Tower International Reports Solid Fourth Quarter Results And Positive Outlook for 2014 and 2015 - WDRB 41 Louisville News

Tower International Reports Solid Fourth Quarter Results And Positive Outlook for 2014 and 2015

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SOURCE Tower International, Inc.

LIVONIA, Mich., Feb. 13, 2014 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced fourth quarter 2013 results and provided preliminary outlooks for 2014 and 2015.

  • Revenue for the fourth quarter was $517 million, up 2 percent from $508 million in the fourth quarter 2012.
  • Adjusted EBITDA for the quarter was $49.6 million, up 11 percent from $44.5 million a year ago.  The improvement primarily reflected favorable net cost performance. 
  • Net income of $19.0 million in the fourth quarter 2013 compared with net income of $13.7 million a year ago.  As detailed below, this year's fourth quarter included certain items, primarily a tax adjustment, that favorably impacted results by $9.4 million.  Excluding these items and comparable items in the fourth quarter of 2012, diluted adjusted earnings were $0.45 per share, up significantly from $0.05 per share a year ago. 
  • For full year 2013, revenue was up 1% (at $2.1 billion), adjusted EBITDA was up 7% (to $212.3 million), adjusted EBITDA margin was up 60 basis points (to 10.1%), and diluted adjusted earnings per share were up 111% (to $2.28).
  • Adjusted free cash flow was positive $23 million in the quarter and $35 million for the full year, exceeding our prior outlook by $5-$10 million.
  • Net debt leverage at year-end declined to 1.7 times adjusted EBITDA.
  • Pension net liability under GAAP declined by $46 million during 2013, to $55 million.
  • Liquidity at year-end 2013 was a record $315 million, up from $207 million at year-end 2012.  An additional $33 million of liquidity was added on January 31 when the company increased the size of its U.S. term loan (which matures in 2020), concurrent with a re-pricing that reduced the interest rate by 75 basis points (to 4.00% at present conditions); the net reduction in ongoing annual interest expense will be $1.8 million.
  • For 2014, the preliminary outlook includes improvements from 2013 in revenue (to about $2,150 million) and diluted adjusted earnings per share (to a range of $2.70-$2.90).  The range outlook for adjusted EBITDA is $210-$215 million, which includes higher launch-related cost of about $10 million.  About half of the increased launch cost is expected to come from two new sources of profitable growth that are anticipated to add about $80 million of revenue in 2015.  This new business includes a major new award in North America and a pending supply agreement that would result in Tower's first production in Mexico.  Adjusted free cash flow is projected to be about $15 million in 2014, which represents $50 million of "ongoing" cash flow, net of deploying $35 million for the opportunistic growth investments.
  • For 2015, the preliminary revenue outlook increases to approximately $2.3 billion and adjusted EBITDA increases to approximately $235 million.  Adjusted free cash flow is presently projected at $70 million in 2015.

"Tower delivered on several promised break-throughs in financial results in 2013, including double-digit adjusted EBITDA margin, adjusted earnings per share more than doubled, significant positive free cash flow, and significant improvements in leverage and liquidity," said President and CEO Mark Malcolm.  "We expect 2014 to be a follow-through year, further building financial strength and momentum, and setting the stage for a higher growth trajectory for Tower in 2015 and beyond."

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

Tower will discuss its fourth quarter 2014 results, preliminary outlooks for 2014 and 2015, and other related matters in a conference call at 11 a.m. EST 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. #89171576.  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 provided in this presentation.  Adjusted EBITDA margin represents Adjusted EBITDA divided by revenues.  Adjusted Earnings Per Share exclude certain income and expense items described in the reconciliation provided in this presentation.  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 and diluted adjusted earnings per share and statements regarding net reductions in ongoing annual interest expense, new sources of profitable growth, 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
December 31,


Year Ended
December 31,



2013


2012


2013


2012










Revenues


$ 516,804


$ 508,144


$ 2,102,019


$ 2,084,914

Cost of sales


456,840


474,808


1,858,553


1,871,290

Gross profit


59,964


33,336


243,466


213,624

Selling, general, and administrative expenses


35,353


32,768


133,588


134,019

Amortization expense


659


1,140


2,793


4,579

Restructuring and asset impairment charges, net


2,301


2,785


21,207


10,738

  Operating income / (loss)


