Tower International Reports Solid Third Quarter Results and Re-Affirms Full Year Earnings Outlook and China JV Sales

30 Oct, 2015, 07:30 ET from Tower International, Inc.

LIVONIA, Mich., Oct. 30, 2015 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered automotive structural metal components and assemblies,  today announced third quarter 2015 results, updated its outlook for the full year, and discussed related business developments.   

  • Revenue for the third quarter was $475 million.  At constant exchange rates, revenue was $516 million, up 4% from $498 million in the third quarter 2014.  Higher sales volumes in North America and Europe were partially offset by lower customer sales in Brazil and China.
  • Adjusted EBITDA for the quarter was $43.8 million, compared with $48.6 million a year ago.  The year-over-year decline reflected unfavorable net cost performance, which was in line with guidance and reflected unfavorable calendarization timing versus a year ago.
  • Net income was $16.3 million, compared with $11.2 million last year.  As detailed below, this year's third quarter included certain items that favorably affected results by $1.8 million.  Excluding these items and comparable items in the third quarter of 2014, diluted adjusted earnings were $0.67 per share, compared with $0.70 a year ago.
  • Adjusted free cash flow for the third quarter was $15 million.
  • Net debt (excluding cash attributable to discontinued operations) was $358 million at September 30, an improvement of $45 million from a year ago. 
  • Earnings guidance for full year 2015 is unchanged, at $190 million adjusted EBITDA and $3.15 adjusted EPS.  Projected revenue is reduced by $20 million, to $1,950 million.
  • The Company expects its two China JV sales to close in the Fourth Quarter, resulting in anticipated cash sale proceeds of about $50 million, plus elimination of about $47 million of minority interests in Tower's net assets; together, this represents more than $4.50 per TOWR share in enterprise value expected to be received in the Fourth Quarter.
  • Tower's capital deployment for full year 2015 now includes accretive organic growth through major new business awards, an accretive acquisition in high-growth Mexico, the initiation of a quarterly dividend to begin returning capital to shareholders, and anticipated further de-leveraging of more than $40 million.

"At this point in our company's evolution, we expect to have excellent future opportunities and the continuing resolve to take disciplined yet decisive actions intended to further improve the business and achieve fair and increasing value for our owners," said President and CEO Mark Malcolm.

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

Tower will discuss its third quarter 2015 results, the outlook for full year 2015, 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. #62619540.  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 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, diluted adjusted earnings per share, adjusted free cash flow and statements regarding 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@towerinternational.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,

2015

2014

2015

2014

Revenues

$               475,249

$               497,722

$            1,462,145

$           1,565,452

Cost of sales

422,436

444,785

1,290,522

1,389,377

 Gross profit

52,813

52,937

171,623

176,075

Selling, general, and administrative expenses

32,232

34,223

95,560

99,934

Amortization expense 

249

220

249

1,544

Restructuring and asset impairment charges, net 

874

1,392

7,398

7,497

  Operating income

19,458

17,102

68,416

67,100

Interest expense 

6,324

7,325

18,175

21,830

Interest income

167

131

393

396

Other expense

-

-

-

87

 Income before provision for income taxes and equity in profit of

 joint venture

13,301

9,908

50,634

45,579

Provision for income taxes 

1,562

1,634

6,035

7,129

Equity in loss of joint venture, net of tax

143

(245)

(46)

(626)

Income from continuing operations

11,882

8,029

44,553

37,824

Income from discontinued operations, net of tax 

4,990

4,873

5,579

7,306

  Net income

16,872

12,902

50,132

45,130

Less: Net income attributable to the noncontrolling interests

589

1,741

1,162

3,018

Net income attributable to Tower International, Inc.

$                 16,283

$                 11,161

$                 48,970

$                42,112

Weighted average basic shares outstanding

21,107,477

20,733,785

21,087,691

20,632,688

Weighted average diluted shares outstanding

21,422,859

21,457,369

21,395,797

21,364,800

Basic income per share attributable to Tower International, Inc.:

Income per share from continuing operations 

$                     0.54

$                     0.30

$                     2.06

$                    1.69

Income per share from discontinued operations 

0.24

0.24

0.26

0.34

Income per share 

0.77

0.54

2.32

2.04

Diluted income per share attributable to Tower International, Inc.:

Income per share from continuing operations 

$                     0.53

$                     0.29

$                     2.03

$                    1.63

Income per share from discontinued operations 

0.23

0.23

0.26

0.34

Income per share 

0.76

0.52

2.29

1.97

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)

