TRS_033114_8K


 
UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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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) April 29, 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 April 29, 2014, reporting its financial results for the first quarter ending March 31, 2014. 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 "First Quarter 2014 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:
 
April 29, 2014
 
By:
 
/s/ David M. Wathen
 
 
 
 
Name:
 
David M. Wathen
 
 
 
 
Title:
 
Chief Executive Officer


 



TRS_033114_Exhibit 99.1


 
 
 
CONTACT:
 
 
 
Sherry Lauderback
 
 
 
VP, Investor Relations & Communications
 
 
 
(248) 631-5506
 
 
 
sherrylauderback@trimascorp.com

TRIMAS CORPORATION REPORTS RECORD FIRST QUARTER RESULTS
Company Reports Growth in Sales of 9% and Income(1) of 11% for the Quarter
Company Reaffirms 2014 Guidance
BLOOMFIELD HILLS, Michigan, April 29, 2014 - TriMas Corporation (NASDAQ: TRS) today announced financial results for the quarter ended March 31, 2014. The Company reported record first quarter net sales of $367.7 million, an increase of 8.9% compared to first quarter 2013. The Company reported first quarter 2014 net income attributable to TriMas Corporation of $18.6 million, or $0.41 per diluted share, as compared to income of $13.2 million, or $0.33 per diluted share, during first quarter 2013. Excluding Special Items(1), first quarter 2014 diluted earnings per share would have been $0.43, as compared to $0.44 in first quarter 2013, while absorbing 13.6% higher weighted average shares outstanding in first quarter 2014 as compared to first quarter 2013.

TriMas Highlights
Reported record first quarter net sales of $367.7 million, an increase of 8.9% as compared to first quarter 2013, due to results from bolt-on acquisitions and the successful execution of numerous growth initiatives.
Improved net income attributable to TriMas Corporation(1) by 10.7%, excluding the impact of Special Items, compared to first quarter 2013.
Continued initiatives to expand operating profit margins with a 30 basis point improvement, after Special Items(1), in first quarter 2014 as compared to first quarter 2013, while investing in the many recent acquisitions completed in 2013 and absorbing the lower margin rates associated with these acquisitions. The Company will continue to improve margins through a variety of initiatives.
Acquired the remaining 30% interest of Arminak & Associates, a leader in the design, manufacture and supply of foamers, lotion pumps, fine mist sprayers and other packaging solutions for the cosmetic, personal care, beauty aids and household product markets.
Reduced interest expense by more than 30% as compared to first quarter 2013. In October 2013, the Company entered into new senior secured credit facilities, which reduced interest rates, extended maturities and increased available liquidity. Also in April 2014, the Company amended its $105.0 million accounts receivable facility to lower rates and extend the maturity until October 2018.
Continued to invest in a lean and flexible manufacturing footprint to optimize manufacturing costs long-term, add needed capacity, enhance customer service and support future growth.

"We are off to a good start in 2014 as our team is focused on the many growth and margin improvement programs in each of our businesses and headquarters," said David Wathen, TriMas President and Chief Executive Officer. "These initiatives contributed positively to our quarter, and will also position TriMas for continued sales and earnings growth, driving additional shareholder value into the future. During the quarter, we achieved 8.9% sales growth, despite the challenges we continued to face in our energy end markets, and the reduction of sales resulting from our third quarter 2013 divestiture of the Italian rings and levers business. We also improved our operating profit and related margin percentage, which was partially offset by a higher tax rate and higher weighted average shares outstanding in first quarter 2014 as compared to a year ago."
"We continue to identify the bright spots and leverage our recent bolt-on acquisitions. We also secured new business in Asia for our packaging business, continued to ramp-up new products in our aerospace business, increased volumes at our energy branches in Asia and continued to leverage Cequent's global platform. We remain committed to increasing margins across all of our businesses, growing faster in our higher margin businesses, exiting and reducing some lower margin business, and implementing productivity and lean programs throughout the organization," Wathen continued.

