UNITED STATES | OMB APPROVAL | |
SECURITIES AND EXCHANGE COMMISSION | OMB Number: 3235-0060 Expires: March 31, 2014 Estimated average burden hours per response. . . 5.0 | |
Washington, D.C. 20549 | ||
FORM 8-K | ||
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 25, 2013
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 001-10716 | 38-2687639 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) | ||
39400 Woodward Avenue, Suite 130, Bloomfield Hills, Michigan | 48304 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (248) 631-5450
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
TriMas Corporation (the “Corporation”) issued a press release and held a teleconference on July 25, 2013, reporting its financial results for the second quarter ending June 30, 2013. A copy of the press release and teleconference visual presentation are attached hereto as exhibits and are incorporated herein by reference. The press release and teleconference visual presentation are also available on the Corporation's website at www.trimascorp.com.
The information furnished pursuant to this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Corporation under the Securities Act of 1933 or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are furnished herewith:
Exhibit No. | Description | |||
99.1 | Press Release | |||
99.2 | The Corporation's visual presentation titled "Second Quarter 2013 Earnings Presentation" | |||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TRIMAS CORPORATION | ||||||
Date: | July 25, 2013 | By: | /s/ David M. Wathen | |||
Name: | David M. Wathen | |||||
Title: | Chief Executive Officer | |||||
CONTACT: | |||
Sherry Lauderback | |||
VP, Investor Relations & Communications | |||
(248) 631-5506 | |||
sherrylauderback@trimascorp.com | |||
TRIMAS CORPORATION REPORTS RECORD SECOND QUARTER RESULTS
Company Reports Growth in Sales of 12% and Income(1) of 20%
Company Reaffirms 2013 Outlook of $2.15 to $2.25 EPS
BLOOMFIELD HILLS, Michigan, July 25, 2013 - TriMas Corporation (NASDAQ: TRS) today announced financial results for the quarter ended June 30, 2013. The Company reported record second quarter net sales from continuing operations of $378.0 million, an increase of 11.7% compared to second quarter 2012. Second quarter 2013 diluted earnings per share from continuing operations attributable to TriMas Corporation was $0.65, as compared to $0.44 during second quarter 2012. Excluding Special Items(1), second quarter 2013 diluted earnings per share from continuing operations would have been $0.69, a 13.1% improvement from $0.61 in second quarter 2012.
TriMas Highlights
• | Reported record second quarter net sales of $378.0 million, an increase of 11.7% as compared to second 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 19.7%, excluding the impact of Special Items, compared to second quarter 2012. Improved diluted earnings per share(1), while absorbing costs related to several acquisitions and approximately 6% higher weighted average shares outstanding for second quarter 2013, as compared to second quarter 2012. |
• | Completed five bolt-on acquisitions for approximately $47 million, net of cash acquired, or approximately one-times revenue acquired, through second quarter year to date to expand and globalize existing product offerings, gain access to new customers and end markets, expand the geographic footprint internationally, further enhance management capacity, and capitalize on scale and cost efficiencies. |
• | Reduced interest expense by more than 45% as compared with second quarter 2012. |
• | Continued to invest in a flexible manufacturing footprint to optimize manufacturing costs long-term, add necessary capacity, enhance customer service and support future growth. |
• | Today announced the acquisition of substantially all of the assets of a towbar manufacturer located in Germany and Finland. These assets, combined with the April 2013 acquisition of C.P. Witter Limited, a leading manufacturer of highly-engineered towbars and cargo management products located in the United Kingdom, position Cequent to capitalize on growth opportunities in new markets through product and geographic expansion. |
"Our second quarter results are as expected with 11.7% sales growth and a 19.7% increase in income from continuing operations attributable to TriMas Corporation(1) compared to second quarter 2012," said David Wathen, TriMas President and Chief Executive Officer. "In addition, we delivered a record second quarter $0.69 in diluted earnings per share from continuing operations (excluding Special Items)(1), while absorbing the effects related to several acquisitions and approximately 6% higher weighted average shares outstanding for second quarter 2013, as compared to second quarter 2012. We continued to effectively invest in future growth and productivity programs, and we successfully lowered our interest expense, reduced our tax rate and generated cash as planned."
"In the midst of a challenging global economic environment, 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. These initiatives have contributed to our year-over-year sales increases in five of our six segments during the second quarter. We also continued with footprint consolidation projects within our Cequent segments, moving toward more efficient and flexible manufacturing facilities."
"In the short term, our margins are lower than our expected run rates due to the temporary costs related to our recent acquisitions, including diligence and integration costs, purchase accounting adjustments and lower initial margin rates of these businesses. We remain committed to increasing margins across our businesses and we will continue to
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implement productivity and Lean programs throughout the organization, improve the margins of our acquired businesses and leverage our flexible manufacturing footprint."
"As we look to the second half of the year, we maintain a conservative macroeconomic outlook, while remaining confident in our ability to deliver our previous guidance for full year 2013," added Mark Zeffiro, TriMas Executive Vice President and Chief Financial Officer. "We remain committed to TriMas' ability to outperform the economy, with expected 2013 sales growth of 6% to 8%, as compared to 2012. We believe our initiatives for continued revenue growth, the structural cost actions being executed this year and on-going productivity projects position TriMas well for the balance of 2013. We are reaffirming our full year 2013 diluted earnings per share range of $2.15 and $2.25 per share, with the midpoint representing more than 19% EPS growth compared to 2012.”
Second Quarter Financial Results - From Continuing Operations
• | TriMas reported record second quarter net sales of $378.0 million, an increase of 11.7% as compared to $338.4 million in second quarter 2012. During second quarter, net sales increased in five of the six reportable segments, primarily as a result of additional sales from bolt-on acquisitions, market share gains, new product introductions, geographic expansion and increased market demand as compared to second quarter 2012. More than half of the sales increase was due to organic growth, while the remainder was the result of recent acquisitions, partially offset by approximately $1.2 million of unfavorable currency exchange. |
• | The Company reported operating profit of $41.6 million in second quarter 2013. Excluding Special Items(1) related to facility consolidation and relocation projects within Cequent, second quarter 2013 operating profit would have been $43.6 million, as compared to $46.2 million during second quarter 2012. Second quarter 2013 operating profit and the related margin percentage were impacted by costs related to recent acquisitions including purchase accounting adjustments, 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, second quarter 2013 income from continuing operations attributable to TriMas Corporation was $26.2 million, or $0.65 per diluted share, compared to income from continuing operations attributable to TriMas Corporation of $16.7 million, or $0.44 per diluted share, during second quarter 2012. Excluding Special Items(1), second quarter 2013 income from continuing operations attributable to TriMas Corporation would have been $27.6 million, an improvement of 19.7%, and diluted earnings per share from continuing operations would have been $0.69, a 13.1% improvement from second quarter 2012, primarily due to lower interest expense, while absorbing approximately 6% higher weighted average shares outstanding. |
• | The Company reported Free Cash Flow (defined as Cash Flow from Operating Activities less Capital Expenditures) of $39.5 million for second quarter 2013, compared to $19.3 million in second quarter 2012. The Company reported a year to date Free Cash Flow use of $12.4 million for 2013, compared to a use of $31.5 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 June 30, 2013, the Company invested $25.9 million in capital expenditures (included in Free Cash Flow above) primarily in support of future growth and productivity opportunities and $46.6 million, net of cash acquired, in bolt-on acquisitions. |
Financial Position
As of June 30, 2013, TriMas reported total indebtedness of $480.7 million, as compared to $422.4 million as of December 31, 2012, and $506.2 million as of March 31, 2013. This increase from year end was primarily as a result of the seasonality related to higher working capital levels and the funding of five acquisitions during the first half of 2013. TriMas ended the second quarter with $198.1 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
Business Segment Results(2) - From Continuing Operations
Packaging - (Consists of Rieke Corporation including Arminak & Associates, Innovative Molding and the foreign subsidiaries of Englass, Rieke Germany, Rieke China and Rieke Italia)
Net sales for second quarter increased 11.2% 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 Asia. In addition, sales of industrial closures, rings and levers increased.
