Tower International Reports Solid Third Quarter, Increases 2013 Adjusted EPS Outlook, and Highlights 2014 EPS and Free Cash Flow Tail-winds

Oct 30, 2013, 08:30 ET from Tower International, Inc.

LIVONIA, Mich., Oct. 30, 2013 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced third quarter 2013 results and updated its outlook.

  • Revenue for the third quarter was $495 million, up 1 percent from $492 million in the third quarter 2012.                  
  • Adjusted EBITDA for the quarter was $48.4 million, up 8 percent from $44.7 million a year ago. Unfavorable volume and mix outside of North America was more than offset by favorable net cost performance. This reflected good overall operating performance and some favorable period benefits.                    
  • Net income of $3.3 million in the third quarter 2013 compared with a net loss of $4.0 million a year ago. As detailed below, this year's third quarter included certain items, primarily one-time charges related to re-financing, that adversely impacted results by $6.8 million. Excluding these items and comparable items in the third quarter of 2012, diluted adjusted earnings were $0.48 per share, up substantially from $0.01 per share a year ago.                   
  • Free cash flow was positive $21 million in the quarter and is positive for the first nine months of the year.              
  • For full year 2013, Tower is increasing its outlook for diluted adjusted earnings per share by 35 cents or 18%, to $2.25 per share. The improvement reflects in part interest savings from a re-financing in the third quarter and a more favorable geographic mix of earnings. Revenue is now projected at $2.1 billion; $15 million lower than the prior outlook, reflecting modest adjustments in Brazil and China. The outlook for Adjusted EBITDA is affirmed at $210 million, as is projected positive free cash flow of $25-$30 million for the full year.

"With consistently good operating execution and lower interest cost, we're pleased to deliver on our projections for positive free cash flow," said President and CEO Mark Malcolm.  "Other things being equal, we can also now look forward to some meaningful favorable tail-winds in 2014, with the already accomplished re-financing actions boosting next year's adjusted earnings per share by about 45 cents and free cash flow by about $15 million, compared with the partial-year savings achieved in 2013."

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

Tower will discuss its third quarter 2013 results and other related matters in a conference call at 1 p.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. #88939581.  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 earnings per share" (or "EPS").  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 earnings per share exclude the impact of certain items as described in the reconciliations provided in this press release 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 and diluted adjusted earnings per share and statements regarding 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 September 30,

Nine Months Ended September 30,

2013

2012

2013

2012

Revenues

$           495,197

$           492,127

$        1,585,215

$        1,576,770

Cost of sales

439,222

438,799

1,401,713

1,396,482

  Gross profit

55,975

53,328

183,502

180,288

Selling, general, and administrative expenses

31,290

32,254

98,235

101,251

Amortization expense

646

1,120

2,134

3,439

Restructuring and asset impairment charges, net

1,575

3,186

18,906

7,953

  Operating income

22,464

16,768

64,227

67,645

Interest expense

9,410

13,530

44,375

41,249

Interest income

283

358

898

831

Other expense

7,490

-

48,418

-

  Income / (loss) before provision for income taxes and equity in loss of

  joint venture

5,847

3,596

(27,668)

27,227

Provision for income taxes

1,423

3,047

8,557

17,713

Equity in loss of joint venture, net of tax

(208)

-

(373)

-

  Income / (loss) from continuing operations

4,216

549

(36,598)

9,514

Loss from discontinued operations, net of tax

-

(2,931)

-

(578)

  Net income / (loss)

4,216

(2,382)

(36,598)

8,936

    Less: Net income attributable to the noncontrolling interests

898

1,593

2,647

4,627

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

$               3,318

$             (3,975)

$           (39,245)

$               4,309

Weighted average common shares outstanding

Basic

20,449,920

20,246,797

20,358,641

20,098,355

Diluted

21,106,471

20,246,797

20,358,641

20,533,788

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

Income / (loss) per share from continuing operations

$                 0.16

$               (0.05)

$               (1.93)

$                 0.24

Loss per share from discontinued operations

-

(0.15)

-

(0.03)

Income / (loss) per share

0.16

(0.20)

(1.93)

0.21

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

Income / (loss) per share from continuing operations

$                 0.16

$               (0.05)

$               (1.93)

$                 0.24

Loss per share from discontinued operations

-

(0.15)

-

(0.03)

Income / (loss) per share

0.16

(0.20)

(1.93)

0.21

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)

