TriMas Corporation Reports Record First Quarter Results
Company Reports Growth in Sales of 9% and Income(1) of 11% for the Quarter
Company Reaffirms 2014 Guidance
TriMas Highlights
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Reported record first quarter net sales of
$367.7 million , an increase of 8.9% as compared to first quarter 2013, due to results from bolt-on acquisitions and the successful execution of numerous growth initiatives. -
Improved net income attributable to
TriMas Corporation (1) by 10.7%, excluding the impact of Special Items, compared to first quarter 2013. - Continued initiatives to expand operating profit margins with a 30 basis point improvement, after Special Items(1), in first quarter 2014 as compared to first quarter 2013, while investing in the many recent acquisitions completed in 2013 and absorbing the lower margin rates associated with these acquisitions. The Company will continue to improve margins through a variety of initiatives.
-
Acquired the remaining 30% interest of
Arminak & Associates , a leader in the design, manufacture and supply of foamers, lotion pumps, fine mist sprayers and other packaging solutions for the cosmetic, personal care, beauty aids and household product markets. -
Reduced interest expense by more than 30% as compared to first quarter
2013. In
October 2013 , the Company entered into new senior secured credit facilities, which reduced interest rates, extended maturities and increased available liquidity. Also inApril 2014 , the Company amended its$105.0 million accounts receivable facility to lower rates and extend the maturity untilOctober 2018 . - Continued to invest in a lean and flexible manufacturing footprint to optimize manufacturing costs long-term, add needed capacity, enhance customer service and support future growth.
"We are off to a good start in 2014 as our team is focused on the many
growth and margin improvement programs in each of our businesses and
headquarters," said
"We continue to identify the bright spots and leverage our recent
bolt-on acquisitions. We also secured new business in
"Looking forward, we remain committed to
First Quarter Financial Results
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TriMas reported record first quarter net sales of$367.7 million , an increase of 8.9% as compared to$337.8 million in first quarter 2013. During first quarter, net sales increased in four of the six reportable segments, primarily as a result of additional sales from bolt-on acquisitions, as well as geographic expansion, new customer wins and strength in certain end markets as compared to first quarter 2013. These sales increases were partially offset by approximately$3.6 million of unfavorable currency exchange. -
The Company reported operating profit of
$32.6 million in first quarter 2014, an increase of 37.3% as compared to first quarter 2013. Excluding Special Items(1) related to the facility consolidation and relocation projects within Cequent Americas in both years, first quarter 2014 operating profit would have been$33.6 million , an increase of 13.5% as compared to$29.6 million during first quarter 2013. First quarter 2014 operating profit margin percentage, excluding Special Items, improved due to productivity and cost reduction initiatives primarily in the Packaging and Engineered Components segments, partially offset by a less favorable product sales mix related to recent acquisitions, which have lower initial margins. The Company continued to generate significant savings from capital investments, productivity projects and lean initiatives, which contributed to the funding of growth initiatives. -
Excluding noncontrolling interests related to
Arminak & Associates , first quarter 2014 net income attributable toTriMas Corporation was$18.6 million , or$0.41 per diluted share, compared to net income attributable toTriMas Corporation of$13.2 million , or$0.33 per diluted share, during first quarter 2013. Excluding Special Items(1), first quarter 2014 net income attributable toTriMas Corporation would have been$19.2 million , an improvement of 10.7%, and diluted earnings per share would have been$0.43 , as compared to$0.44 in first quarter 2013, primarily due to higher operating profit and lower interest expense which was more than offset by significantly higher income tax expense and 13.6% higher weighted average shares outstanding in first quarter 2014 as compared to first quarter 2013. -
The Company reported a Free Cash Flow use (defined as
Cash Flow from Operating Activities less Capital Expenditures) of$33.7 million for first quarter 2014, compared to a use of$51.9 million in first quarter 2013. The Company expects to generate between$55 million and$65 million in Free Cash Flow for 2014, while continuing to invest in capital expenditures, working capital investments in acquisitions and future growth and productivity programs. -
Through March 31, 2014, the Company invested
$9.0 million in capital expenditures (included in Free Cash Flow above) primarily in support of future growth and productivity opportunities and used$51.0 million to acquire the remaining interest ofArminak & Associates in the Packaging reportable segment.
