Writedown causes huge loss at Superior Industries

SOUTHFIELD—The aluminum wheel manufacturer Superior Industries International Inc. reported a loss of $190.1 million or $7.84 a share in the first quarter of 2020, compared to net income of $2 million or 24 cents a share in the first quarter of 2019.

The loss was caused by a one-time, non-cash charge of $194 million to write down the valuation of “goodwill and indefinite-lived intangible assets,” or the value on its books of assets in excess of their actual cash value, such as other businesses purchased.

The company said the writedown was prompted by the effect of the coronavirus pandemic on its business.

Revenue was $301.1 million, down from $357.7 million in the first quarter of 2019, as units shipped fell to 4.3 million from 5 million a year earlier.

“Overall, despite substantial declines in volume related to COVID-19, we delivered margin improvement year-over-year while leveraging the secular trends towards higher content wheels,” said Superior president and CEO Majdi Abulaban. “As the COVID-19 crisis took shape late in the quarter, we immediately took aggressive actions to ensure the health and safety of our employees, align costs to the substantial decline in OEM production, and enhance our cash and liquidity position. As production resumes, we are working closely with customers and suppliers to efficiently manage the restart and ramp-up to ensure successful execution of this process. Our focus has been and remains on the safety of our employees, delivering quality to our customers, and managing our cash flow and liquidity.”

As auto assembly plants closed down during the quarter due to the pandemic, Superior temporarily ceased production at all its plants by early April. In addition, the company has taken multiple actions to reduce costs and bolster liquidity, including reductions in compensation and workforce, temporary furloughs, reduction in third-party spending, and drawdowns on revolving credit facilities. The company is leveraging government programs as applicable, such as participating in the German short-time work program and applying for a €30 million low-cost loan program in Germany, which is currently under review.

As of May 8, most automakers’ plants in Europe have reopened and many of the facilities in North America are expected to open throughout May. Superior has reopened three of its four plants in Europe and expects to reopen the fourth in June based on demand. In North America, the company anticipates reopening its facilities in the coming weeks in line with production demand and finished goods levels. In both regions, Superior is opening facilities with identified safety precautions and in accordance with local government requirements.

Superior also reported a figure for “adjusted earnings before interest, taxes, depreciation and amortization” of $40 million in the quarter, down from $43 million in the first quarter of 2019. This figure excludes the goodwill impairment charge, acquisition costs, restructuring costs, along with income tax, depreciation, amortization, and factoring fees.

To listen to a conference call discussing these results, visit www.supind.com.

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