Tower International Reports Good Second Quarter and Favorable Outlook

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July 26, 2016 8:01 AM EDT

LIVONIA, Mich., July 26, 2016 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced second quarter 2016 results and updated its business outlook through 2017.  (Unless otherwise noted, all information refers to Tower's continuing operations in North America and Europe.)

  • Revenue for the second quarter was $505 million, up from $450 million in the second quarter of 2015, primarily reflecting organic new-business growth in North America.
  • Net loss from continuing and discontinued operations was $4.8 million or a loss of 23 cents per share, compared with net income of $18.6 million or 87 cents per share in the second quarter last year.  As detailed below, this year's second quarter included certain items that adversely impacted results by $22.2 million, mainly reflecting the non-cash impairment related to the accumulated foreign-currency translation adjustments in our discontinued Brazil operation.  Excluding these items and comparable items in the second quarter of 2015, diluted adjusted earnings were 81 cents per share, compared with $1.10 a year ago.  The decline mainly reflected the resumption this year of accrued U.S. income taxes.
  • Adjusted EBITDA for the quarter was $50.3 million, compared with $51.5 million a year ago.  The decline was more than explained by the planned and anticipated up-front costs associated with the major new business. 
  • The Company is re-affirming its outlook for full year earnings and free cash flow.  The outlook for full year revenue is down slightly for vehicle and Company-specific reasons; to date, there has been no evidence experienced by the Company of a meaningful industry production downturn in North America or adverse fall-out in Europe from Brexit.
  • Tower believes it is entering a period of very favorable earnings comparisons and strong free cash flow.  For example:
    • Second half 2016 adjusted EBITDA is projected to be up more than 20% from second half 2015;
    • Free cash flow in the second half of 2016 through 2017 is projected at $130 million; and
    • Depending on the pace of the Company's previously announced stock buyback program, diluted adjusted earnings per share could exceed $4.00 in 2017.   

"Following 24 consecutive quarters of meeting or beating the earnings consensus and a series of important and successful new-business launches, Tower is poised to deliver record results," concluded President and CEO Mark Malcolm.

Tower to Host Conference Call Today at 10 a.m. EDT

Tower will discuss its second quarter 2016 results and other related matters in a conference call at 10 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 (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. #52641232.  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", "adjusted earnings per share", 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.  Adjusted earnings per share exclude certain income and expense items described in the reconciliation provided in this press release.  Free cash flow is defined as cash provided by operating activities less cash disbursed for purchases of property, plant and equipment.  We use adjusted EBITDA, adjusted earnings per share, 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 and in certain instances in measuring performance for compensation purposes.  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; and certain of our non-GAAP financial measures exclude financial information that some may consider important in evaluating our performance.  Given the inherent uncertainty regarding mark to market adjustments of financial instruments, potential gain or loss on our Discontinued Operations, potential restructuring expenses, and expenses related to our long-term incentive compensation programs 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.  Consequently, any attempt to disclose such reconciliations would imply a degree of precision that could be confusing or misleading to investors. 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 full year earnings, cash flow and revenues, second half 2016 Adjusted EBITDA and free cash flow, 2017 adjusted earnings per share and statements regarding 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 FiebigExecutive Director, Investor & External Relations(248) 675-6457[email protected]

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Revenues

$                    505,131

$           449,528

$           994,325

$          898,991

Cost of sales

442,989

388,594

875,094

782,693

     Gross profit

62,142

60,934

119,231

116,298

Selling, general, and administrative expenses

32,050

30,301

64,902

59,733

Amortization expense 

116

-

232

-

Restructuring and asset impairment charges, net 

840

5,266

1,586

6,200

     Operating income

29,136

25,367

52,511

50,365

Interest expense 

4,987

3,880

12,569

11,598

Interest income

40

3

68

10

Other expense

2,905

-

6,481

-

     Income before provision for income taxes, equity in profit of joint      venture, and loss from discontinued operations

21,284

21,490

33,529

38,777

Provision for income taxes 

6,015

1,951

9,531

3,831

     Income from continuing operations

15,269

19,539

23,998

34,946

Loss from discontinued operations, net of tax 

(20,021)

(400)

(20,366)

(1,686)

        Net income / (loss)

(4,752)

19,139

3,632

33,260

     Less: Net income attributable to the noncontrolling interests

89

493

95

573

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

$                      (4,841)

$             18,646

$               3,537

$            32,687

Weighted average basic shares outstanding

21,164,505

21,104,735

21,145,588

21,077,633

Weighted average diluted shares outstanding

21,489,161

21,403,354

21,469,818

21,382,041

Basic income per share attributable to Tower International, Inc.:

Income per share from continuing operations 

$                          0.72

$                 0.90

$                 1.13

$                1.63

Loss per share from discontinued operations 

(0.95)

(0.02)

(0.96)

(0.08)

Income / (loss) per share 

(0.23)

0.88

0.17

1.55

Diluted income per share attributable to Tower International, Inc.:

Income per share from continuing operations 

$                          0.71

$                 0.89

$                 1.11

$                1.61

Loss per share from discontinued operations 

(0.93)

