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 websitewww.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.