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| 8-K - FORM 8-K - Tower International, Inc. | v302916_8k.htm |
Tower International Reports Improved Fourth Quarter and Full Year Results
LIVONIA, Mich., Feb. 16, 2012 /PRNewswire/ -- Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered structural metal components and assemblies, today announced its fourth quarter and full year 2011 results and provided preliminary outlooks for 2012 and 2013.
- Revenue for the quarter was $615 million, up 14 percent from $542 million in the fourth quarter 2010. Excluding changes in exchange rates and steel pricing, revenue was up 10 percent.
- Adjusted EBITDA for the quarter was $57.4 million, up 18 percent from $48.7 million a year ago. The improvement was driven by higher volume and efficiencies that exceeded customer price reductions and economics, offset partially by unfavorable mix.
- Net income for the fourth quarter of 2011 was $6.7 million, compared with a net loss of $21.3 million a year ago. As detailed below, this year's fourth quarter included certain items that adversely impacted results by $4.8 million. Excluding these items and comparable items in the fourth quarter of 2010, diluted adjusted earnings per common share were $0.57, compared with loss of $0.24 per share a year ago.
- Free cash flow in the fourth quarter was seasonally strong at $62 million, and liquidity at year-end was also strong at $258 million.
- For full year 2011, revenue of $2.4 billion was up 14 percent from 2010 at constant exchange rates and steel pricing. Adjusted EBITDA was $227.6 million, up 20 percent from $190.2 million in 2010. Net income was $8.1 million, including certain items that adversely impacted results by $16.7 million. Excluding these items and comparable items a year ago, full year 2011 diluted adjusted earnings per share were $1.23, compared with a loss of $1.67 per share in 2010.
- Tower is providing a preliminary outlook for 2012 revenue of approximately $2.3 billion and Adjusted EBITDA of approximately $205 million. The main changes from the directional outlook provided last November are more-conservative planning assumptions for European industry production, down 8 percent from 2011, and the Euro, at average $1.30 compared with $1.39 in 2011.
- Tower is confident that financial results in 2013 will exceed 2012 and 2011, reflecting in large part a revenue backlog of about $200 million.
"In our first full year since the IPO, Tower's financial results significantly exceeded initial expectations," said President and CEO Mark Malcolm. "More importantly, we built an excellent foundation for the future by achieving better-than-expected growth in our 2013 revenue backlog and by making progress on each element of our balanced long-term game plan. Progress includes major growth actions in the secular growth markets of China and Brazil, further reduction in balance sheet leverage, and an opportunistic acquisition that builds on our core strengths in the automotive business to position Tower as a uniquely capable supplier with additional long-term profitable growth potential in the defense, aerospace, and industrial markets."
Tower to Host Conference Call Today at 1 p.m. EST
Tower will discuss its fourth quarter 2011 results and other related matters in a conference call at 1 p.m. EST 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 1-866-393-4576, international callers should dial 1-706-679-1462. An audio recording of the call will be available approximately two hours after the completion of the call. To access this recording, please dial 1-800-585-8367 (domestic) or 1-404-537-3406 (international) and reference Conference I.D. #49865415. 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," "free cash flow," "net debt," and "diluted adjusted income / (loss) per share." 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. Free cash flow is defined as net cash provided by or used in operating activities less cash disbursed for purchases of property, plant and equipment. Net debt is defined as total debt less cash and cash equivalents. Diluted adjusted income / (loss) per share excludes the impact of certain items as described below that are included in our net income / (loss). We use Adjusted EBITDA 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. We believe these items as well as the non-GAAP financial measures of net debt and diluted adjusted income / (loss) per share are useful to investors as they provide an additional tool for investors to use in evaluating operating results and trends, and in comparing our financial results with other companies. 