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
[email protected]
| 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 |
|||||
| 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 |
125,648 |
114,079 |
||
| 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 |
||||||||
| 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 |
||||||||
SOURCE Tower International
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