1



"Looking forward, we remain committed to TriMas' ability to attain our strategic aspirations, while continuing our intense efforts to increase earnings, operating margins and cash flow. Based on our first quarter results, we continue to estimate 2014 top-line growth of 6% to 8% as compared to 2013. We expect full-year 2014 diluted earnings per share to range between $2.15 and $2.25 per share, taking into account the uncertainty in our energy end markets and a higher effective tax rate, as well as more than 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.
First Quarter Financial Results
TriMas reported record first quarter net sales of $367.7 million, an increase of 8.9% as compared to $337.8 million in first quarter 2013. During first quarter, net sales increased in four of the six reportable segments, primarily as a result of additional sales from bolt-on acquisitions, as well as geographic expansion, new customer wins and strength in certain end markets as compared to first quarter 2013. These sales increases were partially offset by approximately $3.6 million of unfavorable currency exchange.
The Company reported operating profit of $32.6 million in first quarter 2014, an increase of 37.3% as compared to first quarter 2013. Excluding Special Items(1) related to the facility consolidation and relocation projects within Cequent Americas in both years, first quarter 2014 operating profit would have been $33.6 million, an increase of 13.5% as compared to $29.6 million during first quarter 2013. First quarter 2014 operating profit margin percentage, excluding Special Items, improved due to productivity and cost reduction initiatives primarily in the Packaging and Engineered Components segments, partially offset by a less favorable product sales mix related to recent acquisitions, which have lower initial margins. 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, first quarter 2014 net income attributable to TriMas Corporation was $18.6 million, or $0.41 per diluted share, compared to net income attributable to TriMas Corporation of $13.2 million, or $0.33 per diluted share, during first quarter 2013. Excluding Special Items(1), first quarter 2014 net income attributable to TriMas Corporation would have been $19.2 million, an improvement of 10.7%, and diluted earnings per share would have been $0.43, as compared to $0.44 in first quarter 2013, primarily due to higher operating profit and lower interest expense which was more than offset by significantly higher income tax expense and 13.6% higher weighted average shares outstanding in first quarter 2014 as compared to first quarter 2013.
The Company reported a Free Cash Flow use (defined as Cash Flow from Operating Activities less Capital Expenditures) of $33.7 million for first quarter 2014, compared to a use of $51.9 million in first quarter 2013. The Company expects to generate between $55 million and $65 million in Free Cash Flow for 2014, while continuing to invest in capital expenditures, working capital investments in acquisitions and future growth and productivity programs.
Through March 31, 2014, the Company invested $9.0 million in capital expenditures (included in Free Cash Flow above) primarily in support of future growth and productivity opportunities and used $51.0 million to acquire the remaining interest of Arminak & Associates in the Packaging reportable segment.
Financial Position
TriMas reported total indebtedness of $398.2 million as of March 31, 2014, as compared to $305.7 million as of December 31, 2013. TriMas ended first quarter 2014 with $352.4 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.

Business Segment Results(2) 
Packaging
Net sales for first quarter increased 9.5% 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 customer opportunities in Asia. Excluding the impact of the loss of sales related to the third quarter 2013 divestiture of the Italian rings and levers business, industrial closures sales improved due to increased demand in Europe. Operating profit and the related margin percentage for the quarter increased primarily due to higher sales levels, a more favorable product sales mix, savings from ongoing productivity and automation initiatives, and continued margin expansion of past acquisitions. During the quarter, the Company also acquired the remaining 30% interest in Arminak & Associates. The Company continues to develop specialty dispensing and closure applications for growing

2



end markets, including personal care, cosmetic, pharmaceutical, nutrition and food/beverage, and expand into complementary products.
Energy
First quarter net sales decreased 3.9% 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. First quarter operating profit and the related margin percentage decreased, as manufacturing productivity was more than offset by the impact of weaker refinery shutdown activity, which resulted in a less favorable product mix shift towards standard gaskets and bolts, and higher selling, general and administrative expenses in support of our recent acquisitions. On a sequential basis, sales, operating profit and the related margin percentage improved in the first quarter of 2014 as compared to the fourth quarter of 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
Net sales for the first quarter increased 40.9% compared to the year ago period primarily due to the results of the acquisitions of Mac Fasteners in October 2013 and Martinic Engineering in January 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 collar products. First quarter operating profit increased, while the related margin percentage decreased slightly, as the increase in operating profit resulting from higher sales levels was impacted by a less favorable product sales mix within the product lines and lower profit margins associated with the recent acquisitions. 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 continuing to manage existing defense contracts.
Engineered Components
First quarter net sales increased 19.8% compared to the year ago period primarily due to a large order for compressor packages by a significant customer and an increase in industrial cylinder sales related to the asset acquisition from Worthington in November 2013. First quarter operating profit and the related margin percentage increased compared to the prior year period primarily due to the increased sales levels, with margin improvement resulting from continued productivity and cost reduction initiatives as well as the operating leverage from relatively flat selling, general and administrative expense spending. The Company continues to develop new products and expand its international sales efforts.
Cequent APEA
Net sales for first quarter increased 23.0% compared to the year ago period primarily due to the April 2013 acquisition of C.P. Witter and the July 2013 acquisition of the towing assets of AL-KO, partially offset by the negative impact of currency exchange. First quarter operating profit and the related margin percentage decreased primarily as the sales impact related to recent acquisitions, was more than offset by the incremental ongoing selling, general and administrative expenses and integration costs. The Company continues to reduce fixed costs and leverage Cequent's strong brand positions to capitalize on growth opportunities in new markets.
Cequent Americas
Net sales for first quarter were relatively flat compared to the year ago period, as increased sales within the retail channel were offset by a decrease in sales in the aftermarket channel related to higher than normal sales levels in the first quarter of 2013 as customers built safety stock in anticipation of the move of production to lower cost country facilities. First quarter operating profit and the related margin percentage were relatively flat compared to the prior year period, as savings generated from the manufacturing move to Mexico were offset by incremental expenses related to inefficiencies and changing the distribution footprint in connection with the move completion, and higher 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.
2014 Outlook
The Company reaffirmed its 2014 outlook previously provided on February 20, 2014. The Company estimates that 2014 sales will increase 6% to 8% as compared to 2013. The Company expects full-year 2014 diluted earnings per share 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 any future events that may be considered Special Items. In

3



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 first quarter 2014 earnings conference call today, Tuesday, April 29, 2014, at 10:00 a.m. ET. The call-in number is (888) 417-8516. Participants should request to be connected to the TriMas Corporation first quarter 2014 earnings conference call (Conference ID #6663958). 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 #6663958) beginning April 29, 2014 at 3:00 p.m. ET through May 6, 2014 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, 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 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.”