21,651


(3,357)


85,878


64,288

Interest expense


7,693


13,508


52,068


54,757

Interest income


311


111


1,209


942

Other expense


30


-


48,448


-

Income / (loss) before provision / (benefit) for income taxes and equity in loss of joint venture


14,239


(16,754)


(13,429)


10,473

Provision / (benefit) for income taxes


(6,480)


(2,458)


2,077


15,255

Equity in loss of joint venture, net of tax


(185)


-


(558)


-

Income / (loss) from continuing operations


20,534


(14,296)


(16,064)


(4,782)

Income from discontinued operations, net of tax


-


30,368


-


29,790

Net income / (loss)


20,534


16,072


(16,064)


25,008

Less: Net income attributable to the noncontrolling interests


1,564


2,349


4,211


6,976

Net income / (loss) attributable to Tower International, Inc.


$   18,970


$   13,723


$    (20,275)


$      18,032










Weighted average common shares outstanding









Basic


20,471,819


20,247,134


20,387,168


20,080,839

Diluted


21,164,188


20,411,868


20,387,168


20,447,072










Basic income / (loss) per share attributable to Tower International, Inc.:









Income / (loss) per share from continuing operations


$       0.93


$     (0.82)


$        (0.99)


$        (0.58)

Income per share from discontinued operations


-


1.50


-


1.48

Income / (loss) per share


0.93


0.68


(0.99)


0.90










Diluted income / (loss) per share attributable to Tower International, Inc.:









Income / (loss) per share from continuing operations


$       0.90


$     (0.82)


$        (0.99)


$        (0.58)

Income per share from discontinued operations


-


1.49


-


1.46

Income / (loss) per share


0.90


0.67


(0.99)


0.88

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in thousands, except share data - unaudited)













December 31, 2013


December 31, 2012






ASSETS





Cash and cash equivalents


$                 134,880


$               113,943

Accounts receivable, net of allowance of $2,071 and $4,105


255,674


266,138

Inventories


81,278


81,336

Deferred tax asset - current


8,649


10,447

Prepaid tooling, notes receivable, and other


44,896


96,349

Total current assets


525,377


568,213






Property, plant, and equipment, net


549,605


573,148

Goodwill


66,976


64,793

Investment in joint venture


8,624


-

Deferred tax asset - non-current


3,732


3,149

Other assets, net


28,679


28,819

Total assets


$              1,182,993


$            1,238,122






LIABILITIES AND STOCKHOLDERS' EQUITY





Short-term debt and current maturities of capital lease obligations


$                   39,704


$                 74,605

Accounts payable 


262,425


264,897

Accrued liabilities


129,167


134,664

Total current liabilities


431,296


474,166






Long-term debt, net of current maturities


454,073


411,590

Obligations under capital leases, net of current maturities


10,013


10,783

Deferred tax liability - non-current


14,381


13,021

Pension liability


54,915


100,780

Other non-current liabilities


81,446


86,908

Total non-current liabilities 


614,828


623,082

  Total liabilities


1,046,124


1,097,248






Stockholders' Equity:





Tower International, Inc.'s stockholders' equity





Preferred stock, $0.01 par value, 50,000,000 authorized, 0 issued, and 0 outstanding


-


-

Common stock, $0.01 par value, 350,000,000 authorized, 21,079,027 issued and 20,472,637 outstanding at December 31, 2013 and 20,830,425 issued and 20,247,134 outstanding at December 31, 2012 


211


208

Additional paid in capital


327,998


321,032

Treasury stock, at cost,  606,390 and 583,291 shares as of December 31, 2013 and December 31, 2012


(8,594)


(8,297)

Accumulated deficit


(257,487)


(237,212)

Accumulated other comprehensive income / (loss)


12,247


(12,484)

Total Tower International, Inc.'s stockholders' equity


74,375


63,247

Noncontrolling interests in subsidiaries


62,494


77,627

Total stockholders' equity


136,869


140,874






Total liabilities and stockholders' equity


$              1,182,993


$            1,238,122






 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)


















