Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

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

 

LIVONIA, Mich., Jul. 31, 2018 – Tower International, Inc. [NYSE: TOWR], a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced second quarter 2018 results and affirmed its earnings and free cash flow outlook for 2018.

 

·Revenue for the second quarter was $556 million compared with $490 million in the second quarter of 2017 representing a 13 percent increase.

 

·Net income was $22.4 million or $1.07 per share increasing from $19.2 million or $0.92 per share in the second quarter last year. As detailed below, this year’s second quarter included certain items that, in aggregate, decreased results by $468 thousand. Excluding these items and comparable items in the second quarter of 2017, adjusted earnings per share amounted to $1.09, an increase of 12 percent from the $0.97 reported a year ago.

 

·Adjusted EBITDA for the quarter was $58.2 million slightly ahead of the Company’s outlook and up 10 percent from $52.8 million a year ago.

 

·For the quarter, net cash provided by continuing operating activities was $49 million. Cash disbursed for purchases of equipment totaled $40 million resulting in Free Cash Flow of $9 million.

 

·Full year 2018 outlook includes:

 

oRevenue of $2.17 billion, reflecting primarily net new business of $125 million, favorable foreign exchange and higher steel prices;
oAdjusted EBITDA of $230 million;
oDiluted Adjusted EPS of $4.10 per share; and
oFree Cash Flow of $50 million, with strong free cash flow in the second half of the year more than offsetting the cash outflow in the first half of the year.

 

·The Company’s outlook for third quarter 2018 includes revenue of $525 million, Adjusted EBITDA of $57 million and Diluted Adjusted Earnings Per Share of $1.04.

 

“We remain balanced in our approach of growing profitably, reducing leverage – as evidenced by our July pay down of $50 million of Term Loan debt, and returning capital to shareholders,” said CEO Jim Gouin.  “Tower delivered solid financial results in the second quarter as Adjusted EBITDA and Adjusted EPS both increased by more than 10 percent. 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. Tower’s North American revenue continued to significantly outpace the market, growing by 16 percent while the industry production declined by 2 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 second 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. #5089747. 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 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 third quarter earnings and revenues, 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;
·changes to U.S. trade and tariff policies and the reaction of other countries thereto;
·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 June 30,   Six Months Ended June 30, 
   2018   2017   2018   2017 
                 
Revenues  $556,007   $489,925   $1,119,513   $987,515 
Cost of sales   491,948    428,807    995,608    870,097 
Gross profit   64,059    61,118    123,905    117,418 
Selling, general, and administrative expenses   30,869    29,007    63,103    58,232 
Amortization expense   108    113    220    216 
Restructuring and asset impairment charges, net   269    3,337    1,817    7,248 
  Operating income   32,813    28,661    58,765    51,722 
Interest expense   5,255    1,807    10,417    2,260 
Interest income   112    86    269    133 
Net periodic benefit income   559    479    1,117    958 
Other expense   977    -    977    575 
Income before provision for income taxes and income / (loss) from discontinued operations   27,252    27,419    48,757    49,978 
Provision  for income taxes   5,539    7,672    10,606    14,168 
Income from continuing operations   21,713    19,747    38,151    35,810 
Income / (loss) from discontinued operations, net of tax   663    (489)   1,525    861 
        Net income   22,376    19,258    39,676    36,671 
Less: Net income attributable to the noncontrolling interests   -    42    -    110 
Net income attributable to Tower International, Inc.  $22,376   $19,216   $39,676   $36,561 
                     
Weighted average basic shares outstanding   20,597,482    20,508,890    20,577,161    20,467,281 
Weighted average diluted shares outstanding   20,986,122    20,805,931    20,969,142    20,813,100 
                     
Basic income per share attributable to Tower International, Inc.:                    
Income per share from continuing operations  $1.05   $0.96   $1.85   $1.74 
Income / (loss) per share from discontinued operations   0.03    (0.02)   0.07    0.04 
Income per share   1.09    0.94    1.93    1.79 
                     
Diluted income per share attributable to Tower International, Inc.:                    
Income per share from continuing operations  $1.04   $0.95   $1.82   $1.72 
Income / (loss) per share from discontinued operations   0.03    (0.02)   0.07    0.04 
Income per share   1.07    0.92    1.89    1.76 
                     
Dividends declared per share  $0.12   $0.11   $0.24   $0.22 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)

          

   June 30,   December 31, 
   2018   2017 
         
ASSETS          
Cash and cash equivalents  $72,107   $123,688 
Accounts receivable, net of allowance of $1,531 and $1,385   293,093    239,319 
Inventories   86,398    78,745 
Assets held for sale   32,361    44,250 
Prepaid tooling, notes receivable, and other   59,715    78,481 
Total current assets   543,674    564,483 
           
