LIVONIA, Mich., July 30, 2015 /PRNewswire/ -- Tower International, Inc. TOWR, a leading integrated global manufacturer of engineered automotive structural metal components and assemblies, today announced second quarter 2015 results, updated its outlook for full year 2015, and discussed related business developments.
- Revenue for the second quarter was $490 million, matching the company's guidance. At constant exchange rates, revenue was $541 million, compared with $549 million in the second quarter 2014. The quarterly revenue comparison was adversely affected by the timing of customer model changes in North America; Tower North America remains on track for 5% or better growth for full year 2015.
- Adjusted EBITDA for the quarter was $53.3 million, compared with $55.2 million a year ago. The decline was more than explained by unfavorable currency translation. Adjusted EBITDA was $1.3 million better than guidance. Adjusted EBITDA margin was 10.9%, up from 10.1% last year, reflecting good net cost performance that was aided in part by favorable calendarization timing.
- Net income was $18.6 million, compared with $16.1 million last year. As detailed below, this year's second quarter included certain items that adversely impacted results by $3.9 million. Excluding these items and comparable items in the second quarter of 2014, diluted adjusted earnings were $1.05 per share, up 19 percent from 88 cents a year ago.
- Net debt (excluding cash attributable to discontinued operations) was $342 million at June 30, an improvement of $45 million from a year ago. Liquidity was $345 million, up $32 million.
- The Company's growth prospects in North America have recently been further bolstered in two ways: a major follow-on new business award and the acquisition of a stamping supplier in Mexico. The new business award is projected to add about $70 million of booked annual revenue, achieving the high end of the potential range discussed last quarter. The acquisition in Mexico provides a further foothold in that high-growth market and is expected to be immediately accretive, adding about 10 cents to earnings per share on an annual basis. Present annual revenue is about $40 million; industry production growth in Mexico is projected at about an 8% annual rate through 2020, and we expect to grow this business at about a 10% rate during this period. The purchase price (net of acquired net cash) was about $21 million, or approximately four times projected 2015 adjusted EBITDA.
- Revenue and earnings guidance for full 2015 are largely unchanged, with the main factors expected to be essentially offsetting this year. Revenue is now anticipated to be about $1,970 million, up $20 million from prior guidance, with projected favorable currency translation (including the Euro assumed at $1.10 in the second half) and the Mexican acquisition overcoming significantly lower industry and customer volumes in Brazil. The full year earnings outlook remains the same, with adjusted EBITDA at $190 million and diluted adjusted earnings per share at $3.15. In addition to the above revenue-related factors, up-front expenses for the additional new business award are expected to be offset by further improvements in Europe and North America.
- With the additional investment required this year to support the new business award, adjusted free cash flow is now projected at about breakeven for the full year, reflecting capital deployment to enhance future growth. Excluding investment for the major new award that is expected to meaningfully benefit revenue beginning next year, adjusted free cash flow would be forecast at $55 million; also including the cash gains realized earlier this year from re-pricing Tower's debt swaps, the outlook for full year 2015 adjusted free cash flow would be about $87 million.
"We are effectively managing our way through several factors that are affecting near-term results, including the major volume downturn in Brazil, currency changes, and start-up expenses related to major new business. Looking beyond these factors, the underlying positives are very encouraging," said President and CEO Mark Malcolm. "In Europe, our business is improving margin, reflecting both industry and company improvements, and in North America, our already strong momentum has accelerated further. We now project about 15% organic revenue growth for Tower North America from 2015 to 2017, plus the recent acquisition. This bodes well for Tower's future."