September 30,

December 31,

2015

2014

ASSETS

Cash and cash equivalents

$                 114,952

$                 148,561

Accounts receivable, net of allowance of $1,323 and $1,181

293,367

230,377

Inventories 

79,206

69,775

Deferred tax asset - current

7,453

6,900

Assets held for sale 

113,110

141,295

Prepaid tooling, notes receivable, and other

76,147

41,986

Total current assets

684,235

638,894

Property, plant, and equipment, net

435,634

451,126

Goodwill 

60,897

56,691

Investment in joint venture

7,711

7,752

Deferred tax asset - non-current

3,572

3,608

Other assets, net

10,912

12,969

Total assets

$              1,202,961

$              1,171,040

LIABILITIES AND EQUITY

Short-term debt and current maturities of capital lease obligations 

$                   35,624

$                   31,139

Accounts payable 

305,403

257,011

Accrued liabilities

111,221

105,772

Liabilities held for sale 

47,874

67,707

Total current liabilities

500,122

461,629

Long-term debt, net of current maturities 

414,452

445,303

Obligations under capital leases, net of current maturities 

6,407

7,740

Deferred tax liability - non-current

13,368

12,972

Pension liability 

58,320

68,637

Other non-current liabilities

87,124

74,981

Total non-current liabilities 

579,671

609,633

Total liabilities

1,079,793

1,071,262

Stockholders' equity:

Tower International, Inc.'s stockholders' equity

Preferred stock, $0.01 par value, 50,000,000 authorized and 0 issued and outstanding

$                           -

$                           -

Common stock, $0.01 par value, 350,000,000 authorized, 22,000,197 issued and 21,107,987 outstanding at September 30, 2015 and  21,393,592 issued and 20,752,226 outstanding at December 31, 2014 

220

214

Additional paid in capital

337,312

335,338

Treasury stock, at cost, 892,210 and 641,366 shares as of September 30, 2015 and December 31, 2014

(16,067)

(9,516)

Accumulated deficit

(187,001)

(235,971)

Accumulated other comprehensive loss 

(67,566)

(46,914)

Total Tower International, Inc.'s stockholders' equity

66,898

43,151

Noncontrolling interests in subsidiaries 

56,270

56,627

Total stockholders' equity

123,168

99,778

Total liabilities and stockholders' equity

$              1,202,961

$              1,171,040

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

OPERATING ACTIVITIES:

Net income

$                 16,872

$                12,902

$               50,132

$                   45,130

Less: Income from discontinued operations, net of tax

4,990

4,873

5,579

7,306

Income from continuing operations

11,882

8,029

44,553

37,824

Adjustments required to reconcile income from continuing operations to net cash provided by

continuing operating activities:

Premium on notes redemption and other fees

-

-

-

87

Deferred income tax provision

(345)

(486)

(238)

214

Depreciation and amortization

20,049

20,951

59,693

66,549

Non-cash share-based compensation

512

1,157

1,814

3,566

Pension income, net of contributions

(4,039)

(4,855)

(10,267)

(12,916)

Change in working capital and other operating items

(3,122)

(9,841)

(57,245)

(61,083)

Net cash provided by continuing operating activities

$                 24,937

$                14,955

$               38,310

$                   34,241

INVESTING ACTIVITIES:

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

$                (30,370)

$              (34,145)

$             (59,818)

$                 (62,346)

Proceeds from disposal of joint venture

9,947

-

9,947

-

Investment in joint venture

-

-

-

(760)

Acquisition, net of cash

(21,740)

-

(21,740)

-

Net cash used in continuing investing activities

$                (42,163)

$              (34,145)

$             (71,611)

$                 (63,106)

FINANCING ACTIVITIES:

Proceeds from borrowings

$                 31,023

$                26,715

$               97,462

$                   97,091

Repayments of  borrowings

(33,595)

(50,297)

(96,457)

(115,688)

Borrowings/(Repayments) on Term Loan Credit Facility

-

(25,000)

33,145

Debt financing costs

-

(1,644)

-

(2,561)

Proceeds from termination of cross currency swaps

-

-

32,377

-

Secondary stock offering transaction costs

-

-

-

(75)

Proceeds from stock options exercised

12

435

160

2,608

Purchase of treasury stock

(2)

(12)

(6,551)

(922)

Noncontrolling interest dividends

-

-

-

(2,529)

Net cash provided by (used in) continuing financing activities

$                  (2,562)

$              (24,803)

$                 1,991

$                   11,069

Discontinued operations:

Net cash from discontinued operating activities

$                 10,861

$                  4,029

$               19,530

$                     7,496

Net cash from discontinued investing activities

(3,987)

(1,757)

(5,573)

5,999

Net cash from discontinued financing activities

(6,917)

1,513

(12,537)

(806)

         Net cash from discontinued operations

$                       (43)

$                  3,785

$                 1,420

$                   12,689

Effect of exchange rate changes on continuing cash and cash equivalents

$                  (1,220)

$                (2,584)

$               (3,719)

$                   (3,346)

NET CHANGE IN CASH AND CASH EQUIVALENTS

$                (21,050)

$              (42,792)

$             (33,609)

$                   (8,453)

CASH AND CASH EQUIVALENTS:

