmed
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Preliminary results of Superior’s 2016 Annual Meeting of
Shareholders indicate all eight of Superior’s director nominees
re-elected to the Company’s Board of Directors
Superior Industries International, Inc. (NYSE:SUP), the largest
manufacturer of aluminum wheels for passenger cars and light-duty
vehicles in North America, today reported financial results for the
first quarter ended March 27, 2016.
Don Stebbins, President and Chief Executive Officer, commented, “Our
results in the first quarter are encouraging and a testament to the
solid execution throughout the organization. The 25.3% increase in unit
volume was driven by strong growth in our passenger car shipments on top
of sustained increases in our light truck programs. In addition to
higher unit volumes, our improved adjusted EBITDA was driven by improved
cost performance, as we continued to benefit from the strategic changes
to our manufacturing footprint, higher volumes in our new facility in
Mexico, and greater efficiencies across our manufacturing platform.
These accomplishments would not be possible without the tireless efforts
of our employees, who are the core of Superior’s success. I would like
to thank them for all their hard work and continued dedication.”
First Quarter Results
For the first quarter of 2016, the Company reported net income of $14.5
million, or $0.56 per diluted share, compared to net income of $4.3
million, or $0.16 per diluted share for the first quarter of 2015. The
233.7% increase in net income was largely driven by higher shipment
volume as well as improved cost performance in the Company’s
manufacturing facilities, primarily driven by the new facility in Mexico
operating near full capacity in the first quarter of 2016, compared to
the ramp-up during the prior year period.
Value-added sales were $102.3 million for the first quarter of 2016, a
24.4% increase compared to the first quarter of 2015 primarily due to
higher unit shipments. Value-added sales are defined as net sales less
pass-through charges primarily for the value of aluminum. Wheel unit
shipments were 3.2 million in the first quarter of 2016, an increase of
25.3% compared to 2.5 million in the prior year period. Net sales for
the first quarter of 2016 increased 7.1% to $186.1 million from $173.7
million in the first quarter of 2015, driven primarily by higher unit
shipments partially offset by lower value for aluminum. See “Non-GAAP
Financial Measures” below and the reconciliation of consolidated net
sales to value-added sales in this press release.
Gross profit for the first quarter of 2016 increased 147.0% to $27.7
million, compared to $11.2 million in the prior year period. Gross
profit margin expanded 1350 basis points year-over-year to 27.1% of
value-added sales compared to 13.6% of value-added sales in the first
quarter of 2015. The increase in gross profit primarily reflects higher
unit shipments as well as improved cost performance in the Company’s
manufacturing facilities, mainly driven by the new facility in Mexico
operating near full capacity in the first quarter of 2016. Carrying
costs related to the previously closed plant included in gross profit in
the first quarter of 2016 were $0.6 million, compared to $1.9 million in
the same period last year.
Selling, general and administrative expenses were $9.0 million, or 8.8%
of value-added sales in the first quarter of 2016, compared to $7.6
million, or 9.2% of value-added sales in the prior year period. The
increase includes higher professional service expenses, primarily
related to corporate tax projects, the year-end audit and the timing of
proxy contest related costs, as well as higher compensation and accounts
receivable aging expenses. The comparison is also impacted by a $0.5
million gain on the sale of an idle warehouse facility in the first
quarter of 2015.
For the first quarter of 2016, income from operations was $18.7 million,
or 18.3% of value-added sales, an increase of $15.0 million compared to
operating income of $3.7 million, or 4.5% of value-added sales in the
prior year period.
The provision for income taxes for the first quarter of 2016 was $4.6
million, resulting in an effective tax rate of 24.0%. This compares to a
net tax benefit in the first quarter of 2015 of $0.8 million and an
effective tax rate of (21.3%), which reflects a reversal of tax reserves
in conjunction with the expiration of a tax statute.
Adjusted EBITDA, a non-GAAP measure, increased 110.2% to $28.1 million,
or 27.5% of value-added sales, for the first quarter of 2016. This
compares to $13.4 million, or 16.3% of value-added sales, in the first
quarter of 2015. See “Non-GAAP Financial Measures” below and the
reconciliation of net income to adjusted EBITDA in this press release.
