Tower International Reports Second Quarter Results and Maintains Full-Year 2017 Outlook for Earnings and Free Cash Flow
LIVONIA, Mich., July 26, 2017 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced second quarter 2017 results and updated its business outlook through 2017.
-- Revenue for the second quarter was $490 million compared with $505
million in the second quarter of 2016.
-- Net income was $19.2 million or 92 cents per diluted share, compared
with net loss of $4.8 million or 23 cents per share in the second
quarter last year, which included non-cash impairments related to
discontinued operations. As detailed below, this year's second quarter
included certain items that adversely impacted results by $0.9 million.
Excluding these items and comparable items in the second quarter of
2016, diluted adjusted earnings were 97 cents per share, compared with
81 cents a year ago.
-- Adjusted EBITDA for the quarter was $53.2 million, an increase of 6
percent compared with $50.3 million a year ago. Adjusted EBITDA Margin
increased by 90 basis points to 10.9 percent.
-- Free Cash Flow, as defined below, totaled $18 million for the quarter
and was significantly favorable to outlook.
-- Current outlook for full year revenue of $1.97 billion is expected to be
$45 million higher than previous outlook, as higher European steel
prices and favorable foreign exchange more than offset modest production
decreases on Tower contented vehicles in Europe. The Company is
re-affirming its outlook for full year 2017 Adjusted EBITDA of $210
million, Adjusted EPS of $3.60 per share and positive free cash flow of
$55 million.
-- During the second half of 2017, Tower has significant launches in North
America on a number of platforms, which in total represent approximately
20 percent of ongoing revenue for the region.
"Tower delivered solid financial results in the quarter as revenue and earnings were largely in-line with our previous outlook and free cash flow was better than expected," said CEO Jim Gouin. "We continue to invest in the growth of Tower and are well positioned to grow our business at a faster pace than the industry over the coming years. Program launches in the second half of the year exemplify how the emerging secular trends related to outsourcing are fueling Tower's revenue growth."
Tower to Host Conference Call Today at 1 p.m. EDT
Tower will discuss its second quarter 2017 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 (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. #55515739. 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", 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 EBITDA margin is defined as adjusted EBITDA divided by revenue. 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 continuing operating activities less cash disbursed for purchases of property, plant and equipment. We use adjusted EBITDA, adjusted EBITDA margin, 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, Adjusted EBITDA and free cash flow. 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,
--------------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
Revenues $489,925 $505,131 $987,515 $994,325
Cost of sales 428,328 442,989 869,139 875,094
------- ------- ------- -------
Gross profit 61,597 62,142 118,376 119,231
Selling, general, and administrative expenses 29,007 32,050 58,232 64,902
Amortization expense 113 116 216 232
Restructuring and asset impairment charges, net 3,337 840 7,248 1,586
----- --- ----- -----
Operating income 29,140 29,136 52,680 52,511
Interest expense 1,807 4,987 2,260 12,569
Interest income 86 40 133 68
Other expense - 2,905 575 6,481
--- ----- --- -----
Income before provision for income taxes and income / (loss) from 27,419 21,284 49,978 33,529
discontinued operations
Provision for income taxes 7,672 6,015 14,168 9,531
----- ----- ------ -----
Income from continuing operations 19,747 15,269 35,810 23,998
Income / (loss) from discontinued operations, net of tax (489) (20,021) 861 (20,366)
---- ------- --- -------
Net income / (loss) 19,258 (4,752) 36,671 3,632
Less: Net income attributable to the noncontrolling interests 42 89 110 95
--- --- --- ---
Net income / (loss) attributable to Tower International, Inc. $19,216 $(4,841) $36,561 $3,537
======= ======= ======= ======
Weighted average basic shares outstanding 20,508,890 21,164,505 20,467,281 21,145,588
Weighted average diluted shares outstanding 20,805,931 21,489,161 20,813,100 21,469,818
Basic income per share attributable to Tower International, Inc.:
Income per share from continuing operations $0.96 $0.72 $1.74 $1.13
Income / (loss) per share from discontinued operations (0.02) (0.95) 0.04 (0.96)
Income / (loss) per share 0.94 (0.23) 1.79 0.17
