Exhibit 99.1

 

 

  

 

FOR IMMEDIATE RELEASE

 

Tower International Reports Solid Third Quarter Results,
Raises Full Year Adjusted EPS and Free Cash Flow

 

LIVONIA, Mich., Oct. 30, 2014 – Tower International, Inc. [NYSE: TOWR], a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced third quarter 2014 results and updated its outlook for the full year.

 

·

Revenue for the third quarter was $523 million, up 6 percent from $495 million in the third quarter 2013.

 

·

Adjusted EBITDA for the quarter was $50.4 million, compared with $48.4 million a year ago. Volume and mix was net favorable versus a year ago, with good news in North America and Europe and bad news in Brazil. Higher launch cost to support customer new-model programs was a partial offset.

 

·

Net income was $11.2 million, compared with $3.3 million a year ago. As detailed below, this year’s third quarter included certain items that adversely impacted results by $4.5 million. Excluding these items and comparable items in the third quarter of 2013, diluted adjusted earnings were 73 cents per share, up 52% from 48 cents a year ago.

 

·

For full year 2014, Tower is reducing the revenue outlook to $2.175 billion from the prior guidance of $2.20-$2.225 billion, reflecting lower customer production in Europe and Brazil and unfavorable currency translation. Despite these revenue changes, the outlook for adjusted EBITDA, at $217 million, remains within the range of the previous guidance of $217-$220 million. Including other anticipated net improvements, Tower is raising its forecasts for adjusted earnings per share (to $3.10, up 5-15 cents from prior guidance) and adjusted free cash flow (to $25-$30 million versus prior $25 million).

 

·

Tower also recently completed two financing enhancements that further strengthen the company’s financial position and reduce long-term balance sheet risk. In September, a $150 million asset-backed revolver was replaced by a $200 million cash-flow revolver; Tower’s liquidity at September 30 was a record $354 million. In October, the company swapped $200 million of its $450 million Term Loan B maturing in 2020 from variable-rate U.S. Dollar to 4% fixed-rate Euro; this action locked in an attractive long-term interest rate, reduced the company’s exposure to future variable-rate increases, and provided an enterprise-value hedge against changes in the value of the Euro.

 

“With our Third Quarter performance, Tower’s earnings have now met or beat the consensus in all 17 quarters since our IPO in 2010,” said President and CEO Mark Malcolm. “In addition, providing full year earnings and cash-flow guidance within and above the range of prior guidance conveys Tower’s view that the adverse macro developments in Europe and Brazil should be kept in context relative to what we believe is continuing strong total Company performance and a positive future outlook.”

 

 

Tower to Host Conference Call Today at 1 p.m. EDT

 

Tower will discuss its third quarter 2014 results and other related matters in a conference call at 1 p.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. #89247262. 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 (EPS)”, “free cash flow”, “adjusted free cash flow” and “net debt.” 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 presentation. Adjusted earnings per share exclude certain income and expense items described in the reconciliation provided in this presentation. Free cash flow is defined as cash provided by operating activities less cash disbursed for purchases of property, plant and equipment. Adjusted free cash flow is free cash flow excluding cash received or disbursed for customer tooling. Net debt represents total debt less cash and cash equivalents. We use adjusted EBITDA, adjusted earnings per share, free cash flow, adjusted free cash flow and net debt 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. 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 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, diluted adjusted earnings per share and adjusted free cash flow and statements regarding interest rate exposure, new sources of profitable growth, future financial results and the Company’s future business 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:

 

  

	·	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;
	·	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 September 30,								Nine Months Ended September 30,
		2014				2013				2014				2013
Revenues		$	522,645			$	495,197			$	1,647,586			$	1,585,215
Cost of sales			469,930				439,222				1,468,684				1,401,713
Gross profit			52,715				55,975				178,902				183,502
Selling, general, and administrative expenses			34,336				31,290				100,494				98,235
Amortization expense			220				646				1,544				2,134
Restructuring and asset impairment charges, net			1,392				1,575				7,497				18,906
Operating income			16,767				22,464				69,367				64,227
Interest expense			7,418				9,410				22,010				44,375
Interest income			356				283				946				898
Other expense / (income)			(5,549	)			7,490				(5,462	)			48,418
Income / (loss) before provision for income taxes and equity in loss of joint venture			15,254				5,847				53,765				(27,668	)
Provision for income taxes			2,107				1,423				8,009				8,557
Equity in loss of joint venture, net of tax			(245	)			(208	)			(626	)			(373	)
Net income / (loss)			12,902				4,216				45,130				(36,598	)
Less: Net income attributable to the noncontrolling interests			1,741				898				3,018				2,647
Net income / (loss) attributable to Tower International, Inc.		$	11,161			$	3,318			$	42,112			$	(39,245	)
Weighted average common shares outstanding
Basic			20,733,785				20,449,920				20,632,688				20,358,641
Diluted			21,457,369				21,106,471				21,364,800				20,358,641
Net income / (loss) per share attributable to Tower International, Inc.:
Basic		$	0.54			$	0.16			$	2.04			$	(1.93	)
Diluted			0.52				0.16				1.97				(1.93	)