Financial Position and Cash Flow
The Company reported net cash provided by operating activities of $16.0
million for the first quarter of 2016, compared to net cash used by
operating activities of $1.0 million in the same period last year. The
improvement resulted primarily from improved net earnings and lower
working capital aided by reduced cost for aluminum.
During the first quarter of 2016, the Company paid a quarterly dividend
payment of $0.18 per share. In addition, the Company repurchased 672,483
shares for a total of $11.9 million, a portion of which completed the
former $30.0 million stock repurchase program with the remainder coming
from the most recently approved $50.0 million stock repurchase program.
Fiscal year to date through April 26, 2016, the Company repurchased
712,039 shares for a total of $12.8 million.
2016 Outlook
Based on current economic trends and industry outlook, Superior
reaffirms its 2016 outlook provided on April 19, 2016.
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Superior expects value-added sales to be in the range of $380 million
to $395 million, driven by unit shipment growth of approximately 3% to
6% and favorable product mix. Value-added sales are defined as net
sales less pass-through charges, primarily for the value of aluminum.
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Adjusted EBITDA margin as a percentage of value-added sales is
expected to be in the range of 24.1% to 24.8%, an increase of 300
basis points to 370 basis points year-over-year.
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Working capital is expected to be a net source of funds.
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Capital expenditures are expected to be approximately $40 million.
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The effective tax rate is expected to be in the 25% to 27% range.
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Net sales are expected to be in the range of $690 million to $710
million and reflective of a lower assumption for aluminum prices as
compared to the Company’s full year 2016 outlook provided on January
14, 2016. Net sales include the value of aluminum and outsourced
process costs passed through to customers. As a percentage of net
sales, adjusted EBITDA margin is expected to be in the range of 13.3%
to 13.8%, an increase of 285 basis points to 335 basis points
year-over-year.
The Company’s outlook is based on IHS projections, which continue to
expect North American Light Vehicle production to increase by
approximately 4% to 18.2 million units in 2016.
Mr. Stebbins concluded, “Looking ahead, we are confident in our ability
to achieve our short-term 2016 objectives, as we continue to execute on
our strategic initiatives, driving higher levels of operating efficiency
throughout our business on solid unit volume growth, while positioning
the Company for long-term value creation for our shareholders.”
Preliminary Results of 2016 Annual Meeting
Based on a preliminary vote count provided by Superior’s proxy
solicitor, all eight of Superior’s director nominees; Michael R.
Bruynesteyn, Margaret S. Dano, Jack A. Hockema, Paul J. Humphries, James
S. McElya, Timothy C. McQuay, Donald J. Stebbins and Francisco S.
Uranga, were re-elected to Superior’s Board of Directors at the 2016
Annual Meeting of Shareholders held yesterday. Superior’s nominees
received overwhelming support from shareholders at the meeting where 90%
of Superior’s approximately 25.2 million outstanding shares were
represented. Final certified voting results are expected to be made
publicly available later this week. The final tabulation of results will
be completed by the independent tabulation and voting certification firm
IVS Associates, Inc., which served as the Independent Inspector of
Elections.
In addition, all other items of business conducted at the Annual Meeting
were either ratified or approved. Further details regarding the results
of the 2016 Annual Meeting of Shareholders will be contained in a
Current Report on Form 8-K that Superior will be subsequently filing
with the Securities and Exchange Commission (“SEC”) following receipt of
the final voting results. This filing will be available on the SEC’s web
site at www.sec.gov.
Copies will also be available on the Investor Relations section of
Superior’s website at www.supind.com.
Conference Call
Superior will host a conference call beginning at 8:30 AM ET on
Wednesday, April 27th, 2016. The conference call may be accessed by
dialing 866-249-6463 and using the required pass code 1804611. The live
conference call can also be accessed by logging into the Company’s
website at www.supind.com.
