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Tower International Reports Strong Second Quarter Results and Re-Affirms Full Year Outlook

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LIVONIA, Mich., Aug. 7, 2012 /PRNewswire/ -- Tower International, Inc. [NYSE: TOWR], a leading integrated global manufacturer of engineered structural metal components and assemblies for the automotive and other industries, today announced its second quarter 2012 results and provided updated outlooks for the remainder of 2012 and 2013.

  • Revenue for second quarter 2012 was $644 million, up $41 million or 7 percent from $603 million in the second quarter 2011. 
  • Adjusted EBITDA for the quarter was $67.9 million, up $12.3 million or 22 percent from a year ago.  The improvement mainly reflected higher volume in North America and favorable net cost performance across the company, offset partially by unfavorable currency translation.  Adjusted EBITDA margin for the quarter was 10.5 percent. 
  • Net income of $6.9 million for the second quarter 2012 compared with net loss of $2.8 million a year ago.  As detailed in the financial table below, this year's second quarter included certain items that adversely impacted results by $10.3 million.  Excluding these items and comparable items in the second quarter of 2011, diluted adjusted earnings per share were $0.84, up from $0.07 per share a year ago. 
  • The outlook for full year 2012 remains unchanged, anticipating Adjusted EBITDA of $210 to $220 million on revenue of about $2.4 billion.  Good second quarter results and continuing good cost performance are presently expected to offset overseas industry and currency headwinds.  The outlook for the third quarter includes revenue of about $550 million, Adjusted EBITDA of $40 to $45 million, and adjusted net loss of about $0.30 per share.
  • The company's net new business backlog for 2013 now stands at about a $125 million increase from 2012, following a recent reduction of $75 million related to a Chinese customer planning to end production of a vehicle line.  Based on present global production estimates and prevailing exchange rates, the company is re-affirming expectations for higher earnings and positive free cash flow in 2013.

"While we cannot control the macro environment, we remain focused on what we can execute and influence," said President and CEO Mark Malcolm. "With Tower's fundamentally sound game plan and proven resiliency, we are prepared and confident for the balance of 2012 and beyond."

The company also is filing today a shelf registration statement on Form S-3 that will register 100 percent of Cerberus's shares for potential future secondary offerings and up to $100 million for potential future primary issuances.  This filing, which will be valid for 3 years after it is declared effective by the SEC, does not commit the company or Cerberus to take any action, and no actions are presently planned.  This press release does not constitute an offer of any securities for sale.

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

Tower will discuss its second quarter 2012 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 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and reference Conference I.D. #14038822.  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 income / (loss) 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 income / (loss) per share excludes 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, earnings, financial results 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 cause our actual 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;
  • 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; 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 June 30,


Six Months Ended June 30,


2012


2011


2012


2011









Revenues

$     643,857


$     602,718


$   1,261,420


$    1,202,353

Cost of sales

568,680


544,019


1,126,105


1,074,084

Gross profit

75,177


58,699


135,315


128,269

Selling, general and administrative expenses

34,139


39,365


72,191


77,087

Amortization expense

1,142


1,262


2,319


2,154

Restructuring and asset impairment charges, net

2,833


1,169


4,767


1,652

  Operating income

37,063


16,903


56,038


47,376

Interest expense 

15,842


16,061


31,518


28,579

Interest income

233


176


560


439

Other expense

-


-


-


850

Income before provision for income taxes

21,454


1,018


25,080


18,386

Provision for income taxes

12,980


2,570


15,330


9,183

        Net income / (loss)

8,474


(1,552)


9,750


9,203

Less: Net income attributable to the noncontrolling interests

1,600


1,222


3,034


2,955

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

$        6,874


$     (2,774)


$      6,716


$       6,248









Weighted average common shares outstanding








Basic

20,134,096


19,101,588


19,912,888


19,101,588

Diluted

20,328,764


19,101,588


20,494,535


19,991,615









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








Basic

$               0.34


$              (0.15)


