Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered automotive structural metal components and assemblies, today announced fourth quarter 2015 results, provided a preliminary outlook for 2016, and discussed related business developments.
- Revenue for the fourth quarter was $494 million. At constant exchange rates, revenue was $525 million, up 5% from $502 million in the fourth quarter 2014, more than explained by growth in North America and Europe.
- Adjusted EBITDA for the quarter was $45.5 million, compared with $48.8 million a year ago. The year-over-year decline reflected the planned and anticipated up-front expenses associated with the major new business awarded to Tower North America in 2015, in addition to unfavorable currency translation.
- Net income in the fourth quarter was $145.1 million, compared with a loss of $20.6 million last year. As detailed below, this year’s fourth quarter included certain items which favorably affected results by $130.7 million, reflecting primarily the release of a U.S. tax valuation allowance. Excluding these items and comparable items in the fourth quarter of 2014, diluted adjusted earnings were $0.67 per share, compared with $0.74 a year ago.
- Compared with prior Company guidance, fourth quarter revenue was better by $6 million, adjusted EBITDA was better by $0.7 million, and adjusted earnings per share were better by 7 cents.
- Net debt at December 31 was $306 million, an improvement of $52 million from September 30 (excluding cash attributable to discontinued operations). This largely reflected the previously disclosed sales of two joint ventures in China and an operation in Brazil.
- Year-end liquidity was a record-high $372 million. In January, the Company reduced its term debt by $50 million.
- For 2016, the preliminary outlook includes:
- 5% growth in revenue, to $2.05 billion, despite an anticipated currency translation headwind of $55 million (with an average Euro assumption of $1.05);
- Adjusted EBITDA up 7%, to $205 million;
- Adjusted EBITDA margin increasing by 20bps, to 10%, despite being negatively impacted by costs associated with new-business ramp-up;
- Adjusted earnings per share of $3.00, with the decline from $3.22 in 2015 more than explained by the previously disclosed resumption of U.S. income tax accruals in 2016. At comparable U.S. tax bookkeeping rates, the outlook for adjusted earnings per share would be up 21% from 2015. The Company presently does not expect to be a cash tax payer in the U.S. until 2019; and
- Adjusted free cash flow of $35 million, which includes about $35 million of above-trend capital spending to support the major new-business awards in 2015 in North America.
- The Company’s outlook for first quarter 2016 includes revenue of $505 million, adjusted EBITDA of $45 million, and adjusted earnings per share of 55 cents. Costs associated with new-business ramp-up are expected to mainly impact the first two quarters of 2016. Factoring in all calendarization effects, the Company anticipates Adjusted EBITDA to be lower than a year ago in the first half of 2016 and significantly better than a year ago in the second half.
“With our strengths in engineering, program management, operational execution, and financial discipline, we believe Tower’s competitive position is stronger than ever — and still progressing,” said President and CEO Mark Malcolm. “Whether the U.S. auto industry is at or approaching a cyclical peak is anyone’s guess, but the above-industry profitable growth already booked, plus significant opportunities we continue to be presented by customers, make us confident that Tower’s future is brighter than ever. Our peak results are out in front of us.”
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