TriMas Reports First Quarter 2019 Results

Delivers Sales and Earnings Growth; Reaffirms Previously Provided
Guidance

BLOOMFIELD HILLS, Mich.–(BUSINESS WIRE)–TriMas (NASDAQ: TRS) today announced financial results for the quarter
ended March 31, 2019.

TriMas Highlights

  • Increased net sales by 1.9% to $221.3 million, with sales increases in
    all segments
  • Achieved operating profit of $25.9 million, while adjusted operating
    profit(1) increased by 1.2% to $28.4 million
  • Achieved net income of $19.1 million, while adjusted net income(1)
    increased by 10.9% to $21.1 million
  • Achieved diluted EPS of $0.42, while adjusted diluted EPS(1)
    increased by 12.2% to $0.46
  • Ended the first quarter with $84.4 million of cash on hand, $369.3
    million of cash and aggregate availability under its revolving credit
    facility, and a leverage ratio of 1.4x
  • Acquired Taplast S.p.A., a designer and manufacturer of dispensers,
    closures and containers for the beauty and personal care, household,
    and food and beverage packaging end markets in Europe and North
    America, with approximately $32 million in annual net sales

First Quarter 2019

TriMas reported first quarter net sales of $221.3 million, an increase
of 1.9% compared to $217.1 million in first quarter 2018, as organic and
acquisition-related sales growth was partially offset by the unfavorable
impact of currency exchange. The Company reported operating profit of
$25.9 million in first quarter 2019 compared to $35.2 million in first
quarter 2018, as first quarter 2018 was favorably impacted by an $8.2
million non-cash reversal of a legacy related party liability that did
not repeat in first quarter of 2019. Adjusting for Special Items(1),
first quarter 2019 adjusted operating profit was $28.4 million, an
increase of 1.2% compared to the prior year period.

The Company reported first quarter 2019 net income of $19.1 million, or
$0.42 per diluted share, compared to net income of $24.3 million, or
$0.53 per diluted share, in first quarter 2018. First quarter 2019
adjusted net income(1) was $21.1 million, or $0.46 per
diluted share, an increase of 10.9% compared to $19.0 million, or $0.41
per diluted share, in the prior year period, aided in part by a lower
effective tax rate in the quarter.

“We are pleased to begin 2019 with another quarter of solid performance,
in line with our expectations, and we achieved adjusted earnings per
share growth of 12.2% compared to the prior year,” said Thomas Amato,
TriMas President and Chief Executive Officer. “In addition, we remain
committed to the long-term strategy of building out our packaging
platform, as evidenced by our acquisition of Taplast announced today. We
have now taken two meaningful steps during 2019 to grow this core
business by investing in two bolt-on acquisitions to increase our
product breadth, geographic presence, and innovation and engineering
capabilities.”

“We are committed to allocating capital on a balanced basis, focusing on
our highest return opportunities of organic investment, bolt-on
acquisitions and share repurchases, all while maintaining a sound
balance sheet. Our increased deployment of cash has been made possible
by our excellent cash generation over the past couple of
years. Throughout the remainder of 2019, we will continue to drive
performance under the TriMas Business Model, better position our
businesses and brands strategically to grow through innovation, and
capitalize on market opportunities through operational excellence. Based
on our encouraging start to the year and current expectations, we are
reaffirming our full year 2019 sales, earnings per share and free cash
flow guidance,” Amato concluded.

Financial Position

TriMas ended first quarter 2019 with $84.4 million of cash, $369.3
million of cash and aggregate availability under its revolving credit
facility, and a leverage ratio of 1.4x as defined in the Company’s
credit agreement. TriMas reported total debt of $293.9 million as of
March 31, 2019, compared to $301.7 million as of March 31, 2018. In
addition, the Company ended the quarter with Net Debt(2) of
$209.5 million, a reduction of $55.5 million compared to $265.0 million
as of March 31, 2018.

