Overseas Wheel Deals Helping Superior Industries Keep Busy

WALL STREET WEST

New contracts to supply aluminum wheels to foreign automakers have helped Superior Industries International improve its financial results, but slower car sales could be limiting its outlook.

Van Nuys-based Superior's stock is down 9.6 percent this year, to close at $37.75 on May 28, despite a dividend increase and a May 13 announcement that Mazda Motor Corp. will buy more of its 17-inch wheels for the well-received Mazda 6 sedan. Earlier, the company cut a deal to ship new aluminum wheels for Mitsubishi Motors' Endeavor sports-utility vehicle.

Foreign auto firms now account for 14 percent of Superior's sales, up from 11 percent in 2001. The company supplies wheels for the Toyota Camry as well as to Germany's DaimlerChrysler, which installs them on its novelty Chrysler PT Cruiser and Dodge Durango pickup.

These contracts have been a growth driver for Superior.

Net income for the first quarter ended March 31 was $22.3 million (83 cents per diluted share), compared with $17.3 million (65 cents) in the year-ago period. Revenues rose 12 percent, to $208 million.

Superior has made inroads with foreign automakers by touting its product's cost-effectiveness compared with steel wheels and using its two largest customers, General Motors Corp. and Ford Motor Co., as examples.

"We have to meet everyone's requirements. It's a high-wire balancing act, but we do it," said Jeff Ornstein, Superior's chief financial officer.

Superior has also tried to steal market share from its largest rival, auto parts firm Hayes Lemmerz International Inc. while that company is in bankruptcy. Northville, Mich.-based Hayes is expected to emerge from Chapter 11 in June.

But despite a planned expenditure of $80 million this year for expanding plants in the U.S. and Mexico, a slowing auto market may cut into Superior's growth.

Morgan Stanley analyst Stephen Girsky reduced his second quarter estimates for the company by 12 percent, to 67 cents per share, mainly due to a 9.2 percent decline in North American car production that Girsky expects. Ford is also producing fewer of its Mustang and Focus models, both of which are equipped with Superior's wheels.

"We believe it will be difficult for (Superior) to show multiple expansion," said Girsky.

RiShawn Biddle

Double Take

Investors by now are accustomed to companies restating previous years' earnings and even revenues downward.

But shareholders in Sports Club Co. will actually see a slight boost in revenues after the company's restatement, announced on May 27.

The Los Angeles-based operator of health clubs disclosed that its accounting firm, KPMG, had not been properly recognizing "private training" revenues. Because of rules set by the recently passed Sarbanes-Oxley Act on corporate governance, the company will have to revise its revenues and earnings upwards for this quarter, as well as the previous five years.

"It's just a redistribution of income and expenses to reflect a more appropriate version of events," said Sports Club Co-Chief Executive Rex Licklider.

In a May 15 Securities and Exchange Commission filing, Sports Club said it would have to delay the release of first-quarter earnings "due to the complexities" of recognizing those revenues. Licklider expects to release its numbers this week.

Sporadically traded shares of the company changed hands at $2.80 on May 22, the last time they traded. The company is awaiting final approval of an independent shareholders' committee of its plans to go private.

Licklider expects the committee to render its decision within the next two months. If approved, the buyout would be completed by September.

RiShawn Biddle

Tuna Wars

Bumble Bee Seafoods, the San Diego-based tuna canner, was acquired by investor firm Centre Partners Management LLC and the company's management team for an undisclosed price from former owner Omaha-based ConAgra Foods.

"We're looking at this as an opportunity to build a hell of a business here, and a profitable one," said Christopher Lischewski, president and chief executive of Bumble Bee.

Lischewski said the purchase was driven by ConAgra's decision that Bumble Bee didn't fit into its overall product mix. "Seafood was never a core category for them," he said.

For the past two years, Bumble Bee has had revenues of more than $500 million and is ranked as the second-largest tuna canner in North America behind Star Kist, which had revenues last year of more than $600 million, according to a trade association report.

Lischewski is aiming at boosting Bumble Bee's annual sales to more than $1 billion in five years.

"I don't know exactly how we'll get there but part of it will be organically, part of it will be through acquisition, and part of it will be internationally," he said.

While Lischewski didn't disclose management's stake in the new entity, he said it was "significant." The majority owner is Centre Partners, with offices in New York and Los Angeles. The firm has invested more than $3 billion into some 80 private companies since its founding in 1986.

When Bumble Bee was acquired by ConAgra in 2000 from International Home Foods, it was allowed to run as an independent operation. ConAgra is the nation's second-largest food company with more than $2 billion in annual sales.

Bumble Bee has about 75 employees at its Kearny Mesa headquarters, and about 3,000 employees overall, most at offshore packing plants in Puerto Rico, Ecuador, Trinidad & Tobago and Fiji. It also operates a plant in Santa Fe Springs that employs 250 people.

San Diego, which used to be the capital of the tuna processing industry, is also home to Chicken of the Sea International, the third-largest tuna processing firm in sales.

Chicken of the Sea is a subsidiary of Thai Union, a Thailand-based corporation. Most of the world's tuna fishing fleets are based in Samoa and operate in the Western Pacific.

San Diego Business Journal

Gas Deal

SpectraSensors Inc., an Altadena-based developer of laser-based gas detection technology, raised $2 million in venture capital financing from Blueprint Ventures and Newport Beach-based Forrest Binkley & Brown, both previous investors in the company.

At the same time, SpectraSensors acquired the intellectual property of fiber optic components maker Tunable Photonics Corp. The company targets its products for homeland security, medical, and industrial applications. "The cash will be used for expanding our R & D and new product lines," said John Kelly, director of marketing at SpectraSensors.

SpectraSensors was founded in 1999 as a spin-off the NASA/Caltech Jet Propulsion Laboratory in Pasadena.

Michael Thuresson

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