TriMas Corporation Reports Record Third Quarter Results
Company Reports Growth in Sales of 6% and Income(1) of 30%
TriMas Highlights
-
Reported record third quarter net sales of
$355.6 million , an increase of 5.9% as compared to third quarter 2012, due to results from bolt-on acquisitions and the successful execution of numerous growth initiatives. -
Improved income from continuing operations attributable to
TriMas Corporation (1) by 29.5%, excluding the impact of Special Items, compared to third quarter 2012. -
Issued 5,175,000 shares of common stock with net proceeds of
$174.7 million to be used for general corporate purposes, including future acquisitions, capital expenditures and working capital requirements. -
Reduced interest expense by more than 40% as compared to third quarter
2012. In
October 2013 , the Company entered into new senior secured credit facilities, which will further reduce future interest rates, extend maturities and increase available liquidity. - Continued to invest in a flexible manufacturing footprint to optimize manufacturing costs long-term, add necessary capacity, enhance customer service and support future growth.
-
Continued to refine the business portfolio to support the Company's
strategic initiatives, including completing seven bolt-on acquisitions
through third quarter year to date for approximately
$56 million , net of cash acquired, and divesting the non-core assets of the European rings and levers business for approximately$10 million . -
Today announced the acquisition of
Mac Fasteners, Inc. , a leader in the manufacture of aerospace fasteners, globally utilized by OEMs, aftermarket repair companies, and commercial and military aircraft producers. Mac Fasteners will become part of the Aerospace and Defense segment.
"During the quarter, we pursued many key initiatives with actions
focused on fine-tuning our business portfolio via acquisition and
divestiture, enhancing our capital structure through our September
equity offering and recent debt refinancing, moving multiple plants,
integrating past acquisitions and evaluating several potential
acquisitions," said
"Our third quarter results once again demonstrate our ability to operate
in a slower growth global economic environment, while focusing on
continuous improvement on all fronts and making strategic investments to
benefit the future," Wathen continued. "In third quarter, we achieved
5.9% sales growth and a 29.5% increase in income from continuing
operations attributable to
"We continue to identify the bright spots and successfully execute on
new product introductions, geographic expansion and market share
initiatives, as well as leverage our recent bolt-on acquisitions. We
also secured new business in
Third Quarter Financial Results - From Continuing Operations
-
TriMas reported record third quarter net sales of$355.6 million , an increase of 5.9% as compared to$335.9 million in third quarter 2012. During third quarter, net sales increased in five of the six reportable segments, primarily as a result of additional sales from bolt-on acquisitions, as well as market share gains, new product introductions and geographic expansion as compared to third quarter 2012. These sales increases were partially offset by approximately$3.6 million of unfavorable currency exchange. -
The Company reported operating profit of
$43.3 million in third quarter 2013, an increase of 18.3% as compared to third quarter 2012. Excluding Special Items(1) related to the facility consolidation and relocation projects within Cequent and the release of a historical translation adjustments resulting from the sale of Rieke Italy, third quarter 2013 operating profit would have been$40.2 million , as compared to$38.7 million during third quarter 2012. Third quarter 2013 operating profit margin percentage, excluding Special Items, was impacted by a less favorable product sales mix related to recent acquisitions and other acquisition-related costs, higher costs associated with global growth initiatives, and new plant and equipment ramp-up costs. 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 , third quarter 2013 income from continuing operations attributable toTriMas Corporation was$28.6 million , or$0.70 per diluted share, compared to income from continuing operations attributable toTriMas Corporation of$18.7 million , or$0.47 per diluted share, during third quarter 2012. Excluding Special Items(1), third quarter 2013 income from continuing operations attributable toTriMas Corporation would have been$26.0 million , an improvement of 29.5%, and diluted earnings per share from continuing operations would have been$0.64 , a 25.5% improvement from third quarter 2012, primarily due to higher operating profit and lower interest expense, while absorbing approximately 3% higher weighted average shares outstanding. -
The Company reported Free Cash Flow (defined as
Cash Flow from Operating Activities less Capital Expenditures) of$18.5 million for third quarter 2013, compared to$10.5 million in third quarter 2012. The Company reported year to date Free Cash Flow of$6.1 million for 2013, compared to a use of$21.0 million year to date 2012. The Company expects to generate between$40 million and$50 million in Free Cash Flow for 2013, while continuing to invest in capital expenditures, working capital investments in acquisitions and future growth and productivity programs. -
Through September 30, 2013, the Company invested
$35.2 million in capital expenditures (included in Free Cash Flow above) primarily in support of future growth and productivity opportunities and$56.0 million in bolt-on acquisitions, net of cash acquired.
