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) February 20, 2014
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 February 20, 2014, reporting its financial results for the fourth quarter and year ending December 31, 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 "Fourth Quarter and Full Year 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: | February 20, 2014 | 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 FOURTH QUARTER AND FULL YEAR 2013 RESULTS
Company Reports Growth in Sales of 10% and Income(1) of 22% for the Year
Company Provides 2014 Outlook
BLOOMFIELD HILLS, Michigan, February 20, 2014 - TriMas Corporation (NASDAQ: TRS) today announced financial results for the year and quarter ended December 31, 2013. For the year, the Company reported record net sales from continuing operations of $1.395 billion, an increase of 9.6% compared to 2012. The Company reported full year income from continuing operations attributable to TriMas Corporation of $74.9 million, or $1.81 per diluted share, compared to income from continuing operations of $33.9 million, or $0.89 per diluted share, in 2012. Excluding Special Items(1), full year 2013 income from continuing operations would have been $85.1 million, or $2.06 per diluted share, as compared to $1.84 per diluted share in 2012.
The Company reported record fourth quarter net sales from continuing operations of $323.4 million, an increase of 7.4% compared to fourth quarter 2012. The Company reported fourth quarter 2013 income from continuing operations attributable to TriMas Corporation of $6.9 million, or $0.15 per diluted share, as compared to a loss of $13.9 million, or $0.35 per diluted share during fourth quarter 2012. Excluding Special Items(1), fourth quarter 2013 diluted earnings per share from continuing operations would have been $0.31, as compared to $0.33 in fourth quarter 2012, while absorbing 13.8% higher weighted average shares outstanding in fourth quarter 2013 as compared to fourth quarter 2012.
TriMas 2013 Highlights
• | Achieved record net sales of $1.395 billion in 2013, an increase of 9.6%, due to the results from bolt-on acquisitions and the successful execution of numerous growth initiatives. |
• | Improved 2013 income from continuing operations(1) by 22.1% compared to 2012. Improved 2013 diluted earnings per share(1) by 12.0%, while absorbing incremental costs related to numerous acquisitions and 9.1% higher weighted average shares outstanding for 2013 as compared to 2012. |
• | Continued to optimize the debt structure in October 2013 to further reduce future interest rates, extend maturities and increase available liquidity. In 2013, reduced total indebtedness from $422.4 million as of December 31, 2012 to $305.7 million as of December 31, 2013, while reducing interest expense by almost 50% as compared to 2012. |
• | Issued 5,175,000 shares of common stock with net proceeds of $174.7 million in September 2013 to support future revenue and earnings growth including bolt-on acquisitions and capital expenditures in support of growth and productivity initiatives. |
• | Continued to invest in a flexible manufacturing footprint to optimize manufacturing costs long-term, add necessary capacity, enhance customer service and support future growth. |
• | Continued to refine the business portfolio to support the Company's strategic initiatives, including completing 10 bolt-on acquisitions during 2013 for approximately $105.8 million, net of cash acquired, and divesting the non-core assets of the European rings and levers business for approximately $10.3 million. |
• | Expanded geographic reach and related sales into China, Thailand, Singapore, Brazil and several European countries. |
"We completed 2013 with record net sales of approximately $1.4 billion, a 9.6% sales growth as compared to 2012, despite the challenges we faced in our energy end markets," said David Wathen, TriMas President and Chief Executive Officer. "During the year, we pursued many key initiatives with actions focused on fine-tuning our business portfolio via acquisition and divestiture, enhancing our capital structure through our recent equity offering and debt refinancing, moving and consolidating multiple plants for cost reduction, integrating acquisitions and evaluating many potential acquisitions. We also continued to focus on our growth and productivity programs in each of our businesses. These
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initiatives will position TriMas for continued sales and earnings growth and will drive additional shareholder value into the future."
"During the fourth quarter, we experienced additional pressure in our energy businesses, including cost structure and inventory challenges in Brazil," Wathen continued. "While the end markets are negatively affecting current demand for our products, we are focused on optimizing our cost structures and supply chains in these businesses, increasing sales of our higher margin products and leveraging recent acquisitions in newer geographies. We remain focused on continuous improvement and productivity, and are taking actions to improve long-term margins in all of our businesses."
"Looking forward, we remain committed to TriMas' ability to attain our strategic aspirations, while intensifying our efforts to increase earnings, operating margins and cash flow. We are estimating 2014 top-line growth of 6% to 8% as compared to 2013. We expect full-year 2014 diluted earnings per share from continuing operations to range between $2.15 and $2.25 per share, taking into account the uncertainty in our energy end markets, a higher effective tax rate and currency fluctuations, as well as approximately 9% higher weighted average shares outstanding expected for 2014 as compared to 2013. We continue to be confident in our ability to grow the top-line faster than the economy, improve our margins and generate strong cash flow - to deliver increased returns on capital,” Wathen concluded.
Full Year 2013 Financial Results - From Continuing Operations
• | TriMas reported 2013 record net sales from continuing operations of $1.395 billion, an increase of 9.6% as compared to $1.273 billion in 2012. During 2013, net sales increased in five of the six reportable segments, primarily as a result of additional sales from bolt-on acquisitions, as well as market share gains, new product introductions and geographic expansion. These sales increases were partially offset by approximately $9.1 million of unfavorable currency exchange. |
• | The Company reported 2013 operating profit of $120.5 million, compared to operating profit of $127.9 million for 2012. Excluding the impact of Special Items(1), operating profit would have been $138.2 million in 2013. In 2013, operating profit margin (excluding Special Items(1)) was 9.9%, as the favorable impact of ongoing productivity initiatives and operating leverage gained on higher sales levels was offset by a less favorable product sales mix, costs related to recent acquisitions including purchase accounting-related adjustments, manufacturing inefficiencies related to new plants and equipment, and higher costs associated with our global growth initiatives. |
• | Excluding noncontrolling interests related to Arminak & Associates, 2013 income from continuing operations was $74.9 million, or $1.81 per diluted share, compared to income from continuing operations of $33.9 million, or $0.89 per diluted share, during 2012. Excluding the impact of Special Items(1), primarily related to business and tax restructuring items, debt extinguishment costs, the termination of interest rate swaps, and the release of historical translation adjustments resulting from the sale of Rieke Italy, 2013 income from continuing operations would have been $85.1 million, or $2.06 per share, a per share increase of 12.0% as compared to 2012. |
• | The Company reported Free Cash Flow (defined as Cash Flow from Operating Activities less Capital Expenditures) for 2013 of $48.1 million, as compared to $27.1 million in 2012, while continuing to invest in capital expenditures, working capital in acquisitions, and future growth and productivity programs. |
• | During 2013, the Company invested $39.5 million in capital expenditures (included in Free Cash Flow above) primarily in support of future growth and productivity opportunities and $105.8 million in bolt-on acquisitions, net of cash acquired. |
Fourth Quarter 2013 Financial Results - From Continuing Operations
• | TriMas reported record fourth quarter net sales of $323.4 million, an increase of 7.4% as compared to $301.0 million in fourth quarter 2012, as a result of additional sales from bolt-on acquisitions, as well as market share gains, new product introductions and geographic expansion. These sales increases were partially offset by approximately $3.4 million of unfavorable currency exchange. |
• | The Company reported operating profit of $11.9 million in fourth quarter 2013, as compared to operating profit of $19.3 million during fourth quarter 2012. Excluding Special Items(1) related to facility consolidation and relocation projects within the Cequent Americas segment, fourth quarter 2013 operating profit would have been $24.9 million. Fourth quarter 2013 operating profit margin was impacted by a less favorable product sales mix, costs related to recent acquisitions including purchase accounting related adjustments, new plant and equipment ramp-up costs, |
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and higher costs associated with our global growth initiatives. The Company continued to generate significant savings from capital investments, productivity projects and lean initiatives, which funded growth initiatives and offset economic cost increases.