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Operating profit and the related margin percentage for the quarter increased primarily due to higher sales levels and savings from ongoing productivity and automation initiatives, both in the legacy and acquired businesses. The Company continues to develop specialty dispensing and closure applications for growing end markets, including personal care, cosmetic, pharmaceutical, nutrition and food/beverage, and expand into complementary products.
Energy - (Consists of Lamons including South Texas Bolt & Fitting, CIFAL, Gasket Vedações Técnicas and Wulfrun)
Second quarter net sales increased 24.7% compared to the year ago period primarily due to increased sales to engineering and construction customers, recent acquisitions and higher sales levels from the European branches. Second quarter operating profit increased, while the related margin percentage decreased as incremental margin driven by increased sales and manufacturing productivity was more than offset by higher selling, general and administrative expenses in support of branch expansion and acquisition costs incurred during the second quarter of 2013. The Company continues to grow its sales and service branch network in support of its global customers. The Company acquired the assets of Tat Lee (Thailand) Ltd. in April 2013, a manufacturer and distributor of standard and specialty gaskets, in addition to the acquisitions of Gasket Vedações Técnicas Ltda of Brazil in January 2013 and Wulfrun Specialised Fasteners Limited of the United Kingdom in March 2013.
Aerospace & Defense - (Consists of Monogram Aerospace Fasteners, Martinic Engineering and NI Industries)
Net sales for the second quarter increased 22.8% 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. Second quarter operating profit increased, while the related margin percentage decreased primarily due to the impact of Martinic, including purchase accounting adjustments, additional selling, general and administrative costs and a less favorable product mix, as well as new equipment and plant ramp-up costs in the legacy aerospace business during the second quarter of 2013. The Company continues to invest in this segment by developing and marketing highly-engineered products for aerospace applications, as well as bidding on new projects for defense customers.
Engineered Components - (Consists of Arrow Engine and Norris Cylinder)
Second quarter net sales decreased 4.9% 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 second quarter 2012. However, sales of industrial cylinders increased primarily due to growth in international markets and continued domestic market share gains. Second 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 Australia, Asia, Europe and Africa)
The Company renamed its former Cequent Asia Pacific segment to Cequent APEA (Cequent Asia Pacific Europe Africa) effective in the second quarter of 2013 following the Company's recent acquisitions to more appropriately reflect the expanding geography covered by this segment.
Net sales for second quarter increased 34.1% compared to the year ago period, primarily due to the April 2013 acquisition of C.P. Witter in the United Kingdom, the July 2012 acquisition of Trail Com and various growth initiatives in Asia and South Africa. Second quarter operating profit decreased after Special Items, and the related margin percentage decreased primarily as the profit earned on the increased sales levels was offset by costs related to the acquisitions including purchase accounting adjustments and higher selling, general and administrative expenses associated with the recent acquisitions. The Company continues to focus on reducing fixed costs and leveraging Cequent's strong brand positions. Today, the Company announced the acquisition of substantially all of the assets of a towbar manufacturer located in Germany and Finland which enables the Company to continue to capitalize on growth opportunities in new markets.
Cequent Americas - (Consists of Cequent Performance Products and Cequent Consumer Products with operations in North and South America)
Net sales for second quarter increased 7.0% compared to the year ago period, resulting primarily from increased sales within the retail, auto original equipment and aftermarket channels, as well as the sales related to the July 2012 acquisition of Engetran in Brazil. Second quarter operating profit and the related margin percentage decreased compared to the prior year period, as a result of 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 the United States and faster growing markets.
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2013 Outlook
The Company reaffirmed its expectations for full year 2013. The Company is estimating that 2013 sales will increase 6% to 8% compared to 2012. The Company expects full year 2013 diluted earnings per share from continuing operations to be between $2.15 and $2.25 per share, excluding any current and future events that may be considered Special Items. In addition, the Company expects 2013 Free Cash Flow, defined as Cash Flow from Operating Activities less Capital Expenditures, to be between $40 million and $50 million.
Conference Call Information
TriMas Corporation will host its second quarter 2013 earnings conference call today, Thursday, July 25, 2013, at 10:00 a.m. ET. The call-in number is (888) 523-1228. Participants should request to be connected to the TriMas Corporation second quarter 2013 earnings conference call (Conference ID #5087909). 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 Code #5087909) beginning July 25, 2013 at 3:00 p.m. ET through August 1, 2013 at 3:00 p.m. ET.
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 TriMas
Headquartered in Bloomfield Hills, Michigan, TriMas Corporation (NASDAQ: TRS) provides engineered and applied products for growing markets worldwide. TriMas is organized into six reportable segments: Packaging, Energy, Aerospace & Defense, Engineered Components, Cequent APEA and Cequent Americas. TriMas has approximately 5,500 employees at more than 60 different facilities in 17 countries. For more information, visit www.trimascorp.com.
