Q4 2023 Superior Industries International Inc Earnings Call
Thank you.
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So slide 12 sums it all up.
Our exciting position in the real space. We are unmatched in many ways.
So, if you look at Europe and North America as a combined market, we are the unmatched number one league from a market standpoint.
As you look at customer diversity, we are in the top three suppliers to U.S. carmakers, German carmakers, Japanese carmakers, and especially North America.
From a manufacturing footprint, I am comfortable saying that no other supplier can offer the low-cost footprint we have, 100% in Mexico and 100% in Poland.
This wheel industry relies heavily on imports from China or manufacturing in Germany, Spain and Italy. We are very much advantaged.
And finally, unmatched technology. When you look at our library, we have the broadest and most comprehensive portfolio in industry.
Advanced lightweighting and aerodynamics demanded by European power makers.
and then larger wheels with premium finishes in North America and the US.
Most importantly, I will tell you that behind what I will call the new superior is a team that has executed day in and day out, and the results show it.
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Slide 13 is what we expect our business to deliver by 2017.
Growth over market driven by our portfolio
EBITDA north of $200 million, beginning in 2025, growing further through our operating leverage.
This, along with a disciplined approach to capital expenditures, will drive strong, strong unlevered free cash flow generation well into the coming years.
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So now I will turn the call over to Tim to provide more detail on our financial results. Tim?
Thank you, Marci.
Let's begin with an update on the transformation of our European operations on page 15.
Generally accepted accounting principles require a deconsolidation of the income statement and balance sheet of the German manufacturing facility, SPG, beginning with commencement of the protective shield proceedings on August 31st.
Accordingly, the financial results of SPG for the last four months of 2023 are excluded from the company's financial receipts.
As is the balanced-sheeted SVG at Iram.
The deconsolidation of SPG gave rise to an $80 million non-cash charge in 2023.
318,000 wheels produced at the facility in the last four months of the year are excluded from superior unit sales.
Approximately $50 million and $32 million, respectively, of net sales and value-added sales are excluded from Superior's 2023 results.
The deconsolidation of SPG had very little impact on adjusted EBITDA.
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Notwithstanding the transfer of wheels from SBG to our Polish operations, it's taken longer than we had planned.
This strategic action and the associated reorganization of the European Administrative Support Functions
R&D, Engineering and Commercial Functions, and the Aftermarket Sales, Administration, and Logistics.
It's a very valuable creative event for the company.
We expect a step change of an annual adjusted EBITDA on completion of the Transfer of Wills of $23 to $25 million.
and a reduction in annual capital expenditures of approximately $10 million.
Importantly, we expect the variable contribution margin in Europe to improve and to be in line with that of North America, 35 to 40 percent.
The expected cost of the transfer of wheels from SPG to our Polish operations is $20 to $35 million.
We are very pleased to pay back on this investment.
The fourth quarter and full year 2023 financial summary is on page 16.
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Net sales decreased to $209 million for the quarter, compared to $402 million in the prior year. For the full year, net sales were $1.4 billion, compared to $1.6 billion in the prior year.
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Value-added sales in the quarter decreased to $169 million, compared to $218 million in the prior year. And for the full year, value-added sales were $748 million, compared to $771 million in the prior year.
Adjusted EBITDA decreased to $23 million for the quarter compared to $58 million in the prior year period. And for the full year, adjusted EBITDA was $159 million compared to $194 million in 2022.
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Call her on the financial performance to follow Momotaro.
In the fourth quarter, we reported net loss of $2 million or loss per dilute share of $0.44.
compared to net income of $17 million or income of $0.25 per diluted share in the prior year period.
Seven million of restructuring charges contributed to the net loss for the court.
For the full year 2023, we reported a net loss of $2.93 million, or a loss per diluted share of $4.73.
compared to net income of $37 million and earnings per delivered share of $0.02 in the prior year.
The $80 million non-cash charge arising from the deconsolidation of SPG and $23 million of restructuring charges contributed very significantly to the $93 million net loss for the year.
The fourth quarter 2023 year-over-year sales bridge is on page 17.
