Superior Industries International Inc. (SUP) reported a net income of $22.3 million or 82 cents per share in the fourth quarter of 2010 compared with a net loss of $3.9 million or 15 cents per share in the same quarter of 2009.
The net income for the quarter included an $859,000 gain from the settlement of forward natural gas contracts while the 2009 quarter was affected by a $4.8 million of severance and other non-impairment costs associated with plant closures and other workforce reductions, partly offset by a market gain of $484,000 on forward natural gas contracts.
Excluding these items, net earnings amounted to $21.4 million or 79 cents per share versus $386,000 or one cent per share during the prior year period. The company’s earnings per share exceeded the Zacks Consensus Estimate by 45 cents.
Consequently, net sales for the quarter climbed up 32% to $191.0 million from $145.0 million a year ago. The improvement was primarily attributed to an 18% growth in sales volume accompanied by a 13% rise in average selling price of wheels, which in turn was driven by higher aluminum prices.
The growth in sales volume was accredited to changes in sales mix and increased shipments. More specifically, unit shipments to Ford Motor Co. (F) increased by 20% , General Motors Company (GM) by 8%, Chrysler by 5% and international customers by 40%.
Alongside, gross profit more than doubled to $29 million from $12 million in the last year led by increased sales volume and the favorable impact of increased plant utilization. The company ran each of its operations at high utilization rates to meet the increased customer demand.
Full Year Performance
The company realized a net income of $51.6 million or $1.93 per share during 2010 including $2.1 million costs relating to plant closure, partly offset by gains on forward natural gas contracts of $1.9 million. However, Superior Industries’ net loss of $94.1 million or $3.53 per share in 2009 included an $18.8 million of expense associated with plant closures and $2.5 million of losses on forward natural gas contracts.
Excluding these non-recurring items, Superior Industries earned a net profit of $51.8 million or $1.94 per share versus a net loss of $72.8 million or $2.74 per share during 2009. With this, the company has beaten the Zacks Consensus Estimate of $1.23 per share.
Net sales also rose 72% to $719.5 million reflecting the ongoing recovery in the automotive sector and positive impact from the company’s efforts to capitalize on the growing opportunities. Gross profit in the year amounted to $89.2 million compared with a gross loss of $10.2 million in 2009.
Financial Position
As of December 31, 2010, Superior industries had working capital of $311.1 million including cash, cash equivalents and short-term investments of $151.6 million. This compared with a working capital of $241.4 million including cash, cash equivalents and short-term investment of $140.5 million as of December 31, 2009.. The company’s balance sheet is devoid of any interest bearing debt.
Our Take
Superior Industries’ improved performance during the quarter as well as during the full year 2010 reflected measures including cost controls, production efficiencies and a strong management. With a further recovery in the global automotive industry, Superior Industries expects to deliver better performances in the upcoming quarters. Thus, the company maintains a Zacks #2 Rank (Buy) on its stock in the short term and we have recommended the shares of the company as Outperform recommendation in the long term.
FORD MOTOR CO (F): Free Stock Analysis Report
SUPERIOR INDS (SUP): Free Stock Analysis Report
Zacks Investment Research