(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 TriMas Corporation under GAAP, but that management would consider important in evaluating the quality of the Company's operating results. |
(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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TriMas Corporation
Condensed Consolidated Balance Sheet
(Unaudited - dollars in thousands)
June 30, 2013 | December 31, 2012 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 18,830 | $ | 20,580 | ||||
Receivables, net | 207,860 | 150,390 | ||||||
Inventories | 246,060 | 238,020 | ||||||
Deferred income taxes | 17,990 | 18,270 | ||||||
Prepaid expenses and other current assets | 12,770 | 10,530 | ||||||
Total current assets | 503,510 | 437,790 | ||||||
Property and equipment, net | 200,330 | 185,030 | ||||||
Goodwill | 285,360 | 270,940 | ||||||
Other intangibles, net | 208,850 | 206,160 | ||||||
Other assets | 41,270 | 31,040 | ||||||
Total assets | $ | 1,239,320 | $ | 1,130,960 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 20,840 | $ | 14,370 | ||||
Accounts payable | 163,830 | 158,410 | ||||||
Accrued liabilities | 74,120 | 74,420 | ||||||
Total current liabilities | 258,790 | 247,200 | ||||||
Long-term debt | 459,810 | 408,070 | ||||||
Deferred income taxes | 65,160 | 60,370 | ||||||
Other long-term liabilities | 87,140 | 84,960 | ||||||
Total liabilities | 870,900 | 800,600 | ||||||
Redeemable noncontrolling interests | 27,200 | 26,780 | ||||||
Total shareholders' equity | 341,220 | 303,580 | ||||||
Total liabilities and shareholders' equity | $ | 1,239,320 | $ | 1,130,960 | ||||
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TriMas Corporation
Consolidated Statement of Income
(Unaudited - dollars in thousands, except per share amounts)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net sales | $ | 378,030 | $ | 338,430 | $ | 715,810 | $ | 636,000 | ||||||||
Cost of sales | (274,720 | ) | (242,540 | ) | (529,100 | ) | (461,200 | ) | ||||||||
Gross profit | 103,310 | 95,890 | 186,710 | 174,800 | ||||||||||||
Selling, general and administrative expenses | (61,670 | ) | (52,710 | ) | (121,320 | ) | (103,180 | ) | ||||||||
Net gain (loss) on dispositions of property and equipment | — | 20 | (10 | ) | 320 | |||||||||||
Operating profit | 41,640 | 43,200 | 65,380 | 71,940 | ||||||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (5,540 | ) | (10,300 | ) | (10,750 | ) | (20,970 | ) | ||||||||
Debt extinguishment costs | — | (6,560 | ) | — | (6,560 | ) | ||||||||||
Other income (expense), net | 300 | (910 | ) | (1,930 | ) | (2,550 | ) | |||||||||
Other expense, net | (5,240 | ) | (17,770 | ) | (12,680 | ) | (30,080 | ) | ||||||||
Income from continuing operations before income tax expense | 36,400 | 25,430 | 52,700 | 41,860 | ||||||||||||
Income tax expense | (9,300 | ) | (8,260 | ) | (11,560 | ) | (12,440 | ) | ||||||||
Income from continuing operations | 27,100 | 17,170 | 41,140 | 29,420 | ||||||||||||
Income from discontinued operations, net of income tax expense | 700 | — | 700 | — | ||||||||||||
Net income | 27,800 | 17,170 | 41,840 | 29,420 | ||||||||||||
Less: Net income attributable to noncontrolling interests | 910 | 510 | 1,770 | 270 | ||||||||||||
Net income attributable to TriMas Corporation | $ | 26,890 | $ | 16,660 | $ | 40,070 | $ | 29,150 | ||||||||
Basic earnings per share attributable to TriMas Corporation: | ||||||||||||||||
Continuing operations | $ | 0.66 | $ | 0.45 | $ | 1.00 | $ | 0.81 | ||||||||
Discontinued operations | 0.02 | — | 0.02 | — | ||||||||||||
Net income per share | $ | 0.68 | $ | 0.45 | $ | 1.02 | $ | 0.81 | ||||||||
Weighted average common shares—basic | 39,425,471 | 37,345,026 | 39,330,125 | 35,968,646 | ||||||||||||
Diluted earnings per share attributable to TriMas Corporation: | ||||||||||||||||
Continuing operations | $ | 0.65 | $ | 0.44 | $ | 0.99 | $ | 0.80 | ||||||||
Discontinued operations | 0.02 | — | 0.02 | — | ||||||||||||
Net income per share | $ | 0.67 | $ | 0.44 | $ | 1.01 | $ | 0.80 | ||||||||
Weighted average common shares—diluted | 39,886,593 | 37,694,221 | 39,790,349 | 36,421,387 | ||||||||||||
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TriMas Corporation
Consolidated Statement of Cash Flow
(Unaudited - dollars in thousands)
Six months ended June 30, | ||||||||
2013 | 2012 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | 41,840 | 29,420 | ||||||
Adjustments to reconcile net income to net cash provided by (used for) operating activities, net of acquisition impact: | ||||||||
(Gain) loss on dispositions of property and equipment | 10 | (320 | ) | |||||
Depreciation | 14,560 | 12,690 | ||||||
Amortization of intangible assets | 10,230 | 9,180 | ||||||
Amortization of debt issue costs | 870 | 1,600 | ||||||
Deferred income taxes | (3,470 | ) | 200 | |||||
Debt extinguishment costs | — | 6,560 | ||||||
Non-cash compensation expense | 4,750 | 3,510 | ||||||
Excess tax benefits from stock based compensation | (1,180 | ) | (2,130 | ) | ||||
Increase in receivables | (54,460 | ) | (41,630 | ) | ||||
(Increase) decrease in inventories | 1,320 | (31,270 | ) | |||||
Increase in prepaid expenses and other assets | (2,240 | ) | (1,740 | ) | ||||
Increase in accounts payable and accrued liabilities | 2,320 | 8,470 | ||||||
Other, net | (1,010 | ) | 580 | |||||
Net cash provided by (used for) operating activities, net of acquisition impact | 13,540 | (4,880 | ) | |||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (25,920 | ) | (26,640 | ) | ||||
Acquisition of businesses, net of cash acquired | (46,610 | ) | (61,820 | ) | ||||
Net proceeds from disposition of assets | 700 | 2,770 | ||||||
Net cash used for investing activities | (71,830 | ) | (85,690 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from sale of common stock in connection with the Company's equity offering, net of issuance costs | — | 79,040 | ||||||
Proceeds from borrowings on term loan facilities | 106,420 | 69,530 | ||||||
Repayments of borrowings on term loan facilities | (104,830 | ) | (69,150 | ) | ||||
Proceeds from borrowings on revolving credit and accounts receivable facilities | 475,890 | 412,900 | ||||||
