Tower International Reports Fourth Quarter Results Better Than Guidance and Outlines Anticipated Above-Industry Growth in 2016

Feb 11, 2016, 08:00 ET from Tower International, Inc.

LIVONIA, Mich., Feb. 11, 2016 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered automotive structural metal components and assemblies,  today announced fourth quarter 2015 results, provided a preliminary outlook for 2016, and discussed related business developments.   

  • Revenue for the fourth quarter was $494 million.  At constant exchange rates, revenue was $525 million, up 5% from $502 million in the fourth quarter 2014, more than explained by growth in North America and Europe. 
  • Adjusted EBITDA for the quarter was $45.5 million, compared with $48.8 million a year ago.  The year-over-year decline reflected the planned and anticipated up-front expenses associated with the major new business awarded to Tower North America in 2015, in addition to unfavorable currency translation.
  • Net income in the fourth quarter was $145.1 million, compared with a loss of $20.6 million last year.  As detailed below, this year's fourth quarter included certain items which favorably affected results by $130.7 million, reflecting primarily the release of a U.S. tax valuation allowance.  Excluding these items and comparable items in the fourth quarter of 2014, diluted adjusted earnings were $0.67 per share, compared with $0.74 a year ago.
  • Compared with prior Company guidance, fourth quarter revenue was better by $6 million, adjusted EBITDA was better by $0.7 million, and adjusted earnings per share were better by 7 cents.
  • Net debt at December 31 was $306 million, an improvement of $52 million from September 30 (excluding cash attributable to discontinued operations).  This largely reflected the previously disclosed sales of two joint ventures in China and an operation in Brazil. 
  • Year-end liquidity was a record-high $372 million.  In January, the Company reduced its term debt by $50 million.
  • For 2016, the preliminary outlook includes:
    • 5% growth in revenue, to $2.05 billion, despite an anticipated currency translation headwind of $55 million (with an average Euro assumption of $1.05);
    • Adjusted EBITDA up 7%, to $205 million;
    • Adjusted EBITDA margin increasing by 20bps, to 10%, despite being negatively impacted by costs associated with new-business ramp-up;
    • Adjusted earnings per share of $3.00, with the decline from $3.22 in 2015 more than explained by the previously disclosed resumption of U.S. income tax accruals in 2016.  At comparable U.S. tax bookkeeping rates, the outlook for adjusted earnings per share would be up 21% from 2015.  The Company presently does not expect to be a cash tax payer in the U.S. until 2019; and
    • Adjusted free cash flow of $35 million, which includes about $35 million of above-trend capital spending to support the major new-business awards in 2015 in North America.
  • The Company's outlook for first quarter 2016 includes revenue of $505 million, adjusted EBITDA of $45 million, and adjusted earnings per share of 55 cents.  Costs associated with new-business ramp-up are expected to mainly impact the first two quarters of 2016.  Factoring in all calendarization effects, the Company anticipates Adjusted EBITDA to be lower than a year ago in the first half of 2016 and significantly better than a year ago in the second half.

"With our strengths in engineering, program management, operational execution, and financial discipline, we believe Tower's competitive position is stronger than ever -- and still progressing," said President and CEO Mark Malcolm.  "Whether the U.S. auto industry is at or approaching a cyclical peak is anyone's guess, but the above-industry profitable growth already booked, plus significant opportunities we continue to be presented by customers, make us confident that Tower's future is brighter than ever.  Our peak results are out in front of us."

Tower to Host Conference Call Today at 11 a.m. EST

Tower will discuss its fourth quarter 2015 results, the outlook for 2016, and other related matters in a conference call at 11 a.m. EST 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 (866) 393-4576, international callers should dial (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 (855) 859-2056 (domestic) or (404) 537-3406 (international) and reference Conference I.D. #42275835.  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", "adjusted EBITDA margin", "adjusted earnings per share", "adjusted free cash flow", and "net debt."  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 presentation.  Adjusted earnings per share exclude certain income and expense items described in the reconciliation provided in this presentation.  Free cash flow is defined as cash provided by operating activities less cash disbursed for purchases of property, plant and equipment.  Adjusted free cash flow is free cash flow excluding cash received or disbursed for customer tooling.  Net debt represents total debt less cash and cash equivalents.  We use adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per share, free cash flow, adjusted free cash flow and net debt 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.  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 above are not measures of performance under GAAP.  These measures 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; and 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, diluted adjusted earnings per share, adjusted free cash flow and statements regarding new sources of profitable growth, future financial results and the Company's future business 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:

  • global automobile production volumes;
  • the financial condition of our customers and suppliers;
  • our ability to make scheduled payments of principal or interest on our indebtedness and comply with the covenants and restrictions contained in the instruments governing our indebtedness;
  • our ability to refinance our indebtedness;
  • 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;
  • our ability to integrate acquired businesses;
  • risks associated with business divestitures including volatility in the capital markets, the capacity of potential bidders to finance transactions and the difficulty of predicting the outcome of negotiations; 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@towerinternational.com

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended Dec. 31,

Year Ended Dec. 31,

2015

2014

2015

2014

Revenues

$              493,564

$              502,319

$           1,955,709

$           2,067,771

Cost of sales

446,710

449,201

1,737,232

1,838,578

Gross profit

46,854

53,118

218,477

229,193

Selling, general, and administrative expenses

35,090

32,701

130,650

132,635

Amortization expense 

-

-

249

1,544

Restructuring and asset impairment charges, net 

1,209

6,751

8,607

14,248

  Operating income

10,555

13,666

78,971

80,766

Interest expense 

6,115

12,937

24,290

34,767

Interest income

249

138

642

534

Other expense

-

-

-

87

Income before provision for income taxes and equity in profit of joint venture

4,689

867

55,323

46,446

Provision for income taxes 

(129,036)

2,143

(123,001)

9,272

Equity in loss of joint venture, net of tax

-

(25)

(46)

(651)

Income / (loss) from continuing operations

133,725

(1,301)

178,278

36,523

Income / (loss) from discontinued operations, net of tax 

11,934

(16,742)

17,513

(9,436)

        Net income / (loss)

145,659

(18,043)

195,791

27,087

    Less: Net income attributable to the noncontrolling interests

577

2,553

1,739

5,571

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

$              145,082

$               (20,596)

$              194,052

$                21,516

Weighted average basic shares outstanding

21,110,291

20,751,634

21,093,387

20,662,425

Weighted average diluted shares outstanding

21,449,037

20,751,634

21,408,301

21,391,000

Basic income per share attributable to Tower International, Inc.:

Income / (loss) per share from continuing operations 

$                    6.31

$                   (0.19)

$                    8.37

$                    1.50

Income / (loss) per share from discontinued operations 

0.57

(0.81)

0.83

(0.46)

Income / (loss) per share 

6.87

(0.99)

9.20

1.04

Diluted income per share attributable to Tower International, Inc.:

Income / (loss) per share from continuing operations 

$                    6.21

$                   (0.18)

$                    8.25

$                    1.45

Income / (loss) per share from discontinued operations 

0.56

(0.78)

0.81

(0.44)

Income / (loss) per share 

6.76

(0.96)

9.06

1.01

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data - unaudited)

Dec. 31,

Dec. 31,

2015

2014

ASSETS

Cash and cash equivalents

$                 142,640

$                 148,561

Accounts receivable, net of allowance of $1,287 and $1,181

250,933

230,377

Inventories

70,633

69,775

Assets held for sale

-

141,295

Prepaid tooling, notes receivable, and other

71,487

41,986

Total current assets

535,693

631,994

Property, plant, and equipment, net

473,159

451,126

Goodwill

59,340

56,691

Investment in joint venture

7,711

7,752

Deferred tax asset

127,633

4,641

Other assets, net

11,961

12,969

Total assets

$              1,215,497

$              1,165,173

LIABILITIES AND EQUITY

Short-term debt and current maturities of capital lease obligations

$                   30,378

$                   31,139

Accounts payable

297,665

257,011

Accrued liabilities

107,911

104,833

Liabilities held for sale

-

67,707

Total current liabilities

435,954

460,690

Long-term debt, net of current maturities

412,218

445,303

Obligations under capital leases, net of current maturities

5,984

7,740

Deferred tax liability

6,167

8,044

Pension liability

65,621

68,637

Other non-current liabilities

82,834

74,981

Total non-current liabilities

572,824

604,705

Total liabilities

1,008,778

1,065,395

Stockholders' equity:

Tower International, Inc.'s stockholders' equity

Common stock

$                        220

$                        214

Additional paid in capital

337,864

335,338

Treasury stock

(16,067)

(9,516)

Accumulated deficit

(44,030)

(235,971)

Accumulated other comprehensive loss

(80,492)

(46,914)

     Total Tower International, Inc.'s stockholders' equity

197,495

43,151

Noncontrolling interests in subsidiaries

9,224

56,627

Total stockholders' equity

206,719

99,778

Total liabilities and stockholders' equity

$              1,215,497

$              1,165,173

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

Three Months Ended Dec. 31,

Year Ended Dec. 31,

2015

2014

2015

2014

OPERATING ACTIVITIES:

Net income / (loss)

$              145,659

$               (18,043)

$              195,791

$                27,087

Less: Income from discontinued operations, net of tax

11,934

(16,742)

17,513

(9,436)

Income / (loss)  from continuing operations

133,725

(1,301)

178,278

36,523

Adjustments required to reconcile income from continuing operations to net cash provided by continuing operating activities:

   Asset impairment charges

$                        -

$                  4,558

$                        -

$                  4,558

   Term Loan re-pricing fees

-

-

-

87

Deferred income tax provision

(130,194)

(412)

(130,432)

(198)

Depreciation and amortization

20,054

20,692

79,747

87,241

Non-cash share-based compensation

508

1,146

2,322

4,712

Pension income, net of contributions

(3,849)

1,641

(14,116)

(11,275)

Change in working capital and other operating items

44,087

52,008

(13,160)

(9,077)

Net cash provided by continuing operating activities

$                64,331

$                78,332

$              102,639

$              112,571

INVESTING ACTIVITIES:

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

$               (64,823)

$               (36,094)

$             (124,641)

$               (98,440)

Proceeds from disposition of China JVs, net

32,858

-

42,805

-

Proceeds from disposition of Brazilian facility

9,469

-

9,469

-

Investment in joint venture

-

-

-

(760)

Acquisition, net of cash

-

-

(21,740)

-

Net cash used in continuing investing activities

$               (22,496)

$               (36,094)

$               (94,107)

$               (99,200)

FINANCING ACTIVITIES:

Proceeds from borrowings

$                31,336

$                34,222

$              128,799

$              131,313

Repayments of  borrowings

(38,663)

(39,240)

(135,120)

(154,928)

(Repayments)/borrowings on Term Loan Credit Facility

-

-

(25,000)

33,145

Debt financing costs

-

(1,034)

-

(3,595)

Proceeds from termination of cross currency swaps

-

-

32,377

-

Dividend payment to Tower shareholders

(2,111)

-

(2,111)

-

Secondary stock offering transaction costs

-

-

-

(75)

Proceeds from stock options exercised

44

21

204

2,631

Purchase of treasury stock

(2)

-

(6,551)

(922)

Noncontrolling interest dividends

(2,962)

(7,660)

(2,962)

(10,189)

Net cash used in continuing financing activities

$               (12,357)

$               (13,691)

$               (10,364)

$                 (2,620)

Discontinued operations:

Net cash from discontinued operating activities

$                          -

$                  1,083

$                19,530

$                  8,579

Net cash from discontinued investing activities

-

(5,445)

(5,573)

554

Net cash from discontinued financing activities

-

95

(12,537)

(711)

         Net cash from discontinued operations

$                          -

$                 (4,267)

$                  1,420

$                  8,422

Effect of exchange rate changes on continuing cash and cash equivalents

$                 (1,789)

$                 (2,146)

$                 (5,508)

$                 (5,492)

NET CHANGE IN CASH AND CASH EQUIVALENTS

$                27,688

$                22,134

$                 (5,921)

$                13,681

CASH AND CASH EQUIVALENTS:

Beginning of period

$              114,952

$              126,427

$              148,561

$              134,880

End of period

$              142,640

$              148,561

$              142,640

$              148,561

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

Segment Data

Three Months Ended Dec. 31,

2015

2014

Revenues

Adjusted EBITDA

Revenues

Adjusted EBITDA

International

$              179,367

$                17,600

$              195,544

$                15,069

Americas

314,197

27,949

306,775

33,707

Consolidated

$              493,564

$                45,549

$              502,319

$                48,776

Year Ended Dec. 31,

2015

2014

Revenues

Adjusted EBITDA

Revenues

Adjusted EBITDA

International

$              724,928

$                61,200

$              842,269

$                64,400

Americas

1,230,781

129,473

1,225,502

139,782

Consolidated

$           1,955,709

$              190,673

$           2,067,771

$              204,182

Adjusted EBITDA Reconciliation

Three Months Ended Dec. 31,

Year Ended Dec. 31,

2015

2014

2015

2014

Adjusted EBITDA

$                45,549

$                48,776

$              190,673

204,182

Restructuring and asset impairment charges, net

(1,209)

(6,751)

(8,607)

(14,248)

Depreciation and amortization

(20,054)

(20,692)

(79,747)

(87,241)

Acquisition costs and other

(88)

(134)

(836)

(445)

Long-term compensation expense

(3,811)

(3,374)

(12,680)

(11,313)

Loss from sale of Brazil facility

(714)

