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Tower International Reports Solid Second Quarter Results and Further Bolsters Growth Outlook in North America

LIVONIA, Mich., July 30, 2015 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered automotive structural metal components and assemblies,  today announced second quarter 2015 results, updated its outlook for full year 2015, and discussed related business developments.   

  • Revenue for the second quarter was $490 million, matching the company's guidance. At constant exchange rates, revenue was $541 million, compared with $549 million in the second quarter 2014. The quarterly revenue comparison was adversely affected by the timing of customer model changes in North America; Tower North America remains on track for 5% or better growth for full year 2015.
  • Adjusted EBITDA for the quarter was $53.3 million, compared with $55.2 million a year ago. The decline was more than explained by unfavorable currency translation. Adjusted EBITDA was $1.3 million better than guidance. Adjusted EBITDA margin was 10.9%, up from 10.1% last year, reflecting good net cost performance that was aided in part by favorable calendarization timing.
  • Net income was $18.6 million, compared with $16.1 million last year. As detailed below, this year's second quarter included certain items that adversely impacted results by $3.9 million. Excluding these items and comparable items in the second quarter of 2014, diluted adjusted earnings were $1.05 per share, up 19 percent from 88 cents a year ago.
  • Net debt (excluding cash attributable to discontinued operations) was $342 million at June 30, an improvement of $45 million from a year ago. Liquidity was $345 million, up $32 million.
  • The Company's growth prospects in North America have recently been further bolstered in two ways: a major follow-on new business award and the acquisition of a stamping supplier in Mexico. The new business award is projected to add about $70 million of booked annual revenue, achieving the high end of the potential range discussed last quarter. The acquisition in Mexico provides a further foothold in that high-growth market and is expected to be immediately accretive, adding about 10 cents to earnings per share on an annual basis. Present annual revenue is about $40 million; industry production growth in Mexico is projected at about an 8% annual rate through 2020, and we expect to grow this business at about a 10% rate during this period. The purchase price (net of acquired net cash) was about $21 million, or approximately four times projected 2015 adjusted EBITDA.
  • Revenue and earnings guidance for full 2015 are largely unchanged, with the main factors expected to be essentially offsetting this year. Revenue is now anticipated to be about $1,970 million, up $20 million from prior guidance, with projected favorable currency translation (including the Euro assumed at $1.10 in the second half) and the Mexican acquisition overcoming significantly lower industry and customer volumes in Brazil. The full year earnings outlook remains the same, with adjusted EBITDA at $190 million and diluted adjusted earnings per share at $3.15. In addition to the above revenue-related factors, up-front expenses for the additional new business award are expected to be offset by further improvements in Europe and North America.
  • With the additional investment required this year to support the new business award, adjusted free cash flow is now projected at about breakeven for the full year, reflecting capital deployment to enhance future growth. Excluding investment for the major new award that is expected to meaningfully benefit revenue beginning next year, adjusted free cash flow would be forecast at $55 million; also including the cash gains realized earlier this year from re-pricing Tower's debt swaps, the outlook for full year 2015 adjusted free cash flow would be about $87 million.

"We are effectively managing our way through several factors that are affecting near-term results, including the major volume downturn in Brazil, currency changes, and start-up expenses related to major new business.  Looking beyond these factors, the underlying positives are very encouraging," said President and CEO Mark Malcolm.  "In Europe, our business is improving margin, reflecting both industry and company improvements, and in North America, our already strong momentum has accelerated further.  We now project about 15% organic revenue growth for Tower North America from 2015 to 2017, plus the recent acquisition.  This bodes well for Tower's future."

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

Tower will discuss its second quarter 2015 results, the outlook for full year 2015, 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 (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. #88713369.  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 (EPS)", "free cash flow", "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 accompanying this press release.  Adjusted EBITDA margin represents adjusted EBITDA divided by revenues.  Adjusted earnings per share exclude certain income and expense items described in the reconciliation accompanying 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, 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 growth prospects, organic revenue growth, the projected impact of the referenced new business award and Mexican acquisition, industry production growth, projected currency translation, 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; 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

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,



2015


2014


2015


2014










Revenues


$               490,268


$               548,467


$              986,896


$           1,067,730

Cost of sales


427,948


486,118


868,086


944,592

  Gross profit


62,320


62,349


118,810


123,138

Selling, general, and administrative expenses


31,796


31,606


63,328


65,711

Amortization expense 


-


667


-


1,324

Restructuring and asset impairment charges, net 


5,493


4,716


6,524


6,105

  Operating income


25,031


25,360


48,958


49,998

Interest expense 


4,001


7,337


11,851


14,505

Interest income


101


133


226


265

Other expense


-


-


-


87

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


21,131


18,156


37,333


35,671

Provision for income taxes 


2,374


2,661


4,473


5,495

Equity in loss of joint venture, net of tax


(283)


(222)


(189)


(381)

  Income from continuing operations


18,474


15,273


32,671


29,795

Income from discontinued operations, net of tax 


665


1,677


589


2,433

       Net income


19,139


16,950


33,260


32,228

    Less: Net income attributable to the noncontrolling interests


493


854


573


1,277

   Net income attributable to Tower International, Inc.