Repayments of borrowings on revolving credit and accounts receivable facilities | (418,900 | ) | (412,900 | ) | ||||
Repurchase of 9¾% senior secured notes | — | (50,000 | ) | |||||
Senior secured notes redemption premium and debt financing fees | — | (4,880 | ) | |||||
Distributions to noncontrolling interests | (1,350 | ) | (410 | ) | ||||
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 | (3,760 | ) | (990 | ) | ||||
Proceeds from exercise of stock options | 860 | 5,660 | ||||||
Excess tax benefits from stock based compensation | 1,180 | 2,130 | ||||||
Net cash provided by financing activities | 56,540 | 30,930 | ||||||
Cash and Cash Equivalents: | ||||||||
Decrease for the period | (1,750 | ) | (59,640 | ) | ||||
At beginning of period | 20,580 | 88,920 | ||||||
At end of period | $ | 18,830 | $ | 29,280 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 8,280 | $ | 17,790 | ||||
Cash paid for taxes | $ | 13,830 | $ | 13,840 | ||||
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TriMas Corporation
Company and Business Segment Financial Information
Continuing Operations
(Unaudited - dollars in thousands)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Packaging | ||||||||||||||||
Net sales | $ | 78,640 | $ | 70,700 | $ | 152,990 | $ | 125,010 | ||||||||
Operating profit | $ | 19,600 | $ | 16,570 | $ | 34,230 | $ | 26,460 | ||||||||
Energy | ||||||||||||||||
Net sales | $ | 58,820 | $ | 47,170 | $ | 113,740 | $ | 97,760 | ||||||||
Operating profit | $ | 5,210 | $ | 4,350 | $ | 11,080 | $ | 10,740 | ||||||||
Aerospace & Defense | ||||||||||||||||
Net sales | $ | 23,740 | $ | 19,330 | $ | 44,710 | $ | 37,190 | ||||||||
Operating profit | $ | 5,520 | $ | 4,820 | $ | 9,270 | $ | 9,680 | ||||||||
Engineered Components | ||||||||||||||||
Net sales | $ | 50,020 | $ | 52,620 | $ | 96,290 | $ | 102,300 | ||||||||
Operating profit | $ | 5,890 | $ | 8,600 | $ | 11,590 | $ | 16,310 | ||||||||
Cequent APEA | ||||||||||||||||
Net sales | $ | 38,290 | $ | 28,550 | $ | 70,380 | $ | 56,750 | ||||||||
Operating profit | $ | 2,550 | $ | 2,010 | $ | 5,730 | $ | 5,050 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | — | $ | 1,560 | $ | — | $ | 2,280 | ||||||||
Excluding Special Items, operating profit would have been | $ | 2,550 | $ | 3,570 | $ | 5,730 | $ | 7,330 | ||||||||
Cequent Americas | ||||||||||||||||
Net sales | $ | 128,520 | $ | 120,060 | $ | 237,700 | $ | 216,990 | ||||||||
Operating profit | $ | 12,890 | $ | 15,500 | $ | 13,590 | $ | 19,660 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 1,960 | $ | 1,390 | $ | 7,790 | $ | 2,340 | ||||||||
Excluding Special Items, operating profit would have been | $ | 14,850 | $ | 16,890 | $ | 21,380 | $ | 22,000 | ||||||||
Corporate Expenses | ||||||||||||||||
Operating loss | $ | (10,020 | ) | $ | (8,650 | ) | $ | (20,110 | ) | $ | (15,960 | ) | ||||
Total Company | ||||||||||||||||
Net sales | $ | 378,030 | $ | 338,430 | $ | 715,810 | $ | 636,000 | ||||||||
Operating profit | $ | 41,640 | $ | 43,200 | $ | 65,380 | $ | 71,940 | ||||||||
Total Special Items to consider in evaluating operating profit: | $ | 1,960 | $ | 2,950 | $ | 7,790 | $ | 4,620 | ||||||||
Excluding Special Items, operating profit would have been | $ | 43,600 | $ | 46,150 | $ | 73,170 | $ | 76,560 | ||||||||
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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, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Income from continuing operations, as reported | $ | 27,100 | $ | 17,170 | $ | 41,140 | $ | 29,420 | ||||||||
Less: Net income attributable to noncontrolling interests | 910 | 510 | 1,770 | 270 | ||||||||||||
Income from continuing operations attributable to TriMas Corporation | 26,190 | 16,660 | 39,370 | 29,150 | ||||||||||||
After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 1,390 | 1,980 | 5,590 | 3,100 | ||||||||||||
Debt extinguishment costs | — | 4,400 | — | 4,400 | ||||||||||||
Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been | $ | 27,580 | $ | 23,040 | $ | 44,960 | $ | 36,650 | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Diluted earnings per share from continuing operations attributable to TriMas Corporation, as reported | $ | 0.65 | $ | 0.44 | $ | 0.99 | $ | 0.80 | ||||||||
After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 0.04 | 0.05 | 0.14 | 0.09 | ||||||||||||
Debt extinguishment costs | — | 0.12 | — | 0.12 | ||||||||||||
Excluding Special Items, EPS from continuing operations would have been | $ | 0.69 | $ | 0.61 | $ | 1.13 | $ | 1.01 | ||||||||
Weighted-average shares outstanding for the three and six months ended June 30, 2013 and 2012 | 39,886,593 | 37,694,221 | 39,790,349 | 36,421,387 | ||||||||||||
9
Second Quarter 2013 Earnings Presentation July 25, 2013 NASDAQ • TRS
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 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 ending 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 presentation, certain non-GAAP financial measures may be used. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure may be found at the end of this presentation or in the second quarter 2013 earnings release available on the Company’s website. Additional information is available at www.trimascorp.com under the “Investors” section. 2
Agenda • Opening Remarks • Financial Highlights • Segment Highlights • Outlook and Summary • Questions and Answers • Appendix 3
Opening Remarks – Second Quarter Results • Continued investments in short and long-term growth and productivity programs; continue to adjust and refine for events • Record Q2 sales of approximately $378 million – up 12% compared to Q2 2012 – Results from bolt-on acquisitions adding to top-line – Investments in new products and higher growth markets generating results • Q2 2013 income(1) increased 20% and EPS(1) increased 13% – record quarter of EPS(1) of $0.69 • Short-term effects of bolt-on acquisitions – track record of successful acquisitions and synergy attainment • Continued focus on cash flow, working capital and leverage Investing in growth balanced with margin expansion activities. 4 (1) Defined as income from continuing operations and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” for each period are provided in the Appendix.
