Executive Summary

Net sales were $319.0M, Adjusted EBITDA $40.0M (22% of Value-Added Sales), and diluted EPS was a loss of $0.75; sequential margins expanded ~400–430 bps (18% in Q1 to 22% in Q2) despite lower YoY sales due to aluminum pass-through and the SPG deconsolidation .
Guidance was lowered on Net Sales ($1.35–$1.41B), Value-Added Sales ($695–$725M), and Adjusted EBITDA ($150–$165M); Unlevered FCF was maintained ($110–$130M) and Capex cut to ~$40M from ~$50M previously .
A major capital structure catalyst arrived post-quarter: on Aug 15 the company refinanced all existing debt, extended maturities to Dec 2028, and reduced total debt from $627M to $521M, supporting long-term flexibility .
Strategic highlights included completion of production exit from Germany and ramp in Poland, plus a record Volvo program award (~$100M, launches Q4’25) and Audi “A” R&D rating, reinforcing technology and footprint advantages .

What Went Well and What Went Wrong

What Went Well

European transformation executed: exited German manufacturing (SPG) and ramping Poland, expected to deliver $23–$25M annual EBITDA uplift and close margin gap with North America; management emphasized “flawless execution” and strong OEM feedback .
Structural pricing pivot: management moved from one-time recoveries to more permanent price increases to offset inflation, supporting margin resilience in a lower-volume backdrop .
Strategic/customer momentum: record Volvo wheel program (~$100M) with premium aero/lightweight technology and an “A” R&D rating from Audi, strengthening European OEM positioning .

What Went Wrong

YoY top-line pressure: net sales fell to $319.0M from $372.6M on lower aluminum pass-through and deconsolidation; gross profit declined to $31.6M from $41.0M; Adjusted EBITDA fell to $40.0M from $52.0M .
Higher costs and restructuring: SG&A rose to $21.4M (vs $17.0M), and income from operations fell to $10.2M (vs $24.0M), reflecting restructuring tied to the European transformation .
Market headwinds: softer production at key OEMs (industry down ~3%, key customers down ~5%) led management to reduce full-year sales and EBITDA guidance, citing lower volumes in the back half .

Financial Results

Metric	Q2 2023	Q1 2024	Q2 2024
Net Sales ($USD Millions)	$372.6	$316.3	$319.0
Diluted EPS ($USD)	$(0.35)	$(1.52)	$(0.75)
Adjusted EBITDA ($USD Millions)	$52.0	$31.0	$40.0
Adjusted EBITDA Margin (% of VAS)	26%	18%	22%
Gross Profit ($USD Millions)	$41.0	$21.1	$31.6
Income from Operations ($USD Millions)	$24.0	$0.3	$10.2
Net Income (Loss) ($USD Millions)	$(0.1)	$(32.7)	$(11.1)
S&P Global Consensus Revenue ($USD Millions)	N/A (unavailable)	N/A (unavailable)	N/A (unavailable)
S&P Global Consensus EPS ($USD)	N/A (unavailable)	N/A (unavailable)	N/A (unavailable)

Note: Wall Street consensus via S&P Global was unavailable for SUP for Q2 2024; estimate comparisons cannot be provided.

Segment breakdown:

Segment	Q2 2023	Q1 2024	Q2 2024
North America Net Sales ($M)	$208.2	$193.5	$203.2
Europe Net Sales ($M)	$164.4	$122.8	$115.8
Global Net Sales ($M)	$372.6	$316.3	$319.0
North America VAS ($M)	$104.5	$100.7	$108.1
Europe VAS ($M)	$95.8	$71.5	$72.2
Global VAS ($M)	$200.2	$172.2	$180.3

KPIs:

KPI	Q2 2023	Q1 2024	Q2 2024
Wheels Shipped (000s)	3,781	3,623	3,469
Content per Wheel ($)	$52.95	$47.29	$52.21
Cash Flow Provided/Used by Operating Activities ($M)	$(27.6)	$3.5	$(8.0)
Free Cash Flow ($M)	$(37.2)	$(7.5)	$(16.4)
Unlevered Free Cash Flow ($M)	$(16.5)	$7.6	$1.7
Total Debt ($M)	$638.6	$630.2	$627.3
Net Debt ($M)	$457.5	$439.1	$455.0
Value-Added Sales ($M)	$200.2	$172.2	$180.3

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($B)	FY 2024	$1.38–$1.48	$1.35–$1.41	Lowered
Value-Added Sales ($M)	FY 2024	$720–$770	$695–$725	Lowered
Adjusted EBITDA ($M)	FY 2024	$155–$175	$150–$165	Lowered
Unlevered Free Cash Flow ($M)	FY 2024	$110–$130	$110–$130	Maintained
Capital Expenditures ($M)	FY 2024	~$50	~$40	Lowered

Drivers: lower aluminum costs and anticipated OEM production volumes reduce Net Sales/VAS; EBITDA lowered on volume; UFCF held via lower Capex and other actions; Capex reduced as the capital intensity of the business is lowered .

