2014

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

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.



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