Superior Industries International, Inc. (NYSE:SUP) Q4 2023 Earnings Call Transcript

Majdi Abulaban: I think even with our 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 carmakers, Europe is going to be down 3% for the whole year. And probably the first quarter, IHS would tell you, they’re down 8%. We see growth in North America. We are incorporating that in our guide. And again, if you peel the onion on our guide, we’re seeing growth of our market, right, market is flat. So it’s all in there, Mehmet, it’s all in there.

Mehmet Dere: And my last question on the working capital, you’ve given already some guidance there. But given that the market volumes are at best flattish for [2/24]. Would you expect some adjustments in the inventory levels you have, so can we expect some inflow maybe from there?

Majdi Abulaban: So 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 and it’s approximately 6% to 7% 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 improvement we expect in the terms or 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 will come back to us. Now having said that, if you’re going to sort of compare ’24 with ’23, we managed very, very, very effectively in ’23, the capital expenditures.

They were $41 million and we are guiding to $50 million in ’24. 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 of the stock and the presumed recovery in turn. So we don’t get to put all that in our pocket if we spend more — a little bit more on capital spending and we do more business in 2024.

Operator: There are no further questions. So I will now hand you back to your host, Majdi, to conclude today’s conference.

Majdi Abulaban: 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 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. Have a great day.

Operator: Thank you for joining today’s call. You may now disconnect.