Current Environment Headwinds • European downturn continues, although “stable” • New geographies take time and investment to penetrate • Overall industrial production flat to low growth • Growth and customers’ needs create upward pressure on working capital • Inflation in China • Lower level of drilling activity • Geography-specific events • Cost of non-U.S. diligence/acquisitions 5 No significant changes in environment – we continuously fine-tune strategies to more effectively respond to risks and opportunities. Tailwinds • New product sales across businesses • Aircraft build rates • Global investments in petrochemical plants and refineries • Growth in construction markets • Additional sales in Asia for multiple businesses • Global customers want global suppliers with local plants • Recent acquisitions performing to plan (six completed in 2013); solid pipeline • Relatively stable currencies; commodities softening
Growth focused on faster growing markets; following and aiding our customers. Growth Focused on “Bright Spots” 6 • New specialty dispensing and closure systems for consumer applications • Growth in Asian markets • Bolt-on acquisition synergies (Arminak and Innovative) • Continued branch ramp-up (U.S. and non-U.S. based) • Growth in specialty and engineered products • Pursuit of opportunities in Brazil; leverage CIFAL and GVT acquisitions • New aircraft development and production ramp-up • Expansion of product range for composite aircraft applications • Global sales expansion, including China • Recent acquisition of Martinic Engineering expands product offering • New cylinder applications (fire suppression, cell phone towers, mining, ISO small high pressure) • Export opportunities • Additional well-site content (electronics, gas compression products) • Natural gas compressor packaging and shale field opportunities • Geographic expansion into Brazil, Europe, South Africa and New Zealand • OEM wins for engineered, heavy duty trailer products • Thailand-based automotive OEM wins • Cargo management and towing products share gains at large retailers New Products New Geographies New Markets Market Share Gains Bolt-on Acquisitions
Acquisition Update – YTD 2013 Short-term margin impact of bolt-on acquisitions – track record of successful acquisitions and synergy attainment. . 7 Acquisition Date Location Segment Product Geography Customer January 14 Brazil Energy P P January 28 California Aerospace & Defense P P March 26 United Kingdom Energy P P P April 12 United Kingdom Cequent APEA P P P April 29 Thailand Energy P July 19 Germany Cequent APEA P P P Towing technology business assets
Financial Highlights
Second Quarter Summary • Sales increased 11.7% as compared to Q2 2012 – sales increased in five of six segments • Organic initiatives contributed more than 50% of growth • Margin expansion in many of the legacy businesses • Operating profit was negatively impacted by acquisition-related costs and costs related to facility consolidation and relocation projects • Q2 income(1) and EPS(1) increased 19.7% and 13.1%, respectively, while absorbing costs related to acquisitions and taking into account 6% higher weighted average shares compared to Q2 2012 • Lower interest expense and a reduced tax rate had a positive effect 9 (1) Defined as income from continuing operations and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Cash Flows from Operating Activities less Capital Expenditures. (Unaudited, dollars in millions, except per share amounts) (from continuing operations) Q2 2013 Q2 2012 % Chg Revenue 378.0$ 338.4$ 11.7% Operating Profit 41.6$ 43.2$ -3.6% Excl. Special Items (1), Operating Profit would have been: 43.6$ 46.2$ -5.5% Excl. Special Items (1), Operating Profit Margin would have been: 11.5% 13.6% -210 bps Income 27.1$ 17.2$ 57.8% I c me attributable to TriMas Corporation (1) 26.2$ 16.7$ 57.2% Excl. Special Items (1), Income attributable to TriMas Corporation would have been: 27.6$ 23.0$ 19.7% Diluted Earnings Per Share attributable to TriMas Corporation 0.65$ 0.44$ 47.7% Excl. Special Items (1), Diluted Earnings Per Share attributable to TriMas Corporation would have been: 0.69$ 0.61$ 13.1% Free Cash Flow (2) 39.5$ 19.3$ 105.2% Total Debt 480.7$ 420.8$ 14.2%
Q2 2012 Packaging Energy A&D Eng. Comp Cequent APEA Cequent Americas Energy A&D Cequent APEA Cequent Americas Q2 2013 $338.4M Arrow $378.0M LTM Acquisitions Sales Bridge: Q2 2012 to Q2 2013 Legacy Businesses • Record quarterly sales achieved Q2 2013 • More than 50% of sales increase driven by organic initiatives • All businesses increased with the exception of Arrow Engine, resulting from lower drilling and well completion levels • Packaging offerings led growth with significant customer and regional success • Energy business network continues to experience significant growth Norris 10 • Geographic expansion investment in Asia, South America and Europe • Investing in customers and regions which enhance TriMas’ relevance • Cequent APEA acquisitions globalize the broad product offering and supports global customers ~ +625 Basis Points ~ +550 Basis Points
Q2 2012 Productivity Economics Manufacturing Inefficiencies Engine Business Growth Investment Purchase Accounting Acquisition Diligence Mix Operating Profit Margin Bridge: Q2 2012 to Q2 2013 Note: Above reflects operating profit margin excluding Special Items and corporate expenses. “Special Items” and corporate expense for the period are provided in the Appendix. 16.2% 14.2% Q2 2013 LTM Acquisitions Legacy Businesses 11 • Productivity gains offset economics, investments in growth and short-term manufacturing inefficiencies resulting from rapid growth • Price increases essentially offset commodity inflation • Packaging demonstrated margin expansion in all businesses to reach 25% operating profit margin for quarter • Energy expanded legacy margins during the quarter • Lean will drive future manufacturing efficiencies as adjustments are made to smaller lot sizes and short-cycle changes • Margin decline at Arrow Engine due to lower fixed cost absorption and less favorable product mix • Short-term effects of purchase accounting and integration costs addressed in coming year • Mix will be addressed through synergies identified and Lean implementation • Plan to increase the margins of acquisitions over time ~ -100 Basis Points ~ -100 Basis Points
Segment Highlights
Packaging Q2 2013 Results: • Sales increased primarily as a result of specialty systems product sales gains — Increased demand from North American and European dispensing customers, as well as additional business wins in Asia • Sales of industrial closures increased, due to increases in North America and additional market share gains in Europe • European market appears stable, but no signs of improvement • Operating profit increased primarily due to higher sales and ongoing productivity and automation initiatives, in both legacy and acquired businesses • Operating profit margin increased 150 basis points as compared to Q2 2012 (dollars in millions) Key Initiatives: • Target specialty dispensing and closure products in higher growth end markets — Beverage, cosmetic, food, nutrition, personal care and pharmaceutical • Increase focus on Asian market and cultivate other geographic opportunities • Further integrate acquisitions into global sales network, while growing margins • Provide solutions focused on customer needs, differentiation and delivery speed • Increase low cost sourcing and leverage flexible manufacturing footprint • Ensure new products continue to have barriers to entry 13 Net Sales $70.7 $78.6 Q2 2012 Q2 2013 11.2% Operating Profit $16.6 $19.6 Q2 2012 Q2 2013 18.3%