To the far right, aluminum costs passed through to customers, decreased $44 million compared to the prior year period, to $140 million due to lower aluminum prices.
and therefore a lower pass-through of aluminum costs to OEM customers.
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to the far left.
The SVG deconsolidation amounts to $26 million of the decline in value-added sales to $169 million for the fourth quarter of 2023.
Lower unit sales and lower recovery of cost to employees and customers.
partially offset by available product links.
Amounts to a $29 million decline in value-added sales compared to the prior year period.
Stronger Hero resulted in $6 million of foreign exchange benefit.
The full year 2023 year-over-year sales bridge is on page 18.
The SBG deconsolidation, $32 million, amounts to more than all of the $23 million decline in value-added sales in 2023 to $748 million.
Lower unit sales and low recovery of cost inflation to customers.
Offset by a favorable product mix and the stronger Euro.
had a $9 million favorable impact on 2023 value-added sales.
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Aluminum costs passed through to customers decreased $232 million to $637 million in 2023 because of lower aluminum prices.
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On page 19
The fourth quarter of 2023, year-over-year adjusted EBITDA average.
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Justin Ibbidoff in the quarter decreased to $23 million compared to $57 million in the prior year period.
Because SPG is a loss-making facility, the fourth quarter adjusted EBITDA benefits $5 million from the deconsolidation of the entity.
Volume, price, and this was minus $5 million, primarily because of lower unit sales in the quarter compared to the prior year period.
performance and inflation recoveries of minus 34 million
is primarily the result of very significant recovery of cost inflation from customers in the fourth quarter of last year, 2022.
Also impacting year-over-year 4Q2023 financial results are various manufacturing and other inefficiencies.
associated with the transformation of the European business and the UAW strikes.
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The full year 2023 year-over-year adjusted event average is on page 20.
Adjusted EBITDA decreased to $159 million, a 21.3% margin expressed as a percent of value added sales, to $194 million, a 25.2% margin.
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The same can be said for the full year 2023 results as was said for the fourth quarter financial results.
Thank you so much.
More specifically, the full-year results benefited from the SPG deconsolidation, that's $8 million. Lower unit sales is the primary reason volume, price, and mix was minus $10 million.
The performance and inflation recoveries of minus 32 million is primarily the result of more recovery across inflation than customers
in 2022 and in 2023.
In the back half of the year, various manufacturing and other inefficiencies associated with the transformation of the European business and the UAW strides also impacted financial results.
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An overview of the company's fourth quarter and full year 2023 unlettered free cash flow is on page 21.
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We are introducing a new cash flow metric, unlevered free cash flow, because of the impending refinancing of the senior unsecured notes.
Unlevered free cash flow is...
There's cash provided by operating activities.
Lost capital expenditures plus cash interest paid.
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It is the cash-generating power of the enterprise.
and therefore the amount of cash available for debt service and our shareholders.
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Cash flow provided by operating activities was $44 million for the fourth quarter and $64 million for the full year, both lower compared to the prior year due to lower profitability and higher restructuring costs.
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Net cash used in investing activities of $12 million in the fourth quarter was flat compared to the prior year period, and for the full year, $11 million less, down to $46 million from the various initiatives to reduce the capital intensity of the business.
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Cash payments for non-debt financing activities were $6 million for the quarter, up $2 million because of timing of dividend payments, and $16 million for the full year, flat compared to the prior year.
Pre-cash flow was $26 million in the fourth quarter compared to $63 million in the prior year period.
For the full year, free cash flow was $2 million compared to $80 million in the prior year.
Our delivery cash flow is $50 million in the fourth quarter compared to $80 million in the prior year period.
For the full year our levered free cash flow was $80 million compared to $132 million in the prior year.
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On page 22
Unlevered Free Cash Flow Adjusted for Europe Transformation
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Not unexpectedly, the transformation resulted in a temporary increase in working capital.
As of the end of 2023, the company has invested $14 million in safety stock to protect our customers from possible production disruption at SPG.
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We experienced 15 million supplier terms contraction associated with protective shield proceedings and invested 7 million in certain SPG trade supplier clients.
