News Release

Tower International Reports First Quarter Results Better Than Previous Outlook - Maintains Full Year Outlook

LIVONIA, Mich., May 2, 2017 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered automotive structural metal components and assemblies,  today announced first quarter 2017 results and maintained its outlook for 2017.   

  • Revenue for the first quarter was $497.6 million, up 2 percent from $489.2 million in the first quarter 2016.
  • Net income in the first quarter was $17.3 million or $0.83 per diluted share, compared with $8.4 million or $0.39 per diluted share last year. As detailed below, this year's first quarter included certain items which favorably impacted results by $1.4 million. Certain items in the first quarter a year ago adversely affected results by $5.6 million. Excluding these certain items in both periods, Diluted Adjusted Earnings Per Share were $0.76 for the first quarter 2017, a 17 percent increase compared with $0.65 a year ago.
  • Adjusted EBITDA for the quarter was $46.2 million, compared with $45.1 million a year ago, an increase of 2 percent from last year.
  • As anticipated, Free Cash Flow was significantly negative for the first quarter, representing normal seasonal patterns and significant investment in future programs.
  • During the quarter, Tower amended and extended the maturity on its Term Loan by 4 years to 2024 and its Cash Flow Revolver by 3 years to 2022.
  • For full year 2017, the outlook is maintained:
    • Revenue of $1.925 billion;
    • Adjusted EBITDA up 4 percent, to $210 million;
    • Adjusted EBITDA margin increasing by 40 basis points, to 10.9 percent;
    • Diluted Adjusted Earnings Per Share of $3.60, an increase of 7 percent from 2016; and
    • Free Cash Flow of $55 million, driven by strong cash flow in the second half of the year.
  • The Company's outlook for second quarter 2017 includes revenue of $495 million, Adjusted EBITDA of $53 million, and Diluted Adjusted Earnings Per Share of $0.95.

"Tower delivered solid financial results in the quarter as revenue and earnings were above our previous outlook," said CEO Jim Gouin.  "We continue to invest in the growth of Tower and are well positioned to grow our business at a faster pace than the industry over the coming years.  This growth will be fueled by what we believe to be secular trends associated with OEM outsourcing driven by lightweighting and changing technologies such as electrification."  Gouin continued, "Regardless of how vehicles are eventually powered or driven, Tower's structural components and assemblies remain both relevant and necessary."

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

Tower will discuss its first quarter 2017 results, the outlook for 2017, 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 (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. #11034568.  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 EBITDA margin", "Diluted Adjusted Earnings Per Share", "free cash flow", and "net debt."  We define Adjusted EBITDA as net income / (loss) before interest, taxes, depreciation, amortization, restructuring items and other adjustments described in the reconciliations provided with this press release.  We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. Diluted Adjusted Earnings Per Share exclude certain income and expense items described in the reconciliation provided with this press release.  Free cash flow is defined as cash provided by operating activities less cash disbursed for purchases of property, plant and equipment.  Net debt represents total debt less cash and cash equivalents.  We use Adjusted EBITDA, Adjusted EBITDA margin, adjusted earnings per share, free cash flow, and net debt 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.  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, fair value adjustments to our pension plan, 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 quantitative 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 revenue, adjusted EBITDA, adjusted EBITDA margin, diluted adjusted earnings per share, free cash flow and statements regarding new sources of profitable growth, 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;
  • 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 including volatility in the capital markets, the capacity of potential bidders to finance transactions and the difficulty of predicting the outcome of negotiations; 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.

 


TOWER INTERNATIONAL, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


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










Three Months Ended March 31,




2017


2016








Revenues


$

497,590


$

489,194


Cost of sales


440,811


432,105


     Gross profit


56,779


57,089


Selling, general, and administrative expenses


29,225


32,852


Amortization expense 


103


116


Restructuring and asset impairment charges, net 


3,911


746


  Operating income


23,540


23,375


Interest expense 


453


7,582


Interest income


47


28


Other expense


575


3,576


     Income before provision for income taxes and income / (loss) from
     discontinued operations


22,559


12,245


Provision  for income taxes 


6,496


3,516


     Income from continuing operations


16,063


8,729


Income / (loss) from discontinued operations, net of tax 


1,350


(345)


        Net income


17,413


8,384


     Less: Net income attributable to the noncontrolling interests


68


6


Net income attributable to Tower International, Inc.