Three Months Ended
December 31,


Year Ended
December 31,


2013


2012


2013


2012









OPERATING ACTIVITIES:








Net income / (loss)

$     20,534


$     16,072


$    (16,064)


$     25,008

Less: Income from discontinued operations, net of tax

-


30,368


-


29,790

Income / (loss) from continuing operations

20,534


(14,296)


(16,064)


(4,782)









Adjustments required to reconcile income / (loss) from continuing operations to net cash provided by operating activities:








Non-cash restructuring and asset impairment charges, net

230


575


11,236


575

Premium on notes redemption and other fees

30


-


48,448


-

Deferred income tax provision

(10,837)


(3,538)


(10,464)


9,052

Depreciation and amortization

23,904


24,643


94,837


92,856

Non-cash share-based compensation

1,083


1,128


4,743


9,613

Pension expense / (income), net of contributions

(3,777)


18,516


(17,131)


2,568

Change in working capital and other operating items

72,414


36,576


37,745


(8,501)

Net cash provided by continuing operating activities

$   103,581


$     63,604


$   153,350


$   101,381









INVESTING ACTIVITIES:








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

$    (49,570)


$    (35,068)


$    (96,794)


$  (119,771)

Net proceeds from sale of property, plant, and equipment

-


-


12,040


-

Investment in joint venture

-


-


(6,293)


-

Net cash used in continuing investing activities

$    (49,570)


$    (35,068)


$    (91,047)


$  (119,771)









FINANCING ACTIVITIES:








Proceeds from borrowings

$   102,936


$   186,520


$   560,288


$   651,781

Repayments of  borrowings

(130,445)


(227,756)


(615,292)


(638,782)

Proceeds from borrowings on Term Loan Credit Facility

-


-


417,900


-

Redemption of notes

-


-


(361,992)


-

Premium paid on notes redemption and other fees

-


-


(43,078)


-

Debt financing costs

(1,441)


-


(10,878)


-

Premium paid on re-pricing of Term Loan Credit Facility and other fees

-


-


(4,318)


-

Secondary stock offering transaction costs

(754)


-


(814)



Proceeds from stock options exercised

157


-


2,224


-

Purchase of treasury stock

-


-


(297)


(3,167)

Noncontrolling interest dividends

(2,581)


-


(9,329)


-

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

$    (32,128)


$    (41,236)


$    (65,586)


$       9,832









Discontinued operations:








Net cash from discontinued operating activities

$               -


$       9,320


$               -


$    (10,616)

Net cash from discontinued investing activities

4,798


(29,474)


20,492


(51,352)

Net cash from discontinued financing activities

-


25,783


-


45,358

Net cash from discontinued operations

$       4,798


$       5,629


$     20,492


$    (16,610)









Effect of exchange rate changes on continuing cash and cash equivalents

$       1,851


$       2,044


$       3,728


$       4,127









NET CHANGE IN CASH AND CASH EQUIVALENTS

$     28,532


$      (5,027)


$     20,937


$    (21,041)









CASH AND CASH EQUIVALENTS:








Beginning of period

$   106,348


$   118,970


$   113,943


$   134,984









End of period

$   134,880


$   113,943


$   134,880


$   113,943









 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)




























Segment Data


Three Months Ended December 31,



2013


2012



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$    244,766


$      22,299


$    235,889


$      21,771

Americas


272,038


27,302


272,255


22,731

Consolidated


$    516,804


$      49,601


$    508,144


$      44,502












Year Ended December 31,



2013


2012



Revenues


Adjusted EBITDA


Revenues


Adjusted EBITDA

International


$    951,019


$      79,090


$    945,905


$      85,423

Americas


1,151,000


133,204


1,139,009


112,463

Consolidated


$ 2,102,019


$    212,294


$ 2,084,914


$    197,886




























Adjusted EBITDA reconciliation


Three Months Ended
December 31,


Year Ended
December 31,



2013


2012


2013


2012

Adjusted EBITDA


$      49,601


$      44,502


$    212,294


$    197,886

Restructuring and asset impairment charges, net


(2,301)


(2,785)


(21,207)


(10,738)

Depreciation and amortization


(23,904)