(0.02)

(0.95)

(0.08)

Income / (loss) per share 

(0.23)

0.87

0.16

1.53

Dividends declared per share

$                          0.10

-

$                 0.20

-

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)

June 30,

December 31,

2016

2015

ASSETS

Cash and cash equivalents

$                   51,777

$                 121,594

Accounts receivable, net of allowance of $887 and $1,277

256,684

223,735

Inventories 

70,632

66,648

Assets held for sale 

102,378

113,664

Prepaid tooling, notes receivable, and other

93,031

68,242

Total current assets

574,502

593,883

Property, plant, and equipment, net

461,488

427,887

Goodwill 

59,944

59,340

Deferred tax asset

119,559

127,207

Other assets, net

7,545

7,180

Total assets

$              1,223,038

$              1,215,497

LIABILITIES AND EQUITY

Short-term debt and current maturities of capital lease obligations 

$                   32,634

$                   29,492

Accounts payable 

296,735

268,008

Accrued liabilities

103,009

100,529

Liabilities held for sale 

49,100

44,157

Total current liabilities

481,478

442,186

Long-term debt, net of current maturities 

382,823

409,116

Obligations under capital leases, net of current maturities 

5,627

5,984

Deferred tax liability

6,600

6,167

Pension liability 

61,157

65,621

Other non-current liabilities

74,512

79,704

Total non-current liabilities 

530,719

566,592

Total liabilities

1,012,197

1,008,778

Stockholders' equity:

Tower International, Inc.'s stockholders' equity

Common stock

$                        221

$                        220

Additional paid in capital

338,923

337,864

Treasury stock

(16,688)

(16,067)

Accumulated deficit

(44,722)

(44,030)

Accumulated other comprehensive loss 

(73,855)

(80,492)

     Total Tower International, Inc.'s stockholders' equity

203,879

197,495

Noncontrolling interests in subsidiaries 

6,962

9,224

Total stockholders' equity

210,841

206,719

Total liabilities and stockholders' equity

$              1,223,038

$              1,215,497

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

OPERATING ACTIVITIES:

Net income / (loss)

$                  (4,752)

$                19,139

$                 3,632

$                 33,260

Less: Loss from discontinued operations, net of tax

(20,021)

(400)

(20,366)

(1,686)

     Income from continuing operations

15,269

19,539

23,998

34,946

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

     Deferred income tax provision

$                   5,120

$                     (60)

$                 8,116

$                      107

     Depreciation and amortization

18,207

17,873

35,483

35,846

     Non-cash share-based compensation

505

343

1,034

1,302

     Pension income, net of contributions

(2,320)

(2,478)

(4,467)

(6,228)

     Change in working capital and other operating items

(24,650)

(21,297)

(41,769)

(54,056)

     Net cash provided /(used) by continuing operating activities

$                 12,131

$                13,920

$               22,395

$                 11,917

INVESTING ACTIVITIES:

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

$                (35,230)

$              (19,085)

$             (60,926)

$                (28,233)

     Net cash used in continuing investing activities

$                (35,230)

$              (19,085)

$             (60,926)

$                (28,233)

FINANCING ACTIVITIES:

     Proceeds from borrowings

$               149,577

$                34,534

$             295,904

$                 63,372

     Repayments of  borrowings

(134,239)

(5,804)

(272,437)

(62,420)

     Repayments on Term Loan Credit Facility

-

(25,000)

(50,000)

(25,000)

     Proceeds from termination of cross currency swaps

-

-

-

32,377

     Dividend payment to Tower shareholders

(2,118)

-

(4,229)

-

     Proceeds from stock options exercised

25

34

25

148

     Purchase of treasury stock

-

(19)

(621)

(6,549)

     Net cash provided / (used) in continuing financing activities

$                 13,245

$                  3,745

$             (31,358)

$                   1,928

Discontinued operations:

     Net cash from discontinued operating activities

$                      227

$                (1,497)

$                 3,074

$                   7,406

     Net cash from discontinued investing activities

(1,489)

2,096

(1,907)

(2,802)

     Net cash from discontinued financing activities

474

(1,592)

(2,635)

(2,995)

         Net cash from discontinued operations

$                     (788)

$                   (993)

$               (1,468)

$                   1,609

Effect of exchange rate changes on continuing cash and cash equivalents

$                     (399)

$                     702

$                 1,540

$                  (2,499)

NET CHANGE IN CASH AND CASH EQUIVALENTS

$                (11,041)

$                (1,711)

$             (69,817)

$                (15,278)

CASH AND CASH EQUIVALENTS:

Beginning of period

$                 62,818

$              119,117

$             121,594

$               132,684

End of period

$                 51,777

$              117,406

$               51,777

$               117,406

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

Segment Data

Three Months Ended June 30,

2016

2015

Revenues

Adjusted EBITDA

Revenues

Adjusted EBITDA

Europe

$              175,044

$                13,708

$              170,331

$                14,763

North America

330,087

36,550

279,197

36,749

     Consolidated

$              505,131

$                50,258

$              449,528

$                51,512

Six Months Ended June 30,

2016

2015

Revenues

Adjusted EBITDA

Revenues

Adjusted EBITDA

Europe

$              336,142

$                25,202

$              341,101

$                28,164

North America

658,183

70,151

557,890

70,449

     Consolidated

$              994,325

$                95,353

$              898,991

$                98,613

Adjusted EBITDA Reconciliation

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Adjusted EBITDA

$                50,258

$                51,512

$                95,353

98,613

Restructuring and asset impairment charges, net

(840)

