Superior Industries International Inc

Good day and welcome to the Superior Industries first quarter 2022 earnings teleconference call. Today's call is being recorded and at this time I'd like to turn the call over to Clemens Densk. Please go ahead, sir.

Thanks, Anna. Good morning, everyone, and welcome to our first quarter earnings conference call. During our discussion today, we will be referring to our earnings presentation, which along with the earnings release is available on the investor relations section of Superior's website. I'm joined on the call by Majdi Aboulaban, our President and Chief Executive Officer, and Tim Trenary, our Executive Vice President and Chief Financial Officer. 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 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 US GAAP measures can be found in the appendix of this presentation. With that, I'll turn the call over to Marci to provide a portfolio and business update.

Thanks, Clemens, and thanks, everyone, for joining our call today to review our first quarter results. I will begin on slide five with the highlights. Our team delivered strong results, achieving solid revenue growth out of market coupled with strong profitability and cash generation. This while navigating through an incredibly challenging operating environment with lower volumes, production volatility, and continuing inflationary pressures. Most notable, we have been able to generate EBITDA and profit margins on par with pre-pandemic levels, and that is on lower volumes. Here, we have continued to collaborate with our customers and suppliers on price recoveries and cost reduction solutions to mitigate the impact of ever-persistent inflationary pressures. These results underscore both the operational strength of our teams, as well as our continued ability to capitalize on demand for premium wheels, extending our trajectory of growth above market and expanded content per wheel. Further, our performance this quarter resulted in significant cash flow from operations, supporting a decrease in net debt to $477 million, and enabled us to further invest in the business. Slide 6 details industry production by region, specifically the significant industry declines in Europe, which was impacted by the Ukraine conflict. Despite these declines, we delivered 5% growth over market on a combined basis. We saw continued favorable mix during the quarter supported by increased adoption of lightweighting technologies and larger wheels with premium finishes. Slide seven summarizes our current operating environment. Reiterating my comments from the first slide, first quarter industry production levels fell another 10% compared to the first quarter last year. In fact, we continue to see many of the same challenges that impacted production in 2021, further exasperated by the conflict in Ukraine and a heightened inflationary environment. With that said, the strong tailwinds shown on the left side of the chart have supported our growth over market and expanded profitability against depressed industry production levels. Actually, Superior is incredibly well positioned to deliver earnings growth once Industry volumes begin to recover, and should this recovery begin earlier than expected, we anticipate substantial upside to our performance for the year. Moving on to slide eight, we continue to stay focused on our value creation roadmap through consistent execution on our operational excellence and profitable growth initiatives. Our team's commercial discipline has been critical in working closely with customers to recover inflationary cost increases through price, while offsetting others by identifying cost reduction solutions. While we are pleased with the progress in the quarter, we clearly have more work ahead. At the same time, our procurement team has leveraged our longstanding relationship with our supply base to manage volatility and cost. The regional nature and diversified nature of our supply base has been a great asset for us. I do want to share with you a good example of the collaboration between our customers, suppliers, and our manufacturing teams, which is the increased use of recycled aluminum in our manufacturing processes. I would tell you that this type, this type of collaboration efforts on the customer and supplier front have been across the entire superior enterprise. And I am very proud of how our team has responded. Another challenging aspect of the quarter is the continued last minute volatility that our operating team have had to deal with. This is clearly more heightened in Europe with the Ukraine war. From a customer standpoint, we have focused on diligently planning volumes based on buying behaviors with the goal of offsetting order volatility and ensuring stable production levels. We are also engaging with customers on cost recoveries for extreme last minute production releases and with suppliers to mitigate disruption. Finally, Internally, we have enacted both short- and longer-term strategies, flexing labor costs while also driving structural enhancements through operational excellence and continuous improvement initiatives. In terms of profitable growth, Our product portfolio of differentiated technologies and capabilities has continued to enable us to capitalize on the macro trends driving increased demand for lightweighting technologies and for larger wheels with premium finishes. This is evident in our consistent growth over market over the last four years. The collective results of all of these actions is illustrated on slide nine. As I stated previously, despite a double digit decline in shipments since the first quarter of 2021, we have maintained strong EBITDA margins at pre-COVID levels, 26%, while meaningfully growing content per wheel. These results are also supported by the 12% growth in net sales, which reflect executing on contract terms and negotiating recoveries with customers. The collective effort demonstrated on this slide gives us incredible confidence in our ability to execute and to accelerate growth in a more normalized industry production environment. Moving on to slide 10 to highlight how our innovative products position Superior for success and help capture the secular tailwind supporting our growth. We have one of the most comprehensive portfolio of technologies in the industry, and the increased demand we are seeing for our premium offerings show we have the right breadth and mix to meet customer needs. Our launch highlights for the quarter further illustrate this point, with a range of our capabilities being utilized on both the Cadillac Lyric and Silverado platforms. Moving on to slide 11 to provide an update on our recent sustainability initiatives. On the environmental front, we are making progress on our R4 strategy as we work towards our goal to be carbon neutral by 2039. In 2021 alone, we were able to achieve a 9% reduction in our carbon footprint and expect to continue this trend through manufacturing enhancements and further development of environmentally sustainable capabilities. On the social front, we highlight our recent Day of Understanding event held across multiple locations and attended by the entire Superior team. This successful event focused on fostering diversity and inclusion within the workplace and featured guest speakers as well as interactive breakout sessions and training sessions. In addition to our day of understanding, we launched a fundraising campaign with company matching contributions to support humanitarian relief for migrants who suffered from the conflict in Ukraine. I will tell you that we are very proud of our team in Poland as they opened their hearts and homes for many of the Ukrainian migrants. I will now address our full year 2022 outlook on slide 12. we are maintaining our current guidance based on the assumption of mid to high single digit growth in North America and mid single digit growth in Europe for the year. Adjusted EBITDA is anticipated to be in the range of $160 million to $190 million, with cash flow from operations between $105 and $150 million. This includes the expected benefits from further accelerating cost recovery and continuous improvement efforts to mitigate inflationary headwinds. While visibility towards recovery has been fairly limited, we currently expect headwinds to begin easing and industry production to increase in the second half of the year. In closing, I am very proud of the hard work of our teams in delivering solid results for the quarter. We plan to continue this momentum as we head further into 2022. And with that, I will turn the call over to Tim.