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Tower International, Inc. (TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies for the automotive and other industries, today announced its third quarter 2012 results and re-affirmed its outlook for the full year.
Revenue for third quarter 2012 was $564 million, down $25 million or 4 percent from third quarter 2011, reflecting adverse foreign currency translation.
Adjusted EBITDA for the quarter was $44.2 million, down $4.6 million from a year ago, more than explained by unfavorable volume and mix and currency translation in Europe. Favorable net cost performance was a partial offset.
Net loss of $4.8 million for the third quarter 2012 was equal to a year ago. As detailed in the financial table below, this year’s third quarter included certain items that adversely impacted results by $1.2 million. Excluding these items and comparable items in the third quarter of 2011, adjusted loss was $0.18 per share, compared with diluted adjusted earnings per share of $0.03 a year ago.
The present outlook for the full year includes revenue of $2.4 billion, Adjusted EBITDA of $215 million, and diluted adjusted earnings per share of $0.95.
"Despite increased regional volatility and select cutbacks in customer production schedules, we are re-affirming prior mid-point earnings guidance for the full year," said President and CEO Mark Malcolm. "Tower remains focused on what we can execute and influence."
Tower to Host Conference Call Today at 1 p.m. EDT
Tower will discuss its third quarter 2012 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 1-866-393-4576, international callers should dial 1-706-679-1462. An audio recording of the call will be available approximately two hours after the completion of the call. To access this recording, please dial 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and reference Conference I.D. #53233453. 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", "free cash flow," "net debt," and "diluted adjusted income / (loss) per share." 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. Free cash flow is defined as net cash provided by or used in operating activities less cash disbursed for purchases of property, plant and equipment. Net debt is defined as total debt less cash and cash equivalents. Diluted adjusted income / (loss) per share excludes the impact of certain items as described below that are included in our net income / (loss). We use Adjusted EBITDA 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. We believe these items as well as the non-GAAP financial measures of net debt and diluted adjusted income / (loss) per share are useful to investors as they provide an additional tool for investors to use in evaluating operating results and trends, and in comparing our financial results with other companies. 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 are not measures of performance under GAAP and 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. In addition, 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, free cash flow, earnings, financial results and its future sales growth 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:
automobile production volumes;
the financial condition of our customers and suppliers;
our ability to make scheduled payments on our indebtedness and comply with the covenants and restrictions contained in the instruments governing our indebtedness;
our ability to refinance our indebtedness;
our ability to generate non-automotive revenues;
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; 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@towerautomotive.com
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share amounts - unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
Revenues $ 563,849 $ 588,991 $ 1,825,269 $ 1,791,344
Cost of sales 511,577 529,335 1,637,682 1,603,419
Gross profit 52,272 59,656 187,587 187,925
Selling, general and administrative expenses 33,962 42,106 106,153 119,193