4



TriMas Corporation
Condensed Consolidated Balance Sheet
(Unaudited - dollars in thousands)


 
 
March 31,
2014
 
December 31,
2013
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
31,820

 
$
27,000

Receivables, net
 
226,380

 
180,210

Inventories
 
269,900

 
270,690

Deferred income taxes
 
18,340

 
18,340

Prepaid expenses and other current assets
 
19,780

 
18,770

Total current assets
 
566,220

 
515,010

Property and equipment, net
 
208,360

 
206,150

Goodwill
 
310,700

 
309,660

Other intangibles, net
 
214,760

 
219,530

Other assets
 
48,910

 
50,430

Total assets
 
$
1,348,950

 
$
1,300,780

Liabilities and Shareholders' Equity
 
 
 
 
Current liabilities:
 
 
 
 
Current maturities, long-term debt
 
$
14,000

 
$
10,290

Accounts payable
 
159,460

 
166,090

Accrued liabilities
 
80,240

 
85,130

Total current liabilities
 
253,700

 
261,510

Long-term debt
 
384,190

 
295,450

Deferred income taxes
 
53,920

 
64,940

Other long-term liabilities
 
102,270

 
99,990

Total liabilities
 
794,080

 
721,890

Redeemable noncontrolling interests
 

 
29,480

Total shareholders' equity
 
554,870

 
549,410

Total liabilities and shareholders' equity
 
$
1,348,950

 
$
1,300,780





5



TriMas Corporation
Consolidated Statement of Income
(Unaudited - dollars in thousands, except per share amounts)


 
 
Three months ended
March 31,
 
 
2014
 
2013
Net sales
 
$
367,740

 
$
337,780

Cost of sales
 
(271,160
)
 
(254,380
)
Gross profit
 
96,580

 
83,400

Selling, general and administrative expenses
 
(63,990
)
 
(59,660
)
Operating profit
 
32,590

 
23,740

Other expense, net:
 
 
 
 
Interest expense
 
(3,470
)
 
(5,210
)
Other expense, net
 
(1,020
)
 
(2,230
)
Other expense, net
 
(4,490
)
 
(7,440
)
Income before income tax expense
 
28,100

 
16,300

Income tax expense
 
(8,720
)
 
(2,260
)
Net income
 
19,380

 
14,040

Less: Net income attributable to noncontrolling interests
 
810

 
860

Net income attributable to TriMas Corporation
 
$
18,570

 
$
13,180

Basic earnings per share attributable to TriMas Corporation:
 
 
 
 
Net income per share
 
$
0.41

 
$
0.34

Weighted average common shares—basic
 
44,768,594

 
39,234,780

Diluted earnings per share attributable to TriMas Corporation:
 
 
 
 
Net income per share
 
$
0.41

 
$
0.33

Weighted average common shares—diluted
 
45,186,114

 
39,790,524



6



TriMas Corporation
Consolidated Statement of Cash Flow
(Unaudited - dollars in thousands)
 
 
Three months ended
March 31,
 
 
2014
 
2013
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
19,380

 
$
14,040

Adjustments to reconcile net income to net cash used for operating activities, net of acquisition impact:
 
 
 
 
Loss on dispositions of property and equipment
 
70

 
10

Depreciation
 
8,030

 
7,050

Amortization of intangible assets
 
5,480

 
5,080

Amortization of debt issue costs
 
480

 
440

Deferred income taxes
 
(2,820
)
 
(1,640
)
Non-cash compensation expense
 
2,280

 
2,680

Excess tax benefits from stock based compensation
 
(760
)
 
(910
)
Increase in receivables
 
(44,960
)
 
(38,280
)
(Increase) decrease in inventories
 
1,800

 
(3,690
)
(Increase) decrease in prepaid expenses and other assets
 
100

 
(3,560
)
Decrease in accounts payable and accrued liabilities
 
(13,910
)
 
(18,710
)
Other, net
 
160

 
(440
)
Net cash used for operating activities, net of acquisition impact
 
(24,670
)
 
(37,930
)
Cash Flows from Investing Activities:
 
 
 
 
Capital expenditures
 
(9,030
)
 
(13,950
)
Acquisition of businesses, net of cash acquired
 

 
(28,230
)
Net proceeds from disposition of assets
 
240

 
520

Net cash used for investing activities
 
(8,790
)
 
