Tower Automotive Reports Third Quarter 2004 Results
NOVI, Mich.--Oct. 2, 20048, 2004--Tower Automotive, Inc. today announced financial results for the third quarter and nine months ended September 30, 2004, and provided fourth-quarter earnings guidance.Third-Quarter Results:
-- Revenues of $722 million
-- $145 million in cash and cash equivalents at quarter-end
-- New business launches on track
-- Launch costs beginning to decline as programs reach full ramp
Tower Automotive's 2004 third quarter revenues increased to $722 million from $623 million in the 2003 third quarter. The company reported that its net loss for the 2004 third quarter narrowed to $20.2 million, or $0.35 per diluted share, versus a net loss of $105.9 million, or $1.87 per diluted share, for the year-ago period.
"Our focus on operational excellence and expense control helped us through a challenging quarter, despite continued high steel costs and reductions in production volumes on our key North American platforms," said Kathleen Ligocki, president and chief executive officer of Tower Automotive. "While program launch costs were higher than planned for the quarter, our launches remain on schedule and we continue to meet all customer quality commitments."
Earnings in the 2004 third quarter were benefited by approximately $3.8 million, or $0.06 per diluted share, by certain items net of tax, including: mark-to-market income related to the company's senior convertible debentures of $5.1 million offset by restructuring expenses $1.3 million. Earnings in the 2003 third quarter were reduced by approximately $88.1 million, or $1.56 per diluted share, by certain items net of tax, including restructuring charges of $87.3 million and other expense items totaling $0.8 million.
For the nine months ended September 30, 2004, revenues reached $2.3 billion compared to $2.1 billion in the prior-year period. The net loss improved to $10.9 million, or $0.19 per diluted share, versus a net loss of $91.6 million, or $1.62 per diluted share, in the first nine months of last year.
Tower Automotive generated Adjusted EBITDA of approximately $35.4 million in the 2004 third quarter. (A reconciliation of Adjusted EBITDA to net income computed in accordance with GAAP is attached in Table C.) The company incurred capital expenditures of $45.8 million in the quarter and had cash on hand of $145.0 million at September 30, 2004.
Fourth-Quarter and Full-Year 2004 Outlook
"Looking ahead, we expect the combination of falling launch costs, efficiency gains and accelerating organic revenue growth to lead to improved earnings in the fourth quarter," said Ligocki.
Tower Automotive anticipates 2004 fourth-quarter revenues in the range of $830 million to $855 million, with a loss of $0.10 to breakeven per diluted share, excluding restructuring charges. The company expects Adjusted EBITDA of approximately $67 million to $75 million in the 2004 fourth quarter.
Full-year 2004 revenues are estimated in the range of $3.12 billion to $3.14 billion, up approximately 12 percent from $2.8 billion in 2003. Excluding restructuring charges, divestiture gains and certain non-recurring, non-cash charges, the company expects a loss per diluted share in the range of $0.50 to $0.40 for the full year 2004. The company anticipates full-year 2004 Adjusted EBITDA of between $242 million and $250 million.
Accessing the Conference Call Webcast and PowerPoint Presentation
A conference call to discuss third-quarter results is scheduled today at 10 a.m. Eastern Time. Investors may access the Webcast and online presentation by logging onto www.towerautomotive.com, selecting "Investors" and clicking on the Webcast icon.
About Tower Automotive
Tower Automotive, Inc. is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including Ford, DaimlerChrysler, GM, Honda, Toyota, Nissan, Fiat, Hyundai/Kia, BMW, and Volkswagen Group. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The company is based in Novi, Mich. Additional company information is available at www.towerautomotive.com.
Use of Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included in this release, the company has provided information regarding a non-GAAP financial measure. This measure is "Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization" (Adjusted EBITDA). Adjusted EBITDA is a non-GAAP financial measure the company defines as earnings before interest, taxes, depreciation and amortization, non-cash restructuring and asset impairment charges/income and certain other non-recurring, non-cash charges.
