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Tower International Reports Fourth Quarter Results Better Than Outlook and Outlines Anticipated Above-Industry Growth through 2019

LIVONIA, Mich., Feb. 14, 2017 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered automotive structural metal components and assemblies, today announced fourth quarter 2016 results, provided a preliminary outlook for 2017, and discussed its outlook for revenue growth through 2019.   

  • Revenue for the fourth quarter was $462.3 million, up 2% from $454.9 million in the fourth quarter 2015. 

  • Net income in the fourth quarter was $16.9 million or $0.81 per diluted share, compared with $145.1 million of $6.76 per diluted share last year.  As detailed below, this year's fourth quarter included certain items which adversely impacted results by $4.3 million. Certain items in the fourth quarter a year ago favorably affected results by $128.5 million, reflecting primarily the release of a U.S. tax valuation allowance.  Excluding these certain items in both periods, Diluted Adjusted Earnings Per Share were $1.02 in the fourth quarter 2016, compared with $0.77 a year ago.

  • Adjusted EBITDA for the quarter was $56.2 million, compared with $45.9 million a year ago, an increase of 22 percent from last year.  The year-over-year increase reflected primarily the benefit of major new business wins, lower launch costs and favorable commercial settlements.

  • In the fourth quarter the company generated $62.6 million of free cash flow bringing full year 2016 free cash flow to $21.4 million.

  • Net debt at December 31, 2016 was $327.5 million, an improvement of $66 million from September 30 (excluding cash attributable to discontinued operations).  This reflected the significant free cash flow generation in the fourth quarter and $4 million received for the previously disclosed divestiture of a joint venture in China. 

  • Year-end liquidity was $292 million increasing $54 million from the end of the third quarter.

  • For full year 2017, the preliminary outlook includes:
    • 1% growth in revenue, to $1.925 billion, despite an anticipated currency translation headwind of $35 million (with an average Euro assumption of $1.05), and a 1.5% year-over-year decrease in forecasted North American industry production;
    • Adjusted EBITDA up 4%, to about $210 million;
    • Adjusted EBITDA margin increasing by 40 basis points, to 10.9%;
    • Diluted Adjusted Earnings Per Share of $3.60, an increase of 7% from 2016; and
    • Free cash flow of $55 million with strong cash flow in the second half of the year more than offsetting the cash outflow in the first half of the year.

  • The Company's outlook for first quarter 2017 includes revenue of $480 million, Adjusted EBITDA of $43 million, and Diluted Adjusted Earnings Per Share of $0.60

  • The Company has also secured approximately $225 million in net new business for 2018 and 2019.  About two thirds of this incremental revenue is expected to occur in 2019, and the average Adjusted EBITDA margin of the new business is expected to be about 15%.  The launch of these programs should allow the Company to grow significantly faster than the overall automotive market and contribute to Adjusted EBITDA margin expansion, which is expected to increase by more than 100 basis points from the 10.5% recorded for full year 2016.

"Tower delivered solid financial results in the fourth quarter as revenue, Adjusted EBITDA, Adjusted EPS and free cash flow were all above our previous outlook," said CEO Jim Gouin.  "With a solid order book of net new business through 2019, Tower is well positioned to grow revenue at a CAGR of 5 points above industry compared to 2017, while expanding margins and generating significant free cash flow."

Tower to Host Conference Call Today at 11 a.m. EST

Tower will discuss its fourth quarter 2016 results, the outlook for 2017, and other related matters in a conference call at 11 a.m. EST 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. #66570867.  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 in this presentation.  Diluted 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.  Adjusted free cash flow is free cash flow excluding cash received or disbursed for customer tooling.  Net debt represents total debt less cash and cash equivalents.  We use Adjusted EBITDA, Adjusted EBITDA margin, adjusted earnings per share, free cash flow, 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 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, 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.