The Company reported net cash provided by operations of $8.1 million for
first quarter 2019, compared to $16.2 million in first quarter 2018. The
Company reported Free Cash Flow(3) of $2.6 million for first
quarter 2019, compared to $14.4 million in first quarter 2018. As
planned, first quarter 2019 Free Cash Flow was lower than the prior
year, primarily due to the timing of capital expenditure investments, a
federal tax refund received in first quarter 2018 that did not repeat in
2019, and slightly higher investment in working capital. The Company
reaffirmed its 2019 Free Cash Flow(3) guidance of greater
than 100% of net income. Please see Appendix I for further details.

First Quarter Segment Results

Packaging (Approximately 42% of TriMas March 31, 2019 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 first quarter increased 0.7%
compared to the year ago period, as a result of higher sales of health,
beauty and home care products related to new product introductions and
continued growth in Asia, and incremental sales related to the
acquisition of Plastic Srl. These increases were partially offset by a
decrease in sales of food and beverage and industrial products, and the
impact of unfavorable currency exchange. First quarter operating profit
and the related margin percentage decreased, as a result of the impact
of a less favorable product sales mix and higher costs related to the
acquisition of Plastic Srl.

Aerospace (Approximately 18% of TriMas March 31, 2019 LTM
sales)

TriMas’ Aerospace segment, which includes the Monogram Aerospace
Fasteners, Allfast Fastening Systems® and Mac
Fasteners brands, develops, qualifies and manufactures
highly-engineered, precision fasteners to serve the aerospace market.
Net sales for the first quarter increased 1.4% compared to the year ago
period due to steady demand levels for fasteners. First quarter
operating profit and the related margin percentage increased primarily
due to improved production efficiencies and a more favorable product
sales mix.

Specialty Products (Approximately 40% of TriMas March 31, 2019
LTM sales)

TriMas’ Specialty Products segment, which includes the Norris Cylinder,
Lamons®, Arrow® Engine and Martinic Engineering
brands, designs, manufactures and distributes highly-engineered
steel cylinders, sealing and fastener products, wellhead engines and
compression systems, and machined components for use within the
industrial, petrochemical, oil and gas exploration and refining, and
aerospace markets. First quarter net sales increased by 3.3% compared to
the year ago period, with higher sales levels due to refocused
commercial efforts and increased end market demand. First quarter
operating profit increased primarily due to the higher sales levels.
Adjusted operating profit and the related margin level declined as the
impact of higher sales levels were more than offset by higher input
costs.

2019 Modification to Reporting Segments

Effective with the first quarter of 2019, the Company reported its
machined components operations, located in Stanton, California and
Tolleson, Arizona, in the Specialty Products segment. These operations
were previously reported in the Aerospace segment. Please see the 8-K,
Exhibit 99.2, filed on February 28, 2019, for historical quarterly
information related to this segment change.

Outlook

The Company reaffirms its full year 2019 outlook provided on February
28, 2019. The Company estimates that 2019 organic sales growth will be
3% to 5% compared to 2018. The Company expects full year 2019 diluted
earnings per share range to be between $1.82 to $1.92 per share. In
addition, the Company is targeting 2019 Free Cash Flow(3) to
be greater than 100% of net income. All of the above amounts considered
as 2019 guidance are after adjusting for any current or future amounts
that may be considered Special Items, and do not include the impact of
the Taplast acquisition announced today.

Conference Call Information

TriMas will host its first quarter 2019 earnings conference call today,
Tuesday, April 30, 2019, at 10 a.m. ET. The call-in number is (855)
719-5012. Participants should request to be connected to the TriMas
first quarter 2019 earnings conference call (Confirmation Code 4982233).
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 4982233) beginning
April 30, 2019 at 3 p.m. ET through May 7, 2019 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; information technology and other
cyber-related risks; the performance of subcontractors and suppliers;
supply constraints; market demand; 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; 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, 2018. 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, except as required by law.

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 Net Debt as Total Debt less Cash and Cash
Equivalents. Please see Appendix I for additional details.
 
