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Tower International Reports Solid Second Quarter and Raises Full Year Outlook

LIVONIA, Mich., Aug. 4, 2011 /PRNewswire via COMTEX/ --

Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced its second quarter 2011 results.

  • Revenue for the quarter was $603 million, up 20 percent from $502 million in the second quarter 2010. Excluding changes in exchange rates and steel pricing, revenue was up 9 percent.
  • Adjusted EBITDA for the quarter was $55.6 million, up 8 percent from $51.7 million a year ago. The improvement was driven by higher volume and favorable foreign exchange, offset partially by less-favorable product mix and the quarterly timing of launch-related costs to support new customer vehicle programs.
  • Net loss in the second quarter of 2011 was $2.8 million or $0.15 per share. As detailed below, this included certain items that adversely impacted results by $4.2 million. Excluding these items and comparable items in the second quarter of 2010, diluted adjusted earnings per common share were $0.07, compared with a loss of $0.17 a year ago.
  • Based on favorable results achieved in the first half of the year and presently anticipated revenue that increases confidence in achieving continued year-over-year improvements in the second half, Tower is increasing its outlook for full year 2011 Adjusted EBITDA by $15 million, to a range of $215 to $225 million.
  • In the high-priority, high-growth China market, the company won important new business and also reached agreement, subject to government approval, on an additional majority-owned joint venture.

"It was a successful quarter for Tower," said President and CEO Mark Malcolm. "We maintained our positive trend in Adjusted EBITDA, emerged with an upgraded outlook for this year, and further enhanced the company's growth outlook for future years."

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

Tower will discuss its second quarter 2011 results and other related matters in a conference call at 1 p.m. EDT today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company's website or by telephone. The slide presentation and webcast can be accessed via the investor relations portion of Tower's website www.towerinternational.com. To dial into the conference call, domestic callers should dial 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. #85213744. 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", 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 net cash provided by or used in operating activities less cash disbursed for purchases of property, plant and equipment. We use Adjusted EBITDA 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 three 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. 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. In addition, 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 Adjusted EBITDA for 2011, and its future sales growth 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 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 ability to operate non-automotive businesses;
  • our ability to integrate acquired businesses;
  • our customers' ability to obtain equity and debt financing for their businesses;
  • our dependence on our largest customers;
  • significant recalls experienced by our customers;
  • pricing pressure from our customers;
  • potential operating inefficiencies resulting from OEM production volatility;
  • 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.


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


TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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




Three Months Ended June 30,


Six Months Ended June 30,


2011


2010


2011


2010









Revenues

$ 602,718


$ 501,682


$ 1,202,353


$ 980,811

Cost of sales

544,019


446,144


1,074,084


872,048

Gross profit

58,699


55,538


128,269


108,763

Selling, general and administrative expenses

39,365


31,940


77,087


64,961

Amortization expense

1,262


831


2,154


1,541

Restructuring and asset impairment charges, net

1,169


579


1,652


4,686

Operating income

16,903


22,188


47,376


37,575

Interest expense

16,061


14,035


28,579


27,825

Interest income

176


380


439


569

Other expense

-


-


850


-

Income before provision for income taxes

1,018


8,533


18,386


10,319

Provision for income taxes

2,570


4,228


9,183


8,362

Net income / (loss)

(1,552)


4,305


9,203


1,957

Less: Net income attributable to the noncontrolling interests

1,222


2,394


2,955


4,528

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

$ (2,774)


$ 1,911


$ 6,248


$ (2,571)









Less: Preferred unit dividends

$ -


$ (4,380)


$ -


$ (8,649)

Net income / (loss) available to common shareholders

$ (2,774)


$ (2,469)


$ 6,248


$ (11,220)









Weighted average common shares outstanding








Basic

19,101,588


12,467,866


19,101,588


12,467,866

Diluted

19,101,588


12,467,866


19,991,615


12,467,866









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








Basic

$ (0.15)


$ (0.20)


$ 0.33


$ (0.90)

Diluted

(0.15)


(0.20)


