Tower International Reports Third Quarter Results and Affirms Earnings and Free Cash Flow Outlook for 2018

News provided by

Tower International, Inc.

Oct 29, 2018, 08:00 ET

LIVONIA, Mich., Oct. 29, 2018 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced third quarter 2018 results and affirmed its earnings and free cash flow outlook for 2018. 

  • Revenue for the third quarter was $525 million compared with $462 million in the third quarter of 2017 representing a 14 percent increase.

  • Net income was $22.6 million or $1.07 per share increasing from $14.9 million or $0.72 per share in the third quarter last year. As detailed below, this year's third quarter included certain items that, in aggregate, decreased results by $117 thousand. Excluding these items and comparable items in the third quarter of 2017, adjusted earnings per share amounted to $1.08, an increase of 27 percent from the $0.85 reported a year ago.

  • Adjusted EBITDA for the quarter was $57.1 million in-line with the Company's outlook and up 18 percent from $48.5 million a year ago.

  • For the quarter, net cash provided by continuing operating activities was $43 million. Cash disbursed for purchases of equipment totaled $25 million resulting in Free Cash Flow of $18 million.

  • Full year 2018 outlook includes:

    • Revenue of $2.17 billion, reflecting primarily net new business of $125 million, favorable foreign exchange and higher steel prices;
    • Adjusted EBITDA of $230 million;
    • Diluted Adjusted EPS is increased by 10 cents to $4.20 per share; and
    • Free Cash Flow is maintained at $50 million.

  • The Company's outlook for fourth quarter 2018 includes revenue of $526 million, Adjusted EBITDA of $61.6 million and Diluted Adjusted Earnings Per Share of $1.20.

"We remain balanced in our approach to capital allocation, remaining focused on growing profitably, reducing leverage – as evidenced by our $50 million pay-down of Term Loan debt, and returning capital to shareholders – as evidenced by our recent increase of our quarterly dividend," said CEO Jim Gouin.  "Tower delivered solid financial results in the third quarter, growing revenue organically well in excess of the overall auto market and expanding Adjusted EBITDA margins.  Revenue for the quarter increased 14 percent as Tower continues to benefit from the secular trends of outsourcing and a continued production mix shift from cars to trucks and SUVs.  Tower's North American revenue continued to significantly outpace the market, growing by 20 percent from a year ago."

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

Tower will discuss its third quarter 2018 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. #4576237.  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 EBITDA margin represents Adjusted EBITDA divided by revenues, Adjusted earnings per share excludes 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 fourth quarter earnings and revenues, full year earnings, free cash flow and revenues, business growth and adjusted EBITDA.. 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;
  • changes to U.S. trade and tariff policies and the reaction of other countries thereto;
  • 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
[email protected]

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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













Three Months Ended September 30,

Nine Months Ended September 30,



2018

2017

2018

2017











Revenues

$                           524,566

$                 462,372

$                  1,644,079

$               1,449,887

Cost of sales

462,941

404,332

1,458,549

1,274,429

 Gross profit

61,625

58,040

185,530

175,458

Selling, general, and administrative expenses

29,954

29,667

93,057

87,899

Amortization expense 

110

117

330

333

Restructuring and asset impairment charges, net 

491

1,131

2,308

8,379

  Operating income

31,070

27,125

89,835

78,847

Interest expense 

6,048

5,673

16,465

7,933

Interest income

93

64

362

197

Net periodic benefit income

558

713

1,675

1,671

Other expense

-

-

977

575

    Income before provision for income taxes and income from discontinued 
    operations

25,673

22,229

74,430

72,207

Provision  for income taxes 

3,996

8,002

14,602

22,170

    Income  from continuing operations

21,677

14,227

59,828

50,037

Income from discontinued operations, net of tax 

903

704

2,428

1,565

    Net income

22,580

14,931

62,256

51,602

Less: Net income attributable to the noncontrolling interests

-

-

-

110

     Net income attributable to Tower International, Inc.

$                             22,580

$                   14,931

$                       62,256

$                    51,492











Weighted average basic shares outstanding

20,605,168

20,522,001

20,586,599

20,485,722

Weighted average diluted shares outstanding

21,035,802

20,787,405

20,991,606

20,804,441











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








Income per share from continuing operations 

$                                 1.05

$                       0.69

$                           2.91

$                        2.44

Income per share from discontinued operations 

0.04

0.03

0.12

0.08

Income per share 

1.10

0.73

3.02

2.51











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








Income per share from continuing operations 

$                                 1.03

$                       0.68

$                           2.85

$                        2.40

Income per share from discontinued operations 

0.04

0.03

0.12

0.08

Income per share 

1.07

0.72

2.97

2.48











Dividends declared per share

$                                 0.12

$                       0.11

$                           0.36

$                        0.33

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands - unaudited)







