Superior Industries International Inc

Welcome to Superior Industries' third quarter 2023 earnings call. You will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. We are joined this morning by Majdeh Abulaban, President and CEO, Tim Trinaray, Executive Vice President and CFO. I will now hand you over to your host. Tim Trinary, to begin today's conference. Thank you.

Good morning, everyone, and welcome to our third quarter 2023 earnings call. During our call this morning, we will be referring to our earnings presentation, which, along with our earnings release, is available on the investor relations section of Superior's website. I am joined on the call by Majdi Aboulaban, our President and Chief Executive Officer. I am also joined today by Michael Dora, Senior Vice President and President, North America. 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 filing, 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 US GAAP measures can be found in the appendix of the presentation. With that, I'll turn the call over to Majdi to provide a business and portfolio update.

Thank you, Tim, and hello, everyone. Thank you for joining our call today to review our third quarter results. I will start on slide five. Our team delivered solid results in the quarter despite a challenging operating environment. EBITDA was up, margins were up, and content per wheel was up for the 18th consecutive quarter. This is very much a testament to both the operational strength of our teams and the competitive positioning of our portfolio. While we are seeing overall recovery in industry vehicle production, our key markets remain pressured by lingering headwinds leading to our value-added sales adjusted for foreign exchange being flat versus the prior year. The UAW strike had a marginal impact on our third quarter results. However, we expect the strike to have a meaningful impact in the fourth quarter. In North America, fleet sales, where we typically have limited content, continue to grow. And one of our top customers, GM, saw a 4% decline in production, mainly driven by the frequent shutdown of their Mexico operation. In Europe, production at key customers was down 1% for the quarter, especially at VW. Having said that, it does appear that our European aftermarket is showing signs of recovery as wholesalers and distributors restock for the winter season. We remain focused on what we can control. leveraging our commercial discipline, operational excellence, and demand for our differentiated portfolio. In line with our long-term goal of transforming our footprint and elevating our competitive position, we announced in the third quarter the strategic action at our production facility in Verdun, Germany. Recall when we announced this action, we stated that this would result in a €20 million investment depth function improvement, and regional profitability. We are on track to make that a reality in 2024. I will speak to this later in the presentation. Lastly, we have been successful in aligning our pricing with rising impulse costs while taking action to prune underperforming parts and drive long-term profitability. We are continuing to meet consumer demand for lighter and larger real-world premium finishes Content per wheel grew 6% on a year-over-year basis, and premium wheels now comprise more than 52% of our shipments to OEM customers. Further, during the quarter, net debt declined to $453 million, despite having to build safety stock related to our action in Germany. Overall, we are maintaining a strong liquidity position of $194 million and are further enhancing this through capital prudence with year-to-date CapEx spend at $30 million. We are updating our full-year outlook to reflect the impact of both the deconsolidation of our German operations and the UAW strike on our fourth quarter results. we are reducing our full-year revenue and volume guidance and narrowing our adjusted EBITDA range. Further, we are reducing operating cash flow guidance to reflect the temporary buildup of working capital, including $25 million in safety stock to protect customers and facilitate the transfer of production to Poland. We expect the impact on operating cash flow to reverse upon completion of the project in early 24. We are also lowering our outlook for capital expenditures as we focus on lowering the capital intensity of our business. Tim will provide more detail on this updated outlook later in our presentation. Onto slide six, which highlights the strong performance we have seen since 2019. Here, we're showing the comparison of key performance metrics from 2019 and from the last 12 months. While industry production has declined, we have delivered robust growth in value added sales and profitability, expanded margins, significantly reduced net debt, and increased content per wheel. While we continue to navigate through operating challenges, I am confident we will continue to make progress on these metrics thanks to the incredible improvements our teams have made to the business throughout recent years. Moving on to slide seven, our position on premium platforms has continued, with several of our technologies being utilized in recent launches on the left side of this chart. Importantly, as you can see on the right side, we have been successful