Superior Reports First Quarter 2019 Financial Results

First Quarter 2019 Highlights:

• Unit shipments of 5.0 million compared to 5.5 million in the prior
  year
• Net sales of $357.7 million compared to $386.4 million in the prior
  year
• Value-Added Sales⁽¹⁾ of $192.8 million
  compared to $207.4 million in the prior year
• Value-Added Sales⁽¹⁾ per wheel of $38.26,
  up $0.80 compared to the prior year
• Net income of $2.0 million and a loss per diluted share of $0.24⁽²⁾,
  which includes acquisition-related and other expenses of $0.02 per
  diluted share
• Adjusted EBITDA⁽¹⁾ of $43.2 million
  compared to $52.2 million in the prior year
• Full year 2019 outlook reaffirmed

SOUTHFIELD, Mich.–(BUSINESS WIRE)–Superior Industries International, Inc. (NYSE:SUP), one of the
world’s leading aluminum wheel suppliers for OEMs and the European
aftermarket, today reported financial results for the first quarter
ended March 31, 2019.

Timothy McQuay, Executive Chairman of Superior, commented, “During the
first quarter of 2019, we faced lower shipment volumes compared to last
year, primarily in our North American operations, which was driven by
reduced take rates on several platforms that we supply as well as softer
industry production levels at our key customers. Our European business
also continued to be impacted by softer industry production volumes
within our customer base. Despite these headwinds in volume, we
continued to capture the benefits from favorable product mix, including
a secular shift to larger and more premium wheels during the quarter,
with Value-Added Sales per wheel increasing $0.80 compared to the same
period last year. While we anticipate the lower volumes in North America
to persist throughout 2019, our focus remains on operational
improvements and best-in-class execution in order to continue
capitalizing on the secular trends. Also, during the quarter, our
efforts and focus on cash flow generation yielded positive results with
the net change in cash up $29.2 million year-over-year.”

“In addition, in April, we were extremely pleased to announce the
appointment of Majdi Abulaban as President and Chief Executive Officer.
Majdi brings to Superior a long track record of operational excellence
and leadership within the automotive industry. We are looking forward to
him joining the team next week,” concluded Mr. McQuay.

First Quarter Results

Wheel unit shipments were 5.0 million for the first three months of 2019
compared to unit shipments of 5.5 million in the prior year period. As
mentioned above, the decrease was primarily due to lower shipments in
our North American operations with some softness in Europe.

Net sales for the first quarter of 2019 were $357.7 million compared to
$386.4 million in the prior year period. The reduction was driven by
reduced volumes, a weaker Euro, and lower aluminum prices, partially
offset by improved product mix comprised of larger diameter wheels and
premium finishes in both regions.

Value-Added Sales, a non-GAAP measure as defined and reconciled to net
sales below, were $192.8 million for the first quarter of 2019, a 7.0%
decrease compared to the prior year period. Value-Added Sales were
impacted by lower shipments in both regions and a weaker Euro, partially
offset by favorable product mix. Excluding the impact of foreign
exchange, Value-Added Sales decreased 2.9% year-over-year.

Gross profit for the first quarter of 2019 was $33.1 million compared to
$50.0 million in the prior year period. The decrease was primarily due
to lower shipments and production, higher energy costs, and the
alignment of reporting for selling, general, and administrative (“SG&A”)
expenses between our North American and European operations, which
resulted in higher cost of goods sold and lower SG&A expenses by
approximately $4 million. While unit shipments were down 0.5 million,
production of finished goods was reduced further in order to manage
inventory levels. These items were partially offset by improved product
mix. Globally, the impact on gross profit from foreign exchange was
muted with a favorable all-in Mexican Peso rate, inclusive of Superior’s
hedging program, offsetting a weaker Euro.

SG&A expenses for the first quarter of 2019 were $14.5 million, or 4.1%
of net sales, compared to $22.4 million in the prior year period. The
decrease is primarily due to lower integration expenses as well as the
previously mentioned alignment of reporting for SG&A between our regions.

Income from operations for the first quarter of 2019 was $18.6 million,
compared to $27.6 million in the same prior year period.

The provision for income taxes for the first quarter of 2019 was $4.9
million, resulting in an effective tax rate of 71.7% compared to an
effective tax rate of 24.6% in the prior year period. The higher tax
rate was the result of U.S. taxation of foreign earnings under the GILTI
(Global Intangible Low Taxed Income) provisions of tax reform, as well
as the recognition of a valuation allowance on non-deductible interest
expense.

For the first quarter of 2019, Superior reported net income of $2.0
million and a loss per diluted share of $0.24, including
acquisition-related and other expenses of $0.02 per diluted share. This
compares to net income of $10.3 million, or $0.07 per diluted share, in
the prior year period.

Adjusted EBITDA, a non-GAAP measure as defined and reconciled to net
income below, was $43.2 million for the first quarter of 2019 compared
to $52.2 million in the prior year period. The decrease in Adjusted
EBITDA was primarily driven by lower production and sales volumes and
higher energy costs, partially offset by improved product mix.

Cash Flow

Net cash provided by operating activities was $28.7 million for the
first quarter of 2019 compared to $14.4 million in the prior year
period. The increase was mainly due to improved working capital
management, including inventory and usage of Superior’s accounts
receivable program, as well as the timing of cash tax payments,
partially offset by lower earnings.

