UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
Washington, D.C. 20549 | ||
FORM 8-K | ||
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 31, 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 July 31, 2014, reporting its financial results for the second quarter ending June 30, 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 "Second 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: | July 31, 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 SECOND QUARTER RESULTS
Company Reports Growth in Sales and Income(1) of 7% for the Quarter
BLOOMFIELD HILLS, Michigan, July 31, 2014 - TriMas Corporation (NASDAQ: TRS) today announced financial results for the quarter ended June 30, 2014. The Company reported record second quarter net sales from continuing operations of $404.0 million, an increase of 6.9% compared to second quarter 2013. The Company reported second quarter 2014 income from continuing operations attributable to TriMas Corporation of $26.2 million, or $0.58 per diluted share, as compared to income of $26.2 million, or $0.65 per diluted share, during second quarter 2013. Excluding Special Items(1), second quarter 2014 diluted earnings per share would have been $0.65, as compared to $0.69 in second quarter 2013, while absorbing 13.4% higher weighted average shares outstanding in second quarter 2014 as compared to second quarter 2013.
TriMas Highlights
• | Reported record second quarter net sales of $404.0 million, an increase of 6.9% as compared to second quarter 2013, due to results from bolt-on acquisitions and the successful execution of numerous growth initiatives. |
• | The Packaging segment achieved 9.7% sales growth in second quarter 2014, compared to second quarter 2013, or 15.6% sales growth, excluding the third quarter 2013 divestiture of the rings and levers business. |
• | The Aerospace and Defense segment achieved 38.2% sales growth in second quarter 2014, compared to second quarter 2013, nearly half of which was from organic growth initiatives. |
• | Continued initiatives to expand operating profit margins, with a 30 basis point improvement, after Special Items(1), in second quarter 2014 as compared to second quarter 2013, while investing in the acquisitions completed in 2013 and absorbing the lower margin rates associated with these acquisitions. |
• | Improved Engineered Components and Cequent Americas operating profit margins(2) by 470 and 210 basis points, respectively, compared to second quarter 2013, as a result of recent actions taken to improve the businesses. |
• | Reduced interest expense by more than 35% as compared to second quarter 2013, as a result of the Company's October 2013 new senior secured credit facilities and April 2014 accounts receivable facility amendment. |
• | Earlier this week, announced the acquisition of Lion Holdings Pvt. Ltd., a manufacturer of highly engineered dispensing solutions with locations in India and Vietnam, to broaden Asian market coverage and provide additional in-market capacity for the growing packaging business. |
"During the second quarter, we achieved 6.9% sales growth, led by our packaging and aerospace businesses, offsetting the challenges we continued to face in our energy end markets and sales reduction resulting from our third quarter 2013 divestiture of the Italian rings and levers business," said David Wathen, TriMas President and Chief Executive Officer. "We improved our operating profit by 9.7% with a 30 basis point improvement in margin, and achieved an earnings per share of $0.65 (excluding Special Items). This is in spite of a higher share count and tax rate as compared to a year ago, and end market headwinds in energy and the aerospace distribution channel."
"We continue to identify the bright spots and support our customers with new, innovative products and expanded geographic reach. 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. These positive actions help offset the headwinds we are facing, and we remain mindful of the risks and challenges in the back half of 2014," Wathen continued.