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 are not measures of performance under GAAP and 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. In addition, certain of our non-GAAP financial measures exclude financial information that some may consider important in evaluating our performance. Given the inherent uncertainty regarding special items and other expense 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. 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 revenue, Adjusted EBITDA, free cash flow, earnings, financial results and its future sales growth outlook. 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:
- automobile production volumes;
- the financial condition of our customers and suppliers;
- our ability to make scheduled payments on our indebtedness and comply with the covenants and restrictions contained in the instruments governing our indebtedness;
- our ability to refinance our indebtedness;
- our ability to generate non-automotive revenues;
- 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; 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@towerautomotive.com
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Amounts in thousands, except share and per share amounts - unaudited) | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
2011 | 2010 | 2011 | 2010 | |||||
Revenues | $ 614,745 | $ 541,607 | $ 2,406,089 | $ 1,997,058 | ||||
Cost of sales | 546,558 | 484,666 | 2,149,977 | 1,786,476 | ||||
Gross profit | 68,187 | 56,941 | 256,112 | 210,582 | ||||
Selling, general and administrative expenses | 39,199 | 40,887 | 158,392 | 143,975 | ||||
Amortization expense | 1,191 | 880 | 4,589 | 3,265 | ||||
Restructuring and asset impairment charges, net | 514 | 9,281 | 2,660 | 14,288 | ||||
Operating income | 27,283 | 5,893 | 90,471 | 49,054 | ||||
Interest expense | 16,533 | 18,447 | 62,133 | 66,872 | ||||
Interest income | 199 | 102 | 978 | 962 | ||||
Other expense | 131 | 1,300 | 1,331 | 1,300 | ||||
Income / (loss) before provision for income taxes | 10,818 | (13,752) | 27,985 | (18,156) | ||||
Provision / (benefit) for income taxes | 3,082 | 5,672 | 14,812 | 10,297 | ||||
Net income / (loss) | 7,736 | (19,424) | 13,173 | (28,453) | ||||
Less: Net income attributable to the noncontrolling interests | 1,072 | 1,898 | 5,109 | 8,441 | ||||
Net income / (loss) attributable to Tower International, Inc. | $ 6,664 | $ (21,322) | $ 8,064 | $ (36,894) | ||||
Less: Preferred unit dividends | $ - | $ - | $ - | $ (10,707) | ||||
Net income / (loss) available to common shareholders | $ 6,664 | $ (21,322) | $ 8,064 | $ (47,601) | ||||
Weighted average common shares outstanding | ||||||||
Basic | 19,683,032 | 18,012,862 | 19,364,433 | 13,865,509 | ||||
Diluted | 20,221,004 | 18,012,862 | 20,069,532 | 13,865,509 | ||||
Net income / (loss) per share attributable to Tower International, Inc.: | ||||||||
Basic | $ 0.34 | $ (1.18) | $ 0.42 | $ (3.43) | ||||
Diluted | 0.33 | (1.18) | 0.40 | (3.43) | ||||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(Amounts in thousands - unaudited) | ||||
December 31, 2011 | December 31, 2010 | |||
ASSETS | ||||
Cash and cash equivalents | $ 134,984 | $ 150,345 | ||
Accounts receivable, net of allowance of $3,612 and $1,674 | 327,992 | 297,086 | ||
Inventories | 85,100 | 73,189 | ||
Deferred tax asset - current | 12,966 | 12,406 | ||
Assets held for sale | 4,027 | 8,178 | ||
Prepaid tooling and other | 56,189 | 57,754 | ||
Total current assets | 621,258 | 598,958 | ||
Property, plant and equipment, net | 667,686 | 627,497 | ||
Goodwill | 63,983 | 66,309 | ||
Deferred tax asset - non-current | 14,450 | 17,377 | ||
Other assets, net | 30,001 | 30,035 | ||
Total assets | $ 1,397,378 | $ 1,340,176 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Short-term debt and current maturities of capital lease obligations | $ 109,447 | $ 109,848 | ||
Accounts payable | 395,287 | 366,761 | ||
Accrued liabilities | 126,416 | 132,614 | ||
Total current liabilities | 631,150 | 609,223 | ||