Financial Position
As of
"We have continued to enhance our capital structure, starting with the
September issuance of additional equity to be used to support our
strategic initiatives," said
Business Segment Results(2) - From Continuing Operations
Packaging - (Consists of
Net sales for third quarter increased 6.2% 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 new customer opportunities in
Energy - (Consists of Lamons including South Texas Bolt & Fitting, CIFAL, Gasket Vedações Técnicas and Wulfrun)
Third quarter net sales increased 4.9% compared to the year ago period primarily due to the results of the recent acquisitions and higher sales levels from the international branches. Third 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 branch expansion and acquisitions during the third quarter of 2013. The Company continues to grow its sales and service branch network in support of its global customers, while focusing on improving margins.
Aerospace & Defense - (Consists of
Net sales for the third quarter increased 27.5% compared to the year ago period primarily due to the acquisition of Martinic Engineering and higher sales levels in the blind bolt fastener product lines, partially offset by a decrease in sales from the defense business. Third quarter operating profit remained flat, while the related margin percentage decreased primarily due to additional selling, general and administrative costs in support of growth initiatives and acquisitions, as well as new equipment and plant ramp-up costs in the legacy aerospace business during the third quarter of 2013. The Company continues to invest in this segment by developing and marketing highly-engineered products for aerospace applications, as well as managing existing defense contracts.
Engineered Components - (Consists of Arrow Engine and Norris Cylinder)
Third quarter net sales decreased 8.4% compared to the year ago period primarily due to lower demand for engines, gas compression products and other well-site content related to decreased levels of drilling activity and well completions as compared to third quarter 2012. However, sales of industrial cylinders increased primarily due to growth in international markets and continued domestic market share gains. Third quarter operating profit and the related margin percentage decreased compared to the prior year period primarily due to the decreased sales and lower fixed cost absorption in the engine business, which was partially offset by improvements in the industrial cylinder business. The Company continues to develop new products and expand its international sales efforts.
Cequent APEA - (Consists of Cequent operations in
Net sales for third quarter increased 9.3% compared to the year ago
period, primarily due to the
Cequent Americas - (Consists of
Net sales for third quarter increased 7.7% compared to the year ago
period, resulting primarily from increased sales within the retail and
auto original equipment channels. Third quarter operating profit and the
related margin percentage increased compared to the prior year period,
as a result of higher sales levels which more than offset a less
favorable product sales mix and increase in selling, general and
administrative expenses in support of growth initiatives. The Company
continues to reduce fixed costs and leverage Cequent's strong brand
positions and new products for increased market share in
2013 Outlook
The Company provided updated expectations for full-year 2013 and raised
its 2013 sales outlook from an increase of 6% to 8% to a range of 8% to
10% compared to 2012. As a result of the Company's
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, 2012, 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 income from continuing operations 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 - Continuing Operations."
