Tower International Reports Strong First Quarter Results And Increases Outlook For Full Year Earnings And Free Cash Flow

May 02, 2013, 08:00 ET from Tower International, Inc.

LIVONIA, Mich., May 2, 2013 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced first quarter 2013 results and updated its outlook for the full year.

  • Revenue for the first quarter was $534 million, up 1% from $530 million in the first quarter 2012.  Lower industry production in Europe was offset by higher Tower revenue in all other regions.
  • Adjusted EBITDA for the quarter was $52.1 million, a 13% increase from $46.3 million a year ago, reflecting favorable volume and mix, plus net improvements in cost factors such as launch.  Adjusted EBITDA margin improved to 9.8%.   
  • Net income of $2.5 million in the first quarter 2013 compared with net income of $0.6 million a year ago.  As detailed below, this year's first quarter included certain items that adversely impacted results by $4.1 million.  Excluding these items and comparable items in the first quarter of 2012, diluted adjusted earnings were 32 cents per share, up 45% from 22 cents a year ago. 
  • In late April, the company significantly improved its financial outlook by completing an early debt tender and re-financing with a new senior secured term loan maturing in 2020.  Interest savings are projected to improve ongoing free cash flow by about $14 million per year and increase annual net income by about 75 cents per share.
  • For the full year, Tower is increasing its outlook for diluted adjusted earnings per share by 40 cents from the prior mid-point outlook (to $1.65 per share).  The outlook for positive free cash flow is increased to $25 million.  Revenue is projected at the prior mid-point outlook ($2.125 billion), and the range outlook for adjusted EBITDA is increased to the upper end of the prior outlook (now $205 million to $210 million).

"The accretive sale of our Korean operations in late December, the strong execution and results in the first quarter, and the successful debt re-financing in April have materially strengthened Tower's present financial condition and our future business outlook," said President and CEO Mark Malcolm.

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

Tower will discuss its first 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. #57434530.  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." 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 below 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 adjusted earnings per share and statements regarding the accretive nature of the sale of Korean operations, 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 March 31,

2013

2012

Revenues

$           534,140

$           529,691

Cost of sales

476,080

473,194

Gross profit

58,060

56,497

Selling, general and administrative expenses

33,370

36,451

Amortization expense

832

1,177

Restructuring and asset impairment charges, net

2,680

1,934

  Operating income

21,178

16,935

Interest expense

13,428

13,764

Interest income

274

294

Income before provision for income taxes

8,024

3,465

Provision for income taxes

3,490

2,142

Income from continuing operations

4,534

1,323

Income from discontinued operations, net of tax

-

737

        Net income

4,534

2,060

Less: Net income attributable to the noncontrolling interests

1,986

1,434

Net income attributable to Tower International, Inc.

$               2,548

$                  626

Weighted average common shares outstanding

Basic

20,261,259

19,691,679

Diluted

20,593,045

20,660,307

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

Income / (loss) per share from continuing operations

$                 0.13

$               (0.01)

Income per share from discontinued operations

-

0.04

Income per share

0.13

0.03

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

Income / (loss) per share from continuing operations

$                 0.12

$               (0.01)

Income per share from discontinued operations

-

0.04

Income per share

0.12

0.03

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)

March 31, 2013

December 31, 2012

ASSETS

Cash and cash equivalents

$                    111,083

$                         113,943

Accounts receivable, net of allowance of $2,869 and $4,105

329,014

266,138

Inventories

87,345

81,336

Deferred tax asset - current

8,235

10,447

Prepaid tooling, notes receivable, and other

78,429

96,349

Total current assets

614,106

568,213

Property, plant and equipment, net

558,678

573,148

Goodwill

63,065

64,793

Deferred tax asset - non-current

3,051

3,149

Other assets, net

26,691

28,819

Total assets

$                 1,265,591

$                      1,238,122

LIABILITIES AND STOCKHOLDERS' EQUITY

Short-term debt and current maturities of capital lease obligations

$                      70,213

$                           74,605

Accounts payable 

306,235

264,897

Accrued liabilities

135,258

134,664

Total current liabilities

511,706

474,166

Long-term debt, net of current maturities

411,062

411,590

Obligations under capital leases, net of current maturities

10,191

10,783

Deferred tax liability - non-current

10,706

13,021

Pension liability

97,229

100,780

Other non-current liabilities

85,957

86,908

Total non-current liabilities 

615,145

623,082

  Total liabilities

1,126,851

1,097,248

Stockholders' Equity:

Tower International, Inc.'s stockholders' equity

Common stock, $0.01 par value, 350,000,000 authorized, 20,898,098 issued and 20,292,763 outstanding at March 31, 2013 and 20,830,425 issued and 20,247,134 outstanding at December 31, 2012

209

208

Additional paid in capital

322,217

321,032

Treasury stock, at cost, 605,335 shares as of March 31, 2013 and 583,291 shares as of December 31, 2012

(8,572)

(8,297)

Accumulated deficit

(234,664)

(237,212)

Accumulated other comprehensive loss

(20,312)

(12,484)

