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Tower International Reports Strong Second Quarter Results and Increases Earnings Outlook for Full Year

LIVONIA, Mich., July 22, 2013 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced second quarter 2013 results and updated its outlook for the full year.

  • Revenue for the second quarter was $556 million, compared with $555 million in the second quarter 2012.

  • Adjusted EBITDA for the quarter was $62.2 million, compared with $62.4 million a year ago.  Volume and mix was net unfavorable, as business wins were more than offset by the previously announced discontinued customer vehicle in China, less-favorable mix, and capacity-related fixed costs.  Favorable net cost performance offset the unfavorable volume and mix.

  • Adjusted EBITDA margin was 11.2%, unchanged from a year ago.

  • Net loss of $45.1 million in the second quarter 2013 compared with net income of $7.7 million a year ago.  As detailed below, this year's second quarter included certain items that adversely impacted results by $66.6 million.  Excluding these items and comparable items in the second quarter of 2012, diluted adjusted earnings were $1.03 per share, up 29% from 80 cents per share a year ago. 

  • For the full year, Tower is increasing its outlook for diluted adjusted earnings per share by 25 cents or 15% (to $1.90 per share).  Revenue is projected at $2.115 billion, $10 million lower than prior outlook because of exchange-rate translation.  The outlook for Adjusted EBITDA is increased to the upper end of the prior range (now $210 million), and projected free cash flow is increased to a range of $25-$30 million.

Tower to Host Conference Call Today at 4 p.m. EDT

Tower will discuss its second quarter 2013 results and other related matters in a conference call at 4 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 (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. #22365938.  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 earnings 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 and less certain restricted cash that will be used to pay down the remainder of certain of our senior secured bonds in August 2013.  Diluted adjusted earnings per share exclude the impact of certain items as described in the reconciliations provided in this press release 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 and diluted adjusted earnings per share and statements regarding future financial results and 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;
  • 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;
  • 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 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,



2013


2012


2013


2012










Revenues


$ 555,878


$ 554,952


$ 1,090,018


$ 1,084,643

Cost of sales


486,411


484,489


962,491


957,683

   Gross profit


69,467


70,463


127,527


126,960

Selling, general, and administrative expenses


33,575


32,546


66,945


68,997

Amortization expense


656


1,142


1,488


2,319

Restructuring and asset impairment charges, net


14,651


2,833


17,331


4,767

   Operating income


20,585


33,942


41,763


50,877

Interest expense


21,537


13,955


34,965


27,719

Interest income


341


179


615


473

Other expense


40,928


-


40,928


-

   Income / (loss) before provision for income taxes and equity in loss of

   joint ventures


(41,539)


20,166


(33,515)


23,631

Provision for income taxes


3,644


12,524


7,134


14,666

Equity in loss of joint ventures, net of tax


(165)


-


(165)


-

   Income / (loss) from continuing operations


(45,348)


7,642


(40,814)


8,965

Income from discontinued operations, net of tax


-


1,616


-


2,353

   Net income / (loss)


(45,348)


9,258


(40,814)


11,318

      Less: Net income / (loss) attributable to the noncontrolling interests


(237)


1,600


1,749


3,034

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


$ (45,111)


$ 7,658


$ (42,563)


$ 8,284










Weighted average common shares outstanding









Basic


20,362,672


20,134,096


20,312,245


19,912,888

Diluted


20,362,672


20,328,764


20,312,245


20,494,535










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









Income / (loss) per share from continuing operations


$ (2.22)


$ 0.30


$ (2.10)


$ 0.30

Income per share from discontinued operations


-


0.08


-


0.12

Income / (loss) per share


(2.22)


0.38


(2.10)


0.42










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









Income / (loss) per share from continuing operations


$ (2.22)


$ 0.30


$ (2.10)


$ 0.29

Income per share from discontinued operations


-


0.08


-


0.11

Income / (loss) per share


(2.22)


0.38


(2.10)


0.40

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)













