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Tower International Reports Good Second Quarter and Favorable Outlook

LIVONIA, Mich., July 26, 2016 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced second quarter 2016 results and updated its business outlook through 2017.  (Unless otherwise noted, all information refers to Tower's continuing operations in North America and Europe.)

  • Revenue for the second quarter was $505 million, up from $450 million in the second quarter of 2015, primarily reflecting organic new-business growth in North America.
  • Net loss from continuing and discontinued operations was $4.8 million or a loss of 23 cents per share, compared with net income of $18.6 million or 87 cents per share in the second quarter last year.  As detailed below, this year's second quarter included certain items that adversely impacted results by $22.2 million, mainly reflecting the non-cash impairment related to the accumulated foreign-currency translation adjustments in our discontinued Brazil operation.  Excluding these items and comparable items in the second quarter of 2015, diluted adjusted earnings were 81 cents per share, compared with $1.10 a year ago.  The decline mainly reflected the resumption this year of accrued U.S. income taxes.
  • Adjusted EBITDA for the quarter was $50.3 million, compared with $51.5 million a year ago.  The decline was more than explained by the planned and anticipated up-front costs associated with the major new business. 
  • The Company is re-affirming its outlook for full year earnings and free cash flow.  The outlook for full year revenue is down slightly for vehicle and Company-specific reasons; to date, there has been no evidence experienced by the Company of a meaningful industry production downturn in North America or adverse fall-out in Europe from Brexit.
  • Tower believes it is entering a period of very favorable earnings comparisons and strong free cash flow.  For example:
    • Second half 2016 adjusted EBITDA is projected to be up more than 20% from second half 2015;
    • Free cash flow in the second half of 2016 through 2017 is projected at $130 million; and
    • Depending on the pace of the Company's previously announced stock buyback program, diluted adjusted earnings per share could exceed $4.00 in 2017.   

"Following 24 consecutive quarters of meeting or beating the earnings consensus and a series of important and successful new-business launches, Tower is poised to deliver record results," concluded President and CEO Mark Malcolm.

Tower to Host Conference Call Today at 10 a.m. EDT

Tower will discuss its second quarter 2016 results and other related matters in a conference call at 10 a.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. #52641232.  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 earnings per share", 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.  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.  We use adjusted EBITDA, adjusted earnings per share, 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 and in certain instances in measuring performance for compensation purposes.  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, 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 full year earnings, cash flow and revenues, second half 2016 Adjusted EBITDA and free cash flow, 2017 adjusted earnings per share and statements regarding 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; 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 June 30,


Six Months Ended June 30,



2016


2015


2016


2015










Revenues


$                    505,131


$           449,528


$           994,325


$          898,991

Cost of sales


442,989


388,594


875,094


782,693

     Gross profit


62,142


60,934


119,231


116,298

Selling, general, and administrative expenses


32,050


30,301


64,902


59,733

Amortization expense 


116


-


232


-

Restructuring and asset impairment charges, net 


840


5,266


1,586


6,200

     Operating income


29,136


25,367


52,511


50,365

Interest expense 


4,987


3,880


12,569


11,598

Interest income


40


3


68


10

Other expense


2,905


-


6,481


-

     Income before provision for income taxes, equity in profit of joint 
     venture, and loss from discontinued operations


21,284


21,490


33,529


38,777

Provision for income taxes 


6,015


1,951


9,531


3,831

     Income from continuing operations


15,269


19,539


23,998


34,946

Loss from discontinued operations, net of tax 


(20,021)


(400)


(20,366)


(1,686)

        Net income / (loss)


(4,752)


19,139


3,632


33,260

     Less: Net income attributable to the noncontrolling interests


89


493


95


573

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


$                      (4,841)


$             18,646


$               3,537


$            32,687










Weighted average basic shares outstanding


21,164,505


21,104,735


21,145,588


21,077,633

Weighted average diluted shares outstanding


21,489,161


21,403,354


21,469,818


21,382,041










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









Income per share from continuing operations 


$                          0.72


$                 0.90


$                 1.13


$                1.63

Loss per share from discontinued operations 


(0.95)


(0.02)


(0.96)


(0.08)

Income / (loss) per share 


(0.23)


0.88


0.17


1.55










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









Income per share from continuing operations 


$                          0.71


$                 0.89


$                 1.11


$                1.61

Loss per share from discontinued operations 


(0.93)


(0.02)


(0.95)


(0.08)

Income / (loss) per share 


(0.23)


0.87


0.16


1.53










Dividends declared per share


$                          0.10


-


$                 0.20


-

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)