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We also invested $6 million in tooling and capital equipment, and incurred $7 million in closure costs.
2023 unlevered free cash flow adjusted for the year of transformation was 129 million, about the same as unlevered free cash flow generation of 2022.
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An overview of the company's capital structure as of December 31, 2023 can be found on page 23.
Cash on the Balance Sheet at year-end was $202 million. Funded Debt was $638 million at year-end and Net Debt $436 million.
At the end of the year, liquidity, including availability under the revolving credit facility, was $219 million.
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On page 24, you're in a 2023 net debt adjusted for the year of transformation.
We expect a temporary investment of $14 million in safety stock to come back to us this year as the stock is depleted.
There is every reason to believe that supplier terms will normalize to pre-SPG protective shield proceedings levels.
as we put the proceedings behind us.
That's $15 million.
Accordingly, you're in a 2023 net debt adjusted for the year of transplantation is $407 million. $27 million less than that debt that you're in 2022.
Also known as free cash flow generation and therefore deleveraging of the balance sheet the company has enjoyed over the past three years.
Notwithstanding COVID, cost inflation, supply chain disruption, UAW strikes and rising interest rates.
Superior's debt maturity profile as of December 31, 2023 is on page 25.
The revolving credit facility was undrawn at quarter end, but we are in compliance with all loan covers.
Senior unsecured mouse mature in June 2025.
The company has engaged an independent financial advisor to advise on refinancing of the notes.
In conjunction with our advisors, we are evaluating refinancing opportunities in the capital markets.
Refinancing of the notes will likely involve a preferred equity.
It is too early in the process to discuss the capital structure this process might deliver.
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The full year 2024 financial outlook is on page 26.
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For the whole year 2024, we expect net sales in the range of $1.3 to $1.4 billion, and value-added sales in the range of $720 to $770 million.
The sales reflect the impact of having addressed underperforming parts of our real portfolio, thereby optimizing the profitable utilization of manufacturing capacity.
And also light vehicle production in our markets, generally consistent with IHS forecasts.
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We expect an adjustment even of $155,000 to $175,000.
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We anticipate that cost inflation, especially labor and energy, will persist. However, we have ongoing negotiations with OEM customers to recover in wheel price their fair share of inflation.
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We expect to deliver unlevered free cash flow in the range of $110 to $130 million, highlighting the cash-generated power of the enterprise.
Finally, we expect approximately $50 million in capital expenditures as we strategically invest in our business.
in particular finishing and light weighting capabilities.
We model a 25-30% affected tax rate for 2024.
Note that we expect the first quarter of 2024 to be difficult, as we wind up the transfer of wheels from SPG to our manufacturing facilities in Poland.
Also impacting the early part of 2024 is labor and energy inflation.
which we intend to recover from customers.
Furthermore, costs associated with the reorganization of the European Administrative Support and certain other functions.
and the Reorganization of Aftermarket Sales, Administration, and Logistics.
Post or completion of the transfer of wheels to Poland lived that expected performance in the early part of 2024.
On page 27 is the 2024 adjusted EBITDA.
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Guidance Adjusted for European Transformation
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Once again, the European transformation went complete.
is expected to be very valued and believed in the company.
Because the transfer of wheel production from SBG to Poland has bled into 2024, the four-year effect of making the wheels in Poland at very significantly lower cost is not fully reflected in the 2024 financial outlook.
That amount approximates $12 million.
The full year benefit of the reorganization of the European Administrative and other functions
and the aftermarket business approximates $5 million.
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We also expect an improvement in fixed cost absorption and manufacturing performance in the Polish facilities, which amounts to approximately $9 million.
Accordingly, we expect Superior to exit 2024 with a business generating approximately $190 million of adjusted EBITDA on unit sales of just over $15 million.
, and and and and and and
Considering the company's current and expected product list.
Superior has approximately 19 million wheels of installed manufacturing capacity.
recall an important benefit of the European transformation.
Is the variable contribution margin in Europe approaching that of North America?
35 to 40 percent expressed as a percent of value at it sits.
As we develop the book of business in Europe, the improved variable contribution margin should result in improved earnings for superiors.
