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TriMas Reports Second Quarter 2018 Results

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BLOOMFIELD HILLS, Mich., Aug. 07, 2018 (GLOBE NEWSWIRE) -- TriMas (NASDAQ:TRS) today announced financial results for the quarter ended June 30, 2018.

Second Quarter 2018 Highlights

  • Increased net sales by 5.4% to $224.9 million
  • Increased operating profit to $31.5 million, while adjusted operating profit(1) increased by 5.3% to $32.1 million
  • Increased diluted EPS to $0.42, while adjusted diluted EPS(1) increased by 20.0% to $0.48
  • Reduced total debt by $53.5 million to $293.0 million compared to $346.5 million as of June 30, 2017

Second Quarter 2018

TriMas reported second quarter net sales of $224.9 million, an increase of 5.4% compared to $213.4 million in second quarter 2017. The Company reported operating profit of $31.5 million in second quarter 2018 compared to $26.4 million in second quarter 2017. Adjusting for Special Items(1), second quarter 2018 adjusted operating profit was $32.1 million, an increase of 5.3% compared to the prior year period.

The Company reported second quarter 2018 net income of $19.6 million, or $0.42 per diluted share, compared to net income of $14.9 million, or $0.32 per diluted share, in second quarter 2017. Second quarter 2018 adjusted net income(1) was $22.2 million, or $0.48 per diluted share, an increase of 22.0% compared to $18.2 million, or $0.40 per diluted share, in the prior year period.

"We are pleased to report another strong quarter, as our focused commercial efforts and improved market conditions, along with prior realignment actions, drove sales and earnings growth," said Thomas Amato, TriMas President and Chief Executive Officer. "During the quarter, we generated solid cash flow, further strengthening the balance sheet. In addition, we returned capital to shareholders by buying back more than 100,000 of our common shares for $2.9 million in the quarter, under our $50 million share repurchase authorization."

"As a result of our strong first half, and despite uncertainty around the economic impact of tariff actions and increased commodity costs, we are raising our full year 2018 sales and earnings per share midpoint guidance. Our objective remains to execute our plan by driving the performance of our businesses under the TriMas Business Model, continuing to assess opportunities to better position our businesses and TriMas strategically, and driving strong cash flow conversion," Amato concluded.

Financial Position

TriMas reported total debt of $293.0 million as of June 30, 2018, compared to $303.1 million as of December 31, 2017, and $346.5 million as of June 30, 2017, reductions of $10.1 million and $53.5 million, respectively. TriMas ended second quarter 2018 with $53.4 million of cash and $339.3 million of cash and aggregate availability under its revolving credit facility, and a leverage ratio of 1.7x compared to 2.3x as of June 30, 2017, as defined in the Company's current and former credit agreements.

The Company reported net cash provided by operations of $35.4 million for second quarter 2018 compared to $27.6 million in second quarter 2017. As a result, the Company reported Free Cash Flow(2) of $28.9 million for second quarter 2018, compared to $23.8 million in second quarter 2017. Please see Appendix I for further details.

During second quarter 2018, the Company repurchased 100,947 shares of its outstanding common stock for approximately $2.9 million. The Company has approximately $47 million remaining on its November 2015 share buyback authorization as of June 30, 2018.

Second Quarter Segment Results

Packaging (Approximately 42% of TriMas June 30, 2018 LTM sales)

TriMas' 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 second quarter increased 7.2% compared to the year ago period, primarily as a result of higher sales of health, beauty and home care, and industrial products, related to new product introductions, continued growth in Asia, increased demand and favorable currency exchange. Second quarter operating profit increased, while the related margin percentage was relatively flat, as the favorable impact of higher sales was offset by the impact of less favorable product sales mix, investments in manufacturing capacity, technical and commercial resource additions, and higher material costs.

Aerospace (Approximately 22% of TriMas June 30, 2018 LTM sales)

TriMas' 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 second quarter decreased 4.1% compared to the year ago period, as a result of the impact of the decision to exit less profitable machined components, the benefit realized in second quarter 2017 of reductions against past due orders, and order delivery timing within 2018. Second quarter operating profit and the related margin percentage increased, as the impact of continued improved production efficiencies and a more favorable product sales mix offset the impact of lower sales levels.

