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Tower International Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 1, 2012 04:34PM

Tower International Inc (TOWR) filed Quarterly Report for the period ended 2012-09-30. Tower International Inc has a market cap of $141.5 million; its shares were traded at around $6.83 with a P/E ratio of 4.8 and P/S ratio of 0.1.



Highlight of Business Operations:

Total revenues decreased during the three months ended September 30, 2012 by $25 million or 4% from the three months ended September 30, 2011, reflecting primarily the strengthening of the U.S. dollar against foreign currencies in our International segment, primarily the Euro ($25.2 million) and in our Americas segment, primarily the Brazilian Real ($13.3 million) as well as lower volume in our International segment ($9 million). Revenues were positively impacted by higher volume in our Americas segment ($27.6 million). Revenues were also adversely impacted by unfavorable pricing ($5.1 million).

Total gross profit decreased by $7.3 million or 12% from the three months ended September 30, 2011 to the three months ended September 30, 2012, and our gross profit margin decreased from 10.1% during the 2011 period to 9.3% in the 2012 period. The decrease in total gross profit reflects an unfavorable product mix ($7.3 million) and unfavorable foreign exchange ($5.2 million), offset partially by higher volumes ($2.1 million). All other factors were net favorable by $3.2 million. Cost of sales was positively impacted by favorable efficiencies ($9.9 million) offset in part by unfavorable pricing and economics ($6.3 million).

Income tax expense for the three months ended September 30, 2012 was $2.3 million compared to $2.5 million for the three months ended September 30, 2011. During the third quarter of 2012, we recorded a tax benefit of $1.1 million for the favorable conclusion of a tax audit in our International segment. This tax benefit was offset by higher tax expense based on the level and mix of income and losses generated in the various jurisdictions in which we do business. The actual income tax expense is higher than the expected income tax expense based on statutory rates primarily because we have not recorded tax benefits on net losses incurred in certain jurisdictions. The jurisdictions that have had historical cumulative losses are primarily the U.S., Brazil, and the Netherlands. We have not recorded income tax benefits on current year losses in the Netherlands and Brazil due to the uncertainty of the future realization of the deferred tax assets generated by the losses. The U.S. still has a full valuation allowance and the U.S. tax expense is expected to be zero for 2012 despite current year profitability. We continually evaluate our net deferred tax asset positions and valuation allowances in all jurisdictions. We record valuation allowances when a history of cumulative losses exists and there is significant uncertainty related to the future realization of the deferred tax assets. In certain circumstances, we may release some or all of a valuation allowance on deferred tax assets if a jurisdiction that has experienced historical losses returns to sustained profitability.

Total revenues increased during the nine months ended September 30, 2012 by $34 million or 2% from the nine months ended September 30, 2011, reflecting primarily higher volume in both our Americas segment ($101.7 million) and our International segment ($32.1 million). Revenues were adversely impacted by the strengthening of the U.S. dollar against foreign currencies in our International segment, primarily the Euro ($60.2 million) and in our Americas segment, primarily the Brazilian Real ($27.8 million). Revenues were also adversely impacted by unfavorable pricing ($11.8 million).

Total gross profit decreased by $0.3 million from the nine months ended September 30, 2011 to the nine months ended September 30, 2012, and our gross profit margin decreased from 10.5% during the 2011 period to 10.3% in the 2012 period. The decrease in total gross profit reflects unfavorable product mix ($12.7 million) and unfavorable foreign exchange ($11.7 million), offset partially by higher volumes ($13.6 million). All other factors were net favorable by $10.6 million. Cost of sales was positively impacted by favorable efficiencies ($26.9 million) offset in part by unfavorable pricing and economics ($25.1 million). Gross profit was also adversely impacted by the non-recurrence of customer cost recoveries in 2012 ($4.3 million) and the non-recurrence of a favorable settlement associated with a value added tax audit in Brazil ($2.7 million), offset partially by lower launch costs ($5.1 million) and favorable customer cost recoveries in our International segment ($1.6 million).

Read the The complete Report



Stocks Discussed: TOWR,
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