$                 18,646


$                 16,096


$                32,687


$                30,951










Weighted average basic shares outstanding


21,104,735


20,651,097


21,077,633


20,582,140

Weighted average diluted shares outstanding


21,403,354


21,373,867


21,382,041


21,318,515










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









Income per share from continuing operations 


$                     0.85


$                     0.70


$                    1.52


$                    1.39

Income per share from discontinued operations 


0.03


0.08


0.03


0.11

Income per share 


0.88


0.78


1.55


1.50










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









Income per share from continuing operations 


$                     0.84


$                     0.67


$                    1.50


$                    1.34

Income per share from discontinued operations 


0.03


0.08


0.03


0.11

Income per share 


0.87


0.75


1.53


1.45

      

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)








June 30,


December 31,



2015


2014






ASSETS





Cash and cash equivalents


$                136,002


$                   148,561

Accounts receivable, net of allowance of $1,404 and $1,181


274,501


230,377

Inventories 


71,497


69,775

Deferred tax asset - current


6,571


6,900

Assets held for sale 


128,579


141,295

Prepaid tooling, notes receivable, and other


67,264


41,986

Total current assets


684,414


638,894






Property, plant, and equipment, net


426,342


451,126

Goodwill 


52,202


56,691

Investment in joint venture


7,567


7,752

Deferred tax asset - non-current


3,622


3,608

Other assets, net


10,996


12,969

Total assets


$             1,185,143


$                1,171,040






LIABILITIES AND EQUITY





Short-term debt and current maturities of capital lease obligations 


$                  36,415


$                     31,139

Accounts payable 


286,619


257,011

Accrued liabilities


98,831


105,772

Liabilities held for sale 


56,854


67,707

Total current liabilities


478,719


461,629






Long-term debt, net of current maturities 


416,767


445,303

Obligations under capital leases, net of current maturities 


6,633


7,740

Deferred tax liability - non-current


12,087


12,972

Pension liability 


62,359


68,637

Other non-current liabilities


89,801


74,981

Total non-current liabilities 


587,647


609,633

Total liabilities


1,066,366


1,071,262

Commitments and contingencies 










Stockholders' equity:





Tower International, Inc.'s stockholders' equity





Preferred stock, $0.01 par value, 50,000,000 authorized and 0 issued and
outstanding


-


-

Common stock, $0.01 par value, 350,000,000 authorized, 21,998,972
issued and 21,106,826 outstanding at June 30, 2015 and  21,393,592
issued and 20,752,226 outstanding at December 31, 2014 


220


214

Additional paid in capital


336,781


335,338

Treasury stock, at cost, 892,146 and 641,366 shares as of June 30, 2015
and December 31, 2014


(16,065)


(9,516)

Accumulated deficit


(203,277)


(235,971)

Accumulated other comprehensive loss 


(56,054)


(46,914)

Total Tower International, Inc.'s stockholders' equity


61,605


43,151

Noncontrolling interests in subsidiaries *


57,172


56,627

Total stockholders' equity


118,777


99,778






Total liabilities and stockholders' equity


$             1,185,143


$                1,171,040






* Balances include $47.4 million and $47.2 million minority interest attributable to discontinued operations, respectively.

      

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)








Six Months Ended June 30,



2015


2014






OPERATING ACTIVITIES:





Net income


$      33,260


$      32,228

Less: Income from discontinued operations, net of tax


589


2,433

Income from continuing operations


32,671


29,795






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





Premium on notes redemption and other fees


-


87

Deferred income tax provision


107


700

Depreciation and amortization


39,644


45,598

Non-cash share-based compensation


1,302


2,409

Pension income, net of contributions


(6,228)


(8,061)

Change in working capital and other operating items


(54,123)


(51,242)

Net cash provided by continuing operating activities


$      13,373


$      19,286






INVESTING ACTIVITIES:





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


$    (29,448)


$    (28,201)

Investment in joint venture


-


(760)

Net cash used in continuing investing activities


$    (29,448)


$    (28,961)






FINANCING ACTIVITIES:





Proceeds from borrowings


$      66,439


$      70,376

Repayments of  borrowings


(62,862)


(65,391)

Borrowings/(Repayments) on Term Loan Credit Facility


(25,000)


33,145

Debt financing costs


-


(917)

Proceeds from termination of cross currency swaps


32,377


-

Secondary stock offering transaction costs


-


(75)

Proceeds from stock options exercised


148


2,173

Purchase of treasury stock


(6,549)


(910)

Noncontrolling interest dividends


-


(2,529)

Net cash provided by continuing financing activities


$        4,553


$      35,872






Discontinued operations:





Net cash from discontinued operating activities


$        8,669


$        3,467

Net cash from discontinued investing activities


(1,587)


7,756

Net cash from discontinued financing activities


(5,620)