Total Tower International, Inc.'s stockholders' equity

58,878

63,247

Noncontrolling interests in subsidiaries

79,862

77,627

Total stockholders' equity

138,740

140,874

Total liabilities and stockholders' equity

$                 1,265,591

$                      1,238,122

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

Three Months Ended March 31,

2013

2012

OPERATING ACTIVITIES:

Net income

$                 4,534

$                 2,060

Less:  Income from discontinued operations, net of tax

-

737

Income from continuing operations

4,534

1,323

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

Non-cash restructuring and asset impairment charges

955

-

Deferred income tax provision / (benefit)

96

(291)

Depreciation and amortization

25,172

22,311

Non-cash share-based compensation

1,185

4,344

Pension expense, net of contributions

(3,551)

(3,020)

Change in working capital and other operating items

(27,097)

(10,603)

Net cash provided by continuing operating activities

$                 1,294

$               14,064

INVESTING ACTIVITIES:

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

$              (14,587)

$              (28,704)

Net cash used in continuing investing activities

$              (14,587)

$              (28,704)

FINANCING ACTIVITIES:

Purchase of treasury stock

$                   (275)

$                     (83)

Proceeds from borrowings

154,198

168,737

Repayments of  borrowings

(158,478)

(156,253)

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

$                (4,555)

$               12,401

Discontinued operations:

Net cash from discontinued operating activities

$                       -

$                (8,384)

Net cash from discontinued investing activities

15,827

(7,213)

Net cash from discontinued financing activities

-

14,049

Net cash from discontinued operations

$               15,827

$                (1,548)

Effect of exchange rate changes on continuing cash and cash equivalents

$                   (839)

$                 2,822

NET CHANGE IN CASH AND CASH EQUIVALENTS

$                (2,860)

$                   (965)

CASH AND CASH EQUIVALENTS:

Beginning of period

$             113,943

$             134,984

End of period

$             111,083

$             134,019

Supplemental Cash Flow Information:

Interest paid, net of amounts capitalized

$               22,062

$               22,521

Income taxes paid

3,585

4,193

Non-cash Activities:

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

$               12,702

$               16,927

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

Segment Data

Three Months Ended March 31,

2013

2012

Revenues

Adjusted

EBITDA

Revenues

Adjusted

EBITDA

International

$              244,769

$                22,031

$              248,660

$                20,583

Americas

289,371

30,035

281,031

25,702

Consolidated

$              534,140

$                52,066

$              529,691

$                46,285

Adjusted EBITDA reconciliation

Three Months Ended March 31,

Last Twelve Months Ended March 31,

2013

2012

2013

2012

Adjusted EBITDA

$                52,066

$                46,285

$              203,667

$              187,879

Restructuring

(2,680)

(1,934)

(11,484)

(4,111)

Depreciation and amortization

(25,172)

(22,311)

(95,717)

(97,582)

Acquisition costs and other

(74)

(69)

(436)

(1,516)

Long-term compensation expense

(1,362)

(5,036)

(6,742)

(19,867)

Interest expense, net

(13,154)

(13,470)

(53,499)

(56,736)

Closure of Tower Defense & Aerospace

(1,600)

-

(1,600)

-

Other expense

-

-

-

(481)

Pension actuarial loss

-

-

(19,157)

(33,223)

Provision for income taxes

(3,490)

(2,142)

(16,603)

(8,959)

Income from discontinued operation

-

737

29,053

7,309

Net income attributable to noncontrolling interests

(1,986)

(1,434)

(7,528)

(4,810)

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

$                  2,548

$                     626

$                19,954

$              (32,097)

Free cash flow reconciliation

Three Months Ended March 31,

2013

2012

Net cash provided by continuing operating activities

$                  1,294

$                14,064

Cash disbursed for purchases of PP&E, net

(14,587)

(28,704)

Free cash flow

$              (13,293)

$              (14,640)

Net debt reconciliation

March 31,

December 31,

2013

2012

Short-term debt and current maturities of capital lease obligations

$                70,213

$                74,605

Long-term debt, net of current maturities

411,062

411,590

Obligations under capital leases, net of current maturities

10,191

10,783

Total debt

491,466

496,978

Less: cash and cash equivalents

(111,083)

(113,943)

Net debt

$              380,383

$              383,035

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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

Three Months Ended

March 31,

2013

2012

Expense items included in net income, net of tax:

Cost of sales

Closure of Tower Defense & Aerospace

$      (2,630)

$               -

Selling, general and administrative expenses

Incentive compensation related to funding events

-

(4,006)

Restructuring expense

Severance costs in Europe

-

(715)

Facility closure

(1,182)

-

One-time restructuring actions

(330)

-

Discontinued operations

Income from discontinued operations

-

737

Total items included in net income

$      (4,142)

$      (3,984)

Net income attributable to Tower International, Inc.

$       2,548

$          626

Memo:  Average shares outstanding (in thousands)

Basic

20,261

19,692

Diluted

20,593

20,660

Income per common share (GAAP)

Basic

$         0.13

$         0.03

Diluted

0.12

0.03

Diluted adjusted income per share (non-GAAP)*

0.32

0.22

* Excludes the certain items shown above

 

SOURCE Tower International, Inc.



RELATED LINKS

http://www.towerinternational.com