Category: Official Press Release

Tower International Reports Third Quarter Results and Affirms Earnings and Free Cash Flow Outlook for 2018

LIVONIA, Mich., Oct. 29, 2018 /PRNewswire/ — Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced third quarter 2018 results and affirmed its earnings and free cash flow outlook for 2018.

Revenue for the third quarter was $525 million compared with $462 million in the third quarter of 2017 representing a 14 percent increase.

Net income was $22.6 million or $1.07 per share increasing from $14.9 million or $0.72 per share in the third quarter last year. As detailed below, this year's third quarter included certain items that, in aggregate, decreased results by $117 thousand. Excluding these items and comparable items in the third quarter of 2017, adjusted earnings per share amounted to $1.08, an increase of 27 percent from the $0.85 reported a year ago.

Adjusted EBITDA for the quarter was $57.1 million in-line with the Company's outlook and up 18 percent from $48.5 million a year ago.

For the quarter, net cash provided by continuing operating activities was $43 million. Cash disbursed for purchases of equipment totaled $25 million resulting in Free Cash Flow of $18 million.

Full year 2018 outlook includes:

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

Adjusted EBITDA of $230 million;

Diluted Adjusted EPS is increased by 10 cents to $4.20 per share; and

Free Cash Flow is maintained at $50 million.

The Company's outlook for fourth quarter 2018 includes revenue of $526 million, Adjusted EBITDA of $61.6 million and Diluted Adjusted Earnings Per Share of $1.20.

“We remain balanced in our approach to capital allocation, remaining focused on growing profitably, reducing leverage – as evidenced by our $50 million pay-down of Term Loan debt, and returning capital to shareholders – as evidenced by our recent increase of our quarterly dividend,” said CEO Jim Gouin. “Tower delivered solid financial results in the third quarter, growing revenue organically well in excess of the overall auto market and expanding Adjusted EBITDA margins. Revenue for the quarter increased 14 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 20 percent from a year ago.”

Tower to Host Conference Call Today at 11 a.m. EDT

Tower will discuss its third 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. #4576237. 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 excludes 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 fourth quarter earnings and revenues, full year earnings, free cash flow and revenues, business growth and adjusted EBITDA.. 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

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts – unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Revenues

$ 524,566

$ 462,372

$ 1,644,079

$ 1,449,887

Cost of sales

462,941

404,332

1,458,549

1,274,429

Gross profit

61,625

58,040

185,530

175,458

Selling, general, and administrative expenses

29,954

29,667

93,057

87,899

Amortization expense

110

117

330

333

Restructuring and asset impairment charges, net

491

1,131

2,308

8,379

Operating income

31,070

27,125

89,835

78,847

Interest expense

6,048

5,673

16,465

7,933

Interest income

93

64

362

197

Net periodic benefit income

558

713

1,675

1,671

Other expense

–

–

977

575

Income before provision for income taxes and income from discontinued
operations

25,673

22,229

74,430

72,207

Provision for income taxes

3,996

8,002

14,602

22,170

Income from continuing operations

21,677

14,227

59,828

50,037

Income from discontinued operations, net of tax

903

704

2,428

1,565

Net income

22,580

14,931

62,256

51,602

Less: Net income attributable to the noncontrolling interests

–

–

–

110

Net income attributable to Tower International, Inc.

..