Tower to Host Conference Call Today at 1 p.m. EDT
Tower will discuss its second quarter 2015 results, the outlook for full year 2015, 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. #88713369. 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 (EPS)", "free cash flow", "adjusted 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 accompanying this press release. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues. Adjusted earnings per share exclude certain income and expense items described in the reconciliation accompanying this press release. Free cash flow is defined as cash provided by operating activities less cash disbursed for purchases of property, plant and equipment. Adjusted free cash flow is free cash flow excluding cash received or disbursed for customer tooling. Net debt represents total debt less cash and cash equivalents. We use adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per share, free cash flow, adjusted 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 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; 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 special items and other expense 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. 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 revenue, adjusted EBITDA, diluted adjusted earnings per share, adjusted free cash flow and statements regarding growth prospects, organic revenue growth, the projected impact of the referenced new business award and Mexican acquisition, industry production growth, projected currency translation, future financial results and the Company's future business outlook. 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 | ||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
|
(Amounts in thousands, except share and per share amounts - unaudited) | ||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, | |||||||
|
2015 |
2014 |
2015 |
2014 | |||||
|
Revenues |
$ 490,268 |
$ 548,467 |
$ 986,896 |
$ 1,067,730 | ||||
|
Cost of sales |
427,948 |
486,118 |
868,086 |
944,592 | ||||
|
Gross profit |
62,320 |
62,349 |
118,810 |
123,138 | ||||
|
Selling, general, and administrative expenses |
31,796 |
31,606 |
63,328 |
65,711 | ||||
|
Amortization expense |
- |
667 |
- |
1,324 | ||||
|
Restructuring and asset impairment charges, net |
5,493 |
4,716 |
6,524 |
6,105 | ||||
|
Operating income |
25,031 |
25,360 |
48,958 |
49,998 | ||||
|
Interest expense |
4,001 |
7,337 |
11,851 |
14,505 | ||||
|
Interest income |
101 |
133 |
226 |
265 | ||||
|
Other expense |
- |
- |
- |
87 | ||||
|
Income before provision for income taxes and equity in profit of |
21,131 |
18,156 |
37,333 |
35,671 | ||||
|
Provision for income taxes |
2,374 |
2,661 |
4,473 |
5,495 | ||||
|
Equity in loss of joint venture, net of tax |
(283) |
(222) |
(189) |
(381) | ||||
|
Income from continuing operations |
18,474 |
15,273 |
32,671 |
29,795 | ||||
|
Income from discontinued operations, net of tax |
665 |
1,677 |
589 |
2,433 | ||||
|
Net income |
19,139 |
16,950 |
33,260 |
32,228 | ||||
|
Less: Net income attributable to the noncontrolling interests |
493 |
854 |
573 |
1,277 | ||||
|
Net income attributable to Tower International, Inc. |
$ 18,646 |
$ 16,096 |
$ 32,687 |
$ 30,951 | ||||
|
Weighted average basic shares outstanding |
21,104,735 |
20,651,097 |
21,077,633 |
20,582,140 | ||||
|
Weighted average diluted shares outstanding |
21,403,354 |
21,373,867 |
21,382,041 |
21,318,515 | ||||
|
Basic income per share attributable to Tower International, Inc.: |
||||||||
|
Income per share from continuing operations |
$ 0.85 |
$ 0.70 |
$ 1.52 |
$ 1.39 | ||||
|
Income per share from discontinued operations |
0.03 |
