Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

Tower International Reports Second Quarter Results and Maintains Full-Year 2017 Outlook for Earnings and Free Cash Flow

 

LIVONIA, Mich., July 26, 2017 – Tower International, Inc. [NYSE: TOWR], a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced second quarter 2017 results and updated its business outlook through 2017.

 

·Revenue for the second quarter was $490 million compared with $505 million in the second quarter of 2016.

 

·Net income was $19.2 million or 92 cents per diluted share, compared with net loss of $4.8 million or 23 cents per share in the second quarter last year, which included non-cash impairments related to discontinued operations. As detailed below, this year’s second quarter included certain items that adversely impacted results by $0.9 million. Excluding these items and comparable items in the second quarter of 2016, diluted adjusted earnings were 97 cents per share, compared with 81 cents a year ago.

 

·Adjusted EBITDA for the quarter was $53.2 million, an increase of 6 percent compared with $50.3 million a year ago. Adjusted EBITDA Margin increased by 90 basis points to 10.9 percent.

 

·Free Cash Flow, as defined below, totaled $18 million for the quarter and was significantly favorable to outlook.

 

·Current outlook for full year revenue of $1.97 billion is expected to be $45 million higher than previous outlook, as higher European steel prices and favorable foreign exchange more than offset modest production decreases on Tower contented vehicles in Europe. The Company is re-affirming its outlook for full year 2017 Adjusted EBITDA of $210 million, Adjusted EPS of $3.60 per share and positive free cash flow of $55 million.

 

·During the second half of 2017, Tower has significant launches in North America on a number of platforms, which in total represent approximately 20 percent of ongoing revenue for the region.

 

“Tower delivered solid financial results in the quarter as revenue and earnings were largely in-line with our previous outlook and free cash flow was better than expected,” said CEO Jim Gouin. “We continue to invest in the growth of Tower and are well positioned to grow our business at a faster pace than the industry over the coming years. Program launches in the second half of the year exemplify how the emerging secular trends related to outsourcing are fueling Tower’s revenue growth.”

 

 

 

 

Tower to Host Conference Call Today at 1 p.m. EDT

  

Tower will discuss its second quarter 2017 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 (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. #55515739. 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”, 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 is defined as adjusted EBITDA divided by revenue. Adjusted earnings per share exclude 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 full year earnings, cash flow and revenues, Adjusted EBITDA and free cash flow. 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share amounts - unaudited)

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2017   2016   2017   2016 
                 
Revenues  $489,925   $505,131   $987,515   $994,325 
Cost of sales   428,328    442,989    869,139    875,094 
Gross profit   61,597    62,142    118,376    119,231 
Selling, general, and administrative expenses   29,007    32,050    58,232    64,902 
Amortization expense   113    116    216    232 
Restructuring and asset impairment charges, net   3,337    840    7,248    1,586 
  Operating income   29,140    29,136    52,680    52,511 
Interest expense   1,807    4,987    2,260    12,569 
Interest income   86    40    133    68 
Other expense   -    2,905    575    6,481 
Income before provision for income taxes and income / (loss) from discontinued operations   27,419    21,284    49,978    33,529 
Provision  for income taxes   7,672    6,015    14,168    9,531 
Income  from continuing operations   19,747    15,269    35,810    23,998 
Income / (loss) from discontinued operations, net of tax   (489)   (20,021)   861    (20,366)
        Net income / (loss)   19,258    (4,752)   36,671    3,632 
Less: Net income attributable to the noncontrolling interests   42    89    110    95 
Net income / (loss) attributable to Tower International, Inc.  $19,216   $(4,841)  $36,561   $3,537 
                     
Weighted average basic shares outstanding   20,508,890    21,164,505    20,467,281    21,145,588 
Weighted average diluted shares outstanding   20,805,931    21,489,161    20,813,100    21,469,818 
                     
Basic income per share attributable to Tower International, Inc.:                    
Income per share from continuing operations  $0.96   $0.72   $1.74   $1.13 
Income / (loss) per share from discontinued operations   (0.02)   (0.95)   0.04    (0.96)
Income / (loss) per share   0.94    (0.23)   1.79    0.17 
                     
Diluted income per share attributable to Tower International, Inc.:                    
Income per share from continuing operations  $0.95   $0.71   $1.72   $1.11 
Income / (loss) per share from discontinued operations   (0.02)   (0.93)   0.04    (0.95)
Income / (loss) per share   0.92    (0.23)   1.76    0.16 
                     
Dividends declared per share  $0.11   $0.10   $0.22   $0.20 

 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands - unaudited)

 

   June 30,   December 31, 
   2017   2016 
         
ASSETS          
Cash and cash equivalents  $54,794   $62,788 
Accounts receivable, net of allowance of $1,298 and $961   253,139    178,251 
Inventories   74,965    71,710 
Assets held for sale   42,699    102,252 
Prepaid tooling, notes receivable, and other   136,054    103,023 
Total current assets   561,651    518,024 
           
Property, plant, and equipment, net   495,840    465,569 
Goodwill   61,669    56,383 
Deferred tax asset   116,917    112,645 
Other assets, net   10,464    9,902 
Total assets  $1,246,541   $1,162,523 
           