Energy (dollars in millions) Q2 2013 Results: • Sales increased as a result of recent bolt-on acquisitions, sales into the engineering and construction market and increased sales generated by the European branches • Operating profit increased, while the related margin percentage decreased as the margin impact of higher sales and manufacturing productivity were more than offset by the effects of the acquisitions and higher SG&A in support of growth • Legacy business margins improved compared to Q2 2012 • Acquired assets of Tat Lee, a manufacturer and distributor of standard and specialty gaskets in Thailand, in April 2013 Key Initiatives: • Replicate U.S. branch strategy – expand business capabilities with major customers globally • Execute on growth and profitability initiatives in Brazil and other emerging markets • Increase sales of highly-engineered specialty products • Maximize supply chain for cost and delivery • Drive Lean initiatives to improve margins 14 Net Sales $47.2 $58.8 Q2 2012 Q2 2013 24.7% Operating Profit $4.4 $5.2 Q2 2012 Q2 2013 19.8%
Aerospace & Defense Key Initiatives: • Expand aerospace fastener product lines to increase content and applications per aircraft • Leverage positive end market trends including composite aircraft and robotic assembly • Capture incremental opportunities in emerging markets • Drive ongoing Lean initiatives to lower working capital and reduce costs • Continue to integrate Martinic Engineering; consider other complementary bolt-on acquisitions • Bid on new defense projects (dollars in millions) Q2 2013 Results: • Sales increased in the aerospace business primarily as a result of the acquisition of Martinic Engineering in Q1, which expands our content on aircraft • Defense business sales decreased as compared to Q2 2012 • Operating profit increased, while the related margin percentage decreased due to the effect of the acquisition, as well as new equipment and plant ramp-up costs in the aerospace business • Aircraft frame manufacturers continue to ramp-up build rates with growth in backlog 15 Net Sales $19.3 $23.7 Q2 2012 Q2 2013 22.8% Operating Profit $4.8 $5.5 Q2 2012 Q2 2013 14.5%
Engineered Components (dollars in millions) Key Initiatives: • Expand complementary product lines at well-sites and grow compression products – product diversification decreases cyclicality • Grow products to support the shift toward increased use of natural gas and production in shale formations • Expand cylinder business into new markets • Continue to expand product offering and geographies • Continue to improve working capital turnover Q2 2013 Results: • Sales of engines, compressors and other well-site content decreased due to reduced levels of drilling and well completions • Sales of industrial cylinders increased primarily due to market share gains both domestically and internationally, as well as new products • Operating profit and related margin declined due to decreased sales levels and lower fixed cost absorption in the engine business, partially offset by improvements in the industrial cylinder business 16 Net Sales $52.6 $50.0 Q2 2012 Q2 2013 -4.9% Operating Profit $8.6 $5.9 Q2 2012 Q2 2013 -31.5%
Cequent (APEA & Americas) (dollars in millions) $46.4 Q2 2013 Results: • Sales in Americas increased primarily due to higher sales within the automotive OE, aftermarket and retail channels, as well as the July 2012 acquisition in Brazil • Americas operating profit and margin(1) decreased as a result of a less favorable product sales mix and increased SG&A in support of growth initiatives • APEA sales increased due to the acquisitions of Witter and Trail Com, as well as growth initiatives in Asia and South Africa • APEA operating profit and margin(1) decreased as profit from higher sales volumes was offset by additional costs related to the acquisitions Key Initiatives: • Globalize full product line and strong brands for market share and cross-selling • Expand sales in new growing geographies and support global customer needs • Manage utilization of flexible manufacturing footprint in Thailand and Mexico • Integrate opportunistic, bolt-on acquisitions to capture synergies and support global customers • Utilize Lean to continue to reduce fixed costs and simplify the businesses for better customer service and operating effectiveness • Continue to reduce working capital requirements APEA Americas 17 APEA Americas (1) Excluding “Special Items” for each period which are provided in the Appendix. $38.3 $128.5 Net Sales $28.6 $120.1 Q2 2012 Q2 2013 $148.7 $166.8 12.2% $2.6 $14.9 Operating Profit (1) $3.6 $16.9 Q2 2012 Q2 2013 $17.5 -14.5% $20.5
First Half 2013 Summary • Organic growth achieved through product innovation, geographic expansion and market share gains • Five bolt-on acquisitions in the first half – future synergies will deliver improved profitability and growth • Generated double-digit earnings growth and record EPS • Majority legacy businesses’ margins improving as a result of productivity and margin initiatives • Continuous productivity initiatives fund investments for long-term growth • Continued focus on margins, cash flow, working capital and leverage Continue momentum to drive positive results. 18
Outlook and Summary
2013 Outlook Reaffirmed Outlook as of 7/25/13 Comments Sales Growth 6% to 8% Recent acquisitions increase growth expectations to higher end of range Earnings Per Share, diluted(1) $2.15 to $2.25 Midpoint of 2013 EPS outlook represents a more than 19% increase as compared to 2012 Free Cash Flow(2) $40 to $50 million On track for year; seasonal FCF generation (1) Defined as diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” (2) Defined as Cash Flow from Operating Activities less Capital Expenditures. 2013 outlook in line with our strategic aspirations, while effectively investing in future growth and productivity. 20
Strategic Aspirations Strategic aspirations are the foundation for the future. 21 • Generate high single-digit top-line growth • Invest in growing end markets through new products, global expansion and acquisitions • Drive 3% to 5% total gross cost productivity gains annually – utilize savings to fund growth • Grow earnings faster than revenue growth • Optimize capital structure • Strive to be a great place to work
Questions & Answers
Appendix
First Half 2013 Summary • Sales increased 12.5% as compared to YTD 2012 – sales increased in five of six segments • Investments in bolt-on acquisitions, new products and geographic expansion driving positive results • Productivity efforts contributed to funding growth initiatives • Operating profit was negatively impacted by acquisition-related costs and costs related to facility consolidation and relocation projects • Income(1) and EPS(1) increased 22.7% and 11.9%, respectively, while absorbing costs related to acquisitions and taking into account higher weighted average shares compared to YTD 2012 • Lower interest expense and a reduced tax rate had a positive effect • FCF and debt levels as expected 24 (1) Defined as income from continuing operations and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Cash Flows from Operating Activities less Capital Expenditures. (Unaudited, dollars in millions, except per share amounts) (from continuing operations) Q2 YTD 2013 Q2 YTD 2012 % Chg Revenue 715.8$ 636.0$ 12.5% Operating Profit 65.4$ 71.9$ -9.1% Excl. Special Items (1), Operating Profit would have been: 73.2$ 76.6$ -4.4% Excl. Special Items (1), Operating Profit margin would have been: 10.2% 12.0% -180 bps Income 41.1$ 29.4$ 39.8% I c me attributable to TriMas Corporation (1) 39.4$ 29.2$ 35.1% Excl. Special Items (1), Income attributable to TriMas Corporation would have been: 45.0$ 36.7$ 22.7% Diluted earnings per share, attributable to TriMas Corporation 0.99$ 0.80$ 23.8% Excl. Special Items (1), diluted earnings per share attributable to TriMas Corporation would have been: 1.13$ 1.01$ 11.9% Free Cash Flow (2) (12.4)$ (31.5)$ fav Debt 480.7$ 420.8$ 14.2%