Financial Position
Business Segment Results(2)
Packaging
Net sales for first quarter increased 9.5% compared to the year ago
period primarily due to increases in specialty systems product sales
resulting from additional demand from North American and European
dispensing customers, as well as customer opportunities in
Energy
First quarter net sales decreased 3.9% compared to the year ago period primarily due to the significant slow down and postponement of turnaround activity and maintenance spend in the North American refining and petrochemical end markets, partially offset by sales related to acquisitions. First quarter operating profit and the related margin percentage decreased, as manufacturing productivity was more than offset by the impact of weaker refinery shutdown activity, which resulted in a less favorable product mix shift towards standard gaskets and bolts, and higher selling, general and administrative expenses in support of our recent acquisitions. On a sequential basis, sales, operating profit and the related margin percentage improved in the first quarter of 2014 as compared to the fourth quarter of 2013. The Company continues to optimize its sales and service branch network in support of its global customers, while focusing on improving margins.
Aerospace & Defense
Net sales for the first quarter increased 40.9% compared to the year ago
period primarily due to the results of the acquisitions of Mac Fasteners
in
Engineered Components
First quarter net sales increased 19.8% compared to the year ago period
primarily due to a large order for compressor packages by a significant
customer and an increase in industrial cylinder sales related to the
asset acquisition from Worthington in
Cequent APEA
Net sales for first quarter increased 23.0% compared to the year ago
period primarily due to the
Cequent Americas
Net sales for first quarter were relatively flat compared to the year
ago period, as increased sales within the retail channel were offset by
a decrease in sales in the aftermarket channel related to higher than
normal sales levels in the first quarter of 2013 as customers built
safety stock in anticipation of the move of production to lower cost
country facilities. First quarter operating profit and the related
margin percentage were relatively flat compared to the prior year
period, as savings generated from the manufacturing move to
2014 Outlook
The Company reaffirmed its 2014 outlook previously provided on
Conference Call Information
Cautionary Notice Regarding Forward-Looking Statements
Any "forward-looking" statements contained herein, including those relating to market conditions or the Company's financial condition and results, expense reductions, liquidity expectations, business goals and sales growth, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect to general economic and currency conditions, various conditions specific to the Company's business and industry, the Company's substantial leverage, liabilities imposed by the Company's debt instruments, market demand, competitive factors, supply constraints, material and energy costs, technology factors, litigation, government and regulatory actions, the Company's accounting policies, future trends, and other risks which are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and in the Company's Quarterly Reports on Form 10-Q. 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.
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 at the end of this release. Additional information is available at www.trimascorp.com under the "Investors" section.
About
Headquartered in
(1) Appendix I details certain costs, expenses and other
charges, collectively described as "Special Items," that are included in
the determination of net income attributable to
(2) Business Segment Results include Operating Profit that excludes the impact of Special Items. For a complete schedule of Special Items by segment, see "Company and Business Segment Financial Information."
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| Condensed Consolidated Balance Sheet | |||||||||
| (Unaudited - dollars in thousands) | |||||||||
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| 2014 | 2013 | ||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 31,820 | $ | 27,000 | |||||
| Receivables, net | 226,380 | 180,210 | |||||||
| Inventories | 269,900 | 270,690 | |||||||
| Deferred income taxes | 18,340 | 18,340 | |||||||
| Prepaid expenses and other current assets | 19,780 | 18,770 | |||||||