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data - unaudited)

 

		September 30, 2014				December 31, 2013
ASSETS
Cash and cash equivalents		$	126,427			$	134,880
Accounts receivable, net of allowance of $1,763 and $2,071			329,284				255,674
Inventories			91,991				81,278
Deferred tax asset - current			8,454				8,649
Prepaid tooling, notes receivable, and other			53,136				44,896
Total current assets			609,292				525,377
Property, plant, and equipment, net			535,957				549,605
Goodwill			61,672				66,976
Investment in joint venture			7,767				8,624
Deferred tax asset - non-current			3,405				3,732
Other assets, net			26,124				28,679
Total assets		$	1,244,217			$	1,182,993
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt and current maturities of capital lease obligations		$	42,730			$	39,704
Accounts payable			306,693				262,425
Accrued liabilities			129,137				129,167
Total current liabilities			478,560				431,296
Long-term debt, net of current maturities			463,714				454,073
Obligations under capital leases, net of current maturities			8,361				10,013
Deferred tax liability - non-current			14,045				14,381
Pension liability			41,999				54,915
Other non-current liabilities			79,265				81,446
Total non-current liabilities			607,384				614,828
Total liabilities			1,085,944				1,046,124
Stockholders' Equity:
Tower International, Inc.'s stockholders' equity
Preferred stock, $0.01 par value, 50,000,000 authorized and 0 issued and outstanding at September 30, 2014 and December 31, 2013			-				-
Common stock, $0.01 par value, 350,000,000 authorized, 21,391,844 issued and 20,750,478 outstanding at September 30, 2014 and 21,079,027 issued and 20,472,637 outstanding at December 31, 2013			214				211
Additional paid in capital			334,172				327,998
Treasury stock, at cost, 641,366 shares at September 30, 2014 and 606,390 shares at December 31, 2013			(9,516	)			(8,594	)
Accumulated deficit			(215,375	)			(257,487	)
Accumulated other comprehensive income / (loss)			(13,470	)			12,247
Total Tower International, Inc.'s stockholders' equity			96,025				74,375
Noncontrolling interests in subsidiaries			62,248				62,494
Total stockholders' equity			158,273				136,869
Total liabilities and stockholders' equity		$	1,244,217			$	1,182,993

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

 

		Nine Months Ended September 30,
		2014				2013
OPERATING ACTIVITIES:
Net income / (loss)		$	45,130			$	(36,598	)
Adjustments required to reconcile net income / (loss) to net cash provided by continuing operating activities:
Asset impairment charges			-				11,006
Gain on sale of Chinese facility			(5,549	)			-
Term Loan re-pricing fees			87				-
Premium on notes redemption and other fees			-				48,418
Deferred income tax provision			155				373
Depreciation and amortization			72,597				70,933
Non-cash share-based compensation			3,566				3,660
Pension income, net of contributions			(12,916	)			(13,354	)
Change in working capital and other operating items			(61,333	)			(34,669	)
Net cash provided by continuing operating activities		$	41,737			$	49,769
INVESTING ACTIVITIES:
Cash disbursed for purchases of property, plant, and equipment		$	(70,164	)		$	(47,224	)
Proceeds from the sale of Chinese facility			13,817				-
Investment in joint venture			(760	)			(6,293	)
Net proceeds from sale of property, plant, and equipment			-				12,040
Net cash used in continuing investing activities		$	(57,107	)		$	(41,477	)
FINANCING ACTIVITIES:
Proceeds from borrowings		$	102,920			$	457,352
Repayments of  borrowings			(122,323	)			(484,847	)
Proceeds from borrowings on Additional Term Loans			33,145				-
Debt financing costs			(2,561	)			(9,437	)
Secondary stock offering transaction costs			(75	)			-
Proceeds from stock options exercised			2,608				2,067
Purchase of treasury stock			(922	)			(297	)
Noncontrolling interest dividends			(2,529	)			(6,748	)
Proceeds from borrowings on Term Loan Credit Facility			-				417,900
Redemption of notes			-				(361,992	)
Premium paid on redemption of notes and other fees			-				(43,078	)
Premium paid on re-pricing of Term Loan and other fees			-				(4,378	)
Net cash provided by / (used in) continuing financing activities		$	10,263			$	(33,458	)
Discontinued operations:
Net cash from discontinued investing activities		$	-			$	15,694
Net cash from discontinued operations		$	-			$	15,694
Effect of exchange rate changes on continuing cash and cash equivalents		$	(3,346	)		$	1,877
NET CHANGE IN CASH AND CASH EQUIVALENTS		$	(8,453	)		$	(7,595	)
CASH AND CASH EQUIVALENTS:
Beginning of period		$	134,880			$	113,943
End of period		$	126,427			$	106,348

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

 

Segment Data		Three Months Ended September 30,
		2014								2013
		Revenues				Adjusted EBITDA				Revenues				Adjusted EBITDA
International		$	222,081			$	13,284			$	219,250			$	12,795
Americas			300,564				37,126				275,947				35,617
Consolidated		$	522,645			$	50,410			$	495,197			$	48,412

 

