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Tower International Posts Third Quarter 2010 Adjusted EBITDA of $39.1 Million

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LIVONIA, Mich., Nov. 11, 2010 /PRNewswire via COMTEX/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced its third quarter 2010 results.

  • Adjusted EBITDA of $39.1 million for the quarter compared with $45.9 million in the third quarter of 2009. This decline was consistent with the guidance provided in the company's S-1 filing prior to the investor roadshow. Third quarter 2009 results were unusually strong because of non-recurring benefits totaling about $9 million related to recoveries for customer-funded tooling, worker's compensation, and below-normal bonus expense.
  • Net loss of $13.0 million for the quarter compared with a net loss of $9.9 million in the third quarter of 2009.
  • Revenue for the quarter was $475 million, compared with $436 million in the third quarter 2009.
  • Select other third quarter 2010 and recent highlights included:
    • In October, Tower International was the first auto supplier since 2005 to successfully complete an IPO in the U.S. Net proceeds of $77 million are being used to reduce debt, strengthening Tower's balance sheet.
    • In August, Tower completed a debt re-financing that extended the maturity for the major portion of its scheduled debt repayment to 2017.
    • Nick Chabraja, recently retired and highly accomplished Chairman and CEO of General Dynamics, joined Tower as Chairman of the Board.
  • For the first nine months of 2010, Tower earned Adjusted EBITDA of $141.5 million, up $54.6 million or 63 percent from the same period a year ago. Revenue was $1.5 billion, up 28 percent. Net loss of $15.6 million compared to net loss of $49.0 million for first nine months of 2009.
  • For full year 2010, Tower expects to earn Adjusted EBITDA of $180-$183 million and to generate positive free cash flow from automotive operations.

"It speaks volumes for the dedicated teamwork and engagement of our more than 7,000 colleagues worldwide that Tower was able to complete the first auto supplier IPO in the U.S. since 2005," said Tower President and CEO Mark Malcolm. "Looking forward, we remain intensely focused on satisfying our customers, delivering solid and predictable results, and profitably growing our business over time."

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

Tower will discuss its third quarter results 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 1-866-393-4576, international callers should dial 1-706-679-1462. An audio recording of the call will be available approximately two hours after the completion of the call. To access this recording, please dial 1-800-642-1687 (domestic) or 1-706-645-9291 (international) and reference Conference I.D. # 22021967. 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 financial measures neither of which is a measure of performance defined in accordance with U.S. GAAP ("GAAP"): "Adjusted EBITDA" 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. 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 and free cash flow as supplements to our GAAP results in evaluating our business and they are included in this press release because they are two of the 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. 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 expected 2010 full year Adjusted EBITDA and free cash flow, capacity expansions in certain markets and future goals relating to the satisfaction of customers, the delivery of solid and predictable results and profitable growth. The forward-looking statements can be identified by the 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, could affect (and in some cases have affected) our actual results and could cause such results to differ materially from estimates or expectations reflected in such forward-looking statements:

  • automobile production volumes;
  • the financial condition of our customers and suppliers;
  • our ability to make scheduled payments 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;
  • our dependence on our largest customers;
  • significant recalls experienced by our customers;
  • pricing pressure from our customers;
  • work stoppages or other labor issues affecting us or our customers or suppliers;
  • risks associated with our non-U.S.operations, including foreign exchange risks and economic uncertainty;
  • costs or liabilities relating to environmental and safety regulations; and
  • any increase in the expense and funding requirements of our pension and other postretirement benefits.

We do not assume any obligation to update or revise the forward-looking statements contained in this press release.

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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













Three Months Ended

September 30,


Nine Months Ended

September 30,



2010


2009


2010


2009










Revenues


$ 474,640


$ 435,562


$ 1,455,451


$ 1,133,411

Cost of sales


429,762


395,551


1,301,810


1,077,433

Gross profit


44,878


40,011


153,641


55,978

Selling, general and administrative expenses


38,127


30,056


103,088


83,317

Amortization expense


844


720


2,385


2,033

Restructuring and asset impairment charges, net


321


2,078


5,007


933

Operating income / (loss)


5,586


7,157


43,161


(30,305)