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In closing, we look forward to wrapping up the transformation of Europe so our manufacturing, engineering, and commercial teams can turn their full attention to providing value to our customers and shareholders.
This concludes our prepared remarks. Mashi and I are happy to take questions.
Allen
Thank you for watching and don't forget to like and subscribe!
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Thank you. Ladies and gentlemen, if you'd like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. To withdraw your question, please press star 2. You'll be advised when to ask your question.
Our first question comes from the line of Michael Watt, Freedom Capital. Your line is open, please go ahead.
Thanks very much. Good morning everyone.
Good morning Michael
From what I can tell with the SPG and the European restructuring, you have two parts. You have the cost of the closure and then you have the transition.
And it sounds like some of those transition costs are going to...
They're going to be a little more severe in the first half of 2024. Is that the right read?
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That is correct. Michael, Tim, do you want to comment on that? Yeah, Mike, you're right. What is happening is that
With respect to the reorganization of the administrative and other support functions, we do a little bit less to expect the aftermarket business, as we organize ourselves in Poland more so rather than Germany, we will be obliged to basically run two sets for a short period of time, a few months.
of personnel because we cannot release the folks in Germany until we have the folks in process in place in Poland. So the first half of the year...
He's a little burdened with that. That's correct.
Hey Michael, just a couple of other points, when you think of that transformation that we're communicating about Europe.
It's multifaceted, right? It's manufacturing, but it has other elements. It's the backbone of the aftermarket business. It's the administrative cost. So there are quite a few transitions.
and this is absolutely transformational for this company.
It will create capabilities unmatched by any and will enable us to grow and use this capacity that Tim talked about. We have 19 million wheel capacity, we're a little bit north of 15, the operating leverage on this business is 35 to 40%.
So I will tell you this thing is coming together in a very, very good way. And by the way, our customers are helping us, Michael.
I, you know, we undertook this, it was a massive undertaking for many reasons, right? But also because of what we had to do to take care of our customers.
So I would say they were very helpful in that process.
And you mentioned, I think in your comments, Majdi, that the operating costs in Poland were about half.
a level in Germany
Yeah, I took a cheap North Star on that one, absolutely. That is correct.
On page 19
Tim in your comments you talked about the performance cost 34 million dollars were negative in the fourth quarter and I think you mentioned that 29 million from customer recoveries is that the 29 million is the bulk of that 34 is that what that is?
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I didn't specifically mention any customer recoveries, but Mike, if you were to go back and look at this exact slide a year ago, the fourth quarter of...
Twenty-two.
Instead of a red blotch here, you see a big green blotch, okay?
And as I called out, or he called out a year ago...
The recoveries, it's just the way they manifest themselves quarter to quarter, we use the term quickly. They were extraordinary in 2022.
and so compared to 23.
Yeah, take the badge.
okay so it's the ball
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Yes, the bulk of this is the disparity in customer recoveries in the quarters.
So, Michael, just two bookends on that. Q4 last year was absolutely extraordinary. Our margins were above 27%.
When we announced Q4 last year, we did say...
that it has outside recoveries from 2021. So that's one point, right? It was extraordinary. But the other piece of it, Michael, is recoveries in the fourth quarter of 23.
Listen, our customers have been good to us. They've cooperated in this transfer and these dialogues about customer recoveries tend to be very very lumpy, right?
So, this is another factor why you'll see that level of customer recovery in the fourth quarter of 2023. So, it's really on both sides of the bookend.
It sounds like that lumpiness comes back the other way in the second half of 24, between the transition with SPG and then also some of the cash recoveries and also from the transition costs and supplier and those sorts of things, the stock.
So it sounds like the first step is when you're...
All right.
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Oh no, that was it. I was just, it sounds like a lot of that lumpiness turns positive in the second half.
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That is a correct conclusion, Michael.
Just lastly, with your guidance, you mentioned capacity of 19 million, but with your guidance going out the next couple of years...
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you talk about 15 million as the so you're basically saying here's what we think we can perform from an earning standpoint in a flat industry environment or flat unit environment is that the right read through?