September 30, 2013

December 31, 2012

ASSETS

Cash and cash equivalents

$                           106,348

$                         113,943

Accounts receivable, net of allowance of $2,294 and $4,105

331,898

266,138

Inventories

81,682

81,336

Deferred tax asset - current

7,901

10,447

Prepaid tooling, notes receivable, and other

77,278

96,349

Total current assets

605,107

568,213

Property, plant, and equipment, net

529,176

573,148

Goodwill

66,118

64,793

Investment in joint venture

7,975

-

Deferred tax asset - non-current

2,851

3,149

Other assets, net

27,891

28,819

Total assets

$                        1,239,118

$                      1,238,122

LIABILITIES AND STOCKHOLDERS' EQUITY

Short-term debt and current maturities of capital lease obligations

$                             69,428

$                           74,605

Accounts payable 

309,898

264,897

Accrued liabilities

120,962

134,664

Total current liabilities

500,288

474,166

Long-term debt, net of current maturities

451,790

411,590

Obligations under capital leases, net of current maturities

10,154

10,783

Deferred tax liability - non-current

10,003

13,021

Pension liability

87,426

100,780

Other non-current liabilities

83,173

86,908

Total non-current liabilities 

642,546

623,082

  Total liabilities

1,142,834

1,097,248

Stockholders' Equity:

Tower International, Inc.'s stockholders' equity

  Common stock, $0.01 par value, 350,000,000 authorized, 21,074,337

  issued and 20,467,947 outstanding at September 30, 2013 and 20,830,425

  issued and 20,247,134 outstanding at December 31, 2012

211

208

  Additional paid in capital

326,759

321,032

  Treasury stock, at cost, 606,390 shares as of September 30, 2013 and

  583,291 shares as of December 31, 2012

(8,594)

(8,297)

  Accumulated deficit

(276,457)

(237,212)

  Accumulated other comprehensive loss

(8,477)

(12,484)

    Total Tower International, Inc.'s stockholders' equity

33,442

63,247

Noncontrolling interests in subsidiaries

62,842

77,627

  Total stockholders' equity

96,284

140,874

Total liabilities and stockholders' equity

$                        1,239,118

$                      1,238,122

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

Nine Months Ended September 30,

2013

2012

OPERATING ACTIVITIES:

Net income / (loss)

$              (36,598)

$                 8,936

Add:  Loss from discontinued operations, net of tax

-

(578)

  Income / (loss) from continuing operations

(36,598)

9,514

Adjustments required to reconcile income / (loss) from continuing operations to net cash

provided by operating activities:

  Non-cash restructuring and asset impairments, net

11,006

-

  Premium on notes redemption and other fees

48,418

-

  Deferred income tax provision

373

12,590

  Depreciation and amortization

70,933

68,213

  Non-cash share-based compensation

3,660

8,485

  Pension expense / (income),  net of contributions

(13,354)

(15,949)

  Change in working capital and other operating items

(34,669)

(45,076)

    Net cash provided by continuing operating activities

$               49,769

$               37,777

INVESTING ACTIVITIES:

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

$              (47,224)

$              (84,703)

  Investment in joint venture

(6,293)

-

  Net proceeds from sale of property, plant, and equipment

12,040

-

    Net cash used in continuing investing activities

$              (41,477)

$              (84,703)

FINANCING ACTIVITIES:

  Purchase of treasury stock

$                   (297)

$                (3,167)

  Proceeds from borrowings

457,352

465,261

  Repayments of  borrowings

(484,847)

(411,026)

  Proceeds from borrowings on Term Loan Credit Facility

417,900

-

  Redemption of notes

(361,992)

-

  Premium paid on notes redemption and other fees

(43,078)

-

  Debt financing costs

(9,437)

-

  Premium paid on re-pricing of Term Loan B and other fees

(4,378)

-

  Proceeds from stock options exercised

2,067

-

  Noncontrolling interest dividends

(6,748)

-

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

$              (33,458)

$               51,068

Discontinued operations:

  Net cash from discontinued operating activities

$                       -

$              (11,936)

  Net cash from discontinued investing activities

15,694

(21,878)

  Net cash from discontinued financing activities

-

11,575

    Net cash from discontinued operations

$               15,694

$              (22,239)

Effect of exchange rate changes on continuing cash and cash equivalents

$                 1,877

$                 2,083

NET CHANGE IN CASH AND CASH EQUIVALENTS

$                (7,595)

$              (16,014)

CASH AND CASH EQUIVALENTS:

Beginning of period

$             113,943

$             134,984

End of period

$             106,348

$             118,970

Supplemental Cash Flow Information:

  Interest paid, net of amounts capitalized

$               40,865

$               48,674

  Income taxes paid

8,036

6,738

Non-cash Activities:

  Capital expenditures in liabilities for purchases of property, plant, and equipment

