TriMas Reports Fourth Quarter and Full Year 2018 Results
Delivers Strong Sales and Earnings Growth; Provides 2019 Outlook
2018 Highlights
-
Increased net sales by 7.3% to
$877.1 million , with sales increases in all segments -
Increased operating profit to
$122.1 million , while adjusted operating profit(1) increased by 8.5% to$116.1 million -
Increased net income to
$83.3 million , while adjusted net income(1) increased by 25.8% to$81.0 million -
Increased diluted EPS to
$1.80 , while adjusted diluted EPS(1) increased by 25.0% to$1.75 -
Increased Adjusted EBITDA(2) by
$12.4 million to $167.3 million , or 19.1% of sales -
Increased net cash provided by operating activities by 7.7% to
$129.3 million , and ended 2018 with$108.2 million of cash on hand -
Reduced debt less cash and cash equivalents by
$90.1 million , to$185.4 million as ofDecember 31, 2018
Fourth Quarter 2018
The Company reported fourth quarter 2018 net income of
Full Year 2018
For the full year 2018,
The Company reported full year net income of
"We are pleased to report another strong quarter to conclude 2018, a
year in which we achieved 7% organic sales growth and 25% adjusted
earnings per share growth compared to the prior year," said
"In addition to the strong operational and financial performance, we
achieved continued progress on numerous strategic initiatives that
better position
"In 2019, our objectives are to continue our momentum under the
Financial Position
During the fourth quarter, the Company purchased 318,494 shares of its
outstanding common stock for approximately
The Company reported net cash provided by operations of
Fourth Quarter Segment Results
Packaging (Approximately 42% of
Aerospace (Approximately 21% of
Specialty Products (Approximately 37% of
2019 Modification to Reporting Segments
Effective with the first quarter of 2019, the Company will report its
machined components operations, located in
Outlook
The Company is estimating that 2019 full year 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
Conference Call Information
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
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 Adjusted EBITDA as net income (loss) plus expense (benefit) for interest, taxes, depreciation, amortization and non-cash compensation, all as adjusted for the impact of Special Items. Please see Appendix I for additional details. | |
|
(3) |
The Company defines Net Debt as Total Debt less Cash and Cash Equivalents. Please see Appendix I for additional details. | |
|
(4) |
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 Corporation Condensed Consolidated Balance Sheet (Dollars in thousands) |
|||||||
| December 31, 2018 |
December 31, 2017 |
||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 108,150 | $ | 27,580 | |||
| Receivables, net | 123,110 | 112,220 | |||||
| Inventories | 173,120 | 155,350 | |||||
| Prepaid expenses and other current assets | 7,430 | 16,120 | |||||
| Total current assets | 411,810 | 311,270 | |||||
| Property and equipment, net | 187,800 | 190,250 | |||||
| Goodwill | 316,650 | 319,390 | |||||
| Other intangibles, net | 174,530 | 194,220 | |||||
| Deferred income taxes | 1,080 | 9,100 | |||||
| Other assets | 8,650 | 8,970 | |||||
| Total assets | $ | 1,100,520 | $ | 1,033,200 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 93,430 | $ | 72,410 | |||
| Accrued liabilities | 48,300 | 49,470 | |||||
| Total current liabilities | 141,730 | 121,880 | |||||
| Long-term debt, net | 293,560 | 303,080 | |||||
| Deferred income taxes | 5,560 | 5,650 | |||||
| Other long-term liabilities | 39,220 | 58,570 | |||||
| Total liabilities | 480,070 | 489,180 | |||||
| Total shareholders' equity | 620,450 | 544,020 | |||||
| Total liabilities and shareholders' equity | $ | 1,100,520 | $ | 1,033,200 | |||
|
TriMas Corporation Consolidated Statement of Operations (Dollars in thousands, except share and per share amounts) |
