Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

Tower International Reports Third Quarter Results and Increases Outlook for Revenue and Adjusted Earnings Per Share

 

LIVONIA, Mich., October 30, 2017 – Tower International, Inc. [NYSE: TOWR], a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced third quarter 2017 results and updated its business outlook through 2017.

 

·Revenue for the third quarter was $462 million compared with $457 million in the third quarter of 2016.

 

·Net income was $14.9 million or 72 cents per diluted share, compared with $18.2 million or 86 cents per share in the third quarter last year. As detailed below, this year’s third quarter included certain items that adversely impacted results by $2.8 million. Excluding these items and comparable items in the third quarter of 2016, adjusted earnings per share of 85 cents, compared with 90 cents a year ago.

 

·Adjusted EBITDA for the quarter was $49.2 million slightly ahead of the Company’s outlook but down from $50.1 million a year ago.

 

·For the quarter, net cash provided by continuing operating activities amounted to $46.1 million. Cash disbursed for purchases of equipment totaled $32.5 million resulting in Free Cash Flow of $13.6 million.

 

·Present outlook for full year revenue of $1.98 billion is expected to be $10 million higher than previous outlook, as favorable foreign exchange is expected to more than offset modest production decreases on Tower contented vehicles in Europe. The Company is raising its outlook for adjusted earnings per share by 10 cents to $3.70 per share and re-affirming its outlook for Adjusted EBITDA of $210 million and positive free cash flow of $55 million.

 

·Tower remains committed to having a growing and sustainable dividend and increased the quarterly dividend by 9 percent to 12 cents per share.

 

 

“Tower delivered solid financial results in the quarter as revenue and earnings were ahead of our previous outlook,” said CEO Jim Gouin. “We continue to invest in the growth of Tower and continue to benefit from emerging industry trends. With our existing net new business wins and exposure to trucks and SUVs in the North American market we are well positioned to grow our business at a faster pace than the industry over the coming years.”

 

 

 

 

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

 

Tower will discuss its third quarter 2017 results and other related matters in a conference call at 11 a.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. #2170878. 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 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 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 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, business growth, 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;
·our ability to take advantage of emerging secular trends;
·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 Sept. 30,   Nine Months Ended Sept. 30, 
   2017   2016   2017   2016 
                 
Revenues  $462,372   $457,042   $1,449,887   $1,451,367 
Cost of sales   403,619    396,806    1,272,758    1,271,900 
Gross profit   58,753    60,236    177,129    179,467 
Selling, general, and administrative expenses   29,667    31,223    87,899    96,125 
Amortization expense   117    112    333    344 
Restructuring and asset impairment charges, net   1,131    1,196    8,379    2,782 
  Operating income   27,838    27,705    80,518    80,216 
Interest expense   5,673    5,598    7,933    18,167 
Interest income   64    40    197    108 
Other expense   -    -    575    6,481 
Income before provision for income taxes and income / (loss) from discontinued operations   22,229    22,147    72,207    55,676 
Provision  for income taxes   8,002    4,239    22,170    13,770 
Income  from continuing operations   14,227    17,908    50,037    41,906 
Income / (loss) from discontinued operations, net of tax   704    367    1,565    (19,999)
        Net income   14,931    18,275    51,602    21,907 
Less: Net income attributable to the noncontrolling interests   -    118    110    213 
Net income attributable to Tower International, Inc.  $14,931   $18,157   $51,492   $21,694 
                     
Weighted average basic shares outstanding   20,522,001    20,830,203    20,485,722    21,039,305 
Weighted average diluted shares outstanding   20,787,405    21,182,149    20,804,441    21,372,875 
                     
Basic income per share attributable to Tower International, Inc.:                    
Income per share from continuing operations  $0.69   $0.85   $2.44   $1.98 
Income / (loss) per share from discontinued operations   0.03    0.02    0.08    (0.95)
Income per share   0.73    0.87    2.51    1.03 
                     
Diluted income per share attributable to Tower International, Inc.:                    
Income per share from continuing operations  $0.68   $0.84   $2.40   $1.95 
Income / (loss) per share from discontinued operations   0.03    0.02    0.08    (0.94)
Income per share   0.72    0.86    2.48    1.02 
                     
Dividends declared per share  $0.11   $0.10   $0.33   $0.30 

 

 

 

 

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

 

   Sept. 30,   Dec. 31, 
   2017   2016 
         
ASSETS          
Cash and cash equivalents  $43,597   $62,788 
Accounts receivable, net of allowance of $1,533 and $961   272,749    178,251 
Inventories   81,127    71,710 
Assets held for sale   45,065    102,252 
Prepaid tooling, notes receivable, and other   120,500    103,023 
Total current assets   563,038    518,024 
           