0.31


(0.90)









TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)










June 30, 2011


December 31, 2010





ASSETS




Cash and cash equivalents

$ 127,969


$ 150,345

Accounts receivable, net of allowance of $3,935 and $1,674

372,678


297,086

Inventories

90,658


73,189

Deferred tax asset - current

12,438


12,406

Assets held for sale

8,690


8,178

Prepaid tooling and other

70,618


57,754

Total current assets

683,051


598,958





Property, plant and equipment, net

670,655


627,497

Goodwill

71,821


66,309

Deferred tax asset - non-current

15,863


17,377

Other assets, net

32,539


30,035

Total assets

$ 1,473,929


$ 1,340,176





LIABILITIES AND STOCKHOLDERS' EQUITY




Current maturities of long-term debt and capital lease obligations

$ 170,273


$ 109,848

Accounts payable

407,065


366,761

Accrued liabilities

131,828


132,614

Total current liabilities

709,166


609,223





Long-term debt, net of current maturities

426,910


432,726

Obligations under capital leases, net of current maturities

15,322


15,604

Deferred tax liability - non-current

10,299


12,710

Pension liability

71,758


76,403

Other non-current liabilities

82,759


81,884

Total non-current liabilities

607,048


619,327

Total liabilities

1,316,214


1,228,550





Stockholders' equity:




Tower International, Inc.'s stockholders' equity




Common stock, $0.01 par value, 350,000,000 authorized, 19,101,588
issued and outstanding

191


191

Additional paid in capital

303,760


296,262

Accumulated deficit

(186,308)


(192,556)

Accumulated other comprehensive loss

(8,050)


(36,530)

Total Tower International, Inc.'s stockholders' equity

109,593


67,367

Noncontrolling interests in subsidiaries

48,122


44,259

Total stockholders' equity

157,715


111,626





Total liabilities and stockholders' equity

$ 1,473,929


$ 1,340,176

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)



Six Months Ended June 30,


2011


2010





OPERATING ACTIVITIES:




Net income

$ 9,203


$ 1,957

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




Non-cash restructuring and asset impairment charges

-


2,699

Deferred income tax provision

(869)


-

Depreciation and amortization

61,708


58,706

Non-cash share-based compensation

7,498


-

Pension expense, net of contributions

(3,771)


(1,848)

Change in working capital and other operating items

(66,901)


(34,444)

Net cash provided by / (used in) operating activities

$ 6,868


$ 27,070





INVESTING ACTIVITIES:




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

$ (52,559)


$ (40,096)

Net assets acquired, net of cash acquired

(22,300)


(16,687)

Net cash used in investing activities

$ (74,859)


$ (56,783)





FINANCING ACTIVITIES:




Repayments of term debt

$ -


$ (2,340)

Partial redemption of senior secured notes

(17,000)


-

Preferred unit dividends

-


(95)

Proceeds from borrowings

315,202


276,357

Repayments of borrowings

(257,569)


(237,612)

Net cash provided by financing activities

$ 40,633


$ 36,310





Effect of exchange rate changes on cash and cash equivalents

$ 4,982


$ (6,779)





NET CHANGE IN CASH AND CASH EQUIVALENTS

$ (22,376)


$ (182)





CASH AND CASH EQUIVALENTS:




Beginning of period

$ 150,345


$ 149,802





End of period

$ 127,969


$ 149,620

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

Segment Data


Three Months Ended June 30,



2011


2010



Revenues


Adjusted
EBITDA


Revenues


Adjusted
EBITDA

International


$ 337,180


$ 29,497


$ 285,659


$ 30,600

Americas


265,538


26,056


216,023


21,088

Consolidated


$ 602,718


$ 55,553


$ 501,682


$ 51,688












Six Months Ended June 30,



2011


2010



Revenues


Adjusted
EBITDA


Revenues


Adjusted
EBITDA

International


$ 673,284


$ 63,273


$ 558,583


$ 65,500

Americas


529,069


57,987


422,228


36,925

Consolidated


$ 1,202,353


$ 121,260


$ 980,811


$ 102,425

















Adjusted EBITDA reconciliation


Three Months

Ended June 30,


Six Months

Ended June 30,


Last Twelve Months

Ended June 30,



2011


2010


2011


2010


2011


2010

Adjusted EBITDA


$ 55,553


$ 51,688


$ 121,260


$ 102,425


$ 209,070


$ 186,379

Restructuring


(1,169)