Specialty Products (Approximately 36% of TriMas June 30, 2018 LTM sales)

TriMas' 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. Second quarter net sales increased by 9.3% compared to the year ago period, with higher sales levels of cylinders and oil and gas related products due to refocused commercial efforts and increased end market demand. Second quarter operating profit increased, while the related margin percentage decreased slightly, as the impact of higher sales levels and continued realignment actions were offset by the impact of higher material costs.

Outlook

The Company updated its full year 2018 guidance provided on February 27, 2018. The Company raised its 2018 full year organic sales growth estimate to ~5% compared to 2017, from the previous guidance of ~3%. The Company also tightened its 2018 full year diluted earnings per share range to $1.65 to $1.75 from the previous range of $1.60 to $1.75, with the new, higher midpoint representing an increase of approximately 21% over the prior year. The Company continues to expect 2018 Free Cash Flow(2) to be greater than 120% of net income. All of the above figures considered as 2018 guidance are after adjusting for any current or future amounts that may be considered Special Items.

Amato commented, "We successfully overcame the impact of higher commodity costs in our businesses during the first half of the year through commercial actions, improved operating performance and incremental volume. During the remainder of the year, we will continue to aggressively manage the effects of increased commodity costs, as well as the impacts of tariffs, through commercial actions, supply chain management, leveraging our global manufacturing footprint and continued management of our businesses under the TriMas Business Model. Although we expect to mitigate the impact of these incremental costs, it will take some time to implement certain of these countermeasures. Even after the consideration of any potential unmitigated impact from these higher costs, we tightened our EPS guidance toward the higher end of our previously provided range, as a result of higher sales levels and our improved operational performance."

Conference Call Information

TriMas will host its second quarter 2018 earnings conference call today, Tuesday, August 7, 2018, at 10 a.m. ET. The call-in number is (877) 874-1569. Participants should request to be connected to the TriMas second quarter 2018 earnings conference call (Conference ID #4497064). 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 #4497064) beginning August 7, 2018 at 3 p.m. ET through August 14, 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, including, but not limited to, the impact of tariffs, quotas and surcharges; 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)
 
    June 30,
 2018
  December 31,
 2017
Assets   (unaudited)    
Current assets:        
Cash and cash equivalents   $ 53,400     $ 27,580  
Receivables, net   132,500     112,220  
Inventories   160,680     155,350  
Prepaid expenses and other current assets   6,960     16,120  
Total current assets   353,540     311,270  
Property and equipment, net   187,070     190,250  
Goodwill   317,700     319,390  
Other intangibles, net   184,290     194,220  
Deferred income taxes   2,270     9,100  
Other assets   8,990     8,970  
Total assets   $ 1,053,860     $ 1,033,200  
Liabilities and Shareholders' Equity        
Current liabilities:        
Accounts payable   $ 80,970     $ 72,410  
Accrued liabilities   45,040     49,470  
Total current liabilities   126,010     121,880  
Long-term debt, net   293,010     303,080  
Deferred income taxes   5,480     5,650  
Other long-term liabilities   43,670     58,570  
Total liabilities   468,170     489,180  
Total shareholders' equity   585,690     544,020  
Total liabilities and shareholders' equity   $ 1,053,860     $ 1,033,200  
 

 

 
TriMas Corporation
 Consolidated Statement of Income
 (Unaudited - dollars in thousands, except per share amounts)
 
