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Tower International Reports Solid Third Quarter and Raises Full Year Outlook

LIVONIA, Mich., Nov. 3, 2011 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced its third quarter 2011 results.

  • Revenue for the quarter was $589 million, up 24 percent from $475 million in the third quarter 2010.  Excluding changes in exchange rates and steel pricing, revenue was up 16 percent.

  • Adjusted EBITDA for the quarter was $48.8 million, up 25 percent from $39.1 million a year ago.  The improvement was driven by higher volume and favorable foreign exchange, offset partially by non-recurring recoveries in the prior year and an adverse net steel impact in the period.  

  • Net loss in the third quarter of 2011 was $4.8 million or $0.25 per share.  As detailed below, this included certain items that adversely impacted results by $5.4 million.  Excluding these items and comparable items in the third quarter of 2010, diluted adjusted earnings per common share were $0.03, compared with a loss of $0.85 a year ago.  

  • Tower is further increasing its outlook for full year 2011 Adjusted EBITDA to a range of $225 to $230 million, up from the prior outlook of $215 to $225 million.

  • The company recently made $25 million of open market purchases of its 2017 Senior Secured Notes, including $17.5 million during the third quarter and $7.5 million in early October.

  • Tower's net new business revenue backlog for 2013 has grown to about $200 million.

"Third quarter results were solid and better than we had expected," said President and CEO Mark Malcolm.  "We are confident about near-term prospects, as evidenced by the further anticipated increase in 2011 earnings and the additional pay-down of senior debt.  While the macro environment for 2012 volume is uncertain, we are financially and operationally prepared, and the revenue backlog now in place for 2013 is an important milestone achievement to validate and bolster the company's ongoing prospects."

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

Tower will discuss its third quarter 2011 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 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. #21507012.  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", and "free cash flow." 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. 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 three of the 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.   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 Adjusted EBITDA for 2011, 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 affect (and in some cases have affected) our actual results and could cause such 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;
  • our ability to operate non-automotive businesses;
  • our ability to integrate acquired businesses;
  • our customers' ability to obtain equity and debt financing for their businesses;
  • our dependence on our largest customers;
  • significant recalls experienced by our customers;
  • pricing pressure from our customers;
  • potential operating inefficiencies resulting from OEM production volatility;
  • work stoppages or other labor issues affecting us or our customers or suppliers;
  • risks associated with our non-U.S. operations, including foreign exchange risks and economic uncertainty;
  • costs or liabilities relating to environmental and safety regulations; and
  • any increase in the expense and funding requirements of our pension and other postretirement benefits.

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

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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













Three Months Ended September 30,


Nine Months Ended September 30,



2011


2010


2011


2010










Revenues


$              588,991


$              474,640


$           1,791,344


$           1,455,451

Cost of sales


529,335


429,762


1,603,419


1,301,810

Gross profit


59,656


44,878


187,925


153,641

Selling, general and administrative expenses


42,106


38,127


119,193


103,088

Amortization expense


1,244


844


3,398


2,385

Restructuring and asset impairment charges, net


494


321


2,146


5,007

 Operating income


15,812


5,586


63,188


43,161

Interest expense


17,021


20,600


45,600


48,425

Interest income


340


291


779


860

Other expense


350


-


1,200


-

Income / (loss) before provision for income taxes


(1,219)


(14,723)


17,167


(4,404)

Provision / (benefit) for income taxes


2,547


(3,737)


11,730


4,625

       Net income / (loss)


(3,766)


(10,986)


5,437


(9,029)

Less: Net income attributable to the noncontrolling interests


1,082


2,015


4,037


6,543

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


$                 (4,848)


$               (13,001)


$                  1,400


$               (15,572)










Less: Preferred unit dividends


$                          -


$                 (2,058)


$                          -


$               (10,707)

Net income / (loss) available to common shareholders


$                 (4,848)


$               (15,059)


$                  1,400


$               (26,279)










Weighted average common shares outstanding









Basic


19,562,951


12,467,866


19,257,066


12,467,866

Diluted


19,562,951


12,467,866


20,012,418


12,467,866










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









Basic


$                   (0.25)


