Tower International Reports Solid Second Quarter and Raises Full Year Outlook

Aug 04, 2011, 09:00 ET from Tower International, Inc.

LIVONIA, Mich., Aug. 4, 2011 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced its second quarter 2011 results.

  • Revenue for the quarter was $603 million, up 20 percent from $502 million in the second quarter 2010.  Excluding changes in exchange rates and steel pricing, revenue was up 9 percent.
  • Adjusted EBITDA for the quarter was $55.6 million, up 8 percent from $51.7 million a year ago.  The improvement was driven by higher volume and favorable foreign exchange, offset partially by less-favorable product mix and the quarterly timing of launch-related costs to support new customer vehicle programs.  
  • Net loss in the second quarter of 2011 was $2.8 million or $0.15 per share.  As detailed below, this included certain items that adversely impacted results by $4.2 million.  Excluding these items and comparable items in the second quarter of 2010, diluted adjusted earnings per common share were $0.07, compared with a loss of $0.17 a year ago.  
  • Based on favorable results achieved in the first half of the year and presently anticipated revenue that increases confidence in achieving continued year-over-year improvements in the second half, Tower is increasing its outlook for full year 2011 Adjusted EBITDA by $15 million, to a range of $215 to $225 million.
  • In the high-priority, high-growth China market, the company won important new business and also reached agreement, subject to government approval, on an additional majority-owned joint venture.

"It was a successful quarter for Tower," said President and CEO Mark Malcolm.  "We maintained our positive trend in Adjusted EBITDA, emerged with an upgraded outlook for this year, and further enhanced the company's growth outlook for future years."

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

Tower will discuss its second quarter 2011 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 1-800-642-1687 (domestic) or 1-706-645-9291 (international) and reference Conference I.D. #85213744.  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", and "free cash flow." 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. 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 three of the 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.  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 Adjusted EBITDA for 2011, 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 affect (and in some cases have affected) our actual results and could cause such 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;
  • our ability to operate non-automotive businesses;
  • our ability to integrate acquired businesses;
  • our customers' ability to obtain equity and debt financing for their businesses;
  • our dependence on our largest customers;
  • significant recalls experienced by our customers;
  • pricing pressure from our customers;
  • potential operating inefficiencies resulting from OEM production volatility;
  • work stoppages or other labor issues affecting us or our customers or suppliers;
  • risks associated with our non-U.S. operations, including foreign exchange risks and economic uncertainty;
  • costs or liabilities relating to environmental and safety regulations; and
  • any increase in the expense and funding requirements of our pension and other postretirement benefits.

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,

2011

2010

2011

2010

Revenues

$               602,718

$               501,682

$            1,202,353

$               980,811

Cost of sales

544,019

446,144

1,074,084

872,048

Gross profit

58,699

55,538

128,269

108,763

Selling, general and administrative expenses

39,365

31,940

77,087

64,961

Amortization expense

1,262

831

2,154

1,541

Restructuring and asset impairment charges, net

1,169

579

1,652

4,686

 Operating income

16,903

22,188

47,376

37,575

Interest expense

16,061

14,035

28,579

27,825

Interest income

176

380

439

569

Other expense

-

-

850

-

Income before provision for income taxes

1,018

8,533

18,386

10,319

Provision for income taxes

2,570

4,228

9,183

8,362

       Net income / (loss)

(1,552)

4,305

9,203

1,957

Less: Net income attributable to the noncontrolling interests

1,222

2,394

2,955

4,528

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

$                 (2,774)

$                   1,911

$                   6,248

$                 (2,571)

Less: Preferred unit dividends

$                           -

$                 (4,380)

$                           -

$                 (8,649)

Net income / (loss) available to common shareholders

$                 (2,774)

$                 (2,469)

$                   6,248

$               (11,220)

Weighted average common shares outstanding

Basic

19,101,588

12,467,866

19,101,588

12,467,866

Diluted

19,101,588

12,467,866

19,991,615

12,467,866

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

Basic

$                   (0.15)