Condensed Consolidated Balance Sheet (Unaudited, dollars in thousands) 25 June 30, December 31, 2013 2012 Assets Current assets: Cash and cash equivalents …………………………………………...……………………………………….18,830$ 20,580$ Receivables, net………………………………………………….………………………….. 207,860 150,390 Inventories .……………………………………………...……………………………………………………...246,060 238,020 Deferred income taxes …………………………………….……………………………………………………………………17,990 18,270 Prepaid expenses and other current assets ..……….………………….……………………………………………………12,770 10,530 Total current assets ………………………………...……….……………………………………………….. 503,510 437,790 Property and equipment, net ..……………………..…………………………………………200,330 185,030 Goodwill …………………………………………………………………………………………………285,360 270,940 Other intangibles, net ……………………………………………………………………….208,850 206,160 Other assets ...………………………………………………………………………………..41,270 31,040 Total assets …………………………………………………………………………………..1,239,320$ 1,130,960$ Liabilities and Shareholders' Equity Current liabilities: Current maturities, long-term debt ……………………...………………………………………………..20,840$ 14,370$ Accounts payable….…………………………………………….……………………………..163,830 158,410 Accrued liabilities ..………………………………………………….……………………………….74,120 74,420 Total current liabilities ……………………………………...………………………………..258,790 247,200 Long-term debt ………………………………………………..……………………………………459,810 408,070 Deferred income taxes ……………………………………………..…………………………….65,160 60,370 Other long-term liabilities ……………………………………….………………………………………87,140 84,960 Total liabilities …………………………………………………..…………………………………….870,900 800,600 Redeemable noncontrolling interests…………………………………………………..…………………………………….27,200 26,780 Total shareholders' equity …………………………………………..………………….341,220 303,580 Total liabilities and shareholders' equity …………………………….……………………1,239,320$ 1,130,960$
Capitalization 26 (Unaudited, dollars in thousands) June 30, December 31, 2013 2012 Cash and Cash Equivalents……………………………..………………… 18,830$ 20,580$ Credit Agreement……….……………………………….. 412,210 399,500 Receivables facility and other………………………..….. 68,440 22,940 480,650 422,440 Total Debt………………………...………………………...………………………… 480,650$ 422,440$ Key Ratios: Bank LTM EBITDA……………………………………………………………………………….……………………………………… 193,040$ 191,710$ Interest Coverage Ratio………………………………………………………………… 7.89 x 5.68 x Leverage Ratio…………………………………………………………………... 2.57 x 2.30 x Bank Covenants: Minimum Interest Coverage Ratio………………………………………………………………… 3.00 x 3.00 x Maximum Leverage Ratio………………………………………………………………………………… 3.50 x 3.50 x As of June 30, 2013, TriMas had $198.1 million of cash and available liquidity under its revolving credit and accounts receivable facilities.
Consolidated Statement of Income (Unaudited, dollars in thousands, except for per share amounts) 27 Six months ended 2013 2012 2013 2012 Net sales.................................................................................... 378,030$ 338,430$ 715,810$ 636,000$ Cost of sales............................................................................... (274,720) (242,540) (529,100) (461,200) Gross profit.............................................................................. 103,310 95,890 186,710 174,800 Selling, general and administrative expenses.................................. (61,670) (52,710) (121,320) (103,180) Net gain (loss) on dispositions of property and equipment................ - 20 (10) 320 Operating profit......................................................................... 41,640 43,200 65,380 71,940 Other expense, net:..................................................................... Interest expense....................................................................... (5,540) (10,300) (10,750) (20,970) Debt extinguishment costs........................................................ - (6,560) - (6,560) Other income (expense), net...................................................... 300 (910) (1,930) (2,550) Other expense, net................................................................ (5,240) (17,770) (12,680) (30,080) Income from continuing operations before income tax expense......... 36,400 25,430 52,700 41,860 Income tax expense..................................................................... (9,300) (8,260) (11,560) (12,440) Income from continuing operations................................................. 27,100 17,170 41,140 29,420 Income from discontinued operations, net of income tax expense..... 700 - 700 - Net income.................................................................................. 27,800 17,170 41,840 29,420 Less: Net income attributable to noncontrolling interests................. 910 510 1,770 270 Net income attributable to TriMas Corporation................................. 26,890$ 16,660$ 40,070$ 29,150$ Earnings per share attributable to TriMas Corporation - basic: Continuing operations …………………………...….…………………………………………………………………………….…………………….. 0.66$ 0.45$ 1.00$ 0.81$ Discontinued operations…………………….……………………..……. 0.02 - 0.02 - Net income per share…………………………………...……………… 0.68$ 0.45$ 1.02$ 0.81$ Weighted average common shares - basic …………………………...………………….….. 39,425,471 37,345,026 39,330,125 35,968,646 Earnings per share attributable to TriMas Corporation - diluted: Continuing operations …………………………...….……………………………… 0.65$ 0.44$ 0.99$ 0.80$ Discontinued operations……………………..…………………………… 0.02 - 0.02 - Net income per share…………………………………...………………… 0.67$ 0.44$ 1.01$ 0.80$ Weighted average common shares - diluted …………………………...………………….….. 39,886,593 37,694,221 39,790,349 36,421,387 June 30, June 30, Three months ended
Consolidated Statement of Cash Flow (Unaudited, dollars in thousands) 28 2013 2012 Cash Flows from Operating Activities: Net income..................................................................................................................... 41,840$ 29,420$ Adjustments to reconcile net income to net cash provided by (used for) operating activities, net of acquisition impact: (Gain) loss on dispositions of property and equipment...................................................... 10 (320) Depreciation................................................................................................................. 14,560 12,690 Amortization of intangible assets................................................................................... 10,230 9,180 Amortization of debt issue costs.................................................................................... 870 1,600 Deferred income taxes.................................................................................................. (3,470) 200 Debt extinguishment costs............................................................................................ - 6,560 Non-cash compensation expense.................................................................................. 4,750 3,510 Excess tax benefits from stock based compensation....................................................... (1,180) (2,130) Increase in receivables.................................................................................................. (54,460) (41,630) (Increase) decrease in inventories.................................................................................. 1,320 (31,270) Increase in prepaid expenses and other assets............................................................... (2,240) (1,740) Increase in accounts payable and accrued liabilities........................................................ 2,320 8,470 Other, net.................................................................................................................... (1,010) 580 Net cash provided by (used for) operating activities, net of acquisition impact.................. 13,540 (4,880) Cash Flows from Investing Activities: Capital expenditures..................................................................................................... (25,920) (26,640) Acquisition of businesses, net of cash acquired.............................................................. (46,610) (61,820) Net proceeds from disposition of assets......................................................................... 