Exhibit 99.1

 

 

 

 

FOR IMMEDIATE RELEASE

 

Tower International Reports Solid Second Quarter Results and Further Bolsters Growth Outlook in North America

 

LIVONIA, Mich., July 30, 2015 – Tower International, Inc. [NYSE: TOWR], a leading integrated global manufacturer of engineered automotive structural metal components and assemblies, today announced second quarter 2015 results, updated its outlook for full year 2015, and discussed related business developments.

 

·

Revenue for the second quarter was $490 million, matching the company’s guidance. At constant exchange rates, revenue was $541 million, compared with $549 million in the second quarter 2014. The quarterly revenue comparison was adversely affected by the timing of customer model changes in North America; Tower North America remains on track for 5% or better growth for full year 2015.

 

·

Adjusted EBITDA for the quarter was $53.3 million, compared with $55.2 million a year ago. The decline was more than explained by unfavorable currency translation. Adjusted EBITDA was $1.3 million better than guidance. Adjusted EBITDA margin was 10.9%, up from 10.1% last year, reflecting good net cost performance that was aided in part by favorable calendarization timing.

 

·

Net income was $18.6 million, compared with $16.1 million last year. As detailed below, this year’s second quarter included certain items that adversely impacted results by $3.9 million. Excluding these items and comparable items in the second quarter of 2014, diluted adjusted earnings were $1.05 per share, up 19 percent from 88 cents a year ago.

 

·

Net debt (excluding cash attributable to discontinued operations) was $342 million at June 30, an improvement of $45 million from a year ago. Liquidity was $345 million, up $32 million.

 

·

The Company’s growth prospects in North America have recently been further bolstered in two ways: a major follow-on new business award and the acquisition of a stamping supplier in Mexico. The new business award is projected to add about $70 million of booked annual revenue, achieving the high end of the potential range discussed last quarter. The acquisition in Mexico provides a further foothold in that high-growth market and is expected to be immediately accretive, adding about 10 cents to earnings per share on an annual basis. Present annual revenue is about $40 million; industry production growth in Mexico is projected at about an 8% annual rate through 2020, and we expect to grow this business at about a 10% rate during this period. The purchase price (net of acquired net cash) was about $21 million, or approximately four times projected 2015 adjusted EBITDA.

 

·

Revenue and earnings guidance for full 2015 are largely unchanged, with the main factors expected to be essentially offsetting this year. Revenue is now anticipated to be about $1,970 million, up $20 million from prior guidance, with projected favorable currency translation (including the Euro assumed at $1.10 in the second half) and the Mexican acquisition overcoming significantly lower industry and customer volumes in Brazil. The full year earnings outlook remains the same, with adjusted EBITDA at $190 million and diluted adjusted earnings per share at $3.15. In addition to the above revenue-related factors, up-front expenses for the additional new business award are expected to be offset by further improvements in Europe and North America.

 

  

·

With the additional investment required this year to support the new business award, adjusted free cash flow is now projected at about breakeven for the full year, reflecting capital deployment to enhance future growth. Excluding investment for the major new award that is expected to meaningfully benefit revenue beginning next year, adjusted free cash flow would be forecast at $55 million; also including the cash gains realized earlier this year from re-pricing Tower’s debt swaps, the outlook for full year 2015 adjusted free cash flow would be about $87 million.

 

“We are effectively managing our way through several factors that are affecting near-term results, including the major volume downturn in Brazil, currency changes, and start-up expenses related to major new business. Looking beyond these factors, the underlying positives are very encouraging,” said President and CEO Mark Malcolm. “In Europe, our business is improving margin, reflecting both industry and company improvements, and in North America, our already strong momentum has accelerated further. We now project about 15% organic revenue growth for Tower North America from 2015 to 2017, plus the recent acquisition. This bodes well for Tower’s future.”

 

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

 

Tower will discuss its second quarter 2015 results, the outlook for full year 2015, 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 (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. #88713369. 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 (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 accompanying 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 accompanying this press release. 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 EBITDA margin, 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, adjusted free cash flow and statements regarding growth prospects, organic revenue growth, the projected impact of the referenced new business award and Mexican acquisition, industry production growth, projected currency translation, 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 June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Revenues		$	490,268			$	548,467			$	986,896			$	1,067,730
Cost of sales			427,948				486,118				868,086				944,592
Gross profit			62,320				62,349				118,810				123,138
Selling, general, and administrative expenses			31,796				31,606				63,328				65,711
Amortization expense			-				667				-				1,324
Restructuring and asset impairment charges, net			5,493				4,716				6,524				6,105
Operating income			25,031				25,360				48,958				49,998
Interest expense			4,001				7,337				11,851				14,505
Interest income			101				133				226				265
Other expense			-				-				-				87
Income before provision for income taxes and equity in profit of joint venture			21,131				18,156				37,333				35,671
Provision for income taxes			2,374				2,661				4,473				5,495
Equity in loss of joint venture, net of tax			(283	)			(222	)			(189	)			(381	)
Income from continuing operations			18,474				15,273				32,671				29,795
Income from discontinued operations, net of tax			665				1,677				589				2,433
Net income			19,139				16,950				33,260				32,228
Less: Net income attributable to the noncontrolling interests			493				854				573				1,277
Net income attributable to Tower International, Inc.		$	18,646			$	16,096			$	32,687			$	30,951
Weighted average basic shares outstanding			21,104,735				20,651,097				21,077,633				20,582,140
Weighted average diluted shares outstanding			21,403,354				21,373,867				21,382,041				21,318,515
Basic income per share attributable to Tower International, Inc.:
Income per share from continuing operations		$	0.85			$	0.70			$	1.52			$	1.39
Income per share from discontinued operations			0.03				0.08				0.03				0.11
Income per share			0.88				0.78				1.55				1.50
Diluted income per share attributable to Tower International, Inc.:
Income per share from continuing operations		$	0.84			$	0.67			$	1.50			$	1.34
Income per share from discontinued operations			0.03				0.08				0.03				0.11
Income per share			0.87				0.75				1.53				1.45

