Annual Report on Form 10-K for the fiscal year ended December 31, 2024

Executive Summary

Superior Industries International, Inc. is a leading designer and manufacturer of aluminum wheels for the automotive industry. The company’s primary markets are North America and Europe, where it sells wheels to original equipment manufacturers (OEMs) as well as the European aftermarket.

In 2024, Superior faced a number of challenges that impacted its financial performance. Automotive industry production volumes in North America and Europe declined 3.9% compared to 2023, driven by supply chain disruptions, cost inflation, and the lingering effects of the COVID-19 pandemic. The company also dealt with the deconsolidation of its German subsidiary, Superior Industries Production Germany GmbH (SPG), which filed for insolvency in 2023.

Financial Performance Overview

For the fiscal year ended December 31, 2024, Superior reported net sales of $1.27 billion, down 8.5% from $1.39 billion in 2023. This decrease was primarily due to lower aluminum and other pass-through costs, as well as lower sales volumes and a less favorable product mix and pricing.

Superior’s gross profit for 2024 was $110.5 million, or 8.7% of net sales, compared to $115.7 million, or 8.4% of net sales, in 2023. The slight improvement in gross margin was offset by a $6.3 million decrease in selling, general and administrative (SG&A) expenses.

The company reported a net loss of $78.2 million, or $4.25 per diluted share, in 2024 compared to a net loss of $92.9 million, or $4.73 per diluted share, in 2023. The reduced net loss was primarily due to the $79.6 million loss on deconsolidation of SPG recorded in 2023, which did not recur in 2024.

Segment Performance

Superior operates in two geographic segments: North America and Europe.

North America:

• Net sales decreased 1.0% to $786.1 million, primarily due to lower aluminum and other pass-through costs and a less favorable product mix, partially offset by higher sales volumes.
• Segment income from operations decreased 16.9% to $43.0 million, driven by the lower product mix and pricing as well as higher material and conversion costs.

Europe:

• Net sales decreased 18.6% to $481.2 million, mainly due to lower sales volumes, aluminum and other pass-through costs, and product mix.
• Segment loss from operations improved significantly to $13.8 million, compared to a $103.2 million loss in 2023. This was primarily attributable to the $79.6 million loss on deconsolidation of SPG in 2023, as well as lower material, conversion, and SG&A costs, partially offset by the volume decline.

Liquidity and Capital Resources

As of December 31, 2024, Superior had total available liquidity of $44.7 million, including $39.7 million in cash and cash equivalents and $42.5 million in unused commitments on its revolving credit facility. The company is required to maintain minimum contractual liquidity of $37.5 million under its credit agreements.

In August 2024, Superior amended and restated its term loan facility, increasing the principal amount to $520.0 million. The proceeds were used to refinance the previous term loan, redeem the company’s outstanding senior notes, and for general corporate purposes. Superior also amended its revolving credit facility to extend the maturity date and adjust certain financial covenants.

The company’s credit agreements require it to maintain certain financial ratios, including a Secured Net Leverage Ratio and a Total Net Leverage Ratio. As of December 31, 2024, Superior was in compliance with all covenants.

Superior expects capital expenditures in 2025 to be between $30.0 million and $40.0 million, primarily for improving production quality and efficiency, extending the useful lives of existing equipment, and funding new product offerings.

Industry Trends and Outlook

The automotive industry faced several headwinds in 2024, including supply chain disruptions, cost inflation, and the lingering effects of the COVID-19 pandemic. These factors led to a 3.9% decline in light vehicle production volumes in Superior’s primary markets of North America and Europe compared to 2023.

Looking ahead, the industry is expected to continue facing challenges. IHS forecasts a 3.8% decline in production volumes in 2025, with a 5.6% decrease in Western and Central Europe and a 2.1% decline in North America. Production volumes for Superior’s key customers are projected to decrease 5.0%, with a 6.6% drop in Europe and a 4.0% decline in North America.

The company’s financial performance is closely tied to automotive industry production volumes, as well as the mix of vehicles produced (larger vehicles with premium wheels typically generate higher sales). Superior’s ability to pass through changes in aluminum and other costs to its OEM customers is also a key factor in its profitability.

Strengths and Weaknesses

Strengths:

• Diversified global customer base, including North American, European, and Asian OEMs
• Strong market position in the aluminum wheel industry, particularly in North America and Europe
• Ability to pass through changes in aluminum and certain other costs to OEM customers

Weaknesses:

• Dependence on the automotive industry, which is cyclical and facing near-term headwinds
• Exposure to cost inflation, particularly for raw materials and energy
• Deconsolidation of the German subsidiary, SPG, which contributed to the company’s losses in 2023

Outlook and Conclusion

The outlook for Superior Industries remains challenging in the near term, as the automotive industry continues to grapple with supply chain issues, cost inflation, and declining production volumes. The company’s financial performance is closely tied to these industry trends, and it will need to navigate these headwinds effectively to return to profitability.

However, Superior’s strong market position, diversified customer base, and ability to pass through certain costs to OEMs provide some resilience. The company’s recent debt refinancing and amendments to its credit facilities also improve its financial flexibility and liquidity position.

Overall, Superior Industries faces a difficult operating environment, but its core strengths and strategic initiatives may help it weather the current industry challenges and position the company for improved performance in the future.