Tower International Reports Fourth Quarter Results Better Than Outlook and Outlines Anticipated Above-Industry Growth through 2019

LIVONIA, Mich., Feb. 14, 2017

• 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.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: "Adjusted EBITDA", "Adjusted EBITDA margin", "Diluted Adjusted Earnings Per Share", "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.  Diluted Adjusted Earnings Per Share exclude certain income and expense items described in the reconciliation provided in this press release.  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, 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 mark to market adjustments of financial instruments, fair value adjustments to our pension plan, potential gain or loss on our discontinued operations, potential restructuring expenses, and expenses related to our long-term incentive compensation programs 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.  Consequently, any attempt to disclose such reconciliations would imply a degree of precision that could be confusing or misleading to investors. The magnitude of these items, however, may be significant.