Long-term debt, net of current maturities | 461,838 | 432,726 | ||
Obligations under capital leases, net of current maturities | 12,213 | 15,604 | ||
Deferred tax liability - non-current | 11,229 | 12,710 | ||
Pension liability | 96,223 | 76,403 | ||
Other non-current liabilities | 87,265 | 81,884 | ||
Total non-current liabilities | 668,768 | 619,327 | ||
Total liabilities | 1,299,918 | 1,228,550 | ||
Stockholders' equity: | ||||
Tower International, Inc.'s stockholders' equity | ||||
Common stock, $0.01 par value, 350,000,000 authorized, 19,983,403 issued and 19,683,032 outstanding at December 31, 2011 and 19,101,588 issued and outstanding at December 31, 2010 | 200 | 191 | ||
Additional paid in capital | 311,427 | 296,262 | ||
Treasury stock, at cost, 300,371 shares as of December 31, 2011 | (5,130) | - | ||
Accumulated deficit | (184,492) | (192,556) | ||
Accumulated other comprehensive loss | (82,002) | (36,530) | ||
Total Tower International, Inc.'s stockholders' equity | 40,003 | 67,367 | ||
Noncontrolling interests in subsidiaries | 57,457 | 44,259 | ||
Total stockholders' equity | 97,460 | 111,626 | ||
Total liabilities and stockholders' equity | $ 1,397,378 | $ 1,340,176 | ||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Amounts in thousands - unaudited) | ||||||||
Three Months Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2011 | 2010 | 2011 | 2010 | |||||
OPERATING ACTIVITIES: | ||||||||
Net income / (loss) | $ 7,732 | $ (19,424) | $ 13,169 | $ (28,453) | ||||
Adjustments required to reconcile net income / (loss) to net cash provided by operating activities: | ||||||||
Non-cash restructuring and asset impairment charges | - | 9,999 | - | 9,999 | ||||
Deferred income tax provision | 229 | (4,793) | (640) | (13,851) | ||||
Depreciation and amortization | 25,063 | 28,426 | 114,578 | 114,668 | ||||
Non-cash share-based compensation | 3,874 | 3,047 | 15,174 | 3,047 | ||||
Pension expense, net of contributions | (2,204) | (1,210) | (12,992) | (5,619) | ||||
Change in working capital and other operating items | 64,792 | 72,914 | (28,831) | 40,568 | ||||
Net cash provided by operating activities | $ 99,486 | $ 88,959 | $ 100,458 | $ 120,359 | ||||
INVESTING ACTIVITIES: | ||||||||
Cash disbursed for purchases of property, plant and equipment, net | $ (37,484) | $ (44,559) | $ (120,409) | $ (100,495) | ||||
Net assets acquired, net of cash acquired | - | - | (22,300) | (16,687) | ||||
Net cash used in investing activities | $ (37,484) | $ (44,559) | $ (142,709) | $ (117,182) | ||||
FINANCING ACTIVITIES: | ||||||||
Repayments of term debt | $ - | $ - | $ - | $ (3,484) | ||||
Repayment of first lien term loan | - | - | - | (414,172) | ||||
Preferred unit dividends | - | - | - | (95) | ||||
Noncontrolling interest dividends | - | - | - | (5,257) | ||||
Issuance of senior secured notes | - | - | - | 417,203 | ||||
Retirement of senior secured notes | (7,500) | (26,000) | (42,008) | (26,000) | ||||
Proceeds from borrowings | 178,155 | 29,982 | 682,204 | 418,237 | ||||
Repayments of borrowings | (194,018) | (89,893) | (608,767) | (452,286) | ||||
Purchase of treasury stock | - | - | (5,130) | - | ||||
Financing costs | - | (548) | - | (8,356) | ||||
Costs associated with pending initial public offering | - | 76,550 | - | 74,021 | ||||
Net cash provided by financing activities | $ (23,363) | $ (9,909) | $ 26,299 | $ (189) | ||||
Effect of exchange rate changes on cash and cash equivalents | $ (355) | $ 875 | $ 591 | $ (2,445) | ||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | $ 38,284 | $ 35,366 | $ (15,361) | $ 543 | ||||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of period | $ 96,700 | $ 114,979 | $ 150,345 | $ 149,802 | ||||
End of period | $ 134,984 | $ 150,345 | $ 134,984 | $ 150,345 | ||||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||
SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS | ||||||||
(Amounts in thousands - unaudited) | ||||||||
Segment Data | Three Months Ended December 31, | |||||||
2011 | 2010 | |||||||
Revenues | Adjusted EBITDA | Revenues | Adjusted EBITDA | |||||
International | $ 341,451 | $ 31,355 | $ 326,027 | $ 37,091 | ||||
Americas | 273,294 | 26,116 | 215,580 | 11,639 | ||||
Consolidated | $ 614,745 | $ 57,471 | $ 541,607 | $ 48,730 | ||||
Year Ended December 31, | ||||||||
2011 | 2010 | |||||||
