Tower International, Inc. (NYSE: TOWR), a leading integrated global manufacturer of engineered automotive structural metal components and assemblies, today announced fourth quarter 2016 results, provided a preliminary outlook for 2017, and discussed its outlook for revenue growth through 2019.
Revenue for the fourth quarter was $462.3 million, up 2% from $454.9 million in the fourth quarter 2015.
Net income in the fourth quarter was $16.9 million or $0.81 per diluted share, compared with $145.1 million of $6.76 per diluted share last year. As detailed below, this year’s fourth quarter included certain items which adversely impacted results by $4.3 million. Certain items in the fourth quarter a year ago favorably affected results by $128.5 million, reflecting primarily the release of a U.S. tax valuation allowance. Excluding these certain items in both periods, Diluted Adjusted Earnings Per Share were $1.02 in the fourth quarter 2016, compared with $0.77 a year ago.
Adjusted EBITDA for the quarter was $56.2 million, compared with $45.9 million a year ago, an increase of 22 percent from last year. The year-over-year increase reflected primarily the benefit of major new business wins, lower launch costs and favorable commercial settlements.
In the fourth quarter the company generated $62.6 million of free cash flow bringing full year 2016 free cash flow to $21.4 million.
Net debt at December 31, 2016 was $327.5 million, an improvement of $66 million from September 30 (excluding cash attributable to discontinued operations). This reflected the significant free cash flow generation in the fourth quarter and $4 million received for the previously disclosed divestiture of a joint venture in China.
Year-end liquidity was $292 million increasing $54 million from the end of the third quarter.
For full year 2017, the preliminary outlook includes:
- 1% growth in revenue, to $1.925 billion, despite an anticipated currency translation headwind of $35 million (with an average Euro assumption of $1.05), and a 1.5% year-over-year decrease in forecasted North American industry production;
- Adjusted EBITDA up 4%, to about $210 million;
- Adjusted EBITDA margin increasing by 40 basis points, to 10.9%;
- Diluted Adjusted Earnings Per Share of $3.60, an increase of 7% from 2016; and
- Free cash flow of $55 million with strong cash flow in the second half of the year more than offsetting the cash outflow in the first half of the year.
The Company’s outlook for first quarter 2017 includes revenue of $480 million, Adjusted EBITDA of $43 million, and Diluted Adjusted Earnings Per Share of $0.60.
The Company has also secured approximately $225 million in net new business for 2018 and 2019. About two thirds of this incremental revenue is expected to occur in 2019, and the average Adjusted EBITDA margin of the new business is expected to be about 15%. The launch of these programs should allow the Company to grow significantly faster than the overall automotive market and contribute to Adjusted EBITDA margin expansion, which is expected to increase by more than 100 basis points from the 10.5% recorded for full year 2016.
“Tower delivered solid financial results in the fourth quarter as revenue, Adjusted EBITDA, Adjusted EPS and free cash flow were all above our previous outlook,” said CEO Jim Gouin. “With a solid order book of net new business through 2019, Tower is well positioned to grow revenue at a CAGR of 5 points above industry compared to 2017, while expanding margins and generating significant free cash flow.”
Tower to Host Conference Call Today at 11 a.m. EST
Tower will discuss its fourth quarter 2016 results, the outlook for 2017, 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. #66570867. A webcast replay will also be available and may be accessed via Tower’s website.