$               0.34


$               0.33

Diluted

0.34


(0.15)


0.33


0.31









TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)










June 30, 2012


December 31, 2011





ASSETS




Cash and cash equivalents

$                   123,436


$                   134,984

Accounts receivable, net of allowance of $4,385 and $3,612

372,422


327,992

Inventories

99,611


85,100

Deferred tax asset - current

8,399


12,966

Assets held for sale

4,095


4,027

Prepaid tooling and other

64,847


56,189

Total current assets

672,810


621,258





Property, plant and equipment, net

681,042


667,686

Goodwill

62,349


63,983

Deferred tax asset - non-current

11,255


14,450

Other assets, net

27,240


30,001

Total assets

$                1,454,696


$                1,397,378





LIABILITIES AND STOCKHOLDERS' EQUITY




Short-term debt and current maturities of capital lease obligations

$                    113,345


$                   109,447

Accounts payable 

399,949


395,287

Accrued liabilities

126,708


126,416

Total current liabilities

640,002


631,150





Long-term debt, net of current maturities

502,200


461,838

Obligations under capital leases, net of current maturities

10,909


12,213

Deferred tax liability - non-current

13,383


11,229

Pension liability

89,194


96,223

Other non-current liabilities

94,897


87,265

Total non-current liabilities 

710,583


668,768

  Total liabilities

1,350,585


1,299,918





Stockholders' Equity:




Tower International, Inc.'s stockholders' equity




Common stock, $0.01 par value, 350,000,000 authorized, 20,829,429 issued and 20,246,445 outstanding at June 30, 2012, and 19,983,403 issued and 19,683,032 outstanding at December 31, 2011

208


200

Additional paid in capital

318,776


311,427

Treasury stock, at cost, 582,984 shares as of June 30, 2012 and 300,371 shares as of December 31, 2011

(8,295)


(5,130)

Accumulated deficit

(177,776)


(184,492)

Accumulated other comprehensive loss

(88,951)


(82,002)

Total Tower International, Inc.'s stockholders' equity

43,962


40,003

Noncontrolling interests in subsidiaries

60,149


57,457

Total stockholders' equity

104,111


97,460





Total liabilities and stockholders' equity

$                 1,454,696


$                1,397,378





TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)






Six Months Ended June 30,


2012


2011





OPERATING ACTIVITIES:




Net income

$      9,750


$       9,203

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




Deferred income tax provision

10,860


(869)

Depreciation and amortization

51,425


61,708

Non-cash share-based compensation

7,357


7,498

Pension expense, net of contributions

(5,462)


(3,771)

Change in working capital and other operating items

(51,813)


(66,901)

Net cash provided by operating activities

$     22,117


$      6,868





INVESTING ACTIVITIES:




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

$   (75,541)


$   (52,559)

Net assets acquired, net of cash acquired

-


(22,300)

Net cash used in investing activities

$   (75,541)


$   (74,859)





FINANCING ACTIVITIES:




Retirement of senior secured notes

$                -


(17,000)

Purchase of treasury stock

(3,165)


-

Proceeds from borrowings

361,693


315,202

Repayments of  borrowings

(317,247)


(257,569)

Net cash provided by financing activities

$     41,281


$      40,633





Effect of exchange rate changes on cash and cash equivalents

$           595


$        4,982





NET CHANGE IN CASH AND CASH EQUIVALENTS

$    (11,548)


$    (22,376)





CASH AND CASH EQUIVALENTS:




Beginning of period

$   134,984


$  150,345





End of period

$   123,436


$  127,969





TOWER INTERNATIONAL, INC. AND SUBSIDIARIES





SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS





(Amounts in thousands - unaudited)









