1
Second Quarter Financial Results
• | TriMas reported record second quarter net sales of $404.0 million, an increase of 6.9% as compared to $378.0 million in second quarter 2013. During second quarter, net sales increased in five 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 second quarter 2013. These sales increases were partially offset by a decrease of $4.1 million related to the 2013 sale of the Italian rings and levers business in the Packaging segment and a decrease in the Energy segment primarily due to lower sales to engineering and construction customers and a delay in turnaround activity at petrochemical plants and refineries. |
• | The Company reported operating profit of $44.0 million in second quarter 2014, an increase of 5.8% as compared to second quarter 2013. Excluding Special Items(1) related to the facility consolidation and relocation projects within Energy and Cequent Americas, second quarter 2014 operating profit would have been $47.9 million, an increase of 9.7% as compared to $43.6 million during second quarter 2013. Second quarter 2014 operating profit margin percentage, excluding Special Items, improved due to productivity and cost reduction initiatives primarily in the Packaging, Engineered Components and Cequent Americas segments. This improvement was partially offset by a less favorable product sales mix, including the impact 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, second quarter 2014 income from continuing operations attributable to TriMas Corporation was flat at $26.2 million with second quarter 2013, and $0.58 per diluted share, compared to $0.65 per diluted share, due to 13.4% higher weighted average shares outstanding in second quarter 2014 as compared to second quarter 2013. Excluding Special Items(1), second quarter 2014 income from continuing operations attributable to TriMas Corporation would have been $29.4 million, an improvement of 6.6%, and diluted earnings per share would have been $0.65, as compared to $0.69 in second quarter 2013. The effects of higher operating profit and lower interest expense were more than offset by significantly higher income tax expense and share count in second quarter 2014, as compared to second quarter 2013. |
• | The Company reported Free Cash Flow (defined as Cash Flow from Operating Activities less Capital Expenditures) of $36.2 million for second quarter 2014, compared to $39.5 million in second quarter 2013. On a year-to-date basis, the Company generated $2.5 million in Free Cash Flow as compared to a use of $12.4 million during the first six months of 2013. The Company still expects to generate between $55 million and $65 million in Free Cash Flow for 2014. |
• | Through June 30, 2014, the Company invested $20.5 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 $368.5 million as of June 30, 2014, as compared to $305.7 million as of December 31, 2013, and $480.7 million as of June 30, 2013. This increase from year end was primarily as a result of the seasonality related to higher working capital levels and the funding of $51.0 million to acquire the remaining interest of Arminak & Associates during the first quarter of 2014. TriMas ended second quarter 2014 with $394.8 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
Business Segment Results(2)
Packaging
Net sales for the second quarter increased 9.7% 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 related to the third quarter 2013 divestiture of the Italian rings and levers business, industrial closures sales improved due to increased demand in North America and Europe. Operating profit for the quarter increased primarily due to higher sales levels, while the related margin percentage decreased due to a less favorable product sales mix and costs incurred to add capacity to the two manufacturing facilities in China, partially offset by savings from ongoing productivity and automation initiatives. 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.
2
On July 25, 2014, the Company acquired Lion Holdings, a manufacturer of highly-engineered dispensing solutions, with locations in India and Vietnam, to better support its global customers in Asia. Wathen commented, "The acquisition of Lion Holdings provides us the opportunity to accelerate our growth in Asia. It provides needed in-market capacity, high quality plants with expansion opportunities and talented people with a track record of serving the customers we know. We are excited about this combination and congratulate those involved for a job well done."
Energy
Second quarter net sales decreased 11.1% compared to the year ago period due to the significant slow down and postponement of turnaround activity and maintenance spend in the North American refining and petrochemical end markets, and a reduction in sales to engineering and construction customers as second quarter 2013 represented a higher-than-normal sales quarter to these customers. Second 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 toward standard gaskets and bolts, and higher selling, general and administrative expenses. The Company is focused on improving margins and has recently closed a less profitable branch in China and restructured its Brazilian energy business to better reflect the current market demand. The Company also has multiple programs underway to improve the profitability of its standard products.
Aerospace & Defense
Net sales for the second quarter increased 38.2% compared to the year ago period primarily due to the results of the acquisition of 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 introduction of new collar products. Second quarter operating profit and the related margin percentage decreased, as the increase in operating profit earned on higher sales levels was more than offset by ongoing ramp-up costs, manufacturing inefficiencies related to smaller customer order quantities and less predictable order patterns associated with large distribution customers, a less favorable product sales mix related to acquisitions, and higher selling, general and administrative expenses in support of growth initiatives. The Company continues to invest in this segment by developing and marketing highly-engineered products for aerospace applications and leveraging bolt-on acquisitions.
Engineered Components
Second quarter net sales increased 8.6% compared to the year ago period primarily due to an increase in industrial cylinder sales related to the small cylinder asset acquisition in November 2013 and improved sales in gas compression products, partially offset by decreased sales of slow speed engines. Second quarter operating profit increased compared to the prior year period primarily due to the increased sales levels, with margin improvement resulting from operating leverage, continued productivity and cost reduction initiatives. The Company continues to develop new products and expand its international sales efforts.
Cequent APEA
Net sales for the second quarter increased 14.4% 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 lower sales in Australia related to the uncertain general economic conditions, resulting in reduced consumer and business confidence and the negative impact of currency exchange. Second 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. 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 the second quarter increased 4.6% compared to the year ago period, primarily due to increases in the retail and aftermarket channels. The aftermarket channel was positively impacted by the November 2013 acquisition of DHF Soluções Automotivas in Brazil and increases from large national distributors in North America, as the new distribution hub improved efficiency and backlog was significantly reduced. Sales within the retail channel increased primarily due to incremental demand from existing customers for towing, towing accessories and cargo management products. Second quarter operating profit and the related margin percentage increased due to the higher sales levels, improved productivity and reduced costs resulting from the move of production to lower cost country facilities and vendor cost reductions. 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.