$               15,590

$                 9,907

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

Segment Data

Three Months Ended September 30,

2013

2012

Revenues

Adjusted

EBITDA

Revenues

Adjusted

EBITDA

International

$              219,250

$                12,795

$              209,848

$                17,590

Americas

275,947

35,617

282,279

27,088

  Consolidated

$              495,197

$                48,412

$              492,127

$                44,678

Nine Months Ended September 30,

2013

2012

Revenues

Adjusted

EBITDA

Revenues

Adjusted

EBITDA

International

$              706,253

$                56,791

$              710,017

$                63,275

Americas

878,962

105,902

866,753

90,109

  Consolidated

$           1,585,215

$              162,693

$           1,576,770

$              153,384

Adjusted EBITDA reconciliation

Three Months Ended September 30,

Nine Months Ended September 30,

2013

2012

2013

2012

Adjusted EBITDA

$                48,412

$                44,678

$              162,693

$              153,384

Restructuring and asset impairment charges, net

(1,575)

(3,186)

(18,906)

(7,953)

Depreciation and amortization

(22,296)

(23,498)

(70,933)

(68,213)

Acquisition costs and other

(335)

(87)

(904)

(273)

Long-term compensation expense

(1,742)

(1,139)

(4,888)

(9,300)

Interest expense, net

(9,127)

(13,172)

(43,477)

(40,418)

Other expense

(7,490)

-

(48,418)

-

Closure of Tower Defense & Aerospace

-

-

(2,835)

-

Provision for income taxes

(1,423)

(3,047)

(8,557)

(17,713)

Equity in loss of joint venture

(208)

-

(373)

-

Loss from discontinued operations, net of tax

-

(2,931)

-

(578)

Net income attributable to noncontrolling interests

(898)

(1,593)

(2,647)

(4,627)

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

$                  3,318

$                (3,975)

$              (39,245)

$                  4,309

Free cash flow reconciliation

Three Months Ended September 30,

Nine Months Ended September 30,

2013

2012

2013

2012

Net cash provided by continuing operating activities

$                37,967

$                  7,831

$                49,769

$                37,777

Cash disbursed for purchases of PP&E, net

(17,032)

13,365

(47,224)

(84,703)

  Free cash flow

$                20,935

$                21,196

$                  2,545

$              (46,926)

Net debt reconciliation

September 30,

December 31,

2013

2012

Short-term debt and current maturities of capital lease

obligations

$                69,428

$                74,605

Long-term debt, net of current maturities

451,790

411,590

Obligations under capital leases, net of current maturities

10,154

10,783

  Total debt

531,372

496,978

Less: cash and cash equivalents

(106,348)

(113,943)

  Net debt

$              425,024

$              383,035

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Expense items included in net income, net of tax:

 Cost of sales

   Closure of Tower Defense & Aerospace

$               -

$               -

$      (4,414)

$               -

 Selling, general, and administrative expenses

   Incentive compensation related to funding events

-

-

-

(6,128)

   Acquisition costs and other

-

-

(327)

-

 Restructuring expense

   One-time restructuring actions

(425)

-

(1,025)

(1,203)

   Plant relocation

-

(1,683)

-

(2,871)

   Facility closure

-

-

(3,575)

-

   Asset impairment charges

-

(575)

(10,705)

(575)

 Interest expense

   Acceleration of the amortization of debt issue costs and OID

(1,195)

-

(11,342)

-

 Other expense

   Premium on redemption of senior secured notes

(2,150)

-

(42,470)

-

   Premium and other fees for re-pricing of Term Loan 

(4,540)

-

(4,540)

-

   Secondary stock offering transaction costs

(800)

-

(800)

-

   Breakage of Letter of Credit Facility

-

-

(608)

-

 Provision for income taxes

   Foreign subsidiary tax audit

2,300

1,087

2,300

1,087

   Valuation allowance in Brazil

-

-

-

(6,494)

 Discontinued operations

   Income from discontinued operations

-

(2,931)

-

(2,931)

      Total items included in net income

$      (6,810)

$      (4,102)

$    (77,506)

$    (19,115)

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

$       3,318

$      (3,975)

$    (39,245)

$       4,309

Memo:  Average shares outstanding (in thousands)

Basic

20,450

20,247

20,359

20,098

Diluted

21,106

20,247

20,359

20,534

Income / (loss) per common share (GAAP)

Basic

$         0.16

$        (0.20)

$        (1.93)

$         0.21

Diluted

0.16

(0.20)

(1.93)

0.21

Diluted adjusted income per share (non-GAAP)*

0.48

0.01

1.83

1.14

* Excludes the certain items shown above.  For the three months ended September 30, 2012, diluted share count of 20.4 million was used to calculate diluted adjusted income per share. For the nine months ended September 30, 2013, diluted share count of 20.9 million was used to calculate diluted adjusted income per share.

 

SOURCE Tower International, Inc.



RELATED LINKS

http://www.towerinternational.com