Amortization expense 1,120 1,244 3,439 3,398
Restructuring and asset impairment charges, net 3,186 494 7,953 2,146
Operating income 14,004 15,812 70,042 63,188
Interest expense 15,372 17,021 46,890 45,600
Interest income 397 340 957 779
Other expense - 350 - 1,200
Income / (loss) before provision for income taxes (971) (1,219) 24,109 17,167
Provision for income taxes 2,240 2,547 17,570 11,730
Net income / (loss) (3,211) (3,766) 6,539 5,437
Less: Net income attributable to the noncontrolling interests 1,593 1,082 4,627 4,037
Net income / (loss) attributable to Tower International, Inc. $ (4,804) $ (4,848) $ 1,912 $ 1,400
Weighted average common shares outstanding
Basic 20,246,797 19,562,951 20,098,355 19,257,066
Diluted 20,246,797 19,562,951 20,533,788 20,012,418
Net income / (loss) per share attributable to Tower International, Inc.:
Basic $ (0.24) $ (0.25) $ 0.10 $ 0.07
Diluted (0.24) (0.25) 0.09 0.07
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data - unaudited)
September 30, 2012 December 31, 2011
ASSETS
Cash and cash equivalents $ 118,970 $ 134,984
Accounts receivable, net of allowance of $4,265 and $3,612 345,525 327,992
Inventories 104,548 85,100
Deferred tax asset - current 7,680 12,966
Assets held for sale 4,197 4,027
Prepaid tooling and other 76,593 56,189
Total current assets 657,513 621,258
Property, plant and equipment, net 699,327 667,686
Goodwill 63,251 63,983
Deferred tax asset - non-current 11,532 14,450
Other assets, net 28,887 30,001
Total assets $ 1,460,510 $ 1,397,378
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt and current maturities of capital lease obligations $ 158,438 $ 109,447
Accounts payable 371,664 395,287
Accrued liabilities 132,313 126,416
Total current liabilities 662,415 631,150
Long-term debt, net of current maturities 482,131 461,838
Obligations under capital leases, net of current maturities 10,794 12,213
Deferred tax liability - non-current 14,292 11,229
Pension liability 80,304 96,223
Other non-current liabilities 90,186 87,265
Total non-current liabilities 677,707 668,768
Total liabilities 1,340,122 1,299,918
Stockholders’ Equity:
Tower International, Inc.’s stockholders’ equity
Common stock, $0.01 par value, 350,000,000 authorized, 20,830,425 issued and 20,247,134 outstanding at September 30, 2012, and 19,983,403 issued and 19,683,032 outstanding at December 31, 2011 208 200
Additional paid in capital 319,904 311,427
Treasury stock, at cost, 583,291 shares as of September 30, 2012 and 300,371 shares as of December 31, 2011 (8,297) (5,130)
Accumulated deficit (182,580) (184,492)
Accumulated other comprehensive loss (83,148) (82,002)
Total Tower International, Inc.’s stockholders’ equity 46,087 40,003
Noncontrolling interests in subsidiaries 74,301 57,457
Total stockholders’ equity 120,388 97,460
Total liabilities and stockholders’ equity $ 1,460,510 $ 1,397,378
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)
Nine Months Ended September 30,
2012 2011
OPERATING ACTIVITIES:
Net income $ 6,539 $ 5,437
Adjustments required to reconcile net income to net cash provided by operating activities:
Deferred income tax provision 12,590 (869)
Depreciation and amortization 78,344 89,515
Non-cash share-based compensation 8,485 11,300
Pension expense, net of contributions (13,552) (10,788)
Change in working capital and other operating items (66,565) (93,623)
Net cash provided by operating activities $ 25,841 $ 972
INVESTING ACTIVITIES:
Cash disbursed for purchases of property, plant and equipment, net $ (106,581) $ (82,925)
Net assets acquired, net of cash acquired - (22,300)
Net cash used in investing activities $ (106,581) $ (105,225)
FINANCING ACTIVITIES:
Retirement of senior secured notes $ - (34,508)
Purchase of treasury stock (3,167) (5,130)
Proceeds from borrowings 494,644 504,049
Repayments of borrowings (428,834) (414,749)
Net cash provided by financing activities $ 62,643 $ 49,662
Effect of exchange rate changes on cash and cash equivalents $ 2,083 $ 946
