Executive Summary

Q3 2024 delivered resilient operating performance amid softer OEM production: Net Sales $322M, Value-Added Sales $171M, Adjusted EBITDA $41M (24% of Value-Added Sales), Net Loss $(25)M driven by refinancing costs; margins expanded 200 bps YoY .
Guidance cut across all FY 2024 metrics on lower OEM volumes and aluminum prices: Net Sales to $1.25–$1.33B, Value-Added Sales $680–$700M, Adjusted EBITDA $146–$154M, Unlevered FCF $50–$80M, Capex ~$35M .
Strategic catalyst: completed debt refinancing ($520M new term loan, maturities extended to Dec-2028), reducing total debt by $117M since YE’23 and strengthening financial flexibility .
Operational actions: targeted 15% reduction in SG&A and manufacturing overhead with ~$9.5M restructuring charge in Q4; expected $10–$15M run-rate savings by early 2025 (supports margin durability into 2025) .

What Went Well and What Went Wrong

What Went Well

Margin expansion despite lower volumes: Adjusted EBITDA $41M and 24% margin (vs. 22% prior year) on favorable conversion costs and mix; management highlights strong North America performance and improved European cost structure .
Balance sheet and liquidity strengthened: Refinancing attracted $520M, extended maturities to 2028, retired senior notes; total debt reduced to $521M at Q3-end (from $627M at Q2), positioning for long-term growth .
Commercial momentum: Wins linked to localization tailwinds (NA Japanese OEM ~250k wheels annually from mid-2025) and European aftermarket (~200k wheels); increasing content per wheel supports pricing power .

What Went Wrong

Guidance cut on softer OEM production: FY 2024 ranges lowered across Net Sales, Value-Added Sales, Adjusted EBITDA, and Unlevered FCF due to industry production declines and aluminum price pass-through effects .
Net loss impacted by non-GAAP/one-time items: Q3 recognized $(13)M loss on debt extinguishment and higher SG&A from refinancing and restructuring, driving Net Loss $(25)M and Diluted EPS $(1.24) .
Europe volumes and adoption rates lag: Management cited lower European customer production and adoption; restructuring savings needed to align global overhead with weaker volumes into 2025 .

Financial Results

Quarterly Financials (oldest → newest)

Metric (USD)	Q1 2024	Q2 2024	Q3 2024
Net Sales ($ Millions)	$316.3	$319.0	$321.8
Value-Added Sales ($ Millions)	$172.2	$180.3	$171.0
Adjusted EBITDA ($ Millions)	$30.8	$40.0	$40.8
Adjusted EBITDA Margin (%)	18%	22%	24%
Net Income (Loss) ($ Millions)	$(32.7)	$(11.1)	$(24.8)
Diluted EPS ($)	$(1.52)	$(0.75)	$(1.24)

Q3 YoY Comparison

Metric (USD)	Q3 2023	Q3 2024
Net Sales ($ Millions)	$323.1	$321.8
Value-Added Sales ($ Millions)	$176.0	$171.0
Adjusted EBITDA ($ Millions)	$38.6	$40.8
Adjusted EBITDA Margin (%)	22%	24%
Net Income (Loss) ($ Millions)	$(86.3)	$(24.8)
Diluted EPS ($)	$(3.42)	$(1.24)

Segment Breakdown

Segment	Q1 2024 Net Sales ($M)	Q2 2024 Net Sales ($M)	Q3 2024 Net Sales ($M)
North America	$193.5	$203.2	$206.2
Europe	$122.8	$115.8	$115.5
Global	$316.3	$319.0	$321.8

Segment	Q1 2024 Value-Added Sales ($M)	Q2 2024 Value-Added Sales ($M)	Q3 2024 Value-Added Sales ($M)
North America	$100.7	$108.1	$104.7
Europe	$71.5	$72.2	$66.3
Global	$172.2	$180.3	$171.0

KPIs

KPI	Q1 2024	Q2 2024	Q3 2024
Wheels Shipped (000s)	3,623	3,469	3,381
Content per Wheel ($)	$47.29	$52.21	$50.29

Additional P&L/Cash Flow Notes (Q3 2024)

Gross Profit $28.6M; SG&A $23.9M (increase due to refinancing fees and European transformation costs) .
Loss on extinguishment of debt $(13.1)M related to refinancing; Income from Operations $4.7M; Tax provision ~$1M .
Cash used by Operating Activities $(3.3)M; Free Cash Flow $(9.4)M; Unlevered Free Cash Flow $8.8M .

Guidance Changes

Metric	Period	Previous Guidance (Aug-8)	Current Guidance (Nov-7)	Change
Net Sales	FY 2024	$1.35–$1.41B	$1.25–$1.33B	Lowered
Value-Added Sales	FY 2024	$695–$725M	$680–$700M	Lowered
Adjusted EBITDA	FY 2024	$150–$165M	$146–$154M	Lowered
Unlevered Free Cash Flow	FY 2024	$110–$130M	$50–$80M	Lowered (liquidity needs of new term loan)
Capital Expenditures	FY 2024	~$40M	~$35M	Lowered