Beginning of period

$               136,002

$              169,219

$             148,561

$                 134,880

End of period

$               114,952

$              126,427

$             114,952

$                 126,427

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

Segment Data

Three Months Ended September 30,

2015

2014

Revenues

Adjusted EBITDA

Revenues

Adjusted EBITDA

International

$              168,800

$                13,140

$              197,130

$                12,249

Americas

306,449

30,641

300,592

36,382

Consolidated

$              475,249

$                43,781

$              497,722

$                48,631

Nine Months Ended September 30,

2015

2014

Revenues

Adjusted EBITDA

Revenues

Adjusted EBITDA

International

$              545,596

$                43,640

$              646,708

$                49,335

Americas

916,549

101,484

918,744

106,071

Consolidated

$           1,462,145

$              145,124

$           1,565,452

$              155,406

Adjusted EBITDA Reconciliation

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Adjusted EBITDA

$                43,781

$                48,631

$              145,124

$              155,406

Restructuring and asset impairment charges, net

(874)

(1,392)

(7,398)

(7,497)

Depreciation and amortization

(20,049)

(20,951)

(59,693)

(66,549)

Acquisition costs and other

(530)

(101)

(747)

(312)

Long-term compensation expense

(2,870)

(3,076)

(8,870)

(7,939)

Commercial settlement related to 2010-13 scrap

(6,009)

(6,009)

Interest expense, net

(6,157)

(7,194)

(17,782)

(21,434)

Other expense

-

-

-

(87)

Provision for income taxes

(1,562)

(1,634)

(6,035)

(7,129)

Equity in loss of joint venture, net of tax

143

(245)

(46)

(626)

Income from discontinued operations, net of tax 

4,990

4,873

5,579

7,306

Net income attributable to noncontrolling interests

(589)

(1,741)

(1,162)

(3,018)

Net income attributable to Tower International, Inc.

$                16,283

$                11,161

$                48,970

$                42,112

Adjusted Free Cash Flow Reconciliation

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Net cash provided by continuing operating activities

$                24,937

$                14,955

$                38,310

$                34,241

Cash disbursed for purchases of PP&E

(30,370)

(34,145)

(59,818)

(62,346)

Free cash flow

(5,433)

(19,190)

(21,508)

(28,105)

Less:  Cash disbursed for customer-owned tooling

(20,575)

(9,887)

(44,722)

(26,036)

Adjusted free cash flow

$                15,142

$                (9,303)

$                23,214

$                (2,069)

Net Debt Reconciliation

September 30,

December 31,

2015

2014

Short-term debt and current maturities of capital lease obligations

$                35,624

$                31,139

Long-term debt, net of current maturities

424,045

457,179

Debt issue costs

(9,593)

(11,876)

Obligations under capital leases, net of current maturities

6,407

7,740

Total debt

456,483

484,182

Less: Cash and cash equivalents

(114,952)

(148,561)

Add: Cash attributible to discontinued operations

17,445

16,025

Net debt

$              358,976

$              351,646

 

 

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,

2015

2014

2015

2014

Income / (expense) items included in net income, net of tax:

 Cost of sales

 Commercial settlement related to 2010-13 scrap

$               -

$      (6,009)

$               -

$      (6,009)

Selling, general, and administrative expenses

One-time CEO compensation awards

(933)

(884)

(2,799)

(884)

Acquisition costs

(393)

-

(393)

-

Restructuring and asset impairment charges, net

Restructuring actions*

(230)

(156)

(607)

(962)

Change in estimated future rent

-

-

(4,760)

-

Lease buyout of previously closed facility

-

-

-

(3,448)

Interest expense

Mark-to-market gain/ (loss) on derivative financial instruments

(1,006)

-

(1,280)

-

Acceleration of the amortization of debt issue costs and OID

-

-

(440)

-

Other expense

Term Loan re-pricing fees

-

-

-

(87)

Discontinued operations

Income from discontinued operations

4,990

4,873

5,587

7,306

Noncontrolling interests

Net income attributable to noncontrolling interests**

(589)

(1,489)

(870)

(2,265)

Total items included in net income, net of tax

$         1,839

$      (3,665)

$        (5,562)

$      (6,349)

Net income attributable to Tower International, Inc.

$       16,283

$     11,161

$        48,970

$     42,112

Memo:  Average shares outstanding (in thousands)

Basic

21,107

20,734

21,088

20,633

Diluted

21,423

21,457

21,396

21,365

Income / (loss) per common share (GAAP)

Basic

$           0.77

$         0.54

$            2.32

$         2.04

Diluted

0.76

0.52

2.29

1.97

Diluted adjusted earnings per share (non-GAAP) ***

0.67

0.70

2.55

2.28

*   Amount is net of tax of $0k , $44k, $35k , and $127k, respectively 

** Amounts attributible to noncontrolling interests of discontinued operations

*** Excludes the certain items shown above. 

 

 

SOURCE Tower International, Inc.



RELATED LINKS

http://www.towerinternational.com