-

(714)

-

Pension actuarial loss

(9,118)

(4,160)

(9,118)

(4,160)

Commercial settlement related to 2010-13 scrap

(6,009)

Interest expense, net

(5,866)

(12,799)

(23,648)

(34,233)

Other expense

-

-

-

(87)

Provision for income taxes

129,036

(2,143)

123,001

(9,272)

Equity in loss of joint venture, net of tax

-

(25)

(46)

(651)

Income / (loss) from discontinued operations, net of tax 

11,934

(16,742)

17,513

(9,436)

Net income attributable to noncontrolling interests

(577)

(2,553)

(1,739)

(5,571)

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

$              145,082

$              (20,596)

$              194,052

$                21,516

Adjusted Free Cash Flow Reconciliation

Three Months Ended Dec. 31,

Year Ended Dec. 31,

2015

2014

2015

2014

Net cash provided by continuing operating activities

$                64,331

$                78,332

$              102,639

$              112,573

Cash disbursed for purchases of PP&E

(64,823)

(36,094)

(124,641)

(98,440)

Free cash flow

(492)

42,238

(22,002)

14,133

Less:  Cash received / (disbursed) for customer-owned tooling

12,051

20,862

(32,672)

(5,374)

Adjusted free cash flow

$              (12,543)

$                21,376

$                10,670

$                19,507

Net Debt Reconciliation

Dec. 31,

Dec. 31,

2015

2014

Short-term debt and current maturities of capital lease obligations

$                30,378

$                31,139

Long-term debt, net of current maturities

421,180

457,179

Debt issue costs

(8,962)

(11,876)

Obligations under capital leases, net of current maturities

5,984

7,740

Total debt

448,580

484,182

Less: Cash and cash equivalents

(142,640)

(148,561)

Add: Cash attributable to discontinued operations

-

16,025

Net debt

$              305,940

$              351,646

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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

Three Months Ended

Year Ended

Dec. 31,

Dec. 31,

2015

2014

2015

2014

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

 Cost of sales

   Commercial settlement related to 2010-13 scrap

$                 -

$                -

$                -

$        (6,009)

   Pension actuarial loss

(9,118)

(4,160)

(9,118)

(4,160)

Selling, general, and administrative expenses

  One-time CEO compensation awards

(306)

(671)

(3,105)

(1,555)

  Acquisition costs

-

-

(393)

-

Restructuring and asset impairment charges, net

  One-time restructuring actions

(542)

(1,140)

(1,149)

(2,102)

  Severance costs in Europe*

-

(136)

-

(432)

  Change in estimated future rent

-

-

(4,760)

-

  Lease buyout of previously closed facility

-

-

-

(3,448)

  Loss on sale of None, Italy facility

-

(2,266)

-

(2,266)

  Goodwill impairment charge in Brazil

-

(2,292)

-

(2,292)

  Loss on sale of  Brazil facility

(715)

-

(715)

-

Interest expense

  Mark-to-market gain / (loss) on derivative financial instruments

(1,324)

(5,753)

(2,601)

(5,753)

  Debt issue costs

-

(969)

-

(969)

  Acceleration of the amortization of debt issue costs and OID

-

-

(440)

-

Other expense

  Premium and other fees for re-pricing of Term Loan 

-

-

-

(87)

  Release of valuation allowances, net

131,095

-

131,095

-

Discontinued operations

  Income / (loss) from discontinued operations

11,932

(16,742)

17,513

(9,436)

Noncontrolling interests

  Net income attributable to noncontrolling interests**

(355)

(2,290)

(1,225)

(4,555)

   Total items included in net income, net of tax

$       130,667

$      (36,419)

$      125,102

$      (43,064)

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

$       145,082

$      (20,596)

$      194,052

$        21,516

Memo:  Average shares outstanding (in thousands)

Basic

21,110

20,752

21,093

20,662

Diluted

21,449

20,752

21,408

21,391

Income / (loss) per common share (GAAP)

Basic

$             6.87

$          (0.99)

$            9.20

$            1.04

Diluted

6.76

(0.99)

9.06

1.01

Diluted adjusted earnings per share (non-GAAP) ***

$             0.67

$            0.74

$            3.22

$            3.02

*   Amount is net of tax of $0k, $44k, $0k, and $127k, respectively 

** Amounts attributable to noncontrolling interests of discontinued operations

***  Excludes the certain items shown above.  For the three months ended December 31, 2014 diluted share count of 21.5 million was used to calculate diluted adjusted earnings per share.

 

 

SOURCE Tower International, Inc.



RELATED LINKS

http://www.towerinternational.com