Exhibit 99.1

 

 

 

 

FOR IMMEDIATE RELEASE

 

Tower International Reports First Quarter Results and Affirms Earnings and Free Cash Flow Outlook for 2018

 

LIVONIA, Mich., May 3, 2018 – Tower International, Inc. [NYSE: TOWR], a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced first quarter 2018 results and affirmed its earnings and free cash flow outlook for 2018.

 

·Revenue for the first quarter was $564 million compared with $498 million in the first quarter of 2017 representing a 13 percent increase.

 

·Net income was $17.3 million or $0.83 per share essentially equal to the first quarter last year. As detailed below, this year’s first quarter included certain items that, in aggregate, increased results by $27 thousand. Excluding these items and comparable items in the first quarter of 2017, adjusted earnings per share amounted to $0.82, an increase of 8 percent from the $0.76 reported a year ago.

 

·Adjusted EBITDA for the quarter was $53.1 million slightly ahead of the Company’s outlook and up 16 percent from $45.7 million a year ago.

 

·For the quarter, net cash used by continuing operating activities was $16 million. Cash disbursed for purchases of equipment totaled $29 million resulting in Free Cash Flow of negative $45 million. This compares with negative Free Cash Flow of $72 million in the first quarter 2017.

 

·Full year 2018 outlook includes:

 

oRevenue of $2.15 billion, reflecting primarily net new business of $125 million and favorable foreign exchange;
oAdjusted EBITDA of $230 million;
oDiluted Adjusted EPS of $4.10 per share – up 9 percent from 2017; and
oFree Cash Flow of $50 million, with strong free cash flow in the second half of the year more than offsetting the expected cash outflow in the first half of the year.

 

·The Company’s outlook for second quarter 2018 includes revenue of $560 million, Adjusted EBITDA of $58 million and Diluted Adjusted Earnings Per Share of $1.08.

 

“Tower delivered solid financial results in the first quarter as Adjusted EBITDA and Adjusted EPS were slightly ahead of our previous outlook,” said CEO Jim Gouin.  “Revenue for the quarter increased 13 percent as Tower continues to benefit from the secular trends of outsourcing and a continued production mix shift from cars to trucks and SUVs. This mix shift helped Tower’s North American revenue to grow by 16 percent while the industry production declined by 3 percent. These trends, in combination with our solid backlog of net new business, gives us further confidence that we will continue to grow our revenue faster than the industry in total.”

 

 

 

 

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

Tower will discuss its first quarter 2018 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. #6385526. 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 represents Adjusted EBITDA divided by revenues, 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, net new business backlog, business growth, adjusted EBITDA, adjusted EBITDA margin 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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

   Three Months Ended March 31, 
   2018   2017 
         
Revenues  $563,506   $497,590 
Cost of sales   503,660    441,290 
Gross profit   59,846    56,300 
Selling, general, and administrative expenses   32,234    29,225 
Amortization expense   112    103 
Restructuring and asset impairment charges, net   1,548    3,911 
  Operating income   25,952    23,061 
Interest expense   5,162    453 
Interest income   157    47 
Net periodic benefit income   558    479 
Other expense   -    575 
Income before provision for income taxes and income from discontinued operations   21,505    22,559 
Provision  for income taxes   5,067    6,496 
Income from continuing operations   16,438    16,063 
Income from discontinued operations, net of tax   862    1,350 
        Net income   17,300    17,413 
Less: Net income attributable to the noncontrolling interests   -    68 
Net income attributable to Tower International, Inc.  $17,300   $17,345 
           
Weighted average basic shares outstanding   20,556,613    20,425,216 
Weighted average diluted shares outstanding   20,951,973    20,820,457 
           
Basic income per share attributable to Tower International, Inc.:          
Income per share from continuing operations  $0.80   $0.78 
Income per share from discontinued operations   0.04    0.07 
Income per share   0.84    0.85 
           
Diluted income per share attributable to Tower International, Inc.:          
Income per share from continuing operations  $0.79   $0.77 
Income per share from discontinued operations   0.04    0.06 
Income per share   0.83    0.83 
           
Dividends declared per share  $0.12   $0.11 

 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)

 

   March 31,   December 31, 
   2018   2017 
         
ASSETS          
Cash and cash equivalents  $65,602   $123,688 
Accounts receivable, net of allowance of $1,429 and $1,385   333,695    239,319 
Inventories   86,697    78,745 
Assets held for sale   44,428    44,250 
Prepaid tooling, notes receivable, and other   79,755    78,481 
Total current assets   610,177    564,483 
           
Property, plant, and equipment, net   554,549    535,272 
Goodwill   65,732    63,665 
Deferred tax asset   82,217    83,035 
Other assets, net   14,762    13,642 
Total assets  $1,327,437   $1,260,097 
           
LIABILITIES AND EQUITY          
Short-term debt and current maturities of capital lease obligations  $31,785   $42,048 
Accounts payable   350,896    323,271 
Accrued liabilities   142,547    113,949 
Liabilities held for sale   17,228    17,336 
Total current liabilities   542,456    496,604 
           
Long-term debt, net of current maturities   344,218    344,738 
Deferred tax liability   4,916    4,807 
Pension liability   45,577    47,813 
Other non-current liabilities   98,649    96,263 
Total non-current liabilities   493,360    493,621 
Total liabilities   1,035,816    990,225 
           
