SOUTHFIELD—Superior Industries International Inc. (NYSE: SUP), the supplier of aluminum wheels to the transportation industry, announced that it had resumed production at all its plants following the suspension of production in late March and early April due to the COVID-19 pandemic.
To ensure the well-being of its employees, company officials say they are following a Safe Work Playbook, which includes expanded cleaning and sanitization, measures to ensure social distancing, distribution of personal protective equipment in line with government requirements, and daily temperature checks, among other activities.
While Superior is experiencing strong demand from its customers in both North America, specifically on pickup truck and SUV platforms, and in Europe, the company continues to extend and expand cost reduction initiatives to align costs to the lower production environment. In total, Superior has executed temporary and permanent cost reductions including furloughs, wage reductions, temporary facility closures, elimination of merit increases, reduced travel, personnel restructurings, and use of government subsidies where available. These cost initiatives are expected to benefit 2020 results by approximately $40 million.
Further, Superior is currently using, and may use again, selective, temporary facility closures to efficiently balance capacity with production costs and inventory levels. In addition to these cost reductions, the company is taking other measures to improve cash flow through targeted working capital initiatives and by reducing capital expenditures.
“Superior, along with the entire automotive industry, has faced an unprecedented operating environment over the last several months, said Superior president and CEO Majdi Abulaban. “However, as an organization, our strong performance in the first quarter along with the actions we have taken during the second quarter to enhance our liquidity and financial profile, position us well as we enter the second half of 2020. We continue to focus our efforts on 1) ensuring the health and safety of our employees, 2) sustaining our liquidity position, 3) managing costs to current industry production levels, and 4) utilizing our production capacity efficiently. I remain positive regarding our ability to safely and efficiently adapt our business to meet customer demand as industry production normalizes.”
Industry production for the second quarter of 2020 is anticipated to decline by approximately 70 percent in North America and Europe compared to the same period in 2019. Based on Superior’s current releases, the Company anticipates its unit shipments will decline by approximately 60 percent for the second quarter, including expectations for strong shipments in June. Superior’s second quarter financial results are expected to be negatively impacted by lower unit shipments. Accordingly, for the second quarter of 2020, Superior anticipates net income to be negative and adjusted earnings before interest, taxes, depreciation and amortization to be slightly negative.
At the end of the second quarter of 2020, Superior expects net debt to be between $610 million and $630 million and total available liquidity, including cash and available amounts under revolving credit facilities to be between $210 million and $230 million. Superior remains in full compliance with all lending covenants and based on various outlook scenarios, does not anticipate any issues meeting the covenants under the company’s various lending arrangements.
More at www.supind.com.