Property, plant, and equipment, net   550,434    535,272 
Goodwill   62,118    63,665 
Deferred tax asset   76,890    83,035 
Other assets, net   14,005    13,642 
Total assets  $1,247,121   $1,260,097 
           
LIABILITIES AND EQUITY          
Short-term debt and current maturities of capital lease obligations  $28,899   $42,048 
Accounts payable   319,243    323,271 
Accrued liabilities   105,361    113,949 
Liabilities held for sale   13,818    17,336 
Total current liabilities   467,321    496,604 
           
Long-term debt, net of current maturities   343,790    344,738 
Deferred tax liability   4,660    4,807 
Pension liability   43,159    47,813 
Other non-current liabilities   90,488    96,263 
Total non-current liabilities   482,097    493,621 
Total liabilities   949,418    990,225 
           
Stockholders' equity:          
Common stock   224    223 
Additional paid in capital   345,980    344,153 
Treasury stock   (36,882)   (36,408)
Accumulated surplus   60,603    29,712 
Accumulated other comprehensive loss   (72,222)   (67,808)
Total stockholders' equity   297,703    269,872 
           
Total liabilities and stockholders' equity  $1,247,121   $1,260,097 

  

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

                  

   Three Months Ended June 30,   Six Months Ended June 30, 
   2018   2017   2018   2017 
                 
OPERATING ACTIVITIES:                    
Net income  $22,376   $19,258   $39,676   $36,671 
Less: Income / (loss) from discontinued operations, net of tax   663    (489)   1,525    861 
Income from continuing operations  $21,713   $19,747   $38,151   $35,810 
                     
Adjustments required to reconcile income from continuing operations to net cash provided by / (used in) continuing operating activities:                    
Deferred income tax provision  $3,966   $6,010   $7,133   $9,965 
Depreciation and amortization   20,756    18,766    42,151    36,532 
Non-cash share-based compensation   905    599    1,609    1,098 
Pension income, net of contributions   (2,418)   (2,500)   (4,655)   (4,851)
Change in working capital and other operating items   3,760    (4,286)   (51,862)   (88,794)
Net cash provided by / (used in) continuing operating activities  $48,682   $38,336   $32,527   $(10,240)
                     
INVESTING ACTIVITIES:                    
Cash disbursed for purchases of property, plant, and equipment, net  $(39,639)  $(20,252)  $(68,581)  $(44,161)
Proceeds from disposition of joint venture, net   4,314    15,944    4,314    15,944 
Net cash used in continuing investing activities  $(35,325)  $(4,308)  $(64,267)  $(28,217)
                     
FINANCING ACTIVITIES:                    
Proceeds from borrowings  $41,175   $137,109   $45,184   $373,853 
Repayments of  borrowings   (43,307)   (143,606)   (59,273)   (336,032)
Original issuance discount   -    -    -    (1,808)
Debt financing costs   -    (664)   -    (4,747)
Dividend payment to Tower stockholders   (2,472)   (2,256)   (4,937)   (4,498)
Proceeds from stock options exercised   107    114    219    1,052 
Purchase of treasury stock   -    (1)   (474)   (762)
Net cash provided by / (used in) continuing financing activities  $(4,497)  $(9,304)  $(19,281)  $27,058 
                     
Discontinued operations:                    
Net cash from discontinued operating activities  $2,779   $644   $4,384   $74 
Net cash used in discontinued investing activities   (789)   (604)   (2,001)   (1,010)
Net cash from / (used in) discontinued financing activities   (469)   423    (924)   920 
Net cash from / (used in) discontinued operations  $1,521   $463   $1,459   $(16)
                     
Effect of exchange rate changes on continuing cash and cash equivalents  $(3,876)  $2,084   $(2,019)  $3,421 
                     
NET CHANGE IN CASH AND CASH EQUIVALENTS  $6,505   $27,271   $(51,581)  $(7,994)
                     
CASH AND CASH EQUIVALENTS:                    
Beginning of period  $65,602   $27,523   $123,688   $62,788 
                     
End of period  $72,107   $54,794   $72,107   $54,794 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

                  

Segment Data  Three Months Ended June 30, 
   2018   2017 
   Revenues   Adjusted EBITDA   Revenues   Adjusted EBITDA 
Europe  $173,844   $10,442   $160,229   $13,628 
North America   382,163    47,777    329,696    39,137 
Consolidated  $556,007   $58,219   $489,925   $52,765 

 

