August 7, 2018 - 8:00 AM EDT
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TriMas Reports Second Quarter 2018 Results

Company Delivers Sales and Earnings Growth; Raises 2018 Sales Guidance and EPS Midpoint

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
[email protected]

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Source: GlobeNewswire (August 7, 2018 - 8:00 AM EDT)

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