Superior Industries International Inc

Good day and welcome to the Superior Industries fourth quarter and year end 2020 earnings teleconference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Troy Ford. Sir, please go ahead.

Thank you. Good morning, everyone, and welcome to our fourth quarter and full year 2020 earnings call. During our discussion today, we will be referring to our earnings presentation, which along with the earnings release is available on the investor section of Superior's website. I'm joined on the call by Majdi Aboulaban, our president and CEO, and Tim Trenary, our executive vice president and CFO. Before I turn the call over to Majdi, I would like to remind everyone that any forward-looking statements contained in this presentation or commented on today are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to slide two of this presentation for the full safe harbor statement and to the company's SEC filings including the company's current annual report on Form 10-K for a more complete discussion of forward-looking statements and risk factors. We will also be discussing various non-GAAP measures today. These non-GAAP measures exclude the impact of certain items and therefore are not calculated in accordance with U.S. GAAP. Reconciliations of these measures to the most directly comparable U.S. GAAP measures can be found in the appendix of this presentation. With that, I'll turn the call over to Majid to provide an update on our business.

Thanks, Troy, and good morning, everyone. Thank you for joining us today to review our fourth quarter and four-year results. First, I do hope that you and your families are staying safe and healthy during these challenging times. Before I start my presentation, a few words on my side. From my perspective at Superior, as we emerge from a very challenging year, we are absolutely excited. to have a business built for profitable growth as the industry recovers. We have been executing on our growth strategy, delivering and enabling portfolios while driving cost and cash discipline. So with that, I would like to take a few minutes to talk about our growth enablers before reviewing our financial results. Beginning on slide five, I am pleased to say that 2020 marked a third consecutive year growth above market for Superior, underscoring Superior's position as a premium wheel solutions provider. Fundamentally, we are seeing the acceleration of the secular trends for premium and lighter wheels, and this is driving more content in our business. Here you see some of our exciting launches in 2020. Our wheels on the GM full-size SUV, the new Ford Bronco Sport, BMW's X7 and the Mercedes S-Class. Our premium technology offerings on these vehicles, as well as on other platforms, is really our growth driver. As you can see on this page and the coming pages, our technology solutions are enabling all vehicle segments. More than ever, Consumers and OEMs have a tremendous opportunity to customize their vehicles today that did not exist too long ago. Moving on to slide six. The secular trends driving growth in our business do not stop with consumer preference and differentiation. They extend to enabling CO2 reductions through lightweighting and electrification. As highlighted on this slide, we continue to expand our presence in the EV segment, launching various wheel styles on key high-profile EV platforms. Here you see our wheels on Ford's iconic Mach-E and programs for leading in well-positioned European OEMs. As we discussed previously, we continue to demonstrate our position and relevance on both internal combustion engine and electric vehicle platforms, through new programs, and now through new launches. Moving on to slide seven. Throughout 2020, we've continued to expand our product portfolio. In addition to technologies we have discussed in the past, such as alulite, laser etching, and various light weighting processes, we launched several exciting new products. One such example is DecoTech, a unique, patent-pending technology. We also launched our thin-rim lightweighting process on the Porsche Cayenne Spyder. And last, our previously announced award-winning PVD product, a more environmentally-friendly alternative to a foam finish. This expanding portfolio of technologies is truly our enabler and differentiator in the marketplace. Before I move on to our financial results, I would like to pause on slide eight and say thank you to our team. The individual and collective effort was instrumental in responding to an unprecedented year. Really outstanding focus on safety, on cost, and on efficiency. Thank you. Now moving on to slide nine. I will review our financial and other operational highlights. As I mentioned earlier, We are excited about our position as we emerge from this crisis. We have a business built for profitable growth as we move into the recovery. We executed at the bottom of the cycle with cost and cash discipline and strengthened our balance sheets while investing in technology. During the fourth quarter, we grew value-added sales by 12%, outperforming the global market. Improved performance and restructuring delivered a 25% increase in adjusted EBITDA and expanded margins by 160 basis points. This is a culmination of our efforts in 2019 and our team's response to the COVID pandemic. We substantially reduced our net debt in 2020, ending the year with 491 million in net debt, the lowest level since the acquisition of the European operations and well ahead of our previous guidance. Further, In the face of the pandemic, we delivered 10% more free cash flow than the entire calendar year of 2019. As I discussed earlier, the secular trends for lightweighting and premium wheels are accelerating and driving our growth. During the quarter, our content per wheel increased 12% and our growth above market in value added sales was 11%. For the full year 2020, our growth above market was 7%. Impressively, 19-inch and larger wheels represented over 40% of our total shipments. We expect these trends to continue as we execute on new opportunities to meet customer demand for increased wheel content. In terms of operations, we have been very pleased with the success at ensuring our facilities are safe places to work. not only with respect to COVID, but also general safety. In fact, during the year, we achieved an industry best-in-class TRIR, a key safety metric. We also successfully managed through very volatile markets and customer conditions. In Q4, we navigated through mandated closures and capacity restrictions due to COVID in Mexico. There, we have 50% of our global manufacturing operations. These efforts enabled us to successfully support our customers while delivering improved margins. Further, we continue to execute on our strategy to leverage our know-how in Europe to support our European customers in North America. Our operations in Mexico are continuing to launch programs and deliver for BMW, for Audi, for VW, and Volvo, just to name a few. We are very pleased with the progress we achieved on these priorities. I will now address our current operating environment along with our 2021 outlook on slide 10. As noted on the left side of the chart, recovery for the broader automotive industry is well underway. While production levels in North America are rebounding more quickly than in Europe, we still anticipate overall production levels to be down from 2019. So more recovery opportunity still does exist. We expect the industry to be supported by several tailwinds in 2021, including low inventories that are customers in North America, the ongoing favorable shift towards premium product mix that we've discussed, and widespread distribution of the COVID vaccine. That said, we are cognizant that some challenges still exist, including the impact of the ongoing pandemic and the semiconductor shortages. Also of note, During the first quarter, all of our operations in Mexico were temporarily impacted by the cold weather power outage that disrupted Texas and North Mexico. We were able to serve our customers out of our finished goods inventory. We missed very, very limited shipments today, as some of our customers were also shut down. Tim will provide additional background on the financial impact when he reviews our guidance. With these expectations in mind, we will continue to focus on enhancing profitability and driving cash flow. For the full year 2021, we expect to deliver a range of $160 million to $180 million in adjusted EBITDA, along with $110 million to $130 million in cash flow from operations. These ranges contemplate the previously mentioned impact. Moving ahead to our value creation roadmap on slide 11, we continue to make progress on our long-term priorities and are well on our way into the second and third phases, operational excellence and revenue growth. We are focused on transformation of our business around a culture of lean and continuous improvement while expanding our customer base and portfolio to deliver revenue growth. These efforts will continue the momentum from 2020, solidifying our competitive position and moving us along this roadmap in 2021 and beyond. With that, I'll turn the call over to Tim. Tim?