$                   (1.21)


$                    0.07


$                   (2.11)

Diluted


(0.25)


(1.21)


0.07


(2.11)



TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)













September 30, 2011


December 31, 2010






ASSETS





Cash and cash equivalents


$                            96,700


$                        150,345

Accounts receivable, net of allowance of $4,606 and $1,674


362,322


297,086

Inventories


91,336


73,189

Deferred tax asset - current


11,424


12,406

Assets held for sale


7,955


8,178

Prepaid tooling and other


71,784


57,754

Total current assets


641,521


598,958






Property, plant and equipment, net


632,907


627,497

Goodwill


66,050


66,309

Deferred tax asset - non-current


15,267


17,377

Other assets, net


29,334


30,035

Total assets


$                       1,385,079


$                     1,340,176






LIABILITIES AND STOCKHOLDERS' EQUITY





Short-term debt and current maturities of capital lease obligations


$                          113,718


$                        109,848

Accounts payable


372,866


366,761

Accrued liabilities


124,464


132,614

Total current liabilities


611,048


609,223






Long-term debt, net of current maturities


479,884


432,726

Obligations under capital leases, net of current maturities


13,386


15,604

Deferred tax liability - non-current


9,720


12,710

Pension liability


64,215


76,403

Other non-current liabilities


83,812


81,884

Total non-current liabilities


651,017


619,327

 Total liabilities


1,262,065


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 September 30, 2011 and 19,101,588 issued and outstanding at December 31, 2010


200


191

Additional paid in capital


307,553


296,262

Treasury stock


(5,130)


-

Accumulated deficit


(191,156)


(192,556)

Accumulated other comprehensive loss


(38,156)


(36,530)

Total Tower International, Inc.'s stockholders' equity


73,311


67,367

Noncontrolling interests in subsidiaries


49,703


44,259

Total stockholders' equity


123,014


111,626






Total liabilities and stockholders' equity


$                       1,385,079


$                     1,340,176



TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)



Nine Months Ended September 30,


2011


2010





OPERATING ACTIVITIES:




Net income / (loss)

$          5,437


$        (9,029)

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




Non-cash restructuring and asset impairment charges

-


2,699

Deferred income tax provision

(869)


(9,058)

Depreciation and amortization

89,515


86,242

Non-cash share-based compensation

11,300


-

Pension expense, net of contributions

(10,788)


(4,409)

Change in working capital and other operating items

(93,623)


(35,045)

Net cash provided by operating activities

$             972


$        31,400





INVESTING ACTIVITIES:




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

$      (82,925)


$      (55,936)

Net assets acquired, net of cash acquired

(22,300)


(16,687)

Net cash used in investing activities

$    (105,225)


$      (72,623)





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

(34,508)


-

Proceeds from borrowings

504,049


388,256

Repayments of  borrowings

(414,749)


(362,393)

Purchase of treasury stock

(5,130)


-

Financing costs

-


(7,808)

Costs associated with pending initial public offering

-


(2,530)

Net cash provided by financing activities

$        49,662


$          9,720





Effect of exchange rate changes on cash and cash equivalents

$             946


$        (3,320)





NET CHANGE IN CASH AND CASH EQUIVALENTS

$      (53,645)


$      (34,823)





CASH AND CASH EQUIVALENTS:




Beginning of period

$      150,345


$      149,802





End of period

$        96,700


$      114,979



TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended September 30,



2011


2010



Revenues


Adjusted
EBITDA


Revenues


Adjusted
EBITDA

International


$        319,298


$           23,662


$        263,004


$          22,954

Americas


269,693


25,219


211,636


16,126

Consolidated


$        588,991


$          48,881


$        474,640


$          39,080












Nine Months Ended September 30,



2011


2010



Revenues


Adjusted
EBITDA


Revenues


Adjusted
EBITDA

International


$        992,582


$          86,935


$        821,587


$          88,454

Americas


798,762


83,207


633,864


53,051

Consolidated


$     1,791,344


$        170,142


$     1,455,451


$        141,505






































Adjusted EBITDA reconciliation


Three Months Ended September 30,


Nine Months Ended September 30,


Last Twelve Months Ended September 30,



2011


2010


2011


2010


2011


2010

Adjusted EBITDA


$          48,881


$          39,080


$        170,142


$        141,505


$          218,872


$          179,593

Restructuring


(494)


