Tower International Reports Solid First Quarter Results And Increases Outlook For Full Year

LIVONIA, Mich., April 30, 2014 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced first quarter 2014 results and updated its outlook for the full year.

  • Revenue for the first quarter was $548 million, up 3 percent from $534 million in the first quarter 2013. Higher customer production in North America and Europe more than offset declines in Brazil and China.
  • Adjusted EBITDA for the quarter was $54.2 million, a 4 percent increase from $52.1 million a year ago, reflecting higher revenue and favorable net cost performance.
  • Net income of $14.9 million in the first quarter 2014 compared with net income of $2.5 million a year ago. As detailed below, this year's first quarter included certain items that adversely impacted results by $0.5 million. Excluding these items and comparable items in the first quarter of 2013, diluted adjusted earnings were 72 cents per share, up 40 cents or 125 percent from a year ago. Lower interest expense was a major driver of the increase in per-share earnings.
  • Liquidity at March 31 was a record $362 million. During the First Quarter, Tower's corporate rating was increased by both S&P (to BB-) and Moody's.
  • For the full year, Tower is increasing its outlook for revenue by $25 million, to $2.175 billion. The company now expects adjusted EBITDA of $215 million and diluted adjusted earnings per share of $2.90, both at the high-end of prior projections. The outlook for adjusted free cash flow is increased by $5 million.

"With the obvious caveat that the year is still young, first quarter earnings exceeded our expectations, boosting our confidence for full year 2014," said President and CEO Mark Malcolm

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

Tower will discuss its first quarter 2014 results and other related matters in a conference call at 11 a.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 (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. #31661480.  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 (EPS)", "free cash flow", "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 EBITDA margin represents Adjusted EBITDA divided by revenues.  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 and diluted adjusted earnings per share and statements regarding net reductions in ongoing annual interest expense, 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; 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,



2014


2013






Revenues


$           548,375


$           534,140

Cost of sales


486,605


476,080

Gross profit


61,770


58,060

Selling, general, and administrative expenses


34,330


33,370

Amortization expense


657


832

Restructuring and asset impairment charges, net


1,389


2,680

  Operating income


25,394


21,178

Interest expense


7,195


13,428

Interest income


205


274

Other expense


87


-

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


18,317


8,024

Provision for income taxes


2,880


3,490

Equity in loss of joint venture, net of tax


(159)


-

        Net income


15,278


4,534

  Less: Net income attributable to the noncontrolling interests


423


1,986

Net income attributable to Tower International, Inc.


$             14,855


$               2,548






Weighted average common shares outstanding





Basic


20,513,183


20,261,259

Diluted


21,263,163


20,593,045






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





Basic


$                 0.72


$                 0.13

Diluted


0.70


0.12

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)













March 31, 2014


December 31, 2013






ASSETS





Cash and cash equivalents


$                    185,318


$                         134,880

Accounts receivable, net of allowance of $1,913 and $2,071


320,831


255,674

Inventories


89,197


81,278

Deferred tax asset - current


8,633


8,649

Prepaid tooling, notes receivable, and other


57,337


44,896

Total current assets


661,316


525,377






Property, plant, and equipment, net


547,782


549,605

Goodwill


67,196


66,976

Investment in joint venture


8,242


8,624

Deferred tax asset - non-current


3,407


3,732

Other assets, net


27,768


28,679

Total assets


$                 1,315,711


$                      1,182,993






LIABILITIES AND STOCKHOLDERS' EQUITY





Short-term debt and current maturities of capital lease obligations


$                      53,478


$                           39,704

Accounts payable 


318,643


262,425

Accrued liabilities


157,085


129,167

Total current liabilities


529,206


431,296






Long-term debt, net of current maturities


481,603


454,073

Obligations under capital leases, net of current maturities


9,726


10,013

Deferred tax liability - non-current


14,442


14,381

Pension liability


51,069


54,915

Other non-current liabilities


81,366


81,446

Total non-current liabilities 


638,206


614,828

  Total liabilities


1,167,412


1,046,124

Commitments and contingencies










Stockholders' Equity:





Tower International, Inc.'s stockholders' equity





Preferred stock, $0.01 par value, 50,000,000 authorized and 0 issued and outstanding at March 31, 2014 and December 31, 2013


-


-

Common stock, $0.01 par value, 350,000,000 authorized, 21,235,877 issued and 20,595,610 outstanding at March 31, 2014 and 21,079,027 issued and 20,472,637 outstanding at December 31, 2013


212


211

Additional paid in capital


329,860


327,998

Treasury stock, at cost, 640,267 shares as of March 31, 2014 and 606,390 shares as of December 31, 2013


(9,483)


(8,594)

Accumulated deficit


(242,632)


(257,487)

Accumulated other comprehensive income


11,160


12,247

Total Tower International, Inc.'s stockholders' equity


89,117


74,375

Noncontrolling interests in subsidiaries


59,182


62,494

Total stockholders' equity


148,299


136,869






Total liabilities and stockholders' equity


$                 1,315,711


$                      1,182,993

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)










