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Tower International Reports Strong First Quarter

LIVONIA, Mich., May 5, 2011 /PRNewswire via COMTEX/ --

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

  • Revenue for the quarter was $600 million, up 25 percent from $479 million in the first quarter 2010. Excluding changes in steel pricing and exchange rates, revenue was up $100 million or 21 percent.
  • Adjusted EBITDA for the quarter was $65.7 million, up 30 percent from $50.7 million a year ago. The improvement was driven by higher volume, offset partially by less-favorable product mix and launch-related costs.
  • Adjusted EBITDA for the last twelve months increased to $205 million.
  • Net income in the first quarter of 2011 was $9 million or $0.45 per diluted common share. This included certain items that adversely impacted results by $2.4 million, as detailed below. Excluding these items and comparable items in the first quarter of 2010, diluted adjusted earnings per common share were $0.57, compared with a loss of $0.50 a year ago.
  • Free cash flow use of $40.7 million in the first quarter was more than explained by seasonality and timing, including working capital seasonality, the timing of customer-owned tooling, and the semi-annual interest payment on senior notes.

"It was an excellent start to 2011 for Tower," said President and CEO Mark Malcolm. "We continued to deliver our ongoing priority of converting recovering auto volumes into improved earnings and good margins, demonstrating Tower's positive operating leverage and global competitiveness. We also made meaningful further progress on our longer-term priority of sustainable future growth by approving an expansion for one of Tower's China joint ventures and by accessing the adjacent defense, aerospace, and industrial markets through the acquisition of the assets of W Industries."

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

Tower will discuss its first quarter 2011 results and other related matters in a conference call at 11 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 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. # 61564002. 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", "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 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. Net debt represents total debt less cash and cash equivalents. We use Adjusted EBITDA, 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 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.

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 potential for future growth through the acquisition of the assets of W Industries and the expansion of our Chinese Joint Venture, and statements regarding the existence of a multi-year recovery cycle in the automotive sector. 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;
  • 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 March 31,



2011


2010






Revenues


$ 599,635


$ 479,129

Cost of sales


530,065


425,904

Gross profit


69,570


53,225

Selling, general and administrative expenses


37,722


33,021

Amortization expense


892


710

Restructuring and asset impairment charges, net


483


4,107

Operating income


30,473


15,387

Interest expense


12,518


13,790

Interest income


263


189

Other expense


850


-

Income before provision for income taxes


17,368


1,786

Provision for income taxes


6,613


4,134

Net income / (loss)


10,755


(2,348)

Less: Net income attributable to the noncontrolling interests


1,733


2,134

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


$ 9,022


$ (4,482)






Less: Preferred unit dividends


$ -


$ (4,269)

Net income / (loss) available to common shareholders


$ 9,022


$ (8,751)






Weighted average common shares outstanding





Basic


19,101,588


12,467,866

Diluted


19,890,083


12,467,866






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





Basic


$ 0.47


$ (0.70)

Diluted


0.45


(0.70)

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)













March 31, 2011


December 31, 2010






ASSETS





Cash and cash equivalents


$ 134,495


$ 150,345

Accounts receivable, net of allowance of $2,899 and $1,674


377,249


297,086

Inventories


80,862


73,189

Deferred tax asset - current


11,401


12,406

Assets held for sale


8,489


8,178

Prepaid tooling and other


82,229


57,754

Total current assets


694,725


598,958






Property, plant and equipment, net


633,347


627,497

Goodwill


70,136


66,309

Deferred tax asset - non-current


18,835


17,377

Other assets, net


28,890


30,035

Total assets


$ 1,445,933


$ 1,340,176






LIABILITIES AND STOCKHOLDERS' EQUITY





Current maturities of long-term debt and capital lease obligations


$ 131,146


$ 109,848

Accounts payable


405,726


366,761

Accrued liabilities


126,438


132,614

Total current liabilities


663,310


609,223






Long-term debt, net of current maturities


450,526


432,726

Obligations under capital leases, net of current maturities


15,765


15,604

Deferred tax liability - non-current


14,865


12,710

Pension liability


74,574


76,403

Other non-current liabilities


82,209


81,884

Total non-current liabilities


637,939


619,327

Total liabilities


1,301,249


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


299,960


296,262

Accumulated deficit


(183,534)


(192,556)

Accumulated other comprehensive loss


(18,217)


(36,530)