• | Excluding noncontrolling interests related to Arminak & Associates, the Company reported fourth quarter 2013 income from continuing operations of $6.9 million, or $0.15 per diluted share, as compared to a loss from continuing operations of $13.9 million, or a loss of $0.35 per diluted share, during fourth quarter 2012. Excluding Special Items(1) related to business restructuring costs, debt extinguishment costs, the termination of interest rate swaps and tax restructuring, fourth quarter 2013 income from continuing operations would have been $14.1 million, or $0.31 per diluted share, as compared to $0.33 in fourth quarter 2012, while absorbing 13.8% higher weighted average shares outstanding in fourth quarter 2013 as compared to fourth quarter 2012. |
• | The Company generated Free Cash Flow (defined as Cash Flow from Operating Activities less Capital Expenditures) of $42.0 million for fourth quarter 2013, as compared to $48.1 million in fourth quarter 2012. |
Financial Position
TriMas reported total indebtedness of $305.7 million as of December 31, 2013, as compared to $422.4 million as of December 31, 2012. TriMas ended 2013 with $387.3 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
Business Segment Results - From Continuing Operations(2)
Packaging - (Consists of Rieke Corporation including Arminak & Associates, Innovative Molding and the foreign subsidiaries of Englass, Rieke Germany and Rieke China)
Net sales for fourth quarter and full year 2013 increased 7.3% and 13.8%, respectively, as compared to the year ago periods, 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. This increase was partially offset by a decrease in industrial closures sales which is related to the divestiture of the Italian rings and levers business during third quarter 2013. Operating profit and the related margin percentage for the quarter and full year increased due to higher sales levels, margin improvement of the acquired businesses resulting from investments in capital projects and productivity efforts, lower acquisition costs and a gain recognized on the sale of our business in Italy, partially offset by incremental investments to penetrate the Asian specialty dispensing market. 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, Basrur, CIFAL, Gasket Vedações Técnicas and Wulfrun)
Fourth quarter net sales decreased 6.0% as compared to the year ago period, primarily due to the significant slow down and postponement of turnaround activity and maintenance spend in the North American refining and petrochemical end markets, partially offset by sales related to acquisitions. Full year 2013 net sales increased 8.1% primarily due to the results of recent acquisitions and increased sales to engineering and construction customers. This was partially offset by the reduction in customer shutdown activity at refineries and petrochemical plants compared to the prior year, and the impact of unfavorable currency exchange. Operating profit and the related margin percentage for the quarter and year both decreased as manufacturing productivity was more than offset by the impact of weaker refinery shutdown activity, which resulted in a less favorable product mix shift toward standard gaskets and bolts, lower fixed cost absorption and higher selling, general and administrative expenses in support of branch expansion and acquisitions during 2013. The Company continues to optimize its sales and service branch network in support of its global customers, while focusing on improving margins.
Aerospace & Defense - (Consists of Monogram Aerospace Fasteners, Mac Fasteners, Martinic Engineering and NI Industries)
Net sales for fourth quarter and full year 2013 increased 48.4% and 29.5%, respectively, as compared to the year ago periods, primarily due to the results of the acquisitions of Martinic Engineering in January 2013 and Mac Fasteners in October 2013, improved demand for blind bolts and one-sided installation products resulting from new programs with airplane frame manufacturers and the recent introduction of new products. Fourth quarter 2013 operating profit and
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the related margin percentage improved primarily due to higher sales levels and the ramp-up of production at the Tempe, Arizona collar manufacturing facility. Full year 2013 operating profit increased primarily as a result of higher sales levels in the aerospace business. The related margin percentage decreased as a result of manufacturing and new facility inefficiencies in the aerospace business, purchase accounting adjustments and acquisition costs, and a less favorable product sales mix due to the acquired businesses having lower margins than the remainder of the aerospace business. The Company continues to invest in this segment by developing and marketing highly-engineered products for aerospace applications and leveraging bolt-on acquisitions, as well as managing existing defense contracts.
Engineered Components - (Consists of Arrow Engine and Norris Cylinder)
Net sales for fourth quarter and full year 2013 declined 9.3% and 7.3%, respectively, as compared to the year ago periods, 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. Sales of industrial cylinders, however, increased for the full year as compared to 2012 primarily due to growth in international markets and continued domestic market share gains. Fourth quarter 2013 operating profit declined compared to the prior year period due to lower sales levels, while the related margin percentage increased slightly due to efforts to reduce costs in the engine business. Full year 2013 operating profit and the related margin percentage declined compared to the prior year period primarily due to a less favorable product sales mix and lower fixed cost absorption in the engine business, which was partially offset by sales increases and productivity initiatives 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)
Net sales for fourth quarter and full year 2013 increased 17.4% and 17.9%, respectively, as compared to the year ago periods, primarily due to the results of its continued geographic expansion, including the April 2013 acquisition of C.P. Witter, the July 2013 acquisition of the towing assets of AL-KO, the full year effect of the July 2012 acquisition of Trail Com and new business awards in the Asian region, partially offset by the negative impact of currency exchange. Fourth quarter operating profit and the related margin percentage, excluding Special Items(1), increased primarily due to the higher sales levels, facility efficiency gains following the completion of the consolidation of two manufacturing facilities into one new facility and a gain on the sale of a facility in Australia. Full year 2013 operating profit and the related margin percentage declined as the profit earned on the increased sales levels and facility efficiency gains was more than offset by less favorable product sales mix and incremental costs associated with our recent acquisitions. The Company continues to reduce fixed costs and leverage Cequent's strong brand positions 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 Americas)
Net sales for fourth quarter and full year 2013 increased 10.3% and 9.2%, respectively, compared to the year ago periods, resulting primarily from increased sales within the retail, auto original equipment and aftermarket channels. Sales increases were largely the result of new product introductions, continued market share gains and bolt-on acquisitions. Fourth quarter operating profit and related margin percentage declined compared to fourth quarter 2012, excluding Special Items(1) related to the costs incurred associated with the relocation of certain production to a lower cost country and the consolidation of the broom and brush businesses, as increased sales levels and improved sourcing and productivity initiatives, were more than offset by a less favorable product mix, acquisition related costs and increased selling, general and administrative expenses in support of growth initiatives. Full year operating profit decreased slightly and the related margin percentage declined, excluding Special Items(1), due to a less favorable product sales mix in 2013, resulting from incremental sales from the retail broom and brush line, recent acquisitions in Brazil, which yield lower margins than certain of the other products, as well as increased freight costs in our retail business. 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.
2014 Outlook
The Company is estimating that 2014 sales will increase 6% to 8% as compared to 2013. The Company expects full-year 2014 diluted earnings per share from continuing operations to be between $2.15 and $2.25 per share, while absorbing approximately 9% higher weighted average shares outstanding for 2014 as compared to 2013 and excluding
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any future events that may be considered Special Items. In addition, the Company expects 2014 Free Cash Flow, defined as Cash Flow from Operating Activities less Capital Expenditures, to be between $55 million and $65 million.