Diluted income per share attributable to Tower International, Inc.:
Income per share from continuing operations $0.95 $0.71 $1.72 $1.11
Income / (loss) per share from discontinued operations (0.02) (0.93) 0.04 (0.95)
Income / (loss) per share 0.92 (0.23) 1.76 0.16
Dividends declared per share $0.11 $0.10 $0.22 $0.20
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands - unaudited)
June 30, December 31,
2017 2016
---- ----
ASSETS
Cash and cash equivalents $54,794 $62,788
Accounts receivable, net of
allowance of $1,298 and $961 253,139 178,251
Inventories 74,965 71,710
Assets held for sale 42,699 102,252
Prepaid tooling, notes receivable,
and other 136,054 103,023
Total current assets 561,651 518,024
------- -------
Property, plant, and equipment, net 495,840 465,569
Goodwill 61,669 56,383
Deferred tax asset 116,917 112,645
Other assets, net 10,464 9,902
Total assets $1,246,541 $1,162,523
========== ==========
LIABILITIES AND EQUITY
Short-term debt and current
maturities of capital lease
obligations $51,024 $34,211
Accounts payable 273,623 258,129
Accrued liabilities 114,079
125,648
Liabilities held for sale 16,909 53,310
Total current liabilities 467,204 459,729
------- -------
Long-term debt, net of current
maturities 375,562 351,232
Obligations under capital leases,
net of current maturities - 4,863
Deferred tax liability 5,354 5,594
Pension liability 56,777 61,627
Other non-current liabilities 86,443 65,539
Total non-current liabilities 524,136 488,855
------- -------
Total liabilities 991,340 948,584
------- -------
Stockholders' equity:
Tower International, Inc.'s
stockholders' equity
Common stock $223 $221
Additional paid in capital 342,773 340,623
Treasury stock (36,407) (35,645)
Accumulated surplus/ (deficit) 23,371 (14,021)
Accumulated other comprehensive
loss (74,759) (83,383)
Total Tower International, Inc.'s
stockholders' equity 255,201 207,795
Noncontrolling interests in
subsidiaries - 6,144
Total stockholders' equity 255,201 213,939
------- -------
Total liabilities and stockholders'
equity $1,246,541 $1,162,523
========== ==========
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
OPERATING ACTIVITIES:
Net income / (loss) $19,258 $(4,752) $36,671 $3,632
Less: Income / (loss) from discontinued operations, net of tax (489) (20,021) 861 (20,366)
---- ------- --- -------
Income from continuing operations 19,747 15,269 35,810 23,998
Adjustments required to reconcile income from continuing operations to net cash provided by
/ (used in) continuing operating activities:
Deferred income tax provision $6,010 $5,120 $9,965 $8,116
Depreciation and amortization 18,766 18,207 36,532 35,483
Non-cash share-based compensation 599 505 1,098 1,034
Pension income, net of contributions (2,500) (2,320) (4,851) (4,467)
Change in working capital and other operating items (4,286) (24,650) (88,794) (41,769)
Net cash provided by / (used in) continuing operating activities $38,336 $12,131 $(10,240) $22,395
------- ------- -------- -------
INVESTING ACTIVITIES:
Cash disbursed for purchases of property, plant, and equipment, net $(20,252) $(35,230) $(44,161) $(60,926)
Proceeds from disposition of joint venture, net 15,944 - 15,944 -
Net cash used in continuing investing activities $(4,308) $(35,230) $(28,217) $(60,926)
------- -------- -------- --------
FINANCING ACTIVITIES:
Proceeds from borrowings $137,109 $149,577 $373,853 $295,904
Repayments of borrowings (143,606) (134,239) (336,032) (272,437)
Repayments on Term Loan Credit Facility - - - (50,000)
Original issuance discount - - (1,808) -
Debt financing costs (664) - (4,747) -
Dividend payment to Tower stockholders (2,256) (2,118) (4,498) (4,229)
Proceeds from stock options exercised 114 25 1,052 25
Purchase of treasury stock (1) - (762) (621)
Net cash provided by / (used in) continuing financing activities $(9,304) $13,245 $27,058 $(31,358)
------- ------- ------- --------
Discontinued operations:
Net cash from discontinued operating activities $644 $227 $74 $3,074
Net cash used in discontinued investing activities (604) (1,489) (1,010) (1,907)
Net cash from / (used in) discontinued financing activities 423 474 920 (2,635)
Net cash from / (used in) discontinued operations $463 $(788) $(16) $(1,468)
---- ----- ---- -------
Effect of exchange rate changes on continuing cash and cash equivalents $2,084 $(399) $3,421 $1,540
------ ----- ------ ------
NET CHANGE IN CASH AND CASH EQUIVALENTS $27,271 $(11,041) $(7,994) $(69,817)
CASH AND CASH EQUIVALENTS:
Beginning of period $27,523 $62,818 $62,788 $121,594
------- ------- ------- --------
End of period $54,794 $51,777 $54,794 $51,777
======= ======= ======= =======
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(Amounts in thousands - unaudited)
Segment Data Three Months Ended June 30,
2017 2016
