Superior Industries International Inc

first quarter 2025 earnings call. We are joined this morning by Madjia Bhullaban, President and CEO, Dan Lee, Senior Vice President and CFO. All lines have been placed on mute to prevent any background noise. Thank you. I'll now hand the call over to Dan Lee. Please go ahead.

Good morning and welcome to our first quarter 2025 earnings conference call. During our call this morning, we will be referring to our earnings presentation, which is available on the investor relations section of Superior's website. I am joined on the call by Madjia Bhullaban, our President and Chief Executive Officer. Before I turn the call over to Madjia, I remind everyone that any forward-looking statements contained in this presentation or commented on today are subject to the State Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to slide two of this presentation for the full State Harbor statement and to the company's SEC filing, including in the company's current annual report on Form 10-K and the current quarter's Form 10-Q for a more complete discussion of forward-looking statements and risk factors. We will also be discussing various non-GAAP measures today. Non-GAAP measures exclude the impact of certain items and therefore are not calculated in accordance with U.S. GAAP. Reconciliation of these measures to the most directly comparable U.S. GAAP measure can be found in the appendix of this presentation. I now will turn the call over to Madjia to provide a business and portfolio update. Madjia?

Thanks, Dan. Hello, everyone, and welcome to our first quarter of 2025 earnings call. Let's begin with an overview of the first quarter on slide four. We deliver a good start to 2025 despite a challenging macroeconomic environment. Our value-added sales outperform the markets driven by our leading product portfolio, while our teams continue to focus on execution and cost reduction delivered results. Further, during the quarter, we saw evidence of how our competitively advantaged -for-local footprint is paying dividends. As the broader industry responds to tear of pressure, especially from China and Morocco, we are seeing an intensified urgency from OEMs to localize production in region. As they seek more cost-effective manufacturing partners in both North America and Europe. More than ever, our -for-local manufacturing footprint in Mexico and Poland is creating tremendous opportunity. We have seen an unprecedented level of sporting activity in recent months. In fact, year to date, we have quoted on more than 53 million lifetime views. I will speak more about this in a bit. While tear of tailwinds are accelerating localization momentum in North America and Europe, in favor of superior, we experienced a setback in April as we were notified by certain customers in North America who undertook a major global sourcing activity of their intent to resource existing contracts with minimal wind-down notice. This unfortunately represented 33% of our expected revenue in 2025. As such, we immediately shifted focus to working to secure short-term liquidity to mitigate risk to our customers and suppliers and secure the commitment from our term loan lenders providing access of up to $70 million of additional term loans under our existing credit agreement. This is obviously subject to satisfaction of certain conditions. We are also working towards obtaining cover and relief from our lenders and are having advanced discussions regarding a broader recapitalization transaction with our lenders and preferred shareholders. This is to significantly deliver the balance sheet by eliminating the preferred equity instrument and reducing our outstanding debt. This will be done through a debt for equity exchange leaving superior with a strong capital structure. It's implemented as contemplated. This recapitalization transaction is expected to superior with the financial strength to execute our goal strategies and position us as a premier real solutions provider with a competitively advantage localized footprint and

market-leading portfolio of products. We have made progress in support of our short-term liquidity

position given support from our lenders and we are executing self-help liquidity measures including working capital and capital expenditure reductions. We will also continue working with our lenders and preferred shareholders towards the transaction design to deliver a deleveraged company

with

financial strength to capitalize on the tremendous

opportunities there. Turning to slide five,

I spoke briefly regarding our potential transaction. You may recall last year in August 2024 we successfully refinanced our debt which was a key milestone for superior and a testament to our company's potential to deliver long-term growth. The result was a stronger financial profile, $117 million reduction in total debt, and the extension of our debt maturities to the end of 2028. Now as you can see on this slide, the contemplated transaction is designed to significantly reduce our debt burden while positioning our company with additional financial flexibility for future opportunities.

Turning to slide six,

as

we mentioned

in our last earnings call, Third of Dynamics in Europe and in North America are presenting unprecedented opportunity for us. Recall that unlike most automotive commodities, the real commodity is highly dependent on imports from China and Asia for the US and Morocco and China for Europe. More notably, incremental tariffs on Chinese wheel imports into the US are now more than 100% and on Morocco wheel imports into Europe are almost 50%. This is an extremely terrible tailwind for superior. We believe that we are the low-cost leader in the industry with a restructured local manufacturing footprint in Poland and in Mexico

