Tower International Reports First Quarter Results, Increases Guidance for Second Quarter and Full Year

LIVONIA, Mich., May 3, 2012 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced its first quarter 2012 results and raised its outlook for the second quarter and full year.

  • Revenue for the quarter was $618 million, up 3 percent from $600 million in the first quarter 2011. 
  • Adjusted EBITDA for the quarter was $50.8 million.  As expected, this was down from $65.7 million a year ago, but it was at the high end of company guidance.  The decline from first quarter 2011 largely reflected non-recurrence of a customer volume reimbursement and a different quarterly cadence of productivity savings. 
  • Net loss of $0.2 million for the first quarter 2012 compared with net income of $9 million a year ago.  As detailed below, this year's first quarter included certain items that adversely impacted results by $4.7 million.  Excluding these items and comparable items in the first quarter of 2011, diluted adjusted earnings per share were $0.23, compared with $0.57 per share a year ago. 
  • Free cash flow in the first quarter was a seasonally negative $30.2 million, in line with company guidance. 
  • Liquidity at quarter-end remained strong, at $239 million
  • For the second quarter, Tower now anticipates Adjusted EBITDA of $60 to $65 million, an improvement of $4 to $9 million from prior guidance.
  • For the full year, guidance for Adjusted EBITDA is increased by $5 to $15 million, to $210 to $220 million, on anticipated sales of about $2.4 billion.

"While 2012 remains a transition year for Tower, there are promising signs in overall industry volume and our performance that the transition to profitable growth in 2013 will be smoother than previously anticipated," said President and CEO Mark Malcolm.

Tower to Host Conference Call Today at 1 p.m. EDT

Tower will discuss its first quarter 2012 results and other related matters in a conference call at 1 p.m. EDT today.  Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company's website or by telephone.  The slide presentation and webcast can be accessed via the investor relations portion of Tower's website www.towerinternational.com.  To dial into the conference call, domestic callers should dial 1-866-393-4576, international callers should dial 1-706-679-1462.  An audio recording of the call will be available approximately two hours after the completion of the call.  To access this recording, please dial 1-800-585-8367 (domestic) or 1-404-537-3406 (international) and reference Conference I.D. #73174452.  A webcast replay will also be available and may be accessed via Tower's website.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: "Adjusted EBITDA", "free cash flow," "net debt," and "diluted adjusted income / (loss) per share." We define Adjusted EBITDA as net income / (loss) before interest, taxes, depreciation, amortization, restructuring items and other adjustments described in the reconciliations provided in this press release.  Free cash flow is defined as net cash provided by or used in operating activities less cash disbursed for purchases of property, plant and equipment. Net debt is defined as total debt less cash and cash equivalents.  Diluted adjusted income / (loss) per share excludes the impact of certain items as described below that are included in our net income / (loss).  We use Adjusted EBITDA and free cash flow as supplements to information provided in accordance with generally accepted accounting principles ("GAAP") in evaluating our business and they are included in this press release because they are principal factors upon which our management assesses performance.  We believe these items as well as the non-GAAP financial measures of net debt and diluted adjusted income / (loss) per share are useful to investors as they provide an additional tool for investors to use in evaluating operating results and trends, and in comparing our financial results with other companies.  Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP are set forth below.  The non-GAAP measures presented are not measures of performance under GAAP and should not be considered as alternatives for the most directly comparable financial measures calculated in accordance with GAAP. Other companies in our industry may define these non-GAAP measures differently than we do and, as a result, these non-GAAP measures may not be comparable to similarly titled measures used by other companies in our industry.   In addition, certain of our non-GAAP financial measures exclude financial information that some may consider important in evaluating our performance.  Given the inherent uncertainty regarding special items and other expense in any future period, a reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is not feasible.  The magnitude of these items, however, may be significant.