(3) 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 global manufacturer and provider of products for
customers in the consumer products, aerospace, industrial,
petrochemical, and oil & gas end markets with approximately 4,000
dedicated employees in 16 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,
2019

December 31,
2018
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 84,410 $ 108,150
Receivables, net 139,360 123,110
Inventories 179,170 173,120
Prepaid expenses and other current assets 7,020   7,430
Total current assets 409,960 411,810
Property and equipment, net 197,090 187,800
Operating lease right-of-use assets 38,190
Goodwill 325,520 316,650
Other intangibles, net 173,680 174,530
Deferred income taxes 380 1,080
Other assets 12,260   8,650
Total assets $ 1,157,080   $ 1,100,520
Liabilities and Shareholders’ Equity
Current liabilities:
Current maturities, long-term debt $ 90 $
Accounts payable 96,720 93,430
Accrued liabilities 38,830 48,300
Operating lease liabilities, current portion 7,950  
Total current liabilities 143,590 141,730
Long-term debt, net 293,840 293,560
Operating lease liabilities 30,680
Deferred income taxes 10,600 5,560
Other long-term liabilities 37,860   39,220
Total liabilities 516,570 480,070
Total shareholders’ equity 640,510   620,450
Total liabilities and shareholders’ equity $ 1,157,080   $ 1,100,520
 
TriMas Corporation
Consolidated Statement of Income
(Unaudited – dollars in thousands, except per share amounts)
 
Three months ended
March 31,
2019   2018
Net sales $ 221,290 $ 217,100
Cost of sales (161,470 ) (156,720 )
Gross profit 59,820 60,380
Selling, general and administrative expenses (33,970 ) (25,170 )
Operating profit 25,850   35,210  
Other expense, net:
Interest expense (3,440 ) (3,700 )
Other expense, net (680 ) (560 )
Other expense, net (4,120 ) (4,260 )
Income before income tax expense 21,730 30,950
Income tax expense (2,640 ) (6,630 )
Net income $ 19,090   $ 24,320  
Basic earnings per share:    
Net income per share $ 0.42   $ 0.53  
Weighted average common shares—basic 45,578,815   45,779,966  
Diluted earnings per share:    
Net income per share $ 0.42   $ 0.53  
Weighted average common shares—diluted 45,992,182   46,229,337  
 
TriMas Corporation
Consolidated Statement of Cash Flow
(Unaudited – dollars in thousands)
 
Three months ended
March 31,
2019   2018
Cash Flows from Operating Activities:
Net income $ 19,090 $ 24,320
Adjustments to reconcile net income to net cash provided by
operating activities, net of acquisition impact:
(Gain) loss on dispositions of assets 50 (10 )
Depreciation 6,230 6,330
Amortization of intangible assets 4,930 4,910
Amortization of debt issue costs 280 470
Deferred income taxes 2,300 5,010
Non-cash compensation expense 1,320 1,220
Increase in receivables (11,490 ) (16,160 )
Increase in inventories (4,770 ) (840 )
(Increase) decrease in prepaid expenses and other assets (50 ) 5,330
Decrease in accounts payable and accrued liabilities (10,010 ) (15,140 )
Other operating activities 200   800  

Net cash provided by operating activities, net of acquisition
impact

8,080   16,240  
Cash Flows from Investing Activities:
Capital expenditures (6,640 ) (3,170 )
Acquisition of businesses, net of cash acquired (22,270 )
Net proceeds from disposition of property and equipment   250  
Net cash used for investing activities (28,910 ) (2,920 )
Cash Flows from Financing Activities:
Proceeds from borrowings on revolving credit facilities 26,250 32,040
Repayments of borrowings on revolving credit facilities (25,870 ) (33,970 )
Shares surrendered upon exercise and vesting of equity awards to
cover taxes
(2,620 ) (2,300 )
Payments to purchase common stock (670 )  
Net cash used for financing activities (2,910 ) (4,230 )
Cash and Cash Equivalents:
Increase (decrease) for the period (23,740 ) 9,090
At beginning of period 108,150   27,580  
At end of period $ 84,410   $ 36,670  
Supplemental disclosure of cash flow information:
Cash paid for interest $ 300   $ 470  
Cash paid for taxes $ 1,870   $ 970  
 
Appendix I
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited – dollars in thousands)
 
Three months ended
March 31,
2019   2018
Packaging
Net sales $ 88,840 $ 88,200
Operating profit $ 17,640 $ 19,580
Special Items to consider in evaluating operating profit:
Purchase accounting costs 1,020
Adjusted operating profit $ 18,660 $ 19,580
 