Conference Call Information
TriMas Corporation will host its fourth quarter and full year 2013 earnings conference call today, Thursday, February 20, 2014, at 10:00 a.m. Eastern Time. The call-in number is (888) 539-3678. Participants should request to be connected to the TriMas Corporation fourth quarter and full year 2013 earnings conference call (Conference ID #3029887). The conference call will also be simultaneously webcast via TriMas' website at www.trimascorp.com, under the "Investors" section, with an accompanying slide presentation. A replay of the conference call will be available on the TriMas website or by dialing (888) 203-1112 (Replay Passcode #3029887) beginning February 20, 2014 at 3:00 p.m. Eastern Time through February 27, 2014 at 3:00 p.m. Eastern Time.
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 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, 2013, 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 6,000 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 net income (loss) 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
(dollars in thousands)
December 31, 2013 | December 31, 2012 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 27,000 | $ | 20,580 | ||||
Receivables, net | 180,210 | 150,390 | ||||||
Inventories | 270,690 | 238,020 | ||||||
Deferred income taxes | 18,340 | 18,270 | ||||||
Prepaid expenses and other current assets | 18,770 | 10,530 | ||||||
Total current assets | 515,010 | 437,790 | ||||||
Property and equipment, net | 206,150 | 185,030 | ||||||
Goodwill | 309,660 | 270,940 | ||||||
Other intangibles, net | 219,530 | 206,160 | ||||||
Other assets | 50,430 | 31,040 | ||||||
Total assets | $ | 1,300,780 | $ | 1,130,960 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 10,290 | $ | 14,370 | ||||
Accounts payable | 166,090 | 158,410 | ||||||
Accrued liabilities | 85,130 | 74,420 | ||||||
Total current liabilities | 261,510 | 247,200 | ||||||
Long-term debt | 295,450 | 408,070 | ||||||
Deferred income taxes | 64,940 | 60,370 | ||||||
Other long-term liabilities | 99,990 | 84,960 | ||||||
Total liabilities | 721,890 | 800,600 | ||||||
Redeemable noncontrolling interests | 29,480 | 26,780 | ||||||
Total shareholders' equity | 549,410 | 303,580 | ||||||
Total liabilities and shareholders' equity | $ | 1,300,780 | $ | 1,130,960 | ||||
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TriMas Corporation
Consolidated Statement of Operations
(dollars in thousands, except per share amounts)
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(unaudited) | ||||||||||||||||
Net sales | $ | 323,430 | $ | 301,040 | $ | 1,394,860 | $ | 1,272,910 | ||||||||
Cost of sales | (250,890 | ) | (222,220 | ) | (1,041,460 | ) | (929,150 | ) | ||||||||
Gross profit | 72,540 | 78,820 | 353,400 | 343,760 | ||||||||||||
Selling, general and administrative expenses | (62,100 | ) | (59,440 | ) | (244,640 | ) | (216,170 | ) | ||||||||
Net gain (loss) on dispositions of property and equipment | 1,420 | (50 | ) | 11,770 | 280 | |||||||||||
Operating profit | 11,860 | 19,330 | 120,530 | 127,870 | ||||||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (2,010 | ) | (5,380 | ) | (18,330 | ) | (35,800 | ) | ||||||||
Debt extinguishment costs | (2,460 | ) | (40,250 | ) | (2,460 | ) | (46,810 | ) | ||||||||
Other expense, net | (2,340 | ) | (590 | ) | (1,980 | ) | (3,000 | ) | ||||||||
Other expense, net | (6,810 | ) | (46,220 | ) | (22,770 | ) | (85,610 | ) | ||||||||
Income (loss) from continuing operations before income tax expense | 5,050 | (26,890 | ) | 97,760 | 42,260 | |||||||||||
Income tax benefit (expense) | 3,230 | 13,800 | (18,390 | ) | (5,970 | ) | ||||||||||
Income (loss) from continuing operations | 8,280 | (13,090 | ) | 79,370 | 36,290 | |||||||||||
Income from discontinued operations, net of income taxes | — | — | 700 | — | ||||||||||||
Net income (loss) | $ | 8,280 | $ | (13,090 | ) | $ | 80,070 | $ | 36,290 | |||||||
Less: Net income attributable to noncontrolling interests | 1,430 | 850 | 4,520 | 2,410 | ||||||||||||
Net income (loss) attributable to TriMas Corporation | 6,850 | (13,940 | ) | 75,550 | 33,880 | |||||||||||
Basic earnings (loss) per share attributable to TriMas Corporation: | ||||||||||||||||
Continuing operations | $ | 0.15 | $ | (0.36 | ) | $ | 1.83 | $ | 0.90 | |||||||
Discontinued operations | — | — | 0.02 | — | ||||||||||||
Net income (loss) per share | $ | 0.15 | $ | (0.36 | ) | $ | 1.85 | $ | 0.90 | |||||||
Weighted average common shares - basic | 44,698,948 | 39,101,163 | 40,926,257 | 37,520,935 | ||||||||||||
Diluted earnings (loss) per share attributable to TriMas Corporation: | ||||||||||||||||
Continuing operations | $ | 0.15 | $ | (0.35 | ) | $ | 1.81 | $ | 0.89 | |||||||
Discontinued operations | — | — | 0.02 | — | ||||||||||||
Net income (loss) per share | $ | 0.15 | $ | (0.35 | ) | $ | 1.83 | $ | 0.89 | |||||||
Weighted average common shares - diluted | 45,159,205 | 39,680,565 | 41,395,706 | 37,949,021 | ||||||||||||
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TriMas Corporation
Consolidated Statement of Cash Flow
(dollars in thousands)
Twelve months ended December 31, | ||||||||
2013 | 2012 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 80,070 | $ | 36,290 | ||||
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: | ||||||||
Gain on dispositions of businesses and other assets | (11,770 | ) | (280 | ) | ||||
Gain on bargain purchase | (2,880 | ) | — | |||||
Depreciation | 30,810 | 25,050 | ||||||
Amortization of intangible assets | 19,770 | 19,820 | ||||||
Amortization of debt issue costs | 1,780 | 2,490 | ||||||
Deferred income taxes | (8,800 | ) | (8,330 | ) | ||||
Non-cash compensation expense | 9,200 | 9,280 | ||||||
Excess tax benefits from stock based compensation | (1,550 | ) | (2,730 | ) | ||||
Debt extinguishment costs | 2,460 | 46,810 | ||||||
Increase in receivables | (25,580 | ) | (3,800 | ) | ||||
Increase in inventories | (10,690 | ) | (48,010 | ) | ||||
(Increase) decrease in prepaid expenses and other assets | (2,380 | ) | 620 | |||||
Increase (decrease) in accounts payable and accrued liabilities | 7,800 | (3,700 | ) | |||||
Other, net | (630 | ) | (290 | ) | ||||
Net cash provided by operating activities, net of acquisition impact | 87,610 | 73,220 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (39,490 | ) | (46,120 | ) | ||||
Acquisition of businesses, net of cash acquired | (105,790 | ) | (89,880 | ) | ||||
Net proceeds from disposition of businesses and other assets | 14,940 | 3,000 | ||||||
Net cash used for investing activities | (130,340 | ) | (133,000 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from sale of common stock in connection with the Company's equity offering, net of issuance costs | 174,670 | 79,040 | ||||||
Proceeds from borrowings on term loan facilities | 359,470 | 584,670 | ||||||
Repayments of borrowings on term loan facilities | (587,500 | ) | (404,770 | ) | ||||
Proceeds from borrowings on revolving credit and accounts receivable facilities | 1,222,980 | 724,500 | ||||||
Repayments of borrowings on revolving credit and accounts receivable facilities | (1,113,910 | ) | (706,500 | ) | ||||