with customers in aligning product pricing with the input costs of our business. This improved pricing combined with growth in premium content has resulted in substantial and sustained growth in content per wheel. Notably, content growth and price has improved our content per wheel by 29% compared to 2020. Turning on to slide eight, showing a snapshot of the current operating environment. While we have seen continued moderation moderation in supply chain constraints, and lower impact of inflation. In fact, global industry production is decelerating compared to recent quarters. Although industry production in our two regions is up 6%, automotive production and our key customers in both regions remain nearly flat on a year-over-year basis. Recall, 2022 was a supply-constrained year for the industry. Now, 2023 is becoming more demand constraint evident in lower production in the third quarter and the balance of the year. IHS is projecting production in both regions to decline in the fourth quarter versus the prior year. Notably, GM and Ford are expected to see substantial declines in the coming quarter, reflecting the impact of the strike. That said, despite these challenges, We are well positioned to drive long-term profitable growth, driven by industry preference for our localized footprint, secular demand for premium wheels, and the benefit of improvements we are making across our footprint to enhance our competitive position. Turning on to slide nine, another view of our results compared to the wider industry. Our adjusted value-added sales remain flat compared to production growth of our key customers as well as the wider industry. As noted earlier, unfavorable mix in North America and ongoing shutdown of General Motors' salar plans continued to pressure our top line. Further, production at our key customers in Europe was down actually 1%. And finally, the deconsolidation of our German operations in the quarter while ultimately supporting our long-term growth, has resulted in a temporary loss of revenue, which will eventually come back. Moving on to slide 10, for a brief recap on the strategic action we announced in August at our German production facility and how it fits in our wider plans to improve our footprint. Our global manufacturing footprint has been a key differentiator to OEMs as they seek to de-risk long supply chains and source components locally. Most of our capacity is strategically located in low cost locations in Mexico and Poland, which are high performing sites due to the transformation we have made in recent years. The actions we have taken at our German facility represents a continuation of that plan, giving us the opportunity to transform the remainder of our footprint while enabling us to better serve our customers throughout Europe. These plans remain on track per the terms of the protective shield proceedings. Actually, this is better known in the US as Chapter 11 insolvency proceedings. It is now increasingly likely that this project will result in the closure of the Verdun facility in Germany and the transfer of roughly 800,000 wheels to our facilities in Poland. This is a key driver of the step function improvement in profitability I mentioned earlier. I'd like now to move to slide 11 to address the wider actions we have taken in driving margin enhancement across our European footprint. As noted on the previous slide, our actions in Germany are proceeding as planned. We are now focused on shifting production to Poland, which will require a significant buildup of safety stock to ensure no impact of service on our customers as we improve our capabilities and capacities in Poland. In addition, we are working to rationalize administrative overhead while consolidating aftermarket warehouses to improve our overall cost structure. We also have continued to collaborate with our European customers to adjust pricing to match rising costs. Our efforts have been fruitful as evidenced by the 13% increase in price and content here today. Additionally, we have worked to de-risk wheel launches, transferring production of programs to Poland that were originally planned to launch in our German facilities. Lastly, as part of our 80-20 approach, we have pruned performing programs from our portfolio to support better margins and product mix. This has meant cutting roughly 750,000 wheels from our book of business. While this is a sizable figure, it is critical to note that these were marginally profitable wheels on programs that were not ultimately advancing our long-term growth strategy. Overall, what plenty remains to be done I am pleased with the progress we have made in narrowing the margin gap between Europe and North America, and I am excited to continue this momentum to drive our business forward. In closing, our teams have continued to do a great job in managing through challenges to deliver solid results. Our content story continues to play out, and we are making great strides in improving our overall footprint to support long-term profitable growth. Looking to the remainder of 2024, we remain focused on advancing our portfolio, optimizing costs, and generating cash to deliver sustained value for our shareholders. Now, I will turn the call over to Tim to provide more detail on our financial results.