		Nine Months Ended September 30,
		2014								2013
		Revenues				Adjusted EBITDA				Revenues				Adjusted EBITDA
International		$	728,859			$	55,396			$	706,253			$	56,791
Americas			918,727				108,324				878,962				105,902
Consolidated		$	1,647,586			$	163,720			$	1,585,215			$	162,693

 

Adjusted EBITDA Reconciliation		Three Months Ended September 30,								Nine Months Ended September 30,
		2014				2013				2014				2013
Adjusted EBITDA		$	50,410			$	48,412			$	163,720			$	162,693
Restructuring and asset impairment charges, net			(1,392	)			(1,575	)			(7,497	)			(18,906	)
Depreciation and amortization			(23,064	)			(22,296	)			(72,597	)			(70,933	)
Acquisition costs and other			(102	)			(335	)			(311	)			(904	)
Long-term compensation expense			(3,076	)			(1,742	)			(7,939	)			(4,888	)
Interest expense, net			(7,062	)			(9,127	)			(21,064	)			(43,477	)
Other (expense) / income			5,549				(7,490	)			5,462				(48,418	)
Commercial settlement related to 2010-13 scrap			(6,009	)			-				(6,009	)			-
Closure of Tower Defense & Aerospace			-				-				-				(2,835	)
Provision for income taxes			(2,107	)			(1,423	)			(8,009	)			(8,557	)
Equity in loss of joint venture, net of tax			(245	)			(208	)			(626	)			(373	)
Net loss attributable to noncontrolling interests			(1,741	)			(898	)			(3,018	)			(2,647	)
Net income / (loss) attributable to Tower International, Inc.		$	11,161			$	3,318			$	42,112			$	(39,245	)

 

Adjusted Free Cash Flow Reconciliation		Three Months Ended September 30,								Nine Months Ended September 30,
		2014				2013				2014				2013
Net cash provided by continuing operating activities		$	18,984			$	37,967			$	41,737			$	49,769
Cash disbursed for purchases of PP&E			(35,902	)			(17,032	)			(70,164	)			(47,224	)
Proceeds from the sale of Chinese facility			-				-				13,817				-
Free cash flow			(16,918	)			20,935				(14,610	)			2,545
Less:  Cash disbursed for customer-owned tooling			(9,932	)			(1,508	)			(26,136	)			(9,858	)
Adjusted free cash flow		$	(6,986	)		$	22,443			$	11,526			$	12,403

 

Net Debt Reconciliation		September 30,				December 31,
		2014				2013
Short-term debt and current maturities of capital lease obligations		$	42,730			$	39,704
Long-term debt, net of current maturities			463,714				454,073
Obligations under capital leases, net of current maturities			8,361				10,013
Total debt			514,805				503,790
Less: Cash and cash equivalents			126,427				134,880
Net debt		$	388,378			$	368,910

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

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

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
Expense items included in net income / (loss), net of tax:
Cost of sales
Commercial settlement related to 2010-13 scrap		$	(6,009	)		$	-			$	(6,009	)		$	-
Closure of Tower Defense & Aerospace			-				-				-				(4,414	)
Selling, general, and administrative expenses
One-time CEO compensation awards			(884	)			-				(884	)			-
Acquisition costs and other			-				-				-				(327	)
Restructuring and asset impairment charges, net
One-time restructuring actions			(349	)			(425	)			(962	)			(1,025	)
Severance costs in Europe *			(103	)			-				(296	)			-
Lease buyout of previously closed facility			-				-				(3,448	)			-
Asset impairment charges			-				-				-				(10,705	)
Facility closure			-				-				-				(3,575	)
Interest expense
Acceleration of the amortization of debt issue costs and OID			-				(1,195	)			-				(11,342	)
Other expense
Gain on sale of Chinese facility **			2,829				-				2,829				-
Secondary stock offering transaction costs			-				(800	)			(87	)			(800	)
Premium on redemption of Senior Secured Notes			-				(2,150	)			-				(42,470	)
Premium and other fees for re-pricing of Term Loan			-				(4,540	)			-				(4,540	)
Breakage of Letter of Credit Facility			-				-				-				(608	)
Provision for income taxes
Foreign subsidiary tax audit			-				2,300				-				2,300
Total items included in net income / (loss)		$	(4,516	)		$	(6,810	)		$	(8,857	)		$	(77,506	)
Net income / (loss) attributable to Tower International, Inc.		$	11,161			$	3,318			$	42,112			$	(39,245	)
Memo:  Average shares outstanding (in thousands)
Basic			20,734				20,450				20,633				20,359
Diluted			21,457				21,106				21,365				20,359
Income / (loss) per common share (GAAP)
Basic		$	0.54			$	0.16			$	2.04			$	(1.93	)
Diluted			0.52				0.16				1.97				(1.93	)
Diluted adjusted earnings per share (non-GAAP) ***			0.73				0.48				2.39				1.83

 

*       Amount is net of tax of $44K and $127K, respectively.

**     Amount is net of tax of $832K and noncontrolling interest of $1.9M.

***  Excludes the certain items shown above.  For the nine months ended September 30, 2013, diluted share count of 20.9 million

         was used to calculated diluted adjusted earnings per share.