3
2014 Outlook
The Company maintains its 2014 outlook originally 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 addition, the Company expects to generate between $55 million and $65 million of Free Cash Flow, defined as Cash Flow from Operating Activities less Capital Expenditures, for 2014.
Wathen concluded, "We continue to focus on capturing the opportunities and mitigating the risks we face in these choppy end markets. While we are maintaining our full year 2014 EPS guidance of $2.15 to $2.25, we believe we are trending to the lower end of the range given the current conditions we are facing."
Conference Call Information
TriMas Corporation will host its second quarter 2014 earnings conference call today, Thursday, July 31, 2014, at 10:00 a.m. ET. The call-in number is (888) 364-3108. Participants should request to be connected to the TriMas Corporation second quarter 2014 earnings conference call (Conference ID #3923586). 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 #3923586) beginning July 31, 2014 at 3:00 p.m. ET through August 7, 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 19 countries. For more information, visit www.trimascorp.com.
(1) | Appendix I details certain costs, expenses and other charges, collectively described as “Special Items,” that are included in the determination of income from continuing operations attributable to TriMas Corporation under GAAP, but that management would consider important in evaluating the quality of the Company's operating results. |
(2) | Business Segment Results include Operating Profit that excludes the impact of Special Items. For a complete schedule of Special Items by segment, see “Company and Business Segment Financial Information.” |
4
TriMas Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands)
June 30, 2014 | December 31, 2013 | |||||||
Assets | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 38,380 | $ | 27,000 | ||||
Receivables, net | 246,340 | 180,210 | ||||||
Inventories | 260,950 | 270,690 | ||||||
Deferred income taxes | 18,340 | 18,340 | ||||||
Prepaid expenses and other current assets | 18,780 | 18,770 | ||||||
Total current assets | 582,790 | 515,010 | ||||||
Property and equipment, net | 212,130 | 206,150 | ||||||
Goodwill | 312,270 | 309,660 | ||||||
Other intangibles, net | 209,910 | 219,530 | ||||||
Other assets | 47,540 | 50,430 | ||||||
Total assets | $ | 1,364,640 | $ | 1,300,780 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 14,570 | $ | 10,290 | ||||
Accounts payable | 175,300 | 166,090 | ||||||
Accrued liabilities | 79,440 | 85,130 | ||||||
Total current liabilities | 269,310 | 261,510 | ||||||
Long-term debt | 353,910 | 295,450 | ||||||
Deferred income taxes | 54,180 | 64,940 | ||||||
Other long-term liabilities | 100,980 | 99,990 | ||||||
Total liabilities | 778,380 | 721,890 | ||||||
Redeemable noncontrolling interests | — | 29,480 | ||||||
Total shareholders' equity | 586,260 | 549,410 | ||||||
Total liabilities and shareholders' equity | $ | 1,364,640 | $ | 1,300,780 | ||||
5
TriMas Corporation
Consolidated Statement of Income
(Unaudited - dollars in thousands, except per share amounts)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net sales | $ | 403,980 | $ | 378,030 | $ | 771,720 | $ | 715,810 | ||||||||
Cost of sales | (294,220 | ) | (274,720 | ) | (565,380 | ) | (529,100 | ) | ||||||||
Gross profit | 109,760 | 103,310 | 206,340 | 186,710 | ||||||||||||
Selling, general and administrative expenses | (65,720 | ) | (61,670 | ) | (129,710 | ) | (121,330 | ) | ||||||||
Operating profit | 44,040 | 41,640 | 76,630 | 65,380 | ||||||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (3,440 | ) | (5,540 | ) | (6,910 | ) | (10,750 | ) | ||||||||
Other income (expense), net | (1,910 | ) | 300 | (2,930 | ) | (1,930 | ) | |||||||||
Other expense, net | (5,350 | ) | (5,240 | ) | (9,840 | ) | (12,680 | ) | ||||||||
Income from continuing operations before income tax expense | 38,690 | 36,400 | 66,790 | 52,700 | ||||||||||||
Income tax expense | (12,490 | ) | (9,300 | ) | (21,210 | ) | (11,560 | ) | ||||||||
Income from continuing operations | 26,200 | 27,100 | 45,580 | 41,140 | ||||||||||||
Income from discontinued operations, net of income tax expense | — | 700 | — | 700 | ||||||||||||
