TriMas Corporation Reports Third Quarter Results
Reports Sales Growth of 7.1% and EPS of
TriMas Highlights
-
On
October 17, 2014 ,TriMas closed the acquisition of Allfast, a leading global manufacturer of solid and blind rivets, blind bolts, temporary fasteners and installation tools for the aerospace industry with content on substantially all commercial, defense and general aviation platforms in production and in service. -
Reported record third quarter net sales of
$380.1 million , an increase of 7.1% as compared to third quarter 2013, due to results from bolt-on acquisitions and the successful execution of numerous growth initiatives. During third quarter 2014, net sales increased in all six segments as compared to third quarter 2013. - The Packaging segment achieved 8.9% sales growth in third quarter 2014, compared to third quarter 2013, offsetting the third quarter 2013 divestiture of its rings and levers business.
- Increased Engineered Components operating profit margin by 860 basis points, compared to third quarter 2013, as a result of actions taken to improve the businesses.
-
Reduced interest expense by nearly 40% as compared to third quarter
2013, primarily as a result of the Company's
October 2013 refinancing. -
Sold certain intellectual property and related inventory and tooling
of the former NI Industries business for
$6.7 million , consistent with the Company's efforts to simplify the business and capture value. -
On a year-to-date basis, generated
$37.1 million in Free Cash Flow as compared to$6.1 million during the first nine months of 2013. Also raised 2014 Free Cash Flow outlook to be between$70 million and$80 million , from$55 million to$65 million .
"Throughout the third quarter, we continued to face both external market
pressures and operational challenges in our Energy, Aerospace and
Cequent businesses as previously indicated," said
"We have intensified our efforts to increase margins across all of our businesses through the execution of a series of action plans," Wathen continued. "Our teams are focused on simplifying our company, as we concentrate on enhancing our mix of higher-margin businesses and continue to implement productivity and lean programs throughout the organization to reduce complexity and costs. We are in the process of supplementing and building additional capabilities in our operational and finance teams to better reflect our future needs, while continuing to focus on process improvement efforts. We also continue to identify the bright spots and support our customers with new, innovative products and expanded geographic reach."
"While we have taken actions to improve our operating performance, the reality is that these improvements take time to execute. We see positive trends in our businesses, and believe we will be entering 2015 positioned to drive shareholder value through revenue and EPS growth, margin improvement and substantial cash flow generation in line with our strategic aspirations," Wathen concluded.
Third Quarter Financial Results - From Continuing Operations
-
TriMas reported record third quarter net sales of$380.1 million , an increase of 7.1% as compared to$354.9 million in third quarter 2013. During third quarter, net sales increased in all six reportable segments, primarily as a result of sales from acquisitions, as well as geographic expansion, new customer wins and strength in certain end markets as compared to third quarter 2013. -
The Company reported operating profit of
$32.3 million in third quarter 2014, a decrease of 26.0% as compared to third quarter 2013. Excluding Special Items(1) related to severance and business restructuring costs, third quarter 2014 operating profit would have been$35.7 million , a decrease of 11.7% as compared to$40.5 million during third quarter 2013. Third quarter 2014 operating profit and the related margin percentage, excluding Special Items(1), decreased primarily due to a one-time gain recognized on the sale of the rings and levers business within our Packaging segment during the third quarter of 2013, less favorable product sales mix, manufacturing inefficiencies in our Aerospace segment and higher freight and input costs in Cequent. Partially offsetting the decrease in operating profit margin were continued productivity, cost reduction and automation initiatives, as well as operating leverage gained on the higher sales levels, primarily within Engineered Components. -
Third quarter 2014 income from continuing operations attributable to
TriMas Corporation was$18.4 million , or$0.41 per diluted share, compared to$0.71 per diluted share, due to 11.1% higher weighted average shares outstanding in third quarter 2014 as compared to third quarter 2013. Excluding Special Items(1), third quarter 2014 income from continuing operations attributable toTriMas Corporation would have been$21.5 million , or$0.47 per diluted share, as compared to$0.65 in third quarter 2013, which was impacted by the 2013 gains on sale of rings and levers business and bargain purchase of an acquisition that did not recur, and significantly higher income tax expense and share count, as well as$1.9 million of diligence costs in third quarter 2014 related to the acquisition of Allfast, as compared to third quarter 2013. -
The Company reported Free Cash Flow (defined as Cash Flow from
Operating Activities less Capital Expenditures) of
$34.6 million for third quarter 2014, compared to$18.5 million in third quarter 2013. On a year-to-date basis, the Company generated$37.1 million in Free Cash Flow as compared to$6.1 million during the first nine months of 2013. Based on third quarter results and forecast for the remainder of the year, the Company raised its 2014 Free Cash Flow outlook from$55 million to$65 million to between$70 million and$80 million . -
Through
September 30, 2014 , the Company invested$27.8 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 and$27.5 million to acquireLion Holdings in the Packaging segment.