(41,660
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from borrowings on term loan facilities
 
46,750

 
54,110

Repayments of borrowings on term loan facilities
 
(46,340
)
 
(48,840
)
Proceeds from borrowings on revolving credit and accounts receivable facilities
 
331,120

 
268,800

Repayments of borrowings on revolving credit and accounts receivable facilities
 
(239,900
)
 
(190,800
)
Distributions to noncontrolling interests
 
(580
)
 
(550
)
Payment for noncontrolling interests
 
(51,000
)
 

Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations
 
(2,670
)
 
(3,530
)
Proceeds from exercise of stock options
 
140

 
170

Excess tax benefits from stock based compensation
 
760

 
910

Net cash provided by financing activities
 
38,280

 
80,270

Cash and Cash Equivalents:
 
 
 
 
Increase for the period
 
4,820

 
680

At beginning of period
 
27,000

 
20,580

At end of period
 
$
31,820

 
$
21,260

Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
3,010

 
$
3,900

Cash paid for taxes
 
$
2,660

 
$
7,280


7



TriMas Corporation
Company and Business Segment Financial Information
(Unaudited - dollars in thousands)

 
 
Three months ended
March 31,
 
 
2014
 
2013
Packaging
 
 
 
 
Net sales
 
$
81,430

 
$
74,350

Operating profit
 
$
18,360

 
$
14,630

 
 
 
 
 
Energy
 
 
 
 
Net sales
 
$
52,780

 
$
54,920

Operating profit
 
$
2,600

 
$
5,870

 
 
 
 
 
Aerospace & Defense
 
 
 
 
Net sales
 
$
29,540

 
$
20,970

Operating profit
 
$
5,180

 
$
3,750

 
 
 
 
 
Engineered Components
 
 
 
 
Net sales
 
$
55,430

 
$
46,270

Operating profit
 
$
7,880

 
$
5,700

 
 
 
 
 
Cequent APEA
 
 
 
 
Net sales
 
$
39,470

 
$
32,090

Operating profit
 
$
2,500

 
$
3,180

 
 
 
 
 
Cequent Americas
 
 
 
 
Net sales
 
$
109,090

 
$
109,180

Operating profit
 
$
5,710

 
$
700

Special Items to consider in evaluating operating profit:
 
 
 
 
Severance and business restructuring costs
 
$
980

 
$
5,830

Excluding Special Items, operating profit would have been
 
$
6,690

 
$
6,530

 
 
 
 
 
Corporate Expenses
 
 
 
 
Operating loss
 
$
(9,640
)
 
$
(10,090
)
 
 
 
 
 
Total Company
 
 
 
 
Net sales
 
$
367,740

 
$
337,780

Operating profit
 
$
32,590

 
$
23,740

Total Special Items to consider in evaluating operating profit:
 
$
980

 
$
5,830

Excluding Special Items, operating profit would have been
 
$
33,570

 
$
29,570



8




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
March 31,
 
 
2014
 
2013
Net Income, as reported
 
$
19,380

 
$
14,040

Less: Net income attributable to noncontrolling interests
 
810

 
860

Net Income attributable to TriMas Corporation
 
18,570

 
13,180

After-tax impact of Special Items to consider in evaluating quality of net income:
 
 
 
 
Severance and business restructuring costs
 
670

 
4,200

Excluding Special Items, net income attributable to TriMas Corporation would have been
 
$
19,240

 
$
17,380

 
 
 
 
 
 
 
Three months ended
March 31,

 
2014
 
2013
Diluted earnings per share attributable to TriMas Corporation, as reported
 
$
0.41

 
$
0.33

After-tax impact of Special Items to consider in evaluating quality of EPS:
 
 
 
 
Severance and business restructuring costs
 
0.02

 
0.11

Excluding Special Items, EPS would have been
 
$
0.43

 
$
0.44

Weighted-average shares outstanding for the three months ended March 31, 2014 and 2013
 
45,186,114

 
39,790,524

 
 
 
 
 


9
q12014earningspresentati
First Quarter 2014 Earnings Presentation April 29, 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 first quarter 2014 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 – First Quarter Results • Record Q1 sales of approximately $368 million – growth of nearly 9% compared to Q1 2013 – Results from bolt-on acquisitions and organic initiatives adding to top-line • Q1 2014 operating profit(1) improved more than 13% with a 30 basis point improvement in margin percentage compared to Q1 2013 • Q1 2014 headwinds included energy-related end markets, tax rate and higher level of shares outstanding • Increased focus on margin improvement and productivity • Sequential improvement in energy-related businesses – execution of improvement plans, as well as some market recovery Key 2014 growth and margin improvement programs are on track. 4 (1) Operating Profit excluding “Special Items.” “Special Items” for each period are provided in the Appendix.