Net income | 26,200 | 27,800 | 45,580 | 41,840 | ||||||||||||
Less: Net income attributable to noncontrolling interests | — | 910 | 810 | 1,770 | ||||||||||||
Net income attributable to TriMas Corporation | $ | 26,200 | $ | 26,890 | $ | 44,770 | $ | 40,070 | ||||||||
Basic earnings per share attributable to TriMas Corporation: | ||||||||||||||||
Continuing operations | $ | 0.58 | $ | 0.66 | $ | 1.00 | $ | 1.00 | ||||||||
Discontinued operations | — | 0.02 | — | 0.02 | ||||||||||||
Net income per share | $ | 0.58 | $ | 0.68 | $ | 1.00 | $ | 1.02 | ||||||||
Weighted average common shares—basic | 44,901,090 | 39,425,471 | 44,834,842 | 39,330,125 | ||||||||||||
Diluted earnings per share attributable to TriMas Corporation: | ||||||||||||||||
Continuing operations | $ | 0.58 | $ | 0.65 | $ | 0.99 | $ | 0.99 | ||||||||
Discontinued operations | — | 0.02 | — | 0.02 | ||||||||||||
Net income per share | $ | 0.58 | $ | 0.67 | $ | 0.99 | $ | 1.01 | ||||||||
Weighted average common shares—diluted | 45,230,862 | 39,886,593 | 45,208,488 | 39,790,349 | ||||||||||||
6
TriMas Corporation
Consolidated Statement of Cash Flow
(Unaudited - dollars in thousands)
Six months ended June 30, | ||||||||
2014 | 2013 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 45,580 | $ | 41,840 | ||||
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: | ||||||||
Loss on dispositions of property and equipment | 240 | 10 | ||||||
Depreciation | 16,320 | 14,560 | ||||||
Amortization of intangible assets | 10,990 | 10,230 | ||||||
Amortization of debt issue costs | 960 | 870 | ||||||
Deferred income taxes | (2,420 | ) | (3,470 | ) | ||||
Non-cash compensation expense | 4,360 | 4,750 | ||||||
Excess tax benefits from stock based compensation | (1,030 | ) | (1,180 | ) | ||||
Increase in receivables | (63,500 | ) | (54,460 | ) | ||||
Decrease in inventories | 11,520 | 1,320 | ||||||
(Increase) decrease in prepaid expenses and other assets | 1,250 | (2,240 | ) | |||||
Increase (decrease) in accounts payable and accrued liabilities | (1,880 | ) | 2,320 | |||||
Other, net | 600 | (1,010 | ) | |||||
Net cash provided by operating activities, net of acquisition impact | 22,990 | 13,540 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (20,490 | ) | (25,920 | ) | ||||
Acquisition of businesses, net of cash acquired | — | (46,610 | ) | |||||
Net proceeds from disposition of assets | 240 | 700 | ||||||
Net cash used for investing activities | (20,250 | ) | (71,830 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from borrowings on term loan facilities | 89,730 | 106,420 | ||||||
Repayments of borrowings on term loan facilities | (91,030 | ) | (104,830 | ) | ||||
Proceeds from borrowings on revolving credit and accounts receivable facilities | 552,110 | 475,890 | ||||||
Repayments of borrowings on revolving credit and accounts receivable facilities | (489,310 | ) | (418,900 | ) | ||||
Distributions to noncontrolling interests | (580 | ) | (1,350 | ) | ||||
Payment for noncontrolling interests | (51,000 | ) | — | |||||
Proceeds from contingent consideration related to disposition of businesses | — | 1,030 | ||||||
Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (2,740 | ) | (3,760 | ) | ||||
Proceeds from exercise of stock options | 430 | 860 | ||||||
Excess tax benefits from stock based compensation | 1,030 | 1,180 | ||||||
Net cash provided by financing activities | 8,640 | 56,540 | ||||||
Cash and Cash Equivalents: | ||||||||
Increase (decrease) for the period | 11,380 | (1,750 | ) | |||||
At beginning of period | 27,000 | 20,580 | ||||||
At end of period | $ | 38,380 | $ | 18,830 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 5,550 | $ | 8,280 | ||||
Cash paid for taxes | $ | 10,740 | $ | 13,830 | ||||
7
TriMas Corporation
Company and Business Segment Financial Information
(Unaudited - dollars in thousands)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Packaging | ||||||||||||||||
Net sales | $ | 86,250 | $ | 78,640 | $ | 167,680 | $ | 152,990 | ||||||||
Operating profit | $ | 20,540 | $ | 19,600 | $ | 38,900 | $ | 34,230 | ||||||||
Energy | ||||||||||||||||
Net sales | $ | 52,320 | $ | 58,820 | $ | 105,100 | $ | 113,740 | ||||||||
Operating profit (loss) | $ | (630 | ) | $ | 5,210 | $ | 1,970 | $ | 11,080 | |||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 2,350 | $ | — | $ | 2,350 | $ | — | ||||||||