| Total current assets | 566,220 | 515,010 | |||||||
| Property and equipment, net | 208,360 | 206,150 | |||||||
| Goodwill | 310,700 | 309,660 | |||||||
| Other intangibles, net | 214,760 | 219,530 | |||||||
| Other assets | 48,910 | 50,430 | |||||||
| Total assets | $ | 1,348,950 | $ | 1,300,780 | |||||
| Liabilities and Shareholders' Equity | |||||||||
| Current liabilities: | |||||||||
| Current maturities, long-term debt | $ | 14,000 | $ | 10,290 | |||||
| Accounts payable | 159,460 | 166,090 | |||||||
| Accrued liabilities | 80,240 | 85,130 | |||||||
| Total current liabilities | 253,700 | 261,510 | |||||||
| Long-term debt | 384,190 | 295,450 | |||||||
| Deferred income taxes | 53,920 | 64,940 | |||||||
| Other long-term liabilities | 102,270 | 99,990 | |||||||
| Total liabilities | 794,080 | 721,890 | |||||||
| Redeemable noncontrolling interests | — | 29,480 | |||||||
| Total shareholders' equity | 554,870 | 549,410 | |||||||
| Total liabilities and shareholders' equity | $ | 1,348,950 | $ | 1,300,780 | |||||
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| Consolidated Statement of Income | ||||||||||
| (Unaudited - dollars in thousands, except per share amounts) | ||||||||||
| Three months ended | ||||||||||
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| 2014 | 2013 | |||||||||
| Net sales | $ | 367,740 | $ | 337,780 | ||||||
| Cost of sales | (271,160 | ) | (254,380 | ) | ||||||
| Gross profit | 96,580 | 83,400 | ||||||||
| Selling, general and administrative expenses | (63,990 | ) | (59,660 | ) | ||||||
| Operating profit | 32,590 | 23,740 | ||||||||
| Other expense, net: | ||||||||||
| Interest expense | (3,470 | ) | (5,210 | ) | ||||||
| Other expense, net | (1,020 | ) | (2,230 | ) | ||||||
| Other expense, net | (4,490 | ) | (7,440 | ) | ||||||
| Income before income tax expense | 28,100 | 16,300 | ||||||||
| Income tax expense | (8,720 | ) | (2,260 | ) | ||||||
| Net income | 19,380 | 14,040 | ||||||||
| Less: Net income attributable to noncontrolling interests | 810 | 860 | ||||||||
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Net income attributable to |
$ | 18,570 | $ | 13,180 | ||||||
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Basic earnings per share attributable to |
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| Net income per share | $ | 0.41 | $ | 0.34 | ||||||
| Weighted average common shares—basic | 44,768,594 | 39,234,780 | ||||||||
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Diluted earnings per share attributable to |
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| Net income per share | $ | 0.41 | $ | 0.33 | ||||||
| Weighted average common shares—diluted | 45,186,114 | 39,790,524 | ||||||||
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Consolidated Statement of |
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| (Unaudited - dollars in thousands) | ||||||||||
| Three months ended | ||||||||||
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| 2014 | 2013 | |||||||||
| Cash Flows from Operating Activities: | ||||||||||
| Net income | $ | 19,380 | $ | 14,040 | ||||||
| Adjustments to reconcile net income to net cash used for operating activities, net of acquisition impact: | ||||||||||
| Loss on dispositions of property and equipment | 70 | 10 | ||||||||
| Depreciation | 8,030 | 7,050 | ||||||||
| Amortization of intangible assets | 5,480 | 5,080 | ||||||||
| Amortization of debt issue costs | 480 | 440 | ||||||||
| Deferred income taxes | (2,820 | ) | (1,640 | ) | ||||||
| Non-cash compensation expense | 2,280 | 2,680 | ||||||||
| Excess tax benefits from stock based compensation | (760 | ) | (910 | ) | ||||||
| Increase in receivables | (44,960 | ) | (38,280 | ) | ||||||
| (Increase) decrease in inventories | 1,800 | (3,690 | ) | |||||||
| (Increase) decrease in prepaid expenses and other assets | 100 | (3,560 | ) | |||||||
| Decrease in accounts payable and accrued liabilities | (13,910 | ) | (18,710 | ) | ||||||
| Other, net | 160 | (440 | ) | |||||||
| Net cash used for operating activities, net of acquisition impact | (24,670 | ) | (37,930 | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||||
| Capital expenditures | (9,030 | ) | (13,950 | ) | ||||||
| Acquisition of businesses, net of cash acquired | — | (28,230 | ) | |||||||
| Net proceeds from disposition of assets | 240 | 520 | ||||||||
| Net cash used for investing activities | (8,790 | ) | (41,660 | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||||
