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22.07.2013 13:15:00
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Tower International Reports Strong Second Quarter Results and Increases Earnings Outlook for Full Year
LIVONIA, Mich., July 22, 2013 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced second quarter 2013 results and updated its outlook for the full year.
- Revenue for the second quarter was $556 million, compared with $555 million in the second quarter 2012.
- Adjusted EBITDA for the quarter was $62.2 million, compared with $62.4 million a year ago. Volume and mix was net unfavorable, as business wins were more than offset by the previously announced discontinued customer vehicle in China, less-favorable mix, and capacity-related fixed costs. Favorable net cost performance offset the unfavorable volume and mix.
- Adjusted EBITDA margin was 11.2%, unchanged from a year ago.
- Net loss of $45.1 million in the second quarter 2013 compared with net income of $7.7 million a year ago. As detailed below, this year's second quarter included certain items that adversely impacted results by $66.6 million. Excluding these items and comparable items in the second quarter of 2012, diluted adjusted earnings were $1.03 per share, up 29% from 80 cents per share a year ago.
- For the full year, Tower is increasing its outlook for diluted adjusted earnings per share by 25 cents or 15% (to $1.90 per share). Revenue is projected at $2.115 billion, $10 million lower than prior outlook because of exchange-rate translation. The outlook for Adjusted EBITDA is increased to the upper end of the prior range (now $210 million), and projected free cash flow is increased to a range of $25-$30 million.
Tower to Host Conference Call Today at 4 p.m. EDT
Tower will discuss its second quarter 2013 results and other related matters in a conference call at 4 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. #22365938. 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 earnings 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 and less certain restricted cash that will be used to pay down the remainder of certain of our senior secured bonds in August 2013. Diluted adjusted earnings per share exclude the impact of certain items as described in the reconciliations provided in this press release 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 and diluted adjusted earnings per share and statements regarding 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;
- 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;
- 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@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 June 30, | Six Months Ended June 30, | |||||||
2013 | 2012 | 2013 | 2012 | |||||
Revenues | $ 555,878 | $ 554,952 | $ 1,090,018 | $ 1,084,643 | ||||
Cost of sales | 486,411 | 484,489 | 962,491 | 957,683 | ||||
Gross profit | 69,467 | 70,463 | 127,527 | 126,960 | ||||
Selling, general, and administrative expenses | 33,575 | 32,546 | 66,945 | 68,997 | ||||
Amortization expense | 656 | 1,142 | 1,488 | 2,319 | ||||
Restructuring and asset impairment charges, net | 14,651 | 2,833 | 17,331 | 4,767 | ||||
Operating income | 20,585 | 33,942 | 41,763 | 50,877 | ||||
Interest expense | 21,537 | 13,955 | 34,965 | 27,719 | ||||
Interest income | 341 | 179 | 615 | 473 | ||||
Other expense | 40,928 | - | 40,928 | - | ||||
Income / (loss) before provision for income taxes and equity in loss of joint ventures | (41,539) | 20,166 | (33,515) | 23,631 | ||||
Provision for income taxes | 3,644 | 12,524 | 7,134 | 14,666 | ||||
Equity in loss of joint ventures, net of tax | (165) | - | (165) | - | ||||
Income / (loss) from continuing operations | (45,348) | 7,642 | (40,814) | 8,965 | ||||