Interest expense


20,600


13,371


48,425


41,186

Interest income


291


111


860


682

Other (income) / loss, net


-


(1,212)


-


(33,661)

Loss before provision for income taxes


(14,723)


(4,891)


(4,404)


(37,148)

Provision / (benefit) for income taxes


(3,737)


2,497


4,625


5,292

Net loss


(10,986)


(7,388)


(9,029)


(42,440)

Less: Net income attributable to the noncontrolling interests


2,015


2,537


6,543


6,520

Net loss attributable to Tower Automotive, LLC


$ (13,001)


$ (9,925)


$ (15,572)


$ (48,960)










Less: Preferred unit dividends


$ (2,058)


$ (4,036)


$ (10,707)


$ (11,887)

Loss available to common stockholders


$ (15,059)


$ (13,961)


$ (26,279)


$ (60,847)










Weighted average basic and diluted units outstanding


12,467,866


12,467,866


12,467,866


12,467,866










Basic and diluted income / (loss) per share attributable to Tower Automotive, LLC:









Loss per share


$ (1.21)


$ (1.12)


$ (2.11)


$ (4.88)

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)













September 30, 2010


December 31, 2009






ASSETS





Cash and cash equivalents


$ 114,979


$ 149,802

Accounts receivable, net of allowance of $2,118 and $2,439


345,728


290,098

Inventories


73,780


62,611

Deferred tax asset - current


4,645


4,762

Assets held for sale


8,180


6,008

Prepaid tooling and other


77,448


60,139

Total current assets


624,760


573,420






Property, plant and equipment, net


613,027


640,148

Goodwill


67,476


70,565

Deferred tax asset - non-current


24,682


15,009

Other assets, net


39,863


35,279

Total assets


$ 1,369,808


$ 1,334,421






LIABILITIES AND MEMBERS' EQUITY / (DEFICIT)





Current maturities of long-term debt and capital lease obligations


$ 128,835


$ 137,499

Current maturities of long-term debt with affiliate


-


4,132

Accounts payable


364,876


333,773

Accrued liabilities


127,260


127,823

Total current liabilities


620,971


603,227






Long-term debt, net of current maturities


497,478


112,602

Long-term debt with affiliate, net of current maturities


-


399,776

Obligations under capital leases, net of current maturities


16,634


15,544

Deferred tax liability - non-current


14,161


13,917

Pension liability


73,164


78,730

Other non-current liabilities


85,309


86,869

Total non-current liabilities


686,746


707,438

Total liabilities


1,307,717


1,310,665

Commitments and contingencies










Redeemable preferred units


-


170,915






Members' equity / (deficit):





Tower Automotive, LLC's members' equity / (deficit)





Common units, 8,500 units authorized and outstanding


-


12,595

Capital units, 10,000 units authorized and outstanding


219,379


-

Accumulated deficit


(171,234)


(144,955)

Accumulated other comprehensive loss


(27,756)


(54,363)

Total Tower Automotive, LLC's members' equity / (deficit)


20,389


(186,723)

Noncontrolling interests in subsidiaries


41,702


39,564

Total members' equity / (deficit)


62,091


(147,159)






Total liabilities and members' equity / (deficit)


$ 1,369,808


$ 1,334,421

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)








Three Months Ended September 30,


Nine Months Ended September 30,


2010


2009


2010


2009









OPERATING ACTIVITIES:








Net loss

$ (10,986)


$ (7,388)


$ (9,029)


$ (42,440)

Adjustments required to reconcile net loss to net cash provided by / (used in) operating activities:








Deferred income tax provision

(9,058)


-


(9,058)


-

Depreciation and amortization

27,536


36,330


86,242


115,769

Gain from debt repurchase / letter of credit reduction

-


(1,212)


-


(33,661)

Pension expense, net of contributions

(2,910)


(2,034)


(5,556)


(3,037)

Amortization of pension loss

349


375


1,147


1,461

Change in working capital and other operating items

(601)


(12,224)


(32,346)


(40,820)

Net cash provided by / (used in) operating activities

$ 4,330


$ 13,847


$ 31,400


$ (2,728)









INVESTING ACTIVITIES:








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

(15,840)


$ (14,970)


$ (55,936)


$ (60,588)

Net assets acquired, net of cash acquired

-


-


(16,687)


