Superior Ind Announces Share Repurchase

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Superior Industries International, Inc. (SUP) announced that its board of directors has approved share repurchase of up to $30 million of its common stock. The company had roughly 27.3 million outstanding shares at the end of 2012.

The board’s decision followed Superior Industries’ recent announcement to invest $125 million to $135 million for a new manufacturing facility in Mexico. The investment aimed at capacity expansion and meeting anticipated growth in demand.

Superior Industries International, a Zacks Rank #5 (Strong Sell) stock, saw a significant decline in profits to $2.7 million or 10 cents per share in the fourth quarter of 2012 from $12.0 million or 44 cents in the same quarter of 2011 (excluding income tax benefit of $28.2 million). Earnings per share were substantially lower than the Zacks Consensus Estimate of 26 cents.

Revenues in the quarter fell 3% to $210.0 million due to flat sales volume and a reduction in average selling price due to lower aluminum prices. Gross profit decreased to $12.8 million or 6% of sales, from $18.1 million, or 8% in the prior year quarter. The decrease was attributable to higher costs for maintenance and labor, partially offset by lower aluminum prices which are normally passed through customers.

For full year 2012, Superior Industries reported a decline in profits to $30.9 million, or $1.13 per share from $67.2 million or $2.46 in 2011. The decline was largely attributable to a swing to income tax expense of $3.6 million in 2012 from a $25.2 million income tax benefit in 2011. Earnings per share were lower than Zacks Consensus Estimate of $1.28.

Revenues for the year declined marginally to $821.5 million from $822.2 million in 2011. The decline was mainly caused by a 7% rise in sales volume to12.5 million units that was more than offset by a reduction in average selling price, primarily due to a decline in aluminum prices.

As of Dec 31, 2012, Superior Industries had a working capital of $338.3 million, including cash, cash equivalents and short-term investments of $207.3 million. This compared with a working capital of $335.7 million, including cash, cash equivalents and short-term investments of $192.9 million. The company had no bank or other interest bearing debt at the end of the year.

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 Company (GM), Fiat, Ford Motor Co. (F), Jaguar, Land Rover, Mazda, Mercedes Benz, Mitsubishi, Nissan Motor Co., Skoda, Subaru, Suzuki and Toyota Motor Corp. (TM).

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