    Three months ended
June 30,
  Six months ended
June 30,
    2018   2017   2018   2017
Net sales   $ 224,910     $ 213,370     $ 442,010     $ 413,200  
Cost of sales   (160,130 )   (153,900 )   (316,850 )   (301,910 )
Gross profit   64,780     59,470     125,160     111,290  
Selling, general and administrative expenses   (33,260 )   (33,050 )   (58,430 )   (68,960 )
Operating profit   31,520     26,420     66,730     42,330  
Other expense, net:                
Interest expense   (3,480 )   (3,420 )   (7,180 )   (6,970 )
Other expense, net   (2,180 )   (140 )   (2,740 )   (920 )
Other expense, net   (5,660 )   (3,560 )   (9,920 )   (7,890 )
Income before income tax expense   25,860     22,860     56,810     34,440  
Income tax expense   (6,260 )   (8,010 )   (12,890 )   (12,600 )
Net income   $ 19,600     $ 14,850     $ 43,920     $ 21,840  
Basic earnings per share:                
Net income per share   $ 0.43     $ 0.32     $ 0.96     $ 0.48  
Weighted average common shares—basic   45,920,307     45,717,697     45,850,137     45,644,096  
Diluted earnings per share:                
Net income per share   $ 0.42     $ 0.32     $ 0.95     $ 0.48  
Weighted average common shares—diluted   46,200,757     45,922,416     46,215,047     45,915,687  
 

 

 
TriMas Corporation
 Consolidated Statement of Cash Flow
 (Unaudited - dollars in thousands)
 
    Six months ended
June 30,
    2018   2017
Cash Flows from Operating Activities:        
Net income   $ 43,920     $ 21,840  
Adjustments to reconcile net income to net cash provided by operating activities:        
Loss on dispositions of assets   70     3,030  
Depreciation   12,870     13,050  
Amortization of intangible assets   9,740     9,990  
Amortization of debt issue costs   740     690  
Deferred income taxes   6,340     2,060  
Non-cash compensation expense   2,620     3,340  
Increase in receivables   (20,380 )   (11,490 )
(Increase) decrease in inventories   (5,880 )   2,850  
Decrease in prepaid expenses and other assets   8,970     6,280  
Decrease in accounts payable and accrued liabilities   (7,530 )   (1,930 )
Other operating activities   140     (120 )
Net cash provided by operating activities   51,620     49,590  
Cash Flows from Investing Activities:        
Capital expenditures   (11,320 )   (16,910 )
Net proceeds from disposition of property and equipment   250     1,780  
Net cash used for investing activities   (11,070 )   (15,130 )
Cash Flows from Financing Activities:        
Repayments of borrowings on term loan facilities       (6,910 )
Proceeds from borrowings on revolving credit and accounts receivable facilities   59,060     300,050  
Repayments of borrowings on revolving credit and accounts receivable facilities   (68,490 )   (324,900 )
Shares surrendered upon exercise and vesting of equity awards to cover taxes   (2,380 )   (480 )
Payments to purchase common stock   (2,920 )    
Other financing activities       (250 )
Net cash used for financing activities   (14,730 )   (32,490 )
Cash and Cash Equivalents:        
Net increase for the period   25,820     1,970  
At beginning of period   27,580     20,710  
At end of period   $ 53,400     $ 22,680  
Supplemental disclosure of cash flow information:        
Cash paid for interest   $ 7,630     $ 6,060  
Cash paid for taxes   $ 3,210     $ 10,600  

 

 
Appendix I
 
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited - dollars in thousands)
 
    Three months ended
June 30,
  Six months ended
June 30,
    2018   2017   2018   2017
Packaging                
Net sales   $ 95,090     $ 88,740     $ 183,290     $ 169,700  
Operating profit   $ 22,810     $ 21,590     $ 42,390     $ 38,490  
Special Items to consider in evaluating operating profit:                
Business restructuring and severance costs               1,670  
Adjusted operating profit   $ 22,810     $ 21,590     $ 42,390     $ 40,160  
                 
Aerospace                
Net sales   $ 45,620     $ 47,580     $ 91,430     $ 93,000  
Operating profit   $ 7,310     $ 6,990     $ 12,390     $ 12,050  
                 
Specialty Products                
Net sales   $ 84,200     $ 77,050     $ 167,290     $ 150,500  
Operating profit   $ 9,240     $ 5,260     $ 18,890     $ 6,770  
Special Items to consider in evaluating operating profit:                
Business restructuring and severance costs   580     3,890     1,610     10,330  
Adjusted operating profit   $ 9,820     $ 9,150     $ 20,500     $ 17,100  
                 