Management believes that this non-GAAP financial measure is useful to both management and investors in their analysis of the company's financial position and results of operations. In particular, management believes "Adjusted EBITDA" is useful in analyzing the company's ability to service and repay its debt. Further, management uses this non-GAAP measure for planning and forecasting in future periods.
"Adjusted EBITDA" should not be considered in isolation or as a substitute for net income, net cash provided by operating activities or other statement of operations or cash flow statement data prepared in accordance with GAAP or as measures of profitability or liquidity. Also, this non-GAAP financial measure, as determined and presented by the company, may not be comparable to related or similarly titled measures reported by other companies.
A reconciliation of Adjusted EBITDA to net income, cash flow from operations and the cash flow statement, is included in Table C.
future or to reflect the occurrence of unanticipated events.
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts - unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------------
2004 2003 (a) 2004 2003 (a)
--------- ---------- ----------- -----------
Revenues $722,334 $623,013 $2,286,783 $2,098,770
Cost of sales 689,950 587,167 2,125,040 1,909,952
--------- ---------- ----------- -----------
Gross profit 32,384 35,846 161,743 188,818
Selling, general and
administrative expenses 33,503 41,770 102,798 115,581
Restructuring and asset
impairment charge 2,020 132,243 (3,283) 147,621
--------- ---------- ----------- -----------
Operating income (3,139) (138,167) 62,228 (74,384)
Interest expense, net 36,061 27,268 105,409 62,120
Unrealized gain on
derivative (5,710) -- (3,860) --
--------- ---------- ----------- -----------
Income (loss) before
provision for income
taxes (33,490) (165,435) (39,321) (136,504)
Provision (benefit) for
income taxes (12,700) (56,253) (14,418) (46,412)
--------- ---------- ----------- -----------
Income (loss) before
equity in earnings of
joint ventures and
minority interest (20,790) (109,182) (24,903) (90,092)
Equity in earnings of
joint ventures, net 2,124 4,393 9,093 8,181
Minority interest, net (1,552) (1,070) (4,779) (9,730)
Gain on sale of joint
venture -- -- 9,732 --
--------- ---------- ----------- -----------
Net income (loss) $(20,218) $(105,859) $(10,857) $(91,641)
========= ========== =========== ===========
Basic earnings (loss) per
common share: $(0.35) $(1.87) $(0.19) $(1.62)
========= ========== =========== ===========
Weighted average basic
shares outstanding 58,293 56,720 57,901 56,490
========= ========== =========== ===========
Diluted earnings (loss)
per common share: $(0.35) $(1.87) $(0.19) $(1.62)
========= ========== =========== ===========
Weighted average diluted
shares outstanding 58,293 56,720 57,901 56,490
========= ========== =========== ===========
(a) As previously disclosed in Tower Automotive's Annual Report on
Form 10-K for the year ended December 31, 2003, the statement of
operations for the three months ended June 30, 2003 has been restated
to record the pension curtailment loss initially recorded in the
second quarter of 2003, which should have been recorded in the third
quarter of 2003. This restatement decreased reported results by $5.1
million, net of tax, or $0.09 per diluted share. This restatement had
no impact on the results of operations for the nine months ended
September 30, 2003. (A reconciliation of previously reported results
to restated results for the third quarter of 2003 is included in Table
B.)