Excluding Special Items, operating profit would have been | $ | 1,720 | $ | 5,210 | $ | 4,320 | $ | 11,080 | ||||||||
Aerospace & Defense | ||||||||||||||||
Net sales | $ | 32,800 | $ | 23,740 | $ | 62,340 | $ | 44,710 | ||||||||
Operating profit | $ | 5,290 | $ | 5,520 | $ | 10,470 | $ | 9,270 | ||||||||
Engineered Components | ||||||||||||||||
Net sales | $ | 54,320 | $ | 50,020 | $ | 109,750 | $ | 96,290 | ||||||||
Operating profit | $ | 8,950 | $ | 5,890 | $ | 16,830 | $ | 11,590 | ||||||||
Cequent APEA | ||||||||||||||||
Net sales | $ | 43,800 | $ | 38,290 | $ | 83,270 | $ | 70,380 | ||||||||
Operating profit | $ | 2,220 | $ | 2,550 | $ | 4,720 | $ | 5,730 | ||||||||
Cequent Americas | ||||||||||||||||
Net sales | $ | 134,490 | $ | 128,520 | $ | 243,580 | $ | 237,700 | ||||||||
Operating profit | $ | 16,940 | $ | 12,890 | $ | 22,650 | $ | 13,590 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 1,460 | $ | 1,960 | $ | 2,440 | $ | 7,790 | ||||||||
Excluding Special Items, operating profit would have been | $ | 18,400 | $ | 14,850 | $ | 25,090 | $ | 21,380 | ||||||||
Corporate Expenses | ||||||||||||||||
Operating loss | $ | (9,270 | ) | $ | (10,020 | ) | $ | (18,910 | ) | $ | (20,110 | ) | ||||
Total Company | ||||||||||||||||
Net sales | $ | 403,980 | $ | 378,030 | $ | 771,720 | $ | 715,810 | ||||||||
Operating profit | $ | 44,040 | $ | 41,640 | $ | 76,630 | $ | 65,380 | ||||||||
Total Special Items to consider in evaluating operating profit: | $ | 3,810 | $ | 1,960 | $ | 4,790 | $ | 7,790 | ||||||||
Excluding Special Items, operating profit would have been | $ | 47,850 | $ | 43,600 | $ | 81,420 | $ | 73,170 | ||||||||
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 June 30, | Six months ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Income from continuing operations, as reported | $ | 26,200 | $ | 27,100 | $ | 45,580 | $ | 41,140 | ||||||||
Less: Net income attributable to noncontrolling interests | — | 910 | 810 | 1,770 | ||||||||||||
Income from continuing operations attributable to TriMas Corporation | 26,200 | 26,190 | 44,770 | 39,370 | ||||||||||||
After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 3,190 | 1,390 | 3,860 | 5,590 | ||||||||||||
Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been | $ | 29,390 | $ | 27,580 | $ | 48,630 | $ | 44,960 | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Diluted earnings per share from continuing operations attributable to TriMas Corporation, as reported | $ | 0.58 | $ | 0.65 | $ | 0.99 | $ | 0.99 | ||||||||
After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 0.07 | 0.04 | 0.09 | 0.14 | ||||||||||||
Excluding Special Items, EPS from continuing operations would have been | $ | 0.65 | $ | 0.69 | $ | 1.08 | $ | 1.13 | ||||||||
Weighted-average shares outstanding for the three and six months ended June 30, 2014 and 2013 | 45,230,862 | 39,886,593 | 45,208,488 | 39,790,349 | ||||||||||||
9
Second Quarter 2014 Earnings Presentation J u l y 3 1 , 2 0 1 4 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 earnings releases available on the Company’s website. Additional information is available at www.trimascorp.com under the “Investors” section. 2
Agenda • Opening Remarks • Financial Highlights • Segment Highlights • Outlook and Summary • Questions and Answers • Appendix 3
Opening Remarks – Second Quarter Results • Record quarterly sales of approximately $404 million – growth of nearly 7% compared to Q2 2013 – Bolt-on acquisitions and organic growth initiatives adding to top-line – Packaging and Aerospace leading growth • Q2 2014 operating profit(1) improved nearly 10% with a 30 basis point improvement in margin percentage compared to Q2 2013 • Q2 2014 headwinds included energy-related end markets, inefficiencies caused by channel disruptions with aerospace distribution customers, higher level of shares outstanding and tax rate • Focus on margin improvement and productivity • Continued to face low-growth economies in North America and Europe, as well as “choppy” demand levels 4(1) Operating Profit excluding “Special Items.” “Special Items” for each period are provided in the Appendix. Balancing revenue and margin growth a high priority.