|
|
|||||||
| Condensed Consolidated Balance Sheet | |||||||
| (Unaudited - dollars in thousands) | |||||||
|
|
|
||||||
| 2013 | 2012 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 209,350 | $ | 20,580 | |||
| Receivables, net | 201,110 | 150,390 | |||||
| Inventories | 249,630 | 238,020 | |||||
| Deferred income taxes | 17,690 | 18,270 | |||||
| Prepaid expenses and other current assets | 17,960 | 10,530 | |||||
| Total current assets | 695,740 | 437,790 | |||||
| Property and equipment, net | 206,730 | 185,030 | |||||
| Goodwill | 290,270 | 270,940 | |||||
| Other intangibles, net | 200,310 | 206,160 | |||||
| Other assets | 39,270 | 31,040 | |||||
| Total assets | $ | 1,432,320 | $ | 1,130,960 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Current maturities, long-term debt | $ | 21,600 | $ | 14,370 | |||
| Accounts payable | 152,460 | 158,410 | |||||
| Accrued liabilities | 83,090 | 74,420 | |||||
| Total current liabilities | 257,150 | 247,200 | |||||
| Long-term debt | 458,140 | 408,070 | |||||
| Deferred income taxes | 63,310 | 60,370 | |||||
| Other long-term liabilities | 80,940 | 84,960 | |||||
| Total liabilities | 859,540 | 800,600 | |||||
| Redeemable noncontrolling interests | 27,960 | 26,780 | |||||
| Total shareholders' equity | 544,820 | 303,580 | |||||
| Total liabilities and shareholders' equity | $ | 1,432,320 | $ | 1,130,960 | |||
|
|
||||||||||||||||
| Consolidated Statement of Income | ||||||||||||||||
| (Unaudited - dollars in thousands, except per share amounts) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
|
|
|
|||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net sales | $ | 355,620 | $ | 335,870 | $ | 1,071,430 | $ | 971,870 | ||||||||
| Cost of sales | (261,470 | ) | (245,730 | ) | (790,570 | ) | (706,930 | ) | ||||||||
| Gross profit | 94,150 | 90,140 | 280,860 | 264,940 | ||||||||||||
| Selling, general and administrative expenses | (61,220 | ) | (53,550 | ) | (182,540 | ) | (156,730 | ) | ||||||||
| Net gain on dispositions of property and equipment | 10,360 | 10 | 10,350 | 330 | ||||||||||||
| Operating profit | 43,290 | 36,600 | 108,670 | 108,540 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (5,570 | ) | (9,450 | ) | (16,320 | ) | (30,420 | ) | ||||||||
| Debt extinguishment costs | — | — | — | (6,560 | ) | |||||||||||
| Other income (expense), net | 2,290 | 140 | 360 | (2,410 | ) | |||||||||||
| Other expense, net | (3,280 | ) | (9,310 | ) | (15,960 | ) | (39,390 | ) | ||||||||
| Income from continuing operations before income tax expense | 40,010 | 27,290 | 92,710 | 69,150 | ||||||||||||
| Income tax expense | (10,060 | ) | (7,330 | ) | (21,620 | ) | (19,770 | ) | ||||||||
| Income from continuing operations | 29,950 | 19,960 | 71,090 | 49,380 | ||||||||||||
| Income from discontinued operations, net of income tax expense | — | — | 700 | — | ||||||||||||
| Net income | 29,950 | 19,960 | 71,790 | 49,380 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | 1,320 | 1,290 | 3,090 | 1,560 | ||||||||||||
|
Net income attributable to |
$ | 28,630 | $ | 18,670 | $ | 68,700 | $ | 47,820 | ||||||||
|
Basic earnings per share attributable to |
||||||||||||||||
| Continuing operations | $ | 0.71 | $ | 0.48 | $ | 1.71 | $ | 1.29 | ||||||||
| Discontinued operations | — | — | 0.02 | — | ||||||||||||
| Net income per share | $ | 0.71 | $ | 0.48 | $ | 1.73 | $ | 1.29 | ||||||||
| Weighted average common shares—basic | 40,345,828 | 39,045,282 | 39,668,693 | 36,994,192 | ||||||||||||
|
Diluted earnings per share attributable to |
||||||||||||||||
| Continuing operations | $ | 0.70 | $ | 0.47 | $ | 1.70 | $ | 1.28 | ||||||||
| Discontinued operations | — | — | 0.02 | — | ||||||||||||
| Net income per share | $ | 0.70 | $ | 0.47 | $ | 1.72 | $ | 1.28 | ||||||||
| Weighted average common shares—diluted | 40,746,503 | 39,508,503 | 40,029,425 | 37,379,292 | ||||||||||||
|
|
||||||||
|
Consolidated Statement of |
||||||||
| (Unaudited - dollars in thousands) | ||||||||