Repurchase of 93/4% senior secured notes | — | (250,000 | ) | |||||
Senior secured notes redemption premium and debt financing fees | (3,610 | ) | (42,150 | ) | ||||
Distributions to noncontrolling interests | (2,710 | ) | (1,260 | ) | ||||
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 | (4,440 | ) | (990 | ) | ||||
Proceeds from exercise of stock options | 1,620 | 6,170 | ||||||
Excess tax benefits from stock based compensation | 1,550 | 2,730 | ||||||
Net cash provided by (used for) financing activities | 49,150 | (8,560 | ) | |||||
Cash and Cash Equivalents: | ||||||||
Increase (decrease) for the year | 6,420 | (68,340 | ) | |||||
At beginning of year | 20,580 | 88,920 | ||||||
At end of year | $ | 27,000 | $ | 20,580 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 16,750 | $ | 31,300 | ||||
Cash paid for income taxes | $ | 37,700 | $ | 25,820 | ||||
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TriMas Corporation
Company and Business Segment Financial Information
Continuing Operations
(Unaudited - dollars in thousands)
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Packaging | ||||||||||||||||
Net sales | $ | 78,220 | $ | 72,910 | $ | 313,220 | $ | 275,160 | ||||||||
Operating profit | $ | 18,220 | $ | 12,850 | $ | 83,770 | $ | 57,550 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Release of historical translation adjustments related to the sale of Italian business | $ | — | — | (7,910 | ) | — | ||||||||||
Excluding Special Items, operating profit would have been | $ | 18,220 | 12,850 | 75,860 | 57,550 | |||||||||||
Energy | ||||||||||||||||
Net sales | $ | 44,160 | $ | 46,990 | $ | 205,580 | $ | 190,210 | ||||||||
Operating profit (loss) | $ | (3,910 | ) | $ | 3,290 | $ | 8,620 | $ | 17,810 | |||||||
Aerospace & Defense | ||||||||||||||||
Net sales | $ | 30,540 | $ | 20,580 | $ | 101,790 | $ | 78,580 | ||||||||
Operating profit | $ | 8,430 | $ | 5,110 | $ | 23,760 | $ | 20,820 | ||||||||
Engineered Components | ||||||||||||||||
Net sales | $ | 41,540 | $ | 45,820 | $ | 185,370 | $ | 200,000 | ||||||||
Operating profit | $ | 5,000 | $ | 5,370 | $ | 19,450 | $ | 27,990 | ||||||||
Cequent APEA | ||||||||||||||||
Net sales | $ | 40,290 | $ | 34,330 | $ | 151,620 | $ | 128,560 | ||||||||
Operating profit | $ | 4,620 | $ | 3,300 | $ | 13,920 | $ | 12,300 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | — | $ | 270 | $ | — | $ | 3,150 | ||||||||
Excluding Special Items, operating profit would have been: | $ | 4,620 | $ | 3,570 | $ | 13,920 | $ | 15,450 | ||||||||
Cequent Americas | ||||||||||||||||
Net sales | $ | 88,680 | $ | 80,410 | $ | 437,280 | $ | 400,400 | ||||||||
Operating profit (loss) | $ | (12,180 | ) | $ | (670 | ) | $ | 8,850 | $ | 27,420 | ||||||
Special Items to consider in evaluating operating profit (loss): | ||||||||||||||||
Severance and business restructuring costs | $ | 13,000 | $ | 3,690 | $ | 25,570 | $ | 7,530 | ||||||||
Excluding Special Items, operating profit would have been: | $ | 820 | $ | 3,020 | $ | 34,420 | $ | 34,950 | ||||||||
Corporate Expenses | ||||||||||||||||
Operating loss | $ | (8,320 | ) | $ | (9,920 | ) | $ | (37,840 | ) | $ | (36,020 | ) | ||||
Total Company | ||||||||||||||||
Net sales | $ | 323,430 | $ | 301,040 | $ | 1,394,860 | $ | 1,272,910 | ||||||||
Operating profit | $ | 11,860 | $ | 19,330 | $ | 120,530 | $ | 127,870 | ||||||||
Total Special Items to consider in evaluating operating profit: | $ | 13,000 | $ | 3,960 | $ | 17,660 | $ | 10,680 | ||||||||
Excluding Special Items, operating profit would have been: | $ | 24,860 | $ | 23,290 | $ | 138,190 | $ | 138,550 | ||||||||
9
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, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Income (loss) from continuing operations, as reported | $ | 8,280 | $ | (13,090 | ) | $ | 79,370 | $ | 36,290 | |||||||
Less: Net income attributable to noncontrolling interests | 1,430 | 850 | 4,520 | 2,410 | ||||||||||||
Income (loss) from continuing operations attributable to TriMas Corporation | $ | 6,850 | $ | (13,940 | ) | $ | 74,850 | $ | 33,880 | |||||||
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 | ) | — | |||||||||||
Severance and business restructuring costs | 7,170 | 2,630 | 15,860 | 7,150 | ||||||||||||
Debt extinguishment costs | 1,530 | 26,660 | 1,530 | 31,060 | ||||||||||||
Net gain on termination of interest rate swaps | (1,410 | ) | — | (1,410 | ) | — | ||||||||||
Tax restructuring | — | (2,400 | ) | 2,200 | (2,400 | ) | ||||||||||
Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been | $ | 14,140 | $ | 12,950 | $ | 85,120 | $ | 69,690 | ||||||||
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Diluted earnings (loss) per share from continuing operations attributable to TriMas Corporation, as reported | $ | 0.15 | $ | (0.35 | ) | $ | 1.81 | $ | 0.89 | |||||||
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 | ) | — | |||||||||||
Severance and business restructuring costs | 0.16 | 0.07 | 0.38 | 0.19 | ||||||||||||
Debt extinguishment costs | 0.03 | 0.67 | 0.04 | 0.82 | ||||||||||||
Net gain on termination of interest rate swaps | (0.03 | ) | — | (0.03 | ) | — | ||||||||||
Tax restructuring | — | (0.06 | ) | 0.05 | (0.06 | ) | ||||||||||
Excluding Special Items, EPS from continuing operations would have been | $ | 0.31 | $ | 0.33 | $ | 2.06 | $ | 1.84 | ||||||||
Weighted-average shares outstanding for the three and twelve months ended December 31, 2013 and 2012 | 45,159,205 | 39,680,565 | 41,395,706 | 37,949,021 | ||||||||||||
10
Fourth Quarter and Full Year 2013 Earnings Presentation February 20, 2014 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, 2013, 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 fourth quarter and full year 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 – 2013 Accomplishments • Record sales of approximately $1.4 billion – growth of nearly 10% compared to 2012 – Results from bolt-on acquisitions adding to top-line – Investments in new products and higher growth markets generating results • Continued investments in short and long-term growth and productivity programs • Increased focus on lean initiatives • Completed 10 bolt-on acquisitions (including 8 non-U.S.); robust pipeline of strategic acquisitions • Moved and consolidated multiple plants for cost reductions • Enhanced capital structure – September equity offering and October refinance provide additional flexibility and cost reduction Many accomplishments in 2013 – will continue to drive shareholder value into the future. 4
Opening Remarks – 2013 Results • Improved 2013 income(1) by 22% as compared to 2012 • Improved diluted EPS(1) by 12%, while absorbing costs related to numerous acquisitions and 9% higher weighted average shares outstanding for 2013 as compared to 2012 • Challenges in energy end markets impacted fourth quarter and 2013 results • Executing on action plans to improve profitability at Lamons (Energy) and Arrow (Engineered Components) • Several businesses delivered record sales and/or profits Challenges in energy end markets; actions in place to adapt and improve these businesses. 5 (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.
