Superior Industries Reports First Quarter Results
VAN NUYS, Calif.--May 4, 2006--Superior Industries International, Inc. today announced financial results for the first quarter of 2006 that were in line with management's previous guidance."Superior's first quarter results reflected the economic pressures of the 'big 3' facing North American automotive industry suppliers today -- reduced vehicle build schedules, lower capacity utilization, and weak global pricing. However, we do not believe that these results are indicative of what Superior can achieve in the future," said President and Chief Executive Officer Steven Borick.
"We are moving forward with the cost reduction and efficiency enhancement programs that are the keys to restoring our long-term growth and enhancing shareholder value. We have announced significant steps to reduce or eliminate high-cost capacity in the U.S. and expand our world-competitive operations in Mexico. We expect to begin manufacturing cast aluminum wheels at our third facility in Mexico this summer and hope to achieve full-volume production in 2007. We are winning new and replacement wheel business, and investing in automation and new manufacturing technologies that are widening the gap between Superior and our competitors in North America. Our plan is sound, and we have the financial, technical and management resources to implement it successfully," Borick said.
First Quarter Results
For the three months ended March 31, 2006, revenue decreased 9% to $183,525,000 from $202,144,000 for the first quarter of 2005. Unit wheel shipments decreased 13%.
Gross margin declined to 2.3% of revenue for this year's first quarter compared to 8.5% for the first quarter of 2005. Cost of sales for the first quarter of 2006 was impacted by low capacity utilization in all of our plants caused by the 13% reduction in unit shipments referred to above. Other factors impacting gross profit were changes in mix, preproduction costs of $1.4 million related to our third facility in Mexico, approximately $1.0 million in accelerated depreciation expense related to the previously announced downsizing of the Company's manufacturing operation in Van Nuys, California and higher utility costs.
SG&A expenses increased by $500,000 related to new accounting rules that require non-cash stock-based compensation to be expensed for this year's first quarter.
The tax benefit in first quarter of 2006 included a tax provision of $300,000 or an effective tax rate of 36.2%, which was offset by a net reduction of tax reserves totaling $900,000, due to the expiration of a tax statute. The impact of this tax reserve reduction was an increase in earnings per diluted share of $0.03.
Accordingly, income from continuing operations for the first quarter of 2006 declined to $1,436,000, or $0.05 per diluted share, compared to income from continuing operations of $10,973,000, or $0.41 per diluted share, for the first quarter of 2005.
The net loss from the Company's discontinued suspension components business was $326,000, or $0.01 per diluted share, compared to a net loss of $2,307,000, or $0.09 per diluted share, for the same period of 2005. The improvement in discontinued operations was due to a reduction of $1.1 million of depreciation expense related to assets written off at December 31, 2005 and to net reimbursable component development costs improving by $1.1 million in the current quarter.
Net income for the first quarter of 2006 was $1,110,000, or $0.04 per diluted share. This compares to net income for the first quarter of 2005 of $9,891,000, or $0.37 per share, which included income for the cumulative effect of change in accounting principle of $1,225,000, or $0.05 per diluted share.
At March 31, 2006, working capital was $238,900,000, including cash and short-term investments of $104,800,000. Superior has no debt. "With our strong and highly liquid balance sheet, we have the financial resources we need to achieve our objectives," Borick said.
About Superior Industries
Superior supplies aluminum wheels and other aluminum automotive components to Ford, General Motors, DaimlerChrysler, Audi, BMW, Isuzu, Jaguar, Land Rover, Mazda, MG Rover, Mitsubishi, Nissan, Subaru, Toyota, and Volkswagen. For additional information, visit www.supind.com.
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Consolidated Statements of Income (Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended
March 31
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2006 2005
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Net Sales $ 183,525 $ 202,144
Costs and Expenses
Cost of Sales 179,302 184,935
Selling and Administrative
Expenses 5,395 5,058
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Income (Loss) From Operations (1,172) 12,151
Equity in Earnings of Joint
Ventures 493 1,402
Interest Income, net 1,488 1,125
Other Income (Expense), net 9 (59)
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Income from Continuing Operations
Before Income Taxes 818 14,619
Income Tax Benefit (Provision) 618 (3,646)
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Income from Continuing Operations $ 1,436 $ 10,973
Discontinued Operations, net of
taxes (326) (2,307)
Cumulative Effect of Change in
Accounting Principle - 1,225
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Net Income $ 1,110 $ 9,891
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Basic Earnings (Loss) Per Share:
Net Income from Continuing
Operations $ 0.05 $ 0.41
Discontinued Operations (0.01) (0.09)
Cumulative Effect of Change in
Accounting Principle - 0.05
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Net Income $ 0.04 $ 0.37
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Fully Diluted Earnings (Loss) Per
Share:
Net Income from Continuing
Operations $ 0.05 $ 0.41
Discontinued Operations (0.01) (0.09)
Cumulative Effect of Change in
Accounting Principle - 0.05
----------------------------------------------------------------------
Net Income $ 0.04 $ 0.37
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Weighted Average and Equivalent
Shares Outstanding for Earnings Per
Share:
Basic 26,610,000 26,625,000
Diluted 26,613,000 26,642,000
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
Consolidated Balance Sheets (Unaudited)
(Dollars in Thousands)
March 31
2006 2005
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Current Assets $ 371,059 $ 362,458
Property, Plant and Equipment, net 299,016 281,486
Investments and Other Assets 66,971 103,317
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$ 737,046 $ 747,261
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Current Liabilities $ 132,171 $ 85,838
Long-Term Liabilities 31,239 52,718
Shareholders' Equity 573,636 608,705
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$ 737,046 $ 747,261
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