Operator: Thank you for standing by. My name is Archie [ph] and I will be your conference operator today. At this time, I would like to welcome everyone to the Superior Industries’ First Quarter 2025 Earnings Call. We are joined this morning by Majdi Abulaban, President and CEO; Dan Lee, Senior Vice President and CFO. All lines have been placed on mute to prevent any background noise. Thank you. I’ll now hand the call over to Dan Lee. Please go ahead.

Dan Lee: Good morning and welcome to our first quarter 2025 earnings conference call. During our call this morning, we will be referring to our earnings presentation which is available on the Investor Relations section of Superior’s website. I am joined on the call by Majdi Abulaban, our President and Chief Executive Officer. Before I turn the call over to Majdi, I remind everyone that any forward-looking statements contained in this presentation or commented on today are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to Slide 2 of this presentation for the full Safe Harbor statement and to the company’s SEC filings included in the company’s current annual report on Form 10-K and the current quarter’s Form 10-Q for a more complete discussion of forward-looking statements and risk factors.

We will also be discussing various non-GAAP measures today. Non-GAAP measures exclude the impact of certain items and therefore, are not calculated in accordance with U.S. GAAP. Reconciliations of these measures to the most directly comparable U.S. GAAP measure can be found in the appendix of this presentation. I now will turn the call over to Majdi to provide a business and portfolio update. Majdi?

Majdi Abulaban: Thanks, Dan. Hello, everyone and welcome to our first quarter 2025 earnings call. Let’s begin with an overview of the first quarter on Slide 4. We delivered a good start to 2025 despite a challenging macroeconomic environment. Our value-added sales outperformed the market, driven by our leading product portfolio, while our team’s continued focus on execution and cost reduction delivered results. Further, during the quarter, we saw evidence of how our competitively advantaged local-for-local footprint is paying dividends. As the broader industry responds to tariff pressure, especially from China and Morocco, we are seeing an intensified urgency from OEMs to localize production in region as they seek more cost-effective manufacturing partners in both North America and Europe.

More than ever, our local-for-local manufacturing footprint in Mexico and Poland is creating tremendous opportunity. We have seen an unprecedented level of quoting activity in recent months. In fact, year-to-date, we have quoted on more than 53 million lifetime wheels. I will speak more about this in a bit. While tariff tailwinds are accelerating localization momentum in North America and Europe in favor of Superior, we experienced a setback in April as we were notified by certain customers in North America who undertook a major global sourcing activity of their intent to resource existing contracts with minimal wind down notice. This unfortunately represented 33% of our expected revenue in 2025. As such, we immediately shifted focus to working to secure short-term liquidity to mitigate risk to our customers and suppliers and secured a commitment from our term loan lenders, providing access of up to $70 million of additional term loans under our existing credit agreement.

This is, obviously, subject to satisfaction of certain conditions. We are also working towards obtaining covenant relief from our lenders and are having advanced discussions regarding a broader recapitalization transaction with our lenders and preferred shareholders. This is to significantly delever the balance sheet by eliminating the preferred equity instrument and reducing our outstanding debt. This will be done through a debt for equity exchange, leaving Superior with a strong capital structure. If implemented as contemplated, this recapitalization transaction is expected to provide Superior with the financial strength to execute our growth strategies and position us as a premier wheel solutions provider with a competitively advantaged localized footprint and market-leading portfolio of products.

We have made progress in support of our short-term liquidity position given support from our lenders and we are executing self-help liquidity measures, including working capital and capital expenditure reductions. We will also continue working with our lenders and preferred shareholders towards a time action design to deliver a deleveraged company with financial strength to capitalize on the tremendous opportunities ahead. Turning to Slide 5. I spoke briefly regarding our potential transaction. You may recall last year in August 2024, we successfully refinanced our debt which was a key milestone for Superior and a testament to our company’s potential to deliver long-term growth. The result was a stronger financial profile, $117 million reduction in total debt and the extension of our debt maturities to the end of 2028.

Now as you can see on this slide, the contemplated transaction is designed to significantly reduce our debt burden while positioning our company with additional financial flexibility for future opportunities. Turning to Slide 6. As we mentioned in our last earnings call, tariff dynamics in Europe and in North America are presenting unprecedented opportunity for us. Recall that unlike most automotive commodities, the wheel commodity is highly dependent on imports from China and Asia for the U.S. and Morocco and China for Europe. More notably, incremental tariffs on Chinese wheel imports into the U.S. are now more than 100% and on Morocco wheel imports into Europe are almost 50%. This is an extremely favorable tailwind for Superior. We believe that we are the low-cost leader in the industry with a restructured local manufacturing footprint in Poland and in Mexico, ready to support existing customers and new customers.

Slide 7 highlights our proof points and how recent tariff actions are accelerating OEM localization initiatives in our favor. Here, you see the remarkable level of customer RFQs in the last 4 months in Europe and in North America, an all-time record. Year-to-date, we are quoting on more than 53 million lifetime wheels in both regions, twice the level compared to last year at the same time. More encouragingly, many of these quotes are for start of production in 2025 and 2026 which is unusual in the automotive space. Compared to last year, we have 6x the opportunities we saw last year in this category. We are encouraged by these localization dynamics as they will go a long way to support our efforts to mitigate the recent volume losses. I will conclude with Slide 8 which highlights our current position given the updates I shared with you today.