Financial Position
In
Business Segment Results(2) - From Continuing Operations
Packaging
Net sales for the third quarter increased 8.9% 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 incremental customer opportunities in
Energy
Third quarter net sales increased 5.5% compared to the year ago period
primarily as a result of increased demand from North American refining
and petrochemical customers. Third quarter operating profit and the
related margin percentage decreased as a result of a less favorable
product mix shift toward standard gaskets and bolts, manufacturing
inefficiencies, and higher selling, general and administrative expenses.
The Company is focused on improving margins and has recently closed a
less profitable branch in
Aerospace
Net sales for the third quarter increased 6.1% compared to the year ago
period primarily due to the results of the acquisition of Mac Fasteners
in
On
During the third quarter of 2014, the Company discontinued operations of
its
Engineered Components
Third quarter net sales increased 16.3% compared to the year ago period
primarily due to incremental sales related to the small cylinder asset
acquisition in
Cequent APEA
Net sales for the third quarter increased 8.2% compared to the year ago
period primarily due to the
Cequent Americas
Net sales for the third quarter increased 2.3% compared to the year ago
period, primarily due to increases in the aftermarket and retail
channels. The aftermarket channel was positively impacted by the
Discontinued Operations
During the third quarter of 2014, the Company ceased operations of its
2014 Outlook
The Company updated its 2014 outlook provided on
Conference Call Information
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 ability to integrate Allfast and
attain the expected synergies, and the acquisition being accretive, the
Company's 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
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."
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| Condensed Consolidated Balance Sheet | |||||||
| (Dollars in thousands) | |||||||
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| 2014 | 2013 | ||||||
| Assets | (unaudited) | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 30,070 | $ | 27,000 | |||
| Receivables, net | 222,140 | 180,210 | |||||
| Inventories | 262,810 | 270,690 | |||||
| Deferred income taxes | 18,340 | 18,340 | |||||
| Prepaid expenses and other current assets | 18,830 | 18,770 | |||||
| Total current assets | 552,190 | 515,010 | |||||
| Property and equipment, net | 214,550 | 206,150 | |||||
| Goodwill | 321,550 | 309,660 | |||||
| Other intangibles, net | 207,590 | 219,530 | |||||
| Other assets | 45,370 | 50,430 | |||||
| Total assets | $ | 1,341,250 | $ | 1,300,780 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Current maturities, long-term debt | $ | 11,430 | $ | 10,290 | |||
| Accounts payable | 166,200 | 166,090 | |||||
| Accrued liabilities | 85,880 | 85,130 | |||||
| Total current liabilities | 263,510 | 261,510 | |||||
| Long-term debt | 329,690 | 295,450 | |||||
| Deferred income taxes | 52,930 | 64,940 | |||||
| Other long-term liabilities | 94,410 | 99,990 | |||||
| Total liabilities | 740,540 | 721,890 | |||||
| Redeemable noncontrolling interests | — | 29,480 | |||||
| Total shareholders' equity | 600,710 | 549,410 | |||||
| Total liabilities and shareholders' equity | $ | 1,341,250 | $ | 1,300,780 | |||
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| Consolidated Statement of Income | ||||||||||||||||
| (Unaudited - dollars in thousands, except per share amounts) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net sales | $ | 380,120 | $ | 354,910 | $ | 1,148,510 | $ | 1,068,410 | ||||||||
| Cost of sales | (282,070 | ) | (260,800 | ) | (845,100 | ) | (788,120 | ) | ||||||||
| Gross profit | 98,050 | 94,110 | 303,410 | 280,290 | ||||||||||||
| Selling, general and administrative expenses | (65,540 | ) | (60,890 | ) | (193,970 | ) | (181,490 | ) | ||||||||
| Net gain (loss) on dispositions of property and equipment | (240 | ) | 10,360 | (490 | ) | 10,350 | ||||||||||
| Operating profit | 32,270 | 43,580 | 108,950 | 109,150 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (3,360 | ) | (5,570 | ) | (10,270 | ) | (16,320 | ) | ||||||||
| Other income (expense), net | (2,370 | ) | 2,480 | (5,220 | ) | 560 | ||||||||||
| Other expense, net | (5,730 | ) | (3,090 | ) | (15,490 | ) | (15,760 | ) | ||||||||