(321)


(2,146)


(5,007)


(11,427)


(17,510)

Depreciation and amortization


(27,807)


(27,535)


(89,515)


(86,241)


(117,942)


(118,176)

Receivable factoring charges and other


(75)


(86)


(344)


(358)


(457)


(601)

Acquisition costs


-


-


(1,100)


(679)


(1,100)


(679)

Expense related to the compensation programs


(4,693)


(5,552)


(13,849)


(6,059)


(18,865)


(6,059)

Interest expense, net


(16,681)


(20,309)


(44,821)


(47,565)


(63,166)


(63,960)

Premium on retirement of senior secured notes


(350)


-


(1,200)


-


(2,500)


-

Gain on Letter of Credit Facility reduction


-


-


-


-


-


-

Provision for income taxes


(2,547)


3,737


(11,730)


(4,625)


(17,402)


1,771

Net income attributable to noncontrolling interests


(1,082)


(2,015)


(4,037)


(6,543)


(5,935)


(8,927)

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


$           (4,848)


$         (13,001)


$            1,400


$         (15,572)


$           (19,922)


$          (34,548)


































Free cash flow reconciliation


Three Months Ended September 30,


Nine Months Ended September 30,



2011


2010


2011


2010

Net cash provided by operating activities


$           (5,896)


$            4,330


$               972


$          31,400

Cash disbursed for purchases of PP&E, net


(30,366)


(15,840)


(82,925)


(55,936)

Free cash flow


$         (36,262)


$         (11,510)


$         (81,953)


$         (24,536)




























Net debt reconciliation






September 30,


December 31,







2011


2010

Current maturities of long-term debt and capital lease obligations






$        113,718


$        109,848

Long-term debt, net of current maturities






479,884


432,726

Obligations under capital leases, net of current maturities






13,386


15,604

Total debt






606,988


558,178

Less: cash and cash equivalents






(96,700)


(150,345)

Net debt






$        510,288


$        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


Nine Months Ended



September 30,


September 30,



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)


$         (5,552)


$       (13,172)


$         (6,059)

Acquisition costs


-


-


(1,100)


(679)

Interest expense









Acceleration of the amortization of debt issue costs and OID


(705)


(5,327)


(1,458)


(5,327)

Settlement of value added tax audit in Brazil


-


-


2,838


-

Restructuring expense









Asset impairments


-


-


-


(1,842)

Adjustment of lease liability


-


-


754


-

Sale of closed facilities


-


647


-


647

Other income









Partial redemption of senior secured notes


(350)


-


(1,200)


-

Provision for income taxes









Reversal of South Korean valuation allowance


-


7,785


-


7,785

Tax effect for termination of interest rate swaps


-


(2,000)


-


(2,000)

Tax law and tax election changes


-


-


1,406


-

Total items included in net income / (loss)


$         (5,404)


$         (4,447)


$       (11,932)


$         (7,475)










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


$         (4,848)


$       (13,001)


$           1,400


$       (15,572)

Less: Preferred unit dividends


-


(2,058)


-


(10,707)

Income / (loss) available to common shareholders


$         (4,848)


$       (15,059)


$           1,400


$       (26,279)










Memo:  Average shares outstanding (in thousands)









Basic


19,563


12,468


19,257


12,468

Diluted


19,563


12,468


20,012


12,468










Income / (loss) per common share (GAAP)









Basic


$           (0.25)


$           (1.21)


$             0.07


$           (2.11)

Diluted


(0.25)


(1.21)


0.07


(2.11)










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


0.03


(0.85)


0.67


(1.51)










* Excludes the certain items shown above











SOURCE Tower International, Inc.



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