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TriMas Reports First Quarter 2018 Results

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BLOOMFIELD HILLS, Mich., April 26, 2018 (GLOBE NEWSWIRE) -- TriMas (NASDAQ:TRS) today announced financial results for the quarter ended March 31, 2018.

First Quarter 2018 Highlights

  • Increased net sales by 8.6% to $217.1 million, with organic sales growth in all segments
  • Increased operating profit to $35.2 million, while adjusted operating profit(1) increased by 16.9% to $28.1 million
  • Increased diluted EPS to $0.53, while adjusted diluted EPS(1) increased by 36.7% to $0.41
  • Reduced total debt by $65.2 million, or 17.8%, to $301.7 million compared to March 31, 2017

First Quarter 2018

TriMas reported first quarter net sales of $217.1 million, an increase of 8.6% compared to $199.8 million in first quarter 2017. The Company reported operating profit of $35.2 million in first quarter 2018 compared to $15.9 million in first quarter 2017. Adjusting for a non-cash reversal of an $8.2 million accrual related to a now extinguished legacy liability and $1.0 million of business realignment expenses, first quarter 2018 adjusted operating profit was $28.1 million, an increase of 16.9% compared to the prior year period.

The Company reported first quarter 2018 net income of $24.3 million, or $0.53 per diluted share, compared to net income of $7.0 million, or $0.15 per diluted share, in first quarter 2017. First quarter 2018 adjusted net income(1) was $19.0 million, or $0.41 per diluted share, an increase of 36.7% compared to $0.30 per diluted share in the prior year period.

"We are pleased with our strong performance and carried momentum into the first quarter, as we continue to benefit from our realignment actions and implementation of the TriMas Business Model," said Thomas Amato, TriMas President and Chief Executive Officer. "During the quarter, we captured increased end market demand through our refocused commercial efforts, leveraged our streamlined cost structure to improve profitability and continued to strengthen our balance sheet."

"In 2018, our objective remains to execute our plan of driving performance of our businesses by operating under the TriMas Business Model, continuing to assess opportunities to better position our businesses and TriMas strategically, and driving strong cash flow conversion. We are committed to achieving our 2018 operating plan and are reaffirming our full year outlook provided in February," Amato concluded.

Financial Position

TriMas reported total debt of $301.7 million as of March 31, 2018, compared to $303.1 million as of December 31, 2017, and $366.9 million as of March 31, 2017, reductions of $1.4 million and $65.2 million, respectively. TriMas ended first quarter 2018 with $36.7 million of cash and $312.9 million of cash and aggregate availability under its revolving credit facility, and a leverage ratio of 1.8x compared to 2.5x as of March 31, 2017, as defined in the Company's current and former credit agreements.

The Company reported net cash provided by operations of $16.2 million for first quarter 2018 compared to $22.0 million in first quarter 2017. As a result, the Company reported that Free Cash Flow(2) was on plan at $14.4 million for first quarter 2018, compared to $17.7 million in first quarter 2017. Please see Appendix I for further details.

First Quarter Segment Results

Packaging (Approximately 42% of TriMas March 31, 2018 LTM sales)

The Packaging segment, which consists primarily of the Rieke® brand, develops and manufactures specialty dispensing and closure products for the health, beauty and home care, food and beverage, and industrial markets. Net sales for the first quarter increased 8.9% compared to the year ago period, as a result of higher sales in all of Rieke's primary end markets served. First quarter operating profit increased, while the related margin percentage declined slightly, as the favorable impact of higher sales was more than offset by the impact of investing in manufacturing capacity, and adding technical and commercial resources to the Rieke team.

Aerospace (Approximately 22% of TriMas March 31, 2018 LTM sales)

The Aerospace segment, which includes the Monogram Aerospace Fasteners, Allfast Fastening Systems®, Mac Fasteners and Martinic Engineering brands, develops, qualifies and manufactures highly-engineered, precision fasteners and machined products to serve the aerospace market. Net sales for the first quarter increased slightly compared to the year ago period, as higher sales of machined products and continued solid demand for fasteners were partially offset by the impact of the decision to exit less profitable components and the benefit realized in first quarter 2017 of reductions against past due orders. First quarter operating profit and the related margin percentage was relatively flat, as the impact of continued performance improvement actions was mitigated by less favorable product sales mix.