Management attributed these changes to lower OEM production volumes, lower aluminum costs, higher working capital, and restructuring costs, while maintaining focus on balancing FCF with term loan liquidity requirements .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
European Transformation	Q1: Exit German SPG; transfer to Poland to improve profitability and footprint . Q2: Completion of relocation; transformation expected to significantly improve profitability .	Benefits materializing despite lower Europe volumes; improved cost absorption and fixed cost performance; more savings in 2025 .	Positive structural margin tailwind; ongoing execution.
Localization Wins	Q1/Q2: Emphasis on premium tech and portfolio supporting OEM needs .	NA Japanese OEM localization (~250k wheels starting mid-2025); EU aftermarket win (~200k wheels in 2025) .	Building commercial momentum; pipeline strengthening.
Volume/Macro	Q1/Q2: Softer production at key OEMs; lumpy price recoveries .	Industry production down ~6% in H2’24; Q4 outlook challenged (Europe −11%, NA −3% per IHS); SUP expects to outperform NA .	Demand headwind intensifying into Q4.
Cost Actions & Restructuring	Q1/Q2: Restructuring costs; SG&A increases linked to transformation .	Target 15% reduction in SG&A/overhead; ~$9.5M Q4 charge; $10–$15M run-rate savings by early 2025 .	Aggressive cost alignment to protect margins.
Pricing/Recoveries	Q2: Lower price increases vs prior year; lumpy recoveries .	Negotiated recurring price increases to recover inflation; lower than prior year onetime recoveries .	Structural improvement in pricing terms; reduces volatility.
Balance Sheet/Refinancing	Q2: In advanced discussions to retire senior notes .	$520M refi complete; maturities to 2028; total debt $521M; net debt $497M .	Financial flexibility improved.
Content per Wheel	Q1/Q2: Content per wheel variability with pricing and FX .	Continued growth; +34% since 2019 (management highlight) .	Mix tailwind supports margins.

Management Commentary

“Our teams executed in a challenging production environment to deliver margin expansion and Adjusted EBITDA growth this quarter… This refinancing significantly strengthens our balance sheet and competitive positioning” — CEO Majdi Abulaban .
“We are adjusting our full-year outlook as production amongst key customers has softened more than expected in the second half… we are working to align costs with the current production environment” — CEO .
“Our low-cost manufacturing footprint, now with all production consolidated in Mexico and Poland, gives us a distinct advantage…” — CEO .
“We are taking action to align our global cost structure… targeted a 15% reduction in SG&A and manufacturing overhead… ~$10–$15M in run rate savings” — CEO .
“Our new term loan facility now matures in December 2028… bolstered our balance sheet, improved liquidity and enhanced our financial flexibility” — CFO Dan Lee .

Q&A Highlights

Regional demand softness: Volumes down in both regions; NA down ~5% YoY, EU down ~6.5% YoY; SUP expects to outperform market in NA and be in line in EU; Q4 industry outlook challenged (EU −11%, NA −3%) .
Restructuring program: Global overhead reduction; ~$9.5M Q4 charge; $10–$15M EBITDA improvement in 2025 run-rate; actions across all facilities .
Margin potential: With normalized volumes, 26–27% value-added EBITDA margin not out of question, contingent on better volumes; management aims to sustain >24% into 2025 .
Refinancing terms: Term loan rate SOFR + 750 bps; Q3 effective rate ~12.6%; quarterly principal payments ~$1.3M begin Q4 .
Working capital: Elevated AR from September sales expected to unwind in Q4; unlevered FCF range reflects liquidity requirements of new term loan .

Estimates Context

S&P Global consensus estimates for Q3 2024 were unavailable due to missing mapping in our data source, so a direct comparison to Street revenue/EPS/EBITDA consensus could not be performed. Management’s actuals are disclosed above and guidance revisions are detailed in the Guidance Changes section [GetEstimates error: SpgiEstimatesError].

Key Takeaways for Investors

Margin resilience: Despite volume headwinds, Adjusted EBITDA margin expanded to 24% and management expects to sustain/improve margins into 2025 with structural cost actions and pricing improvements .
Balance sheet de-risking: Refinancing extended maturities to 2028 and reduced total debt to $521M; expect improved flexibility but note higher interest costs (SOFR+750; ~12.6% effective in Q3) .
Guidance reset: FY 2024 guide lowered across Net Sales, Value-Added Sales, Adjusted EBITDA, and Unlevered FCF; near-term sentiment likely driven by visibility on OEM volumes and Q4 cash conversion .
Cost-down execution: 15% overhead cut with $10–$15M run-rate savings by early 2025 provides a cushion if volumes remain soft; watch Q4 restructuring charge and early 2025 flow-through .
Commercial pipeline: Localization and aftermarket wins (starting 2025) support medium-term mix and content per wheel growth; track ramp and utilization in Poland/Mexico .
Europe stabilization: Structural benefits from deconsolidation and consolidation to Poland should continue, but near-term EU demand remains weaker; mix/pricing and fixed-cost absorption are key .
Liquidity management: Unlevered FCF target lowered to $50–$80M to balance covenant-liquidity needs; monitor working capital unwind and term loan requirements through Q1’25 .

Sources: Q3 2024 8-K earnings release and exhibits ; Q3 2024 earnings call transcript ; Q2 2024 8-K earnings release ; Q1 2024 8-K earnings release ; Aug-15 2024 debt refinancing press release ; Oct-24 2024 earnings release schedule press release .

SUPERIOR INDUSTRIES INTERNATIONAL INC (SUP)·Q3 2024 Earnings Summary