Segment Data

Three Months Ended June 30,






2012


2011






Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA





International

$        340,414


$         30,850


$              337,180


$               29,497





Americas

303,443


36,999


265,538


26,056





Consolidated

$        643,857


$         67,849


$              602,718


$               55,553


















Six Months Ended June 30,






2012


2011






Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA





International

$         676,946


$        56,153


$              673,284


$               63,273





Americas

584,474


62,521


529,069


57,987





Consolidated

$      1,261,420


$      118,674


$          1,202,353


$             121,260









































Adjusted EBITDA
  reconciliation

Three Months Ended June 30,


Six Months Ended June 30,


Last Twelve Months Ended June 30,


2012


2011


2012


2011


2012


2011

Adjusted EBITDA

$               67,849


$               55,553


$              118,674


$              121,260


$              225,027


$              209,070

Restructuring

(2,833)


(1,169)


(4,767)


(1,652)


(5,775)


(11,254)

Depreciation and amortization

(25,738)


(31,561)


(51,425)


(61,708)


(104,295)


(117,670)

Acquisition costs and other

(117)


(1,263)


(185)


(1,368)


(370)


(1,567)

Expense related to the compensation programs

(2,099)


(4,657)


(6,259)


(9,156)


(15,454)


(19,724)

Interest expense, net

(15,608)


(15,885)


(30,958)


(28,140)


(63,973)


(66,794)

Other expense

-


-


-


(850)


(481)


(2,150)

Provision for income taxes

(12,980)


(2,570)


(15,330)


(9,183)


(20,959)


(11,118)

Net income attributable to noncontrolling interests

(1,600)


(1,222)


(3,034)


(2,955)


(5,188)


(6,868)

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

$                  6,874


$                (2,774)


$                  6,716


$                  6,248


$                  8,532


$              (28,075)





































Free cash flow
  reconciliation

Three Months Ended June 30,


Six Months Ended June 30,






2012


2011


2012


2011





Net cash provided by operating activities

$             16,437


$             20,830


$            22,117


$              6,868





Cash disbursed for purchases of PP&E, net

(39,624)


(25,861)


(75,541)


(52,559)





Free cash flow

$           (23,187)


$             (5,031)


$           (53,424)


$          (45,691)









































Net debt reconciliation





June 30,


December 31,










2012


2011





Short-term debt and current maturities of capital lease obligations





$              113,345


$              109,447





Long-term debt, net of current maturities





502,200


461,838





Obligations under capital leases, net of current maturities





10,909


12,213





Total debt





626,454


583,498





Less: cash and cash equivalents





(123,436)


(134,984)





Net debt





$              503,018


$              448,514

















TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME / (LOSS)

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


















Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011





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








Selling, general and administrative expenses








Incentive compensation related to funding events

$      (2,099)


$      (4,474)


$      (6,128)


$      (8,823)

Acquisition costs

-


(1,100)


-


(1,100)

Interest expense








Acceleration of the amortization of debt issue costs and OID

-


-


-


(753)

Settlement of value added tax audit in Brazil

-


-


-


2,838

Restructuring expense








Severance costs in Europe

(488)


-


(1,203)


-

Plant relocation costs

(1,188)


-


(1,188)


-

Adjustment of lease liability

-


-


-


754

Other income








Retirement of senior secured notes

-


-


-


(850)

Provision for income taxes








Valuation allowance in Brazil

(6,494)


-


(6,494)


-

Tax law and tax election changes

-


1,406


-


1,406

Total items included in net income / (loss)

$   (10,269)


$      (4,168)


$    (15,013)


$      (6,528)









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

$       6,874


$      (2,774)


$       6,716


$       6,248









Memo:  Average shares outstanding (in thousands)








Basic

20,134


19,102


19,913


19,102

Diluted

20,329


19,102


20,495


19,992









Income / (loss) per common share (GAAP)








Basic

$         0.34


$        (0.15)


$         0.34


$         0.33

Diluted

0.34


(0.15)


0.33


0.31









Diluted adjusted income / (loss) per share (non-GAAP)*

0.84


0.07


1.06


0.64









* Excludes the certain items shown above
















 

SOURCE Tower International, Inc.



RELATED LINKS
http://www.towerinternational.com

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