   Six Months Ended June 30, 
   2018   2017 
   Revenues   Adjusted EBITDA   Revenues   Adjusted EBITDA 
Europe  $345,483   $19,171   $320,381   $24,800 
North America   774,030    92,157    667,134    73,690 
Consolidated  $1,119,513   $111,328   $987,515   $98,490 

 

Adjusted EBITDA Reconciliation  Three Months Ended June 30,   Six Months Ended June 30, 
   2018   2017   2018   2017 
Net income attributable to Tower International, Inc.  $22,376   $19,216   $39,676   $36,561 
Restructuring and asset impairment charges, net   269    3,337    1,817    7,248 
Depreciation and amortization   20,756    18,766    42,151    36,532 
Lease expense   2,450    -    4,900    - 
Acquisition costs and other   200    109    301    184 
Long-term compensation expense   1,731    1,892    3,394    2,804 
Interest expense, net   5,143    1,721    10,148    2,127 
Net periodic benefit income   (559)   (479)   (1,117)   (958)
Other expense   977    -    977    575 
Provision for income taxes   5,539    7,672    10,606    14,168 
(Income) / loss from discontinued operations, net of tax   (663)   489    (1,525)   (861)
Net income attributable to noncontrolling interests   -    42    -    110 
Adjusted EBITDA  $58,219   $52,765   $111,328   $98,490 

 

Free Cash Flow Reconciliation  Three Months Ended June 30,   Six Months Ended June 30, 
   2018   2017   2018   2017 
Net cash provided by continuing operating activities  $48,682   $38,336   $32,527   $(10,240)
Cash disbursed for purchases of PP&E   (39,639)   (20,252)   (68,581)   (44,161)
Free cash flow  $9,043   $18,084   $(36,054)  $(54,401)

 

Net Debt Reconciliation  June 30,   December 31,         
   2018   2017         
Short-term debt and current maturities of capital lease obligations  $28,899   $42,048           
Long-term debt, net of current maturities   351,262    352,886           
Debt issue costs   (7,472)   (8,148           
Total debt   372,689    386,786           
Less: Cash and cash equivalents   (72,107)   (123,688           
Net debt  $300,582   $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 
   June 30,   June 30, 
   2018   2017   2018   2017 
                 
Income / (expense) items included in net income, net of tax:                    
Restructuring and asset impairment charges, net                    
One-time restructuring actions  $(388)  $(2,006)  $(543)  $(3,157)
Interest expense                    
Mark-to-market gain on derivative financial instruments   -    1,631    -    2,630 
Other Expense                    
Acquisition related diligence costs   (743)   -    (977)   - 
Discontinued operations                    
Loss on sale of joint venture   -    (2,596)   -    (2,596)
Income from discontinued operations   663    2,108    663    2,108 
Noncontrolling interests                    
Net income attributable to noncontrolling interests*   -    (42)   -    (42)
Total items included in net income, net of tax  $(468)  $(905)          
                     
Net income attributable to Tower International, Inc.  $22,376   $19,216           
                     
Memo:  Average shares outstanding (in thousands)                    
Basic   20,597    20,509           
Diluted   20,986    20,806           
                     
Income per common share (GAAP)                    
Basic  $1.09   $0.94           
Diluted   1.07    0.92           
                     
Diluted adjusted earnings per share (non-GAAP)  $1.09   $0.97           

 

*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, 
   2018   2017   2018   2017 
                 
Income / (expense) items included in net income, net of tax:                    
Restructuring and asset impairment charges, net                    
One-time restructuring actions  $(1,223)  $(4,161)  $(1,658)  $(6,633)
Interest expense                    
Mark-to-market gain on derivative financial instruments   -    4,286    -    6,912 
Other Expense                    
Debt refinancing costs   -    (357)   -    (575)
Acquisition related diligence costs   (743)   -    (977)   - 
Discontinued operations                    
Loss on sale of joint venture   -    (2,596)   -    (2,596)
Income from discontinued operations   1,525    3,458    1,525    3,458 
Noncontrolling interests                    
Net income attributable to noncontrolling interests*   -    (110)   -    (110)
Total items included in net income, net of tax  $(441)  $520           
                     
Net income attributable to Tower International, Inc.  $39,676   $36,561           
                     
Memo:  Average shares outstanding (in thousands)                    
Basic   20,577    20,467           
Diluted   20,969    20,813           
                     
Income per common share (GAAP)                    
Basic  $1.93   $1.79           
Diluted   1.89    1.76           
                     
Diluted adjusted earnings per share (non-GAAP)  $1.91   $1.73           

 

*Amounts attributable to noncontrolling interests of discontinued operations

 

 

 

 

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