Superior Industries Lags Estimate

Superior Industries International Inc. (SUP - Analyst Report) reported a net income of $4.2 million or 16 cents per share in the third quarter of 2011 compared with $10.4 million or 39 cents in the year-ago quarter. Earnings per share were substantially lower than the Zacks Consensus Estimate of 34 cents.

During the quarter, net sales climbed 12.7% year over year to $207.1 million, primarily driven by an increase in the pass-through pricing of aluminum. Net sales from the U.S. operations rose 11% to $77.0 million while the same from the Mexico operations climbed 14% to $130.1 million.

Unit wheel shipments remained almost flat year over year at 2.9 million, despite a 10.8% increase in average unit selling price to $70.48 per wheel. Higher unit shipments to Ford Motor Co. (F - Analyst Report), Nissan Motor Co. Ltd. (NSANY) and BMW were partially offset by lower shipments to Chrysler and General Motors Company (GM - Analyst Report).

Cost of sales increased 18.6% year over year to $194.5 million, primarily due to higher direct labor expense related to the commercialization of new product programs, equipment reliability problems and certain other factory costs, such as repairs and maintenance, operating supplies and wheel development activities. Higher costs in the reported quarter led to a 36% decline in gross profit to $12.6 million.

Operating income also plunged 47.4% to $6 million despite a 20.5% drop in selling, general and administrative expenses.

As of September 30, 2011, Superior Industries had working capital of $328.6 million including cash, cash equivalents and short-term investments of $152.2 million. This compares favorably with working capital of $311.1 million including cash, cash equivalents and short-term investment of $151.6 million as of December 31, 2010. The company’s balance sheet is also devoid of any interest bearing debt.

Based in California, Superior Industries, a Zacks#4 Rank (Sell rating) stock, is one of the world’s largest designers and manufacturers of cast aluminum road wheels for the automotive industry.

Superior Industries’ aluminum road wheels are sold to OEMs such as Audi, BMW, Chrysler LLC, General Motors, Fiat, Ford, Jaguar, Land Rover, Mazda, Mercedes Benz, Mitsubishi, Nissan, Skoda, Subaru, Suzuki, Toyota Motor Corp. (TM - Analyst Report), Volkswagen and Volvo AB (VOLVY) for their automobiles and light trucks.