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Superior Earnings Fall but Meet Ests

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Superior Industries Inc. (SUP - Free Report) posted a 28% decline in earnings per share to 18 cents in the first quarter of 2013 compared with 25 cents in the year ago quarter. Earnings per share were in line with the Zacks Consensus Estimate. Net income declined 26.7% to $4.9 million from $6.7 million in the year-ago quarter.

Revenues in the quarter rose 1.97% to $206.4 million, beating the Zacks Consensus Estimate of $199.0 million. The year over year improvement was driven by stronger sales mix. Unit shipments remained flat at 3.1 million units compared with the year-ago quarter.

Gross profit decreased 21% to $13.5 million or 6.5% of sales, from $17.1 million, or 8.5% in the prior-year quarter. The decrease was attributable to higher operating costs in the largest and oldest U.S. facility of the company and increased labor payments.

Selling, general and administrative expenses in the quarter rose 4.7% to $7.2 million or 3.5% of net sales, from $6.9 million, or 3.4% for the comparable period in 2012. Operating income declined 38.3% to $6.3 million from $10.2 million year ago, mainly due to a drop in gross profit.
Financial Details

As of Mar 31, 2013, Superior Industries had a working capital of $345.3 million, including cash, cash equivalents and short-term investments of $190.1 million. This compared with a working capital of $338.3 million, including cash, cash equivalents and short-term investments of $207.3 million. The company has no bank or other interest bearing debt at the end of the quarter.

New Facility

Superior Industries announced that it will construct a new manufacturing facility in Chihuahua, Mexico. It will invest around $125 million to $135 million for the construction of the facility. The facility has an initial capacity of 2.0 million and 2.5 million wheels annually. The company believes with the completion of construction of the facility by mid 2015 production capacity will improve by 15% to 20%.

Our Take

California-based 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 Co. (GM - Free Report) , Fiat, Ford Motor Co. (F - Free Report) , Jaguar, Land Rover, Mazda, Mercedes Benz, Mitsubishi, Nissan Motor Co., Skoda, Subaru, Suzuki and Toyota Motor Corp. (TM - Free Report) . It currently retains a Zacks Rank #5 (Strong Sell).

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