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

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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












Three Months Ended December 31,


Twelve Months Ended December 31,



2016


2015


2016


2015










Revenues


$                           462,274


$                 454,922


$                  1,913,641


$               1,796,103

Cost of sales


403,332


406,549


1,675,232


1,578,231

     Gross profit


58,942


48,373


238,409


217,872

Selling, general, and administrative expenses


35,427


33,857


131,552


124,459

Amortization expense 


105


-


449


249

Restructuring and asset impairment charges, net 


2,607


835


5,389


7,819

  Operating income


20,803


13,681


101,019


85,345

Interest expense 


3,451


6,026


21,618


23,847

Interest income


506


109


614


125

Other expense


-


-


6,481


-

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


17,858


7,764


73,534


61,623

Provision / (benefit)  for income taxes 


3,476


(129,131)


17,246


(123,844)

     Income  from continuing operations


14,382


136,895


56,288


185,467

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


2,991


8,764


(17,008)


10,324

        Net income


17,373


145,659


39,280


195,791

          Less: Net income attributable to the noncontrolling interests


488


577


701


1,739

     Net income attributable to Tower International, Inc.


$                             16,885


$                 145,082


$                       38,579


$                  194,052










Weighted average basic shares outstanding


20,345,078


21,110,291


20,864,321


21,093,387

Weighted average diluted shares outstanding


20,775,024


21,449,037


21,222,183


21,408,301










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









Income per share from continuing operations 


$                                 0.68


$                       6.46


$                           2.66


$                        8.71

Income / (loss) per share from discontinued operations 


0.15


0.42


(0.82)


0.49

Income per share 


0.83


6.87


1.85


9.20










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









Income per share from continuing operations 


$                                 0.67


$                       6.36


$                           2.62


$                        8.58

Income / (loss) per share from discontinued operations 


0.14


0.41


(0.80)


0.48

Income per share 


0.81


6.76


1.82


9.06










Dividends declared per share


$                                 0.11


$                       0.10


$                           0.41


$                        0.10

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)








December 31,


December 31,



2016


2015






ASSETS





Cash and cash equivalents


$                   62,788


$                 121,594

Accounts receivable, net of allowance of $961 and $1,277


178,251


223,735

Inventories 


71,710


66,648

Assets held for sale 


102,252


113,664

Prepaid tooling, notes receivable, and other


103,023


68,242

Total current assets


518,024


593,883






Property, plant, and equipment, net


465,569


427,887

Goodwill 


56,383


59,340

Deferred tax asset


112,645


127,207

Other assets, net


9,902


7,180

Total assets


$              1,162,523


$              1,215,497






LIABILITIES AND EQUITY





Short-term debt and current maturities of capital lease obligations 


$                   34,211


$                   29,492

Accounts payable 


258,129


268,008

Accrued liabilities


114,079


100,529

Liabilities held for sale 


53,310


44,157

Total current liabilities


459,729


442,186






Long-term debt, net of current maturities 


351,232


409,116

Obligations under capital leases, net of current maturities 


4,863


5,984

Deferred tax liability


5,594


6,167

Pension liability 


61,627


65,621

Other non-current liabilities


65,539


79,704

Total non-current liabilities 


488,855


566,592

Total liabilities


948,584


1,008,778











Stockholders' equity:





Tower International, Inc.'s stockholders' equity





  Common stock


221


220

  Additional paid in capital


340,623


337,864

  Treasury stock


(35,645)


(16,067)

  Accumulated deficit


(14,021)


(44,030)

  Accumulated other comprehensive loss 


(83,383)


(80,492)

     Total Tower International, Inc.'s stockholders' equity


207,795


197,495

Noncontrolling interests in subsidiaries 


6,144


9,224

   Total stockholders' equity


213,939


206,719






Total liabilities and stockholders' equity


$              1,162,523


$              1,215,497

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)












Three Months Ended December 31,


Twelve Months Ended December 31,



2016


2015


2016


2015










OPERATING ACTIVITIES:









Net income


$                 17,373


$              145,659


$               39,280


$               195,791

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


2,991


8,764


(17,008)


10,324

Income from continuing operations


$                 14,382


$              136,895


$               56,288


$               185,467










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









Deferred income tax provision / (benefit)


$                   3,691


$            (130,726)


$                 9,546


$              (130,964)

Depreciation and amortization


19,086


18,315


72,469


72,542

Non-cash share-based compensation


910


508


2,455


2,322

Pension income / (loss), net of contributions


5,852


(3,849)