I'm sorry. I'm sorry. I'm sorry.
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That's alright.
I think he's wondering aloud...
in the United States.
If you could just correct them, they, you know, the...
The earnings and margin uplift is very much tied to this transformation we're seeing in Europe.
Right, so the upside you're talking about are the benefits you're getting from this transformation in Europe. If we get a return to more normalized volume levels in Europe and North America, that provides additional upside on the revenue and earnings.
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That's correct.
Perfect. Thank you, everyone.
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Thanks, Michael.
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Our next question comes from the line of Gary Prestopino, Barrington Research. Your line is open. Please go ahead.
Thank you.
Hey, good morning all.
We have a number of questions here. First of all, just for my understanding, and I think you might have touched on this,
In this transformation in Q4 and basically into Q1 or even Q3, Q4, Q1, you are running two factories in tandem until you can actually get everything transferred to Poland and shut down Germany. Is that correct?
And Gary, that is correct.
Okay so that that that accounts for a lot of the inefficiencies that we saw here in
Thank you.
Q4. One thing I wanted to ask though
Your content per wheel was down.
somewhat dramatically, 20%
and you you're saying that's primarily due to lower recovery of cost inflation from customers
I'm trying to understand just what is going on there for that number to decline.
so dramatically. Is that factoring in, obviously, maybe running the two factories in tandem?
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So, it's a very, Gary, it's a very noisy year, right, with the deconsolidation of SPG, with the mix that's coming from GM and the UAW strike. Actually, if you just...
Peel the onion on a planted palillo.
in 2023.
Average content per wheel has gone up by 3%. Once you adjust it for, okay, we don't have the revenues in the fourth quarter that we had in Germany, and you make the comparison year on year, and you make other adjustments for FX and such,
It's not as impressive as we used to have.
in terms of what we looked at for the year, but it is 3%.
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Uh, that and period. Okay.
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The reason why, the reason why Steve...
is suggesting you look at it over a longer period of time than over the last two years.
as this inflation has
and the industry has had to deal with it in many ways, including, by the way, recovering this cost of inflation through pricing and one-off recoveries, etc.
The bookkeeping for the recoveries is such that it gets
been or bookkept in our books and value-added sales.
So if you look at our content per wheel, which by definition includes pricing and the recoveries, from quarter to quarter it can whipsaw, okay? So it's sort of better looking at it over a longer period of time.
Did you find that?
I was talking for the whole year, you're talking for the fourth quarter.
Right, yeah, that's what I'm getting at. I mean, that's a rather dramatic decline, and I realize there's a ton of noise out there. I guess maybe I should have...
raised the question is there anything that has changed in the industry that would cause that to happen or is that just a function of what's going on with what you're doing with the transformation and I think it's more of the latter, right?
it's more the latter. Absolutely. Absolutely. Okay. I mean, we're always cautious about looking at content for real. By quarter, we like to look at the trend. But I can assure you the fourth quarter has got so much noise that looking at content for real is the last metric you want to look at for the fourth quarter.
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Okay, and then...
I would assume you're using IHS numbers.
to lead you to your guidance for 2024. Is that kind of correct, or at least IHS numbers for your markets?
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Yeah, Gary, that's what we use. Listen, we adjust. We, you know, in several cases IHS sometimes tends to be more optimistic, so we take our knowledge of customers and we make some adjustments, but generally the baseline
Thank you.
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So, in 2023, I remember at the beginning of last year when you guys reported Q4, it was kind of a surprise that you were a little bit sanguine.
You know, we all thought the industry was going to recover, which it did, but you basically said a lot of the recovery was going to be fleet, and you don't participate in fleet. So as you're looking at 2024, what are you anticipating in terms of — do you anticipate that shifting more to production of consumer passenger cars versus fleet?
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Absolutely. So let me just let me start with the noise in the 23, okay? GM was a big deal for us and if you look at IHS data, GM is our largest customer. They were down for the whole year.
Then you look at the quarter, all of them were down 7%. And for us especially, if you remember, that fallow plant was down every other week last year, right? And we have a lot of content on the GM fallow plant.
and then the aftermarket business as well. So, as you go into...