Property, plant, and equipment, net   514,137    465,569 
Goodwill   63,407    56,383 
Deferred tax asset   114,399    112,645 
Other assets, net   12,112    9,902 
Total assets  $1,267,093   $1,162,523 
           
LIABILITIES AND EQUITY          
Short-term debt and current maturities of capital lease obligations  $42,853   $34,211 
Accounts payable   300,292    258,129 
Accrued liabilities   117,305    114,079 
Liabilities held for sale   16,814    53,310 
Total current liabilities   477,264    459,729 
           
Long-term debt, net of current maturities   361,734    351,232 
Obligations under capital leases, net of current maturities   -    4,863 
Deferred tax liability   5,533    5,594 
Pension liability   51,723    61,627 
Other non-current liabilities   97,070    65,539 
Total non-current liabilities   516,060    488,855 
Total liabilities   993,324    948,584 
           
Stockholders' equity:          
Tower International, Inc.'s stockholders' equity          
Common stock  $223   $221 
Additional paid in capital   343,374    340,623 
Treasury stock   (36,408)   (35,645)
Accumulated surplus/ (deficit)   36,044    (14,021)
Accumulated other comprehensive loss   (69,464)   (83,383)
     Total Tower International, Inc.'s stockholders' equity   273,769    207,795 
Noncontrolling interests in subsidiaries   -    6,144 
     Total stockholders' equity   273,769    213,939 
           
Total liabilities and stockholders' equity  $1,267,093   $1,162,523 

 

 

 

 

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

 

   Three Months Ended Sept. 30,   Nine Months Ended Sept. 30, 
   2017   2016   2017   2016 
                 
OPERATING ACTIVITIES:                    
Net income  $14,931   $18,275   $51,602   $21,907 
Less: Income / (loss) from discontinued operations, net of tax   704    367    1,565    (19,999)
Income from continuing operations   14,227    17,908    50,037    41,906 
                     
Adjustments required to reconcile income from continuing operations to net cash provided by continuing operating activities:                    
Deferred income tax provision  $5,402   $2,135   $15,367   $10,251 
Depreciation and amortization   18,321    17,900    54,853    53,383 
Non-cash share-based compensation   559    511    1,657    1,545 
Pension income, net of contributions   (5,055)   (3,384)   (9,906)   (7,851)
Change in working capital and other operating items   12,699    (25,107)   (76,095)   (66,876)
Net cash provided by continuing operating activities  $46,153   $9,963   $35,913   $32,358 
                     
INVESTING ACTIVITIES:                    
Cash disbursed for purchases of property, plant, and equipment, net  $(32,526)  $(12,610)  $(76,687)  $(73,536)
Proceeds from disposition of joint venture, net   -    -    15,944    - 
Net cash used in continuing investing activities  $(32,526)  $(12,610)  $(60,743)  $(73,536)
                     
FINANCING ACTIVITIES:                    
Proceeds from borrowings  $162,073   $162,848   $535,926   $458,752 
Repayments of  borrowings   (185,997)   (145,227)   (522,029)   (417,664)
Repayments on Term Loan Credit Facility   -    -    -    (50,000)
Original issuance discount   -    -    (1,808)   - 
Debt issuance costs   -    -    (4,747)   - 
Dividend payment to Tower stockholders   (2,258)   (2,105)   (6,756)   (6,334)
Proceeds from stock options exercised   42    43    1,094    68 
Purchase of treasury stock   (1)   (17,912)   (763)   (18,533)
Net cash provided by / (used in) continuing financing activities  $(26,141)  $(2,353)  $917   $(33,711)
                     
Discontinued operations:                    
Net cash from / (used in) discontinued operating activities  $(396)  $639   $(322)  $3,714 
Net cash used in discontinued investing activities   (241)   (203)   (1,251)   (2,110)
Net cash from / (used in) discontinued financing activities   217    (263)   1,137    (2,899)
Net cash from / (used in) discontinued operations  $(420)  $173   $(436)  $(1,295)
                     
Effect of exchange rate changes on continuing cash and cash equivalents  $1,737   $266   $5,158   $1,806 
                     
NET CHANGE IN CASH AND CASH EQUIVALENTS  $(11,197)  $(4,561)  $(19,191)  $(74,378)
                     
CASH AND CASH EQUIVALENTS:                    
Beginning of period  $54,794   $51,777   $62,788   $121,594 
                     
End of period  $43,597   $47,216   $43,597   $47,216 

 

 

 

 

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

 

Segment Data  Three Months Ended Sept. 30, 
   2017   2016 
   Revenues  

Adjusted

EBITDA

   Revenues  

Adjusted

EBITDA

 
Europe  $146,559   $8,219   $147,964   $12,084 
North America   315,813    40,975    309,078    38,039 
Consolidated  $462,372   $49,194   $457,042   $50,123 

