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

LIVONIA, Mich., Nov. 1, 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 third quarter 2012 results and re-affirmed its outlook for the full year.

  • Revenue for third quarter 2012 was $564 million, down $25 million or 4 percent from third quarter 2011, reflecting adverse foreign currency translation.
  • Adjusted EBITDA for the quarter was $44.2 million, down $4.6 million from a year ago, more than explained by unfavorable volume and mix and currency translation in Europe.  Favorable net cost performance was a partial offset.
  • Net loss of $4.8 million for the third quarter 2012 was equal to a year ago.  As detailed in the financial table below, this year's third quarter included certain items that adversely impacted results by $1.2 million.  Excluding these items and comparable items in the third quarter of 2011, adjusted loss was $0.18 per share, compared with diluted adjusted earnings per share of $0.03 a year ago. 
  • The present outlook for the full year includes revenue of $2.4 billion, Adjusted EBITDA of $215 million, and diluted adjusted earnings per share of $0.95.

"Despite increased regional volatility and select cutbacks in customer production schedules, we are re-affirming prior mid-point earnings guidance for the full year," said President and CEO Mark Malcolm.  "Tower remains focused on what we can execute and influence."

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

Tower will discuss its third quarter 2012 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 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. #53233453.  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 September 30,


Nine Months Ended September 30,



2012


2011


2012


2011










Revenues


$            563,849


$            588,991


$         1,825,269


$         1,791,344

Cost of sales


511,577


529,335


1,637,682


1,603,419

  Gross profit


52,272


59,656


187,587


187,925

Selling, general and administrative expenses


33,962


42,106


106,153


119,193

Amortization expense


1,120


1,244


3,439


3,398

Restructuring and asset impairment charges, net


3,186


494


7,953


2,146

  Operating income


14,004


15,812


70,042


63,188

Interest expense 


15,372


17,021


46,890


45,600

Interest income


397


340


957


779

Other expense


-


350


-


1,200

Income / (loss) before provision for income taxes


(971)


(1,219)


24,109


17,167

Provision for income taxes


2,240


2,547


17,570


11,730

    Net income / (loss)


(3,211)


(3,766)


6,539


5,437

Less: Net income attributable to the noncontrolling interests

1,593


1,082


4,627


4,037

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


$              (4,804)


$              (4,848)


$                1,912


$                1,400










Weighted average common shares outstanding









Basic


20,246,797


19,562,951


20,098,355


19,257,066

Diluted


20,246,797


19,562,951


20,533,788


20,012,418










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









Basic


$                (0.24)


$                (0.25)


$                  0.10


$                  0.07

Diluted


(0.24)


(0.25)


0.09


0.07

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)













September 30, 2012


December 31, 2011






ASSETS





Cash and cash equivalents


$                    118,970


$                   134,984

Accounts receivable, net of allowance of $4,265 and $3,612


345,525


327,992

Inventories


104,548


85,100

Deferred tax asset - current


7,680


12,966

Assets held for sale


4,197


4,027

Prepaid tooling and other


76,593


56,189

Total current assets


657,513


621,258






Property, plant and equipment, net


699,327


667,686

Goodwill


63,251


63,983

Deferred tax asset - non-current


11,532


14,450

Other assets, net


28,887


30,001

Total assets


$                 1,460,510


$                1,397,378






LIABILITIES AND STOCKHOLDERS' EQUITY





Short-term debt and current maturities of capital lease obligations


$                    158,438


$                   109,447

Accounts payable 


371,664


395,287

Accrued liabilities


132,313


126,416

Total current liabilities


662,415


631,150






Long-term debt, net of current maturities


482,131


461,838

Obligations under capital leases, net of current maturities


10,794


12,213

Deferred tax liability - non-current


14,292


11,229

Pension liability


80,304


96,223

Other non-current liabilities


90,186


87,265

Total non-current liabilities 


677,707


668,768

  Total liabilities


1,340,122


1,299,918






Stockholders' Equity:





Tower International, Inc.'s stockholders' equity





Common stock, $0.01 par value, 350,000,000 authorized, 20,830,425 issued and 20,247,134 outstanding at September 30, 2012, and 19,983,403 issued and 19,683,032 outstanding at December 31, 2011


208


200

Additional paid in capital


319,904


311,427

Treasury stock, at cost, 583,291 shares as of September 30, 2012 and 300,371 shares as of December 31, 2011


(8,297)


(5,130)

Accumulated deficit


(182,580)


(184,492)

Accumulated other comprehensive loss


(83,148)


(82,002)

Total Tower International, Inc.'s stockholders' equity


46,087


40,003

Noncontrolling interests in subsidiaries


74,301


57,457

Total stockholders' equity


120,388


97,460






Total liabilities and stockholders' equity


$                 1,460,510


$                1,397,378

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)






Nine Months Ended September 30,


2012


2011





OPERATING ACTIVITIES:




Net income

$                 6,539


$                 5,437

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




Deferred income tax provision

12,590


(869)

Depreciation and amortization

78,344


89,515

Non-cash share-based compensation

8,485


11,300

Pension expense, net of contributions

(13,552)


(10,788)

Change in working capital and other operating items

(66,565)


