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