Corporate Expenses                
Operating loss   $ (7,840 )   $ (7,420 )   $ (6,940 )   $ (14,980 )
Special Items to consider in evaluating operating loss:                
Business restructuring and severance costs       180         180  
Reversal of legacy related party liability           (8,150 )    
Adjusted operating loss   $ (7,840 )   $ (7,240 )   $ (15,090 )   $ (14,800 )
                 
Total Company                
Net sales   $ 224,910     $ 213,370     $ 442,010     $ 413,200  
Operating profit   $ 31,520     $ 26,420     $ 66,730     $ 42,330  
Total Special Items to consider in evaluating operating profit   580     4,070     (6,540 )   12,180  
Adjusted operating profit   $ 32,100     $ 30,490     $ 60,190     $ 54,510  
 

 

 
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
June 30,
  Six months ended
June 30,
    2018   2017   2018   2017
Net Income, as reported   $ 19,600     $ 14,850     $ 43,920     $ 21,840  
Special Items to consider in evaluating quality of net income:                
Business restructuring and severance costs   660     4,000     1,870     12,110  
Reversal of legacy related party liability           (8,150 )    
Defined benefit pension plan settlement charge   2,500         2,500      
Income tax effect of Special Items(1)   (610 )   (690 )   1,040     (1,800 )
Adjusted net income   $ 22,150     $ 18,160     $ 41,180     $ 32,150  
                 
    Three months ended
June 30,
  Six months ended
June 30,
    2018   2017   2018   2017
Diluted earnings per share, as reported   $ 0.42     $ 0.32     $ 0.95     $ 0.48  
Special Items to consider in evaluating quality of EPS:                
Business restructuring and severance costs   0.01     0.09     0.04     0.26  
Reversal of legacy related party liability           (0.18 )    
Defined benefit pension plan settlement charge   0.06         0.06      
Income tax effect of Special Items(1)   (0.01 )   (0.01 )   0.02     (0.04 )
Adjusted diluted EPS   $ 0.48     $ 0.40     $ 0.89     $ 0.70  
Weighted-average shares outstanding   46,200,757     45,922,416     46,215,047     45,915,687  

(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 and six month periods ended June 30, 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 June 30,
    2018   2017
                         
    As
reported
  Special
Items
  As
adjusted
  As
reported
  Special
Items
  As
adjusted
Net cash provided by operating activities   $ 35,380     $ 1,630     $ 37,010     $ 27,620     $ 2,340     $ 29,960  
Less: Capital expenditures   (8,150 )       (8,150 )   (6,170 )       (6,170 )
Free Cash Flow   27,230     1,630     28,860     21,450     2,340     23,790  
Net Income   19,600     2,550     22,150     14,850     3,310     18,160  
Free Cash Flow as a percentage of net income   139 %       130 %   144 %       131 %
                         
    Six months ended June 30,
    2018   2017
                         
    As
reported
  Special
Items
  As
adjusted
  As
reported
  Special
Items
  As
adjusted
Net cash provided by operating activities   $ 51,620     $ 2,980     $ 54,600     49,590     $ 8,830     $ 58,420  
Less: Capital expenditures   (11,320 )       (11,320 )   (16,910 )       (16,910 )
Free Cash Flow   40,300     2,980     43,280     32,680     8,830     41,510  
Net Income   43,920     (2,740 )   41,180     21,840     10,310     32,150  
Free Cash Flow as a percentage of net income   92 %       105 %   150 %       129 %
                         


    June 30,
 2018
  December 31,
 2017
  June 30,
 2017
Current maturities, long-term debt   $   $   $ 13,760
Long-term debt, net   293,010   303,080   332,740
Total Debt   293,010   303,080   346,500
Less: Cash and cash equivalents   53,400   27,580   22,680
Net Debt   $ 239,610   $ 275,500   $ 323,820


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

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