Income from discontinued operations, net of tax | - | 1,616 | - | 2,353 | ||||
Net income / (loss) | (45,348) | 9,258 | (40,814) | 11,318 | ||||
Less: Net income / (loss) attributable to the noncontrolling interests | (237) | 1,600 | 1,749 | 3,034 | ||||
Net income / (loss) attributable to Tower International, Inc. | $ (45,111) | $ 7,658 | $ (42,563) | $ 8,284 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 20,362,672 | 20,134,096 | 20,312,245 | 19,912,888 | ||||
Diluted | 20,362,672 | 20,328,764 | 20,312,245 | 20,494,535 | ||||
Basic income / (loss) per share attributable to Tower International, Inc.: | ||||||||
Income / (loss) per share from continuing operations | $ (2.22) | $ 0.30 | $ (2.10) | $ 0.30 | ||||
Income per share from discontinued operations | - | 0.08 | - | 0.12 | ||||
Income / (loss) per share | (2.22) | 0.38 | (2.10) | 0.42 | ||||
Diluted income / (loss) per share attributable to Tower International, Inc.: | ||||||||
Income / (loss) per share from continuing operations | $ (2.22) | $ 0.30 | $ (2.10) | $ 0.29 | ||||
Income per share from discontinued operations | - | 0.08 | - | 0.11 | ||||
Income / (loss) per share | (2.22) | 0.38 | (2.10) | 0.40 | ||||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(Amounts in thousands, except share data - unaudited) | ||||
June 30, 2013 | December 31, 2012 | |||
ASSETS | ||||
Cash and cash equivalents | $ 118,182 | $ 113,943 | ||
Restricted cash | 45,150 | - | ||
Accounts receivable, net of allowance of $2,158 and $4,105 | 332,387 | 266,138 | ||
Inventories | 80,511 | 81,336 | ||
Deferred tax asset - current | 8,042 | 10,447 | ||
Prepaid tooling, notes receivable, and other | 85,221 | 96,349 | ||
Total current assets | 669,493 | 568,213 | ||
Property, plant, and equipment, net | 522,600 | 573,148 | ||
Goodwill | 63,684 | 64,793 | ||
Deferred tax asset - non-current | 3,168 | 3,149 | ||
Other assets, net | 40,281 | 28,819 | ||
Total assets | $ 1,299,226 | $ 1,238,122 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Short-term debt and current maturities of capital lease obligations | $ 74,486 | $ 74,605 | ||
Accounts payable | 311,882 | 264,897 | ||
Accrued liabilities | 116,548 | 134,664 | ||
Total current liabilities | 502,916 | 474,166 | ||
Long-term debt, net of current maturities | 518,065 | 411,590 | ||
Obligations under capital leases, net of current maturities | 10,055 | 10,783 | ||
Deferred tax liability - non-current | 10,778 | 13,021 | ||
Pension liability | 93,341 | 100,780 | ||
Other non-current liabilities | 83,937 | 86,908 | ||
Total non-current liabilities | 716,176 | 623,082 | ||
Total liabilities | 1,219,092 | 1,097,248 | ||
Stockholders' Equity: | ||||
Tower International, Inc.'s stockholders' equity | ||||
Common stock, $0.01 par value, 350,000,000 authorized, 21,021,912 issued and 20,415,837 outstanding at June 30, 2013 and 20,830,425 issued and 20,247,134 outstanding at December 31, 2012 | 210 | 208 | ||
Additional paid in capital | 324,951 | 321,032 | ||
Treasury stock, at cost, 606,075 shares as of June 30, 2013 and 583,291 shares as of December 31, 2012 | (8,587) | (8,297) | ||
Accumulated deficit | (279,775) | (237,212) | ||
Accumulated other comprehensive loss | (20,152) | (12,484) | ||
Total Tower International, Inc.'s stockholders' equity | 16,647 | 63,247 | ||
Noncontrolling interests in subsidiaries | 63,487 | 77,627 | ||
Total stockholders' equity | 80,134 | 140,874 | ||
Total liabilities and stockholders' equity | $ 1,299,226 | $ 1,238,122 | ||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(Amounts in thousands - unaudited) | |||
Six Months Ended June 30, | |||
2013 | 2012 | ||
OPERATING ACTIVITIES: | |||
