Tower International Reports Solid Third Quarter and Raises Full Year Outlook

Nov 03, 2011, 08:00 ET from Tower International, Inc.

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.



RELATED LINKS

http://www.towerinternational.com