2014

Tower International Reports Improved Fourth Quarter and Full Year Results

LIVONIA, Mich., Feb. 16, 2012 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced its fourth quarter and full year 2011 results and provided preliminary outlooks for 2012 and 2013.

  • Revenue for the quarter was $615 million, up 14 percent from $542 million in the fourth quarter 2010.  Excluding changes in exchange rates and steel pricing, revenue was up 10 percent.

  • Adjusted EBITDA for the quarter was $57.4 million, up 18 percent from $48.7 million a year ago.  The improvement was driven by higher volume and efficiencies that exceeded customer price reductions and economics, offset partially by unfavorable mix.

  • Net income for the fourth quarter of 2011 was $6.7 million, compared with a net loss of $21.3 million a year ago.  As detailed below, this year's fourth quarter included certain items that adversely impacted results by $4.8 million.  Excluding these items and comparable items in the fourth quarter of 2010, diluted adjusted earnings per common share were $0.57, compared with loss of $0.24 per share a year ago.  

  • Free cash flow in the fourth quarter was seasonally strong at $62 million, and liquidity at year-end was also strong at $258 million.  

  • For full year 2011, revenue of $2.4 billion was up 14 percent from 2010 at constant exchange rates and steel pricing.  Adjusted EBITDA was $227.6 million, up 20 percent from $190.2 million in 2010.  Net income was $8.1 million, including certain items that adversely impacted results by $16.7 million.  Excluding these items and comparable items a year ago, full year 2011 diluted adjusted earnings per share were $1.23, compared with a loss of $1.67 per share in 2010.

  • Tower is providing a preliminary outlook for 2012 revenue of approximately $2.3 billion and Adjusted EBITDA of approximately $205 million.  The main changes from the directional outlook provided last November are more-conservative planning assumptions for European industry production, down 8 percent from 2011, and the Euro, at average $1.30 compared with $1.39 in 2011.

  • Tower is confident that financial results in 2013 will exceed 2012 and 2011, reflecting in large part a revenue backlog of about $200 million.  

"In our first full year since the IPO, Tower's financial results significantly exceeded initial expectations," said President and CEO Mark Malcolm.  "More importantly, we built an excellent foundation for the future by achieving better-than-expected growth in our 2013 revenue backlog and by making progress on each element of our balanced long-term game plan.  Progress includes major growth actions in the secular growth markets of China and Brazil, further reduction in balance sheet leverage, and an opportunistic acquisition that builds on our core strengths in the automotive business to position Tower as a uniquely capable supplier with additional long-term profitable growth potential in the defense, aerospace, and industrial markets."

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

Tower will discuss its fourth quarter 2011 results and other related matters in a conference call at 1 p.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 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. #49865415.  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 December 31,


Year Ended December 31,


2011


2010


2011


2010









Revenues

$               614,745


$               541,607


$            2,406,089


$            1,997,058

Cost of sales

546,558


484,666


2,149,977


1,786,476

Gross profit

68,187


56,941


256,112


210,582

Selling, general and administrative expenses

39,199


40,887


158,392


143,975

Amortization expense

1,191


880


4,589


3,265

Restructuring and asset impairment charges, net

514


9,281


2,660


14,288

 Operating income

27,283


5,893


90,471


49,054

Interest expense

16,533


18,447


62,133


66,872

Interest income

199


102


978


962

Other expense

131


1,300


1,331


1,300

Income / (loss) before provision for income taxes

10,818


(13,752)


27,985


(18,156)

Provision / (benefit) for income taxes

3,082


5,672


14,812


10,297

       Net income / (loss)

7,736


(19,424)


13,173


(28,453)

Less: Net income attributable to the noncontrolling interests

1,072


1,898


5,109


8,441

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

$                   6,664


$               (21,322)


$                   8,064


$               (36,894)









Less: Preferred unit dividends

$                           -


$                           -


$                           -


$               (10,707)

Net income / (loss) available to common shareholders

$                   6,664


$               (21,322)


$                   8,064


$               (47,601)









Weighted average common shares outstanding








Basic

19,683,032


18,012,862


19,364,433


13,865,509

Diluted

20,221,004


18,012,862


20,069,532


13,865,509









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








Basic

$                     0.34


$                   (1.18)


$                     0.42


$                   (3.43)

Diluted

0.33


(1.18)


0.40


(3.43)



TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)