$

17,345


$

8,378








Weighted average basic shares outstanding


20,425,216


21,126,462


Weighted average diluted shares outstanding


20,820,457


21,444,570








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






Income per share from continuing operations 


$

0.78


$

0.41


Income / (loss) per share from discontinued operations 


0.07


(0.02)


Income per share 


0.85


0.40








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






Income per share from continuing operations 


$

0.77


$

0.41


Income / (loss) per share from discontinued operations 


0.06


(0.02)


Income per share 


0.83


0.39








Dividends declared per share


$

0.11


$

0.10













 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands - unaudited)








March 31,


December 31,



2017


2016






ASSETS





Cash and cash equivalents


$

27,523


$

62,788

Accounts receivable, net of allowance of $1,150 and $961


250,092


178,251

Inventories 


75,492


71,710

Assets held for sale 


100,182


102,252

Prepaid tooling, notes receivable, and other


134,212


103,023

Total current assets


587,501


518,024






Property, plant, and equipment, net


472,493


465,569

Goodwill 


57,761


56,383

Deferred tax asset


117,033


112,645

Other assets, net


10,920


9,902

Total assets


$

1,245,708


$

1,162,523






LIABILITIES AND EQUITY





Short-term debt and current maturities of capital lease obligations 


$

39,735


$

34,211

Accounts payable 


280,103


258,129

Accrued liabilities


121,801


114,079

Liabilities held for sale 


48,294


53,310

Total current liabilities


489,933


459,729






Long-term debt, net of current maturities 


389,907


351,232

Obligations under capital leases, net of current maturities 


-


4,863

Deferred tax liability


5,108


5,594

Pension liability 


59,277


61,627

Other non-current liabilities


64,558


65,539

Total non-current liabilities 


518,850


488,855

Total liabilities


1,008,783


948,584











Stockholders' equity:





Tower International, Inc.'s stockholders' equity





Common stock


$

223


$

221

  Additional paid in capital


342,060


340,623

Treasury stock


(36,406)


(35,645)

Accumulated surplus/ (deficit)


6,411


(14,021)

Accumulated other comprehensive loss 


(81,627)


(83,383)

     Total Tower International, Inc.'s stockholders' equity


230,661


207,795

Noncontrolling interests in subsidiaries 


6,264


6,144

Total stockholders' equity


236,925


213,939






Total liabilities and stockholders' equity


$

1,245,708


$

1,162,523






 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)








Three Months Ended March 31,



2017


2016






OPERATING ACTIVITIES:





Net income


$

17,413


$

8,384

Less: Income / (loss) from discontinued operations, net of tax


1,350


(345)

Income from continuing operations


16,063


8,729






Adjustments required to reconcile income from continuing operations to net cash provided by
/ (used in) continuing operating activities:





Deferred income tax provision


$

3,955


$

2,996

Depreciation and amortization


17,766


17,276

Non-cash share-based compensation


499


529

Pension income, net of contributions


(2,351)


(2,147)

Change in working capital and other operating items


(84,356)


(17,121)

Net cash provided by / (used in) continuing operating activities


$

(48,424)


$

10,262






INVESTING ACTIVITIES:





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


$

(23,909)


$

(25,696)

Net cash used in continuing investing activities


$

(23,909)


$

(25,696)






FINANCING ACTIVITIES:





Proceeds from borrowings


$

236,744


$

146,327

Repayments of  borrowings


(192,426)


(138,198)

Repayments on Term Loan Credit Facility


-


(50,000)

Original issuance discount


(1,808)


-

Debt financing costs


(4,083)


-

Dividend payment to Tower shareholders


(2,242)


(2,111)