Specialty Products (Approximately 36% of TriMas March 31, 2018 LTM sales)

The Specialty Products segment, which includes the Norris Cylinder, Lamons® and Arrow® Engine brands, designs, manufactures and distributes highly-engineered steel cylinders, sealing and fastener products, and wellhead engines and compression systems for use within the industrial, petrochemical, and oil and gas exploration and refining markets. First quarter net sales increased by 13.1% compared to the year ago period, with higher sales levels of all brands resulting from refocused commercial efforts and capturing increased end market demand. First quarter operating profit and the related margin percentage increased due to the impact of higher sales levels and continued realignment actions.

Effective with the first quarter of 2018, the Company realigned its reporting segment structure from four segments to three, combining the Energy and Engineered Components segments into a single segment, titled Specialty Products. This change better aligns with the Company's more streamlined operating structure and efforts to better leverage resources across the businesses. Please see the 8-K, Exhibit 99.2, filed February 27, 2018 for historical quarterly information related to this segment reporting change.

Outlook

The Company reaffirms its full year 2018 outlook provided on February 27, 2018. The Company estimates that 2018 organic sales will increase ~3% compared to 2017. The Company expects full year 2018 diluted earnings per share to be between $1.60 to $1.75, and 2018 Free Cash Flow(2) to be greater than 120% of net income, adjusting for any current or future amounts that may be considered Special Items.

"In addition to echoing the previous comments on our continued progress at TriMas, I would like to add that we always welcome input from our shareholders," said Samuel Valenti, Chairman of the TriMas Board of Directors. "Several of our shareholders have provided constructive comments over the past few years, which in turn the Board has taken into consideration as it oversees TriMas. In particular, the Board would like to thank Barington Capital Group, L.P. for their thoughtful discussions with us over the past two years. TriMas looks forward to continuing our dialogue and meetings in the future with Barington, as well as other shareholders."

Conference Call Information

TriMas will host its first quarter 2018 earnings conference call today, Thursday, April 26, 2018, at 10 a.m. ET. The call-in number is (888) 378-4361. Participants should request to be connected to the TriMas first quarter 2018 earnings conference call (Conference ID #2946189). The conference call will also be simultaneously webcast via TriMas' website at www.trimascorp.com, under the "Investors" section, with an accompanying slide presentation. A replay of the conference call will be available on the TriMas website or by dialing (888) 203-1112 (Replay Passcode #2946189) beginning April 26, 2018 at 3 p.m. ET through May 3, 2018 at 3 p.m. ET. 

Notice Regarding Forward-Looking Statements

Any "forward-looking" statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, contained herein, including those relating to the Company's business, financial condition or future results, involve risks and uncertainties with respect to, including, but not limited to: general economic and currency conditions; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other intangible asset impairment charges; competitive factors; future trends; the Company's ability to realize its business strategies; the Company's ability to identify attractive acquisition candidates, successfully integrate acquired operations or realize the intended benefits of such acquisitions; the performance of subcontractors and suppliers; supply constraints; market demand; technology factors; intellectual property factors; litigation; government and regulatory actions; the Company's leverage; liabilities imposed by debt instruments; labor disputes; changes to fiscal and tax policies; contingent liabilities relating to acquisition activities; information technology factors; the disruption of operations from catastrophic or extraordinary events, including natural disasters; the potential impact of Brexit; tax considerations relating to the Cequent spin-off; the Company's future prospects; and other risks that are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements.

Non-GAAP Financial Measures
In this release, certain non-GAAP financial measures are used. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure may be found in Appendix I at the end of this release. Additional information is available at www.trimascorp.com under the "Investors" section.

(1)   Appendix I details certain costs, expenses and other amounts or charges, collectively described as "Special Items," that are included in the determination of net income, earnings per share and/or cash flows from operating activities under GAAP, but that management believes should be separately considered when evaluating the quality of the Company's core operating results, given they may not reflect the ongoing activities of the business. Management believes that presenting these non-GAAP financial measures, adjusted to remove the impact of Special Items, provides useful information to investors by helping them identify underlying trends in the Company's businesses and facilitating comparisons of performance with prior and future periods. These non-GAAP financial measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP financial measures.
     
(2)   The Company defines Free Cash Flow as Net Cash Provided by/Used for Operating Activities, excluding the cash impact of Special Items, less Capital Expenditures. Please see Appendix I for additional details.