| Nine months ended | ||||||||
|
|
||||||||
| 2013 | 2012 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | 71,790 | 49,380 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: | ||||||||
| Gain on dispositions of property and equipment | (10,350 | ) | (330 | ) | ||||
| Bargain purchase gain | (2,880 | ) | — | |||||
| Depreciation | 22,190 | 18,990 | ||||||
| Amortization of intangible assets | 14,420 | 14,460 | ||||||
| Amortization of debt issue costs | 1,310 | 2,240 | ||||||
| Deferred income taxes | (3,180 | ) | (3,480 | ) | ||||
| Debt extinguishment costs | — | 6,560 | ||||||
| Non-cash compensation expense | 7,110 | 6,640 | ||||||
| Excess tax benefits from stock based compensation | (1,280 | ) | (2,310 | ) | ||||
| Increase in receivables | (48,560 | ) | (38,750 | ) | ||||
| (Increase) decrease in inventories | 1,800 | (31,440 | ) | |||||
| Increase in prepaid expenses and other assets | (7,100 | ) | (600 | ) | ||||
| Decrease in accounts payable and accrued liabilities | (4,280 | ) | (6,130 | ) | ||||
| Other, net | 290 | 170 | ||||||
| Net cash provided by operating activities, net of acquisition impact | 41,280 | 15,400 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (35,150 | ) | (36,440 | ) | ||||
| Acquisition of businesses, net of cash acquired | (56,000 | ) | (84,600 | ) | ||||
| Net proceeds from disposition of assets | 10,720 | 2,950 | ||||||
| Net cash used for investing activities | (80,430 | ) | (118,090 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of common stock in connection with the Company's equity offering, net of issuance costs | 174,720 | 79,040 | ||||||
| Proceeds from borrowings on term loan facilities | 150,090 | 140,370 | ||||||
| Repayments of borrowings on term loan facilities | (151,710 | ) | (130,850 | ) | ||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 632,740 | 555,300 | ||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (575,730 | ) | (555,300 | ) | ||||
| Repurchase of 9¾% senior secured notes | — | (50,000 | ) | |||||
| Senior secured notes redemption premium and debt financing fees | — | (4,880 | ) | |||||
| Distributions to noncontrolling interests | (1,910 | ) | (820 | ) | ||||
| Proceeds from contingent consideration related to disposition of businesses | 1,030 | — | ||||||
| Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (3,930 | ) | (990 | ) | ||||
| Proceeds from exercise of stock options | 1,340 | 5,680 | ||||||
| Excess tax benefits from stock based compensation | 1,280 | 2,310 | ||||||
| Net cash provided by financing activities | 227,920 | 39,860 | ||||||
| Cash and Cash Equivalents: | ||||||||
| Increase (decrease) for the period | 188,770 | (62,830 | ) | |||||
| At beginning of period | 20,580 | 88,920 | ||||||
| At end of period | $ | 209,350 | $ | 26,090 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 12,610 | $ | 20,990 | ||||
| Cash paid for taxes | $ | 29,880 | $ | 23,000 | ||||
|
|
||||||||||||||||
| Company and Business Segment Financial Information | ||||||||||||||||
| Continuing Operations | ||||||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
|
|
|
|||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Packaging | ||||||||||||||||
| Net sales | $ | 82,010 | $ | 77,240 | $ | 235,000 | $ | 202,250 | ||||||||
| Operating profit | $ | 31,320 | $ | 18,240 | $ | 65,550 | $ | 44,700 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Release of historical translation adjustments related to the sale of Italian business | $ | (7,910 | ) | $ | — | $ | (7,910 | ) | $ | — | ||||||
| Excluding Special Items, operating profit would have been | $ | 23,410 | $ | 18,240 | $ | 57,640 | $ | 44,700 | ||||||||
| Energy | ||||||||||||||||
| Net sales | $ | 47,680 | $ | 45,460 | $ | 161,420 | $ | 143,220 | ||||||||
| Operating profit | $ | 1,450 | $ | 3,780 | $ | 12,530 | $ | 14,520 | ||||||||
| Aerospace & Defense | ||||||||||||||||
| Net sales | $ | 26,540 | $ | 20,810 | $ | 71,250 | $ | 58,000 | ||||||||