June 30, 2013


December 31, 2012






ASSETS





Cash and cash equivalents


$                    118,182


$                         113,943

Restricted cash


45,150


-

Accounts receivable, net of allowance of $2,158 and $4,105


332,387


266,138

Inventories


80,511


81,336

Deferred tax asset - current


8,042


10,447

Prepaid tooling, notes receivable, and other


85,221


96,349

Total current assets


669,493


568,213






Property, plant, and equipment, net


522,600


573,148

Goodwill


63,684


64,793

Deferred tax asset - non-current


3,168


3,149

Other assets, net


40,281


28,819

Total assets


$                 1,299,226


$                      1,238,122






LIABILITIES AND STOCKHOLDERS' EQUITY





Short-term debt and current maturities of capital lease obligations


$                      74,486


$                           74,605

Accounts payable 


311,882


264,897

Accrued liabilities


116,548


134,664

Total current liabilities


502,916


474,166






Long-term debt, net of current maturities


518,065


411,590

Obligations under capital leases, net of current maturities


10,055


10,783

Deferred tax liability - non-current


10,778


13,021

Pension liability


93,341


100,780

Other non-current liabilities


83,937


86,908

Total non-current liabilities 


716,176


623,082

  Total liabilities


1,219,092


1,097,248






Stockholders' Equity:





   Tower International, Inc.'s stockholders' equity





   Common stock, $0.01 par value, 350,000,000 authorized, 21,021,912

   issued and 20,415,837 outstanding at June 30, 2013 and 20,830,425

   issued and 20,247,134 outstanding at December 31, 2012


210


208

   Additional paid in capital


324,951


321,032

   Treasury stock, at cost, 606,075 shares as of June 30, 2013 and 583,291

   shares as of December 31, 2012


(8,587)


(8,297)

   Accumulated deficit


(279,775)


(237,212)

   Accumulated other comprehensive loss


(20,152)


(12,484)

      Total Tower International, Inc.'s stockholders' equity


16,647


63,247

   Noncontrolling interests in subsidiaries


63,487


77,627

   Total stockholders' equity


80,134


140,874






Total liabilities and stockholders' equity


$                 1,299,226


$                      1,238,122

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)










Six Months Ended June 30,


2013


2012





OPERATING ACTIVITIES:




Net income / (loss)

$              (40,814)


$               11,318

Less:  Income from discontinued operations, net of tax

-


2,353

   Income / (loss) from continuing operations

(40,814)


8,965





Adjustments required to reconcile income / (loss) from continuing operations to net cash

provided by operating activities:




   Non-cash restructuring and asset impairments, net

11,006


-

   Premium paid on notes redemption and other fees

40,928


-

   Deferred income tax provision

103


10,326

   Depreciation and amortization

48,637


44,715

   Non-cash share-based compensation

2,413


7,357

   Pension expense, net of contributions

(7,438)


(7,030)

   Change in working capital and other operating items

(43,033)


(34,387)

      Net cash provided by continuing operating activities

$               11,802


$               29,946





INVESTING ACTIVITIES:




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

$              (30,192)


$              (60,589)

   Deconsolidation of joint venture

(6,293)


-

   Net proceeds from sale of property, plant, and equipment

9,100


-

      Net cash used in continuing investing activities

$              (27,385)


$              (60,589)





FINANCING ACTIVITIES:




   Purchase of treasury stock

$                   (290)


$                (3,165)

   Proceeds from borrowings

329,013


337,153

   Repayments of  borrowings

(325,748)


(300,600)

   Proceeds from borrowings on Term Loan Credit Facility

417,900


-

   Partial redemption of notes

(318,992)


-

   Premium paid on partial redemption of notes

(40,928)


-

   Cash restricted for notes repurchase

(45,150)


-

   Debt financing costs

(8,437)


-

   Proceeds from stock options exercised

1,506


-

   Noncontrolling interest dividends

(4,477)


-

      Net cash provided by continuing financing activities

$                 4,397


$               33,388





Discontinued operations:




   Net cash from discontinued operating activities

$                         -


$                (7,829)

   Net cash from discontinued investing activities

15,694


(14,952)

   Net cash from discontinued financing activities

-


7,893

      Net cash from discontinued operations

$               15,694


$              (14,888)





Effect of exchange rate changes on continuing cash and cash equivalents

$                   (269)


$                    595





NET CHANGE IN CASH AND CASH EQUIVALENTS

$                 4,239


$              (11,548)





CASH AND CASH EQUIVALENTS:




Beginning of period

$             113,943


$             134,984





End of period

$             118,182


$             123,436

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended June 30,



2013


2012



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$              242,584


$                21,965


$              251,509


$                25,102

Americas


313,294


40,250


303,443


37,319

   Consolidated


$              555,878


$                62,215


$              554,952


$                62,421












Six Months Ended June 30,



2013


2012



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$              487,353


$                43,996


$              500,169


$                45,685

Americas


602,665


70,285


584,474


63,021

   Consolidated


$           1,090,018


$              114,281


$           1,084,643


$              108,706




























Adjusted EBITDA reconciliation


Three Months Ended June 30,


Six Months Ended June 30,



2013


2012


2013


2012

Adjusted EBITDA


$                62,215


$                62,421


$              114,281


$              108,706

Restructuring and asset impairment charges, net


(14,651)


(2,833)


(17,331)


(4,767)

Depreciation and amortization


(23,465)


(22,404)


(48,637)


(44,715)

Acquisition costs and other


(495)


(119)


(569)


(186)

Long-term compensation expense


(1,784)


(3,123)


(3,146)


(8,161)

Interest expense, net


(21,196)


(13,776)


(34,350)


(27,246)

Other expense


(40,928)


-


(40,928)


-

Closure of Tower Defense & Aerospace


(1,235)


-


(2,835)


-

Provision for income taxes


(3,644)


(12,524)


(7,134)


(14,666)

Equity in earnings of joint ventures


(165)


-


(165)


-

Income from discontinued operation


-


1,616


-


2,353

Net (income) / loss attributable to noncontrolling interests


237


(1,600)


(1,749)


(3,034)

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


$              (45,111)


$                  7,658


$              (42,563)


$                  8,284




























Free cash flow reconciliation


Three Months Ended June 30,


Six Months Ended June 30,



2013


2012


2013


2012

Net cash provided by continuing operating activities


$                10,508


$                15,882


$                11,802


$                29,946

Cash disbursed for purchases of PP&E, net


(15,605)


(31,885)


(30,192)


(60,589)

   Free cash flow


$                (5,097)


$              (16,003)


$              (18,390)


$              (30,643)




























Net debt reconciliation






June 30,


December 31,







2013


2012

Short-term debt and current maturities of capital lease obligations






$                74,486


$                74,605

Long-term debt, net of current maturities






518,065


411,590

Obligations under capital leases, net of current maturities






10,055


10,783

   Total debt






602,606


496,978

Less: cash and cash equivalents






(118,182)


(113,943)

Less: restricted cash excluding premium for redemption of Senior Secured notes




(43,000)


-

   Net debt






$              441,424


$              383,035

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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





















Three Months Ended


Six Months Ended



June 30,


June 30,



2013


2012


2013


2012






Expense items included in net income, net of tax:









   Cost of sales









      Closure of Tower Defense & Aerospace


$      (1,784)


$               -


$      (4,414)


$               -

   Selling, general and administrative expenses









      Incentive compensation related to funding events


-


(2,099)


-


(6,128)

      Acquisition costs and other


(327)


-


(327)


-

   Restructuring expense









      One-time restructuring actions


(270)


(488)


(600)


(1,203)

      Plant relocation


-


(1,188)


-


(1,188)

      Facility closure


(3,348)


-


(3,575)


-

      Asset impairment charges


(9,750)




(10,705)



   Interest expense









      Acceleration of the amortization of debt issue costs and OID


(10,147)


-


(10,147)


-

   Other expense









      Partial redemption of senior secured notes


(40,320)


-


(40,320)


-

      Breakage of Letter of Credit Facility


(608)


-


(608)


-

   Provision for income taxes









      Valuation allowance in Brazil


-


(6,494)


-


(6,494)

   Discontinued operations









      Income from discontinued operations


-


1,616


-


2,353

         Total items included in net income


$    (66,553)


$      (8,653)


$    (70,695)


$    (12,660)










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


$    (45,111)


$       7,658


$    (42,563)


$       8,284










Memo:  Average shares outstanding (in thousands)









Basic


20,363


20,134


20,312


19,913

Diluted


20,363


20,329


20,312


20,495










Income / (loss) per common share (GAAP)









Basic


$        (2.22)


$         0.38


$        (2.10)


$         0.42

Diluted


(2.22)


0.38


(2.10)


0.40










Diluted adjusted income per share (non-GAAP)*


1.03


0.80


1.36


1.02










* Excludes the certain items shown above. For the three months ended June 30, 2013 and six months ended June 30, 2013, diluted share count of 20.9 million and 20.8 million, respectively, were used to calculate diluted adjusted income per share.

 

SOURCE Tower International, Inc.