(2,319)

         Net cash from discontinued operations


$        1,462


$        8,904






Effect of exchange rate changes on continuing cash and cash equivalents


$      (2,499)


$         (762)






NET CHANGE IN CASH AND CASH EQUIVALENTS


$    (12,559)


$      34,339






CASH AND CASH EQUIVALENTS:





Beginning of period


$    148,561


$    134,880






End of period


$    136,002


$    169,219

      

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended June 30,



2015


2014



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$              186,931


$                16,356


$              228,787


$                18,513

Americas


303,337


36,916


319,680


36,637

Consolidated


$              490,267


$                53,272


$              548,467


$                55,150












Six Months Ended June 30,



2015


2014



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$              376,754


$                30,500


$              449,552


$                37,080

Americas


610,142


70,843


618,178


69,694

Consolidated


$              986,896


$              101,343


$           1,067,730


$              106,774




























Adjusted EBITDA Reconciliation


Three Months Ended June 30,


Six Months Ended June 30,



2015


2014


2015


2014

Adjusted EBITDA


$                53,272


$                55,150


$              101,343


$              106,774

Restructuring and asset impairment charges, net


(5,493)


(4,716)


(6,524)


(6,105)

Depreciation and amortization


(19,736)


(22,745)


(39,644)


(45,598)

Acquisition costs and other


(128)


(103)


(218)


(210)

Long-term compensation expense


(2,884)


(2,226)


(5,999)


(4,863)

Interest expense, net


(3,900)


(7,204)


(11,625)


(14,240)

Other expense


-


-


-


(87)

Provision for income taxes


(2,374)


(2,661)


(4,473)


(5,495)

Equity in loss of joint venture, net of tax


(283)


(222)


(189)


(381)

Income from discontinued operations, net of tax 


665


1,677


589


2,433

Net income attributable to noncontrolling interests


(493)


(854)


(573)


(1,277)

Net income attributable to Tower International, Inc.


$                18,646


$                16,096


$                32,687


$                30,951




























Adjusted Free Cash Flow Reconciliation


Three Months Ended June 30,


Six Months Ended June 30,



2015


2014


2015


2014

Net cash provided by continuing operating activities


$                20,167


$                  4,093


$                13,373


$                19,286

Cash disbursed for purchases of PP&E


(19,886)


(19,538)


(29,448)


(28,201)

Free cash flow


281


(15,445)


(16,075)


(8,915)

Less:  Cash disbursed for customer-owned tooling


(14,033)


(7,749)


(24,147)


(16,149)

Adjusted free cash flow


$                14,314


$                (7,696)


$                  8,072


$                  7,234




























Net Debt Reconciliation






June 30,


December 31,







2015


2014

Short-term debt and current maturities of capital lease obligations






$                36,415


$                31,139

Long-term debt, net of current maturities






426,968


457,179

Debt issue costs






(10,201)


(11,876)

Obligations under capital leases, net of current maturities






6,633


7,740

Total debt






459,815


484,182

Less: Cash and cash equivalents






(136,002)


(148,561)

Add: Cash attributable to discontinued operations






17,556


16,025

Net debt






$              341,369


$              351,646

        

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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





















Three Months Ended


Six Months Ended



June 30,


June 30,



2015


2014


2015


2014










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









Selling, general, and administrative expenses









One-time CEO compensation awards


(933)


-


(1,866)


-

Restructuring and asset impairment charges, net









Restructuring actions*


(211)


(440)


(377)


(806)

Change in estimated future rent for a closed facility


(4,760)


-


(4,760)


-

Lease buyout of previously closed facility


-


(3,448)




(3,448)

Interest expense









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


1,630


-


(274)


-

Acceleration of the amortization of debt issue costs and OID


-


-


(440)


-

Other expense






-


-

Term Loan re-pricing fees


-


-


-


(87)

Discontinued operations









Income / (loss) from discontinued operations


665


1,677


589


2,433

Noncontrolling interests









Net income attributable to noncontrolling interests**


(290)


(576)


(281)


(776)

Total items included in net income, net of tax


$       (3,899)


$      (2,787)


$        (7,409)


$      (2,684)










Net income attributable to Tower International, Inc.


$       18,646


$     16,096


$        32,687


$     30,951










Memo:  Average shares outstanding (in thousands)









Basic


21,105


20,651


21,078


20,582

Diluted


21,403


21,374


21,382


21,319










Income / (loss) per common share (GAAP)









Basic


$           0.88


$         0.78


$            1.55


$         1.50

Diluted


0.87


0.75


1.53


1.45










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


1.05


0.88


1.88


1.58



















*   Amount is net of tax of $0k , $29k, $31k , and $86k, respectively 

** Amounts attributible to noncontrolling interests of discontinued operations

*** Excludes the certain items shown above. 

        

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tower-international-reports-solid-second-quarter-results-and-further-bolsters-growth-outlook-in-north-america-300121000.html

SOURCE Tower International, Inc.