Tower International Reports Third Quarter Results and Increases Outlook for Revenue and Adjusted Earnings Per Share
LIVONIA, Mich., Oct. 30, 2017 /PRNewswire/ -- Tower International, Inc. [NYSE: TOWR], a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced third quarter 2017 results and updated its business outlook through 2017.
-- Revenue for the third quarter was $462 million compared with $457
million in the third quarter of 2016.
-- Net income was $14.9 million or 72 cents per diluted share, compared
with $18.2 million or 86 cents per share in the third quarter last year.
As detailed below, this year's third quarter included certain items that
adversely impacted results by $2.8 million. Excluding these items and
comparable items in the third quarter of 2016, adjusted earnings per
share of 85 cents, compared with 90 cents a year ago.
-- Adjusted EBITDA for the quarter was $49.2 million slightly ahead of the
Company's outlook but down from $50.1 million a year ago.
-- For the quarter, net cash provided by continuing operating activities
amounted to $46.1 million. Cash disbursed for purchases of equipment
totaled $32.5 million resulting in Free Cash Flow of $13.6 million.
-- Present outlook for full year revenue of $1.98 billion is expected to be
$10 million higher than previous outlook, as favorable foreign exchange
is expected to more than offset modest production decreases on Tower
contented vehicles in Europe. The Company is raising its outlook for
adjusted earnings per share by 10 cents to $3.70 per share and
re-affirming its outlook for Adjusted EBITDA of $210 million and
positive free cash flow of $55 million.
-- Tower remains committed to having a growing and sustainable dividend and
increased the quarterly dividend by 9 percent to 12 cents per share.
"Tower delivered solid financial results in the quarter as revenue and earnings were ahead of our previous outlook," said CEO Jim Gouin. "We continue to invest in the growth of Tower and continue to benefit from emerging industry trends. With our existing net new business wins and exposure to trucks and SUVs in the North American market we are well positioned to grow our business at a faster pace than the industry over the coming years."
Tower to Host Conference Call Today at 11 a.m. EDT
Tower will discuss its third quarter 2017 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 (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. #2170878. 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 continuing 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, business growth, 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;
-- our ability to take advantage of emerging secular trends;
-- 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 Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
2017 2016 2017 2016
---- ---- ---- ----
Revenues $462,372 $457,042 $1,449,887 $1,451,367
Cost of sales 403,619 396,806 1,272,758 1,271,900
------- ------- --------- ---------
Gross profit 58,753 60,236 177,129 179,467
Selling, general, and administrative expenses 29,667 31,223 87,899 96,125
Amortization expense 117 112 333 344
Restructuring and asset impairment charges, net 1,131 1,196 8,379 2,782
----- ----- ----- -----
Operating income 27,838 27,705 80,518 80,216
Interest expense 5,673 5,598 7,933 18,167
Interest income 64 40 197 108
Other expense - - 575 6,481
--- --- --- -----
Income before provision for income taxes and income / (loss) from discontinued operations 22,229 22,147 72,207 55,676
Provision for income taxes 8,002 4,239 22,170 13,770
----- ----- ------ ------
Income from continuing operations 14,227 17,908 50,037 41,906
Income / (loss) from discontinued operations, net of tax 704 367 1,565 (19,999)
--- --- ----- -------
Net income 14,931 18,275 51,602 21,907
Less: Net income attributable to the noncontrolling interests - 118 110 213
--- --- --- ---
Net income attributable to Tower International, Inc. $14,931 $18,157 $51,492 $21,694
======= ======= ======= =======
Weighted average basic shares outstanding 20,522,001 20,830,203 20,485,722 21,039,305
Weighted average diluted shares outstanding 20,787,405 21,182,149 20,804,441 21,372,875
Basic income per share attributable to Tower International, Inc.:
Income per share from continuing operations $0.69 $0.85 $2.44 $1.98
Income / (loss) per share from discontinued operations 0.03 0.02 0.08 (0.95)
Income per share 0.73 0.87 2.51 1.03
Diluted income per share attributable to Tower International, Inc.:
