Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced second quarter 2014 results, updated its outlook for the full year, and provided a new business model target for free cash flow.
- Revenue for the second quarter was $577 million, up 4 percent from $556 million in the second quarter 2013. Sales were higher in all regions except Brazil.
- Adjusted EBITDA for the quarter was $59.1 million, compared with $62.2 million a year ago. Favorable volume and currency translation were offset by anticipated unfavorable net cost performance, reflecting a different quarterly cadence this year versus last year in commercial arrangements, manufacturing productivity, and launch costs. This quarter’s adjusted EBITDA margin was 10.2%.
- Net income of $16.1 million in the second quarter 2014 compared with a net loss of $45.1 million a year ago. Last year’s loss reflected charges related to redeeming high-cost debt. 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 2013, diluted adjusted earnings were 93 cents per share, compared with $1.03 a year ago.
- For full year 2014, Tower is increasing its outlook for revenue by $25-$50 million, to $2.200-$2.225 billion. The company now expects adjusted EBITDA of $217-$220 million, up $2-$5 million from prior guidance, and adjusted earnings per share of $2.95-$3.05, an increase of 5-15 cents.
- Tower’s business model is revised to increase the target for adjusted free cash flow to 4% of revenue in 2016, up from the prior target of 3% of revenue by 2015, reflecting anticipated further improvement in adjusted EBITDA less capital expenditures and a further decrease in interest expense.
“Focusing on free cash flow keeps the Tower team aligned and disciplined,” said President and CEO Mark Malcolm. “Free cash flow is also the ultimate generator of capital, which we can deploy to strengthen the business and benefit customers, shareholders, suppliers, and colleagues. That’s what makes this anticipated step-function improvement a meaningful milestone.”
Tower to Host Conference Call Today at 1 p.m. EDT
Tower will discuss its second 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. #78689181. 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 provided in this presentation. 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 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 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 and diluted adjusted earnings per share and statements regarding net reductions in ongoing annual interest expense, 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.
