Superior Industries (SUP) Skyrocketed 60% on Monday After Q3 Margin and Cash Flow Growth

Third quarter results recorded improvement from the second quarter as the company delivered substantial cash flow and earnings growth, along with year-over-year margin improvement.

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Superior Industries International, Inc. (SUP), a globally recognized manufacturer of cast aluminum wheels for the world’s largest automobile companies, recently announced its third quarter results for the period ended September 30, 2020.

The stock spiked in yesterday’s trading session followed by strong Q3 results which recovered from the last year period. SUP soared to 60% at close trading at $1.97 compared to the previous close of $1.23. 

The stock traded with a high volume of 40 million, driven by strong earnings per share which rose to $0.12 compared to a loss of $0.57 last year.

The second quarter was massively affected by the COVID-19 pandemic, but the Company recorded a strong recovery during Q3 driven by the successful ramp-up of its facilities, temporary and permanent cost reductions, and structural cost improvements. 

Superior Industries completed a total unit shipments of 4.4 million, which recorded a 10% decline compared to the prior year shipments of 4.9 million. The gross profit and operating income increased significantly to $32 million and $19 million, respectively. 

The company added $317 million from net sales in comparison to last year’s net sales of $352 million. The decrease in net sales was recorded due to lower volumes and a decline in aluminum prices, which were initially affected by a stronger Euro and favorable product mix. 

The strong point for the company was the improvement of its cash position and having record liquidity during Q3. The total liquidity, including cash and cash equivalents under the revolving credit facilities, was $336 million.

Superior Industries repaid the outstanding amounts on its U.S. and European revolving credit facilities. The funded debt and net debt reduced to $630 million and $519 million, which was supported by an improvement in Adjusted EBITDA and favorable working capital. The Adjusted EBITDA increased 20% to $47 million from the prior year period. 

The ongoing mix shift towards higher content wheel has helped the firm to support the Value-Added Sales growth at or above market throughout 2020, said Majdi Abulaban, CEO of Superior Industries. 

Q4 Outlook

Based on strong third quarter results, the company has raised its free cash flow expectations for full year 2020. Superior Industries International, Inc. (SUP) anticipates Q4 unit shipments between 4.15 to 4.45 million, net sales between $300 to $325 million, and adjusted EBITDA between $40 to $46 million.