-

Net cash used in investing activities

$ (15,840)


$ (14,970)


$ (72,623)


$ (60,588)









FINANCING ACTIVITIES:








Proceeds from letter of credit reduction

$ -


$ 1,250


$ -


$ 13,250

Repayments of term debt

(1,144)


(1,202)


(3,484)


(15,176)

Repayment of first lien term loan

(414,172)


-


(414,172)


-

Preferred unit dividends

-


-


(95)


(388)

Noncontrolling interest dividends

(5,257)


(2,887)


(5,257)


(4,866)

Issuance of senior secured notes

417,203


-


417,203


-

Proceeds from borrowings

111,899


80,697


388,256


336,803

Repayments of borrowings

(124,781)


(104,437)


(362,393)


(286,439)

Financing costs

(7,808)


(37)


(7,808)


(1,488)

Costs associated with initial public offering

(2,530)


-


(2,530)


-

Net cash provided by financing activities

$ (26,590)


$ (26,616)


$ 9,720


$ 41,696









Effect of exchange rate changes on cash and cash equivalents

$ 3,459


$ 4,314


$ (3,320)


$ 6,778









NET CHANGE IN CASH AND CASH EQUIVALENTS

$ (34,641)


$ (23,425)


$ (34,823)


$ (14,842)









CASH AND CASH EQUIVALENTS:








Beginning of period

$ 149,620


$ 135,403


$ 149,802


$ 126,820









End of period

$ 114,979


$ 111,978


$ 114,979


$ 111,978









Supplemental Cash Flow Information:








Interest paid, net of amounts capitalized





$ 37,829


$ 38,933

Income taxes paid





9,661


9,782

Non-cash Activities:








Capital expenditures in accounts payable for purchases of property, plant and equipment





$ 19,967


$ 24,836

Cumulative preferred stock units accrued





10,612


11,530

Contribution of indebtedness





25,000


-

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)



Segment Data











Three Months Ended September 30,



2010


2009



Revenues


Adjusted

EBITDA


Revenues


Adjusted

EBITDA

International


$ 263,004


$ 22,594


$ 253,500


$ 26,534

Americas


211,636


16,126


182,062


19,332

Consolidated


$ 474,640


$ 38,720


$ 435,562


$ 45,866












Nine Months Ended September 30,



2010


2009



Revenues


Adjusted

EBITDA


Revenues


Adjusted

EBITDA

International


$ 821,587


$ 633,864


$ 691,721


$ 441,690

Americas


88,454


53,051


72,530


14,382

Consolidated


$ 910,041


$ 686,915


$ 764,251


$ 456,072



















Adjusted EBITDA reconciliation











Three Months Ended September 30,


Nine Months Ended September 30,



2010


2009


2010


2009

Adjusted EBITDA


$ 39,080


$ 45,866


$ 141,505


$ 86,912

Restructuring


(321)


(2,078)


(5,007)


(933)

Depreciation and amortization


(27,535)


(36,331)


(86,241)


(115,770)

Receivable factoring charges and other


(86)


(300)


(358)


(514)

Acquisition costs


-


-


(679)


-

Expense related to the compensation programs


(5,552)


-


(6,059)


-

Interest expense, net


(20,309)


(13,260)


(47,565)


(40,504)

Other income, net


-


1,212


-


33,661

(Provision) / benefit for income taxes


3,737


(2,497)


(4,625)


(5,292)

Net income attributable to noncontrolling interest


(2,015)


(2,537)


(6,543)


(6,520)

Net loss attributable to Tower Automotive, LLC


$ (13,001)


$ (9,925)


$ (15,572)


$ (48,960)




























Free cash flow reconciliation











Year Ended

December 31,


Three Months

Ended

September 30,


Nine Months

Ended

September 30,





2009


2010


2010



Net cash provided by operating activities


$ 48,874


$ 4,330


$ 31,400



Cash disbursed for purchases of PP&E, net


(85,995)


(15,840)


(55,936)



Free cash flow


$ (37,121)


$ (11,510)


$ (24,536)



Contact: Derek Fiebig

Director, Investor & External Relations

(248) 675-6457

fiebig.derek@towerautomotive.com

SOURCE Tower International, Inc.