| Operating profit | $ | 6,060 | $ | 6,030 | $ | 15,330 | $ | 15,710 | ||||||||
| Engineered Components | ||||||||||||||||
| Net sales | $ | 47,540 | $ | 51,880 | $ | 143,830 | $ | 154,180 | ||||||||
| Operating profit | $ | 2,860 | $ | 6,310 | $ | 14,450 | $ | 22,620 | ||||||||
| Cequent APEA | ||||||||||||||||
| Net sales | $ | 40,950 | $ | 37,480 | $ | 111,330 | $ | 94,230 | ||||||||
| Operating profit | $ | 3,570 | $ | 3,950 | $ | 9,300 | $ | 9,000 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | — | $ | 600 | $ | — | $ | 2,880 | ||||||||
| Excluding Special Items, operating profit would have been | $ | 3,570 | $ | 4,550 | $ | 9,300 | $ | 11,880 | ||||||||
| Cequent Americas | ||||||||||||||||
| Net sales | $ | 110,900 | $ | 103,000 | $ | 348,600 | $ | 319,990 | ||||||||
| Operating profit | $ | 7,440 | $ | 8,430 | $ | 21,030 | $ | 28,090 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 4,780 | $ | 1,500 | $ | 12,570 | $ | 3,840 | ||||||||
| Excluding Special Items, operating profit would have been | $ | 12,220 | $ | 9,930 | $ | 33,600 | $ | 31,930 | ||||||||
| Corporate Expenses | ||||||||||||||||
| Operating loss | $ | (9,410 | ) | $ | (10,140 | ) | $ | (29,520 | ) | $ | (26,100 | ) | ||||
|
|
||||||||||||||||
| Net sales | $ | 355,620 | $ | 335,870 | $ | 1,071,430 | $ | 971,870 | ||||||||
| Operating profit | $ | 43,290 | $ | 36,600 | $ | 108,670 | $ | 108,540 | ||||||||
| Total Special Items to consider in evaluating operating profit: | $ | (3,130 | ) | $ | 2,100 | $ | 4,660 | $ | 6,720 | |||||||
| Excluding Special Items, operating profit would have been | $ | 40,160 | $ | 38,700 | $ | 113,330 | $ | 115,260 | ||||||||
| Appendix I | |||||||||||||||
|
|
|||||||||||||||
| Additional Information Regarding Special Items Impacting | |||||||||||||||
| Reported GAAP Financial Measures | |||||||||||||||
| (Unaudited - dollars in thousands, except per share amounts) | |||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||
|
|
|
||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Income from continuing operations, as reported | $ | 29,950 | $ | 19,960 | $ | 71,090 | $ | 49,380 | |||||||
| Less: Net income attributable to noncontrolling interests | 1,320 | 1,290 | 3,090 | 1,560 | |||||||||||
|
Income from continuing operations attributable to |
28,630 | 18,670 | 68,000 | 47,820 | |||||||||||
| After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | |||||||||||||||
| Release of historical translation adjustments related to the sale of Italian business | (7,910 | ) | — | (7,910 | ) | — | |||||||||
| Severance and business restructuring costs | 3,100 | 1,420 | 8,690 | 4,520 | |||||||||||
| Tax restructuring | 2,200 | — | 2,200 | — | |||||||||||
| Debt extinguishment costs | — | — | — | 4,400 | |||||||||||
|
Excluding Special Items, income from continuing operations
attributable to |
$ | 26,020 | $ | 20,090 | $ | 70,980 | $ | 56,740 | |||||||
| Three months ended | Nine months ended | ||||||||||||||
|
|
|
||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
|
Diluted earnings per share from continuing operations attributable
to |
$ | 0.70 | $ | 0.47 | $ | 1.70 | $ | 1.28 | |||||||
| After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | |||||||||||||||
| Release of historical translation adjustments related to the sale of Italian business | (0.19 | ) | — | (0.20 | ) | — | |||||||||
| Severance and business restructuring costs | 0.08 | 0.04 | 0.22 | 0.12 | |||||||||||
| Tax restructuring | 0.05 | — | 0.05 | — | |||||||||||
| Debt extinguishment costs | — | — | — | 0.12 | |||||||||||
| Excluding Special Items, EPS from continuing operations would have been | $ | 0.64 | $ | 0.51 | $ | 1.77 | $ | 1.52 | |||||||
|
Weighted-average shares outstanding for the three and nine months
ended |
40,746,503 | 39,508,503 | 40,029,425 | 37,379,292 | |||||||||||
VP, Investor Relations
(248) 631-5506
sherrylauderback@trimascorp.com
Source:
News Provided by Acquire Media