Income per share from continuing operations $0.68 $0.84 $2.40 $1.95
Income / (loss) per share from discontinued operations 0.03 0.02 0.08 (0.94)
Income per share 0.72 0.86 2.48 1.02
Dividends declared per share $0.11 $0.10 $0.33 $0.30
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands - unaudited)
Sept. 30, Dec. 31,
2017 2016
---- ----
ASSETS
Cash and cash equivalents $43,597 $62,788
Accounts receivable, net of allowance of $1,533 and $961 272,749 178,251
Inventories 81,127 71,710
Assets held for sale 45,065 102,252
Prepaid tooling, notes receivable, and other 120,500 103,023
------- -------
Total current assets 563,038 518,024
------- -------
Property, plant, and equipment, net 514,137 465,569
Goodwill 63,407 56,383
Deferred tax asset 114,399 112,645
Other assets, net 12,112 9,902
------ -----
Total assets $1,267,093 $1,162,523
========== ==========
LIABILITIES AND EQUITY
Short-term debt and current maturities of capital lease obligations $42,853 $34,211
Accounts payable 300,292 258,129
Accrued liabilities 114,079
117,305
Liabilities held for sale 53,310
16,814
Total current liabilities 477,264 459,729
------- -------
Long-term debt, net of current maturities 361,734 351,232
Obligations under capital leases, net of current maturities - 4,863
Deferred tax liability 5,533 5,594
Pension liability 51,723 61,627
Other non-current liabilities 97,070 65,539
Total non-current liabilities 516,060 488,855
------- -------
Total liabilities 993,324 948,584
------- -------
Stockholders' equity:
Tower International, Inc.'s stockholders' equity
Common stock $223 $221
Additional paid in capital 343,374 340,623
Treasury stock (36,408) (35,645)
Accumulated surplus/ (deficit) 36,044 (14,021)
Accumulated other comprehensive loss (69,464) (83,383)
Total Tower International, Inc.'s stockholders' equity 273,769 207,795
Noncontrolling interests in subsidiaries - 6,144
Total stockholders' equity 273,769 213,939
------- -------
Total liabilities and stockholders' equity $1,267,093 $1,162,523
========== ==========
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
2017 2016 2017 2016
---- ---- ---- ----
OPERATING ACTIVITIES:
Net income $14,931 $18,275 $51,602 $21,907
Less: Income / (loss) from discontinued operations, net of tax 704 367 1,565 (19,999)
--- --- ----- -------
Income from continuing operations 14,227 17,908 50,037 41,906
Adjustments required to reconcile income from continuing operations to net cash provided by continuing operating activities:
Deferred income tax provision $5,402 $2,135 $15,367 $10,251
Depreciation and amortization 18,321 17,900 54,853 53,383
Non-cash share-based compensation 559 511 1,657 1,545
Pension income, net of contributions (5,055) (3,384) (9,906) (7,851)
Change in working capital and other operating items 12,699 (25,107) (76,095) (66,876)
Net cash provided by continuing operating activities $46,153 $9,963 $35,913 $32,358
------- ------ ------- -------
INVESTING ACTIVITIES:
Cash disbursed for purchases of property, plant, and equipment, net $(32,526) $(12,610) $(76,687) $(73,536)
Proceeds from disposition of joint venture, net - - 15,944 -
Net cash used in continuing investing activities $(32,526) $(12,610) $(60,743) $(73,536)
-------- -------- -------- --------
FINANCING ACTIVITIES:
Proceeds from borrowings $162,073 $162,848 $535,926 $458,752
Repayments of borrowings (185,997) (145,227) (522,029) (417,664)
Repayments on Term Loan Credit Facility - - - (50,000)
Original issuance discount - - (1,808) -
Debt issuance costs - - (4,747) -
Dividend payment to Tower stockholders (2,258) (2,105) (6,756) (6,334)
Proceeds from stock options exercised 42 43 1,094 68
Purchase of treasury stock (1) (17,912) (763) (18,533)
Net cash provided by / (used in) continuing financing activities $(26,141) $(2,353) $917 $(33,711)
-------- ------- ---- --------
Discontinued operations:
Net cash from / (used in) discontinued operating activities $(396) $639 $(322) $3,714
Net cash used in discontinued investing activities (241) (203) (1,251) (2,110)
Net cash from / (used in) discontinued financing activities 217 (263) 1,137 (2,899)
Net cash from / (used in) discontinued operations $(420) $173 $(436) $(1,295)
----- ---- ----- -------
Effect of exchange rate changes on continuing cash and cash equivalents $1,737 $266 $5,158 $1,806
------ ---- ------ ------
NET CHANGE IN CASH AND CASH EQUIVALENTS $(11,197) $(4,561) $(19,191) $(74,378)
CASH AND CASH EQUIVALENTS:
Beginning of period $54,794 $51,777 $62,788 $121,594
------- ------- ------- --------
End of period $43,597 $47,216 $43,597 $47,216