||||||||||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (unaudited) | ||||||||||||||||
| Net sales | $ | 211,350 | $ | 195,210 | $ | 877,140 | $ | 817,740 | ||||||||
| Cost of sales | (154,110 | ) | (146,000 | ) | (633,020 | ) | (598,350 | ) | ||||||||
| Gross profit | 57,240 | 49,210 | 244,120 | 219,390 | ||||||||||||
| Selling, general and administrative expenses | (31,600 | ) | (32,800 | ) | (121,800 | ) | (129,140 | ) | ||||||||
| Net gain (loss) on dispositions of assets | (180 | ) | 2,140 | (250 | ) | (1,080 | ) | |||||||||
| Operating profit | 25,460 | 18,550 | 122,070 | 89,170 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (3,250 | ) | (4,040 | ) | (13,910 | ) | (14,400 | ) | ||||||||
| Debt financing and related expenses | — | — | — | (6,640 | ) | |||||||||||
| Other income (expense), net | 150 | (630 | ) | (2,180 | ) | (1,920 | ) | |||||||||
| Other expense, net | (3,100 | ) | (4,670 | ) | (16,090 | ) | (22,960 | ) | ||||||||
| Income before income tax expense | 22,360 | 13,880 | 105,980 | 66,210 | ||||||||||||
| Income tax expense | (5,650 | ) | (17,890 | ) | (22,680 | ) | (35,250 | ) | ||||||||
| Net income (loss) | 16,710 | (4,010 | ) | 83,300 | 30,960 | |||||||||||
| Basic earnings (loss) per share: | ||||||||||||||||
| Net income (loss) per share | $ | 0.37 | $ | (0.09 | ) | $ | 1.82 | $ | 0.68 | |||||||
| Weighted average common shares - basic | 45,747,659 | 45,721,160 | 45,824,555 | 45,682,627 | ||||||||||||
| Diluted earnings (loss) per share: | ||||||||||||||||
| Net income (loss) per share | $ | 0.36 | $ | (0.09 | ) | $ | 1.80 | $ | 0.67 | |||||||
| Weighted average common shares - diluted | 46,085,202 | 45,721,160 | 46,170,464 | 45,990,252 | ||||||||||||
|
TriMas Corporation Consolidated Statement of Cash Flow (Dollars in thousands) |
||||||||
| Twelve months ended December 31, |
||||||||
| 2018 | 2017 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 83,300 | $ | 30,960 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Loss on dispositions of assets | 250 | 1,080 | ||||||
| Depreciation | 24,580 | 26,950 | ||||||
| Amortization of intangible assets | 19,440 | 19,920 | ||||||
| Amortization of debt issue costs | 1,290 | 1,320 | ||||||
| Deferred income taxes | 7,200 | 15,260 | ||||||
| Non-cash compensation expense | 7,170 | 6,780 | ||||||
| Debt financing and related expenses | — | 6,640 | ||||||
| (Increase) decrease in receivables | (11,420 | ) | 1,220 | |||||
| (Increase) decrease in inventories | (18,690 | ) | 4,350 | |||||
| (Increase) decrease in prepaid expenses and other assets | 9,060 | (310 | ) | |||||
| Increase in accounts payable and accrued liabilities | 4,340 | 3,640 | ||||||
| Other operating activities | 2,800 | 2,250 | ||||||
| Net cash provided by operating activities | 129,320 | 120,060 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (25,050 | ) | (36,800 | ) | ||||
| Net proceeds from dispositions of property and equipment | 250 | 4,450 | ||||||
| Net cash used for investing activities | (24,800 | ) | (32,350 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 59,060 | 401,300 | ||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (68,490 | ) | (517,310 | ) | ||||
| Payments to purchase common stock | (12,140 | ) | — | |||||
| Shares surrendered upon exercise and vesting of equity awards to cover taxes | (2,380 | ) | (510 | ) | ||||
| Proceeds from issuance of senior notes | — | 300,000 | ||||||
| Repayments of borrowings on term loan facilities | — | (257,940 | ) | |||||
| Debt financing fees | — | (6,070 | ) | |||||
| Other financing activities | — | (310 | ) | |||||
| Net cash used for financing activities | (23,950 | ) | (80,840 | ) | ||||
| Cash and Cash Equivalents: | ||||||||
| Increase for the year | 80,570 | 6,870 | ||||||
| At beginning of year | 27,580 | 20,710 | ||||||
| At end of year | $ | 108,150 | $ | 27,580 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 13,800 | $ | 9,430 | ||||