0.08 |
0.03 |
0.11 | ||||
|
Income per share |
0.88 |
0.78 |
1.55 |
1.50 | ||||
|
Diluted income per share attributable to Tower International, Inc.: |
||||||||
|
Income per share from continuing operations |
$ 0.84 |
$ 0.67 |
$ 1.50 |
$ 1.34 | ||||
|
Income per share from discontinued operations |
0.03 |
0.08 |
0.03 |
0.11 | ||||
|
Income per share |
0.87 |
0.75 |
1.53 |
1.45 | ||||
|
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
|
(Amounts in thousands, except share data - unaudited) | ||||
|
June 30, |
December 31, | |||
|
2015 |
2014 | |||
|
ASSETS |
||||
|
Cash and cash equivalents |
$ 136,002 |
$ 148,561 | ||
|
Accounts receivable, net of allowance of $1,404 and $1,181 |
274,501 |
230,377 | ||
|
Inventories |
71,497 |
69,775 | ||
|
Deferred tax asset - current |
6,571 |
6,900 | ||
|
Assets held for sale |
128,579 |
141,295 | ||
|
Prepaid tooling, notes receivable, and other |
67,264 |
41,986 | ||
|
Total current assets |
684,414 |
638,894 | ||
|
Property, plant, and equipment, net |
426,342 |
451,126 | ||
|
Goodwill |
52,202 |
56,691 | ||
|
Investment in joint venture |
7,567 |
7,752 | ||
|
Deferred tax asset - non-current |
3,622 |
3,608 | ||
|
Other assets, net |
10,996 |
12,969 | ||
|
Total assets |
$ 1,185,143 |
$ 1,171,040 | ||
|
LIABILITIES AND EQUITY |
||||
|
Short-term debt and current maturities of capital lease obligations |
$ 36,415 |
$ 31,139 | ||
|
Accounts payable |
286,619 |
257,011 | ||
|
Accrued liabilities |
98,831 |
105,772 | ||
|
Liabilities held for sale |
56,854 |
67,707 | ||
|
Total current liabilities |
478,719 |
461,629 | ||
|
Long-term debt, net of current maturities |
416,767 |
445,303 | ||
|
Obligations under capital leases, net of current maturities |
6,633 |
7,740 | ||
|
Deferred tax liability - non-current |
12,087 |
12,972 | ||
|
Pension liability |
62,359 |
68,637 | ||
|
Other non-current liabilities |
89,801 |
74,981 | ||
|
Total non-current liabilities |
587,647 |
609,633 | ||
|
Total liabilities |
1,066,366 |
1,071,262 | ||
|
Commitments and contingencies |
||||
|
Stockholders' equity: |
||||
|
Tower International, Inc.'s stockholders' equity |
||||
|
Preferred stock, $0.01 par value, 50,000,000 authorized and 0 issued and |
- |
- | ||
|
Common stock, $0.01 par value, 350,000,000 authorized, 21,998,972 |
220 |
214 | ||
|
Additional paid in capital |
336,781 |
335,338 | ||
|
Treasury stock, at cost, 892,146 and 641,366 shares as of June 30, 2015 |
(16,065) |
(9,516) | ||
|
Accumulated deficit |
(203,277) |
(235,971) | ||
|
Accumulated other comprehensive loss |
(56,054) |
(46,914) | ||
|
Total Tower International, Inc.'s stockholders' equity |
61,605 |
43,151 | ||
|
Noncontrolling interests in subsidiaries * |
57,172 |
56,627 | ||
|
Total stockholders' equity |
118,777 |
99,778 | ||
|
Total liabilities and stockholders' equity |
$ 1,185,143 |
$ 1,171,040 | ||
|
* Balances include $47.4 million and $47.2 million minority interest attributable to discontinued operations, respectively. | ||||
|
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
|
(Amounts in thousands - unaudited) | ||||
|
Six Months Ended June 30, | ||||
|
2015 |
2014 | |||
|
OPERATING ACTIVITIES: |
||||
|
Net income |
$ 33,260 |
$ 32,228 | ||
|
Less: Income from discontinued operations, net of tax |
589 |
2,433 | ||
|
Income from continuing operations |
32,671 |
29,795 | ||
|
Adjustments required to reconcile income from continuing operations to net cash provided |
||||
|
Premium on notes redemption and other fees |
- |
87 | ||
|
Deferred income tax provision |
107 |
700 | ||
|
Depreciation and amortization |
39,644 |
45,598 | ||
|
Non-cash share-based compensation |
1,302 |
2,409 | ||
|
