Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced first quarter 2015 results, another major new business award, and an updated outlook for the full year.
- Revenue for the first quarter was $497 million, compared with $519 million in the first quarter 2014. At constant exchange rates, organic revenue growth was positive 4 percent.
- Adjusted EBITDA for the quarter was $48.1 million, compared with $51.6 million a year ago. The decline was more than explained by unfavorable currency translation. Volume and mix was net favorable, with year-to-year gains in all markets except Brazil. Unfavorable net cost performance was in line with prior guidance, largely reflecting different calendarization timing than a year ago.
- Net income was $14.0 million, compared with $14.9 million last year. As detailed below, this year’s first quarter included certain items that adversely impacted results by $3.6 million. Excluding these items and comparable items in the first quarter of 2014, diluted adjusted earnings were 82 cents per share, up 19 percent from 69 cents a year ago.
- Tower recently received a major business award that is projected to provide ongoing annual revenue of about $70-$140 million, depending on final customer plans for a potential capacity expansion. This business will begin production late this year and is projected to provide about $70 million of revenue in 2016. In total, Tower’s three major new business announcements since last February are projected to provide ongoing annual revenue of about $270-$340 million and provide about $40-$50 million of ongoing annual Adjusted EBITDA, for a margin of about 15%.
- For the full year, Tower is lowering its revenue guidance by $50 million (to $1.95 billion), essentially reflecting revised currency assumptions (including the Euro at an average of $1.05 for the balance of the year). Adjusted EBITDA is now projected at $190 million, down $10 million from prior guidance, reflecting the revised currency assumptions, launch expense associated with the new business award, and lower-than-expected Brazil volume. Despite these changes, the outlook for diluted adjusted earnings per share is being increased by 5 cents, to $3.15, reflecting the flow-through effect of First Quarter good news on the remaining quarters. Adjusted free cash flow is now projected at $25 million, largely reflecting partial deployment of the previously forecasted $60 million for capital spending to support the new business. Although not included in free cash flow, cash gains already received this year from re-pricing Tower’s Euro debt swaps now total $32 million.
“Despite currency translation clouding some comparisons, we clearly see accelerating positive business momentum for Tower,” said President and CEO Mark Malcolm. “The rapid series of major new business awards demonstrates that we can consistently convert our strong competitive capabilities into above-industry profitable growth. With already booked business, plus replacement and high-confidence wins, Tower is now projecting annual compound organic revenue growth of 6-8% in our North American business through 2018. In addition to deploying cash flow to support accretive growth (our Priority 1A), we are also continuing to reduce leverage (Priority 1B). Tower’s business model is robust, and it is providing good financial flexibility to opportunistically strengthen the business and reward shareholders.”