December 31, 2011


December 31, 2010





ASSETS




Cash and cash equivalents

$                          134,984


$                        150,345

Accounts receivable, net of allowance of $3,612 and $1,674

327,992


297,086

Inventories

85,100


73,189

Deferred tax asset - current

12,966


12,406

Assets held for sale

4,027


8,178

Prepaid tooling and other

56,189


57,754

Total current assets

621,258


598,958





Property, plant and equipment, net

667,686


627,497

Goodwill

63,983


66,309

Deferred tax asset - non-current

14,450


17,377

Other assets, net

30,001


30,035

Total assets

$                       1,397,378


$                     1,340,176





LIABILITIES AND STOCKHOLDERS' EQUITY




Short-term debt and current maturities of capital lease obligations

$                          109,447


$                        109,848

Accounts payable

395,287


366,761

Accrued liabilities

126,416


132,614

Total current liabilities

631,150


609,223





Long-term debt, net of current maturities

461,838


432,726

Obligations under capital leases, net of current maturities

12,213


15,604

Deferred tax liability - non-current

11,229


12,710

Pension liability

96,223


76,403

Other non-current liabilities

87,265


81,884

Total non-current liabilities

668,768


619,327

 Total liabilities

1,299,918


1,228,550





Stockholders' equity:




Tower International, Inc.'s stockholders' equity




Common stock, $0.01 par value, 350,000,000 authorized, 19,983,403

issued and 19,683,032 outstanding at December 31, 2011 and 19,101,588   

issued and outstanding at December 31, 2010

200


191

Additional paid in capital

311,427


296,262

Treasury stock, at cost, 300,371 shares as of December 31, 2011

(5,130)


-

Accumulated deficit

(184,492)


(192,556)

Accumulated other comprehensive loss

(82,002)


(36,530)

Total Tower International, Inc.'s stockholders' equity

40,003


67,367

Noncontrolling interests in subsidiaries

57,457


44,259

Total stockholders' equity

97,460


111,626





Total liabilities and stockholders' equity

$                       1,397,378


$                     1,340,176



TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)







Three Months Ended


Year Ended


December 31,


December 31,


2011


2010


2011


2010

OPERATING ACTIVITIES:








Net income / (loss)

$                      7,732


$                  (19,424)


$                    13,169


$                  (28,453)

Adjustments required to reconcile net income / (loss) to net cash provided   

by operating activities:








Non-cash restructuring and asset impairment charges

-


9,999


-


9,999

Deferred income tax provision

229


(4,793)


(640)


(13,851)

Depreciation and amortization

25,063


28,426


114,578


114,668

Non-cash share-based compensation

3,874


3,047


15,174


3,047

Pension expense, net of contributions

(2,204)


(1,210)


(12,992)


(5,619)

Change in working capital and other operating items

64,792


72,914


(28,831)


40,568

Net cash provided by operating activities

$                    99,486


$                    88,959


$                  100,458


$                  120,359









INVESTING ACTIVITIES:








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

$                  (37,484)


$                  (44,559)


$                (120,409)


$                (100,495)

Net assets acquired, net of cash acquired

-


-


(22,300)


(16,687)

Net cash used in investing activities

$                  (37,484)


$                  (44,559)


$                (142,709)


$                (117,182)









FINANCING ACTIVITIES:








Repayments of term debt

$                              -


$                              -


$                              -


$                    (3,484)

Repayment of first lien term loan

-


-


-


(414,172)

Preferred unit dividends

-


-


-


(95)

Noncontrolling interest dividends

-


-


-


(5,257)

Issuance of senior secured notes

-


-


-


417,203

Retirement of senior secured notes

(7,500)


(26,000)


(42,008)


(26,000)

Proceeds from borrowings

178,155


29,982


682,204


418,237

Repayments of  borrowings

(194,018)


(89,893)


(608,767)


(452,286)

Purchase of treasury stock

-


-


(5,130)


-

Financing costs

-


(548)


-


(8,356)

Costs associated with pending initial public offering

-


76,550


-


74,021

Net cash provided by financing activities

$                  (23,363)


$                    (9,909)


$                    26,299


$                       (189)









Effect of exchange rate changes on cash and cash equivalents

$                       (355)


$                         875


$                         591


$                    (2,445)









NET CHANGE IN CASH AND CASH EQUIVALENTS

$                    38,284


$                    35,366


$                  (15,361)


$                         543









CASH AND CASH EQUIVALENTS:








Beginning of period

$                    96,700


$                  114,979


$                  150,345


$                  149,802









End of period

$                  134,984


$                  150,345


$                  134,984


$                  150,345



TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)