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data - unaudited)

 

		June 30,				December 31,
		2015				2014
ASSETS
Cash and cash equivalents		$	136,002			$	148,561
Accounts receivable, net of allowance of $1,404 and $1,181			274,501				230,377
Inventories			71,497				69,775
Deferred tax asset - current			6,571				6,900
Assets held for sale			128,579				141,295
Prepaid tooling, notes receivable, and other			67,264				41,986
Total current assets			684,414				638,894
Property, plant, and equipment, net			426,342				451,126
Goodwill			52,202				56,691
Investment in joint venture			7,567				7,752
Deferred tax asset - non-current			3,622				3,608
Other assets, net			10,996				12,969
Total assets		$	1,185,143			$	1,171,040
LIABILITIES AND EQUITY
Short-term debt and current maturities of capital lease obligations		$	36,415			$	31,139
Accounts payable			286,619				257,011
Accrued liabilities			98,831				105,772
Liabilities held for sale			56,854				67,707
Total current liabilities			478,719				461,629
Long-term debt, net of current maturities			416,767				445,303
Obligations under capital leases, net of current maturities			6,633				7,740
Deferred tax liability - non-current			12,087				12,972
Pension liability			62,359				68,637
Other non-current liabilities			89,801				74,981
Total non-current liabilities			587,647				609,633
Total liabilities			1,066,366				1,071,262
Commitments and contingencies
Stockholders' equity:
Tower International, Inc.'s stockholders' equity
Preferred stock, $0.01 par value, 50,000,000 authorized and 0 issued and outstanding			-				-
Common stock, $0.01 par value, 350,000,000 authorized, 21,998,972 issued and 21,106,826 outstanding at June 30, 2015 and  21,393,592 issued and 20,752,226 outstanding at December 31, 2014			220				214
Additional paid in capital			336,781				335,338
Treasury stock, at cost, 892,146 and 641,366 shares as of June 30, 2015 and December 31, 2014			(16,065	)			(9,516	)
Accumulated deficit			(203,277	)			(235,971	)
Accumulated other comprehensive loss			(56,054	)			(46,914	)
Total Tower International, Inc.'s stockholders' equity			61,605				43,151
Noncontrolling interests in subsidiaries *			57,172				56,627
Total stockholders' equity			118,777				99,778
Total liabilities and stockholders' equity		$	1,185,143			$	1,171,040

 

* Balances include $47.4 million and $47.2 million minority interest attributable to discontinued operations, respectively.

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

 

		Six Months Ended June 30,
		2015				2014
OPERATING ACTIVITIES:
Net income		$	33,260			$	32,228
Less: Income from discontinued operations, net of tax			589				2,433
Income from continuing operations			32,671				29,795
Adjustments required to reconcile income from continuing operations to net cash provided by continuing operating activities:
Premium on notes redemption and other fees			-				87
Deferred income tax provision			107				700
Depreciation and amortization			39,644				45,598
Non-cash share-based compensation			1,302				2,409
Pension income, net of contributions			(6,228	)			(8,061	)
Change in working capital and other operating items			(54,123	)			(51,242	)
Net cash provided by continuing operating activities		$	13,373			$	19,286
INVESTING ACTIVITIES:
Cash disbursed for purchases of property, plant, and equipment, net		$	(29,448	)		$	(28,201	)
Investment in joint venture			-				(760	)
Net cash used in continuing investing activities		$	(29,448	)		$	(28,961	)
FINANCING ACTIVITIES:
Proceeds from borrowings		$	66,439			$	70,376
Repayments of  borrowings			(62,862	)			(65,391	)
Borrowings/(Repayments) on Term Loan Credit Facility			(25,000	)			33,145
Debt financing costs			-				(917	)
Proceeds from termination of cross currency swaps			32,377				-
Secondary stock offering transaction costs			-				(75	)
Proceeds from stock options exercised			148				2,173
Purchase of treasury stock			(6,549	)			(910	)
Noncontrolling interest dividends			-				(2,529	)
Net cash provided by continuing financing activities		$	4,553			$	35,872
Discontinued operations:
Net cash from discontinued operating activities		$	8,669			$	3,467
Net cash from discontinued investing activities			(1,587	)			7,756
Net cash from discontinued financing activities			(5,620	)			(2,319	)
Net cash from discontinued operations		$	1,462			$	8,904
Effect of exchange rate changes on continuing cash and cash equivalents		$	(2,499	)		$	(762	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		$	(12,559	)		$	34,339
CASH AND CASH EQUIVALENTS:
Beginning of period		$	148,561			$	134,880
End of period		$	136,002			$	169,219