======= ======= ======= =======
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(Amounts in thousands - unaudited)
Segment Data Three Months Ended Sept. 30,
2017 2016
---- ----
Revenues Adjusted Revenues Adjusted
EBITDA EBITDA
------ ------
Europe $146,559 $8,219 $147,964 $12,084
North America 315,813 40,975 309,078 38,039
Consolidated $462,372 $49,194 $457,042 $50,123
======== ======= ======== =======
Nine Months Ended Sept. 30,
2017 2016
---- ----
Revenues Adjusted Revenues Adjusted
EBITDA EBITDA
------ ------
Europe $466,956 $33,019 $484,064 $37,307
North America 982,931 115,623 967,303 108,170
Consolidated $1,449,887 $148,642 $1,451,367 $145,477
========== ======== ========== ========
Adjusted EBITDA Reconciliation Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
2017 2016 2017 2016
---- ---- ---- ----
Net income attributable to Tower International, Inc. $14,931 $18,157 $51,492 $21,694
Restructuring and asset impairment charges, net 1,131 1,196 8,379 2,782
Depreciation and amortization 18,321 17,900 54,853 53,383
Acquisition costs and other 90 47 273 318
Long-term compensation expense 1,814 3,275 4,619 8,778
Interest expense, net 5,609 5,558 7,736 18,059
Other expense - - 575 6,481
Provision for income taxes 8,002 4,239 22,170 13,770
(Income) / loss from discontinued operations, net of tax (704) (367) (1,565) 19,999
Net income attributable to noncontrolling interests - 118 110 213
Adjusted EBITDA $49,194 $50,123 $148,642 $145,477
======= ======= ======== ========
Free Cash Flow Reconciliation Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
2017 2016 2017 2016
---- ---- ---- ----
Net cash provided by continuing operating activities $46,153 $9,963 $35,913 $32,358
Cash disbursed for purchases of PP&E (32,526) (12,610) (76,687) (73,536)
Free cash flow $13,627 $(2,647) $(40,774) $(41,178)
======= ======= ======== ========
Net Debt Reconciliation Sept. 30, Dec. 31,
2017 2016
---- ----
Short-term debt and current maturities of capital lease obligations $42,853 $34,211
Long-term debt, net of current maturities 370,199 357,298
Debt issue costs (8,465) (6,066)
Obligations under capital leases, net of current maturities - 4,863
Total debt 404,587 390,306
Less: Cash and cash equivalents (43,597) (62,788)
Net debt $360,990 $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
Sept. 30, Sept. 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 $ - $(710) $ - $(1,044)
Restructuring and asset impairment charges, net
One-time restructuring actions (419) - (651) -
Interest expense
Mark-to-market loss on derivative financial instruments (614) (428) (991) (629)
Provision for income taxes
Establishment of valuation allowance (2,448) - (2,448) -
Discontinued operations
Income from discontinued operations 703 367 703 367
Noncontrolling interests
Net income attributable to noncontrolling interests* - (118) - (118)
Total items included in net income, net of tax $(2,778) $(889)
======= =====
Net income attributable to Tower International, Inc. $14,931 $18,157
Memo: Average shares outstanding (in thousands)
Basic 20,522 20,830
Diluted 20,787 21,182
Income per common share (GAAP)
Basic $0.73 $0.87
Diluted 0.72 0.86
Diluted adjusted earnings per share (non-GAAP) $0.85 $0.90
* 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
Nine Months Ended Nine Months Ended
Sept. 30, Sept. 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 $ - $(1,154) $ - $(1,697)
Restructuring and asset impairment charges, net
One-time restructuring actions (4,580) - (7,284) -
Interest expense
Mark-to-market loss on derivative financial instruments 3,672 (2,320) 5,921 (3,412)
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) -
Provision for income taxes
Establishment of valuation allowance (2,448) - (2,448) -
Discontinued operations
Loss on sale of joint venture (2,596) - (2,596) -
Income / (loss) from discontinued operations 4,161 (19,999) 4,161 (19,999)
Noncontrolling interests
Net income attributable to noncontrolling interests* (110) (213) (110) (213)
Total items included in net income, net of tax $(2,258) $(28,733)
======= ========
Net income attributable to Tower International, Inc. $51,492 $21,694
Memo: Average shares outstanding (in thousands)
Basic 20,486 21,039
Diluted 20,804 21,373
Income per common share (GAAP)
Basic $2.51 $1.03
Diluted 2.48 1.02
Diluted adjusted earnings per share (non-GAAP) $2.58 $2.36
* Amounts attributable to noncontrolling interests of discontinued operations
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SOURCE Tower International
