Superior Industries (SUP) Q2 Earnings Miss, Revenues Beat

Superior Industries International Inc.’s (NYSE:SUP) adjusted earnings were 37 cents per share in second-quarter 2017, missing the Zacks Consensus Estimate of 48 cents. The reported quarter’s figure also plunged 28.9% from the year-ago tally of 52 cents. Including acquisition-related costs, earnings came in at 78 cents per share.

Revenues were $240.6 million in the reported quarter, higher than $182.7 million in the year-ago quarter. Revenues also comfortably surpassed the Zacks Consensus Estimate of $189.4 million.

Wheel unit shipments were 3.8 million compared with the prior-year quarter of 3.1 million units. Value-added sales, i.e., net sales minus pass-through charges for aluminum increased to $130.4 million in comparison to $101.2 million in the second quarter of 2016.

Gross profit fell to $20.1 million (8.4% of net sales) from $29.5 million (16.2%) in the year-ago quarter. This decrease was due to lower unit shipments and manufacturing inefficiencies in North America, partly offset by a favorable foreign exchange. Accounting and amortization of intangibles by $8.3 million, related to the acquisition of UNIWHEELS, has also in turn led to the decline in gross profit.

Selling, general and administrative expenses jumped to $22.1 million (9.2% of net sales) in second-quarter 2017 from $10 million (5.5% of net sales) in the prior-year quarter.

Following the quarterly results, Superior Industries’ shares have declined 6.53% to $17.90 per share on Aug 4.

Superior Industries International, Inc. Price, Consensus and EPS Surprise

Superior Industries International, Inc. Price, Consensus and EPS Surprise | Superior Industries International, Inc. Quote

Acquisitions

On May 30, 2017, the company completed the acquisition of approximately 92.3% of UNIWHEELS’ outstanding common stocks. The acquisition will help Superior Industries to expand its global reach, diversify customer base and expand their technological capabilities.

Financial Details

In second-quarter 2017, Superior Industries’ net cash used by operating activities was $8.5 million as against the cash generated from operating activities of $8.5 million in the year-ago period. The decrease was primarily due to costs related to the acquisition of UNIWHEELS and an increase in working capital.

Outlook

Superior Industries expects net sales for 2017 in the range of $1.1-$1.11 billion compared with the previous projection of $730–$750 million. Unit shipments in 2017 are expected in the range of 16.9–17.2 million compared with the past estimate of 12−12.25 million.

Superior Industries expects value-added sales in the band of $595-$615 million, much above the previous guidance of $400–$410 million. Adjusted EBITDA is expected in the range of $135-$145 million compared with the prior outlook of $97−$105 million.

The company projected capital expenditure to be approximately $85 million, higher than the previous expectation of around $50 million for 2017. The effective tax rate is estimated at a 10-13% range, lower than the previous outlook of 25−28%.

Price Performance

Superior Industries’ shares have lost 20.4% in the last six months, massively underperforming the 13.6% increase of the industry it belongs to.

Zacks Rank & Key Picks

Currently, Superior Industries carries a Zacks Rank #3 (Hold).

A few better-ranked automobile stocks worth considering are Fox Factory Holding Corp. (NASDAQ:FOXF) , Cummins Inc. (NYSE:CMI) and Ferrari N.V. (NYSE:RACE) , all currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fox Factory has a long-term growth rate of 15.9%.

Cummins has an expected long-term earnings-per-share growth rate of 12.1%.

Ferrari has an expected earnings growth rate of 14.1% over the long term.

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