Total Tower International, Inc.'s stockholders' equity


98,400


67,367

Noncontrolling interests in subsidiaries


46,284


44,259

Total stockholders' equity


144,684


111,626






Total liabilities and stockholders' equity


$ 1,445,933


$ 1,340,176

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)






Three Months Ended March 31,


2011


2010





OPERATING ACTIVITIES:




Net income / (loss)

$ 10,755


$ (2,348)

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




Non-cash restructuring and asset impairment charges

-


2,699

Deferred income tax provision

1,333


-

Depreciation and amortization

30,147


30,273

Non-cash share-based compensation

3,698


-

Pension expense, net of contributions

(1,392)


(817)

Change in working capital and other operating items

(58,503)


(24,137)

Net cash provided by / (used in) operating activities

$ (13,962)


$ 5,670





INVESTING ACTIVITIES:




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

$ (26,698)


$ (18,685)

Acquisition of a third-party debt instrument

(11,254)


-

Net assets acquired, net of cash acquired

-


(16,687)

Net cash used in investing activities

$ (37,952)


$ (35,372)





FINANCING ACTIVITIES:




Repayments of term debt

$ -


$ (1,183)

Partial redemption of senior secured notes

(17,000)


-

Preferred unit dividends

-


(95)

Proceeds from borrowings

139,296


133,612

Repayments of borrowings

(88,756)


(114,135)

Net cash provided by financing activities

$ 33,540


$ 18,199





Effect of exchange rate changes on cash and cash equivalents

$ 2,524


$ (2,456)





NET CHANGE IN CASH AND CASH EQUIVALENTS

$ (15,850)


$ (13,959)





CASH AND CASH EQUIVALENTS:




Beginning of period

$ 150,345


$ 149,802





End of period

$ 134,495


$ 135,843

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended March 31,



2011


2010



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$ 336,104


$ 33,776


$ 272,924


$ 34,900

Americas


263,531


31,931


206,205


15,837

Consolidated


$ 599,635


$ 65,707


$ 479,129


$ 50,737




























Adjusted EBITDA reconciliation


Three Months Ended March 31,


Last Twelve Months Ended March 31,



2011


2010


2011


2010

Adjusted EBITDA


$ 65,707


$ 50,737


$ 205,205


$ 165,355

Restructuring


(483)


(4,107)


(10,664)


(17,581)

Depreciation and amortization


(30,147)


(30,273)


(114,542)


(137,947)

Receivable factoring charges and other


(105)


(133)


(443)


(846)

Acquisition costs


-


(679)


-


(679)

Expense related to the compensation programs


(4,499)


(158)


(15,416)


(158)

Interest expense, net


(12,255)


(13,601)


(64,564)


(56,994)

Other income / (expense)


(850)


-


(2,150)


33,661

Provision for income taxes


(6,613)


(4,134)


(12,776)


(4,513)

Net income attributable to noncontrolling interests


(1,733)


(2,134)


(8,040)


(9,672)

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


$ 9,022


$ (4,482)


$ (23,390)


$ (29,374)




























Free cash flow reconciliation




Three Months Ended March 31,







2011


2010

Net cash provided by / (used in) operating activities






$ (13,962)


$ 5,670

Cash disbursed for purchases of PP&E, net






(26,698)


(18,685)

Free cash flow






$ (40,660)


$ (13,015)




























Net debt reconciliation






March 31,


December 31,







2011


2010

Current maturities of long-term debt and capital lease obligations






$ 131,146


$ 109,848

Long-term debt, net of current maturities






450,526


432,726

Obligations under capital leases, net of current maturities






15,765


15,604

Total debt






597,437


558,178

Less: cash and cash equivalents






(134,495)


(150,345)

Net debt






$ 462,942


$ 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



March 31,



2011


2010






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





Selling, general and administrative expenses





Incentive compensation related to funding events


$ (4,349)


$ -

Acquisition costs


-


(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)


-

Total items included in net income / (loss)


$ (2,360)


$ (2,521)






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


$ 9,022


$ (4,482)

Less: Preferred unit dividends


-


(4,269)

Income / (loss) available to common shareholders


$ 9,022


$ (8,751)






Memo: Average shares outstanding (in thousands)





Basic


19,102


12,468

Diluted


19,890


12,468






Income / (loss) per common share (GAAP)





Basic


$ 0.47


$ (0.70)

Diluted


0.45


(0.70)






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


0.57


(0.50)






* Excludes the certain items shown above





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

SOURCE Tower International, Inc.