Earnings Call Themes & Trends

Topic	Q4 2023 (two quarters prior)	Q1 2024 (prior quarter)	Q2 2024 (current)	Trend
European transformation (SPG → Poland)	Expect margin uplift; cost in Poland ~half Germany; full transfer by end Q1’24; EBITDA uplift $23–$25M, Capex ~$10M less annually	Completed exit; ramp in Poland; deconsolidation distorting YoY comps; run-rate EBITDA exiting 2024 ~$190M	Fully exited Germany; ramping in Poland; margin to approach NA; benefit to be fully realized in 2025	Positive; execution complete, benefits ramping
Pricing with OEMs	Recoveries “lumpy” in 2023; intention to recover inflation via wheel pricing	Negotiations ongoing; expect recovery of labor/energy inflation; pivot toward permanent pricing	Pricing dialogues pivoted to permanent price increases; small energy indexation in Europe	Structural improvement; reduced reliance on one-offs
Macro/production mix	Detroit 3 down (UAW impact); softer aftermarket; key customers down	Industry down ~2% in regions; key customers down 8%; expects stronger H2	Industry down 3%; key customers down 5%; lowered back-half sales outlook	Mixed; headwinds persist, H2 recovery moderated
Capital structure/refinancing	Plan to avoid notes going current; prefer equity involvement possible	Pursuing refinancing; aim to complete sooner rather than later	Advanced discussions to retire senior unsecured notes “in the very near future”	Catalyst realized post-quarter: refinancing completed Aug 15 with maturity extension and debt reduction
Technology/customer wins	Content per wheel up; lightweighting/aero adoption accelerating	Portfolio aligned with larger/lighter premium wheels; multiple launches	Volvo ~$100M program; Audi “A” R&D rating	Strengthening OEM positioning; supports future growth

Management Commentary

“We have now completely exited our German manufacturing operations and are well on our way, ramping up in [Poland]… This will position us for a significant profitability uplift by the end of this year.” — CEO Majdi Abulaban .
“We have successfully pivoted pricing dialogues with OEMs from one-time price recoveries to permanent price increases.” — CEO Majdi Abulaban .
“Adjusted EBITDA was $40 million… 22% [of VAS]… Lower unit sales, partially offset by favorable price and product mix… lower performance primarily because [Q2’23] benefited from nonrecurring recovery cost inflation.” — CFO Tim Trenary .
“We are in advanced discussions with lenders to retire our senior unsecured notes in the very near future.” — CEO Majdi Abulaban .
“We are lowering adjusted EBITDA to $150 million to $165 million due to lower sales… unleveraged free cash flow remains $110 million to $130 million… Capex now $40 million.” — CFO Tim Trenary .

Q&A Highlights

Volvo award and OEM momentum: Management sees the Volvo win (~$100M) as emblematic of a broader shift with European luxury OEMs given SUP’s new cost structure; Audi praised execution of the insolvency/transfer .
Pricing structure: Most price increases are permanent; a small portion in Europe is indexed to energy (gas/electricity) .
Transformation benefits timing: All wheels manufactured in Poland by Q4’24; annual uplift ($23–$25M) fully reflected in 2025, with partial benefits in H2’24 .
Notes retirement/refinancing: Company declined to discuss specifics until completion; indicated advanced progress and expectation of near-term resolution .

Estimates Context

S&P Global consensus estimates for Q2 2024 EPS and Revenue for SUP were unavailable; as a result, beat/miss analysis versus Street cannot be provided for this quarter. Management indicated sequential margin expansion and lowered FY guidance due to volume headwinds, suggesting Street estimates may need to reflect lower sales and EBITDA trajectories for H2’24 while maintaining UFCF supported by lower Capex .

Key Takeaways for Investors

Sequential margin expansion with Adjusted EBITDA margin up to 22% and diluted EPS loss narrowing quarter-over-quarter; European transformation now executed with benefits ramping through H2’24 into 2025 .
Guidance reset: Net Sales/VAS/EBITDA ranges lowered; UFCF maintained; Capex cut, signaling cash discipline amid lower OEM production — watch for H2 volume trends and pricing durability .
Capital structure derisking: Post-quarter refinancing extended maturities to Dec 2028 and reduced total debt to $521M — a significant catalyst for equity and credit narratives; monitor interest burden and covenant headroom post-transaction .
Strategic/customer wins reinforce medium-term thesis: Volvo program (~$100M) and Audi “A” R&D rating demonstrate technology leadership and local-for-local footprint advantage, supporting content per wheel and mix improvement .
Non-GAAP adjustments and deconsolidation effects matter: SPG deconsolidation and inflation recoveries created YoY comparability noise; focus on VAS, Adjusted EBITDA margin, content per wheel, and ramp progress in Poland for underlying trajectory .
Watch Europe margin convergence and pricing permanence: Management expects Europe margins to approach North America; permanent pricing should temper inflation impacts — a key driver of sustained margin improvement .
Near-term trading lens: Narrative likely driven by progress updates on production ramp, any further OEM wins, and post-refinancing disclosures; estimate revisions may skew cautious on H2 volume but supportive on cash generation given Capex reduction .

SUPERIOR INDUSTRIES INTERNATIONAL INC (SUP)·Q2 2024 Earnings Summary