Forward-Looking Statements and Risk Factors

This press release contains statements which constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding the company's projected revenue, Adjusted EBITDA, free cash flow, earnings, financial results and its future sales growth outlook. The forward-looking statements can be identified by words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "project," "target," and other similar expressions.  Forward-looking statements are made as of the date of this press release and are based upon management's current expectations and beliefs concerning future developments and their potential effects on us.  Such forward-looking statements are not guarantees of future performance.  The following important factors, as well as risk factors described in our reports filed with the SEC, could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements:

  • automobile production volumes;
  • the financial condition of our customers and suppliers;
  • our ability to make scheduled payments on our indebtedness and comply with the covenants and restrictions contained in the instruments governing our indebtedness;
  • our ability to refinance our indebtedness;
  • our ability to generate non-automotive revenues;
  • risks associated with our non-U.S. operations, including foreign exchange risks and economic uncertainty in some regions;
  • any increase in the expense and funding requirements of our pension and other postretirement benefits;
  • our customers' ability to obtain equity and debt financing for their businesses;
  • our dependence on our largest customers;
  • pricing pressure from our customers;
  • work stoppages or other labor issues affecting us or our customers or suppliers; and
  • costs or liabilities relating to environmental and safety regulations.

We do not assume any obligation to update or revise the forward-looking statements contained in this press release.

Contact:
Derek Fiebig
Executive Director, Investor & External Relations
(248) 675-6457
fiebig.derek@towerautomotive.com

  






TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts - unaudited)













Three Months Ended March 31,



2012


2011






Revenues


$    617,563


$    599,635

Cost of sales


557,425


530,065

Gross profit


60,138


69,570

Selling, general and administrative expenses


38,052


37,722

Amortization expense


1,177


892

Restructuring and asset impairment charges, net


1,934


483

  Operating income


18,975


30,473

Interest expense 


15,676


12,518

Interest income


327


263

Other expense


-


850

Income before provision for income taxes


3,626


17,368

Provision for income taxes


2,350


6,613

        Net income


1,276


10,755

Less: Net income attributable to the noncontrolling interests


1,434


1,733

Net income / (loss) attributable to Tower International, Inc.


$         (158)


$        9,022






Weighted average common shares outstanding





Basic


19,691,679


19,101,588

Diluted


19,691,679


19,890,083






Net income / (loss) per share attributable to Tower International, Inc.:





Basic


$        (0.01)


$          0.47

Diluted


(0.01)


0.45







  






TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands - unaudited)













March 31, 2012


December 31, 2011






ASSETS





Cash and cash equivalents


$             134,019


$                   134,984

Accounts receivable, net of allowance of $3,763 and $3,612


358,135


327,992

Inventories


101,547


85,100

Deferred tax asset - current


14,997


12,966

Assets held for sale


4,127


4,027

Prepaid tooling and other


71,015


56,189

Total current assets


683,840


621,258






Property, plant and equipment, net


686,575


667,686

Goodwill


65,845


63,983

Deferred tax asset - non-current


14,435


14,450

Other assets, net


29,099


30,001

Total assets


$          1,479,794


$                1,397,378






LIABILITIES AND STOCKHOLDERS' EQUITY





Short-term debt and current maturities of capital lease obligations


$             120,528


$                   109,447

Accounts payable 


414,070


395,287

Accrued liabilities


136,139


126,416

Total current liabilities


670,737


631,150






Long-term debt, net of current maturities


482,201


461,838

Obligations under capital leases, net of current maturities


11,793


12,213

Deferred tax liability - non-current


13,382


11,229

Pension liability


93,203


96,223

Other non-current liabilities


94,580


87,265

Total non-current liabilities 


695,159


668,768

  Total liabilities


1,365,896


1,299,918






Stockholders' Equity:





Tower International, Inc.'s stockholders' equity





Common stock, $0.01 par value, 350,000,000 authorized, 20,015,281
issued and 19,708,416 outstanding at March 31, 2012, and 19,983,403
issued and 19,683,032 outstanding at December 31, 2011


200


200

Additional paid in capital


315,771


311,427

Treasury stock, at cost, 306,865 shares as of March 31, 2012 and 300,371
shares as of December 31, 2011


(5,213)


(5,130)

Accumulated deficit


(184,650)


(184,492)

Accumulated other comprehensive loss


(71,299)


(82,002)

Total Tower International, Inc.'s stockholders' equity


54,809


40,003

Noncontrolling interests in subsidiaries


59,089


57,457

Total stockholders' equity


113,898


97,460






Total liabilities and stockholders' equity


$          1,479,794


$                1,397,378











  







TOWER INTERNATIONAL, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



(Amounts in thousands - unaudited)










Three Months Ended March 31,




2012


2011









OPERATING ACTIVITIES:






Net income

$    1,276


$  10,755



Adjustments required to reconcile net income to net cash provided by /
(used in) operating activities:






Deferred income tax provision

68


1,333



Depreciation and amortization

25,687


30,147



Non-cash share-based compensation

4,344


3,698



Pension expense, net of contributions

(2,236)