700 2,770 Net cash used for investing activities........................................................................... (71,830) (85,690) Cash Flows from Financing Activities: Proceeds from sale of common stock in connection with the Company's equity offering, net of issuance costs …....…....…….………..…...……………………………….……………….… - 79,040 Proceeds from borrowings on term loan facilities............................................................. 106,420 69,530 Repayments of borrowings on term loan facilities............................................................. (104,830) (69,150) Proceeds from borrowings on revolving credit and accounts receivable facilities.................. 475,890 412,900 Repayments of borrowings on revolving credit and accounts receivable facilities................. (418,900) (412,900) Retirement of 9¾% senior secured notes........................................................................ - (50,000) Senior secured notes redemption premium and debt financing fees................................... - (4,880) Distributions to noncontrolling interests.......................................................................... (1,350) (410) 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………..…………...….…..………………….....………………………………………. (3,760) (990) Proceeds from exercise of stock options........................................................................ 860 5,660 Excess tax benefits from stock based compensation....................................................... 1,180 2,130 Net cash provided by financing activities...................................................................... 56,540 30,930 Cash and Cash Equivalents: Decrease for the period................................................................................................. (1,750) (59,640) At beginning of period................................................................................................... 20,580 88,920 At end of period......................................................................................................... 18,830$ 29,280$ Supplemental disclosure of cash flow information: Cash paid for interest................................................................................................. 8,280$ 17,790$ Cash paid for taxes.................................................................................................... 13,830$ 13,840$ Six months ended June 30,
Company and Business Segment Financial Information 29 Three months ended 2013 2012 2013 2012 Packaging Net sales………………………...………………………………………… 78,640$ 70,700$ 152,990$ 125,010$ Operating profit…………………………………………………………… 19,600$ 16,570$ 34,230$ 26,460$ Energy Net sales………………………………………………………………….. 58,820$ 47,170$ 113,740$ 97,760$ Operating profit…………………………………………………………… 5,210$ 4,350$ 11,080$ 10,740$ Aerospace & Defense Net sales………………………………………………………………….. 23,740$ 19,330$ 44,710$ 37,190$ Operating profit…………………………………………………………… 5,520$ 4,820$ 9,270$ 9,680$ Engineered Components Net sales………………………………………………………………….. 50,020$ 52,620$ 96,290$ 102,300$ Operating profit…………………………………………………………… 5,890$ 8,600$ 11,590$ 16,310$ Cequent APEA Net sales………………………………………………………………….. 38,290$ 28,550$ 70,380$ 56,750$ Operating profit…………………………………………………………… 2,550$ 2,010$ 5,730$ 5,050$ Special Items to consider in evaluating operating profit: - Severance and business restructuring costs…..………….………. -$ 1,560$ -$ 2,280$ Excluding Special Items, operating profit would have been…….. 2,550$ 3,570$ 5,730$ 7,330$ Cequent Americas Net sales………………………………………………………………….. 128,520$ 120,060$ 237,700$ 216,990$ Operating profit…………………………………………………………… 12,890$ 15,500$ 13,590$ 19,660$ Special Items to consider in evaluating operating profit: - Severance and business restructuring costs……………………. 1,960$ 1,390$ 7,790$ 2,340$ Excluding Special Items, operating profit would have been…….. 14,850$ 16,890$ 21,380$ 22,000$ Corporate Expenses Operating loss……………………………………………………………. (10,020)$ (8,650)$ (20,110)$ (15,960)$ Total Company Net sales………………………………………………………………….. 378,030$ 338,430$ 715,810$ 636,000$ Operating profit…………………………………………………………… 41,640$ 43,200$ 65,380$ 71,940$ Total Special Items to consider in evaluating operating profit………. 1,960$ 2,950$ 7,790$ 4,620$ Excluding Special Items, operating profit would have been…….. 43,600$ 46,150$ 73,170$ 76,560$ Six months ended June 30, June 30, (Unaudited, dollars in thousands)
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures 30 (Unaudited, dollars in thousands, except for per share amounts) 2013 2012 2013 2012 Income from continuing operations, as reported………………………………………………..………………….. 27,100$ 17,170$ 41,140$ 29,420$ Less: Net income attributable to noncontrolling interests…………………………………. 910 510 1,770 270 Income from continuing operations attributable to TriMas Corporation……………………………………………………………….. 26,190 16,660 39,370 29,150 After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: Severance and business restructuring costs………………………………………………………………1,390 1,980 5,590 3,100 Debt extinguishment costs………………………………………………………. - 4,400 - 4,400 Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been……………………………………………………………………….. 27,580$ 23,040$ 44,960$ 36,650$ 2013 2012 2013 2012 Diluted earnings per share from continuing operations attributable to TriMas Corporation, as reported………………………………………………………………………..……………………………………………. 0.65$ 0.44$ 0.99$ 0.80$ After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: Severance and business restructuring costs……………………………………………………………… 0.04 0.05 0.14 0.09 Debt extinguishment costs - 0.12 - 0.12 Excluding Special Items, EPS from continuing operations would have been…………………………………………………. $ 0.69 $ 0.61 $ 1.13 $ 1.01 Weighted-average shares outstanding for the three and six months ended June 30, 2013 and 2012 39,886,593 37,694,221 39,790,349 36,421,387 Three months ended June 30, Six months ended June 30, Three months ended June 30, Six months ended June 30, 2013 2012 2013 2012 Operating profit (excluding Special Items)……………………….………. 43,600$ 46,150$ 73,170$ 76,560$ Corporate expenses……………………………………………………………. 10,020 8,650 20,110 15,960 Segment operating profit (excluding Special Items) .. 53,620$ 54,800$ 93,280$ 92,520$ Segment operating profit margin (excluding Special Items)…...…… 14.2% 16.2% 13.0% 14.5% Three months ended June 30, Six months ended June 30,
LTM Bank EBITDA as Defined in Credit Agreement 31 (Unaudited, dollars in thousands) Net income attributable to TriMas Corporation for the twelve months ended June 30, 2013 ………………………………………………………...……………………….. 44,800$ Net income attributable to partially-owned subsidiaries…….………………………………………………………………………. 3,910 Interest expense, net (as defined)…………………….…………………………………………………………………………….. 25,580 Income tax expense.……………………………….……………………………………………………………………………………… 5,090 Depreciation and amortization……………………………...………………………………………………………………………. 47,790 Non-cash compensation expense………………….…………………..…………………………………………………………. 10,520 Other non-cash expenses or losses………………………………………………………………………………….. 2,240 Non-recurring expenses or costs in connection with acquisition integration………………...…………………………………………………………… 530 Debt extinguishment costs……………………...………………………………………………………………… 40,250 Non-recurring expenses or costs for cost saving projects…………………………………………………………………. 13,100 Permitted acquisitions……………………………………………………………………………………………………………. 4,670 EBITDA of partially-owned subsidiaries attributable to noncontrolling interest……………………………………….. (5,440) Bank EBITDA - LTM Ended June 30, 2013 (1)…………………………………………………………………………………………… 193,040$ (1) As defined in the Credit Agreement dated October 11, 2012.