While recent contract losses are regrettable, we are focused on recovering these losses through the many short-term opportunities we are pursuing. Further, we will not give up and we will continue to pursue recovery of these customers given the recent tariff dynamics that are sure to impact them as well. Superior is well positioned to compete in the wheel space with a leading portfolio of products and a competitively advantaged local footprint. We have been talking about localization tailwinds for many years. They are here now. Superior’s journey has been one of perseverance over hardship and unprecedented recent challenges. I am grateful for the hard work and effort of our Superior team. Year-in and year-out, they have prevailed over unprecedented challenges and I am confident we will continue to do so.

I will now turn the call over to Dan to review our financial results in more detail.

Dan Lee: Thank you, Majdi. Beginning on Slide 10, first quarter 2025 financial summary. Net sales for the first quarter was $322 million compared to $316 million in the prior year period. First quarter adjusted EBITDA was $25 million. The associated margin expressed as a percentage of value-added sales was 15%. I will provide color on this in the upcoming pages. Net loss was $13 million in the first quarter which is a $20 million improvement versus the same period last year. The first quarter 2025 year-over-year sales bridge is on Slide 11. Value-added sales were down approximately $3 million compared to the prior year quarter, primarily driven by lower unit sales and the negative impact of FX, partially offset by favorable pricing.

On Slide 12, in the first quarter 2025 year-over-year adjusted EBITDA bridge, adjusted EBITDA for the quarter decreased to $25 million compared to $31 million in the prior year period. The adjusted EBITDA margin for the quarter was 15% compared to 18% in the prior year period. The decrease was mostly due to unfavorable cost absorption due to lower production volumes, the impact of metal timing and lower unit sales, partially offset by favorable FX. An overview of the company’s first quarter 2025 unlevered free cash flow is on Slide 13. Cash provided by operating activities was $24 million for the first quarter compared to $4 million in the prior year period. The increase in cash provided by operating activities was driven by lower working capital.

Capital expenditures in the first quarter were $6 million compared to $7 million in the prior year period, reflecting our continued efforts to reduce the capital intensity of the business. There were $1 million of cash payments for non-debt financing activities in the first quarter compared to $4 million in the prior year period due to picking of dividend payments. Unlevered free cash flow in the quarter was $33 million compared to $8 million in the prior year period. The increase in unlevered free cash flow was primarily driven by lower working capital. An overview of the company’s capital structure as of March 31, 2025, can be found on Slide 14. Total cash on the balance sheet as of March 31, 2025, was $54 million and we did not have anything drawn on the $60 million revolving credit facility.

Net debt at quarter end was $462 million, down $18 million compared to December 31, 2024 and represents 2 consecutive quarters of reducing net debt since refinancing. Superior’s debt maturity as of March 31, 2025, is on Slide 15. As you may recall, we successfully completed our debt refinancing in 2024, attracting $520 million of new capital and extending our term loan maturities to 2028. As mentioned by Majdi, subsequent to the end of the quarter, certain larger North American OEM customers notified Superior that they would be shifting their wheel purchases to other suppliers with immediate effect and minimal wind down. This sudden loss of volumes results in a short-term liquidity constraint and reductions to the company’s earnings generation.

The combination of these items has put in doubt the company’s ability to meet the near-term covenant thresholds in the term loan and revolving credit facility. As mentioned in our earnings release this morning, we have received a commitment letter from our term loan lenders, providing us access up to $70 million of additional term loans under the existing credit agreement. This is subject to certain conditions required by our lenders. We are also discussing with our lenders about getting some flexibility in our financial covenants. In addition, we are actively engaged in advanced dialogue with our lenders and preferred shareholders on a broader recapitalization transaction designed to delever the balance sheet. The results of the successful recapitalization transaction and the access to the incremental funds from the commitment letter would be near-term financial stability and a meaningful improvement to the long-term capital structure.

Given the uncertainty stemming from our subsequent events, ongoing discussions with our lenders and preferred shareholders and challenging macroenvironment with sudden global tariff changes, we are suspending our full year ’25 guidance. Once the environment stabilizes and we have more clarity with our discussions, as previously mentioned, we will provide a comprehensive update, including full year projections. In conclusion, I want to thank the Superior team for their hard work in our challenging operating environment. This has been a challenging quarter for the entire industry and we appreciate everyone’s commitment as we pursue solutions for our near-term headwinds and overall capital structure. As we continue discussions with our lenders and preferred shareholders, we will not be taking any questions during this call.

Majdi?

Majdi Abulaban: Thank you again for joining our call today and many, many thanks for the Superior team for your hard work and efforts. This concludes our call.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

End of Q&A:

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SUPERIOR INDUSTRIES INTERNATIONAL INC

Q1 2025

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