Thank you, Mashi. On August 31st this year, we announced a strategic action. the continuation of our local for local manufacturing footprint optimization, and the transformation of the remaining 6% of our manufacturing footprint to a more competitive cost structure. More specifically, our production facility in Bernoulli, Germany, otherwise known as Superior Industries Production Germany, or SPG, entered protective shield proceedings, a German court administered reorganization process. Generally accepted accounting principles require the SPG's statement of operations and balance sheet, beginning with the commencement of the proceedings, be deconsolidated from superior industry's financial statements. Accordingly, the income statement of SPG for the month of September is excluded from the third quarter financial results, as is the balance sheet of SPG as of the end of the third quarter. The deconsolidation of SPG gave rise to an $80 million charge in the quarter. Furthermore, approximately 80,000 wheels produced at SPG in September are excluded from wheel shipments, and approximately 9 million and 6 million, respectively, of net sales and value-added sales are excluded from third quarter sales. The deconsolidation of SPG had less than a $1 million impact on third quarter adjusted EBITDA. Let's look at the quarter on page 13, third quarter 2023 financial summary. Net sales decreased to 323 million for the quarter compared to 406 million in the prior year period, but value added sales of 176 million was substantially the same as the prior year quarter. The lower cost of aluminum is the primary reason for the decline in net sales. Aluminum prices have now normalized after a significant run-up beginning in early 2022. Adjusted EBITDA is $39 million, $3 million more than the prior year quarter. The adjusted EBITDA margin expressed as a percent of value-added sales improved year-over-year by 160 basis points and was 22%. We incurred a net loss of $86 million in the second quarter, or a loss per diluted share of $3.42, compared to a net loss of $400,000 in the prior year period, or a loss per diluted share of $0.35. The third quarter includes an $80 million charge related to the SVG proceedings and the attempted deconsolidation of SVG from Superior's financial statement. The third quarter year-over-year sales bridge is on page 14. To the far right, aluminum costs passed through to customers was down 81 million, or by 35 percent compared to the prior year period, reflecting the normalization of the cost of aluminum. Value-added sales decreased by only 2 million, or 1 percent, compared to the prior year period, reflecting fewer wheel shipments, largely offset by mix in price. Value-added sales continues to benefit from increasing content per wheel. Currency benefited net sales by $8 million. On page 15, third quarter 2023, year-over-year adjusted EBITDA average. Adjusted EBITDA for the quarter increased to $39 million compared to $36 million in the prior year period. The adjusted EBITDA margin for the quarter of 22% is approved by 160 basis points from the prior year period on flat year-over-year value-add sales. Volume, price, and mix, metal timing, and performance all contributed to the increase in adjusted EBITDA for the quarter. Currency, however, burned adjusted EBITDA by a small amount, less than $1 million. An overview of the company's third quarter 2023 free cash flow is on page 16. Cash flow provided by operating activities was $9 million compared to $17 million in the prior year period. This decline is primarily attributable to small increases in working capital and restructuring charges and higher interest expense. Net cash used in investing activities was $12 million compared to $11 million in the prior year period. The $3 million decrease in capital expenditures in the quarter compared to the prior year period was more than offset by a $4 million charge in cash associated with the deconsolidation of SVG. Cash flow used in financing activities was zero for the third quarter compared to $4 million in the prior year period. Preferred dividends of approximately $3 million were lowered due to timing of payments at quarter end 2023. Free cash flow for the quarter was negative $3 million versus positive $2 million in the prior year period. An overview of the company's capital structure as of September 30, 2023, may be found on page 17. Cash on the balance sheet at quarter end was $177 million. Funded debt was $630 million at quarter end, and net debt was $453 million, a decrease of $3 million compared to the prior year. At the end of the third quarter, liquidity, including availability under the revolving credit facility, was $194 million. Superior's debt maturity profile as of September 30, 2023, is on page 18. The revolving credit facility was undrawn at quarter end. We are in compliance with all loan covenants. And the $250 million in SOFR-based interest rate swaps we entered into last year in anticipation of the term loan refinancing are in the money because of the Fed's rate hikes. Annual interest expense is about $5 million less than it otherwise would be. We are adjusting the full year 2023 financial outlook on page 19. These adjustments reflect the impact of the deconsolidation of SPG from the company's financial results for the last four months of the year and an estimate of the impact of the UAW strike. With respect to the deconsolidation of SPG, we are reducing wheel shipments by 300,000 wheels, net sales by 32 million, and value at sales by $20 million. The impact on adjusted EBITDA is an improvement of $1 million. The impact on capital from operations is projected to be $35 million and reflects a temporary investment in working capital at year end, most notably the build of safety stock to protect our customers during the SPG proceedings. This investment in working capital will come back to the company in 2024. With respect to the UAW start, the impact on the third quarter was negligible. Through the end of October, the impact is approximately 85,000 wheels and 8 million and 4 million respectively on net sales and value added sales. The impact on adjusted EBITDA is almost 2 million. Incorporated in our adjustments to the 2023 financial outlook is the assumption that no additional facilities are struck and that the strike is resolved mid-November. On page 20, the full year 2023 financial outlook. Adjusted guidance for 2023 is 14.6 to 15 million wheels, net sales of 1.39 to 1.49 billion, and value-added sales of 745 to 765 million. We are narrowing the guidance range for adjusted EBITDA to $170 to $185 million, and adjusting guidance for cash flow from operations to $80 to $95 million. Once again, the adjustment for cash flow from operations incorporates a temporary investment in working capital, primarily safety stock, projected to be $35 million at year end. Offsetting in part this temporary investment in working capital is a $15 million reduction in capital expenditures for the year. Capital expenditures for 2023 are now expected to be approximately $50 million. This $15 million reduction in capital expenditures is a further reflection of our intention to lower the capital intensity of the business. The strategic action involving the SPG production facility is expected to be significantly valuable created to the company It could result in an almost 20 million Euro improvement in adjusted EBITDA in our European operations upon completion. In closing, we delivered another solid quarter. I'm pleased with our teams, especially operations, procurement, and the commercial team. This concludes our prepared remarks. Majdi and I are happy to take questions. Laura?

Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Thank you. We'll now take our first question from Gary Prestapino at Barrington Research. Your line is open. Please go ahead.

Good morning, all. Lots of questions here. First of all, with Germany, and I'm just trying to get to that slide. You're going to be closing the production facility. What about the R&D center as well as the European headquarters? Will that still be in Germany, or did you close down the whole thing?

As we stated previously, good question. Our actions are only limited to the German manufacturing operation, which is not even in the same location as our headquarters and our tech center. So you are correct. Okay. This is only specific to the manufacturing operation. Okay.

So just as I'm looking back on some of my notes here, you said that you were looking at prior to doing all this, uh, $10 million in annual cost savings this year, Germany actions in Germany should yield savings on a combined basis of 26 to 30 million by the end of 2024. Are we still on track for that? I think you did say that you're on track.

I just want to make sure that you... No, no, we are actually, I mean, we are absolutely on track. And I would tell you the entire plan of addressing our margin performance in Europe is absolutely on track. When we undertook the actions back in August in operation in Germany, Obviously, there was a lot of heavy lifting on that front, Gary, and I will tell you our team has done a spectacular job with planning, with execution. Our customers have been extremely collaborative with us, and this basically sets us up, Gary, to transform Europe similar to the story we have done in North America. Just a couple of tip points for you in terms of as you peel the onion, the North America business is actually delivering and all time records on all fronts, right? Record revenues, record value added sales, record dollars in profitability, record margins. And the reason for that is the journey of fixing our footprint, improving our factories, enhancing our portfolio and capabilities, expanding our customer base. So that business is hitting on all 12 cylinders. And we're very pleased with that and very proud. And the plan we're executing, the playbook, It's not much different in Europe, and I'm very, very pleased with what the team has done to set us up for next year's success and mirroring what we have in North America.

Gary, it's Tim. I want to make sure that there's no misunderstanding with respect to the financial metrics. I think you mentioned two sets of metrics, the first being an initiative that the company has launched very early this year to remove approximately 10 million dollars by the end of the year from our overhead structures, both in North America and Europe. Certainly with respect to North America, we will achieve our objectives by year end. I would tell you that the piece of that 10 million that is Europe, some piece of that European piece will be shifted a little bit into 24 just because of the extra activity surrounding the facility in Germany. So we'll come up just a little bit short by year end on that $10 million, but it's not a terribly significant amount. The other financial metric I think I heard you mention was $26 to $30 million for Europe, and I'm not sure what that is. But just so there's no misunderstanding, as Mashti and I both indicated, once these 800,000 wheels are sold, are residents in Poland instead of Germany. We sized a step change in the company's performance there in Europe at approximately 20 million euros. So I would use 20 million euros instead of that 26 to 30.

Okay. No, I'm just... Let me backtrack here. I'm just looking at what I wrote when you announced this You said the expected to incur cash charges of 15 to 18 million euro. The benefit on a full run rate is expected to be a payback of approximately one year. So what I was saying is if you tag the 10 million on to what you're going to get, you say you're going to get from Europe on an annual run rate basis by the end of 2024, it would be 26 to 30 million combined with the 10 million that you're you're doing in the United States. I think that's what I was alluding to.

I missed a key word in there combined. I missed that. Sorry. Okay. The only other thing I would tell you is that the only other thing I would make sure there's no misunderstanding about, on August 31st when we announced the activities in Germany and I spoke to the cash costs expected at that time to actually initiative, that's the I think it is 15 to 18 million Euro, and a similar payback. We thought at that time that that payback would be resonant in the entire year 2024. That is to say that the activities in Germany might be complete by year end. In fact, as Majdi and I have both alluded to, as much as we are building some safety stock, the movement of those wheels is going to not be done by the end of the year, but Some of those wheels will shift into 2024. So some of that annual return will not find its way all into 2024. So 2024 will have some impact on the step change, a little bit less than that. Call it 20 million euro.

Okay, that's fine. I'll let somebody else go, and then I'll jump back in the queue. Hello?