Financial Highlights
Fourth Quarter Summary • Sales increased 7.4% as compared to Q4 2012 as a result of bolt-on acquisitions and organic growth initiatives, offsetting challenges in energy end markets • Operating profit was impacted by a less favorable product sales mix in many of the businesses, costs related to acquisitions and global growth initiatives, and facility consolidation and relocation projects • Q4 income(1) increased 8.5%, while Q4 EPS(1) decreased due to almost 14% higher weighted average shares outstanding in Q4 2013 as compared to Q4 2012 • Q4 Free Cash Flow(2) and Total Debt were as expected 7 (1) Defined as operating profit, excluding “Special Items,” and 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) ( f ro m co ntinuing o perat io ns) Q4 2013 Q4 2012 % Chg Revenue 323.4$ 301.0$ 7.4% Operating Profit 11.9$ 19.3$ -38.3% Excl. Total Special Items (1) , Operating Profit would have been: 24.9$ 23.3$ 6.9% Excl. Total Special Items (1) , Operating Profit margin would have been: 7.7% 7.7% nm Income (Loss) 8.3$ (13.1)$ 163.3% Income (loss) attributable to TriM as Corporation 6.9$ (13.9)$ 149.6% Excl. Total Special Items (1) , Income attributable to TriM as Corporation would have been: 14.1$ 13.0$ 8.5% Diluted earnings (loss) per share, attributable to TriMas Corporation 0.15$ (0.35)$ 142.9% Excl. Total Special Items (1) , diluted earnings per share attributable to TriM as Corporation would have been: 0.31$ 0.33$ -6.1% Free Cash Flow (2) 42.0$ 48.1$ -12.8% Total Debt 305.7$ 422.4$ -27.6%
2013 Summary • Sales increased 9.6% as compared to 2012 – sales increased in five of six segments • Operating profit and the related margin were impacted by the favorable effect of ongoing productivity initiatives and operating leverage gained on higher sales levels and gains from sale of property/business, but offset by a less favorable product sales mix in many of the businesses, costs related to acquisitions and growth initiatives, and facility consolidation and relocation projects • 2013 income(1) and EPS(1) increased 22.1% and 12.0%, respectively, primarily due to lower interest expense in 2013 as compared to 2012 – offset the impact of 9% higher weighted average shares outstanding in 2013 as compared to 2012 • Free Cash Flow(2) significantly ahead of 2012 • Total Debt down 27.6% as compared to December 31, 2012 8 (1) Defined as operating profit, excluding “Special Items,” and 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) ( f ro m co ntinuing o perat io ns) FY 2013 FY 2012 % Chg Revenue 1,394.9$ 1,272.9$ 9.6% Operating Profit 120.5$ 127.9$ -5.7% Excl. Total Special Items (1) , Operating Profit would have been: 138.2$ 138.6$ nm Excl. Total Special Items (1) , Operating Profit margin would have been: 9.9% 10.9% -100 bps Inco e 79.4$ 36.3$ 118.7% Income attributable to TriM as Corporation 74.9$ 33.9$ 120.9% Excl. Total Special Items (1) , Income attributable to TriM as Corporation would have been: 85.1$ 69.7$ 22.1% Diluted earnings per share, attributable to TriMas Corporation 1.81$ 0.89$ 103.4% Excl. Total Special Items (1) , diluted earnings per share attributable to TriM as Corporation would have been: 2.06$ 1.84$ 12.0% Free Cash Flow (2) 48.1$ 27.1$ 77.6% Total Debt 305.7$ 422.4$ -27.6%
Operating Profit Margin Bridge: 2012 to 2013 9 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. Opportunities • Address mix through synergies identified and lean implementation • Increase the margins of acquisitions over time Results • Accretive growth and productivity efforts contribute to margin rate and more than offset economics • Price increases more than offset commodity inflation • Manufacturing inefficiencies from short cycle schedules, rapid expansion and optimizing production • Margin decline at Arrow and Lamons due to end market challenges and resulting lower fixed cost absorption and inventory challenges FY 2012 Acquisitions Gains on business/ property sales Economics Energy end-market businesses FY 2013 Manufacturing inefficiencies Productivity & growth initiatives
10 ($ in millions) Capitalization Total Debt and Leverage Ratio (including A/R Facility) Comments: • Reduced interest expense by $17.5 million, or almost 50%, in 2013 as compared to 2012 • Q4 2013 leverage ratio of 1.67x as compared to 2.30x as of Q4 2012 • October refinance further reduced rates, extended maturities and increased financial flexibility As of December 31, 2013, TriMas had $387.3 million of cash and available liquidity under its revolving credit and accounts receivable facilities. $630 $515 $495 $470 $422 $306 1x 2x 3x 4x 5x $200 $300 $400 $500 $600 $700 YE 08 YE 09 YE 10 YE 11 YE 12 YE 13 Leve ra ge R ati o To tal D e b t Series1 Series2Total Debt Leverage Ratio
Segment Highlights
Packaging Q4 and FY 2013 Results: • Q4 and FY 2013 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 — Impacted by divestiture of Italian industrial rings and levers business during Q3 — European market appears stable, but no signs of improvement • FY 2013 operating profit(1) and margin increased primarily due to higher sales, margin improvement of Arminak and Innovative Molding resulting from investments in capital projects and productivity efforts, and gain on sale of business (Quarterly results unaudited, dollars in millions) Key Initiatives: • Target specialty dispensing and closure products in higher growth end markets — Beverage, food, nutrition, personal care and pharmaceutical • Increase focus on Asian market and cultivate other emerging market opportunities • Complete second plant in China to improve cost structure and flexibility • 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 12 Net Sales Q4-12 Q4-13 $72.9 $78.2 7.3% 2012 2013 13.8% $275.2 $313.2 Operating Profit (1) Q4-12 Q4-13 $12.9 $18.2 41.8% 2012 2013 31.8% $57.6 $75.9 (1) Excluding “Special Items” for each period which are provided in the Appendix.
