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Tower International Reports Fourth Quarter Results Better Than Guidance and Outlines Anticipated Above-Industry Growth in 2016

LIVONIA, Mich., Feb. 11, 2016 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered automotive structural metal components and assemblies,  today announced fourth quarter 2015 results, provided a preliminary outlook for 2016, and discussed related business developments.   

  • Revenue for the fourth quarter was $494 million.  At constant exchange rates, revenue was $525 million, up 5% from $502 million in the fourth quarter 2014, more than explained by growth in North America and Europe. 
  • Adjusted EBITDA for the quarter was $45.5 million, compared with $48.8 million a year ago.  The year-over-year decline reflected the planned and anticipated up-front expenses associated with the major new business awarded to Tower North America in 2015, in addition to unfavorable currency translation.
  • Net income in the fourth quarter was $145.1 million, compared with a loss of $20.6 million last year.  As detailed below, this year's fourth quarter included certain items which favorably affected results by $130.7 million, reflecting primarily the release of a U.S. tax valuation allowance.  Excluding these items and comparable items in the fourth quarter of 2014, diluted adjusted earnings were $0.67 per share, compared with $0.74 a year ago.
  • Compared with prior Company guidance, fourth quarter revenue was better by $6 million, adjusted EBITDA was better by $0.7 million, and adjusted earnings per share were better by 7 cents.
  • Net debt at December 31 was $306 million, an improvement of $52 million from September 30 (excluding cash attributable to discontinued operations).  This largely reflected the previously disclosed sales of two joint ventures in China and an operation in Brazil. 
  • Year-end liquidity was a record-high $372 million.  In January, the Company reduced its term debt by $50 million.
  • For 2016, the preliminary outlook includes:
    • 5% growth in revenue, to $2.05 billion, despite an anticipated currency translation headwind of $55 million (with an average Euro assumption of $1.05);
    • Adjusted EBITDA up 7%, to $205 million;
    • Adjusted EBITDA margin increasing by 20bps, to 10%, despite being negatively impacted by costs associated with new-business ramp-up;
    • Adjusted earnings per share of $3.00, with the decline from $3.22 in 2015 more than explained by the previously disclosed resumption of U.S. income tax accruals in 2016.  At comparable U.S. tax bookkeeping rates, the outlook for adjusted earnings per share would be up 21% from 2015.  The Company presently does not expect to be a cash tax payer in the U.S. until 2019; and
    • Adjusted free cash flow of $35 million, which includes about $35 million of above-trend capital spending to support the major new-business awards in 2015 in North America.
  • The Company's outlook for first quarter 2016 includes revenue of $505 million, adjusted EBITDA of $45 million, and adjusted earnings per share of 55 cents.  Costs associated with new-business ramp-up are expected to mainly impact the first two quarters of 2016.  Factoring in all calendarization effects, the Company anticipates Adjusted EBITDA to be lower than a year ago in the first half of 2016 and significantly better than a year ago in the second half.

"With our strengths in engineering, program management, operational execution, and financial discipline, we believe Tower's competitive position is stronger than ever -- and still progressing," said President and CEO Mark Malcolm.  "Whether the U.S. auto industry is at or approaching a cyclical peak is anyone's guess, but the above-industry profitable growth already booked, plus significant opportunities we continue to be presented by customers, make us confident that Tower's future is brighter than ever.  Our peak results are out in front of us."

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

Tower will discuss its fourth quarter 2015 results, the outlook for 2016, 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. #42275835.  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", "adjusted earnings per share", "adjusted 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.  Adjusted earnings per share exclude certain income and expense items described in the reconciliation provided in this presentation.  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, adjusted 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 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, diluted adjusted earnings per share, adjusted 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 Dec. 31,


Year Ended Dec. 31,




2015


2014


2015


2014














Revenues


$              493,564


$              502,319


$           1,955,709


$           2,067,771



Cost of sales


446,710


449,201


1,737,232


1,838,578



Gross profit


46,854


53,118


218,477


229,193



Selling, general, and administrative expenses


35,090


32,701


130,650


132,635



Amortization expense 


-


-


249


1,544



Restructuring and asset impairment charges, net 


1,209


6,751


8,607


14,248



  Operating income


10,555


13,666


78,971


80,766



Interest expense 


6,115


12,937


24,290


34,767



Interest income


249


138


642


534



Other expense


-


-


-


87



Income before provision for income taxes and equity in profit of joint venture


4,689


867


55,323


46,446



Provision for income taxes 


(129,036)