 
TriMas Key Initiatives & Accomplishments 5 Growth – New Products, Global Expansion & Bolt-on Acquisitions • Completing second packaging plant in China for in-country sales – shipping in April • Acquired remaining 30% of Arminak in Packaging • Multiple contract wins for Energy leveraging our combined seals and fasteners offering • Shipping OEM aerospace collars out of Arizona plant; new distribution contract • Mac Fasteners aerospace acquisition improving bookings and higher-spec products • Arrow launched new higher horsepower engine and sold compressor fleet; positive customer reactions • Successful integration of Q4 asset acquisition into Huntsville cylinder plant • New Cequent Reynosa plant providing increased sales opportunities in Mexico • Consolidation of Cequent’s acquisitions in Brazil complete • Cequent retail sales increased due to broader product portfolio, offsetting weather challenges Achieved 9% revenue growth in quarter – focused on “bright spots” in growing markets.


 
TriMas Key Initiatives & Accomplishments 6 Margin Expansion & Productivity • Q1 productivity projects on track • New Cequent Reynosa plant running at previous production rates • Increased launch and sales efforts of specialty and engineered products in Energy • Trained 40 green belts; implementing projects • Acquisition integration acceleration yielding positive results • Continued purchasing consolidation of freight, MRO, supplies etc. • Price actions and focus on higher margin products at Lamons and Arrow • Plans to grow highest margin businesses (Packaging and Aerospace) at faster rates • Continued to fine tune Lamons’ footprint Increased focus on margin expansion, productivity and lean initiatives.


 
Financial Highlights


 
First Quarter Summary • Sales increased 8.9% as compared to Q1 2013 as a result of acquisitions and organic initiatives, offsetting challenges in energy end markets and the Q3 2013 disposition of the Italian rings and levers business • Q1 operating profit(1) and the related margin percentage improved due to productivity and cost reduction initiatives, partially offset by a less favorable product sales mix related to recent acquisitions which have lower initial margins • Q1 income(1) increased 10.7%, while Q1 EPS(1) decreased slightly due to a higher tax rate and more than 13% higher weighted average shares outstanding in Q1 2014 as compared to Q1 2013 • Q1 Free Cash Flow(2) ahead of last year by $18.2 million and Total Debt decreased 21.3% as compared to Q1 2013 – both as expected 8 (1) Defined as operating profit, excluding “Special Items,” and net income and diluted earnings per share attributable to TriMas Corporation, excluding “Special Items.” “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Cash Flows from Operating Activities less Capital Expenditures. (Unaudited, dollars in millions, except per share amounts) Q1 2014 Q1 2013 % Chg Revenue 367.7$ 337.8$ 8.9% Operating Profit 32.6$ 23.7$ 37.3% Excl. Total Special Items (1) , Operating Profit would have been: 33.6$ 29.6$ 13.5% Excl. Total Special Items (1) , Operating Profit margin would have been: 9.1% 8.8% 30 bps Income 19.4$ 14.0$ 38.0% Income attributable to TriM as Corporation 18.6$ 13.2$ 40.9% Excl. Total Special Items (1) , Income attributable to TriM as Corporation would have been: 19.2$ 17.4$ 10.7% Diluted earnings per share, attributable to TriMas Corporation 0.41$ 0.33$ 24.2% Excl. Total Special Items (1) , diluted earnings per share attributable to TriM as Corporation would have been: 0.43$ 0.44$ -2.3% Free Cash Flow (2) (33.7)$ (51.9)$ 35.0% Total Debt 398.2$ 506.2$ -21.3%


 
$630 $515 $495 $470 $422 $306 $398 $200 $300 $400 $500 $600 $700 To tal D e b t Total Debt Leve ra ge R ati o Leverage Ratio 5x 3x 4x 2x 1x 9 ($ in millions) Capitalization Total Debt and Leverage Ratio (including A/R Facility) • Reduced interest expense by $1.7 million, or more than 30%, in Q1 2014 as compared to Q1 2013 • Effective weighted average rate on variable rate borrowings decreased 100 basis points to approximately 1.8% as compared to Q1 2013 • Q1 2014 leverage ratio of 1.99x as compared to 2.70x as of Q1 2013 • October 2013 refinance reduced rates and extended maturities • In April 2014, amended accounts receivable facility to lower rates and extend maturity until October 2018 As of March 31, 2014, TriMas had $352.4 million of cash and available liquidity under its revolving credit and accounts receivable facilities.


 
Segment Highlights


 
Packaging Q1 2014 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 — Improved demand in Europe for industrial closures, offset by the divestiture of the Italian industrial rings and levers business during Q3 2013 • Operating profit and margin increased primarily due to higher sales, a more favorable product sales mix, savings from ongoing productivity and automation initiatives, and continued margin expansion of past acquisitions • Acquired the remaining 30% interest of Arminak (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 • Ramp up 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 11 Net Sales Q1-13 Q1-14 $74.4 $81.4 9.5% Operating Profit Q1-13 Q1-14 $14.6 $18.4 25.5%