Interested parties are invited to listen to the webcast. In addition, a
presentation will be posted on the Company's website and referred to
during the conference call. The webcast replay will be available at the
same Internet address approximately one hour after the conclusion of the
conference call and will be archived for approximately one year.
During the conference call, the Company's management plans to review
operating results and discuss other financial and operating matters. In
addition, management may disclose material information in response to
questions posed by participants during the call.
About Superior Industries
Headquartered in Southfield, Michigan, Superior is the largest
manufacturer of aluminum wheels for passenger cars and light-duty
vehicles in North America. From its plants in the U.S. and Mexico, the
Company supplies aluminum wheels to the original equipment market. Major
customers include BMW, FCA, Ford, General Motors, Mazda, Nissan, Subaru,
Tesla, Toyota and Volkswagen. For more information, visit www.supind.com.
Non-GAAP Financial Information
In addition to the results reported in accordance with GAAP included
throughout this earnings release, this release refers to “Adjusted
EBITDA,” which we have defined as earnings before interest, income
taxes, depreciation, amortization, restructuring charges and plant
closure costs and impairments of long-lived assets and investments and
“Value-Added Sales,” which we define as net sales less pass-through
charges primarily for the value of aluminum.” Adjusted EBITDA as a
percentage of value-added sales is a key measure that is not calculated
according to GAAP. Adjusted EBITDA as a percentage of value-added sales
is defined as Adjusted EBITDA divided by value-added sales. See the
Non-GAAP Financial Measures section of this annual report for a
reconciliation of Adjusted EBITDA and value-added sales.
Management believes the non-GAAP financial measures used in this press
release are useful to management and may be useful to investors in their
analysis of the Company’s financial position and results of operations.
Further, management uses these non-GAAP financial measures for planning
and forecasting future periods. This non-GAAP financial information is
provided as additional information for investors and is not in
accordance with or an alternative to GAAP. These non-GAAP measures may
be different from similar measures used by other companies.
For reconciliations of Adjusted EBITDA and Value-Added Sales to the most
directly comparable financial measures calculated and presented in
accordance with GAAP, see the attached supplemental data pages which,
together with this press release, have been posted on the Company’s
website through the “Investors” link at www.supind.com.
We have not quantitatively reconciled differences between Valued-Added
Sales, EBITDA and EBITDA margins, as well as their corresponding GAAP
measures, presented in our 2016 Outlook, due to the inherent uncertainty
regarding variables affecting the comparison of these forward-looking
measures. The magnitude of these differences, however, may be
significant.
Forward-Looking Statements
This press release contains statements that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include all statements
that do not relate solely to historical or current facts and can
generally be identified by the use of future dates or words such as
"may," "should," "could," “will,” "expects," "seeks to," "anticipates,"
"plans," "believes," "estimates," "intends," "predicts," "projects,"
"potential" or "continue" or the negative of such terms and other
comparable terminology. These statements also include, but are not
limited to, the 2016 outlook and projections for reported net sales,
value-added sales, adjusted EBITDA and adjusted EBITDA margin, income
before income taxes, net income, the effective tax rate, capital
expenditures and the change in working capital, and the Company’s
strategic and operational initiatives, and are based on current
expectations, estimates, and projections about the Company's business
based, in part, on assumptions made by management. These statements are
not guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or
forecasted in such forward-looking statements due to numerous factors,
risks, and uncertainties discussed in the Company's Securities and
Exchange Commission filings and reports, including the Company's Annual
Report on Form 10-K and our reports from time to time filed with the
Securities and Exchange Commission. You are cautioned not to unduly rely
on such forward looking statements when evaluating the information
presented in this press release. Such forward-looking statements speak
only as of the date on which they are made and the Company does not
undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this release.