2,143


(123,001)


9,272



Equity in loss of joint venture, net of tax


-


(25)


(46)


(651)



Income / (loss) from continuing operations


133,725


(1,301)


178,278


36,523



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


11,934


(16,742)


17,513


(9,436)



        Net income / (loss)


145,659


(18,043)


195,791


27,087



    Less: Net income attributable to the noncontrolling interests


577


2,553


1,739


5,571



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


$              145,082


$               (20,596)


$              194,052


$                21,516














Weighted average basic shares outstanding


21,110,291


20,751,634


21,093,387


20,662,425



Weighted average diluted shares outstanding


21,449,037


20,751,634


21,408,301


21,391,000














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











Income / (loss) per share from continuing operations 


$                    6.31


$                   (0.19)


$                    8.37


$                    1.50



Income / (loss) per share from discontinued operations 


0.57


(0.81)


0.83


(0.46)



Income / (loss) per share 


6.87


(0.99)


9.20


1.04














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











Income / (loss) per share from continuing operations 


$                    6.21


$                   (0.18)


$                    8.25


$                    1.45



Income / (loss) per share from discontinued operations 


0.56


(0.78)


0.81


(0.44)



Income / (loss) per share 


6.76


(0.96)


9.06


1.01


 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data - unaudited)








Dec. 31,


Dec. 31,



2015


2014






ASSETS





Cash and cash equivalents


$                 142,640


$                 148,561

Accounts receivable, net of allowance of $1,287 and $1,181


250,933


230,377

Inventories


70,633


69,775

Assets held for sale


-


141,295

Prepaid tooling, notes receivable, and other


71,487


41,986

Total current assets


535,693


631,994






Property, plant, and equipment, net


473,159


451,126

Goodwill


59,340


56,691

Investment in joint venture


7,711


7,752

Deferred tax asset


127,633


4,641

Other assets, net


11,961


12,969

Total assets


$              1,215,497


$              1,165,173






LIABILITIES AND EQUITY





Short-term debt and current maturities of capital lease obligations


$                   30,378


$                   31,139

Accounts payable


297,665


257,011

Accrued liabilities


107,911


104,833

Liabilities held for sale


-


67,707

Total current liabilities


435,954


460,690






Long-term debt, net of current maturities


412,218


445,303

Obligations under capital leases, net of current maturities


5,984


7,740

Deferred tax liability


6,167


8,044

Pension liability


65,621


68,637

Other non-current liabilities


82,834


74,981

Total non-current liabilities


572,824


604,705

Total liabilities


1,008,778


1,065,395











Stockholders' equity:





Tower International, Inc.'s stockholders' equity





Common stock


$                        220


$                        214

Additional paid in capital


337,864


335,338

Treasury stock


(16,067)


(9,516)

Accumulated deficit


(44,030)


(235,971)

Accumulated other comprehensive loss


(80,492)


(46,914)

     Total Tower International, Inc.'s stockholders' equity


197,495


43,151

Noncontrolling interests in subsidiaries


9,224


56,627

Total stockholders' equity


206,719


99,778






Total liabilities and stockholders' equity


$              1,215,497


$              1,165,173

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


(Amounts in thousands - unaudited)














Three Months Ended Dec. 31,


Year Ended Dec. 31,



2015


2014


2015


2014












OPERATING ACTIVITIES:










Net income / (loss)


$              145,659


$               (18,043)


$              195,791


$                27,087


Less: Income from discontinued operations, net of tax


11,934


(16,742)


17,513


(9,436)


Income / (loss)  from continuing operations


133,725


(1,301)


178,278


36,523












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










   Asset impairment charges


$                        -


$                  4,558


$                        -


$                  4,558


   Term Loan re-pricing fees


-


-


-


87


Deferred income tax provision


(130,194)


(412)


(130,432)