Stockholders' equity:          
Common stock   224    223 
Additional paid in capital   344,968    344,153 
Treasury stock   (36,882)   (36,408)
Accumulated surplus   40,699    29,712 
Accumulated other comprehensive loss   (57,388)   (67,808)
Total stockholders' equity   291,621    269,872 
           
Total liabilities and stockholders' equity  $1,327,437   $1,260,097 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

 

   Three Months Ended March 31, 
   2018   2017 
         
OPERATING ACTIVITIES:          
Net income  $17,300   $17,413 
Less: Income from discontinued operations, net of tax   862    1,350 
Income from continuing operations  $16,438   $16,063 
           
Adjustments required to reconcile income from continuing operations to net cash used in continuing operating activities:          
Deferred income tax provision  $3,167   $3,955 
Depreciation and amortization   21,395    17,766 
Non-cash share-based compensation   703    499 
Pension income, net of contributions   (2,237)   (2,351)
Change in working capital and other operating items   (55,620)   (84,356)
Net cash used in continuing operating activities  $(16,154)  $(48,424)
           
INVESTING ACTIVITIES:          
Cash disbursed for purchases of property, plant, and equipment, net  $(28,942)  $(23,909)
Net cash used in continuing investing activities  $(28,942)  $(23,909)
           
FINANCING ACTIVITIES:          
Proceeds from borrowings  $4,009   $236,744 
Repayments of  borrowings   (15,966)   (192,426)
Original issuance discount   -    (1,808)
Debt financing costs   -    (4,083)
Dividend payment to Tower stockholders   (2,465)   (2,242)
Proceeds from stock options exercised   112    938 
Purchase of treasury stock   (474)   (761)
Net cash provided by / (used in) continuing financing activities  $(14,784)  $36,362 
           
Discontinued operations:          
Net cash from / (used in) discontinued operating activities  $1,605   $(570)
Net cash used in discontinued investing activities   (1,212)   (406)
Net cash from / (used in) discontinued financing activities   (455)   497 
Net cash used in discontinued operations  $(62)  $(479)
           
Effect of exchange rate changes on continuing cash and cash equivalents  $1,856   $1,185 
           
NET CHANGE IN CASH AND CASH EQUIVALENTS  $(58,086)  $(35,265)
           
CASH AND CASH EQUIVALENTS:          
Beginning of period  $123,688   $62,788 
           
End of period  $65,602   $27,523 

  

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited) 

 

Segment Data  Three Months Ended March 31, 
   2018   2017 
   Revenues   Adjusted EBITDA   Revenues   Adjusted EBITDA 
Europe  $171,618   $8,739   $160,152   $11,176 
North America   391,888    44,370    337,438    34,549 
Consolidated  $563,506   $53,109   $497,590   $45,725 

 

Adjusted EBITDA Reconciliation  Three Months Ended March 31, 
   2018   2017 
Net income attributable to Tower International, Inc.  $17,300   $17,345 
Restructuring and asset impairment charges, net   1,548    3,911 
Depreciation and amortization   21,395    17,766 
Lease expense   2,450    - 
Acquisition costs and other   101    75 
Long-term compensation expense   1,663    912 
Interest expense, net   5,005    406 
Net periodic benefit income   (558)   (479)
Other expense   -    575 
Provision for income taxes   5,067    6,496 
Income from discontinued operations, net of tax   (862)   (1,350)
Net income attributable to noncontrolling interests   -    68 
Adjusted EBITDA  $53,109   $45,725 

 

 

Free Cash Flow Reconciliation  Three Months Ended March 31, 
   2018   2017 
Net cash provided by continuing operating activities  $(16,154)  $(48,424)
Cash disbursed for purchases of PP&E   (28,942)   (23,909)
Free cash flow  $(45,096)  $(72,333)
           

 

Net Debt Reconciliation  March 31,   December 31, 
   2018   2017 
Short-term debt and current maturities of capital lease obligations  $31,785   $42,048 
Long-term debt, net of current maturities   352,074    352,886 
Debt issue costs   (7,856)   (8,148)
Total debt   376,003    386,786 
Less: Cash and cash equivalents   (65,602)   (123,688)
Net debt  $310,401   $263,098 

 

 

 

 

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 
   March 31,   March 31, 
   2018   2017   2018   2017 
                 
Income / (expense) items included in net income, net of tax:                    
Restructuring and asset impairment charges, net                    
One-time restructuring actions  $(835)  $(2,155)  $(1,115)  $(3,476)
Interest expense                    
Mark-to-market gain on derivative financial instruments   -    2,655    -    4,282 
Other Expense                    
Debt refinancing costs   -    (357)   -    (575)
Discontinued operations                    
Income from discontinued operations   862    1,350    862    1,350 
Noncontrolling interests                    
Net income attributable to noncontrolling interests*   -    (68)   -    (68)
Total items included in net income, net of tax  $27   $1,425           
                     
Net income attributable to Tower International, Inc.  $17,300   $17,345           
                     
Memo:  Average shares outstanding (in thousands)                    
Basic   20,557    20,425           
Diluted   20,952    20,820           
                     
Income per common share (GAAP)                    
Basic  $0.84   $0.85           
Diluted   0.83    0.83           
                     
Diluted adjusted earnings per share (non-GAAP)  $0.82   $0.76           

                                                                                                                                  

* Amounts attributable to noncontrolling interests of discontinued operations

 

 

 

 

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