| Income from continuing operations before income tax expense | 26,540 | 40,490 | 93,460 | 93,390 | ||||||||||||
| Income tax expense | (8,150 | ) | (10,240 | ) | (29,410 | ) | (21,880 | ) | ||||||||
| Income from continuing operations | 18,390 | 30,250 | 64,050 | 71,510 | ||||||||||||
| Income (loss) from discontinued operations, net of income tax expense | 3,840 | (300 | ) | 3,760 | 280 | |||||||||||
| Net income | 22,230 | 29,950 | 67,810 | 71,790 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | — | 1,320 | 810 | 3,090 | ||||||||||||
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Net income attributable to |
$ | 22,230 | $ | 28,630 | $ | 67,000 | $ | 68,700 | ||||||||
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Basic earnings per share attributable to |
||||||||||||||||
| Continuing operations | $ | 0.41 | $ | 0.72 | $ | 1.41 | $ | 1.72 | ||||||||
| Discontinued operations | 0.08 | (0.01 | ) | 0.08 | 0.01 | |||||||||||
| Net income per share | $ | 0.49 | $ | 0.71 | $ | 1.49 | $ | 1.73 | ||||||||
| Weighted average common shares—basic | 44,919,340 | 40,345,828 | 44,863,008 | 39,668,693 | ||||||||||||
|
Diluted earnings per share attributable to |
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| Continuing operations | $ | 0.41 | $ | 0.71 | $ | 1.40 | $ | 1.71 | ||||||||
| Discontinued operations | 0.08 | (0.01 | ) | 0.08 | 0.01 | |||||||||||
| Net income per share | $ | 0.49 | $ | 0.70 | $ | 1.48 | $ | 1.72 | ||||||||
| Weighted average common shares—diluted | 45,276,199 | 40,746,503 | 45,231,058 | 40,029,425 | ||||||||||||
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| Consolidated Statement of Cash Flow | ||||||||
| (Unaudited - dollars in thousands) | ||||||||
| Nine months ended | ||||||||
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| 2014 | 2013 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 67,810 | $ | 71,790 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: | ||||||||
| Gain on dispositions of property and equipment | (6,320 | ) | (10,350 | ) | ||||
| Bargain purchase gain | — | (2,880 | ) | |||||
| Depreciation | 24,190 | 22,190 | ||||||
| Amortization of intangible assets | 16,630 | 14,420 | ||||||
| Amortization of debt issue costs | 1,430 | 1,310 | ||||||
| Deferred income taxes | (6,910 | ) | (3,180 | ) | ||||
| Non-cash compensation expense | 6,690 | 7,110 | ||||||
| Excess tax benefits from stock based compensation | (1,100 | ) | (1,280 | ) | ||||
| Increase in receivables | (43,520 | ) | (48,560 | ) | ||||
| Decrease in inventories | 7,380 | 1,800 | ||||||
| (Increase) decrease in prepaid expenses and other assets | 2,320 | (7,100 | ) | |||||
| Decrease in accounts payable and accrued liabilities | (3,460 | ) | (4,280 | ) | ||||
| Other, net | (240 | ) | 290 | |||||
| Net cash provided by operating activities, net of acquisition impact | 64,900 | 41,280 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (27,770 | ) | (35,150 | ) | ||||
| Acquisition of businesses, net of cash acquired | (27,510 | ) | (56,000 | ) | ||||
| Net proceeds from disposition of assets | 6,990 | 10,720 | ||||||
| Net cash used for investing activities | (48,290 | ) | (80,430 | ) | ||||
| 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 | ||||||
| Proceeds from borrowings on term loan facilities | 134,080 | 150,090 | ||||||
| Repayments of borrowings on term loan facilities | (139,800 | ) | (151,710 | ) | ||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 732,480 | 632,740 | ||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (687,520 | ) | (575,730 | ) | ||||
| Distributions to noncontrolling interests | (580 | ) | (1,910 | ) | ||||
| Payment for noncontrolling interests | (51,000 | ) | — | |||||
| 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 | (2,780 | ) | (3,930 | ) | ||||
| Proceeds from exercise of stock options | 480 | 1,340 | ||||||
| Excess tax benefits from stock based compensation | 1,100 | 1,280 | ||||||
| Net cash provided by (used for) financing activities | (13,540 | ) | 227,920 | |||||
| Cash and Cash Equivalents: | ||||||||
| Increase for the period | 3,070 | 188,770 | ||||||
| At beginning of period | 27,000 | 20,580 | ||||||
| At end of period | $ | 30,070 | $ | 209,350 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 7,960 | $ | 12,610 | ||||
| Cash paid for taxes | $ | 25,610 | $ | 29,880 | ||||
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| Company and Business Segment Financial Information | ||||||||||||||||