(5,266)

(1,586)

(6,200)

Depreciation and amortization

(18,207)

(17,878)

(35,483)

(35,846)

Acquisition costs and other

(154)

(117)

(178)

(203)

Long-term compensation expense

(1,921)

(2,884)

(5,595)

(5,999)

Interest expense, net

(4,947)

(3,877)

(12,501)

(11,588)

Other expense

(2,905)

-

(6,481)

-

Provision for income taxes

(6,015)

(1,951)

(9,531)

(3,831)

Loss from discontinued operations, net of tax 

(20,021)

(400)

(20,366)

(1,686)

Net income attributable to noncontrolling interests

(89)

(493)

(95)

(573)

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

$                (4,841)

$                18,646

$                  3,537

$                32,687

Adjusted Free Cash Flow Reconciliation

Three Months Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Net cash provided by continuing operating activities

$                12,131

$                13,920

$                22,395

$                11,917

Cash disbursed for purchases of PP&E

(35,230)

(19,085)

(60,926)

(28,233)

     Free cash flow

(23,099)

(5,165)

(38,531)

(16,316)

Less:  Cash received / (disbursed) for customer-owned tooling

(10,810)

(12,271)

(20,751)

(20,493)

     Adjusted free cash flow

$              (12,289)

$                  7,106

$              (17,780)

$                  4,177

Net Debt Reconciliation

June 30,

December 31,

2016

2015

Short-term debt and current maturities of capital lease obligations

$                32,634

$                29,492

Long-term debt, net of current maturities

390,057

418,078

Debt issue costs

(7,234)

(8,962)

Obligations under capital leases, net of current maturities

5,627

5,984

     Total debt

421,084

444,592

Less: Cash and cash equivalents

(51,777)

(121,594)

Add: Cash attributable to discontinued operations

-

8,720

     Net debt

$              369,307

$              331,718

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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

After tax

Before tax

Three Months Ended

Three Months Ended

June 30,

June 30,

2016

2015

2016

2015

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

Selling, general, and administrative expenses

One-time CEO compensation awards

$              203

$           (933)

$              299

$           (933)

Restructuring and asset impairment charges, net

Change in estimated future rent

-

(4,760)

-

(4,760)

Interest expense

Mark-to-market gain / (loss) on derivative financial instruments

(242)

1,630

(356)

1,630

Other expense

European divestiture expenses

(2,112)

-

(2,905)

-

Discontinued operations

Income / (loss) from discontinued operations

(20,021)

(400)

(20,021)

(400)

Noncontrolling interests

Net income attributable to noncontrolling interests*

(89)

(493)

(89)

(493)

Total items included in net income, net of tax

$        (22,261)

$        (4,956)

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

$          (4,841)

$        18,646

Memo:  Average shares outstanding (in thousands)

Basic

21,165

21,105

Diluted

21,489

21,403

Income / (loss) per common share (GAAP)

Basic

$            (0.23)

$            0.88

Diluted

(0.23)

0.87

Diluted adjusted earnings per share (non-GAAP) 

$             0.81

$            1.10

* Amounts attributable to noncontrolling interests of discontinued operations

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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

After tax

Before tax

Six Months Ended

Six Months Ended

June 30,

June 30,

2016

2015

2016

2015

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

     Selling, general, and administrative expenses

     One-time CEO compensation awards

$             (444)

$        (1,866)

$             (653)

$        (1,866)

     Restructuring and asset impairment charges, net

     Change in estimated future rent

-

(4,760)

-

(4,760)

     Interest expense

     Mark-to-market gain / (loss) on derivative financial instruments

(1,892)

(274)

(2,782)

(274)

     Acceleration of the amortization of debt issue costs and OID

(503)

(440)

(740)

(440)

     Other expense

     European divestiture expenses

(4,544)

-

(6,481)

-

     Discontinued operations

     Income / (loss) from discontinued operations

(20,366)

(1,686)

(20,366)

(1,686)

     Noncontrolling interests

     Net income attributable to noncontrolling interests*

(95)

(573)

(95)

(573)

     Total items included in net income, net of tax

$        (27,844)

$        (9,599)

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

$           3,537

$        32,687

Memo:  Average shares outstanding (in thousands)

Basic

21,146

21,078

Diluted

21,470

21,382

Income / (loss) per common share (GAAP)

Basic

$             0.17

$            1.55

Diluted

0.16

1.53

Diluted adjusted earnings per share (non-GAAP) 

$             1.46

$            1.97

* Amounts attributable to noncontrolling interests of discontinued operations

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tower-international-reports-good-second-quarter-and-favorable-outlook-300303682.html

SOURCE Tower International, Inc.


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