(1,999)


(14,116)

Change in working capital and other operating items


61,412


41,784


(1,051)


(13,838)

Net cash provided by continuing operating activities


$               105,333


$                62,927


$             137,708


$               101,413










INVESTING ACTIVITIES:









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


$                (42,767)


$              (63,311)


$           (116,283)


$              (119,749)

Return from joint venture


4,546


-


4,546


-

Acquisition, net of cash


-


-


-


(21,740)

Net cash used in continuing investing activities


$                (38,221)


$              (63,311)


$           (111,737)


$              (141,489)










FINANCING ACTIVITIES:









Proceeds from borrowings


$               123,081


$                31,338


$             581,833


$               125,290

Repayments of  borrowings


(169,482)


(37,282)


(587,146)


(133,116)

Repayments on Term Loan Credit Facility


-


-


(50,000)


(25,000)

Proceeds from termination of cross currency swaps


-


-


-


32,377

Dividend payment to Tower shareholders


(2,236)


(2,111)


(8,570)


(2,111)

Proceeds from stock options exercised


237


42


305


204

Purchase of treasury stock


(1,045)


-


(19,578)


(6,551)

Noncontrolling interest dividends and other activity


-


(2,633)


-


(2,633)

Net cash used in continuing financing activities


$                (49,445)


$              (10,646)


$             (83,156)


$                (11,540)










Discontinued operations:









Net cash from / (used in) discontinued operating activities


$                   2,318


$                (5,965)


$                 6,032


$                 15,586

Net cash from (used in) discontinued investing activities


(1,479)


40,815


(3,589)


41,809

Net cash used in discontinued financing activities


(542)


(1,711)


(3,441)


(11,361)

         Net cash from / (used in) discontinued operations


$                      297


$                33,139


$                  (998)


$                 46,034










Effect of exchange rate changes on continuing cash and cash equivalents


$                  (2,392)


$                (1,789)


$                  (623)


$                  (5,508)










NET CHANGE IN CASH AND CASH EQUIVALENTS


$                 15,572


$                20,320


$             (58,806)


$                (11,090)










CASH AND CASH EQUIVALENTS:









Beginning of period


$                 47,216


$              101,274


$             121,594


$               132,684










End of period


$                 62,788


$              121,594


$               62,788


$               121,594

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended December 31,



2016


2015



Revenues


Adjusted
EBITDA


Revenues


Adjusted
EBITDA

Europe


$              155,243


$                18,007


$              156,649


$                15,863

North America


307,031


38,238


298,273


30,003

     Consolidated


$              462,274


$                56,245


$              454,922


$                45,866












Twelve Months Ended December 31,



2016


2015



Revenues


Adjusted
EBITDA


Revenues


Adjusted
EBITDA

Europe


$              639,307


$                55,314


$              652,600


$                57,057

North America


1,274,334


146,408


1,143,503


131,252

     Consolidated


$           1,913,641


$              201,722


$           1,796,103


$              188,309




























Adjusted EBITDA Reconciliation


Three Months Ended December 31,


Twelve Months Ended December 31,



2016


2015


2016


2015

Adjusted EBITDA


$                56,245


$                45,867


$              201,722


188,309

Restructuring and asset impairment charges, net


(2,607)


(835)


(5,389)


(7,819)

Depreciation and amortization


(19,086)


(18,315)


(72,469)


(72,542)

Acquisition costs and other


(104)


(107)


(422)


(805)

Long-term compensation expense


(5,315)


(3,811)


(14,093)


(12,680)

Pension actuarial loss


(8,330)


(9,118)


(8,330)


(9,118)

Interest expense, net


(2,945)


(5,917)


(21,004)


(23,722)

Other expense


-


-


(6,481)


-

Provision / (benefit) for income taxes


(3,476)


129,131


(17,246)


123,844

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


2,991


8,764


(17,008)


10,324

Net income attributable to noncontrolling interests


(488)


(577)


(701)


(1,739)

     Net income attributable to Tower International, Inc.