| Cash paid for income taxes | $ | 7,380 | $ | 16,230 | ||||
Appendix I
|
TriMas Corporation Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures (Unaudited - dollars in thousands) |
||||||||||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Packaging | ||||||||||||||||
| Net sales | $ | 89,660 | $ | 85,310 | $ | 368,200 | $ | 344,570 | ||||||||
| Operating profit | $ | 20,140 | $ | 18,980 | $ | 84,590 | $ | 80,610 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | — | 40 | — | 1,710 | ||||||||||||
| Adjusted operating profit | $ | 20,140 | $ | 19,020 | $ | 84,590 | $ | 82,320 | ||||||||
| Aerospace | ||||||||||||||||
| Net sales | $ | 45,420 | $ | 42,760 | $ | 185,920 | $ | 184,310 | ||||||||
| Operating profit | $ | 6,610 | $ | 6,550 | $ | 27,290 | $ | 26,410 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | 250 | — | 250 | — | ||||||||||||
| Adjusted operating profit | $ | 6,860 | $ | 6,550 | $ | 27,540 | $ | 26,410 | ||||||||
| Specialty Products | ||||||||||||||||
| Net sales | $ | 76,270 | $ | 67,140 | $ | 323,020 | $ | 288,860 | ||||||||
| Operating profit | $ | 7,650 | $ | 510 | $ | 34,260 | $ | 12,280 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | 30 | 4,550 | 1,910 | 15,350 | ||||||||||||
| Adjusted operating profit | $ | 7,680 | $ | 5,060 | $ | 36,170 | $ | 27,630 | ||||||||
| Corporate Expenses | ||||||||||||||||
| Operating loss | $ | (8,940 | ) | $ | (7,490 | ) | $ | (24,070 | ) | $ | (30,130 | ) | ||||
| Special Items to consider in evaluating operating loss: | ||||||||||||||||
| Business restructuring and severance costs | — | 390 | — | 750 | ||||||||||||
| Reversal of legacy related party liability | $ | — | $ | — | $ | (8,150 | ) | $ | — | |||||||
| Adjusted operating loss | $ | (8,940 | ) | $ | (7,100 | ) | $ | (32,220 | ) | $ | (29,380 | ) | ||||
| Total Company | ||||||||||||||||
| Net sales | $ | 211,350 | $ | 195,210 | $ | 877,140 | $ | 817,740 | ||||||||
| Operating profit | $ | 25,460 | $ | 18,550 | $ | 122,070 | $ | 89,170 | ||||||||
| Total Special Items to consider in evaluating operating profit | 280 | 4,980 | (5,990 | ) | 17,810 | |||||||||||
| Adjusted operating profit | $ | 25,740 | $ | 23,530 | $ | 116,080 | $ | 106,980 | ||||||||
Appendix I
|
TriMas Corporation Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures (Unaudited - dollars in thousands, except share and per share amounts) |
||||||||||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net income (loss), as reported | $ | 16,710 | $ | (4,010 | ) | $ | 83,300 | $ | 30,960 | |||||||
| Special Items to consider in evaluating quality of net income (loss): | ||||||||||||||||
| Business restructuring and severance costs | 250 | 5,580 | 2,830 | 18,130 | ||||||||||||
| Reversal of legacy related party liability | — | — | (8,150 | ) | — | |||||||||||
| Debt financing and related expenses | — | — | — | 6,640 | ||||||||||||
| Defined benefit pension plan settlement charge | — | — | 2,500 | — | ||||||||||||
| Tax reform adjustments (1) | 700 | 12,660 | (400 | ) | 12,660 | |||||||||||
| Income tax effect of Special Items (2) | (120 | ) | 270 | 910 | (4,010 | ) | ||||||||||
| Adjusted net income | $ | 17,540 | $ | 14,500 | $ | 80,990 | $ | 64,380 | ||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Diluted earnings (loss) per share, as reported | $ | 0.36 | $ | (0.09 | ) | $ | 1.80 | $ | 0.67 | |||||||
| Special Items to consider in evaluating quality of EPS: | ||||||||||||||||
| Business restructuring and severance costs | — | 0.12 | 0.06 | 0.40 | ||||||||||||
| Reversal of legacy related party liability | — | — | (0.17 | ) | — | |||||||||||
| Debt financing and related expenses | — | — | — | 0.14 | ||||||||||||
| Defined benefit pension plan settlement charge | — | — | 0.05 | — | ||||||||||||
| Tax reform adjustments (1) | 0.02 | 0.28 | (0.01 | ) | 0.28 | |||||||||||
