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:

 

o

Revenue of $2.17 billion, reflecting primarily net new business of $125 million, favorable foreign exchange and higher steel prices;

o

Adjusted EBITDA of $230 million;

o

Diluted Adjusted EPS of $4.10 per share; and

o

Free 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