Category: Suppliers

Tower International Reports 2018 Financial Results in-line with Outlook and Provides Outlook through 2020

LIVONIA, Mich., Feb. 12, 2019 /PRNewswire/ — Tower International, Inc. (NYSE: TOWR), a leading manufacturer of engineered automotive structural metal components and assemblies, today announced fourth quarter and full year 2018 results and provided its business outlook through 2020.

During the fourth quarter 2018, Tower reached a definitive agreement to divest its European operations. As such, these operations are classified as discontinued operations. Additionally, the Company has decided to retain its operations in Brazil; accordingly, the results for the Company's Brazilian operations are now included in continuing operations. The divestiture of Tower Europe is expected to close during the first quarter 2019 and result in net cash proceeds of approximately $250 million after payment of transaction costs and fees and the unwinding of the Euro denominated swaps related to the Term Loan.

Revenue for the full year 2018 was $1.572 billion compared with $1.382 billion in 2017, representing a 14 percent increase. Revenue for 2018 excluded $650 million of European revenue and included $53 million of Brazilian revenue.

Full year net income was $48.9 million or $2.33 per share, compared with $47.6 million or $2.29 per share last year. As detailed below, this year's results included special items which adversely impacted net income by $24.5 million. Excluding these items and comparable items in 2017, adjusted earnings per share of $3.50 increased 6 percent from $3.30 from a year ago. Adjusted EPS for 2018 excluded 78 cents associated with Europe and included 8 cents associated with Brazil.

Adjusted EBITDA for full year 2018 was $178 million up 13 percent from $157 million a year ago. Adjusted EBITDA for 2018 excluded $58 million associated with Europe and included $5 million associated with Brazil.

For full year 2018, net cash provided by continuing operating activities were $98 million. Cash disbursed for purchases of equipment totaled $83 million resulting in Free Cash Flow of $15 million.

If European operations were included in continuing operations and Brazilian operations were not included in continuing operations, Tower's full year 2018 revenue of $2.169 billion, Adjusted EBITDA of $230 million, Adjusted EPS of $4.20 and Free Cash Flow of $41 million would have been in-line with full year outlook.

Tower's net new business backlog for 2019 through 2020 is now $250 million. This represents an increase of more than 10 percent from the $225 million provided last year.

“Despite a difficult macro-environment, Tower delivered 2018 results in-line with our Outlook. We continue to balance our capital allocation, by investing in profitable growth, reducing debt and returning capital to shareholders. The pending sale of Tower Europe further strengthens our balance sheet and positions Tower to capitalize on the healthy and growing light truck and SUV market in North America,” said CEO Jim Gouin. “With significant program changeovers and the launch of approximately $700 million in annual run rate revenue, 2019 will be a transition year. By 2020 these major launches will be completed and we expect significant margin improvement and substantial Free Cash Flow.”

During 2019 Tower expects to launch programs which will represent nearly $700 million of on-going revenue. These product launches combined with customer downtime associated with platform changeover will adversely impact results, particularly in the first half of the year.

Full year 2019 outlook includes:

Revenue of $1.65 billion, reflecting primarily net new business of $175 million, offset partially by adverse program mix of $90 million;

Adjusted EBITDA of $175 million;

Diluted Adjusted EPS of $2.50 per share which is adversely impacted by the adoption of ASC 842 and a higher tax rate; and

Free Cash Flow of $15 million, with strong free cash flow in the second half of the year more than offsetting the expected cash outflow in the first half of the year.

With the completion of significant launch activity in 2019, financial results are expected to improve substantially. Full year 2020 outlook includes:

Revenue of $1.69 to $1.74 billion;

Adjusted EBITDA of $200 to $210 million;

Adjusted EBITDA Margin of approximately 12 percent; and

Free Cash Flow of more than $60 million.

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

Tower will discuss its 2018 results and other related matters in a conference call at 11 a.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. # 7888969. 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”, 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. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of 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 completion of the divestiture of the Company's European operations, prospective program launches, business growth, and the Company's projected earnings, free cash flow, revenues, Adjusted EBITDA and Adjusted EBITDA margin. 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;

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