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

SEGMENT DATA AND NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited)

 

Segment Data		Three Months Ended June 30,
		2015								2014
		Revenues				Adjusted EBITDA				Revenues				Adjusted EBITDA
International		$	186,931			$	16,356			$	228,787			$	18,513
Americas			303,337				36,916				319,680				36,637
Consolidated		$	490,267			$	53,272			$	548,467			$	55,150

 

		Six Months Ended June 30,
		2015								2014
		Revenues				Adjusted EBITDA				Revenues				Adjusted EBITDA
International		$	376,754			$	30,500			$	449,552			$	37,080
Americas			610,142				70,843				618,178				69,694
Consolidated		$	986,896			$	101,343			$	1,067,730			$	106,774

  

Adjusted EBITDA Reconciliation		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Adjusted EBITDA		$	53,272			$	55,150			$	101,343			$	106,774
Restructuring and asset impairment charges, net			(5,493	)			(4,716	)			(6,524	)			(6,105	)
Depreciation and amortization			(19,736	)			(22,745	)			(39,644	)			(45,598	)
Acquisition costs and other			(128	)			(103	)			(218	)			(210	)
Long-term compensation expense			(2,884	)			(2,226	)			(5,999	)			(4,863	)
Interest expense, net			(3,900	)			(7,204	)			(11,625	)			(14,240	)
Other expense			-				-				-				(87	)
Provision for income taxes			(2,374	)			(2,661	)			(4,473	)			(5,495	)
Equity in loss of joint venture, net of tax			(283	)			(222	)			(189	)			(381	)
Income from discontinued operations, net of tax			665				1,677				589				2,433
Net income attributable to noncontrolling interests			(493	)			(854	)			(573	)			(1,277	)
Net income attributable to Tower International, Inc.		$	18,646			$	16,096			$	32,687			$	30,951

  

Adjusted Free Cash Flow Reconciliation		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Net cash provided by continuing operating activities		$	20,167			$	4,093			$	13,373			$	19,286
Cash disbursed for purchases of PP&E			(19,886	)			(19,538	)			(29,448	)			(28,201	)
Free cash flow			281				(15,445	)			(16,075	)			(8,915	)
Less:  Cash disbursed for customer-owned tooling			(14,033	)			(7,749	)			(24,147	)			(16,149	)
Adjusted free cash flow		$	14,314			$	(7,696	)		$	8,072			$	7,234

  

Net Debt Reconciliation		June 30,				December 31,
		2015				2014
Short-term debt and current maturities of capital lease obligations		$	36,415			$	31,139
Long-term debt, net of current maturities			426,968				457,179
Debt issue costs			(10,201	)			(11,876	)
Obligations under capital leases, net of current maturities			6,633				7,740
Total debt			459,815				484,182
Less: Cash and cash equivalents			(136,002	)			(148,561	)
Add: Cash attributible to discontinued operations			17,556				16,025
Net debt		$	341,369			$	351,646

 

  

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

 CERTAIN ITEMS INCLUDED IN NET INCOME

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

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
Income / (expense) items included in net income, net of tax:
Selling, general, and administrative expenses
One-time CEO compensation awards			(933	)			-				(1,866	)			-
Restructuring and asset impairment charges, net
Restructuring actions*			(211	)			(440	)			(377	)			(806	)
Change in estimated future rent for a closed facility			(4,760	)			-				(4,760	)			-
Lease buyout of previously closed facility			-				(3,448	)							(3,448	)
Interest expense
Mark-to-market gain/ (loss) on derivative financial instruments			1,630				-				(274	)			-
Acceleration of the amortization of debt issue costs and OID			-				-				(440	)			-
Other expense											-				-
Term Loan re-pricing fees			-				-				-				(87	)
Discontinued operations
Income / (loss) from discontinued operations			665				1,677				589				2,433
Noncontrolling interests
Net income attributable to noncontrolling interests**			(290	)			(576	)			(281	)			(776	)
Total items included in net income, net of tax		$	(3,899	)		$	(2,787	)		$	(7,409	)		$	(2,684	)
Net income attributable to Tower International, Inc.		$	18,646			$	16,096			$	32,687			$	30,951
Memo:  Average shares outstanding (in thousands)
Basic			21,105				20,651				21,078				20,582
Diluted			21,403				21,374				21,382				21,319
Income / (loss) per common share (GAAP)
Basic		$	0.88			$	0.78			$	1.55			$	1.50
Diluted			0.87				0.75				1.53				1.45
Diluted adjusted earnings per share (non-GAAP) ***			1.05				0.88				1.88				1.58

 

*

Amount is net of tax of $0k , $29k, $31k , and $86k, respectively

**

Amounts attributible to noncontrolling interests of discontinued operations

***

Excludes the certain items shown above.