(Financial Tables Follow)
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
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Condensed Consolidated Statements of Operations (Unaudited)
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(Dollars in Thousands, Except Per Share Amounts)
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Three Months Ended
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March 27, 2016
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March 29, 2015
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Net Sales
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$
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186,065
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$
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173,729
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|
|
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|
|
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Cost of Sales
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|
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158,320
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|
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160,635
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Restructuring costs
|
|
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30
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|
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1,872
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|
|
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158,350
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|
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162,507
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Gross Profit
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27,715
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11,222
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Selling, General and Administrative Expenses
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8,993
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7,553
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Income From Operations
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18,722
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3,669
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Interest Income (Expense), net
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32
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85
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Other Income (Expense), net
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268
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(182)
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Income Before Income Taxes
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19,022
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3,572
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Income Tax Provision
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(4,558)
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762
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Net Income
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$
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14,464
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$
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4,334
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Earnings Per Share:
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Basic
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$
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0.56
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$
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0.16
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Diluted
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$
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0.56
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$
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0.16
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Weighted Average and Equivalent Shares Outstanding for Income Per
Share (in Thousands):
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Basic
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25,603
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26,860
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Diluted
|
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25,644
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26,951
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
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Condensed Consolidated Balance Sheets (Unaudited)
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(Dollars in Thousands)
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March 27, 2016
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December 27, 2015
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Current Assets
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$
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248,120
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$
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245,820
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Property, Plant and Equipment, net
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230,406
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234,646
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Investments and Other Assets
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61,498
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59,463
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Total Assets
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$
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540,024
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$
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539,929
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Current Liabilities
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$
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73,457
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$
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73,862
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Long-Term Liabilities
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54,758
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52,155
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Shareholders’ Equity
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411,809
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413,912
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Total Liabilities and Shareholders' Equity
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$
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540,024
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$
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539,929
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
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Non-GAAP Financial Measures
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(Dollars in Thousands)
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Value-Added Sales
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Three Months Ended
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March 27, 2016
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March 29, 2015
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Net Sales
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$
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186,065
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$
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173,729
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Less:
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Aluminum value and outside service providers
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(83,726)
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(91,466)
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Value-added sales
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$
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102,339
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$
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82,263
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Value-added sales is a key measure that is not calculated
according to GAAP. Value-added sales represent net sales less the
value of aluminum and services provided by OSP's that are included
in net sales. Arrangements with our customers allow us to pass on
changes in aluminum prices and OSP costs; therefore, fluctuations
in underlying aluminum price and the use of OSP's generally do not
directly impact our profitability. Accordingly, value-added sales
is worthy of being highlighted for the benefit of users of our
financial statements. Our intent is to allow users of the
financial statements to consider our net sales information both
with and without the aluminum and OSP cost components thereof.
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Three Months Ended
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Adjusted EBITDA
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March 27, 2016
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March 29, 2015
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Net Income
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$
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14464
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$
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4,334
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Adjusting Items:
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- Interest (income), net
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(32)
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(85)
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- Income tax provision (benefit)
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4,558
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(762)
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- Depreciation
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8,643
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|
|
8,528
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- Closure costs (excluding accelerated depreciation)
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|
|
469
|
|
|
1,355
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|
|
|
13,638
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|
|
9,036
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Adjusted EBITDA
|
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$
|
28,102
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$
|
13,370
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Adjusted EBITDA is a key measure that is not calculated according
to GAAP. Adjusted EBITDA is defined as earnings before interest
income and expense, income taxes, depreciation, amortization,
restructuring charges and other closure costs and impairments of
long-lived assets and investments. We use Adjusted EBITDA as an
important indicator of the operating performance of our
business. Adjusted EBITDA is used in our internal forecasts and
models when establishing internal operating budgets, supplementing
the financial results and forecasts reported to our Board of
Directors and evaluating short-term and long-term operating trends
in our operations. We believe the Adjusted EBITDA financial
measure assists in providing a more complete understanding of our
underlying operational measures to manage our business, to
evaluate our performance compared to prior periods and the
marketplace, and to establish operational goals. Adjusted EBITDA
is a non-GAAP financial measure and should not be considered in
isolation or as a substitute for financial information provided in
accordance with GAAP. This non-GAAP financial measure may not be
computed in the same manner as similarly titled measures used by
other companies.
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