About TriMas

TriMas is a diversified industrial manufacturer of products for customers in the consumer products, aerospace, industrial, petrochemical, refinery and oil & gas end markets with approximately 4,000 dedicated employees in 13 countries. We provide customers with a wide range of innovative and quality product solutions through our market-leading businesses, which operate in three segments: Packaging, Aerospace and Specialty Products. The TriMas family of businesses has strong brand names in the markets served, and operates under a common set of values and strategic priorities under the TriMas Business Model. TriMas is publicly traded on the NASDAQ under the ticker symbol "TRS," and is headquartered in Bloomfield Hills, Michigan. For more information, please visit www.trimascorp.com.

 
TriMas Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands)
         
    March 31,
 2018
  December 31,
 2017
Assets   (unaudited)    
Current assets:        
Cash and cash equivalents   $ 36,670     $ 27,580  
Receivables, net   128,850     112,220  
Inventories   156,560     155,350  
Prepaid expenses and other current assets   10,840     16,120  
Total current assets   332,920     311,270  
Property and equipment, net   188,440     190,250  
Goodwill   320,210     319,390  
Other intangibles, net   189,260     194,220  
Deferred income taxes   5,280     9,100  
Other assets   9,020     8,970  
Total assets   $ 1,045,130     $ 1,033,200  
Liabilities and Shareholders' Equity        
Current liabilities:        
Accounts payable   $ 73,020     $ 72,410  
Accrued liabilities   44,720     49,470  
Total current liabilities   117,740     121,880  
Long-term debt, net   301,710     303,080  
Deferred income taxes   5,710     5,650  
Other long-term liabilities   54,190     58,570  
Total liabilities   479,350     489,180  
Total shareholders' equity   565,780     544,020  
Total liabilities and shareholders' equity   $ 1,045,130     $ 1,033,200  
                 
                 



 
TriMas Corporation
 Consolidated Statement of Income
 (Unaudited - dollars in thousands, except per share amounts)
 
    Three months ended
March 31,
    2018   2017
Net sales   $ 217,100     $ 199,830  
Cost of sales   (156,720 )   (148,010 )
Gross profit   60,380     51,820  
Selling, general and administrative expenses   (25,170 )   (35,910 )
Operating profit   35,210     15,910  
Other expense, net:        
Interest expense   (3,700 )   (3,550 )
Other expense, net   (560 )   (780 )
Other expense, net   (4,260 )   (4,330 )
Income before income tax expense   30,950     11,580  
Income tax expense   (6,630 )   (4,590 )
Net income   $ 24,320     $ 6,990  
Basic earnings per share:        
Net income per share   $ 0.53     $ 0.15  
Weighted average common shares—basic   45,779,966     45,570,495  
Diluted earnings per share:        
Net income per share   $ 0.53     $ 0.15  
Weighted average common shares—diluted   46,229,337     45,908,958  
             
             

 

 
TriMas Corporation
Consolidated Statement of Cash Flow
(Unaudited - dollars in thousands)
 
    Three months ended
March 31,
    2018   2017
Cash Flows from Operating Activities:        
Net income   $ 24,320     $ 6,990  
Adjustments to reconcile net income to net cash provided by operating activities:        
(Gain) loss on dispositions of assets   (10 )   4,170  
Depreciation   6,330     5,800  
Amortization of intangible assets   4,910     4,990  
Amortization of debt issue costs   470     350  
Deferred income taxes   5,010     1,870  
Non-cash compensation expense   1,220     1,470  
Increase in receivables   (16,160 )   (7,590 )
Increase in inventories   (840 )   (420 )
Decrease in prepaid expenses and other assets   5,330     8,070  
Decrease in accounts payable and accrued liabilities   (15,140 )   (3,160 )
Other operating activities   800     (570 )
Net cash provided by operating activities   16,240     21,970  
Cash Flows from Investing Activities:        
Capital expenditures   (3,170 )   (10,740 )
Net proceeds from disposition of property and equipment   250     30  
Net cash used for investing activities   (2,920 )   (10,710 )
Cash Flows from Financing Activities:        
Repayments of borrowings on term loan facilities       (3,470 )
Proceeds from borrowings on revolving credit and accounts receivable facilities   32,040     186,640  
Repayments of borrowings on revolving credit and accounts receivable facilities   (33,970 )   (191,760 )
Shares surrendered upon exercise and vesting of equity awards to cover taxes   (2,300 )   (450 )
Other financing activities       (290 )
Net cash used for financing activities   (4,230 )   (9,330 )
Cash and Cash Equivalents:        
Net increase for the period   9,090     1,930  
At beginning of period   27,580     20,710  
At end of period   $ 36,670     $ 22,640  
Supplemental disclosure of cash flow information:        
Cash paid for interest   $ 470     $ 3,050  
Cash paid for taxes   $ 970     $ 1,230  
                 