(579)


(1,652)


(4,686)


(11,254)


(19,268)

Depreciation and amortization


(31,561)


(28,433)


(61,708)


(58,706)


(117,670)


(126,972)

Receivable factoring charges and other


(163)


(139)


(268)


(272)


(467)


(815)

Acquisition costs


(1,100)


-


(1,100)


(679)


(1,100)


(679)

Expense related to the compensation programs


(4,657)


(349)


(9,156)


(507)


(19,724)


(507)

Interest expense, net


(15,885)


(13,655)


(28,140)


(27,256)


(66,794)


(56,911)

Premium on redemption of senior secured notes


-


-


(850)


-


(2,150)


-

Gain on Letter of Credit Facility reduction


-


-


-


-


-


1,212

Provision for income taxes


(2,570)


(4,228)


(9,183)


(8,362)


(11,118)


(4,462)

Net income attributable to noncontrolling interests


(1,222)


(2,394)


(2,955)


(4,528)


(6,868)


(9,449)

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


$ (2,774)


$ 1,911


$ 6,248


$ (2,571)


$ (28,075)


$ (31,472)



























Free cash flow reconciliation


Three Months Ended June 30,


Six Months Ended June 30,



2011


2010


2011


2010

Net cash provided by operating activities


$ 20,830


$ 21,400


$ 6,868


$ 27,070

Cash disbursed for purchases of PP&E, net


(25,861)


(21,411)


(52,559)


(40,096)

Free cash flow


$ (5,031)


$ (11)


$ (45,691)


$ (13,026)

Net debt reconciliation






June 30,


December 31,







2011


2010

Current maturities of long-term debt and capital lease obligations






$ 170,273


$ 109,848

Long-term debt, net of current maturities






426,910


432,726

Obligations under capital leases, net of current maturities






15,322


15,604

Total debt






612,505


558,178

Less: cash and cash equivalents






(127,969)


(150,345)

Net debt






$ 484,536


$ 407,833

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME / (LOSS)

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




Three Months Ended


Six Months Ended


June 30,


June 30,


2011


2010


2011


2010





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








Selling, general and administrative expenses








Incentive compensation related to funding events

$ (4,474)


$ (349)


$ (8,823)


$ (507)

Acquisition costs

(1,100)


-


(1,100)


(679)

Interest expense








Acceleration of the amortization of debt issue costs and OID

-


-


(753)


-

Settlement of value added tax audit in Brazil

-


-


2,838


-

Restructuring expense








Asset impairments

-


-


-


(1,842)

Adjustment of lease liability

-


-


754


-

Other income








Partial redemption of senior secured notes

-


-


(850)


-

Provision for income taxes








Tax law and tax election changes

1,406


-


1,406


-

Total items included in net income / (loss)

$ (4,168)


$ (349)


$ (6,528)


$ (3,028)









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

$ (2,774)


$ 1,911


$ 6,248


$ (2,571)

Less: Preferred unit dividends

-


(4,380)


-


(8,649)

Income / (loss) available to common shareholders

$ (2,774)


$ (2,469)


$ 6,248


$ (11,220)









Memo: Average shares outstanding (in thousands)








Basic

19,102


12,468


19,102


12,468

Diluted

19,102


12,468


19,992


12,468









Income / (loss) per common share (GAAP)








Basic

$ (0.15)


$ (0.20)


$ 0.33


$ (0.90)

Diluted

(0.15)


(0.20)


0.31


(0.90)









Diluted adjusted income / (loss) per share (non-GAAP)*

0.07


(0.17)


0.64


(0.66)









* Excludes the certain items shown above
















SOURCE Tower International, Inc.