U.S. supplier Tower International cancels plan to sell European unit
U.S. supplier Tower International Inc., which makes heavy metal components and assemblies for cars and trucks, said it will not sell its European division, citing the industry’s growth in the region.
Tower said on Thursday in an earnings statement that its European business now has “potentially significant new business opportunities” with “multiple customers” that boost the unit’s viability.
“Sometimes, the best deals are the ones you decide not to do,” Tower CEO Mark Malcolm said in a statement. “Following 23 consecutive quarters of meeting or beating the earning 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.”
The Livonia, Michigan, supplier said in November that it was considering selling its European operations in order to focus on its North American business. Tower has factories in Belgium, Czech Republic, Germany, Italy, Poland and Slovakia and provides parts for brands including BMW, Mercedes-Benz, Porsche, Volkswagen and Volvo.
The company said it put its China and Brazil businesses, which combine for less than 5 percent of Tower’s total revenue, up for sale earlier this month.
Tower also said it posted net income of $8.4 million in the quarter, a 40-percent decline from $14 million in 2015. Adjusting for one-time expenses, earnings per share fell to 63 cents from 82 cents in the year-earlier period.
“The decline was more than explained by the previously disclosed resumption this year of accrued U.S. income taxes,” Tower said.
Adjusted earnings before interest, taxes, depreciation and amortization fell 4 percent to $46.2 million, a decline Tower pinned on expenses related to new business in 2015. Ford Motor Co. brought on the supplier to handle work for the F-150 pickup and Tower launched two assembly lines at its Bellevue, Ohio, plant.
Revenue rose on the quarter to $511 million, a 3-percent gain from the first quarter of 2015.
Tower said it raised its outlook for full-year earnings per share from $3 to $3.20, while it anticipates a 10 percent rise in adjusted earnings in 2017 from projected 2016 levels to $225 million.