Thank you, Paul. And the interruption, I'm so sorry. We'll now take our next question from Michael Ward at Benchmark. Your line is open. Please go ahead.

Thanks very much. Good morning, everyone. A few things. First off, I just want to confirm. On the aluminum costs, you can see that it's down 30% to 40% year over year. That's all pass-through. There's no benefit to you, correct?

That's correct.

Okay. The second thing, in the release, you mentioned that you've seen a pickup in the aftermarket sales in Europe. I wonder if you could talk about that a little bit and what you're seeing.

Yeah, I mean, listen, recall we had a lot of factors going on in the first three quarters of the year, ending the year with high inventories because of the warm winter, because the wholesalers decided to go on destocking, and now we're seeing what I would call a 12% uptick in that business. I think, Mike, there's still more room for improvement. We have actually shifted our strategy to distributors outside of Germany, and we see a lot more opportunity. But it's a good start, but we need to do a lot more to get to where we were and to capture an opportunity that I think is on the table.

Well, that's certainly good news. The third thing, you mentioned in the slides the Salau plant at General Motors. it looked like September was back to a more normalized rate. Am I looking at the right data or is there something that I'm not seeing? Did it tick back down in October?

Yeah, I mean, GM has been a, I mean, there's a lot of noise in the quarter and a lot of it is GM because they're down overall 4%. But I tell you, if you look at their salal plant, it's just staggering how many days, Michael, we lost. In fact, you know what? I have, have my president here who runs all of North America and has done a magnificent job. I'd like to turn it over to him for a second to tell you about what's happened in Salau.

That'd be great. Good morning, everyone. So Salau took two months out in one in Q2 and another one in Q3. They are back now running full, especially since the strike. They've been building above their normal build rate so Salau is running extremely well right now but prior quarters we suffered with them for unexpected downtime probably because of other suppliers okay now it's um do you have any feedback as far as the timing of the reacceleration of the big three plants that were shut down I think Arlington probably should come back

because they were least affected, or maybe Sterling Heights. I'm not sure if you have anything at Sterling Heights.

So for GM, most of the plants started back up yesterday. There's one plant that's going to come back next week. Arlington, to your specific question, comes on today. The volumes that we're requesting are not full, so we expect to have an update scheduled next week.

Okay. And any idea of when you can get back up to full production? I think it usually takes at least a couple of weeks.

Yeah, it's probably going to be about two weeks. Two weeks, okay, not too bad. Yeah.

Okay, well, that's certainly good news. All right, thank you very much.

Thank you, Michael. Thank you. Thank you. We now move on to our next question from Mehmet Dera at Deutsche Bank. Your line is open. Please go ahead.

Hey, good morning. Just thank you for my questions. On the capex, which I have reduced for the year end, is this going to stay also for next year or are you going to increase your capex? If you can give us an update there. And also the improvement in EBITDA with the closure of the German plan of the 20 million. Can you just remind us again, like for 224, what portion of that is in 224 and what portion of that is going into the next year? And then also another two further questions on depth, which I will ask afterwards.

Sure. Hi, it's Tim. First of all, with respect to your first question, the company has, over the last certainly three years, We've been very focused on our investment in the balance sheet, more specifically working capital, which has come down dramatically, and then capital spending. To your point, this year we're projecting capital spending of $50 million for the year. And with respect to our ability to maintain that level going into 2024, I would tell you that while we are not done with our business planning yet for 2024, And our objective, frankly, is to keep the spending down closer to that number than the numbers that it's been in the past. So if you're sort of thinking about modeling, you might think of the time being, let's say, $50 to $55 million for next year, subject to us perhaps adjusting that a little bit early next year when we present our guidance for the year. But a significant reduction in capital spending, we think for the most part that we can maintain that. With respect to the step change in the profitability of Europe associated with the proceedings in Germany and more specifically the transfer of the wheels being produced in Germany to Poland, the exact timing of that process whereby the wheels will be transferred is really quite fluid. And at this point, I think it would be inappropriate for me to say specifically how much of that approx 20 million euro when we're all done with the transfer will land in 2024 i would tell you that we have been and continue to be very focused on getting those wheels moved just as quickly as we can so you know i would anticipate that it would be sometime reasonably early next year but i can't tell you the exact point in time that that would be the third question i don't think I recall that, to be honest with you.