ready

to support existing

customers and new customers. Slide seven highlights our

group points and how recent tariff actions are accelerating OEM localization initiatives in our favor. Here you see the remarkable level of customer RFQs in the last four months in Europe and in North America, an all-time record. Here today, we are quoting on more than 53 million lifetime wheels in both regions, twice the level compared to last year at the same time. More importantly, many of these schools are for startup production in 2025 and 2026, which is unusual in automotive space. Compared to last year, we have six times the opportunities we saw last year in this category. We are encouraged by these localization dynamics as they will go a long way to support our efforts to mitigate the recent volume losses. I will conclude with slide eight, which highlights our current position given the updates I shared with you today. While recent contract losses are regrettable, we are focused on recovering these losses through the many short-term opportunities we are pursuing. Further, we will not give up and will continue to pursue recovery of these customers given the recent tariff dynamics that are sure

to superior. Superior is well positioned to compete in the wheel space

with a leading portfolio of products and a competitively advantaged local footprint. We have been talking about localization tear winds for many years. They are here now. Superior's journey has been one of perseverance over hardship and unprecedented recent challenges. I am grateful for the hard work and effort of our superior team. Year in and year out, they have prevailed over unprecedented challenges and I am confident we will continue to do so. I will now turn the call over to Dan to review our financial results in more detail.

Thank you, Mahshi. Beginning on July 10, first quarter, 2025 financial summary. Net sales for the first quarter was $322 million compared to $316 million in the prior year period. First quarter adjusted EBITDA was $25 million. The associated margin expressed as a percentage of value added sales was 15%. I will provide color on this in the upcoming pages. Net loss was $13 million in the first quarter which is a 20 million improvement versus the same period last year. The first quarter, 2025, year over year sales risk is on slide 11. Value added sales were down approximately $3 million compared to the prior year quarter, primarily driven by lower unit sales and the first quarter 2025, year over year adjusted EBITDA average adjusted EBITDA for the quarter decreased to $25 million compared to $31 million in the prior year period. The adjusted EBITDA margin for the quarter was 15% compared to 18% in the prior year period. The decrease was mostly due to unfavorable cost absorption due to lower production volumes, the impact of metal timing, and lower unit sales, partially offset by favorable effects. An overview of the company's first quarter 2025 unlevered free cash flow is on slide 13. Cash provided by operating activities was $24 million for the first quarter compared to $4 million in the prior year period. The increase in cash provided by operating activities was driven by lower working capital. Capital expenditures in the first quarter were $6 million compared to $7 million in the prior year period reflecting our continued efforts to reduce the capital intensity of the business. There were $1 million of cash payments for non-debt financing activities in the first quarter compared to $4 million in the prior year period due to picking of dividend payments. Unlevered free cash flow in the quarter was $33 million compared to $8 million in the prior year period. The increase in unlevered free cash flow was driven by lower working capital. An overview of the company's capital structure as of March 31, 2025 can be found on slide 14. Total cash in the balance sheet as of March 31, 2025 was $54 million and we did not have anything drawn on the $60 million revolving credit facility. Net debt at quarter end was $462 million, down $18 million compared to December 31, 2024 and represents two consecutive quarters of reducing net debt since refinancing. The peer debt maturity as of March 31, 2025 is on slide 15. As you may recall, we successfully completed our debt refinancing in 2024, attracting $520 million of new capital and extending our term loan maturities to 2028. As mentioned by Manji, subsequent to the end of the quarter, certain larger North American OEM customers notified Superior that they would be shifting their real purchases to other suppliers with immediate effects and minimal wind down. This sudden loss of bonds results in a short-term liquidity constraint and reductions to the company's earnings generation. The combination of these items has put in doubt the company's ability to meet the near-term covenant threshold in the term loan and revolving credit facility. As mentioned in our earnings release this morning, we have received a commitment letter from our term loan lenders providing us access up to $70 million of additional term loans under the existing credit agreement. This is subject to certain conditions required by lenders. We are also discussing with our lenders about getting some flexibility in our financial covenants. In addition, we are actively engaged in advanced dialogue with our lenders and preferred shareholders on a broader recapitalization transaction designed to de-lever the balance sheet. The results of the successful recapitalization transaction and the access to the incremental funds from the commitment letter would be near-term financial stability and a meaningful improvement to the long-term capital structure. Given the uncertainty stemming from our subsequent events, ongoing discussions with our lenders and preferred shareholders, and challenging macro environment with stunning global tariff changes, we are suspending our full year 25 guidance. Once the environment stabilizes and we have more clarity with our discussions as previously mentioned, we will provide a comprehensive update including full year projections. In conclusion, I want to thank the superior team for their hard work in our challenging operating environment. This has been a challenging quarter for the entire industry and we appreciate everyone's commitment as we pursue solutions for our near-term headwinds and overall capital structure. As we continue discussions with our lenders and preferred shareholders, we will not be

taking any questions during this call. Modsby? Thank you again for joining our call

today and many, many thanks for the superior team for your hard work and

efforts. This concludes our call.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.