Energy Q4 and FY 2013 Results: • Q4 sales decreased due the significant slow down and postponement of turnaround activity and maintenance spend in refining and petrochemical markets • Q4 operating profit and margin was negatively impacted by slow down, which resulted in less favorable product mix, and cost structure and inventory challenges in Brazil • FY 2013 sales increased as a result of recent bolt-on acquisitions and increased sales generated by international locations • FY 2013 operating profit and the related margin percentage decreased as the margin impact of higher sales and manufacturing productivity was more than offset by the items mentioned above Key Initiatives: • Replicate U.S. branch strategy – expand business capabilities with major customers globally • Optimize geographic footprint by selling all products at all locations • Execute on growth and profitability initiatives in Brazil and other emerging markets • Increase sales of highly-engineered specialty products • Vertically integrate, maximize supply chain and drive lean initiatives to lower costs and improve margins 13 Net Sales Q4-12 Q4-13 $47.0 $44.2 -6.0% 2012 2013 8.1% $190.2 $205.6 Operating Profit Q4-12 Q4-13 unfav 2012 2013 -51.6% $3.3 $17.8 $8.6 $(3.9) (Quarterly results unaudited, dollars in millions)
Aerospace & Defense Key Initiatives: • Expand aerospace fastener product lines to increase content and applications • Leverage positive end market trends of 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 and Mac Fasteners; consider other complementary bolt-on acquisitions • Manage existing defense contracts Q4 and FY 2013 Results: • Q4 and FY 2013 sales increased in the aerospace business primarily as a result of recent acquisitions, which expand our content on aircraft, and higher blind bolt sales • Q4 operating profit and the related margin percentage increased due to higher sales levels and the ramp-up of aerospace collar production • FY 2013 operating profit increased due to higher sales levels, but the margin level decreased as a result of manufacturing and new facility inefficiencies, acquisition related costs and a less favorable product sales mix from acquisitions • Aircraft frame manufacturers continue to ramp-up build rates with growth in backlog • Acquired Mac Fasteners, a leading manufacturer of aerospace fasteners, in October 2013 14 Net Sales Q4-12 Q4-13 $20.6 $30.5 48.4% 2012 2013 $78.6 $101.8 29.5% Operating Profit Q4-12 Q4-13 65.0% 2012 2013 14.1% $5.1 $8.4 $20.8 $23.8 (Quarterly results unaudited, dollars in millions)
Engineered Components 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 • Integrate recent cylinder acquisition to leverage cost structure • Continue to expand product offering and geographies • Continue to improve working capital turnover Q4 and FY 2013 Results: • Sales of engines, compressors and other well-site content decreased for both periods due to reduced levels of drilling and well completions • FY 2013 sales of industrial cylinders increased primarily due to market share gains, both domestically and internationally, as well as new products – experienced a slow down in sales in Q4 2013 compared to Q4 2012 • 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 • Acquired small and medium high pressure cylinder assets from Worthington in November 2013 15 Net Sales 2012 2013Q4-12 Q4-13 $45.8 $41.5 -9.3% -7.3% $200.0 $185.4 Operating Profit Q4-12 Q4-13 -6.9% 2012 2013 -30.5% $5.4 $5.0 $28.0 $19.5 (Quarterly results unaudited, dollars in millions)
Cequent (APEA & Americas) $46.4 Q4 and FY 2013 Results: • Q4 and FY 2013 sales in Americas increased primarily due to higher sales within the automotive OE, aftermarket and retail channels • Q4 and FY 2013 Americas operating profit(1) and related margin percentage declined as increased sales levels and productivity initiatives were more than offset by a less favorable product mix, acquisition related costs, higher freight costs and increased SG&A in support of growth • Q4 and FY 2013 APEA sales increased due to continued geographic expansion including its recent acquisitions, partially offset by the negative impact of currency exchange • Q4 APEA operating profit(1) and margin increased due to higher sales volumes, facility efficiency gains, and gain on sale of property, partially offset by acquisition impacts • FY 2013 APEA operating profit(1) and margin decreased as profit from higher sales volumes was offset by additional costs and less favorable product sales mix 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 • 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 16 APEA Americas (1) Excluding “Special Items” for each period which are provided in the Appendix. $34.3 $40.3 $128.6 $151.6 $80.4 $88.7 $400.4 $437.3 Net Sales Q4-12 Q4-13 $129.0 2012 2013 $529.0 $588.9 11.3% $114.7 12.4% $3.6 $4.6 $15.5 $13.9 $3.0 $0.8 $35.0 $34.4 Operating Profit (1) Q4-12 Q4-13 $5.4 -17.5% 2012 2013 -4.1% $6.6 $50.4 $48.3 (Quarterly results unaudited, dollars in millions)
Outlook and Summary
Strategic Aspirations Strategic aspirations are the foundation for the future. 18 • 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
Long Term Margin Expansion • Grow Packaging and Aerospace revenue twice as fast as the rest of TriMas; hold mid-20s operating profit percentage • Elevate acquisitions to core business margins via productivity, consolidations and synergies • Achieve historically demonstrated margins at all businesses • Increase Cequent operating profit to the low-teens • Headquarters overhead grows slower than revenue growth Productivity is vital for margin expansion to the mid-teens. Yields peer group operating profit margin over time 19
Driving Long Term Productivity Gains 20 2010 •Global Sourcing Organization formation •Low cost country sourcing •Aggregate spend •Back office sourcing •Working capital improvements 2011 •Emerging markets •New low cost countries •Functional summits launched •National contracts •Capital equipment leverage •Commodity buying 2012 •TriMas Operating System •Value stream mapping •Acquisition support team •Logistics cost focus •Problem solving tools •ERP consolidation 2013 •Lean enterprise •Six Sigma •People engagement through continuous improvement •Hong Kong sourcing office •Trade compliance •Sales, inventory and operating plans (SIOP) •Business to business sharing •Re-launch Global Sourcing Organization as Global Services Organization 2014 •India Technical Center •Supplier Executive Council •Acquisition integration cross-functional teams •Product Launch Readiness program •Quality/Engineering Council for quality improvement •“Design for Cost” initiative •Additional Green and Black Belt certifications Continue to drive 3% to 5% productivity gains annually.