June 30,


December 31,



2016


2015






ASSETS





Cash and cash equivalents


$                   51,777


$                 121,594

Accounts receivable, net of allowance of $887 and $1,277


256,684


223,735

Inventories 


70,632


66,648

Assets held for sale 


102,378


113,664

Prepaid tooling, notes receivable, and other


93,031


68,242

Total current assets


574,502


593,883






Property, plant, and equipment, net


461,488


427,887

Goodwill 


59,944


59,340

Deferred tax asset


119,559


127,207

Other assets, net


7,545


7,180

Total assets


$              1,223,038


$              1,215,497






LIABILITIES AND EQUITY





Short-term debt and current maturities of capital lease obligations 


$                   32,634


$                   29,492

Accounts payable 


296,735


268,008

Accrued liabilities


103,009


100,529

Liabilities held for sale 


49,100


44,157

Total current liabilities


481,478


442,186






Long-term debt, net of current maturities 


382,823


409,116

Obligations under capital leases, net of current maturities 


5,627


5,984

Deferred tax liability


6,600


6,167

Pension liability 


61,157


65,621

Other non-current liabilities


74,512


79,704

Total non-current liabilities 


530,719


566,592

Total liabilities


1,012,197


1,008,778











Stockholders' equity:





Tower International, Inc.'s stockholders' equity





Common stock


$                        221


$                        220

Additional paid in capital


338,923


337,864

Treasury stock


(16,688)


(16,067)

Accumulated deficit


(44,722)


(44,030)

Accumulated other comprehensive loss 


(73,855)


(80,492)

     Total Tower International, Inc.'s stockholders' equity


203,879


197,495

Noncontrolling interests in subsidiaries 


6,962


9,224

Total stockholders' equity


210,841


206,719






Total liabilities and stockholders' equity


$              1,223,038


$              1,215,497

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)












Three Months Ended June 30,


Six Months Ended June 30,



2016


2015


2016


2015










OPERATING ACTIVITIES:









Net income / (loss)


$                  (4,752)


$                19,139


$                 3,632


$                 33,260

Less: Loss from discontinued operations, net of tax


(20,021)


(400)


(20,366)


(1,686)

     Income from continuing operations


15,269


19,539


23,998


34,946










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









     Deferred income tax provision


$                   5,120


$                     (60)


$                 8,116


$                      107

     Depreciation and amortization


18,207


17,873


35,483


35,846

     Non-cash share-based compensation


505


343


1,034


1,302

     Pension income, net of contributions


(2,320)


(2,478)


(4,467)


(6,228)

     Change in working capital and other operating items


(24,650)


(21,297)


(41,769)


(54,056)

     Net cash provided /(used) by continuing operating activities


$                 12,131


$                13,920


$               22,395


$                 11,917










INVESTING ACTIVITIES:









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


$                (35,230)


$              (19,085)


$             (60,926)


$                (28,233)

     Net cash used in continuing investing activities


$                (35,230)


$              (19,085)


$             (60,926)


$                (28,233)










FINANCING ACTIVITIES:









     Proceeds from borrowings


$               149,577


$                34,534


$             295,904


$                 63,372

     Repayments of  borrowings


(134,239)


(5,804)


(272,437)


(62,420)

     Repayments on Term Loan Credit Facility


-


(25,000)


(50,000)


(25,000)

     Proceeds from termination of cross currency swaps


-


-


-


32,377

     Dividend payment to Tower shareholders


(2,118)


-


(4,229)


-

     Proceeds from stock options exercised


25


34


25


148

     Purchase of treasury stock


-


(19)


(621)


(6,549)

     Net cash provided / (used) in continuing financing activities


$                 13,245


$                  3,745


$             (31,358)


$                   1,928










Discontinued operations:









     Net cash from discontinued operating activities


$                      227


$                (1,497)


$                 3,074


$                   7,406

     Net cash from discontinued investing activities


(1,489)


2,096


(1,907)


(2,802)

     Net cash from discontinued financing activities


474


(1,592)


(2,635)


(2,995)

         Net cash from discontinued operations


$                     (788)


$                   (993)


$               (1,468)


$                   1,609










Effect of exchange rate changes on continuing cash and cash equivalents


$                     (399)


$                     702


$                 1,540


$                  (2,499)










NET CHANGE IN CASH AND CASH EQUIVALENTS


$                (11,041)


$                (1,711)


$             (69,817)


$                (15,278)










CASH AND CASH EQUIVALENTS:









Beginning of period


$                 62,818


$              119,117


$             121,594


$               132,684










End of period


$                 51,777


$              117,406


$               51,777


$               117,406

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended June 30,



2016


2015



Revenues


Adjusted
EBITDA


Revenues


Adjusted
EBITDA

Europe


$              175,044


$                13,708


$              170,331


$                14,763

North America


330,087


36,550


279,197


36,749

     Consolidated


$              505,131


$                50,258


$              449,528


$                51,512












Six Months Ended June 30,



2016


2015



Revenues


Adjusted
EBITDA


Revenues


Adjusted
EBITDA

Europe


$              336,142


$                25,202


$              341,101


$                28,164

North America


658,183


70,151


557,890


70,449

     Consolidated


$              994,325


$                95,353


$              898,991


$                98,613




























Adjusted EBITDA Reconciliation


Three Months Ended June 30,


Six Months Ended June 30,



2016


2015


2016


2015

Adjusted EBITDA


$                50,258


$                51,512


$                95,353


98,613

Restructuring and asset impairment charges, net


(840)