Segment Data

Three Months Ended December 31,


2011


2010


Revenues


Adjusted

EBITDA


Revenues


Adjusted

EBITDA

International

$                  341,451


$                    31,355


$                  326,027


$                    37,091

Americas

273,294


26,116


215,580


11,639

Consolidated

$                  614,745


$                    57,471


$                  541,607


$                    48,730










Year Ended December 31,


2011


2010


Revenues


Adjusted

EBITDA


Revenues


Adjusted

EBITDA

International

$               1,334,033


$                  118,290


$               1,147,614


$                  125,545

Americas

1,072,056


109,323


849,444


64,690

Consolidated

$               2,406,089


$                  227,613


$               1,997,058


$                  190,235

























Adjusted EBITDA reconciliation

Three Months Ended December 31,


Year Ended December 31,


2011


2010


2011


2010

Adjusted EBITDA

$                    57,471


$                    48,730


$                  227,613


$                  190,235

Restructuring

(514)


(9,281)


(2,660)


(14,288)

Depreciation and amortization

(25,063)


(28,427)


(114,578)


(114,668)

Receivable factoring charges and other

(107)


(113)


(453)


(471)

Acquisition costs

-


-


(1,100)


(679)

Expense related to the compensation programs

(4,503)


(5,016)


(18,351)


(11,075)

Interest expense, net

(16,335)


(18,345)


(61,155)


(65,910)

Other expense

(131)


(1,300)


(1,331)


(1,300)

Provision for income taxes

(3,082)


(5,672)


(14,812)


(10,297)

Net income attributable to noncontrolling interests

(1,072)


(1,898)


(5,109)


(8,441)

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

$                      6,664


$                   (21,322)


$                      8,064


$                   (36,894)

























Free cash flow reconciliation

Three Months Ended December 31,


Year Ended December 31,


2011


2010


2011


2010

Net cash provided by operating activities

$                    99,486


$                    88,959


$                  100,458


$                  120,359

Cash disbursed for purchases of PP&E, net

(37,484)


(44,559)


(120,409)


(100,495)

Free cash flow

$                    62,002


$                    44,400


$                   (19,951)


$                    19,864

























Net debt reconciliation





December 31,


December 31,






2011


2010

Current maturities of long-term debt and capital lease obligations   





$                  109,447


$                  109,848

Long-term debt, net of current maturities





461,838


432,726

Obligations under capital leases, net of current maturities





12,213


15,604

Total debt





583,498


558,178

Less: cash and cash equivalents





(134,984)


(150,345)

Net debt





$                  448,514


$                  407,833



TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME / (LOSS)

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


















Three Months Ended


Year Ended


December 31,


December 31,


2011


2010


2011


2010





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








Selling, general and administrative expenses








Incentive compensation related to funding events

$         (4,349)


$         (4,793)


$       (17,521)


$       (10,852)

Acquisition costs

-


-


(1,100)


(679)

Interest expense








Acceleration of the amortization of debt issue costs and OID

(302)


(1,247)


(1,760)


(6,574)

Settlement of value added tax audit in Brazil

-


-


2,838


-

Restructuring expense








Asset impairments

-


(7,300)


-


(9,142)

Adjustment of lease liability

-


-


754


-

Sale of closed facilities

-


(2,327)


-


(1,680)

Other items








Partial retirement of senior secured notes

(131)


(1,300)


(1,331)


(1,300)

Provision for income taxes








Reversal of South Korean valuation allowance

-


-


-


7,785

Tax effect for termination of interest rate swaps

-


-


-


(2,000)

Tax law and tax election changes

-


-


1,406


-

Total items included in net income / (loss)

$         (4,782)


$       (16,967)


$       (16,714)


$       (24,442)









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

$           6,664


$       (21,322)


$           8,064


$       (36,894)

Less: Preferred unit dividends

-


-


-


(10,707)

Income / (loss) available to common shareholders

$           6,664


$       (21,322)


$           8,064


$       (47,601)









Memo:  Average shares outstanding (in thousands)








Basic

19,683


18,013


19,364


13,866

Diluted

20,221


18,013


20,070


13,866









Income / (loss) per common share (GAAP)








Basic

$             0.34


$           (1.18)


$             0.42


$           (3.43)

Diluted

0.33


(1.18)


0.40


(3.43)









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

0.57


(0.24)


1.23


(1.67)









* Excludes the certain items shown above










SOURCE Tower International, Inc.



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http://www.towerinternational.com

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