| Continuing Operations (Unaudited - dollars in thousands) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Packaging | ||||||||||||||||
| Net sales | $ | 89,320 | $ | 82,010 | $ | 257,000 | $ | 235,000 | ||||||||
| Operating profit | $ | 20,770 | $ | 31,320 | $ | 59,670 | $ | 65,550 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 620 | $ | — | $ | 620 | $ | — | ||||||||
| Release of historical translation adjustments related to the sale of Italian business | $ | — | $ | (7,910 | ) | $ | — | $ | (7,910 | ) | ||||||
| Excluding Special Items, operating profit would have been | $ | 21,390 | $ | 23,410 | $ | 60,290 | $ | 57,640 | ||||||||
| Energy | ||||||||||||||||
| Net sales | $ | 50,290 | $ | 47,680 | $ | 155,390 | $ | 161,420 | ||||||||
| Operating profit (loss) | $ | (1,100 | ) | $ | 1,450 | $ | 870 | $ | 12,530 | |||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 2,080 | $ | — | $ | 4,430 | $ | — | ||||||||
| Excluding Special Items, operating profit would have been | $ | 980 | $ | 1,450 | $ | 5,300 | $ | 12,530 | ||||||||
| Aerospace | ||||||||||||||||
| Net sales | $ | 27,410 | $ | 25,830 | $ | 86,420 | $ | 68,230 | ||||||||
| Operating profit | $ | 3,870 | $ | 6,350 | $ | 14,390 | $ | 15,810 | ||||||||
| Engineered Components | ||||||||||||||||
| Net sales | $ | 55,310 | $ | 47,540 | $ | 165,060 | $ | 143,830 | ||||||||
| Operating profit | $ | 8,090 | $ | 2,860 | $ | 24,920 | $ | 14,450 | ||||||||
| Cequent APEA | ||||||||||||||||
| Net sales | $ | 44,290 | $ | 40,950 | $ | 127,560 | $ | 111,330 | ||||||||
| Operating profit | $ | 3,210 | $ | 3,570 | $ | 7,930 | $ | 9,300 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 380 | $ | — | $ | 380 | $ | — | ||||||||
| Excluding Special Items, operating profit would have been | $ | 3,590 | $ | 3,570 | $ | 8,310 | $ | 9,300 | ||||||||
| Cequent Americas | ||||||||||||||||
| Net sales | $ | 113,500 | $ | 110,900 | $ | 357,080 | $ | 348,600 | ||||||||
| Operating profit | $ | 8,660 | $ | 7,440 | $ | 31,310 | $ | 21,030 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 360 | $ | 4,780 | $ | 2,800 | $ | 12,570 | ||||||||
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Excluding Special Items, operating profit would have been |
$ | 9,020 | $ | 12,220 | $ | 34,110 | $ | 33,600 | ||||||||
| Corporate Expenses | ||||||||||||||||
| Operating loss | $ | (11,230 | ) | $ | (9,410 | ) | $ | (30,140 | ) | $ | (29,520 | ) | ||||
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| Net sales | $ | 380,120 | $ | 354,910 | $ | 1,148,510 | $ | 1,068,410 | ||||||||
| Operating profit | $ | 32,270 | $ | 43,580 | $ | 108,950 | $ | 109,150 | ||||||||
| Total Special Items to consider in evaluating operating profit: | $ | 3,440 | $ | (3,130 | ) | $ | 8,230 | $ | 4,660 | |||||||
| Excluding Special Items, operating profit would have been | $ | 35,710 | $ | 40,450 | $ | 117,180 | $ | 113,810 | ||||||||
| 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 | Nine months ended | |||||||||||||||
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Income from continuing operations, as reported | $ | 18,390 | $ | 30,250 | $ | 64,050 | $ | 71,510 | ||||||||
| Less: Net income attributable to noncontrolling interests | — | 1,320 | 810 | 3,090 | ||||||||||||
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Income from continuing operations attributable to |
18,390 | 28,930 | 63,240 | 68,420 | ||||||||||||
| 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 | 3,060 | 3,100 | 6,920 | 8,690 | ||||||||||||
| Tax restructuring | — | 2,200 | — | 2,200 | ||||||||||||
|
Excluding Special Items, income from continuing operations
attributable to |
$ | 21,450 | $ | 26,320 | $ | 70,160 | $ | 71,400 | ||||||||
| Three months ended | Nine months ended | |||||||||||||||
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
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Diluted earnings per share from continuing operations attributable
to |
$ | 0.41 | $ | 0.71 | $ | 1.40 | $ | 1.71 | ||||||||
| 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 | 0.06 | 0.08 | 0.15 | 0.22 | ||||||||||||
| Tax restructuring | — | 0.05 | — | 0.05 | ||||||||||||
| Excluding Special Items, EPS from continuing operations would have been | $ | 0.47 | $ | 0.65 | $ | 1.55 | $ | 1.78 | ||||||||
|
Weighted-average shares outstanding for the three and nine months
ended |
45,276,199 | 40,746,503 | 45,231,058 | 40,029,425 | ||||||||||||
VP, Investor Relations
(248) 631-5506
sherrylauderback@trimascorp.com
Source:
News Provided by Acquire Media