(5,266)


(1,586)


(6,200)

Depreciation and amortization


(18,207)


(17,878)


(35,483)


(35,846)

Acquisition costs and other


(154)


(117)


(178)


(203)

Long-term compensation expense


(1,921)


(2,884)


(5,595)


(5,999)

Interest expense, net


(4,947)


(3,877)


(12,501)


(11,588)

Other expense


(2,905)


-


(6,481)


-

Provision for income taxes


(6,015)


(1,951)


(9,531)


(3,831)

Loss from discontinued operations, net of tax 


(20,021)


(400)


(20,366)


(1,686)

Net income attributable to noncontrolling interests


(89)


(493)


(95)


(573)

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


$                (4,841)


$                18,646


$                  3,537


$                32,687



















Adjusted Free Cash Flow Reconciliation


Three Months Ended June 30,


Six Months Ended June 30,



2016


2015


2016


2015

Net cash provided by continuing operating activities


$                12,131


$                13,920


$                22,395


$                11,917

Cash disbursed for purchases of PP&E


(35,230)


(19,085)


(60,926)


(28,233)

     Free cash flow


(23,099)


(5,165)


(38,531)


(16,316)

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


(10,810)


(12,271)


(20,751)


(20,493)

     Adjusted free cash flow


$              (12,289)


$                  7,106


$              (17,780)


$                  4,177




























Net Debt Reconciliation






June 30,


December 31,







2016


2015

Short-term debt and current maturities of capital lease obligations






$                32,634


$                29,492

Long-term debt, net of current maturities






390,057


418,078

Debt issue costs






(7,234)


(8,962)

Obligations under capital leases, net of current maturities






5,627


5,984

     Total debt






421,084


444,592

Less: Cash and cash equivalents






(51,777)


(121,594)

Add: Cash attributable to discontinued operations






-


8,720

     Net debt






$              369,307


$              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



June 30,


June 30,



2016


2015


2016


2015










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









Selling, general, and administrative expenses









One-time CEO compensation awards


$              203


$           (933)


$              299


$           (933)

Restructuring and asset impairment charges, net









Change in estimated future rent


-


(4,760)


-


(4,760)

Interest expense









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


(242)


1,630


(356)


1,630

Other expense









European divestiture expenses


(2,112)


-


(2,905)


-

Discontinued operations









Income / (loss) from discontinued operations


(20,021)


(400)


(20,021)


(400)

Noncontrolling interests









Net income attributable to noncontrolling interests*


(89)


(493)


(89)


(493)

Total items included in net income, net of tax


$        (22,261)


$        (4,956)














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


$          (4,841)


$        18,646














Memo:  Average shares outstanding (in thousands)









Basic


21,165


21,105





Diluted


21,489


21,403














Income / (loss) per common share (GAAP)









Basic


$            (0.23)


$            0.88





Diluted


(0.23)


0.87














Diluted adjusted earnings per share (non-GAAP) 


$             0.81


$            1.10























* 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



Six Months Ended


Six Months Ended



June 30,


June 30,



2016


2015


2016


2015










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









     Selling, general, and administrative expenses









     One-time CEO compensation awards


$             (444)


$        (1,866)


$             (653)


$        (1,866)

     Restructuring and asset impairment charges, net









     Change in estimated future rent


-


(4,760)


-


(4,760)

     Interest expense









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


(1,892)


(274)


(2,782)


(274)

     Acceleration of the amortization of debt issue costs and OID


(503)


(440)


(740)


(440)

     Other expense









     European divestiture expenses


(4,544)


-


(6,481)


-

     Discontinued operations









     Income / (loss) from discontinued operations


(20,366)


(1,686)


(20,366)


(1,686)

     Noncontrolling interests









     Net income attributable to noncontrolling interests*


(95)


(573)


(95)


(573)

     Total items included in net income, net of tax


$        (27,844)


$        (9,599)














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


$           3,537


$        32,687














Memo:  Average shares outstanding (in thousands)









Basic


21,146


21,078





Diluted


21,470


21,382














Income / (loss) per common share (GAAP)









Basic


$             0.17


$            1.55





Diluted


0.16


1.53














Diluted adjusted earnings per share (non-GAAP) 


$             1.46


$            1.97























* 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-good-second-quarter-and-favorable-outlook-300303682.html

SOURCE Tower International, Inc.