Net income / (loss) | $ (40,814) | $ 11,318 | |
Less: Income from discontinued operations, net of tax | - | 2,353 | |
Income / (loss) from continuing operations | (40,814) | 8,965 | |
Adjustments required to reconcile income / (loss) from continuing operations to net cash provided by operating activities: | |||
Non-cash restructuring and asset impairments, net | 11,006 | - | |
Premium paid on notes redemption and other fees | 40,928 | - | |
Deferred income tax provision | 103 | 10,326 | |
Depreciation and amortization | 48,637 | 44,715 | |
Non-cash share-based compensation | 2,413 | 7,357 | |
Pension expense, net of contributions | (7,438) | (7,030) | |
Change in working capital and other operating items | (43,033) | (34,387) | |
Net cash provided by continuing operating activities | $ 11,802 | $ 29,946 | |
INVESTING ACTIVITIES: | |||
Cash disbursed for purchases of property, plant, and equipment, net | $ (30,192) | $ (60,589) | |
Deconsolidation of joint venture | (6,293) | - | |
Net proceeds from sale of property, plant, and equipment | 9,100 | - | |
Net cash used in continuing investing activities | $ (27,385) | $ (60,589) | |
FINANCING ACTIVITIES: | |||
Purchase of treasury stock | $ (290) | $ (3,165) | |
Proceeds from borrowings | 329,013 | 337,153 | |
Repayments of borrowings | (325,748) | (300,600) | |
Proceeds from borrowings on Term Loan Credit Facility | 417,900 | - | |
Partial redemption of notes | (318,992) | - | |
Premium paid on partial redemption of notes | (40,928) | - | |
Cash restricted for notes repurchase | (45,150) | - | |
Debt financing costs | (8,437) | - | |
Proceeds from stock options exercised | 1,506 | - | |
Noncontrolling interest dividends | (4,477) | - | |
Net cash provided by continuing financing activities | $ 4,397 | $ 33,388 | |
Discontinued operations: | |||
Net cash from discontinued operating activities | $ - | $ (7,829) | |
Net cash from discontinued investing activities | 15,694 | (14,952) | |
Net cash from discontinued financing activities | - | 7,893 | |
Net cash from discontinued operations | $ 15,694 | $ (14,888) | |
Effect of exchange rate changes on continuing cash and cash equivalents | $ (269) | $ 595 | |
NET CHANGE IN CASH AND CASH EQUIVALENTS | $ 4,239 | $ (11,548) | |
CASH AND CASH EQUIVALENTS: | |||
Beginning of period | $ 113,943 | $ 134,984 | |
End of period | $ 118,182 | $ 123,436 | |
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||
SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS | ||||||||
(Amounts in thousands - unaudited) | ||||||||
Segment Data | Three Months Ended June 30, | |||||||
2013 | 2012 | |||||||
Revenues | Adjusted EBITDA | Revenues | Adjusted EBITDA | |||||
International | $ 242,584 | $ 21,965 | $ 251,509 | $ 25,102 | ||||
Americas | 313,294 | 40,250 | 303,443 | 37,319 | ||||
Consolidated | $ 555,878 | $ 62,215 | $ 554,952 | $ 62,421 | ||||
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Revenues | Adjusted EBITDA | Revenues | Adjusted EBITDA | |||||
International | $ 487,353 | $ 43,996 | $ 500,169 | $ 45,685 | ||||
Americas | 602,665 | 70,285 | 584,474 | 63,021 | ||||
Consolidated | $ 1,090,018 | $ 114,281 | $ 1,084,643 | $ 108,706 | ||||
Adjusted EBITDA reconciliation | Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2013 | 2012 | 2013 | 2012 | |||||
Adjusted EBITDA | $ 62,215 | $ 62,421 | $ 114,281 | $ 108,706 | ||||
Restructuring and asset impairment charges, net | (14,651) | (2,833) | (17,331) | (4,767) | ||||
Depreciation and amortization | (23,465) | (22,404) | (48,637) | (44,715) | ||||
Acquisition costs and other | (495) | (119) | (569) | (186) | ||||
Long-term compensation expense | (1,784) | (3,123) | (3,146) | (8,161) | ||||
Interest expense, net | (21,196) | (13,776) | (34,350) | (27,246) | ||||