LIABILITIES AND EQUITY          
Short-term debt and current maturities of capital lease obligations  $51,024   $34,211 
Accounts payable   273,623    258,129 
Accrued liabilities   125,648    114,079 
Liabilities held for sale   16,909    53,310 
Total current liabilities   467,204    459,729 
           
Long-term debt, net of current maturities   375,562    351,232 
Obligations under capital leases, net of current maturities   -    4,863 
Deferred tax liability   5,354    5,594 
Pension liability   56,777    61,627 
Other non-current liabilities   86,443    65,539 
Total non-current liabilities   524,136    488,855 
Total liabilities   991,340    948,584 
           
           
Stockholders' equity:          
Tower International, Inc.'s stockholders' equity          
Common stock  $223   $221 
Additional paid in capital   342,773    340,623 
Treasury stock   (36,407)   (35,645)
Accumulated surplus/ (deficit)   23,371    (14,021)
Accumulated other comprehensive loss   (74,759)   (83,383)
     Total Tower International, Inc.'s stockholders' equity   255,201    207,795 
Noncontrolling interests in subsidiaries   -    6,144 
Total stockholders' equity   255,201    213,939 
           
Total liabilities and stockholders' equity  $1,246,541   $1,162,523 

 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2017   2016   2017   2016 
                 
OPERATING ACTIVITIES:                    
Net income / (loss)  $19,258   $(4,752)  $36,671   $3,632 
Less: Income / (loss) from discontinued operations, net of tax   (489)   (20,021)   861    (20,366)
Income from continuing operations   19,747    15,269    35,810    23,998 
                     
Adjustments required to reconcile income from continuing operations to net cash provided by / (used in) continuing operating activities:                    
Deferred income tax provision  $6,010   $5,120   $9,965   $8,116 
Depreciation and amortization   18,766    18,207    36,532    35,483 
Non-cash share-based compensation   599    505    1,098    1,034 
Pension income, net of contributions   (2,500)   (2,320)   (4,851)   (4,467)
Change in working capital and other operating items   (4,286)   (24,650)   (88,794)   (41,769)
Net cash provided by / (used in) continuing operating activities  $38,336   $12,131   $(10,240)  $22,395 
                     
INVESTING ACTIVITIES:                    
Cash disbursed for purchases of property, plant, and equipment, net  $(20,252)  $(35,230)  $(44,161)  $(60,926)
Proceeds from disposition of joint venture, net   15,944    -    15,944    - 
Net cash used in continuing investing activities  $(4,308)  $(35,230)  $(28,217)  $(60,926)
                     
FINANCING ACTIVITIES:                    
Proceeds from borrowings  $137,109   $149,577   $373,853   $295,904 
Repayments of  borrowings   (143,606)   (134,239)   (336,032)   (272,437)
Repayments on Term Loan Credit Facility   -    -    -    (50,000)
Original issuance discount   -    -    (1,808)   - 
Debt financing costs   (664)   -    (4,747)   - 
Dividend payment to Tower stockholders   (2,256)   (2,118)   (4,498)   (4,229)
Proceeds from stock options exercised   114    25    1,052    25 
Purchase of treasury stock   (1)   -    (762)   (621)
Net cash provided by / (used in) continuing financing activities  $(9,304)  $13,245   $27,058   $(31,358)
                     
Discontinued operations:                    
Net cash from discontinued operating activities  $644   $227   $74   $3,074 
Net cash used in discontinued investing activities   (604)   (1,489)   (1,010)   (1,907)
Net cash from / (used in) discontinued financing activities   423    474    920    (2,635)
Net cash from / (used in) discontinued operations  $463   $(788)  $(16)  $(1,468)
                     
Effect of exchange rate changes on continuing cash and cash equivalents  $2,084   $(399)  $3,421   $1,540 
                     
NET CHANGE IN CASH AND CASH EQUIVALENTS  $27,271   $(11,041)  $(7,994)  $(69,817)
                     
CASH AND CASH EQUIVALENTS:                    
Beginning of period  $27,523   $62,818   $62,788   $121,594 
                     
End of period  $54,794   $51,777   $54,794   $51,777 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(Amounts in thousands - unaudited)

 

Segment Data  Three Months Ended June 30, 
   2017   2016 
   Revenues  

Adjusted

EBITDA

   Revenues  

Adjusted

EBITDA

 
Europe  $160,229   $13,628   $175,044   $13,708 
North America   329,696    39,616    330,087    36,550 
Consolidated  $489,925   $53,244   $505,131   $50,258 

 

 

   Six Months Ended June 30, 
   2017   2016 
   Revenues  

Adjusted

EBITDA

   Revenues 

 

 

Adjusted

EBITDA

 
Europe  $320,381   $24,800   $336,142   $25,202 
North America   667,134    74,648    658,183    70,151 
Consolidated  $987,515   $99,448   $994,325   $95,353 

 

 

