Superior Industries (SUP) Increases Debt Offering To EUR 250M

Superior Industries International Inc. (NYSE:SUP) has increased its debt offering to €250 million aggregate principal senior notes, priced at 6.00% due 2025. The notes will be general unsecured obligations of the company and will be guaranteed, with certain exceptions, by Superior’s existing and future domestic subsidiaries.

Originally, the company had intended to offer €240 million but increased it by €10 million. The net proceeds from the offering are expected to be used to repay all outstanding balances under the €240 million bridge loan that was entered into for the purchase of the outstanding shares of UNIWHEELS. Remaining proceeds will be utilized for the repayment of a portion of the existing term-loan facility.

The company also expects to slash its dividends to 9 cents per share post the UNIWHEELS acquisition, to help deleverage.

Superior Industries acquired UNIWHEELS AG for around $715 million by purchasing 100% of the company’s outstanding shares. Headquartered in Germany, UNIWHEELS is the third largest supplier of aluminum wheels to the European OEM automotive market apart from being a leading manufacturer of the same for the automotive aftermarket in the region.

Superior Industries reaffirmed its fiscal 2017 outlook for net sales, value-added sales and unit volume growth. The company projects revenues in the range of $730–$750 million compared with $732.7 million reported in 2016. It also expects 2017 value-added sales, which are net sales minus the value of aluminum passed through to customers, to be in the range of $400–$410 million compared with $408.7 million reported in 2016.

The company expects adjusted earnings before income tax depreciation and amortization (EBITDA) to increase to $97–$105 million from $88.5 million in 2016. However, the above outlook does not include the future impact from the acquisition of UNIWHEELS.

Price Performance

Superior Industries has underperformed the Zacks categorized Auto/Truck-Original Equipment industry in the last three months. The company’s share price dipped 24.9% during this period against the industry’s gain of 7.6%.

Zacks Rank & Stocks Picks

Superior Industries currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the auto space include Dana Inc. (NYSE:DAN) , Allison Transmission Holdings Inc. (NYSE:ALSN) and Ferrari N.V. (NYSE:RACE) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dana has expected long-term growth rate of 3%.

Ferrari has expected long-term growth rate of 14.1%.

Allison Transmission has expected long-term growth rate of 11%.

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