Proceeds from stock options exercised


938


-

Purchase of treasury stock


(761)


(622)

Net cash provided by / (used in) continuing financing activities


$

36,362


$

(44,604)






Discontinued operations:





Net cash from / (used in) discontinued operating activities


$

(570)


$

2,847

Net cash used in discontinued investing activities


(406)


(418)

Net cash from / (used in) discontinued financing activities


497


(3,109)

         Net cash from / (used in) discontinued operations


$

(479)


$

(680)






Effect of exchange rate changes on continuing cash and cash equivalents


$

1,185


$

1,942






NET CHANGE IN CASH AND CASH EQUIVALENTS


$

(35,265)


$

(58,776)






CASH AND CASH EQUIVALENTS:





Beginning of period


$

62,788


$

121,594






End of period


$

27,523


$

62,818






 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended March 31,



2017


2016



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

Europe


$

160,152


$

11,172


$

161,118


$

11,518

North America


337,438


35,032


328,076


33,577

     Consolidated


$

497,590


$

46,204


$

489,194


$

45,095



















Adjusted EBITDA Reconciliation


Three Months Ended March 31,







2017


2016





Adjusted EBITDA


$

46,204


$

45,095





Restructuring and asset impairment charges, net


(3,911)


(746)





Depreciation and amortization


(17,766)


(17,276)





Acquisition costs and other


(75)


(116)





Long-term compensation expense


(912)


(3,582)





Interest expense, net


(406)


(7,554)





Other expense


(575)


(3,576)





Provision for income taxes


(6,496)


(3,516)





Income / (loss) from discontinued operations, net of tax 


1,350


(345)





Net income attributable to noncontrolling interests


(68)


(6)





   Net income attributable to Tower International, Inc.


$

17,345


$

8,378























Free Cash Flow Reconciliation


Three Months Ended March 31,







2017


2016





Net cash provided by / (used in) continuing operating activities


$

(48,424)


$

10,264





Cash disbursed for purchases of PP&E


(23,909)


(25,696)





     Free cash flow


$

(72,333)


$

(15,432)























Net Debt Reconciliation


March 31,


December 31,







2017


2016





Short-term debt and current maturities of capital lease obligations


$

39,735


$

34,211





Long-term debt, net of current maturities


399,322


357,298





Debt issue costs


(9,415)


(6,066)





Obligations under capital leases, net of current maturities


-


4,863





     Total debt


429,642


390,306





Less: Cash and cash equivalents


(27,523)


(62,788)





     Net debt


$

402,119


$

327,518














 

 

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



March 31,


March 31,



2017


2016


2017


2016










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









Selling, general, and administrative expenses









One-time CEO compensation awards


$

-


$

(647)


$

-


$

(951)

Restructuring and asset impairment charges, net









One-time restructuring actions


(2,155)


-


(3,476)


-

Interest expense









Mark-to-market loss on derivative financial instruments


2,655


(1,650)


4,282


(2,426)

Acceleration of the amortization of debt issue costs and OID


-


(503)


-


(740)

Other expense









European divestiture expenses


-


(2,432)


-


(3,576)

Debt refinancing costs


(357)


-


(575)


-

Discontinued operations









Income from discontinued operations


1,350


(345)


1,350


(345)

Noncontrolling interests









Net income attributable to noncontrolling interests*


(68)


(6)


(68)


(6)

Total items included in net income, net of tax


$

1,425


$

(5,583)














Net income attributable to Tower International, Inc.


$

17,345


$

8,378














Memo:  Average shares outstanding (in thousands)









Basic


20,425


21,126





Diluted


20,820


21,445














Income per common share (GAAP)









Basic


$

0.85


$

0.40





Diluted


0.83


0.39














Diluted adjusted earnings per share (non-GAAP) 


$

0.76


$

0.65























* Amounts attributable to noncontrolling interests of discontinued operations









 

Contact:
Derek Fiebig
Executive Director, Investor & External Relations
(248) 675-6457
fiebig.derek@towerinternational.com

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SOURCE Tower International, Inc.