 
Energy Q1 2014 Results: • Sales decreased due to the lower levels of turnaround activity and maintenance spend in refining and petrochemical markets • Operating profit and margin was negatively impacted by the slow down, which resulted in a less favorable product mix toward standard gaskets and bolts, and increased SG&A expenses from recent acquisitions • On a sequential basis, sales, operating profit and margins improved in Q1 2014 as compared to the Q4 2013 • Increased focus on productivity and margin improvement initiatives Key Initiatives: • Expand business capabilities with major customers globally by replicating U.S. branch strategy and success • 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 12 (Unaudited, dollars in millions) Net Sales Q1-13 Q1-14 $54.9 $52.8 -3.9% Operating Profit Q1-13 Q1-14 -55.7% $5.9 $2.6


 
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 Q1 2014 Results: • Sales increased in the aerospace business primarily as a result of recent acquisitions, which expanded our content on aircraft, and higher blind bolt sales • Operating profit increased due to higher sales levels and the ramp-up of aerospace collar production • Operating profit margin was impacted by a less favorable product sales mix within the product lines and lower margins associated with the recent acquisitions • Aircraft frame manufacturers continue to ramp-up build rates with growth in backlog 13 (Unaudited, dollars in millions) Net Sales Q1-13 Q1-14 $21.0 $29.5 40.9% Operating Profit Q1-13 Q1-14 38.1% $3.8 $5.2


 
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 Q1 2014 Results: • Sales of engines, compressors and other well-site content increased due to slightly improved levels of demand and the sale of the compressor fleet • Sales of industrial cylinders increased primarily due to the asset acquisition from Worthington in November 2013 • Operating profit and related margin improved due to the increased sales levels, with margin improvement resulting from continued productivity and cost reduction initiatives, as well as the operating leverage from relatively flat SG&A spending 14 (Unaudited, dollars in millions) Net Sales $55.4 Q1-13 Q1-14 $46.3 19.8% Operating Profit Q1-13 Q1-14 38.2% $5.7 $7.9


 
Cequent (APEA & Americas) $46.4 Q1 2014 Results: • Sales in Americas were relatively flat, as increased retail sales were offset by a decrease in aftermarket sales related to higher sales levels in Q1 2013 as customers built safety stock in anticipation of the production move to Mexico • Americas operating profit(1) and margin percentage were relatively flat, as savings generated from the manufacturing move to Mexico were offset by incremental expenses related to inefficiencies and changing the distribution footprint in connection with the move completion, and higher SG&A from acquisitions • APEA sales increased due to continued geographic expansion including its recent acquisitions, partially offset by the negative impact of currency exchange • APEA operating profit and margin decreased as profit from higher sales volumes was more than offset by the incremental, ongoing SG&A and integration costs related to the recent 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 15 APEA Americas (1) Excluding “Special Items” for each period which are provided in the Appendix. (Unaudited, dollars in millions) $39.5 $109.1 Net Sales $32.1 $109.2 Q1-13 Q1-14 $148.6 $141.3 5.2% $2.5 $6.7 Operating Profit (1) $3.2 $6.5 Q1-13 Q1-14 $9.2 -5.4% $9.7


 
Outlook and Summary


 
TriMas Planning Process Operating Reviews Strategic Plan People Plan Budget Board Reviews Incentive Plan Risk Mgmt Update JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Rolling Plans & Forecasts Incentive Plan & Budget Strategic Plan People Plan Operating Plan Repeatable structured processes drive accountability and performance. 17 • Operating Reviews: Management team visits businesses quarterly; more frequent meetings for any “off-track” initiatives • Strategic Plan: Based on a 3-year horizon; agree on growth and productivity programs • People Plan: Includes succession planning, “high-potential” retention and need assessment • Budget and Operating Plans: Detailed look at Year One of Strategic Plan • Incentive Plan: Includes short-term and long-term incentive planning and tracking • Other Processes: Acquisitions, Environmental Health & Safety, Governance & Compliance, Employee Communications & Engagement External Risks Strategic Risks Internal Risks Emerging Risks


 
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 • Enhance margins through productivity initiatives, leveraging costs and business mix • Grow earnings faster than revenue growth • Optimize capital structure • Strive to be a great place to work


 
2014 Outlook Outlook as of 2/20/14 and 4/29/2014 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 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. 19


 
TriMas Value Proposition Growth > End Markets Clear goals, high-performance teams and streamlined processes drive enhanced results. 20 • Multiple projects in all businesses • Geographic • Product • Customer penetration • Acquisitions Stability • Consumer • Industrial • Agricultural • Aerospace • Energy • Geographic diversity • Customer diversity Margin Expansion & Funds Growth • Rationalization • Optimization of global supply chain • Lean initiatives • Better cost positions • Non-operational efficiencies • Earnings growth > sales growth • Strong cash flow dynamics • Increased return on capital Balanced Portfolio Productivity Growth Opportunities Increased Enterprise Value