Pension income, net of contributions |
(6,228) |
(8,061) | ||
|
Change in working capital and other operating items |
(54,123) |
(51,242) | ||
|
Net cash provided by continuing operating activities |
$ 13,373 |
$ 19,286 | ||
|
INVESTING ACTIVITIES: |
||||
|
Cash disbursed for purchases of property, plant, and equipment, net |
$ (29,448) |
$ (28,201) | ||
|
Investment in joint venture |
- |
(760) | ||
|
Net cash used in continuing investing activities |
$ (29,448) |
$ (28,961) | ||
|
FINANCING ACTIVITIES: |
||||
|
Proceeds from borrowings |
$ 66,439 |
$ 70,376 | ||
|
Repayments of borrowings |
(62,862) |
(65,391) | ||
|
Borrowings/(Repayments) on Term Loan Credit Facility |
(25,000) |
33,145 | ||
|
Debt financing costs |
- |
(917) | ||
|
Proceeds from termination of cross currency swaps |
32,377 |
- | ||
|
Secondary stock offering transaction costs |
- |
(75) | ||
|
Proceeds from stock options exercised |
148 |
2,173 | ||
|
Purchase of treasury stock |
(6,549) |
(910) | ||
|
Noncontrolling interest dividends |
- |
(2,529) | ||
|
Net cash provided by continuing financing activities |
$ 4,553 |
$ 35,872 | ||
|
Discontinued operations: |
||||
|
Net cash from discontinued operating activities |
$ 8,669 |
$ 3,467 | ||
|
Net cash from discontinued investing activities |
(1,587) |
7,756 | ||
|
Net cash from discontinued financing activities |
(5,620) |
(2,319) | ||
|
Net cash from discontinued operations |
$ 1,462 |
$ 8,904 | ||
|
Effect of exchange rate changes on continuing cash and cash equivalents |
$ (2,499) |
$ (762) | ||
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
$ (12,559) |
$ 34,339 | ||
|
CASH AND CASH EQUIVALENTS: |
||||
|
Beginning of period |
$ 148,561 |
$ 134,880 | ||
|
End of period |
$ 136,002 |
$ 169,219 | ||
|
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||
|
SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS | ||||||||
|
(Amounts in thousands - unaudited) | ||||||||
|
Segment Data |
Three Months Ended June 30, | |||||||
|
2015 |
2014 | |||||||
|
Revenues |
Adjusted EBITDA |
Revenues |
Adjusted EBITDA | |||||
|
International |
$ 186,931 |
$ 16,356 |
$ 228,787 |
$ 18,513 | ||||
|
Americas |
303,337 |
36,916 |
319,680 |
36,637 | ||||
|
Consolidated |
$ 490,267 |
$ 53,272 |
$ 548,467 |
$ 55,150 | ||||
|
Six Months Ended June 30, | ||||||||
|
2015 |
2014 | |||||||
|
Revenues |
Adjusted EBITDA |
Revenues |
Adjusted EBITDA | |||||
|
International |
$ 376,754 |
$ 30,500 |
$ 449,552 |
$ 37,080 | ||||
|
Americas |
610,142 |
70,843 |
618,178 |
69,694 | ||||
|
Consolidated |
$ 986,896 |
$ 101,343 |
$ 1,067,730 |
$ 106,774 | ||||
|
Adjusted EBITDA Reconciliation |
Three Months Ended June 30, |
Six Months Ended June 30, | ||||||
|
2015 |
2014 |
2015 |
2014 | |||||
|
Adjusted EBITDA |
$ 53,272 |
$ 55,150 |
$ 101,343 |
$ 106,774 | ||||
|
Restructuring and asset impairment charges, net |
(5,493) |
(4,716) |
(6,524) |
(6,105) | ||||
|
Depreciation and amortization |
(19,736) |
(22,745) |
(39,644) |
(45,598) | ||||
|
Acquisition costs and other |
(128) |
(103) |
(218) |
(210) | ||||
|
Long-term compensation expense |
(2,884) |
(2,226) |
(5,999) |
(4,863) | ||||
|
Interest expense, net |
(3,900) |
(7,204) |
(11,625) |
(14,240) | ||||
|
Other expense |
- |
- |
- |
(87) | ||||
|
Provision for income taxes |
(2,374) |
(2,661) |
(4,473) |
(5,495) | ||||
|
Equity in loss of joint venture, net of tax |
(283) |
(222) |
(189) |
(381) | ||||
|
Income from discontinued operations, net of tax |
665 |
1,677 |
589 |
2,433 | ||||
|
Net income attributable to noncontrolling interests |
(493) |
(854) |
(573) |
(1,277) | ||||
|
Net income attributable to Tower International, Inc. |
$ 18,646 |
$ 16,096 |
$ 32,687 |