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands - unaudited)
September 30, December 31,
Assets 2004 2003
------------------------------------------- ------------- ------------
Current assets:
Cash and cash equivalents $144,980 $160,899
Accounts receivable 380,526 325,599
Inventories 136,967 130,004
Deferred income taxes, net 15,203 20,116
Prepaid tooling and other 149,994 91,662
------------- ------------
Total current assets 827,670 728,280
------------- ------------
Property, plant and equipment, net 1,168,751 1,055,873
Investments in joint ventures 208,023 248,133
Deferred income taxes 164,413 146,944
Goodwill 497,110 498,663
Other assets, net 160,022 168,516
------------- ------------
$3,025,989 $2,846,409
============= ============
Liabilities and Stockholders' Investment
-------------------------------------------
Current liabilities:
Current maturities of long-term debt and
capital lease Obligations $101,811 $99,597
Convertible Subordinated Notes, 5% due
2004 -- 199,984
Accounts payable 668,533 556,036
Accrued liabilities 246,810 249,984
------------- ------------
Total current liabilities 1,017,154 1,105,601
------------- ------------
Long-term debt, net of current maturities 1,232,474 1,060,859
Convertible Senior Debentures 121,636 --
Obligations under capital leases, net of
current maturities 35,353 42,798
Other noncurrent liabilities 214,371 223,641
------------- ------------
Total noncurrent liabilities 1,603,834 1,327,298
------------- ------------
Stockholders' investment:
Common stock 666 661
Additional paid-in capital 681,055 680,608
Retained deficit (192,707) (181,849)
Deferred compensation plans (7,791) (9,609)
Accumulated other comprehensive loss (26,898) (22,751)
Treasury stock (49,324) (53,550)
------------- ------------
Total stockholders' investment 405,001 413,510
------------- ------------
$3,025,989 $2,846,409
============= ============
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)
Nine Months Ended
September 30,
---------------------
2004 2003
--------- -----------
OPERATING ACTIVITIES:
Net income (loss) $(10,857) $(91,641)
Adjustments required to reconcile net income
(loss) to net cash provided by operating
activities -
Restructuring and asset impairment charge (6,276) 145,724
Customer recovery related to program
cancellation -- 15,600
Unrealized gain on derivative (3,860) --
Depreciation 114,354 119,639
Deferred income tax benefit (25,199) (50,259)
Deferred compensation plans 856 --
Gain on sale of JV Investment (9,732) --
Equity in earnings of joint ventures, net (9,093) (8,181)
Change in working capital and other
operating items (9,886) 9,260
--------- -----------
Net cash provided by operating activities 40,307 140,142
--------- -----------
INVESTING ACTIVITIES:
Capital expenditures, net (176,848) (180,126)
Acquisitions, including joint venture
interests, earn out payments and dividends (21,299) 274
Divestiture of subsidiary 51,700
Other 3,232
--------- -----------
Net cash used in investing activities (146,447) (176,620)
--------- -----------
FINANCING ACTIVITIES:
Proceeds from borrowings 580,037 1,548,797
Repayments of debt (489,891) (1,391,411)
Net proceeds from issuance of stock 75 650
--------- -----------
Net cash provided by financing activities 90,221 158,036
--------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (15,919) 121,558
CASH AND CASH EQUIVALENTS:
Beginning of period 160,899 13,699
--------- -----------
End of period $144,980 $135,257
========= ===========
Supplemental Cash Flow Information:
Interest Paid, net of amounts capitalized $92,329 $57,742
Income taxes paid (refunded) $(1,174) $(270)
TABLE A
Items Impacting the Third Quarter of 2004
----------------------------------------------------------------------
----------------------------------------------------------------------
($ in thousands, except per share amounts) Per share
---------
----------------------------------------------------------------------
Option mark to market, net of tax $5,081 $0.08
----------------------------------------------------------------------
Restructuring expense, net of tax (1,333) (0.02)
----------------------------------------------------------------------
Per share impact $0.06
----------------------------------------------------------------------
Items Impacting the Third Quarter of 2003
----------------------------------------------------------------------
----------------------------------------------------------------------
($ in thousands, except per share amounts) Per share
---------
----------------------------------------------------------------------
Restructuring and asset impairment charge, net of
tax $(87,280) $(1.54)
----------------------------------------------------------------------
Litigation reserves, net of tax (792) (0.02)
----------------------------------------------------------------------
Per share impact $(1.56)
----------------------------------------------------------------------
TABLE B
Reconciliation of Previously Reported Results to
Restated Results for the Third Quarter of 2003
----------------------------------------------------------------------
----------------------------------------------------------------------
($ in thousands, except per share amounts) Actual Per share
------ ---------
----------------------------------------------------------------------
Net loss, as previously reported $(100,790) $(1.78)
----------------------------------------------------------------------
Less: Pension curtailment loss, net of tax (5,069) (0.09)
----------------------------------------------------------------------