September 30,

December 31,


2018

2017





ASSETS



Cash and cash equivalents

$                   47,744

$                 123,688

Accounts receivable, net of allowance of $1,387 and $1,385

280,973

239,319

Inventories 

93,655

78,745

Assets held for sale 

28,686

44,250

Prepaid tooling, notes receivable, and other

48,212

78,481

  Total current assets

499,270

564,483





Property, plant, and equipment, net

547,127

535,272

Goodwill 

62,164

63,665

Deferred tax asset

74,410

83,035

Other assets, net

27,809

13,642

  Total assets

$              1,210,780

$              1,260,097





LIABILITIES AND EQUITY



Short-term debt and current maturities of capital lease obligations 

$                   23,136

$                   42,048

Accounts payable 

303,016

323,271

Accrued liabilities

121,532

113,949

Liabilities held for sale 

12,667

17,336

  Total current liabilities

460,351

496,604





Long-term debt, net of current maturities 

294,300

344,738

Deferred tax liability

4,629

4,807

Pension liability 

39,749

47,813

Other non-current liabilities

93,843

96,263

  Total non-current liabilities 

432,521

493,621

     Total liabilities

892,872

990,225





Stockholders' equity:



 Common stock

224

223

 Additional paid in capital

346,915

344,153

 Treasury stock

(36,882)

(36,408)

 Retained earnings

80,711

29,712

 Accumulated other comprehensive loss 

(73,060)

(67,808)

  Total stockholders' equity

317,908

269,872





Total liabilities and stockholders' equity

$              1,210,780

$              1,260,097

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)











Three Months Ended September 30,

Nine Months Ended September 30,


2018

2017

2018

2017









OPERATING ACTIVITIES:







Net income

$                  22,580

$                14,931

$               62,256

$                  51,602

Less: Income from discontinued operations, net of tax

903

704

2,428

1,565

  Income from continuing operations

21,677

14,227

59,828

50,037









Adjustments required to reconcile income from continuing operations to net cash used in
continuing operating activities:







  Deferred income tax provision

$                    2,201

$                  5,402

$                 9,334

$                  15,367

  Depreciation and amortization

20,334

18,321

62,485

54,853

  Non-cash share-based compensation

903

559

2,512

1,657

  Pension income, net of contributions

(3,408)

(5,055)

(8,063)

(9,906)

  Change in working capital and other operating items

1,378

12,699

(50,484)

(76,095)

     Net cash provided by continuing operating activities

$                  43,085

$                46,153

$               75,612

$                  35,913









INVESTING ACTIVITIES:







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

$                (25,184)

$              (32,526)

$             (93,765)

$                (76,687)

  Proceeds from disposition of joint venture, net

-

-

4,314

15,944

  Net proceeds from sale of property, plant, and equipment

14,883

-

14,883

-

     Net cash used in continuing investing activities

$                (10,301)

$              (32,526)

$             (74,568)

$                (60,743)









FINANCING ACTIVITIES:







  Proceeds from borrowings

$                  92,512

$              162,073

$             137,696

$                535,926

  Repayments of  borrowings

(97,150)

(185,997)

(156,423)

(522,029)

  Repayments on Term Loan Credit Facility

(50,000)

-

(50,000)

-

  Debt financing costs

-

-

-

(4,747)

  Original issuance discount

-

-

-

(1,808)

  Dividend payment to Tower shareholders

(2,472)

(2,258)

(7,409)

(6,756)

  Proceeds from stock options exercised

32

42

251

1,094

  Purchase of treasury stock

-

(1)

(474)

(763)

    Net cash provided by / (used in) continuing financing activities

$                (57,078)

$              (26,141)

$             (76,359)

$                       917









Discontinued operations:







  Net cash from / (used in) discontinued operating activities

$                    2,943

$                   (396)

$                 7,327

$                     (322)

  Net cash used in discontinued investing activities

(770)

(241)

(2,771)

(1,251)

  Net cash from / (used in) discontinued financing activities

(1,718)

217

(2,642)

1,137

    Net cash used in discontinued operations

$                       455

$                   (420)

$                 1,914

$                     (436)









Effect of exchange rate changes on continuing cash and cash equivalents

$                     (524)

$                  1,737

$               (2,543)

$                    5,158









NET CHANGE IN CASH AND CASH EQUIVALENTS

$                (24,363)

$              (11,197)

$             (75,944)

$                (19,191)









CASH AND CASH EQUIVALENTS:







Beginning of period

$                  72,107

$                54,794

$             123,688

$                  62,788









End of period

$                  47,744

$                43,597

$               47,744

$                  43,597

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)



























Segment Data

Three Months Ended September 30,


2018

2017


Revenues

Adjusted
EBITDA

Revenues

Adjusted
EBITDA

Europe

$              146,192

$                  7,583

$            146,559

$                  8,219

North America

378,374

49,534

315,813

40,262

   Consolidated

$              524,566

$                57,117

$            462,372

$                48,481











Nine Months Ended September 30,


2018

2017


Revenues

Adjusted
EBITDA

Revenues

Adjusted
EBITDA

Europe

$              491,655

$                26,774

$            466,956

$                33,019

North America

1,152,424

141,671

982,931

113,952

   Consolidated

$           1,644,079

$              168,445

$         1,449,887

$              146,971


















Adjusted EBITDA Reconciliation

Three Months Ended September 30,

Nine Months Ended September 30,


2018

2017

2018

2017

Net income attributable to Tower International, Inc.