$ 30,951 | ||||
|
Adjusted Free Cash Flow Reconciliation |
Three Months Ended June 30, |
Six Months Ended June 30, | ||||||
|
2015 |
2014 |
2015 |
2014 | |||||
|
Net cash provided by continuing operating activities |
$ 20,167 |
$ 4,093 |
$ 13,373 |
$ 19,286 | ||||
|
Cash disbursed for purchases of PP&E |
(19,886) |
(19,538) |
(29,448) |
(28,201) | ||||
|
Free cash flow |
281 |
(15,445) |
(16,075) |
(8,915) | ||||
|
Less: Cash disbursed for customer-owned tooling |
(14,033) |
(7,749) |
(24,147) |
(16,149) | ||||
|
Adjusted free cash flow |
$ 14,314 |
$ (7,696) |
$ 8,072 |
$ 7,234 | ||||
|
Net Debt Reconciliation |
June 30, |
December 31, | ||||||
|
2015 |
2014 | |||||||
|
Short-term debt and current maturities of capital lease obligations |
$ 36,415 |
$ 31,139 | ||||||
|
Long-term debt, net of current maturities |
426,968 |
457,179 | ||||||
|
Debt issue costs |
(10,201) |
(11,876) | ||||||
|
Obligations under capital leases, net of current maturities |
6,633 |
7,740 | ||||||
|
Total debt |
459,815 |
484,182 | ||||||
|
Less: Cash and cash equivalents |
(136,002) |
(148,561) | ||||||
|
Add: Cash attributable to discontinued operations |
17,556 |
16,025 | ||||||
|
Net debt |
$ 341,369 |
$ 351,646 | ||||||
|
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||
|
CERTAIN ITEMS INCLUDED IN NET INCOME | ||||||||
|
(Amounts in thousands, except per share amounts - unaudited) | ||||||||
|
Three Months Ended |
Six Months Ended | |||||||
|
June 30, |
June 30, | |||||||
|
2015 |
2014 |
2015 |
2014 | |||||
|
Income / (expense) items included in net income, net of tax: |
||||||||
|
Selling, general, and administrative expenses |
||||||||
|
One-time CEO compensation awards |
(933) |
- |
(1,866) |
- | ||||
|
Restructuring and asset impairment charges, net |
||||||||
|
Restructuring actions* |
(211) |
(440) |
(377) |
(806) | ||||
|
Change in estimated future rent for a closed facility |
(4,760) |
- |
(4,760) |
- | ||||
|
Lease buyout of previously closed facility |
- |
(3,448) |
(3,448) | |||||
|
Interest expense |
||||||||
|
Mark-to-market gain/ (loss) on derivative financial instruments |
1,630 |
- |
(274) |
- | ||||
|
Acceleration of the amortization of debt issue costs and OID |
- |
- |
(440) |
- | ||||
|
Other expense |
- |
- | ||||||
|
Term Loan re-pricing fees |
- |
- |
- |
(87) | ||||
|
Discontinued operations |
||||||||
|
Income / (loss) from discontinued operations |
665 |
1,677 |
589 |
2,433 | ||||
|
Noncontrolling interests |
||||||||
|
Net income attributable to noncontrolling interests** |
(290) |
(576) |
(281) |
(776) | ||||
|
Total items included in net income, net of tax |
$ (3,899) |
$ (2,787) |
$ (7,409) |
$ (2,684) | ||||
|
Net income attributable to Tower International, Inc. |
$ 18,646 |
$ 16,096 |
$ 32,687 |
$ 30,951 | ||||
|
Memo: Average shares outstanding (in thousands) |
||||||||
|
Basic |
21,105 |
20,651 |
21,078 |
20,582 | ||||
|
Diluted |
21,403 |
21,374 |
21,382 |
21,319 | ||||
|
Income / (loss) per common share (GAAP) |
||||||||
|
Basic |
$ 0.88 |
$ 0.78 |
$ 1.55 |
$ 1.50 | ||||
|
Diluted |
0.87 |
0.75 |
1.53 |
1.45 | ||||
|
Diluted adjusted earnings per share (non-GAAP) *** |
1.05 |
0.88 |
1.88 |
1.58 | ||||
|
* Amount is net of tax of $0k , $29k, $31k , and $86k, respectively | ||||||||
|
** Amounts attributible to noncontrolling interests of discontinued operations | ||||||||
|
*** Excludes the certain items shown above. | ||||||||
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tower-international-reports-solid-second-quarter-results-and-further-bolsters-growth-outlook-in-north-america-300121000.html
SOURCE Tower International, Inc.
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