(1,392)



Change in working capital and other operating items

(23,459)


(58,503)



Net cash provided by / (used in) operating activities

$    5,680


$ (13,962)









INVESTING ACTIVITIES:






Cash disbursed for purchases of property, plant and equipment, net

$ (35,917)


$ (26,698)



Net assets acquired, net of cash acquired

-


(11,254)



Net cash used in investing activities

$ (35,917)


$ (37,952)









FINANCING ACTIVITIES:






Retirement of senior secured notes

$            -


$ (17,000)



Purchase of treasury stock

(83)


-



Proceeds from borrowings

183,690


139,296



Repayments of  borrowings

(157,157)


(88,756)



Net cash provided by financing activities

$  26,450


$  33,540









Effect of exchange rate changes on cash and cash equivalents

$    2,822


$    2,524









NET CHANGE IN CASH AND CASH EQUIVALENTS

$      (965)


$ (15,850)









CASH AND CASH EQUIVALENTS:






Beginning of period

$134,984


$150,345









End of period

$134,019


$134,495






















































  










TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended March 31,



2012


2011



Revenues


Adjusted EBITDA


Revenues


Adjusted
EBITDA

International


$ 336,532


$ 25,303


$  336,104


$          33,776

Americas


281,031


25,521


263,531


31,931

Consolidated


$ 617,563


$ 50,824


$  599,635


$          65,707




























Adjusted EBITDA reconciliation


Three Months Ended March 31,


Last Twelve Months Ended March 31,



2012


2011


2012


2011

Adjusted EBITDA


$   50,824


$ 65,707


$  212,730


$        205,205

Restructuring


(1,934)


(483)


(4,111)


(10,664)

Depreciation and amortization


(25,687)


(30,147)


(110,118)


(114,542)

Acquisition costs and other


(68)


(105)


(1,516)


(443)

Expense related to the compensation programs


(4,160)


(4,499)


(18,012)


(15,416)

Interest expense, net


(15,349)


(12,255)


(64,249)


(64,564)

Other expense


-


(850)


(481)


(2,150)

Provision for income taxes


(2,350)


(6,613)


(10,549)


(12,776)

Net income attributable to noncontrolling interests


(1,434)


(1,733)


(4,810)


(8,040)

Net income / (loss) attributable to Tower International, Inc.


$      (158)


$   9,022


$    (1,116)


$         (23,390)




























Free cash flow reconciliation




Three Months Ended March 31,







2012


2011

Net cash provided by / (used in) operating activities






$      5,680


$         (13,962)

Cash disbursed for purchases of PP&E, net






(35,917)


(26,698)

Free cash flow






$  (30,237)


$         (40,660)




























Net debt reconciliation






March 31,


December 31,







2012


2011

Short-term debt and current maturities of capital lease obligations






$  120,528


$        109,447

Long-term debt, net of current maturities






482,201


461,838

Obligations under capital leases, net of current maturities






11,793


12,213

Total debt






614,522


583,498

Less: cash and cash equivalents






(134,019)


(134,984)

Net debt






$  480,503


$        448,514










  







TOWER INTERNATIONAL, INC. AND SUBSIDIARIES


CERTAIN ITEMS INCLUDED IN NET INCOME / (LOSS)


(Amounts in thousands, except per share amounts - unaudited)
















Three Months Ended




March 31,




2012


2011






Income / (expense) items included in net income / (loss), net of tax:






Selling, general and administrative expenses






Incentive compensation related to funding events


$ (4,029)


$ (4,349)


Interest expense






Acceleration of the amortization of debt issue costs and OID


-


(753)


Settlement of value added tax audit in Brazil


-


2,838


Restructuring expense






Severance costs in Europe


(715)


-


Adjustment of lease liability


-


754


Other income






Retirement of senior secured notes


-


(850)


Total items included in net income / (loss)


$ (4,744)


$ (2,360)








Net income / (loss) attributable to Tower International, Inc.


$    (158)


$  9,022








Memo:  Average shares outstanding (in thousands)






Basic


19,692


19,102


Diluted


19,692


19,890








Income / (loss) per common share (GAAP)






Basic


$   (0.01)


$    0.47


Diluted


(0.01)


0.45








Diluted adjusted income / (loss) per share (non-GAAP)*


0.23


0.57








* Excludes the certain items shown above
























SOURCE Tower International, Inc.



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