Aerospace
Net sales $ 38,330 $ 37,790
Operating profit $ 5,740 $ 4,590
Special Items to consider in evaluating operating profit:
Business restructuring and severance costs 440
Adjusted operating profit $ 6,180 $ 4,590
 
Specialty Products
Net sales $ 94,120 $ 91,110
Operating profit $ 10,860 $ 10,140
Special Items to consider in evaluating operating profit:
Business restructuring and severance costs 1,030
Adjusted operating profit $ 10,860 $ 11,170
 
Corporate Expenses
Operating profit (loss) $ (8,390 ) $ 900
Special Items to consider in evaluating operating loss:
M&A diligence and transaction costs 1,120
Reversal of legacy related party liability (8,150 )
Adjusted operating loss $ (7,270 ) $ (7,250 )
 
Total Company
Net sales $ 221,290 $ 217,100
Operating profit $ 25,850 $ 35,210
Total Special Items to consider in evaluating operating profit 2,580 (7,120 )
Adjusted operating profit $ 28,430 $ 28,090
 
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,

2019   2018
Net Income, as reported $ 19,090 $ 24,320
Special Items to consider in evaluating quality of net income:
M&A diligence and transaction costs 1,120
Purchase accounting costs 1,020
Business restructuring and severance costs 440 1,210
Reversal of legacy related party liability (8,150 )
Income tax effect of Special Items(1) (560 ) 1,650  
Adjusted net income $ 21,110   $ 19,030  
 
Three months ended
March 31,
2019 2018
Diluted earnings per share, as reported $ 0.42 $ 0.53
Special Items to consider in evaluating quality of EPS:
M&A diligence and transaction costs 0.02
Purchase accounting costs 0.02
Business restructuring and severance costs 0.01 0.03
Reversal of legacy related party liability (0.18 )
Income tax effect of Special Items(1) (0.01 ) 0.03  
Adjusted diluted EPS $ 0.46   $ 0.41  
Weighted-average shares outstanding 45,992,182   46,229,337  
(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 period ended March 31, 2019, 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 discrete items that occurred during the period for GAAP
reporting purposes. For the three month period ended March 31, 2018,
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 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,
2019   2018

As
reported

 

Special
Items

 

As
adjusted

As
reported

 

Special
Items

 

As
adjusted

Net cash provided by operating activities $ 8,080 $ 1,130 $ 9,210 $ 16,240 $ 1,350 $ 17,590
Less: Capital expenditures (6,640 )   (6,640 ) (3,170 )   (3,170 )
Free Cash Flow 1,440 1,130 2,570 13,070 1,350 14,420
Net Income 19,090   2,020 21,110   24,320   (5,290 ) 19,030  
Free Cash Flow as a percentage of net income 8 % 12 % 54 % 76 %
     
March 31,
2019
December 31,
2018
March 31,
2018
Current maturities, long-term debt $ 90 $ $
Long-term debt, net 293,840   293,560   301,710
Total Debt 293,930 293,560 301,710
Less: Cash and cash equivalents 84,410   108,150   36,670
Net Debt $ 209,520   $ 185,410   $ 265,040
   
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,

Twelve months ended
March 31,

2019   2018 2019   2018
Net income, as reported $ 19,090 $ 24,320 $ 78,070 $ 48,290
Depreciation expense 6,230 6,330 24,480 27,480
Amortization expense 4,930 4,910 19,460 19,840
Interest expense 3,440 3,700 13,650 14,550
Income tax expense 2,640 6,630 18,690 37,290
Non-cash compensation expense 1,320   1,220   7,270   6,530  
Adjusted EBITDA, before Special Items $ 37,650   $ 47,110   $ 161,620   $ 153,980  
Adjusted EBITDA impact of Special Items 2,580   (7,120 ) 5,870   5,290  
Adjusted EBITDA $ 40,230   $ 39,990   $ 167,490   $ 159,270  
Adjusted EBITDA as a percentage of net sales 18.2 % 18.4 % 19.0 % 19.1 %

Contacts

CONTACT:
Sherry Lauderback
VP, Investor Relations &
Communications
(248) 631-5506
[email protected]

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