(93,623)

Net cash provided by operating activities

$               25,841


$                    972





INVESTING ACTIVITIES:




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

$            (106,581)


$              (82,925)

Net assets acquired, net of cash acquired

-


(22,300)

Net cash used in investing activities

$            (106,581)


$            (105,225)





FINANCING ACTIVITIES:




Retirement of senior secured notes

$                         -


(34,508)

Purchase of treasury stock

(3,167)


(5,130)

Proceeds from borrowings

494,644


504,049

Repayments of  borrowings

(428,834)


(414,749)

Net cash provided by financing activities

$               62,643


$               49,662





Effect of exchange rate changes on cash and cash equivalents

$                 2,083


$                    946





NET CHANGE IN CASH AND CASH EQUIVALENTS

$              (16,014)


$              (53,645)





CASH AND CASH EQUIVALENTS:




Beginning of period

$             134,984


$             150,345





End of period

$             118,970


$               96,700

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES





SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS





(Amounts in thousands - unaudited)












































Segment Data


Three Months Ended

September 30,







2012


2011







Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA





International


$    281,570


$     17,577


$    319,298


$     23,662





Americas


282,279


26,633


269,693


25,219





  Consolidated


$    563,849


$     44,210


$    588,991


$     48,881




















Nine Months Ended

September 30,







2012


2011







Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA





International


$    958,516


$     73,730


$   992,582


$    86,935





Americas


866,753


89,154


798,762


83,207





  Consolidated


$ 1,825,269


$   162,884


$1,791,344


$  170,142












































Adjusted EBITDA reconciliation


Three Months Ended

September 30,


Nine Months Ended

September 30,


Last Twelve Months Ended

September 30,



2012


2011


2012


2011


2012


2011

Adjusted EBITDA


$      44,210


$      48,881


$  162,884


$ 170,142


$    220,355


$     218,872

Restructuring


(3,186)


(494)


(7,953)


(2,146)


(8,467)


(11,427)

Depreciation and amortization


(26,919)


(27,807)


(78,344)


(89,515)


(103,407)


(117,942)

Acquisition costs and other


(101)


(75)


(274)


(1,444)


(383)


(1,557)

Expense related to the compensation programs


-


(4,693)


(6,271)


(13,849)


(10,773)


(18,865)

Interest expense, net


(14,975)


(16,681)


(45,933)


(44,821)


(62,267)


(63,166)

Other expense


-


(350)


-


(1,200)


(131)


(2,500)

Provision for income taxes


(2,240)


(2,547)


(17,570)


(11,730)


(20,652)


(17,402)

Net income attributable to noncontrolling interests


(1,593)


(1,082)


(4,627)


(4,037)


(5,699)


(5,935)

  Net income / (loss) attributable to Tower

  International, Inc.


$      (4,804)


$     (4,848)


$     1,912


$    1,400


$      8,576


$    (19,922)








































Free cash flow reconciliation


Three Months Ended

September 30,


Nine Months Ended

September 30,







2012


2011


2012


2011





Net cash provided by operating activities


$        3,724


$      (5,896)


$    25,841


$         972





Cash disbursed for purchases of PP&E, net


(31,040)


(30,366)


(106,581)


(82,925)





Free cash flow


$    (27,316)


$    (36,262)


$  (80,740)


$  (81,953)












































Net debt reconciliation






September

 30,


December

 31,











2012


2011





Short-term debt and current maturities of capital lease obligations






$  158,438


$ 109,447





Long-term debt, net of current maturities






482,131


461,838





Obligations under capital leases, net of current maturities






10,794


12,213





  Total debt






651,363


583,498





Less: cash and cash equivalents






(118,970)


(134,984)





  Net debt






$  532,393


$ 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


Nine Months Ended



September 30,


September 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


$         -


$ (4,349)


$ (6,128)


$ (13,172)

Acquisition costs


-


-


-


(1,100)

Interest expense









Acceleration of the amortization of debt issue costs and OID


-


(705)


-


(1,458)

Settlement of value added tax audit in Brazil


-


-


-


2,838

Restructuring expense









Severance costs in Europe


-


-


(1,203)


-

Plant relocation costs


(1,683)


-


(2,871)


-

Asset impairments


(575)


-


(575)


-

Adjustment of lease liability


-


-


-


754

Other income









Retirement of senior secured notes


-


(350)


-


(1,200)

Provision for income taxes









German tax audit


1,087


-


1,087


-

Valuation allowance in Brazil


-


-


(6,494)


-

Tax law and tax election changes


-


-


-


1,406

Total items included in net income / (loss)


$  (1,171)


$ (5,404)


$ (16,184)


$ (11,932)










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


$  (4,804)


$ (4,848)


$     1,912


$    1,400










Memo:  Average shares outstanding (in thousands)









Basic


20,247


19,563


20,098


19,257

Diluted


20,247


19,563


20,534


20,012










Income / (loss) per common share (GAAP)









Basic


$   (0.24)


$   (0.25)


$      0.10


$     0.07

Diluted


(0.24)


(0.25)


0.09


0.07










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


(0.18)


0.03


0.88


0.67










* Excludes the certain items shown above

 

SOURCE Tower International, Inc.



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