Tower International reports solid first quarter, raises full year 2016 outlook, and expects double-digit earnings growth in 2017, including retention of Europe business
Tower International, Inc. (NYSE: TOWR), a leading global manufacturer of engineered automotive structural metal components and assemblies, today announced first quarter 2016 results, updated its outlook for full year 2016, provided a preliminary outlook for 2017, and discussed developments regarding Tower’s businesses in Europe, Brazil, and China.
- Revenue for the first quarter was $511 million. At constant exchange rates, revenue was $523 million, up 5% from $497 million in the first quarter of 2015.
- Adjusted EBITDA for the quarter was $46.2 million, compared with $48.1 million a year ago. The decline was more than explained by the planned and anticipated up-front expenses associated with the major new business awarded to Tower North America in 2015.
- Net income was $8.4 million, compared with $14 million last year. As detailed below, this year’s first quarter included certain items that adversely impacted results by $5.2 million. Excluding these items and comparable items in the first quarter of 2015, diluted adjusted earnings were 63 cents per share, compared with 82 cents a year ago. The decline was more than explained by the previously disclosed resumption this year of accrued U.S. income taxes.
- The Company has completed its evaluation of Tower Europe and has decided to retain the business. Tower Europe is a strong and competitive business, the European industry is recovering, and potentially significant new business opportunities have recently arisen with multiple customers, further bolstering the long-term outlook. There is no further intention to sell this business.
- Tower’s remaining businesses in Brazil and China are no longer considered to be core and were declared in April as held for sale. In the Company’s next quarterly report, these businesses will be accounted for as discontinued operations. Projected 2016 financial results for these combined businesses included revenue of about $100 million (less than 5% of total Tower), with adjusted EBITDA of $3 million and an adjusted net loss of about 10 cents per TOWR share.
- The outlook for full year 2016 earnings from continuing operations is being raised from $3.00 to $3.20 per share. Anticipated free cash flow (including customer tooling) is being increased by $10 million (to $20 million).
- The preliminary directional outlook for continuing operations in 2017 includes a 10% increase from projected 2016 in adjusted EBITDA (to $225 million), a 16% increase in diluted adjusted earnings per share (to $3.70), adjusted EBITDA margin increasing to 11%, and strong free cash flow of $70 million. The anticipated improvements in 2017 largely reflect a reduction in the up-front costs and cash outflows associated with launch of the new revenue coming on board this year.
“Sometimes, the best deals are the ones you decide not to do,” said President and CEO Mark Malcolm. “Following 23 consecutive quarters of meeting or beating the earnings consensus, Tower’s businesses in Europe and North America are now poised to deliver record results, including double-digit earnings growth and strong free cash flow.”
Tower to Host Conference Call Today at 1 p.m. EDT
Tower will discuss its first quarter 2016 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 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. #98915756. A webcast replay will also be available and may be accessed via Tower’s website.
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