(24,643)


(94,837)


(92,856)

Acquisition costs and other


(3)


(146)


(907)


(431)

Long-term compensation expense


(1,742)


(1,128)


(6,630)


(10,416)

Interest expense, net


(7,382)


(13,397)


(50,859)


(53,815)

Other expense


(30)


-


(48,448)


-

Closure of Tower Defense & Aerospace


-


-


(2,835)


-

Benefit / (provision) for income taxes


6,480


2,458


(2,077)


(15,255)

Equity in loss of joint venture


(185)


-


(558)


-

Income from discontinued operations, net of tax


-


30,368


-


29,790

Pension actuarial loss


-


(19,157)


-


(19,157)

Net income attributable to noncontrolling interests


(1,564)


(2,349)


(4,211)


(6,976)

Net income / (loss) attributable to Tower International, Inc.


$      18,970


$      13,723


$    (20,275)


$      18,032




























Adjusted free cash flow reconciliation


Three Months Ended
December 31,


Year Ended
December 31,



2013


2012


2013


2012

Net cash provided by continuing operating activities


$    103,581


$      63,604


$    153,350


$    101,381

Cash disbursed for purchases of PP&E, net


(49,570)


(35,068)


(96,794)


(119,771)

Free cash flow


54,011


28,536


56,556


(18,390)

Net cash provided / (disbursed) for customer-owned tooling


30,966


(2,292)


21,108


3,550

Adjusted free cash flow


$      23,045


$      30,828


$      35,448


$    (21,940)




























Net debt reconciliation






December 31,


December 31,







2013


2012

Short-term debt and current maturities of capital lease obligations






$      39,704


$      74,605

Long-term debt, net of current maturities






454,073


411,590

Obligations under capital leases, net of current maturities






10,013


10,783

Total debt






503,790


496,978

Less: cash and cash equivalents






(134,880)


(113,943)

Net debt






$    368,910


$    383,035










 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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





















Three Months Ended


Year Ended



December 31,


December 31,



2013


2012


2013


2012






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









Cost of sales









Closure of Tower Defense & Aerospace


$               -


$               -


$      (4,414)


$               -

Pension actuarial loss


-


(19,157)


-


(19,157)

Selling, general, and administrative expenses









Incentive compensation related to funding events


-


-


-


(6,105)

Acquisition costs and other


-


-


(327)


-

Restructuring expense









One-time restructuring actions


(1,195)


(1,563)


(2,219)


(2,766)

Plant relocation


-


(170)


-


(3,041)

Facility closure


-


-


(3,575)


-

Asset impairment charges


(230)


-


(10,935)


(575)

Interest expense









Acceleration of the amortization of debt issue costs and OID


-


-


(11,342)


-

Other expense









Premium on redemption of Senior Secured Notes


-


-


(42,470)


-

Premium and other fees for re-pricing of Term Loan 


130


-


(4,410)


-

Secondary stock offering transaction costs


(160)


-


(960)


-

Breakage of Letter of Credit Facility


-


-


(608)


-

Provision for income taxes









Foreign subsidiary tax audit


-


3,252


2,300


4,339

Non-cash income tax benefit on gain in other comprehensive income

10,828


-


10,828


-

Valuation allowance in Brazil


-


-


-


(6,494)

Discontinued operations









Income from discontinued operations


-


30,368


-


29,790

Total items included in net income


$       9,373


$     12,730


$    (68,132)


$      (4,009)










Net income / (loss) attributable to Tower International, Inc.


$     18,970


$     13,723


$    (20,275)


$     18,032










Memo:  Average shares outstanding (in thousands)









Basic


20,472


20,247


20,387


20,081

Diluted


21,164


20,412


20,387


20,447










Income / (loss) per common share (GAAP)









Basic


$         0.93


$         0.68


$        (0.99)


$         0.90

Diluted


0.90


0.67


(0.99)


0.88










Diluted adjusted earnings per share (non-GAAP)*


$         0.45


$         0.05


$         2.28


$         1.08










* Excludes the certain items shown above.  For the year ended December 31, 2013, a diluted share count of 20.9 million was used to calculate diluted adjusted earnings per share.

 

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