Superior Exceeds but Profits Fall

Superior Industries International Inc. ( SUP - Analyst Report ) reported a 17% decline in net income to $6.7 million in the first quarter of 2012 compared to $8.1 million in the year-ago quarter. On a per-share basis, profits declined 14% to 25 cents per share from 29 cents in the same quarter last year. With this, the company has surpassed Zacks Consensus Estimate by 6 cents per share.

Revenue in the quarter hiked 7% to $202.5 million from $189.5 million in the year-ago quarter, exceeding the Zacks Consensus Estimate of $193 million. Unit shipments boosted by 11% to 3.1 million from 2.8 million in the year-ago quarter. The increase in sales volume led the company to operate at full capacity in order to fulfill the customer’s demands.

Average selling price decreased 3% to $65.58 in the quarter from $67.81 in the same quarter last year. The main reason behind the decline in selling price was the change in average aluminum price.

Gross profit was $17.1 million or 8.5% of sales compared to $16.9 million or 8.9% of sales in the first quarter of 2011. The increase in gross profit was attributable to higher sales volume in the quarter. However, margins declined year-over-year due to product mix changes.

Cost of sales swelled 7% to $185.3 million from $172.7 million in the corresponding quarter of the prior year. The rise in cost was primarily due to higher direct labor expense related to the increased production and certain other factory costs, such as repairs, maintenance and operating supplies.

Superior Industries recorded flat operating income of $10.2 million or 5% of sales in the quarter compared with the prior year. Selling, general and administrative expenses went up to $6.9 million or 3% of sales from $6.7 million or 4% of sales in the corresponding quarter last year.

As of March 25, 2012, Superior Industries had working capital of $342.4 million including cash, cash equivalents and short-term investments of $198.0 million. This compared with working capital of $335.7 million including cash, cash equivalents and short-term investment of $192.9 million as of December 31, 2011. The company’s balance sheet is devoid of any interest-bearing debt.

Based in California, Superior Industries is one of the world’s largest designers and manufacturers of cast aluminum road wheels for the automotive industry. The company’s aluminum road wheels are sold to OEMs such as Audi, BMW, Chrysler LLC, General Motors Company ( GM - Analyst Report ) , Fiat, Ford Motor Co. ( F - Analyst Report ) , Jaguar, Land Rover, Mazda, Mercedes Benz, Mitsubishi, Nissan Motor Co. Ltd. ( NSANY ) , Skoda, Subaru, Suzuki, Toyota Motor Corp. ( TM - Analyst Report ) Volkswagen and Volvo AB ( VOLVY ) for their automobiles and light trucks.

Currently, it retains a Zacks #3 Rank, which implies a Hold rating for the short-term.