Superior Industries (SUP) Exceeds Estimates

Superior Industries International, Inc. (SUP) posted income of $14.2 million or 53 cents per share (excluding the loss on sale of the company’s joint venture in Hungary) in the second quarter of 2010, compared with a loss of $21 million or 79 cents per share in the year-ago quarter. The profit, led by an increase in unit shipments, far exceeded the Zacks Consensus Estimate of 21 cents per share.

Consolidated sales more than doubled to $194.6 million from $80.9 million a year ago, driven by a 114% rise in unit shipments and a 14% hike in average selling prices. Sales were higher than the Zacks Consensus Estimate of $155 million.

Unit shipments to Ford Motor Co. (F) increased 68%, General Motors (MTLQQ) shot up 139%, Chrysler jumped 264% and international customers rose 115%.

Gross profit increased to $27.9 million, or 14.3% of net sales, compared with a negative gross profit of $12 million, or 14.9% of net sales in the second quarter of 2009. This was attributed to a rise in wheel production, which significantly affected the absorption of plant-fixed costs. The company’s operating income was $20.6 million, or 10.6% of net sales, versus an operating loss $20.8 million or 25.7% of net sales in the second quarter of 2009.

Superior Industries had cash, cash equivalents and short-term investments of $143.4 million as of June 30, 2010, compared with $169.3 million in the year-ago period. The company has no bank or other interest bearing debt as of the above period.

Superior Industries has a product portfolio geared to suit current market trends. We appreciate the company’s effort to maintain a debt-free balance sheet. We also appreciate the company’s sale of its 50% ownership in the loss making Suoftec joint venture in June this year. The company is currently a Zacks #2 Rank (‘Buy’) in the short term.

SUPERIOR INDS (SUP): Free Stock Analysis Report

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