 
Questions & Answers


 
Appendix


 
Condensed Consolidated Balance Sheet 23 (Unaudited, dollars in thousands) March 31, December 31, 2014 2013 Assets Current assets: Cash and cash equivalents............................................................. 31,820$ 27,000$ Receivables, net............................................................................ 226,380 180,210 Inventories..................................................................................... 269,900 270,690 Deferred income taxes................................................................... 18,340 18,340 Prepaid expenses and other current assets...................................... 19,780 18,770 Total current assets.................................................................... 566,220 515,010 Property and equipment, net.............................................................. 208,360 206,150 Goodwill........................................................................................... 310,700 309,660 Other intangibles, net........................................................................ 214,760 219,530 Other assets.................................................................................... 48,910 50,430 Total assets............................................................................... 1,348,950$ 1,300,780$ Liabilities and Shareholders' Equity Current liabilities: Current maturities, long-term debt................................................... 14,000$ 10,290$ Accounts payable.......................................................................... 159,460 166,090 Accrued liabilities.......................................................................... 80,240 85,130 Total current liabilities................................................................. 253,700 261,510 Long-term debt................................................................................. 384,190 295,450 Deferred income taxes...................................................................... 53,920 64,940 Other long-term liabilities................................................................... 102,270 99,990 Total liabilities............................................................................ 794,080 721,890 Redeemable noncontrolling interests............................................ - 29,480 Total shareholders' equity............................................................ 554,870 549,410 Total liabilities and shareholders' equity........................................ 1,348,950$ 1,300,780$


 
Consolidated Statement of Income (Dollars in thousands, except for per share amounts) 24 Three months ended 2014 2013 Net sales................................................................................................. 367,740$ 337,780$ Cost of sales............................................................................................ (271,160) (254,380) Gross profit........................................................................................... 96,580 83,400 Selling, general and administrative expenses............................................... (63,990) (59,660) Operating profit...................................................................................... 32,590 23,740 Other expense, net: Interest expense.................................................................................... (3,470) (5,210) Other expense, net................................................................................ (1,020) (2,230) Other expense, net............................................................................. (4,490) (7,440) Income before income tax expense............................................................. 28,100 16,300 Income tax expense.................................................................................. (8,720) (2,260) Net income............................................................................................... 19,380 14,040 Less: Net income attributable to noncontrolling interests.............................. 810 860 Net income attributable to TriMas Corporation.............................................. 18,570$ 13,180$ Earnings per share attributable to TriMas Corporation - basic: Net income per share............................................................................. $ 0.41 $ 0.34 Weighted average common shares - basic 44,768,594 39,234,780 Earnings per share attributable to TriMas Corporation - diluted: Net income per share............................................................................. $ 0.41 $ 0.33 Weighted average common shares - diluted 45,186,114 39,790,524 March 31, (unaudited)


 
Consolidated Statement of Cash Flow (Dollars in thousands) 25 2014 2013 Cash Flows from Operating Activities: Net income......................................................................................................................... 19,380$ 14,040$ Adjustments to reconcile net income to net cash used for operating activities, net of acquisition impact: Loss on dispositions of property and equipment.................................................................. 70 10 Depreciation..................................................................................................................... 8,030 7,050 Amortization of intangible assets....................................................................................... 5,480 5,080 Amortization of debt issue costs........................................................................................ 480 440 Deferred income taxes...................................................................................................... (2,820) (1,640) Non-cash compensation expense...................................................................................... 2,280 2,680 Excess tax benefits from stock based compensation........................................................... (760) (910) Increase in receivables...................................................................................................... (44,960) (38,280) (Increase) decrease in inventories...................................................................................... 1,800 (3,690) (Increase) decrease in prepaid expenses and other assets................................................... 100 (3,560) Decrease in accounts payable and accrued liabilities........................................................... (13,910) (18,710) Other, net........................................................................................................................ 160 (440) Net cash used for operating activities, net of acquisition impact......................................... (24,670) (37,930) Cash Flows from Investing Activities: Capital expenditures......................................................................................................... (9,030) (13,950) Acquisition of businesses, net of cash acquired.................................................................. - (28,230) Net proceeds from disposition of assets............................................................................. 240 520 Net cash used for investing activities............................................................................... (8,790) (41,660) Cash Flows from Financing Activities: Proceeds from borrowings on term loan facilities................................................................. 46,750 54,110 Repayments of borrowings on term loan facilities................................................................. (46,340) (48,840) Proceeds from borrowings on revolving credit and accounts receivable facilities...................... 331,120 268,800 Repayments of borrowings on revolving credit and accounts receivable facilities..................... (239,900) (190,800) Distributions to noncontrolling interests.............................................................................. (580) (550) Payment for noncontrolling interests................................................................................... (51,000) - Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations…...………………………………………………………………………………………… (2,670) (3,530) Proceeds from exercise of stock options............................................................................ 140 170 Excess tax benefits from stock based compensation........................................................... 760 910 Net cash provided by financing activities.......................................................................... 38,280 80,270 Cash and Cash Equivalents: Increase for the period....................................................................................................... 4,820 680 At beginning of period....................................................................................................... 27,000 20,580 At end of period............................................................................................................. 31,820$ 21,260$ Supplemental disclosure of cash flow information: Cash paid for interest..................................................................................................... 3,010$ 3,900$ Cash paid for taxes........................................................................................................ 2,660$ 7,280$ Three months ended March 31, (unaudited)