Cash used for capital expenditures during the first quarter of 2019
totaled $13.4 million.

During the quarter, Superior paid total dividends of $6.1 million.
Superior also purchased $1.4 million in shares from minority
shareholders of Superior Industries Europe AG, leaving $12.2 million
outstanding.

Capital Structure and Liquidity

Total funded debt and net debt at March 31, 2019 were $680.1 million and
$626.5 million, respectively. Cash and available amounts under revolving
credit facilities totaled $243.4 million at the end of the quarter.

2019 Outlook

Superior reaffirmed its full year 2019 outlook as follows:

• Net sales are expected to be in the range of $1.42 billion to $1.47
  billion, driven by unit shipments of 19.85 million to 20.30 million
• Value-Added Sales are expected to be in the range of $765 million to
  $805 million
• Adjusted EBITDA is expected to be in the range of $170 million to $185
  million
• Cash flow from operations is expected to be between $125 million and
  $145 million
• Capital expenditures are expected to be approximately $85 million

Value-Added Sales and Adjusted EBITDA are non-GAAP measures as defined
below. In reliance on the safe harbor provided under section 10(e) or
Regulation S-K, Superior has not quantitatively reconciled differences
between Adjusted EBITDA presented in the 2019 outlook to net income, the
most comparable GAAP measure, as Superior is unable to quantify certain
amounts included in net income without unreasonable efforts and due to
the inherent uncertainty regarding such variables. Superior also
believes that such reconciliation would imply a degree of precision that
could potentially be confusing or misleading to investors. However, the
magnitude of these amounts may be significant.

Conference Call

Superior will host a conference call beginning at 8:00 AM ET on
Thursday, May 9, 2019. The conference call may be accessed by dialing
(855) 719-5012 for participants in the U.S./Canada or +1 (334) 323-0505
for participants outside the U.S./Canada using the required conference
ID 6276873. The live conference call can also be accessed by logging
into Superior’s website at www.supind.com
or by clicking this link: earnings
webcast link. A replay of the webcast will be available on
Superior’s website immediately following the conclusion of the call.

During the conference call, management plans to review operating results
and discuss other financial and operating matters. In addition,
management may disclose material information in response to questions
posed by participants during the call.

About Superior

Superior is one of the world’s leading aluminum wheel suppliers.
Superior’s team collaborates and partners with customers to design,
engineer, and manufacture a wide variety of innovative and high-quality
products utilizing the latest lightweighting and finishing technologies.
Superior also maintains leading aftermarket brands including ATS^®,
RIAL^®, ALUTEC^®, and ANZIO^®.
Headquartered in Southfield, Michigan, Superior is listed on the New
York Stock Exchange and is a component of Standard & Poor’s Small Cap
600 and Russell 2000 Indices. For more information, please visit www.supind.com.

Non-GAAP Financial Information

In addition to the results reported in accordance with GAAP included
throughout this earnings release, this release refers to “Adjusted
EBITDA,” which Superior has defined as earnings before interest income
and expense, income taxes, depreciation, amortization, restructuring
charges and other closure costs and impairments of long-lived assets and
investments, changes in fair value of redeemable preferred stock
embedded derivative liability, acquisition and integration costs, CEO
separation related costs, and accounts receivable program fees. This
release also refers to “Value-Added Sales,” which Superior defines as
net sales less the value of aluminum and services provided by outsourced
service providers that are included in net sales. For reconciliations of
these non-GAAP measures to the most directly comparable GAAP measure,
see the attached supplemental data pages which, together with this press
release, have been posted on Superior’s website through the “Investors”
link at www.supind.com.

Management believes these non-GAAP measures are useful to management
and may be useful to investors in their analysis of Superior’s financial
position and results of operations. Further, management uses these
non-GAAP financial measures for planning and forecasting purposes. This
non-GAAP financial information is provided as additional information for
investors and is not in accordance with or an alternative to GAAP and
may be different from similar measures used by other companies.

Forward-Looking Statements

This press release contains statements that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include all statements
that do not relate solely to historical or current facts and can
generally be identified by the use of future dates or words such as
“may,” “should,” “could,” “will,” “expects,” “seeks to,” “anticipates,”
“plans,” “believes,” “estimates,” “intends,” “predicts,” “projects,”
“potential” or “continue” or the negative of such terms and other
comparable terminology. These statements also include, but are not
limited to, the 2019 outlook included herein, Superior’s strategic and
operational initiatives, product mix and overall cost improvement and
are based on current expectations, estimates, and projections about
Superior’s business based, in part, on assumptions made by management.
These statements are not guarantees of future performance and involve
risks, uncertainties, and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what
is expressed or forecasted in such forward-looking statements due to
numerous factors, risks, and uncertainties discussed in Superior’s
Securities and Exchange Commission filings and reports, including
Superior’s Annual Report on Form 10-K for the year-ended December 31,
2018, and other reports from time to time filed with the Securities and
Exchange Commission. You are cautioned not to unduly rely on such
forward-looking statements when evaluating the information presented in
this press release. Such forward-looking statements speak only as of the
date on which they are made, and Superior does not undertake any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of this release.

Contacts

Superior Investor Relations
Troy Ford
(248) 234-7104
[email protected]