1. In 2024 we mostly saw limited impact associated with the move as the facilities in Germany were being closed and the Polish facility was getting up to speed but starting from 2025 it should allow for costs lower by ~20m USD when compared to 2023 (as this was before the move)
2. This was due to negative trends in global automotive sales, with Superior actually outperforming as the decline was often lower than pure global sales numbers would indicate.
3. This is probably the proverbial the sword of Damocles as even though the Company doesn't have to repay it once it's due, there will be significant pressure from TPG Growth III as it is nearing the end of its lifecycle being 2015 vintage, this could give Superior a chance for a haircut in the value of as high as 25%. If we use that as a base and include PIK'ed dividends we get a value at Q3 25' of ~250, with a split between debt and equity of 60/40 (based on the idea that TPG would want to avoid losses) we get a possibility of maximum dilution of current shareholders to 40% (realistically we expect better performance too drive share price higher and as such decrease the dilution to ~60%) at current share price. So with a base case (dilution to 60%) for this scenario we get a share price of ~25 USD, in the more conservative scenario (dilution to 40%) we get a share price of ~15 USD.
We hope this helps clear it up, if you have any further questions please let us know.
Hi, this is a really well thought out article although I have 3 questions:
How has the relocation of Superior Industries' operations to Poland impacted its profitability and cash flow?
What are the key factors contributing to the decline in the total number of units produced by Superior Industries from 2019 to 2024?
What are the possible scenarios regarding the preferred shares maturity?
Hi, we are happy to answer your questions!
1. In 2024 we mostly saw limited impact associated with the move as the facilities in Germany were being closed and the Polish facility was getting up to speed but starting from 2025 it should allow for costs lower by ~20m USD when compared to 2023 (as this was before the move)
2. This was due to negative trends in global automotive sales, with Superior actually outperforming as the decline was often lower than pure global sales numbers would indicate.
3. This is probably the proverbial the sword of Damocles as even though the Company doesn't have to repay it once it's due, there will be significant pressure from TPG Growth III as it is nearing the end of its lifecycle being 2015 vintage, this could give Superior a chance for a haircut in the value of as high as 25%. If we use that as a base and include PIK'ed dividends we get a value at Q3 25' of ~250, with a split between debt and equity of 60/40 (based on the idea that TPG would want to avoid losses) we get a possibility of maximum dilution of current shareholders to 40% (realistically we expect better performance too drive share price higher and as such decrease the dilution to ~60%) at current share price. So with a base case (dilution to 60%) for this scenario we get a share price of ~25 USD, in the more conservative scenario (dilution to 40%) we get a share price of ~15 USD.
We hope this helps clear it up, if you have any further questions please let us know.