(198)


Depreciation and amortization


20,054


20,692


79,747


87,241


Non-cash share-based compensation


508


1,146


2,322


4,712


Pension income, net of contributions


(3,849)


1,641


(14,116)


(11,275)


Change in working capital and other operating items


44,087


52,008


(13,160)


(9,077)


Net cash provided by continuing operating activities


$                64,331


$                78,332


$              102,639


$              112,571












INVESTING ACTIVITIES:










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


$               (64,823)


$               (36,094)


$             (124,641)


$               (98,440)


Proceeds from disposition of China JVs, net


32,858


-


42,805


-


Proceeds from disposition of Brazilian facility


9,469


-


9,469


-


Investment in joint venture


-


-


-


(760)


Acquisition, net of cash


-


-


(21,740)


-


Net cash used in continuing investing activities


$               (22,496)


$               (36,094)


$               (94,107)


$               (99,200)












FINANCING ACTIVITIES:










Proceeds from borrowings


$                31,336


$                34,222


$              128,799


$              131,313


Repayments of  borrowings


(38,663)


(39,240)


(135,120)


(154,928)


(Repayments)/borrowings on Term Loan Credit Facility


-


-


(25,000)


33,145


Debt financing costs


-


(1,034)


-


(3,595)


Proceeds from termination of cross currency swaps


-


-


32,377


-


Dividend payment to Tower shareholders


(2,111)


-


(2,111)


-


Secondary stock offering transaction costs


-


-


-


(75)


Proceeds from stock options exercised


44


21


204


2,631


Purchase of treasury stock


(2)


-


(6,551)


(922)


Noncontrolling interest dividends


(2,962)


(7,660)


(2,962)


(10,189)


Net cash used in continuing financing activities


$               (12,357)


$               (13,691)


$               (10,364)


$                 (2,620)












Discontinued operations:










Net cash from discontinued operating activities


$                          -


$                  1,083


$                19,530


$                  8,579


Net cash from discontinued investing activities


-


(5,445)


(5,573)


554


Net cash from discontinued financing activities


-


95


(12,537)


(711)


         Net cash from discontinued operations


$                          -


$                 (4,267)


$                  1,420


$                  8,422












Effect of exchange rate changes on continuing cash and cash equivalents

$                 (1,789)


$                 (2,146)


$                 (5,508)


$                 (5,492)












NET CHANGE IN CASH AND CASH EQUIVALENTS


$                27,688


$                22,134


$                 (5,921)


$                13,681












CASH AND CASH EQUIVALENTS:










Beginning of period


$              114,952


$              126,427


$              148,561


$              134,880












End of period


$              142,640


$              148,561


$              142,640


$              148,561


 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended Dec. 31,



2015


2014



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$              179,367


$                17,600


$              195,544


$                15,069

Americas


314,197


27,949


306,775


33,707

Consolidated


$              493,564


$                45,549


$              502,319


$                48,776












Year Ended Dec. 31,



2015


2014



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$              724,928


$                61,200


$              842,269


$                64,400

Americas


1,230,781


129,473


1,225,502


139,782

Consolidated


$           1,955,709


$              190,673


$           2,067,771


$              204,182




























Adjusted EBITDA Reconciliation


Three Months Ended Dec. 31,


Year Ended Dec. 31,



2015


2014


2015


2014

Adjusted EBITDA


$                45,549


$                48,776


$              190,673


204,182

Restructuring and asset impairment charges, net


(1,209)


(6,751)


(8,607)


(14,248)

Depreciation and amortization


(20,054)


(20,692)


(79,747)


(87,241)

Acquisition costs and other


(88)


(134)


(836)


(445)

Long-term compensation expense


(3,811)


(3,374)


(12,680)


(11,313)

Loss from sale of Brazil facility


(714)


-


(714)


-

Pension actuarial loss


(9,118)


(4,160)


(9,118)


(4,160)

Commercial settlement related to 2010-13 scrap








(6,009)

Interest expense, net


(5,866)


(12,799)


(23,648)


(34,233)

Other expense


-


-


-


(87)

Provision for income taxes


129,036


(2,143)


123,001


(9,272)