Adjusted EBITDA Reconciliation  Three Months Ended June 30,   Six Months Ended June 30, 
   2017   2016   2017   2016 
Adjusted EBITDA  $53,244   $50,258   $99,448   $95,353 
Restructuring and asset impairment charges, net   (3,337)   (840)   (7,248)   (1,586)
Depreciation and amortization   (18,766)   (18,207)   (36,532)   (35,483)
Acquisition costs and other   (109)   (154)   (184)   (178)
Long-term compensation expense   (1,892)   (1,921)   (2,804)   (5,595)
Interest expense, net   (1,721)   (4,947)   (2,127)   (12,501)
Other expense   -    (2,905)   (575)   (6,481)
Provision for income taxes   (7,672)   (6,015)   (14,168)   (9,531)
Income / (loss) from discontinued operations, net of tax   (489)   (20,021)   861    (20,366)
Net income attributable to noncontrolling interests   (42)   (89)   (110)   (95)
Net income / (loss) attributable to Tower International, Inc.  $19,216   $(4,841)  $36,561   $3,537 

 

 

Free Cash Flow Reconciliation  Three Months Ended June 30,   Six Months Ended June 30, 
   2017   2016   2017   2016 
Net cash provided by / (used in) continuing operating activities  $38,336   $12,131   $(10,240)  $22,395 
Cash disbursed for purchases of PP&E   (20,252)   (35,230)   (44,161)   (60,926)
Free cash flow  $18,084   $(23,099)  $(54,401)  $(38,531)

 

 

Net Debt Reconciliation  June 30,   December 31, 
   2017   2016 
Short-term debt and current maturities of capital lease obligations  $51,024   $34,211 
Long-term debt, net of current maturities   384,509    357,298 
Debt issue costs   (8,947)   (6,066)
Obligations under capital leases, net of current maturities   -    4,863 
Total debt   426,586    390,306 
Less: Cash and cash equivalents   (54,794)   (62,788)
Net debt  $371,792   $327,518 

 

 

 

 

 

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 
   June 30,   June 30, 
   2017   2016   2017   2016 
                 
Income / (expense) items included in net income, net of tax:                    
Selling, general, and administrative expenses                    
One-time CEO compensation awards  $-   $203   $-   $299 
Restructuring and asset impairment charges, net                    
One-time restructuring actions   (2,006)   -    (3,157)   - 
Interest expense                    
Mark-to-market loss on derivative financial instruments   1,631    (242)   2,630    (356)
Other expense                    
European divestiture expenses   -    (2,112)   -    (2,905)
Discontinued operations                    
Loss on sale of joint venture   (2,596)   -    (2,596)   - 
Income from discontinued operations   2,108    (20,021)   2,108    (20,021)
Noncontrolling interests                    
Net income attributable to noncontrolling interests*   (42)   (89)   (42)   (89)
Total items included in net income, net of tax  $(905)  $(22,261)          
                     
Net income / (loss) attributable to Tower International, Inc.  $19,216   $(4,841)          
                     
Memo:  Average shares outstanding (in thousands)                    
Basic   20,509    21,165           
Diluted   20,806    21,489           
                     
Income / (loss) per common share (GAAP)                    
Basic  $0.94   $(0.23)          
Diluted   0.92    (0.23)          
                     
Diluted adjusted earnings per share (non-GAAP)  $0.97   $0.81           

 

 

* Amounts attributable to noncontrolling interests of discontinued operations

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CERTAIN ITEMS INCLUDED IN NET INCOME
(Amounts in thousands, except per share amounts - unaudited)

 

   After tax   Before tax 
   Six Months Ended   Six Months Ended 
   June 30,   June 30, 
   2017   2016   2017   2016 
                 
Income / (expense) items included in net income, net of tax:                    
Selling, general, and administrative expenses                    
One-time CEO compensation awards  $-   $(444)       $(653)
Restructuring and asset impairment charges, net                    
One-time restructuring actions   (4,161)   -    (6,633)   - 
Interest expense                    
Mark-to-market loss on derivative financial instruments   4,286    (1,892)   6,912    (2,782)
Acceleration of the amortization of debt issue costs and OID   -    (503)   -    (740)
Other expense                    
European divestiture expenses   -    (4,544)   -    (6,481)
     Debt refinancing costs   (357)        (575)   - 
Discontinued operations                    
Loss on sale of joint venture   (2,596)   -    (2,596)   - 
Income / (loss) from discontinued operations   3,458    (20,366)   3,458    (20,366)
Noncontrolling interests                    
Net income attributable to noncontrolling interests*   (110)   (95)   (110)   (95)
Total items included in net income, net of tax  $520   $(27,844)          
                     
Net income attributable to Tower International, Inc.  $36,561   $3,537           
                     
Memo:  Average shares outstanding (in thousands)                    
Basic   20,467    21,146           
Diluted   20,813    21,470           
                     
Income per common share (GAAP)                    
Basic  $1.79   $0.17           
Diluted   1.76    0.16           
                     
Diluted adjusted earnings per share (non-GAAP)  $1.73   $1.46           

 

 

* Amounts attributable to noncontrolling interests of discontinued operations

 

 

 

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