| Income tax effect of Special Items (2) | — | — | 0.02 | (0.09 | ) | |||||||||||
| Adjusted diluted EPS | $ | 0.38 | $ | 0.31 | $ | 1.78 | $ | 1.40 | ||||||||
| Weighted-average shares outstanding | 46,085,202 | 45,721,160 | 46,170,464 | 45,990,252 | ||||||||||||
|
(1) |
As a result of the Tax Cuts and Jobs Act of 2017, the Company recognized one-time charges of $12.7 million in December 2017 from the estimated impact of the inclusion of foreign earnings and revaluation of deferred tax assets and liabilities. In 2018, the Company finalized its accounting related to foreign earnings and recognized approximately $0.7 million of additional tax obligation in the three months ended December 31, 2018. In the twelve months ended December 31, 2018, the Company recognized a net tax benefit of $0.4 million associated with finalizing its estimates of the impact of the Tax Cuts and Jobs Act of 2017. | |
|
(2) |
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 twelve month periods ended December 31, 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, except per share amounts) |
||||||||||||||||||||||||
| Three months ended December 31, | ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
|
As reported |
Special Items |
As adjusted |
As reported |
Special Items |
As adjusted |
|||||||||||||||||||
| Net cash provided by operating activities | $ | 46,230 | $ | 530 | $ | 46,760 | $ | 47,410 | $ | 1,970 | $ | 49,380 | ||||||||||||
| Less: Capital expenditures | (9,160 | ) | — | (9,160 | ) | (12,680 | ) | — | (12,680 | ) | ||||||||||||||
| Free Cash Flow | 37,070 | 530 | 37,600 | 34,730 | 1,970 | 36,700 | ||||||||||||||||||
| Net income (loss) | 16,710 | 830 | 17,540 | (4,010 | ) | 18,510 | 14,500 | |||||||||||||||||
| Free Cash Flow as a percentage of net income (loss) | 222 | % | 214 | % | n/m | 253 | % | |||||||||||||||||
| Twelve months ended December 31, | ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
|
As reported |
Special Items |
As adjusted |
As reported |
Special Items |
As adjusted |
|||||||||||||||||||
| Net cash provided by operating activities | $ | 129,320 | $ | 3,980 | $ | 133,300 | 120,060 | $ | 16,970 | $ | 137,030 | |||||||||||||
| Less: Capital expenditures | (25,050 | ) | — | (25,050 | ) | (36,800 | ) | — | (36,800 | ) | ||||||||||||||
| Free Cash Flow | 104,270 | 3,980 | 108,250 | 83,260 | 16,970 | 100,230 | ||||||||||||||||||
| Net income | 83,300 | (2,310 | ) | 80,990 | 30,960 | 33,420 | 64,380 | |||||||||||||||||
| Free Cash Flow as a percentage of net income | 125 | % | 134 | % | 269 | % | 156 | % | ||||||||||||||||
| December 31, 2018 |
December 31, 2017 |
||||||
| Long-term debt, net | $ | 293,560 | $ | 303,080 | |||
| Less: Cash and cash equivalents | 108,150 | 27,580 | |||||
| Net Debt | $ | 185,410 | $ | 275,500 | |||
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 December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net income (loss), as reported | $ | 16,710 | $ | (4,010 | ) | $ | 83,300 | $ | 30,960 | |||||||
| Depreciation expense | 5,950 | 8,060 | 24,580 | 26,950 | ||||||||||||
| Amortization expense | 4,840 | 5,000 | 19,440 | 19,920 | ||||||||||||
| Interest expense | 3,250 | 4,040 | 13,910 | 14,400 | ||||||||||||
| Income tax expense | 5,650 | 17,890 | 22,680 | 35,250 | ||||||||||||
| Non-cash compensation expense | 2,770 | 1,690 | 7,170 | 6,780 | ||||||||||||
| Adjusted EBITDA, before Special Items | $ | 39,170 | $ | 32,670 | $ | 171,080 | $ | 134,260 | ||||||||
| Adjusted EBITDA impact of Special Items | 350 | 3,010 | (3,830 | ) | 20,570 | |||||||||||
| Adjusted EBITDA | $ | 39,520 | $ | 35,680 | $ | 167,250 | $ | 154,830 | ||||||||
| Adjusted EBITDA as a percentage of net sales | 18.7 | % | 18.3 | % | 19.1 | % | 18.9 | % | ||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190228005125/en/
Source:
Sherry Lauderback
VP, Investor Relations & Communications
(248)
631-5506
sherrylauderback@trimascorp.com
