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Superior Misses Estimates

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Superior Industries International Inc. (SUP - Free Report) saw its profit slide 56.5% year over year to $6.4 million in second-quarter 2012. The company earned 23 cents per share in the quarter compared with 53 cents per share in the corresponding quarter last year, missing the Zacks Consensus Estimate of 29 cents.

Revenues increased 3% to $215.1 million in the reported quarter, also missing the Zacks Consensus Estimate of $222 million. Average unit selling price declined 10% year over year to $64.22 per wheel in the quarter due to a fall in average aluminum price and depreciation of Mexican peso relative to the U.S. dollar, thus leading to a drop in revenues. Meanwhile, unit shipment jumped 14% to 3.3 million compared with 2.9 million recorded in the year ago quarter.

Revenues from U.S. operations swelled 14% to $86.1 million in the quarter. The year- over-year improvement reflects a 23% increase in unit shipments, offset by an 8% decrease in the average selling price.

Revenues from Mexico operations dipped 3% to $129 million. The decline was due to an 11% fall in the average selling price owing to a fall in aluminum price, which offset a 9% rise in shipments volume.

Gross profit was $15.7 million or 7.3% of sales compared with $19.5 million or 9.4% of sales in the second quarter of 2011. The reduction in gross profit was attributable to product mix challenges, adverse effects of foreign currency translation and manufacturing challenges in the U.S.

Selling, general and administrative expenses went up 17.2% to $7.5 million in the quarter from $6.4 million in the same quarter last year, driven by an increase in legal, audit and consulting expenses. The operating income slipped 36% to $8.2 million from $12.9 million a year ago. Operating income was adversely affected by an unfavorable product mix and foreign currency translation.

As of June 30, 2012, Superior Industries had a working capital of $344.6 million including cash, cash equivalents and short-term investments of $212.3 million. This is compared with a working capital of $335.7 million including cash, cash equivalents and short-term investments 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 major customers of the company are Chrysler, General Motors Company (GM - Free Report) , and Ford Motor Co. (F - Free Report) .  

Ford, General Motors and Chrysler accounted for 37%, 26% and 11% of Superior’s total unit shipment, respectively, in the second quarter. Currently, Superior has a Zacks #3 Rank, which translates into a short term (1 to 3 months) Hold rating.

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