2014 Key Initiatives Initiatives in place to drive revenue growth and margin expansion. 21 Packaging • Complete second plant in China to improve cost structure and flexibility • Continue to globalize; grow in emerging markets and expand sales of acquired products Energy • Optimize geographic footprint; all products at all locations • Vertically integrate to lower costs • Grow higher margin products and applications Aerospace & Defense • Ramp-up Arizona collar facility and obtain more approvals •Maintain quality and continue to decrease lead times in acquisitions for revenue growth • Continue to invest to match capacity to demand Engineered Components • Integrate recent cylinder acquisition to leverage cost structure • Increase margins via pricing, mix and cost out • Use cost position to capture export sales Cequent APEA • Leverage broad product portfolio and geographic footprint to supply global OES customers • Capitalize on new lower cost structure in Australia and South Africa Cequent Americas • Complete supply chain moves (suppliers and warehouses) as new plants in Mexico are in full production • Capitalize on Brazil market position • Continue to grow share via full product line, new products and customer service TriMas • Continue lean training and project implementation • Leverage purchases – services, outsourced support, new locations • Utilize India technical office •Manage tax rates and increased currency exposure
2014 Outlook Outlook as of 2/20/14 Sales Growth 6% to 8% Earnings Per Share, diluted(1) $2.15 to $2.25 Free Cash Flow(2) $55 to $65 million (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. Line of sight on outlook ranges; will provide quarterly updates. 22
2013 to 2014 EPS Bridge 2013 EPS(1) Higher estimated tax rate Share Count(2) 2014 EPS(1) $2.06 ($0.18) ($0.12) $0.53 - $0.63 Business Operations $0.05 $2.15 - $2.25 Commodity Inflation Investments in Growth & Future Productivity Productivity ($0.19) Other non- operational items Price Existing Acquisition Improvements Faster Program Implementation Interest Reduction 2014 Opportunities/Risks: Energy End Markets Currency Rates (1) Defined as diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” 2014 EPS is based on management’s expectations. (2) Majority of increase resulting from September 16, 2013 equity offering. 23
TriMas Value Proposition Growth > End Markets Clear goals, high-performance teams and streamlined processes drive enhanced results. 24 • Multiple projects in all businesses • Geographic • Product • Customer penetration • Acquisitions • Services Stability • Energy • Aerospace • Industrial • Consumer • Agricultural • Geographic diversity • Customer diversity Funds Growth & Margin Expansion • Rationalization • Optimization of global supply chain • Lean initiatives • Better cost positions • Non-operational efficiencies • Earnings growth > sales growth • Strong cash flow dynamics • Deleverage • Increased return on capital Balanced Portfolio Productivity Growth Opportunities Increased Enterprise Value
Questions & Answers
Appendix
2014 Additional Assumptions 2014 Estimates Interest expense ~$17 – $18 million Capital expenditures ~4% – 4.5% of sales Tax rate ~27% – 29% 27
Condensed Consolidated Balance Sheet 28 December 31, December 31, 2013 2012 Assets Current assets: Cash and cash equivalents............................................................. 27,000$ 20,580$ Receivables, net............................................................................ 180,210 150,390 Inventories..................................................................................... 270,690 238,020 Deferred income taxes................................................................... 18,340 18,270 Prepaid expenses and other current assets...................................... 18,770 10,530 Total current assets.................................................................... 515,010 437,790 Property and equipment, net.............................................................. 206,150 185,030 Goodwill........................................................................................... 309,660 270,940 Other intangibles, net........................................................................ 219,530 206,160 Other assets.................................................................................... 50,430 31,040 Total assets............................................................................... 1,300,780$ 1,130,960$ Liabilities and Shareholders' Equity Current liabilities: Current maturities, long-term debt................................................... 10,290$ 14,370$ Accounts payable.......................................................................... 166,090 158,410 Accrued liabilities.......................................................................... 85,130 74,420 Total current liabilities................................................................. 261,510 247,200 Long-term debt................................................................................. 295,450 408,070 Deferred income taxes...................................................................... 64,940 60,370 Other long-term liabilities................................................................... 99,990 84,960 Total liabilities............................................................................ 721,890 800,600 Redeemable noncontrolling interests............................................ 29,480 26,780 Total shareholders' equity............................................................ 549,410 303,580 Total liabilities and shareholders' equity........................................ 1,300,780$ 1,130,960$ (Dollars in thousands)
Consolidated Statement of Income (Dollars in thousands, except for per share amounts) 29 Three months ended Twelve months ended 2013 2012 2013 2012 Net sales................................................................................................. 323,430$ 301,040$ 1,394,860$ 1,272,910$ Cost of sales............................................................................................ (250,890) (222,220) (1,041,460) (929,150) Gross profit........................................................................................... 72,540 78,820 353,400 343,760 Selling, general and administrative expenses............................................... (62,100) (59,440) (244,640) (216,170) Net gain (loss) on dispositions of property and equipment............................. 1,420 (50) 11,770 280 Operating profit...................................................................................... 11,860 19,330 120,530 127,870 Other expense, net: Interest expense.................................................................................... (2,010) (5,380) (18,330) (35,800) Debt extinguishment costs..................................................................... (2,460) (40,250) (2,460) (46,810) Other expense, net................................................................................ (2,340) (590) (1,980) (3,000) Other expense, net............................................................................. (6,810) (46,220) (22,770) (85,610) Income (loss) from continuing operations before income taxes...................... 5,050 (26,890) 97,760 42,260 Income tax benefit (expense)..................................................................... 3,230 13,800 (18,390) (5,970) Income (loss) from continuing operations..................................................... 8,280 (13,090) 79,370 36,290 Income from discontinued operations, net of income tax expense.................. - - 700 - Net income (loss)...................................................................................... 8,280 (13,090) 80,070 36,290 Less: Net income attributable to noncontrolling interests.............................. 1,430 850 4,520 2,410 Net income (loss) attributable to TriMas Corporation..................................... 6,850$ (13,940)$ 75,550$ 33,880$ Earnings (loss) per share attributable to TriMas Corporation - basic: Continuing operations............................................................................. $ 0.15 $ (0.36) $ 1.83 $ 0.90 Discontinued operations......................................................................... - - 0.02 - Net income (loss) per share.................................................................... $ 0.15 $ (0.36) $ 1.85 $ 0.90 Weighted average common shares - basic 44,698,948 39,101,163 40,926,257 37,520,935 Earni gs (loss) per share attributable to TriMas Corporation - diluted: Continuing operations............................................................................. $ 0.15 $ (0.35) $ 1.81 $ 0.89 Discontinued operations......................................................................... - - 0.02 - Net income (loss) per share.................................................................... $ 0.15 $ (0.35) $ 1.83 $ 0.89 Weighted average common shares - diluted 45,159,205 39,680,565 41,395,706 37,949,021 December 31, December 31, (unaudited)
Consolidated Statement of Cash Flow (Dollars in thousands) 30 2013 2012 Cash Flows from Operating Activities: Net income......................................................................................................................... 80,070$ 36,290$ Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: Gain on dispositions of businesses and other assets........................................................... (11,770) (280) Gain on bargain purchase.................................................................................................. (2,880) - Depreciation..................................................................................................................... 30,810 25,050 Amortization of intangible assets....................................................................................... 19,770 19,820 Amortization of debt issue costs........................................................................................ 1,780 2,490 Deferred income taxes...................................................................................................... (8,800) (8,330) Non-cash compensation expense...................................................................................... 9,200 9,280 Excess tax benefits from stock based compensation........................................................... (1,550) (2,730) Debt extinguishment costs................................................................................................ 2,460 46,810 Increase in receivables...................................................................................................... (25,580) (3,800) Increase in inventories....................................................................................................... (10,690) (48,010) (Increase) decrease in prepaid expenses and other assets................................................... (2,380) 620 Increase (decrease) in accounts payable and accrued liabilities............................................ 7,800 (3,700) Other, net........................................................................................................................ (630) (290) Net cash provided by operating activities, net of acquisition impact.................................... 87,610 73,220 Cash Flows from Investing Activities: Capital expenditures......................................................................................................... (39,490) (46,120) Acquisition of businesses, net of cash acquired.................................................................. (105,790) (89,880) Net proceeds from disposition of businesses and other assets............................................. 