24. We expect to see normalization with our North America customers.
No liberalization on the fleet side and, you know, you look at our fourth quarter actually and the third the aftermarket the entire segment, not just us, in the aftermarket is rebalancing in a very
Thank you.
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Right, right.
So then then that's fine. I just want to understand where you're coming from and then as we look at your numbers on page 13
which you know give a long-term picture of where you think you can be. You're looking at value-added sales up 4.4% on a CAGR.
What kind of market environment
Are you factoring in there in terms of units produced?
growth in units produced over that time period when you aggregate it between
North America. We use IHS
And again, within that, there is the mix of what we want, the businesses we want, where the content...
is coming from and you know the underlying overlay of that 227 outlook so if you look at IHS it's relatively it's marginal growth for the next four years in the industry and when you appeal on your growth we've always said five ten percent
on Facebook at www.facebook.com
If you look at IHRS in the next three or four years, you know, let's say half a percent to one percent, the balance is really content growth and the visibility we have on content from programs we want.
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Okay and then lastly and I'm just trying to flip through the slides here so bear with me. I think you gave a number of like 20 to 35 million of costs associated with what you're doing in Europe.
Thank you.
How much of that was
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taken in 2023 and how much of that remains into 2024. And then as a follow-up to that, you're talking about, you know, another challenging quarter.
in terms of EBITDA for Q1. Would you expect the EBITDA for Q1 to be on par with Q4, lower or a little bit higher? I mean, can you just give us an idea of what you're thinking?
Gary, with respect to your first question, I'm looking at my notes.
and we can back into the number because in my
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comments, my compared comments, I made reference to how much of the
A'ūdhū bi-Llāhi r-Rahmāni r-Rahīm.
was associated with the restructuring of charges in the first half of the year. Bear with me just one moment please.
Yeah.
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There was 23 million restructuring charges associated. 23 of that total is associated with 2020-23. And you can think of the rest of it as being...
in 24, okay?
Okay, so that helps. And then in terms of
You know again, I know you don't give quarterly guidance, but I think it would be very it's pretty important here that We set the expectations in line with with
where you think you could be, given all the noise and the numbers. So is it fair to say that
Bye.
you know, we would see maybe...
flat sequential EBITDA, slightly up, slightly down. Just give us an idea of how we should frame that.
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Yeah, I'm going to give you an idea. It's very fluid, okay, because of all that's going on with the business. What do I mean by this? Our financial results for the first half of the year are going to be very fluid because of the additional costs of completing the transformation in Europe.
and also the negotiations that we're undertaking with the customers. And so to sort of demonstrate how you might think of the year evolving quarter to quarter, if you think about
using the midpoint of the guidance of 165 million for the year and then our comments exiting
the year of the business generating, let's say, $190 million. What that means...
is that there's a ramp during the year because of the cost coming out and presumably the additional wheel price that's coming in. That ramp starts very, very modestly in Q2 and gathers steam in Q3 and Q4.
So, I'm not prepared to give you an exact number, because I don't know how the number is.
is so fluid. But the way I've sort of modeled it is that I see the first quarter and second quarter being somewhat higher, you know, sequentially than it was in the fourth quarter, but not dramatically so.
okay no that's directionally that that's that's good no I appreciate that okay thank you very much
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Thank you, Gary.
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Our next questions come from the line of Mohamed Der from Dutch Bank. Your line is open, please go ahead.
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Hello, guys. Thanks. Can you hear me well?
for joining us.
Great. Just on the relocation to Poland.
As you guys are looking for completion in Q1,
There's never risk for any
legal consequence for you guys which could potentially negatively impact that.
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Mehmet, there's always a risk, right? But I would tell you that our customers are in with us. We have a team that has executed on this very, very well. Most of that product has already been relocated to Poland. Our legal team has been on it and guarding the eyes and crossing the T's. There is risk, but it's minimal there, Mehmet.
We feel good about where we're at.
Okay, that's very clear. I know that you guys are in the early process of the refinancing.