| Proceeds from borrowings on term loan facilities | 46,750 | 54,110 | ||||||||
| Repayments of borrowings on term loan facilities | (46,340 | ) | (48,840 | ) | ||||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 331,120 | 268,800 | ||||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (239,900 | ) | (190,800 | ) | ||||||
| Distributions to noncontrolling interests | (580 | ) | (550 | ) | ||||||
| Payment for noncontrolling interests | (51,000 | ) | — | |||||||
| Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (2,670 | ) | (3,530 | ) | ||||||
| Proceeds from exercise of stock options | 140 | 170 | ||||||||
| Excess tax benefits from stock based compensation | 760 | 910 | ||||||||
| Net cash provided by financing activities | 38,280 | 80,270 | ||||||||
| Cash and Cash Equivalents: | ||||||||||
| Increase for the period | 4,820 | 680 | ||||||||
| At beginning of period | 27,000 | 20,580 | ||||||||
| At end of period | $ | 31,820 | $ | 21,260 | ||||||
| Supplemental disclosure of cash flow information: | ||||||||||
| Cash paid for interest | $ | 3,010 | $ | 3,900 | ||||||
| Cash paid for taxes | $ | 2,660 | $ | 7,280 | ||||||
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| Company and Business Segment Financial Information | ||||||||||
| (Unaudited - dollars in thousands) | ||||||||||
| Three months ended | ||||||||||
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| 2014 | 2013 | |||||||||
| Packaging | ||||||||||
| Net sales | $ | 81,430 | $ | 74,350 | ||||||
| Operating profit | $ | 18,360 | $ | 14,630 | ||||||
| Energy | ||||||||||
| Net sales | $ | 52,780 | $ | 54,920 | ||||||
| Operating profit | $ | 2,600 | $ | 5,870 | ||||||
| Aerospace & Defense | ||||||||||
| Net sales | $ | 29,540 | $ | 20,970 | ||||||
| Operating profit | $ | 5,180 | $ | 3,750 | ||||||
| Engineered Components | ||||||||||
| Net sales | $ | 55,430 | $ | 46,270 | ||||||
| Operating profit | $ | 7,880 | $ | 5,700 | ||||||
| Cequent APEA | ||||||||||
| Net sales | $ | 39,470 | $ | 32,090 | ||||||
| Operating profit | $ | 2,500 | $ | 3,180 | ||||||
| Cequent Americas | ||||||||||
| Net sales | $ | 109,090 | $ | 109,180 | ||||||
| Operating profit | $ | 5,710 | $ | 700 | ||||||
| Special Items to consider in evaluating operating profit: | ||||||||||
| Severance and business restructuring costs | $ | 980 | $ | 5,830 | ||||||
| Excluding Special Items, operating profit would have been | $ | 6,690 | $ | 6,530 | ||||||
| Corporate Expenses | ||||||||||
| Operating loss | $ | (9,640 | ) | $ | (10,090 | ) | ||||
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| Net sales | $ | 367,740 | $ | 337,780 | ||||||
| Operating profit | $ | 32,590 | $ | 23,740 | ||||||
| Total Special Items to consider in evaluating operating profit: | $ | 980 | $ | 5,830 | ||||||
| Excluding Special Items, operating profit would have been | $ | 33,570 | $ | 29,570 | ||||||
| Appendix I | |||||||||
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| Additional Information Regarding Special Items Impacting | |||||||||
| Reported GAAP Financial Measures | |||||||||
| (Unaudited - dollars in thousands, except per share amounts) | |||||||||
| Three months ended | |||||||||
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| 2014 | 2013 | ||||||||
| Net Income, as reported | $ | 19,380 | $ | 14,040 | |||||
| Less: Net income attributable to noncontrolling interests | 810 | 860 | |||||||
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Net Income attributable to |
18,570 | 13,180 | |||||||
| After-tax impact of Special Items to consider in evaluating quality of net income: | |||||||||
| Severance and business restructuring costs | 670 | 4,200 | |||||||
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Excluding Special Items, net income attributable to |
$ | 19,240 | $ | 17,380 | |||||
| Three months ended | |||||||||
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| 2014 | 2013 | ||||||||
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Diluted earnings per share attributable to |
$ | 0.41 | $ | 0.33 | |||||
| After-tax impact of Special Items to consider in evaluating quality of EPS: | |||||||||
| Severance and business restructuring costs | 0.02 | 0.11 | |||||||
| Excluding Special Items, EPS would have been | $ | 0.43 | $ | 0.44 | |||||
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Weighted-average shares outstanding for the three months ended |
45,186,114 | 39,790,524 | |||||||
VP,
Investor Relations
sherrylauderback@trimascorp.com
Source:
News Provided by Acquire Media