 

   Nine Months Ended Sept. 30, 
   2017   2016 
   Revenues  

Adjusted

EBITDA

   Revenues  

Adjusted

EBITDA

 
Europe  $466,956   $33,019   $484,064   $37,307 
North America   982,931    115,623    967,303    108,170 
Consolidated  $1,449,887   $148,642   $1,451,367   $145,477 

 

Adjusted EBITDA Reconciliation  Three Months Ended Sept. 30,   Nine Months Ended Sept. 30, 
   2017   2016   2017   2016 
Net income attributable to Tower International, Inc.  $14,931   $18,157   $51,492   $21,694 
Restructuring and asset impairment charges, net   1,131    1,196    8,379    2,782 
Depreciation and amortization   18,321    17,900    54,853    53,383 
Acquisition costs and other   90    47    273    318 
Long-term compensation expense   1,814    3,275    4,619    8,778 
Interest expense, net   5,609    5,558    7,736    18,059 
Other expense   -    -    575    6,481 
Provision for income taxes   8,002    4,239    22,170    13,770 
(Income) / loss from discontinued operations, net of tax   (704)   (367)   (1,565)   19,999 
Net income attributable to noncontrolling interests   -    118    110    213 
Adjusted EBITDA  $49,194   $50,123   $148,642   $145,477 

 

Free Cash Flow Reconciliation  Three Months Ended Sept. 30,   Nine Months Ended Sept. 30, 
   2017   2016   2017   2016 
Net cash provided by continuing operating activities  $46,153   $9,963   $35,913   $32,358 
Cash disbursed for purchases of PP&E   (32,526)   (12,610)   (76,687)   (73,536)
Free cash flow  $13,627   $(2,647)  $(40,774)  $(41,178)

 

Net Debt Reconciliation  Sept. 30,   Dec. 31,         
   2017   2016         
Short-term debt and current maturities of capital lease obligations  $42,853   $34,211         
Long-term debt, net of current maturities   370,199    357,298           
Debt issue costs   (8,465)   (6,066)          
Obligations under capital leases, net of current maturities   -    4,863           
Total debt   404,587    390,306           
Less: Cash and cash equivalents   (43,597)   (62,788)          
Net debt  $360,990   $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 
   Sept. 30,   Sept. 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  $-   $(710)  $-   $(1,044)
Restructuring and asset impairment charges, net                    
One-time restructuring actions   (419)   -    (651)   - 
Interest expense                    
Mark-to-market loss on derivative financial instruments   (614)   (428)   (991)   (629)
Provision for income taxes                    
Establishment of valuation allowance   (2,448)   -    (2,448)   - 
Discontinued operations                    
Income from discontinued operations   703    367    703    367 
Noncontrolling interests                    
Net income attributable to noncontrolling interests*   -    (118)   -    (118)
Total items included in net income, net of tax  $(2,778)  $(889)          
                     
Net income attributable to Tower International, Inc.  $14,931   $18,157           
                     
Memo:  Average shares outstanding (in thousands)                    
Basic   20,522    20,830           
Diluted   20,787    21,182           
                     
Income per common share (GAAP)                    
Basic  $0.73   $0.87           
Diluted   0.72    0.86           
                     
Diluted adjusted earnings per share (non-GAAP)  $0.85   $0.90           

 

 

* 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 
   Nine Months Ended   Nine Months Ended 
   Sept. 30,   Sept. 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  $-   $(1,154)  $-   $(1,697)
Restructuring and asset impairment charges, net                    
One-time restructuring actions   (4,580)   -    (7,284)   - 
Interest expense                    
Mark-to-market loss on derivative financial instruments   3,672    (2,320)   5,921    (3,412)
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)   - 
Provision for income taxes                    
Establishment of valuation allowance   (2,448)   -    (2,448)   - 
Discontinued operations                    
Loss on sale of joint venture   (2,596)   -    (2,596)   - 
Income / (loss) from discontinued operations   4,161    (19,999)   4,161    (19,999)
Noncontrolling interests                    
Net income attributable to noncontrolling interests*   (110)   (213)   (110)   (213)
Total items included in net income, net of tax  $(2,258)  $(28,733)          
                     
Net income attributable to Tower International, Inc.  $51,492   $21,694           
                     
Memo:  Average shares outstanding (in thousands)                    
Basic   20,486    21,039           
Diluted   20,804    21,373           
                     
Income per common share (GAAP)                    
Basic  $2.51   $1.03           
Diluted   2.48    1.02           
                     
Diluted adjusted earnings per share (non-GAAP)  $2.58   $2.36           

 

 

* Amounts attributable to noncontrolling interests of discontinued operations

 

 

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