NET CHANGE IN CASH AND CASH EQUIVALENTS $ (16,014) $ (53,645)
CASH AND CASH EQUIVALENTS:
Beginning of period $ 134,984 $ 150,345
End of period $ 118,970 $ 96,700
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(Amounts in thousands - unaudited)
Segment Data Three Months Ended
September 30,
2012 2011
Revenues Adjusted EBITDA Revenues Adjusted EBITDA
International $ 281,570 $ 17,577 $ 319,298 $ 23,662
Americas 282,279 26,633 269,693 25,219
Consolidated $ 563,849 $ 44,210 $ 588,991 $ 48,881
Nine Months Ended
September 30,
2012 2011
Revenues Adjusted EBITDA Revenues Adjusted EBITDA
International $ 958,516 $ 73,730 $ 992,582 $ 86,935
Americas 866,753 89,154 798,762 83,207
Consolidated $ 1,825,269 $ 162,884 $1,791,344 $ 170,142
Adjusted EBITDA reconciliation Three Months Ended Nine Months Ended Last Twelve Months Ended
September 30, September 30, September 30,
2012 2011 2012 2011 2012 2011
Adjusted EBITDA $ 44,210 $ 48,881 $ 162,884 $ 170,142 $ 220,355 $ 218,872
Restructuring (3,186) (494) (7,953) (2,146) (8,467) (11,427)
Depreciation and amortization (26,919) (27,807) (78,344) (89,515) (103,407) (117,942)
Acquisition costs and other (101) (75) (274) (1,444) (383) (1,557)
Expense related to the compensation programs - (4,693) (6,271) (13,849) (10,773) (18,865)
Interest expense, net (14,975) (16,681) (45,933) (44,821) (62,267) (63,166)
Other expense - (350) - (1,200) (131) (2,500)
Provision for income taxes (2,240) (2,547) (17,570) (11,730) (20,652) (17,402)
Net income attributable to noncontrolling interests (1,593) (1,082) (4,627) (4,037) (5,699) (5,935)
Net income / (loss) attributable to Tower $ (4,804) $ (4,848) $ 1,912 $ 1,400 $ 8,576 $ (19,922)
International, Inc.
Free cash flow reconciliation Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Net cash provided by operating activities $ 3,724 $ (5,896) $ 25,841 $ 972
Cash disbursed for purchases of PP&E, net (31,040) (30,366) (106,581) (82,925)
Free cash flow $ (27,316) $ (36,262) $ (80,740) $ (81,953)
Net debt reconciliation September December
30, 31,
2012 2011
Short-term debt and current maturities of capital lease obligations $ 158,438 $ 109,447
Long-term debt, net of current maturities 482,131 461,838
Obligations under capital leases, net of current maturities 10,794 12,213
Total debt 651,363 583,498
Less: cash and cash equivalents (118,970) (134,984)
Net debt $ 532,393 $ 448,514
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CERTAIN ITEMS INCLUDED IN NET INCOME / (LOSS)
(Amounts in thousands, except per share amounts - unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Income / (expense) items included in net income / (loss), net of tax:
Selling, general and administrative expenses
Incentive compensation related to funding events $ - $ (4,349) $ (6,128) $ (13,172)
Acquisition costs - - - (1,100)
Interest expense
Acceleration of the amortization of debt issue costs and OID - (705) - (1,458)
Settlement of value added tax audit in Brazil - - - 2,838
Restructuring expense
Severance costs in Europe - - (1,203) -
Plant relocation costs (1,683) - (2,871) -
Asset impairments (575) - (575) -
Adjustment of lease liability - - - 754
Other income
Retirement of senior secured notes - (350) - (1,200)
Provision for income taxes
German tax audit 1,087 - 1,087 -
Valuation allowance in Brazil - - (6,494) -
Tax law and tax election changes - - - 1,406
Total items included in net income / (loss) $ (1,171) $ (5,404) $ (16,184) $ (11,932)
Net income / (loss) attributable to Tower International, Inc. $ (4,804) $ (4,848) $ 1,912 $ 1,400
Memo: Average shares outstanding (in thousands)
Basic 20,247 19,563 20,098 19,257
Diluted 20,247 19,563 20,534 20,012
Income / (loss) per common share (GAAP)
Basic $ (0.24) $ (0.25) $ 0.10 $ 0.07
Diluted (0.24) (0.25) 0.09 0.07
Diluted adjusted income / (loss) per share (non-GAAP)* (0.18) 0.03 0.88 0.67
* Excludes the certain items shown above
SOURCE Tower International, Inc.
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