14,940 3,000 Net cash used for investing activities............................................................................... (130,340) (133,000) Cash Flows from Financing Activities: Proceeds from sale of common stock in connection with the Company's equity offering, net of issuance costs………………………………………………………………………………………….. 174,670 79,040 Proceeds from borrowings on term loan facilities................................................................. 359,470 584,670 Repayments of borrowings on term loan facilities................................................................. (587,500) (404,770) Proceeds from borrowings on revolving credit and accounts receivable facilities...................... 1,222,980 724,500 Repayments of borrowings on revolving credit and accounts receivable facilities..................... (1,113,910) (706,500) Repurchase of 9¾% senior secured notes.......................................................................... - (250,000) Senior secured notes redemption premium and debt financing fees....................................... (3,610) (42,150) Distributions to noncontrolling interests.............................................................................. (2,710) (1,260) 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…...………………………………………………………………………………………… (4,440) (990) Proceeds from exercise of stock options............................................................................ 1,620 6,170 Excess tax benefits from stock based compensation........................................................... 1,550 2,730 Net cash provided by (used for) financing activities............................................................ 49,150 (8,560) Cash and Cash Equivalents: Increase (decrease) for the year......................................................................................... 6,420 (68,340) At beginning of year.......................................................................................................... 20,580 88,920 At end of year............................................................................................................... 27,000$ 20,580$ Supplemental disclosure of cash flow information: Cash paid for interest..................................................................................................... 16,750$ 31,300$ Cash paid for income taxes............................................................................................ 37,700$ 25,820$ Year ended December 31,
Company and Business Segment Financial Information 31 Three months ended 2013 2012 2013 2012 Packaging Net sales......................................................................................................... 78,220$ 72,910$ 313,220$ 275,160$ Operating profit................................................................................................. 18,220$ 12,850$ 83,770$ 57,550$ Special Items to consider in evaluating operating profit: Release of historical translation adjustment related to the sale of Italian business…………………...…….………….………………………………………. -$ -$ (7,910)$ -$ Excluding Special Items, operating profit would have been………………….. 18,220$ 12,850$ 75,860$ 57,550$ Energy Net sales......................................................................................................... 44,160$ 46,990$ 205,580$ 190,210$ Operating profit (loss)........................................................................................ (3,910)$ 3,290$ 8,620$ 17,810$ Aerospace & Defense Net sales......................................................................................................... 30,540$ 20,580$ 101,790$ 78,580$ Operating profit................................................................................................. 8,430$ 5,110$ 23,760$ 20,820$ Engineered Components Net sales......................................................................................................... 41,540$ 45,820$ 185,370$ 200,000$ Operating profit................................................................................................. 5,000$ 5,370$ 19,450$ 27,990$ Cequent APEA Net sales......................................................................................................... 40,290$ 34,330$ 151,620$ 128,560$ Operating profit................................................................................................. 4,620$ 3,300$ 13,920$ 12,300$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs.................................................... -$ 270$ -$ 3,150$ Excluding Special Items, operating profit would have been.............................. 4,620$ 3,570$ 13,920$ 15,450$ Cequent Americas Net sales......................................................................................................... 88,680$ 80,410$ 437,280$ 400,400$ Operating profit (loss)........................................................................................ (12,180)$ (670)$ 8,850$ 27,420$ Special Items to consider in evaluating operating profit (loss): Severance and business restructuring costs.................................................... 13,000$ 3,690$ 25,570$ 7,530$ Excluding Special Items, operating profit would have been.............................. 820$ 3,020$ 34,420$ 34,950$ Corporate Expenses Operating loss.................................................................................................. (8,320)$ (9,920)$ (37,840)$ (36,020)$ Total Company Net sales......................................................................................................... 323,430$ 301,040$ 1,394,860$ 1,272,910$ Operating profit................................................................................................. 11,860$ 19,330$ 120,530$ 127,870$ Total Special Items to consider in evaluating operating profit................................. 13,000$ 3,960$ 17,660$ 10,680$ Excluding Special Items, operating profit would have been.............................. 24,860$ 23,290$ 138,190$ 138,550$ (unaudited) December 31, December 31, Twelve months ended (Dollars in thousands)
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures 32 Three months ended Twelve months ended December 31, December 31, 2013 2012 2013 2012 Income (loss) from continuing operations, as reported………….……………………………………………………8,280$ (13,090)$ 79,370$ 36,290$ Less: Net income attributable to noncontrolling interests……….……………………………… 1,430 850 4,520 2,410 Income (loss) from continuing operations attributable to TriMas Corporation………………… 6,850 (13,940) 74,850 33,880 After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: Release of historical translation adjustment related to the sale of Italian business................ - - (7,910) - Severance and business restructuring costs..................................................................... 7,170 2,630 15,860 7,150 Debt extinguishment costs............................................................................................. 1,530 26,660 1,530 31,060 Net gain on termination of interest rate swaps................................................................... (1,410) - (1,410) - Tax restructuring............................................................................................................ - (2,400) 2,200 (2,400) Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been………………………………………………………………………………. 14,140$ 12,950$ 85,120$ 69,690$ Three months ended Twelve months ended December 31, December 31, 2013 2012 2013 2012 Diluted earnings (loss) per share from continuing operations attributable to TriMas Corporation, as reported………….……………………………………………… 0.15$ (0.35)$ 1.81$ 0.89$ After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: Release of historical translation adjustment related to the sale of Italian business................ - - (0.19) - Severance and business restructuring costs..................................................................... 0.16 0.07 0.38 0.19 Debt extinguishment costs............................................................................................. 0.03 0.67 0.04 0.82 Net gain on termination of interest rate swaps................................................................... (0.03) - (0.03) - Tax restructuring............................................................................................................ - (0.06) 0.05 (0.06) Excluding Special Items, EPS from continuing operations would have been….......... 0.31$ 0.33$ 2.06$ 1.84$ Weighted-average shares outstanding for the three months and twelve months ended December 31, 2013 and 2012…………………………………………… 45,159,205 39,680,565 41,395,706 37,949,021 2013 2012 2013 2012 Operating profit (excluding Special Items)……………………….………............................. 24,860$ 23,290$ 138,190$ 138,550$ Corporate expenses……………………………………………………………............................ 8,320 9,920 37,840 36,020 Segment operating profit (excluding Special Items)…………………............................... 33,180$ 33,210$ 176,030$ 174,570$ Segment operating profit margin (excluding Special Items)…...……............................. 10.3% 11.0% 12.6% 13.7% December 31, December 31, Three months ended Twelve months ended (Unaudited, dollars in thousands, except for per share amounts)
Enhanced Debt Structure 33 As of December 31, 2013, TriMas had $387.3 million of cash and available liquidity under its revolving credit and accounts receivable facilities. December 31, December 31, 2013 2012 Cash and Cash Equivalents……………………………..………………… 27,000$ 20,580$ Credit Agreement……………………………………….. 246,130 399,500 Receivables facility and other……………………………….. 59,610 22,940 305,740 422,440 Total Debt………………………...………………………...………………………… 305,740$ 422,440$ Key Ratios: Bank LTM EBITDA……………………………………………………………………………….……………………………………… 196,990$ 191,710$ Interest Coverage Ratio………………………………………………………………… 11.08 x 5.68 x Leverage Ratio…………………………………………………………………... 1.67 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 (Unaudited, dollars in thousands)
LTM Bank EBITDA as Defined in Credit Agreement 34 (Unaudited, dollars in thousands) 75,550$ Net income attributable to partially-owned subsidiaries................................................................. 4,520 Interest expense, net (as defined)............................................................................................... 18,330 Income tax expense.................................................................................................................. 18,390 Depreciation and amortization.................................................................................................... 50,580 Non-cash compensation expense............................................................................................... 9,200 Other non-cash expenses or losses........................................................................................... 4,180 Non-recurring expenses or costs in connection with acquisition integration.................................... 410 Debt extinguishment costs........................................................................................................ 2,460 Non-recur ing expenses or costs for cost saving projects.............................................................. 15,000 Permitted dispositions............................................................................................................... (1,550) Permitted acquisitions............................................................................................................... 6,230 EBITDA of partially-owned subsidiaries attributable to noncontrolling interest.................................. (6,310) 196,990$ (1) As defined in the Credit Agreement dated October 16, 2013 Net income attributable to TriMas Corporation for the year ended December 31, 2013 ....................... Bank EBITDA - Year Ended December 31, 2013 (1)........................................................................