 
Company and Business Segment Financial Information 26 Three months ended 2014 2013 Packaging Net sales......................................................................................................... 81,430$ 74,350$ Operating profit................................................................................................. 18,360$ 14,630$ Energy Net sales......................................................................................................... 52,780$ 54,920$ Operating profit................................................................................................. 2,600$ 5,870$ Aerospace & Defense Net sales......................................................................................................... 29,540$ 20,970$ Operating profit................................................................................................. 5,180$ 3,750$ Engineered Components Net sales......................................................................................................... 55,430$ 46,270$ Operating profit................................................................................................. 7,880$ 5,700$ Cequent APEA Net sales......................................................................................................... 39,470$ 32,090$ Operating profit................................................................................................. 2,500$ 3,180$ Cequent Americas Net sales......................................................................................................... 109,090$ 109,180$ Operating profit................................................................................................. 5,710$ 700$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs.................................................... 980$ 5,830$ Excluding Special Items, operating profit would have been.............................. 6,690$ 6,530$ Corporate Expenses Operati g loss.................................................................................................. (9,640)$ (10,090)$ Total Company Net sales......................................................................................................... 367,740$ 337,780$ Operating profit................................................................................................. 32,590$ 23,740$ Total Special Items to consider in evaluating operating profit................................. 980$ 5,830$ Excluding Special Items, operating profit would have been.............................. 33,570$ 29,570$ (unaudited) March 31, (Dollars in thousands)


 
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures 27 Three months ended March 31, 2014 2013 Net income, as reported................................................................................................. 19,380$ 14,040$ Less: Net income attributable to noncontrolling interests...................................................... 810 860 Net income attributable to TriMas Corporation...................................................................... 18,570 13,180 After-tax impact of Special Items to consider in evaluating quality of net income: Severance and business restructuring costs..................................................................... 670 4,200 Excluding Special Items, net income attributable to TriMas Corporation would have been......................................................................................................... 19,240$ 17,380$ Three months ended March 31, 2014 2013 Diluted earnings per share attributable to TriMas Corporation, as reported................... 0.41$ 0.33$ After-tax impact of Special Items to consider in evaluating quality of EPS: Severance and business restructuring costs..................................................................... 0.02 0.11 Excluding Special Items, EPS would have been......................................................... 0.43$ 0.44$ Weighted-average shares outstanding for the three months ended March 31, 2014 and 2013.............................................................................................. 45,186,114 39,790,524 2014 2013 Operating profit (excluding Special Items)……………………….………............................. 33,570$ 29,570$ Corporate expenses……………………………………………………………............................ 9,640 10,090 Segment operating profit (excluding Special Items)…………………............................... 43,210$ 39,660$ Segment operating profit margin (excluding Special Items)…...……............................. 11.8% 11.7% March 31, Three months ended (Unaudited, dollars in thousands, except for per share amounts)


 
Enhanced Debt Structure 28 As of March 31, 2014, TriMas had $352.4 million of cash and available liquidity under its revolving credit and accounts receivable facilities. (Unaudited, dollars in thousands) March 31, December 31, 2014 2013 Cash and Cash Equivalents……………………………..………………… 31,820$ 27,000$ Credit Agreement……………………………………….. 328,540 246,130 Receivables facility and other……………………………….. 69,650 59,610 398,190 305,740 Total Debt………………………...………………………...………………………… 398,190$ 305,740$ Key Ratios: Bank LTM EBITDA……………………………………………………………………………….……………………………………… 212,990$ 196,990$ Interest Coverage Ratio………………………………………………………………… 13.90 x 11.08 x Leverage Ratio…………………………………………………………………... 1.99 x 1.67 x Bank Covenants: Minimum Interest Coverage Ratio………………………………………………………………… 3.00 x 3.00 x Maximum Leverage Ratio………………………………………………………………………………… 3.50 x 3.50 x


 
LTM Bank EBITDA as Defined in Credit Agreement 29 (Unaudited, dollars in thousands) 85,410$ Interest expense, net (as defined)............................................................................................... 16,590 Income tax expense.................................................................................................................. 24,850 Depreciation and amortization.................................................................................................... 51,960 Non-cash compensation expense............................................................................................... 8,800 Other non-cash expenses or losses........................................................................................... 4,550 Non-recurring expenses or costs in connection with acquisition integration.................................... 15,000 Acquisition integration costs...................................................................................................... 820 Debt extinguishment costs........................................................................................................ 2,460 Permitted dispositions............................................................................................................... (1,060) Permitted acquisitions............................................................................................................... 3,610 212,990$ (1) As defined in the Credit Agreement dated October 16, 2013 Net income attributable to TriMas Corporation for the twelve months ended March 31, 2014 ............... Bank EBITDA - LTM Ended March 31, 2014 (1)…………………………………………………………………