Because there was a comment that you expect basically a ramp-up starting in
in Q2 and more coming in H2 24. Can you give us some color on the timing of the potential refinancing? Is it more expected towards the second half of the year? That's the first question and you are mentioning the preferred equity to be a part of the process.
And also mentioning the notes, but you are not mentioning the term loan. Can we assume that the term loan is going to stay there in place?
What are the plans there?
for joining us. Thank you. Thank you.
So, the final construct of the company's capital structure coming out of this process
is TBD to be determined yet. We are fairly early in the process with our financial advisor exploring the capital markets.
The
The terminal facility that we put in place 14 months ago now, internally we use a term called, we use the term durable.
The facility
to the extent it was practicable to do so, along with the revolving credit facility, was pre-wired. In other words, it contemplated the refinancing of the senior unsecured notes to the extent we could do so within certain ranges. So, the lenders, Oaktree and the three banks, JP Morgan Bank of America and Deutsche Bank, within certain limits,
allow for the company to go out and place additional debt to address the rest of its balance sheet. So the term loan doesn't necessarily have to change. That doesn't mean that it won't change. It may change.
But it has been pre-wired so that it contemplated that we would be undertaking this exercise.
In terms of when this exercise might be complete, as I said, we are on our way, it's early in the process.
We're probing the capital markets, and we shall see there will, I think, not necessarily a necessity, but there will likely be incorporated in this process a change.
One more changes and the TPG the preferred equity security so that that
That will be a part of this exercise.
Having said all of that, the company's intention is to address the senior secured notes timely. We would very much prefer that they not go current, so our intent is to complete this refinancing before the notes go current.
Okay, that's very clear.
on the inefficiencies and the UAW strikes.
You have already given an EBITDA guidance for 2024, and what I want to ask is, is there any upside potential to what you have already guided, given also ongoing discussions with the OEMs as well, or expecting any unwinding from the...
challenges you've seen due to the strikes and the inefficiencies.
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It's a very good question, Mehmet. Listen, I think, you know, even without numbers, if you look at the first half, it's going to be choppy from a market standpoint.
And if you look at the entire year...
I mean, IHS and whatever, what do we know about the car makers, Europe is going to be down you know.
3% for the whole year and probably the first quarter. I just would tell you they're down 8%. We see growth in North America. We are incorporating that.
in our guide. And again, if you feel the onion on our guide, we're saying growth of our market, right? Market is flat. So it's all in there, Mehmet. It's all in there.
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Okay, and my last question on the working capital. You've given already some guidance there, but given that the market's volumes are at best flattish for 2024, would you expect some adjustments in the inventory levels you have? So can we expect some inflow maybe from there?
Yes, we've done, the company has done really a very nice job in managing its working capital.
especially in this very difficult environment the last couple of years. So if you look at our investment in receivables plus inventory, less payables, what we refer to as operating working capital.
expressed as a percent of net sales. It's been fairly flat.
is approximately six to seven percent at the end of the year.
We expect that sort of trend to continue. That's number one. Number two, we do expect some benefit in 24 from the
Thank you. Bye.
Improvement we expect in the terms are some of our supplier terms in Europe once we put these protective shield proceedings behind us and also as we deplete the safety stock that that will come back to us now having said that
If you're going to sort of compare 24 to 23...
We managed very, very, very effectively in 23 of the capital expenditures. There were 41 million in Buryar.
guiding to $50 million in 2024. So that delta will consume some of that recovery of working capital off the balance sheet.
And also, to the extent the sales go up during the year, which they will, just the additional volume will consume some of that recovery.
the stock and the presumed recovery in terms. So we don't get to put all that in our pocket if we spend a little bit more on capital spending and
We do more business in 24.
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Okay, very clear. Thank you very much guys.
Thank you, Robert. Thanks, Thomas.
There are no further questions, so I will now hand you back to your host, Majidi, to conclude today's conference.
Thanks. Thanks everyone for joining today's call. Listen, we have tackled a very challenging 2023.
But we are absolutely excited. We have positioned our company to compete and win
unlike any other period in our history.
And for that, I would like to thank the Superior team for their hard work and effort. Just a fantastic team and bringing us to where we're at today.
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Have a great day
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