$                   (0.20)

$                     0.33

$                   (0.90)

Diluted

(0.15)

(0.20)

0.31

(0.90)

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)

June 30, 2011

December 31, 2010

ASSETS

Cash and cash equivalents

$                          127,969

$                        150,345

Accounts receivable, net of allowance of $3,935 and $1,674

372,678

297,086

Inventories

90,658

73,189

Deferred tax asset - current

12,438

12,406

Assets held for sale

8,690

8,178

Prepaid tooling and other

70,618

57,754

Total current assets

683,051

598,958

Property, plant and equipment, net

670,655

627,497

Goodwill

71,821

66,309

Deferred tax asset - non-current

15,863

17,377

Other assets, net

32,539

30,035

Total assets

$                       1,473,929

$                     1,340,176

LIABILITIES AND STOCKHOLDERS' EQUITY

Current maturities of long-term debt and capital lease obligations

$                          170,273

$                        109,848

Accounts payable

407,065

366,761

Accrued liabilities

131,828

132,614

Total current liabilities

709,166

609,223

Long-term debt, net of current maturities

426,910

432,726

Obligations under capital leases, net of current maturities

15,322

15,604

Deferred tax liability - non-current

10,299

12,710

Pension liability

71,758

76,403

Other non-current liabilities

82,759

81,884

Total non-current liabilities

607,048

619,327

 Total liabilities

1,316,214

1,228,550

Stockholders' equity:

Tower International, Inc.'s stockholders' equity

Common stock, $0.01 par value, 350,000,000 authorized, 19,101,588   issued and outstanding

191

191

Additional paid in capital

303,760

296,262

Accumulated deficit

(186,308)

(192,556)

Accumulated other comprehensive loss

(8,050)

(36,530)

Total Tower International, Inc.'s stockholders' equity

109,593

67,367

Noncontrolling interests in subsidiaries

48,122

44,259

Total stockholders' equity

157,715

111,626

Total liabilities and stockholders' equity

$                       1,473,929

$                     1,340,176

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

Six Months Ended June 30,

2011

2010

OPERATING ACTIVITIES:

Net income

$                      9,203

$                      1,957

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

Non-cash restructuring and asset impairment charges

-

2,699

Deferred income tax provision

(869)

-

Depreciation and amortization

61,708

58,706

Non-cash share-based compensation

7,498

-

Pension expense, net of contributions

(3,771)

(1,848)

Change in working capital and other operating items

(66,901)

(34,444)

Net cash provided by / (used in) operating activities

$                      6,868

$                    27,070

INVESTING ACTIVITIES:

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

$                  (52,559)

$                  (40,096)

Net assets acquired, net of cash acquired

(22,300)

(16,687)

Net cash used in investing activities

$                  (74,859)

$                  (56,783)

FINANCING ACTIVITIES:

Repayments of term debt

$                              -

$                    (2,340)

Partial redemption of senior secured notes

(17,000)

-

Preferred unit dividends

-

(95)

Proceeds from borrowings

315,202

276,357

Repayments of  borrowings

(257,569)

(237,612)

Net cash provided by financing activities

$                    40,633

$                    36,310

Effect of exchange rate changes on cash and cash equivalents

$                      4,982

$                    (6,779)

NET CHANGE IN CASH AND CASH EQUIVALENTS

$                  (22,376)

$                       (182)

CASH AND CASH EQUIVALENTS:

Beginning of period

$                  150,345

$                  149,802

End of period

$                  127,969

$                  149,620

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

Segment Data

Three Months Ended June 30,

2011

2010

Revenues

Adjusted EBITDA

Revenues

Adjusted EBITDA

International

$                  337,180

$                    29,497

$                  285,659

$                    30,600

Americas

265,538

26,056

216,023

21,088

Consolidated

$                  602,718

$                    55,553

    $                  501,682

$                    51,688

Six Months Ended June 30,

2011

2010

Revenues

Adjusted EBITDA

Revenues

Adjusted EBITDA

International

$                  673,284

$                    63,273

$                  558,583

$                    65,500

Americas

529,069

57,987

422,228

36,925

Consolidated

$               1,202,353

$                  121,260

$                  980,811

$                  102,425

Adjusted EBITDA reconciliation

Three Months

Ended June 30,

Six Months

Ended June 30,

Last Twelve Months

Ended June 30,

2011

2010

2011

2010

2011

2010

Adjusted EBITDA

$ 55,553

$ 51,688

$ 121,260

$ 102,425

$ 209,070

$ 186,379

Restructuring

(1,169)

(579)

(1,652)

(4,686)

(11,254)

(19,268)

Depreciation and amortization

(31,561)

(28,433)

(61,708)

(58,706)

(117,670)

(126,972)

Receivable factoring charges and other

(163)

(139)

(268)

(272)

(467)

(815)

Acquisition costs

(1,100)

-

(1,100)

(679)

(1,100)

(679)

Expense related to the compensation programs

(4,657)

(349)

(9,156)

(507)

(19,724)

(507)

Interest expense, net

(15,885)

(13,655)

(28,140)

(27,256)

(66,794)

(56,911)

Premium on redemption of senior secured notes

-

-

(850)

-

(2,150)

-

Gain on Letter of Credit Facility reduction

-

-

-

-

-

1,212

Provision for income taxes

(2,570)

(4,228)

(9,183)

(8,362)

(11,118)

(4,462)

Net income attributable to noncontrolling interests

(1,222)

(2,394)

(2,955)

(4,528)

(6,868)

(9,449)

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

$ (2,774)

$ 1,911

$  6,248

$   (2,571)

$ (28,075)

$ (31,472)

Free cash flow reconciliation

Three Months Ended June 30,

Six Months Ended June 30,

2011

2010

2011

2010

Net cash provided by operating activities

$                    20,830

$                    21,400

$                      6,868

$                    27,070

Cash disbursed for purchases of PP&E, net

(25,861)

(21,411)

(52,559)

(40,096)

Free cash flow

$                     (5,031)

$                          (11)

$                   (45,691)

$                   (13,026)

Net debt reconciliation

June 30,

December 31,

2011

2010

Current maturities of long-term debt and capital lease obligations                                      

$                  170,273

$                  109,848

Long-term debt, net of current maturities

426,910

432,726

Obligations under capital leases, net of current maturities

15,322

15,604

Total debt

612,505

558,178

Less: cash and cash equivalents

(127,969)

(150,345)

Net debt

$                  484,536

$                  407,833

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,

2011

2010

2011

2010

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

Selling, general and administrative expenses

Incentive compensation related to funding events

$         (4,474)

$            (349)

$         (8,823)

$            (507)

Acquisition costs

(1,100)

-

(1,100)

(679)

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

Asset impairments

-

-

-

(1,842)

Adjustment of lease liability

-

-

754

-

Other income

Partial redemption of senior secured notes

-

-

(850)

-

Provision for income taxes

Tax law and tax election changes

1,406

-

1,406

-

Total items included in net income / (loss)

$         (4,168)

$            (349)

$         (6,528)

$         (3,028)

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

$         (2,774)

$           1,911

$           6,248

$         (2,571)

Less: Preferred unit dividends

-

(4,380)

-

(8,649)

Income / (loss) available to common shareholders

$         (2,774)

$         (2,469)

$           6,248

$       (11,220)

Memo:  Average shares outstanding (in thousands)

Basic

19,102

12,468

19,102

12,468

Diluted

19,102

12,468

19,992

12,468

Income / (loss) per common share (GAAP)

Basic

$           (0.15)

$           (0.20)

$             0.33

$           (0.90)

Diluted

(0.15)

(0.20)

0.31

(0.90)

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

0.07

(0.17)

0.64

(0.66)

* Excludes the certain items shown above

SOURCE Tower International, Inc.



RELATED LINKS

http://www.towerinternational.com