---- ----
Revenues Adjusted EBITDA Revenues Adjusted EBITDA
-------- --------------- -------- ---------------
Europe $160,229 $13,628 $175,044 $13,708
North America 329,696 39,616 330,087 36,550
Consolidated $489,925 $53,244 $505,131 $50,258
======== ======= ======== =======
Six Months Ended June 30,
2017 2016
---- ----
Revenues Adjusted EBITDA Revenues Adjusted EBITDA
-------- --------------- -------- ---------------
Europe $320,381 $24,800 $336,142 $25,202
North America 667,134 74,648 658,183 70,151
Consolidated $987,515 $99,448 $994,325 $95,353
======== ======= ======== =======
Adjusted EBITDA Reconciliation Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
Adjusted EBITDA $53,244 $50,258 $99,448 $95,353
Restructuring and asset impairment charges, net (3,337) (840) (7,248) (1,586)
Depreciation and amortization (18,766) (18,207) (36,532) (35,483)
Acquisition costs and other (109) (154) (184) (178)
Long-term compensation expense (1,892) (1,921) (2,804) (5,595)
Interest expense, net (1,721) (4,947) (2,127) (12,501)
Other expense - (2,905) (575) (6,481)
Provision for income taxes (7,672) (6,015) (14,168) (9,531)
Income / (loss) from discontinued operations, net of tax (489) (20,021) 861 (20,366)
Net income attributable to noncontrolling interests (42) (89) (110) (95)
Net income / (loss) attributable to Tower International, Inc. $19,216 $(4,841) $36,561 $3,537
======= ======= ======= ======
Free Cash Flow Reconciliation Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net cash provided by / (used in) continuing operating activities $38,336 $12,131 $(10,240) $22,395
Cash disbursed for purchases of PP&E (20,252) (35,230) (44,161) (60,926)
Free cash flow $18,084 $(23,099) $(54,401) $(38,531)
======= ======== ======== ========
Net Debt Reconciliation June 30, December 31,
2017 2016
---- ----
Short-term debt and current maturities of capital lease obligations $51,024 $34,211
Long-term debt, net of current maturities 384,509 357,298
Debt issue costs (8,947) (6,066)
Obligations under capital leases, net of current maturities - 4,863
Total debt 426,586 390,306
Less: Cash and cash equivalents (54,794) (62,788)
Net debt $371,792 $327,518
======== ========
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,
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
Income / (expense) items included in net income, net of tax:
Selling, general, and administrative expenses
One-time CEO compensation awards $ - $203 $ - $299
Restructuring and asset impairment charges, net
One-time restructuring actions (2,006) - (3,157) -
Interest expense
Mark-to-market loss on derivative financial instruments 1,631 (242) 2,630 (356)
Other expense
European divestiture expenses - (2,112) - (2,905)
Discontinued operations
Loss on sale of joint venture (2,596) - (2,596) -
Income from discontinued operations 2,108 (20,021) 2,108 (20,021)
Noncontrolling interests
Net income attributable to noncontrolling interests* (42) (89) (42) (89)
Total items included in net income, net of tax $(905) $(22,261)
===== ========
Net income / (loss) attributable to Tower International, Inc. $19,216 $(4,841)
Memo: Average shares outstanding (in thousands)
Basic 20,509 21,165
Diluted 20,806 21,489
Income / (loss) per common share (GAAP)
Basic $0.94 $(0.23)
Diluted 0.92 (0.23)
Diluted adjusted earnings per share (non-GAAP) $0.97 $0.81
* 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,
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
Income / (expense) items included in net income, net of tax:
Selling, general, and administrative expenses
One-time CEO compensation awards $ - $(444) $(653)
Restructuring and asset impairment charges, net
One-time restructuring actions (4,161) - (6,633) -
Interest expense
Mark-to-market loss on derivative financial instruments 4,286 (1,892) 6,912 (2,782)
Acceleration of the amortization of debt issue costs and OID - (503) - (740)
Other expense
European divestiture expenses - (4,544) - (6,481)
Debt refinancing costs (357) (575) -
Discontinued operations
Loss on sale of joint venture (2,596) - (2,596) -
Income / (loss) from discontinued operations 3,458 (20,366) 3,458 (20,366)
Noncontrolling interests
Net income attributable to noncontrolling interests* (110) (95) (110) (95)
Total items included in net income, net of tax $520 $(27,844)
==== ========
Net income attributable to Tower International, Inc. $36,561 $3,537
Memo: Average shares outstanding (in thousands)
Basic 20,467 21,146
Diluted 20,813 21,470
Income per common share (GAAP)
Basic $1.79 $0.17
Diluted 1.76 0.16
Diluted adjusted earnings per share (non-GAAP) $1.73 $1.46
* Amounts attributable to noncontrolling interests of discontinued operations
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SOURCE Tower International