$                22,580

$                14,931

$              62,256

$                51,492

Restructuring and asset impairment charges, net

491

1,131

2,308

8,379

Depreciation and amortization

20,334

18,321

62,485

54,853

Acquisition costs and other

114

90

415

273

Long-term compensation expense

2,677

1,814

6,071

4,619

Lease expense

2,431

-

7,332

-

Interest expense, net

5,955

5,609

16,103

7,736

Other expense

-

-

977

575

Net periodic benefit income

(558)

(713)

(1,675)

(1,671)

Provision for income taxes

3,996

8,002

14,602

22,170

Income from discontinued operations, net of tax 

(903)

(704)

(2,428)

(1,565)

Net income attributable to noncontrolling interests

-

-

-

110

   Adjusted EBITDA

$                57,117

$                48,481

$            168,445

$              146,971


















Free Cash Flow Reconciliation

Three Months Ended September 30,

Nine Months Ended September 30,


2018

2017

2018

2017

Net cash used in continuing operating activities

$                43,085

$                46,153

$              75,612

$                35,913

Cash disbursed for purchases of PP&E

(25,184)

(32,526)

(93,765)

(76,687)

   Free cash flow

$                17,901

$                13,627

$            (18,153)

$              (40,774)


















Net Debt Reconciliation

September 30,

December 31,





2018

2017



Short-term debt and current maturities of capital lease obligations

$                23,136

$                42,048



Long-term debt, net of current maturities

300,731

352,886



Debt issue costs

(6,431)

(8,148)



   Total debt

317,436

386,786



Less: Cash and cash equivalents

(47,744)

(123,688)



   Net debt

$              269,692

$              263,098



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


September 30,

September 30,


2018

2017

2018

2017









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







 Restructuring and asset impairment charges, net







 One-time restructuring actions

$             (285)

$           (419)

$             (398)

$           (651)

 Interest expense







 Acceleration of the amortization of debt issue costs and OID

(735)

-

(967)

-

 Mark-to-market loss on derivative financial instruments

-

(614)

-

(991)

 Provision for income taxes







 Establishment of valuation allowance

-

(2,448)

-

(2,448)

 Discontinued operations







 Income from discontinued operations

903

704

903

704

 Total items included in net income, net of tax

$             (117)

$        (2,777)












Net income attributable to Tower International, Inc.

$         22,580

$        14,931












Memo:  Average shares outstanding (in thousands)







Basic

20,605

20,522



Diluted

21,036

20,787












Income per common share (GAAP)







Basic

$             1.10

$            0.73



Diluted

1.07

0.72












Diluted adjusted earnings per share (non-GAAP) 

$             1.08

$            0.85



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


September 30,

September 30,


2018

2017

2018

2017









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







 Restructuring and asset impairment charges, net







 One-time restructuring actions

$          (1,676)

$        (4,580)

$          (2,055)

$        (7,284)

 Interest expense







 Acceleration of the amortization of debt issue costs and OID

(735)

-

(967)

-

 Mark-to-market loss on derivative financial instruments

-

3,672

-

5,921

 Other expense







 Premium and other fees for re-pricing of Term Loan 

(743)

-

(977)

-

   Debt refinancing costs 

-

(357)

-

(575)

 Provision for income taxes







 Establishment of valuation allowance

-

(2,448)

-

(2,448)

 Discontinued operations







 Income from discontinued operations

2,428

4,161

2,428

4,161

 Loss of sale of Wuhu Joint Venture

-

(2,596)

-

(2,596)

 Noncontrolling interests







 Net income attributable to noncontrolling interests*

-

(110)

-

(110)

 Total items included in net income, net of tax

$             (726)

$        (2,258)












Net income attributable to Tower International, Inc.

$         62,256

$        51,492












Memo:  Average shares outstanding (in thousands)







Basic

20,587

20,486



Diluted

20,992

20,804












Income per common share (GAAP)







Basic

$             3.02

$            2.51



Diluted

2.97

2.48












Diluted adjusted earnings per share (non-GAAP) 

$             3.00

$            2.58












* Amounts attributable to noncontrolling interests of discontinued operations




SOURCE Tower International, Inc.

Related Links

http://www.towerinternational.com

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

icon3
440k+
Newsrooms &
Influencers
icon1
9k+
Digital Media
Outlets
icon2
270k+
Journalists
Opted In
GET STARTED