$                16,885


$              145,082


$                38,579


$              194,052



















Adjusted Free Cash Flow Reconciliation


Three Months Ended December 31,


Twelve Months Ended December 31,



2016


2015


2016


2015

Net cash provided by continuing operating activities


$              105,333


$                62,927


$              137,728


$              101,413

Cash disbursed for purchases of PP&E


(42,767)


(63,311)


(116,303)


(119,749)

     Free cash flow


62,566


(384)


21,425


(18,336)

Net cash received / (disbursed) for customer-owned tooling


19,560


12,405


(32,509)


(27,400)

     Adjusted free cash flow


$                43,006


$              (12,789)


$                53,934


$                  9,064




























Net Debt Reconciliation






December 31,


December 31,







2016


2015

Short-term debt and current maturities of capital lease obligations






$                34,211


$                29,492

Long-term debt, net of current maturities






357,298


418,078

Debt issue costs






(6,066)


(8,962)

Obligations under capital leases, net of current maturities






4,863


5,984

     Total debt






390,306


444,592

Less: Cash and cash equivalents






(62,788)


(121,594)

Add: Cash attributable to discontinued operations






-


8,720

     Net debt






$              327,518


$              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



December 31,


December 31,



2016


2015


2016


2015










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









 Cost of sales









   Pension actuarial loss


$          (5,415)


$        (9,118)


$          (8,330)


$        (9,118)

Selling, general, and administrative expenses









  One-time CEO compensation awards


(1,375)


(306)


(2,115)


(306)

Restructuring and asset impairment charges, net









  Lease buyout of previously closed facility


(1,186)


-


(1,824)


-

Interest expense









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


653


(1,324)


1,005


(1,324)

Tax expense









  Release of valuation allowances, net


553


131,095


553


131,095

Discontinued operations









  Income from discontinued operations


2,991


8,764


2,991


8,764

Noncontrolling interests









  Net income attributable to noncontrolling interests*


(488)


(577)


(488)


(577)

Total items included in net income, net of tax


$          (4,267)


$      128,534














Net income attributable to Tower International, Inc.


$         16,885


$      145,082














Memo:  Average shares outstanding (in thousands)









Basic


20,345


21,110





Diluted


20,775


21,449














Income per common share (GAAP)









Basic


$             0.83


$            6.87





Diluted


0.81


6.76














Diluted adjusted earnings per share (non-GAAP) 


$             1.02


$            0.77














* 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



Twelve Months Ended


Twelve Months Ended



December 31,


December 31,



2016


2015


2016


2015










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









 Cost of sales









   Pension actuarial loss


$          (5,415)


$        (9,118)


$          (8,330)


$        (9,118)

Selling, general, and administrative expenses









  One-time CEO compensation awards


(2,477)


$        (3,105)


(3,812)


$        (3,105)

  Acquisition costs


-


(393)


-


(393)

Restructuring and asset impairment charges, net









  One-time restructuring actions


-


(192)


-


(192)

  Change in estimated future rent


-


(4,760)


-


(4,760)

  Lease buyout of previously closed facility


(1,186)


-


(1,824)


-

Interest expense









  Mark-to-market loss on derivative financial instruments


(1,565)


(2,604)


(2,407)


(2,604)

  Acceleration of the amortization of debt issue costs and OID


(481)


(440)


(740)


(440)

Tax expense









  Release of valuation allowances, net


553


131,095


553


131,095

Other expense









  European divestiture expenses


(4,476)


-


(6,481)


-

Discontinued operations









  Income / (loss) from discontinued operations


(17,008)


10,324


(17,008)


10,324

Noncontrolling interests









  Net income attributable to noncontrolling interests*


(701)


(1,739)


(701)


(1,739)

Total items included in net income, net of tax


$        (32,756)


$      119,067














Net income attributable to Tower International, Inc.


$         38,579


$      194,052














Memo:  Average shares outstanding (in thousands)









Basic


20,864


21,093





Diluted


21,222


21,408














Income per common share (GAAP)









Basic


$             1.85


$            9.20





Diluted


1.82


9.06














Diluted adjusted earnings per share (non-GAAP) 


$             3.36


$            3.50














* 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-fourth-quarter-results-better-than-outlook-and-outlines-anticipated-above-industry-growth-through-2019-300406946.html

SOURCE Tower International