                 


 
Appendix I
 
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited - dollars in thousands)
 
    Three months ended
March 31,
    2018   2017
Packaging        
Net sales   $ 88,200     $ 80,960  
Operating profit   $ 19,580     $ 16,900  
Special Items to consider in evaluating operating profit:        
Business restructuring and severance costs       1,670  
Adjusted operating profit   $ 19,580     $ 18,570  
         
Aerospace        
Net sales   $ 45,810     $ 45,420  
Operating profit   $ 5,080     $ 5,060  
         
Specialty Products        
Net sales   $ 83,090     $ 73,450  
Operating profit   $ 9,650     $ 1,510  
Special Items to consider in evaluating operating profit:        
Business restructuring and severance costs   1,030     6,440  
Adjusted operating profit   $ 10,680     $ 7,950  
         
Corporate Expenses        
Operating profit (loss)   $ 900     $ (7,560 )
Special Items to consider in evaluating operating loss:        
Reversal of legacy related party liability   (8,150 )    
Adjusted operating loss   $ (7,250 )   $ (7,560 )
         
Total Company        
Net sales   $ 217,100     $ 199,830  
Operating profit   $ 35,210     $ 15,910  
Total Special Items to consider in evaluating operating profit   (7,120 )   8,110  
Adjusted operating profit   $ 28,090     $ 24,020  
                 
                 


 
Appendix I
 
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited - dollars in thousands, except per share amounts)
 
    Three months ended
March 31,
    2018   2017
Net Income, as reported   $ 24,320     $ 6,990  
Special Items to consider in evaluating quality of net income:        
Business restructuring and severance costs   1,210     8,110  
Reversal of legacy related party liability   (8,150 )    
Income tax effect of Special Items(1)   1,650     (1,110 )
Adjusted net income   $ 19,030     $ 13,990  
         
    Three months ended
March 31,
    2018   2017
Diluted earnings per share, as reported   $ 0.53     $ 0.15  
Special Items to consider in evaluating quality of EPS:        
Business restructuring and severance costs   0.03     0.18  
Reversal of legacy related party liability   (0.18 )    
Income tax effect of Special Items(1)   0.03     (0.03 )
Adjusted diluted EPS   $ 0.41     $ 0.30  
Weighted-average shares outstanding   46,229,337     45,908,958  
             


 (1)   Income tax effect of Special Items is calculated on an item-by-item basis, utilizing the tax rate in the jurisdiction where the Special Item occurred. For the three month periods ended March 31, 2018 and 2017, the income tax effect of Special Items varied from the tax rate inherent in the Company's reported GAAP results, primarily as a result of certain of the Special Items in each period being incurred in jurisdictions where no tax benefit could be recorded due to valuation allowance assessments.
     


 
Appendix I
 
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited - dollars in thousands)
 
    Three months ended March 31,
    2018   2017
    As
reported
  Special
Items
  As
adjusted
  As
reported
  Special
Items
  As
adjusted
Net cash provided by operating activities   $ 16,240     $ 1,350     $ 17,590     $ 21,970     $ 6,490     $ 28,460  
Less: Capital expenditures   (3,170 )       (3,170 )   (10,740 )       (10,740 )
Free Cash Flow   13,070     1,350     14,420     11,230     6,490     17,720  
Net Income   24,320     (5,290 )   19,030     6,990     7,000     13,990  
Free Cash Flow as a percentage of net income   54 %       76 %   161 %       127 %
                         
                         


             
    March 31,
 2018
  December 31,
 2017
  March 31,
 2017
Current maturities, long-term debt   $     $     $ 13,770  
Long-term debt, net   301,710     303,080     353,110  
Total Debt   301,710     303,080     366,880  
Less: Cash and cash equivalents   36,670     27,580     22,640  
Net Debt   $ 265,040     $ 275,500     $ 344,240  
                         

CONTACT:
Sherry Lauderback
VP, Investor Relations & Communications
(248) 631-5506
sherrylauderback@trimascorp.com

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