Revenues | Adjusted EBITDA | Revenues | Adjusted EBITDA | |||||
International | $ 1,334,033 | $ 118,290 | $ 1,147,614 | $ 125,545 | ||||
Americas | 1,072,056 | 109,323 | 849,444 | 64,690 | ||||
Consolidated | $ 2,406,089 | $ 227,613 | $ 1,997,058 | $ 190,235 | ||||
Adjusted EBITDA reconciliation | Three Months Ended December 31, | Year Ended December 31, | ||||||
2011 | 2010 | 2011 | 2010 | |||||
Adjusted EBITDA | $ 57,471 | $ 48,730 | $ 227,613 | $ 190,235 | ||||
Restructuring | (514) | (9,281) | (2,660) | (14,288) | ||||
Depreciation and amortization | (25,063) | (28,427) | (114,578) | (114,668) | ||||
Receivable factoring charges and other | (107) | (113) | (453) | (471) | ||||
Acquisition costs | - | - | (1,100) | (679) | ||||
Expense related to the compensation programs | (4,503) | (5,016) | (18,351) | (11,075) | ||||
Interest expense, net | (16,335) | (18,345) | (61,155) | (65,910) | ||||
Other expense | (131) | (1,300) | (1,331) | (1,300) | ||||
Provision for income taxes | (3,082) | (5,672) | (14,812) | (10,297) | ||||
Net income attributable to noncontrolling interests | (1,072) | (1,898) | (5,109) | (8,441) | ||||
Net income / (loss) attributable to Tower International, Inc. | $ 6,664 | $ (21,322) | $ 8,064 | $ (36,894) | ||||
Free cash flow reconciliation | Three Months Ended December 31, | Year Ended December 31, | ||||||
2011 | 2010 | 2011 | 2010 | |||||
Net cash provided by operating activities | $ 99,486 | $ 88,959 | $ 100,458 | $ 120,359 | ||||
Cash disbursed for purchases of PP&E, net | (37,484) | (44,559) | (120,409) | (100,495) | ||||
Free cash flow | $ 62,002 | $ 44,400 | $ (19,951) | $ 19,864 | ||||
Net debt reconciliation | December 31, | December 31, | ||||||
2011 | 2010 | |||||||
Current maturities of long-term debt and capital lease obligations | $ 109,447 | $ 109,848 | ||||||
Long-term debt, net of current maturities | 461,838 | 432,726 | ||||||
Obligations under capital leases, net of current maturities | 12,213 | 15,604 | ||||||
Total debt | 583,498 | 558,178 | ||||||
Less: cash and cash equivalents | (134,984) | (150,345) | ||||||
Net debt | $ 448,514 | $ 407,833 | ||||||
TOWER INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||
CERTAIN ITEMS INCLUDED IN NET INCOME / (LOSS) | ||||||||
(Amounts in thousands, except per share amounts - unaudited) | ||||||||
Three Months Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2011 | 2010 | 2011 | 2010 | |||||
Income / (expense) items included in net income / (loss), net of tax: | ||||||||
Selling, general and administrative expenses | ||||||||
Incentive compensation related to funding events | $ (4,349) | $ (4,793) | $ (17,521) | $ (10,852) | ||||
Acquisition costs | - | - | (1,100) | (679) | ||||
Interest expense | ||||||||
Acceleration of the amortization of debt issue costs and OID | (302) | (1,247) | (1,760) | (6,574) | ||||
Settlement of value added tax audit in Brazil | - | - | 2,838 | - | ||||
Restructuring expense | ||||||||
Asset impairments | - | (7,300) | - | (9,142) | ||||
Adjustment of lease liability | - | - | 754 | - | ||||
Sale of closed facilities | - | (2,327) | - | (1,680) | ||||
Other items | ||||||||
Partial retirement of senior secured notes | (131) | (1,300) | (1,331) | (1,300) | ||||
Provision for income taxes | ||||||||
Reversal of South Korean valuation allowance | - | - | - | 7,785 | ||||
Tax effect for termination of interest rate swaps | - | - | - | (2,000) | ||||
Tax law and tax election changes | - | - | 1,406 | - | ||||
Total items included in net income / (loss) | $ (4,782) | $ (16,967) | $ (16,714) | $ (24,442) | ||||
Net income / (loss) attributable to Tower International, Inc. | $ 6,664 | $ (21,322) | $ 8,064 | $ (36,894) | ||||
Less: Preferred unit dividends | - | - | - | (10,707) | ||||
Income / (loss) available to common shareholders | $ 6,664 | $ (21,322) | $ 8,064 | $ (47,601) | ||||
Memo: Average shares outstanding (in thousands) | ||||||||
Basic | 19,683 | 18,013 | 19,364 | 13,866 | ||||
Diluted | 20,221 | 18,013 | 20,070 | 13,866 | ||||
Income / (loss) per common share (GAAP) | ||||||||
Basic | $ 0.34 | $ (1.18) | $ 0.42 | $ (3.43) | ||||
Diluted | 0.33 | (1.18) | 0.40 | (3.43) | ||||
Diluted adjusted income / (loss) per share (non-GAAP)* | 0.57 | (0.24) | 1.23 | (1.67) | ||||
* Excludes the certain items shown above | ||||||||