Restated net loss $(105,859) $(1.87)
----------------------------------------------------------------------
TABLE C
Reconciliation of Adjusted EBITDA to Net Income and
Cash Flows
----------------------------------------------------------------------
Actual Actual
----------------------------------------------------------------------
($ in thousands) Q3 2004 Q3 2003
----------------------------------------------------------------------
----------------------------------------------------------------------
Adjusted EBITDA $35,434 $36,045
----------------------------------------------------------------------
Less: Interest expense 36,061 27,268
----------------------------------------------------------------------
Less: Provision for income taxes (12,700) (56,253)
----------------------------------------------------------------------
Less: Depreciation expense 38,001 40,533
----------------------------------------------------------------------
Less: Non-cash restructuring charge - 130,356
----------------------------------------------------------------------
Plus: Option Mark to Market 5,710 -
----------------------------------------------------------------------
Net income (loss) (20,218)(105,859)
----------------------------------------------------------------------
Adjustments required to reconcile net income (loss)
to net cash provided by operating activities -
----------------------------------------------------------------------
Restructuring and asset impairment charge - 130,356
----------------------------------------------------------------------
Unrealized gain on derivative (5,710) -
----------------------------------------------------------------------
Depreciation 38,001 40,533
----------------------------------------------------------------------
Deferred income tax benefit (15,547) (51,070)
----------------------------------------------------------------------
Deferred compensation plans 132 (94)
----------------------------------------------------------------------
Equity in earnings of joint ventures, net (2,124) (4,393)
----------------------------------------------------------------------
Change in working capital and other operating items 15,324 17,593
----------------------------------------------------------------------
----------------------------------------------------------------------
Net cash provided by operating activities 9,858 27,066
----------------------------------------------------------------------
----------------------------------------------------------------------
INVESTING ACTIVITIES:
----------------------------------------------------------------------
Capital expenditures, net (45,821) (81,400)
----------------------------------------------------------------------
----------------------------------------------------------------------
Net cash used in investing activities (45,821) (81,400)
----------------------------------------------------------------------
----------------------------------------------------------------------
FINANCING ACTIVITIES:
----------------------------------------------------------------------
Proceeds from borrowings 3,546 61,369
----------------------------------------------------------------------
Repayments of debt (15,498) (77,229)
----------------------------------------------------------------------
Net proceeds from issuance of stock 10 168
----------------------------------------------------------------------
----------------------------------------------------------------------
Net cash provided by financing activities (11,942) (15,692)
----------------------------------------------------------------------
----------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (47,905) (70,026)
----------------------------------------------------------------------
----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS:
----------------------------------------------------------------------
----------------------------------------------------------------------
Beginning of period $192,885 $205,283
----------------------------------------------------------------------
----------------------------------------------------------------------
End of period $144,980 $135,257
----------------------------------------------------------------------
Reconciliation of Adjusted EBITDA to Net Income
----------------------------------------------------------------------
Forecast Forecast
----------------------------------------------------------------------
($ in thousands) Q4 2004 2004
----------------------------------------------------------------------
----------------------------------------------------------------------
Adjusted EBITDA $72,000 $246,600
----------------------------------------------------------------------
Less: Interest expense 36,200 141,600
----------------------------------------------------------------------
Less: Provision for income taxes (1,700) (16,100)
----------------------------------------------------------------------
Less: Depreciation expense 40,800 155,200
----------------------------------------------------------------------
Plus: Mark to Market on Option - 3,900
----------------------------------------------------------------------
Plus: Non-cash restructuring charge reversal - 6,300
----------------------------------------------------------------------
Plus: Divestiture gains - 10,000
----------------------------------------------------------------------
Net income $(3,300) $(13,900)
----------------------------------------------------------------------