Tower Int'l (TOWR) Misses Q4 EPS by 40c, Revenues Miss; Offers FY19 EPS/Revenue Guidance Below Consensus, Provides FY20 Revenues Outlook

Tower Int'l (NYSE: TOWR) reported Q4 EPS of $0.74, $0.40 worse than the analyst estimate of $1.14. Revenue for the quarter came in at $377.27 million versus the consensus estimate of $525.48 million.

"Despite a difficult macro-environment, Tower delivered 2018 results in-line with our Outlook. We continue to balance our capital allocation, by investing in profitable growth, reducing debt and returning capital to shareholders. The pending sale of Tower Europe further strengthens our balance sheet and positions Tower to capitalize on the healthy and growing light truck and SUV market in North America," said CEO Jim Gouin. "With significant program changeovers and the launch of approximately $700 million in annual run rate revenue, 2019 will be a transition year. By 2020 these major launches will be completed and we expect significant margin improvement and substantial Free Cash Flow."

• During 2019 Tower expects to launch programs which will represent nearly $700 million of on-going revenue. These product launches combined with customer downtime associated with platform changeover will adversely impact results, particularly in the first half of the year.

Full year 2019 outlook includes:

• Revenue of $1.65 billion, reflecting primarily net new business of $175 million, offset partially by adverse program mix of $90 million;
• Adjusted EBITDA of $175 million;
• Diluted Adjusted EPS of $2.50 per share which is adversely impacted by the adoption of ASC 842 and a higher tax rate; and
• Free Cash Flow of $15 million, with strong free cash flow in the second half of the year more than offsetting the expected cash outflow in the first half of the year.

With the completion of significant launch activity in 2019, financial results are expected to improve substantially. Full year 2020 outlook includes:

• Revenue of $1.69 to $1.74 billion;
• Adjusted EBITDA of $200 to $210 million;
• Adjusted EBITDA Margin of approximately 12 percent; and
• Free Cash Flow of more than $60 million.

GUIDANCE:

Tower Int'l sees FY2019 EPS of $2.50, versus the consensus of $3.82. Tower Int'l sees FY2019 revenue of $1.65 billion, versus the consensus of $1.92 billion.

Tower Int'l sees FY2019 revenue of $1.69-1.74 billion.

For earnings history and earnings-related data on Tower Int'l (TOWR) click here.

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