Three Months Ended March 31,


2014


2013





OPERATING ACTIVITIES:




Net income

$               15,278


$                 4,534





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




Non-cash restructuring and asset impairment charges, net

-


955

Term Loan re-pricing fees

87


-

Deferred income tax provision

351


96

Depreciation and amortization

24,688


25,172

Non-cash share-based compensation

1,204


1,185

Pension income, net of contributions

(3,846)


(3,551)

Change in working capital and other operating items

(21,712)


(27,097)

Net cash provided by continuing operating activities

$               16,050


$                 1,294





INVESTING ACTIVITIES:




Cash disbursed for purchases of property, plant, and equipment

$              (13,903)


$              (14,587)

Deposit received for the sale of property, plant, and equipment

13,817


-

Investment in joint venture

(760)


-

Net cash used in continuing investing activities

$                   (846)


$              (14,587)





FINANCING ACTIVITIES:




Proceeds from borrowings

$               36,953


$             154,198

Repayments of  borrowings

(30,795)


(158,478)

Proceeds from borrowings on Additional Term Loans

33,145


-

Debt re-financing costs

(917)


-

Purchase of treasury stock

(889)


(275)

Secondary stock offering transaction costs

(75)


-

Proceeds from stock options exercised

658


-

Noncontrolling interest dividends

(2,149)


-

Net cash provided by / (used in) continuing financing activities

$               35,931


$                (4,555)





Discontinued operations:




Net cash from discontinued operating activities

$                         -


$                         -

Net cash from discontinued investing activities

-


15,827

Net cash from discontinued financing activities

-


-

Net cash from discontinued operations

$                         -


$               15,827





Effect of exchange rate changes on continuing cash and cash equivalents

$                   (697)


$                   (839)





NET CHANGE IN CASH AND CASH EQUIVALENTS

$               50,438


$                (2,860)





CASH AND CASH EQUIVALENTS:




Beginning of period

$             134,880


$             113,943





End of period

$             185,318


$             111,083

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended March 31,



2014


2013



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$              249,863


$                20,466


$              244,769


$                22,031

Americas


298,512


33,748


289,371


30,035

Consolidated


$              548,375


$                54,214


$              534,140


$                52,066




























Adjusted EBITDA Reconciliation


Three Months Ended March 31,





2014


2013





Adjusted EBITDA


$                54,214


$                52,066





Restructuring and asset impairment charges, net


(1,389)


(2,680)





Depreciation and amortization


(24,688)


(25,172)





Acquisition costs and other


(106)


(74)





Long-term compensation expense


(2,637)


(1,362)





Interest expense, net


(6,990)


(13,154)





Closure of Tower Defense & Aerospace


-


(1,600)





Other expense


(87)


-





Provision for income taxes


(2,880)


(3,490)





Equity in loss of joint venture, net of tax


(159)


-





Net income attributable to noncontrolling interests


(423)


(1,986)





Net income attributable to Tower International, Inc.


$                14,855


$                  2,548
































Adjusted Free Cash Flow Reconciliation


Three Months Ended March 31,







2014


2013





Net cash provided by continuing operating activities


$                16,050


$                  1,294





Cash disbursed for purchases of PP&E


(13,903)


(14,587)





Deposit received for sale of PP&E


13,817


-





Free cash flow


15,964


(13,293)





Less:  Cash disbursed for customer-owned tooling


(7,927)


(4,244)





Adjusted free cash flow


$                23,891


$                (9,049)
































Net Debt Reconciliation


March 31,


December 31,







2014


2013





Short-term debt and current maturities of capital lease obligations


$                53,478


$                39,704





Long-term debt, net of current maturities


481,603


454,073





Obligations under capital leases, net of current maturities


9,726


10,013





Total debt


544,807


503,790





Less: Cash and cash equivalents


185,318


134,880





Net debt


$              359,489


$              368,910





 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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













Three Months Ended



March 31,



2014


2013




Expense items included in net income, net of tax:





Cost of sales





Closure of Tower Defense & Aerospace


$               -


$      (2,630)

Restructuring and asset impairment charges, net





Severance costs in Europe *


(126)


-

Facility closure


-


(1,182)

One-time restructuring actions


(240)


(330)

Other expense





Term Loan re-pricing fees


(87)


-

Total items included in net income


$         (453)


$      (4,142)






Net income attributable to Tower International, Inc.


$     14,855


$       2,548






Memo:  Average shares outstanding (in thousands)





Basic


20,513


20,261

Diluted


21,263


20,593






Income per common share (GAAP)





Basic


$         0.72


$         0.13

Diluted


0.70


0.12






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


0.72


0.32






*   Amount is net of tax of $54k





** Excludes the certain items shown above





 

SOURCE Tower International, Inc.



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