Yeah, I saw two questions on your debt. Can you give us an update again on your TLB hedging? Because you said just the interest payment was $5 million lower than without hedging. Also for 224, your interest costs, if you can give us guidance there, if nothing changes there. And also on any potential talks,

about or plans about refinancing of the bond and the preferred that would be also very helpful thank you all right so last year I think it was in March last year when it was it was clear that the Federal Reserve is going to start to address inflation and raise the interest rates the company entered into a series of swap agreements exchanging variable rate interest for fixed rate interest for a total of $250 million is my recollection. And those agreements, if you get into the details of our SEC filings, you'll find that they are very significantly in the money, as well as, frankly, our currency hedging agreements. And as a consequence of that, the approximate savings, if you will, on interest, cash interest, in 2023 is about $5 million. In terms of projecting, if you will, what interest expense might be for 2024, assuming the current capital structure, I think you would be well served just to take a look at what Q3 or Q4 is in the financial results and annualize that, whether you do it on a quarterly or an annual basis. But I think absent any very significant changes in the Fed's behavior, which there's all indications that they might have pretty much be done with their increases. I think that the third and fourth quarter of this year is a pretty good reflection of what might happen in 24 with the existing capital structure. With respect to the company's balance sheet, the next maturity on the notes in Europe, 217 million euros in notes, they mature in a little more than a year and a half, in June of 25. I believe it's in the company's best interest at this point to let the matters in Germany settle down just a little bit so that the capital markets might better appreciate the financial impact, the favorable financial impact that that action will have on our financial results. So I would expect to to begin to address the balance sheet interest very early next year, depending in part on the speed with which the facility in Germany is wound down.

Mehmet, I do want to add something here related to your question. on capital expenditures. To be sure, we have been actively and prudently upgrading our capabilities in recent years, especially given the evolution of our portfolio. So I feel very good about our position as a well-invested company. I just came back from Mexico with Michael Dora. We just launched a brand-new state-of-the-art paint line, actually one of our in Mexico, where we are shipping the first 24-inch wheels in North America. We've upgraded automation. We've upgraded and invested in lightweighting capabilities on both sides of the ocean. So we've been at this for some time, and I think now we have capability that is bar none on both sides of the ocean. And we have capacity to address not the current situation, but also growth in the coming years. So we feel very good about our well-invested position here. Operator?

Okay, that's very clear. Sorry.

Thank you. And Bill and I'll take a follow-up question from Gary from Barrington Research. Your line is open. Please go ahead.

Yeah, Maggie, just a quick question. It looks like the percentage of wheels that are 19 inches or higher, at least for the last couple of quarters, or 19 inches or bigger, has kind of stagnated at 52%. Do you see that increasing going forward? And the other thing is, I know you've got some pricing concessions on, let me just add something to that question, too. You've got some pricing that's helping you increase your content per wheel. But besides larger wheels, what is being requested more by your clients? Is it lightweighting, premium finishes, aerodynamics? I mean, what are some of the other things that are driving content?

Yeah, so a couple of things. Let me get your 19 inch wheel question. So the content adders in our business started with sizing of wheels and now they're evolving very quickly to other technologies, including light weighting and finishing. So it's your question on 19 inch wheels, Gary. Actually, I mean, for the next call, we may just change the line of demarcation here because 19 inch wheels now is small wheels. So now we're, you know, The majority of our wheels are quickly becoming 20 inches or larger. So if you look at the growth in 20-inch wheels year on year, you'll see a big, big movement. If you look at 22-inch wheels, you'll see almost a doubling in the last three years. So that trend of sizing continues. If you talk to me four years ago, would I be launching a 24-inch wheel for the top two OEMs in North America this year? It would be hard to believe. And we're doing that also on the other side of the ocean. So what are customers asking for? So still the trend for motor wheels is accelerating, but now lightweighting is such a big deal, Gary. It was... Probably 10% of our business not too long ago. Now it's less than 20%, but it's accelerating very fast. It's a big deal when you think of electrification, strengthening the wheel, taking weight out and improving the range. I've talked about it extensively in... we continue to invest in capacity. So that's moving very fast. And then, you know, we talked about how wheels now are being effectively used by carmakers to sell cars. And all these new finishes, not only diamond-cut wheels, but laser etching and other personalization of application to wheels are taking off. So I feel very good about our trends, not only in wheel sizes and going to larger wheels, but also life waiting is becoming a very big deal in our business. Okay, thank you. You're welcome.

Thank you. There are no further questions in queue. I will now hand it back to Moshday for closing remarks. Thank you.

Thank you all for joining our call today and to the superior team. Thank you again. Thank you again for your hard work this quarter. Look forward to continuing to execute on our growth strategy to drive our business forward. Have a great day. Thank you.

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.