Other expense | (40,928) | - | (40,928) | - | ||||
Closure of Tower Defense & Aerospace | (1,235) | - | (2,835) | - | ||||
Provision for income taxes | (3,644) | (12,524) | (7,134) | (14,666) | ||||
Equity in earnings of joint ventures | (165) | - | (165) | - | ||||
Income from discontinued operation | - | 1,616 | - | 2,353 | ||||
Net (income) / loss attributable to noncontrolling interests | 237 | (1,600) | (1,749) | (3,034) | ||||
Net income / (loss) attributable to Tower International, Inc. | $ (45,111) | $ 7,658 | $ (42,563) | $ 8,284 | ||||
Free cash flow reconciliation | Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2013 | 2012 | 2013 | 2012 | |||||
Net cash provided by continuing operating activities | $ 10,508 | $ 15,882 | $ 11,802 | $ 29,946 | ||||
Cash disbursed for purchases of PP&E, net | (15,605) | (31,885) | (30,192) | (60,589) | ||||
Free cash flow | $ (5,097) | $ (16,003) | $ (18,390) | $ (30,643) | ||||
Net debt reconciliation | June 30, | December 31, | ||||||
2013 | 2012 | |||||||
Short-term debt and current maturities of capital lease obligations | $ 74,486 | $ 74,605 | ||||||
Long-term debt, net of current maturities | 518,065 | 411,590 | ||||||
Obligations under capital leases, net of current maturities | 10,055 | 10,783 | ||||||
Total debt | 602,606 | 496,978 | ||||||
Less: cash and cash equivalents | (118,182) | (113,943) | ||||||
Less: restricted cash excluding premium for redemption of Senior Secured notes | (43,000) | - | ||||||
Net debt | $ 441,424 | $ 383,035 | ||||||
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, | |||||||
2013 | 2012 | 2013 | 2012 | |||||
Expense items included in net income, net of tax: | ||||||||
Cost of sales | ||||||||
Closure of Tower Defense & Aerospace | $ (1,784) | $ - | $ (4,414) | $ - | ||||
Selling, general and administrative expenses | ||||||||
Incentive compensation related to funding events | - | (2,099) | - | (6,128) | ||||
Acquisition costs and other | (327) | - | (327) | - | ||||
Restructuring expense | ||||||||
One-time restructuring actions | (270) | (488) | (600) | (1,203) | ||||
Plant relocation | - | (1,188) | - | (1,188) | ||||
Facility closure | (3,348) | - | (3,575) | - | ||||
Asset impairment charges | (9,750) | (10,705) | ||||||
Interest expense | ||||||||
Acceleration of the amortization of debt issue costs and OID | (10,147) | - | (10,147) | - | ||||
Other expense | ||||||||
Partial redemption of senior secured notes | (40,320) | - | (40,320) | - | ||||
Breakage of Letter of Credit Facility | (608) | - | (608) | - | ||||
Provision for income taxes | ||||||||
Valuation allowance in Brazil | - | (6,494) | - | (6,494) | ||||
Discontinued operations | ||||||||
Income from discontinued operations | - | 1,616 | - | 2,353 | ||||
Total items included in net income | $ (66,553) | $ (8,653) | $ (70,695) | $ (12,660) | ||||
Net income / (loss) attributable to Tower International, Inc. | $ (45,111) | $ 7,658 | $ (42,563) | $ 8,284 | ||||
Memo: Average shares outstanding (in thousands) | ||||||||
Basic | 20,363 | 20,134 | 20,312 | 19,913 | ||||
Diluted | 20,363 | 20,329 | 20,312 | 20,495 | ||||
Income / (loss) per common share (GAAP) | ||||||||
Basic | $ (2.22) | $ 0.38 | $ (2.10) | $ 0.42 | ||||
Diluted | (2.22) | 0.38 | (2.10) | 0.40 | ||||
Diluted adjusted income per share (non-GAAP)* | 1.03 | 0.80 | 1.36 | 1.02 | ||||
* Excludes the certain items shown above. For the three months ended June 30, 2013 and six months ended June 30, 2013, diluted share count of 20.9 million and 20.8 million, respectively, were used to calculate diluted adjusted income per share. | ||||||||
SOURCE Tower International, Inc.
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