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

30 Apr, 2014, 08:30 ET from Tower International, Inc.

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.



RELATED LINKS

http://www.towerinternational.com