Equity in loss of joint venture, net of tax


-


(25)


(46)


(651)

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


11,934


(16,742)


17,513


(9,436)

Net income attributable to noncontrolling interests


(577)


(2,553)


(1,739)


(5,571)

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


$              145,082


$              (20,596)


$              194,052


$                21,516




























Adjusted Free Cash Flow Reconciliation


Three Months Ended Dec. 31,


Year Ended Dec. 31,



2015


2014


2015


2014

Net cash provided by continuing operating activities


$                64,331


$                78,332


$              102,639


$              112,573

Cash disbursed for purchases of PP&E


(64,823)


(36,094)


(124,641)


(98,440)

Free cash flow


(492)


42,238


(22,002)


14,133

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


12,051


20,862


(32,672)


(5,374)

Adjusted free cash flow


$              (12,543)


$                21,376


$                10,670


$                19,507




























Net Debt Reconciliation






Dec. 31,


Dec. 31,







2015


2014

Short-term debt and current maturities of capital lease obligations






$                30,378


$                31,139

Long-term debt, net of current maturities






421,180


457,179

Debt issue costs






(8,962)


(11,876)

Obligations under capital leases, net of current maturities






5,984


7,740

Total debt






448,580


484,182

Less: Cash and cash equivalents






(142,640)


(148,561)

Add: Cash attributable to discontinued operations






-


16,025

Net debt






$              305,940


$              351,646

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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





















Three Months Ended


Year Ended



Dec. 31,


Dec. 31,



2015


2014


2015


2014










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









 Cost of sales









   Commercial settlement related to 2010-13 scrap


$                 -


$                -


$                -


$        (6,009)

   Pension actuarial loss


(9,118)


(4,160)


(9,118)


(4,160)

Selling, general, and administrative expenses









  One-time CEO compensation awards


(306)


(671)


(3,105)


(1,555)

  Acquisition costs


-


-


(393)


-

Restructuring and asset impairment charges, net









  One-time restructuring actions


(542)


(1,140)


(1,149)


(2,102)

  Severance costs in Europe*


-


(136)


-


(432)

  Change in estimated future rent


-


-


(4,760)


-

  Lease buyout of previously closed facility


-


-


-


(3,448)

  Loss on sale of None, Italy facility


-


(2,266)


-


(2,266)

  Goodwill impairment charge in Brazil


-


(2,292)


-


(2,292)

  Loss on sale of  Brazil facility


(715)


-


(715)


-

Interest expense









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


(1,324)


(5,753)


(2,601)


(5,753)

  Debt issue costs


-


(969)


-


(969)

  Acceleration of the amortization of debt issue costs and OID


-


-


(440)


-

Other expense









  Premium and other fees for re-pricing of Term Loan 


-


-


-


(87)

  Release of valuation allowances, net


131,095


-


131,095


-

Discontinued operations









  Income / (loss) from discontinued operations


11,932


(16,742)


17,513


(9,436)

Noncontrolling interests









  Net income attributable to noncontrolling interests**


(355)


(2,290)


(1,225)


(4,555)

   Total items included in net income, net of tax


$       130,667


$      (36,419)


$      125,102


$      (43,064)










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


$       145,082


$      (20,596)


$      194,052


$        21,516










Memo:  Average shares outstanding (in thousands)









Basic


21,110


20,752


21,093


20,662

Diluted


21,449


20,752


21,408


21,391










Income / (loss) per common share (GAAP)









Basic


$             6.87


$          (0.99)


$            9.20


$            1.04

Diluted


6.76


(0.99)


9.06


1.01










Diluted adjusted earnings per share (non-GAAP) ***


$             0.67


$            0.74


$            3.22


$            3.02



















*   Amount is net of tax of $0k, $44k, $0k, and $127k, respectively 









** Amounts attributable to noncontrolling interests of discontinued operations









***  Excludes the certain items shown above.  For the three months ended December 31, 2014 diluted share count of 21.5 million was used to calculate diluted adjusted earnings per share.


 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tower-international-reports-fourth-quarter-results-better-than-guidance-and-outlines-anticipated-above-industry-growth-in-2016-300218514.html

SOURCE Tower International, Inc.