Focus on “Bright Spots” 5 Growth focused on faster growing markets as we follow and support our customers. “Bright Spot” Packaging • Asia • Higher-end products Energy • Customers’ willingness to adopt advanced, safety-related products Aerospace & Defense • Boeing and Airbus build rates • Increasing carbon fiber construction of aircraft Engineered Components • Ability to leverage small-cylinder plant with new volumes • Arrow’s new product acceptance in marketplace Cequent • Continuous progress on recent restructuring and new plants • Changes within OEMs
6 Maintaining investments for growth. Innovation Drives Long-Term Growth Innovation Examples Packaging • Large customer foam pumps now in stores • Ohio “Beauty Park” plant adding new products • “Instant” color change capability in process • Lion Holdings acquisition supports the pursuit of opportunities in Asia Energy • E-catalogs for share growth within current customer contracts • Isotek and “fire-safe” seals; pursue subsea fasteners • Key customers approve new Matrix product • European and Asian order intake increased 25% in 2014 versus 2013 Aerospace & Defense • Mac Fasteners YTD orders nearly doubled in 2014 versus 2013 • Actively seeking six additional collar family approvals • Flush bolts Engineered Components • Launched SA90 higher horsepower engine line • Kanban stocking programs for cylinder customers • Fire-suppressant products • Norris achieved ISO 18001 certification Cequent • High-featured jacks and winches launched • Skid plates developed for key customers in Brazil • Certain 2014 SUVs delivered without hitch-in-frame • Internet and “.com” orders are fastest growing channel • Brake controller redesign
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 • Grow headquarters overhead slower than revenue growth Plan to expand operating profit margin to the mid-teens 7 Demonstrating progress on each margin expansion tactic.
8 Productivity, cost reductions and pricing actions drive increased margins. Impacts on Margin Response Packaging + Price increases due to resin cost increases ‒ Higher than anticipated sales in China requiring manual assembly ‒ Outsourcing for capacity • Ramping-up China II plant • Acquired Lion Holdings Energy + Branch profitability reviews + Increased focus on high-tech products ‒ Market softness leads to facility underutilization ‒ Brazil offshore oil program a minimum of two years late • Closing branch in Brazil and China • Reduced headcount • “Right-sized” for lower demand Aerospace & Defense + Product line reviews + Mac Fasteners average selling price increases ‒ Decrease in defense business ‒ Raw material supplier issues • Exit less profitable product(s) • Winding down NI business • Evaluating supplier processes Engineered Components + Price increases on majority of Arrow products + Recovery of compressor sales + Huntsville cylinder plant leveraging acquisition volume + Material content down via tolerance reduction ‒ Three specialty steel suppliers raising price • Ramping-up transferred equipment • New chamfer equipment in Q3 • Increase selling prices and yield Cequent + Reynosa = Goshen production levels; need additional 15% production + Dallas warehouse output doubled during Q2 versus Q1 2014 + Evaluating location of brake controller production + China currency relatively “flat” ‒ 20% of outbound freight is split shipments • Inventory recovery Current Margin Actions
9 All actions improve TriMas – revenue and/or margin; Focus on strategic, bolt-on acquisitions in packaging and aerospace. Continued Portfolio Management Packaging • Divested industrial rings and levers business in Italy – low growth, low tech • Acquired remaining 30% of Arminak – ability to accelerate plans • Acquired Lion Holdings with three plants in Asia – adds in-market capacity Energy • “Right-sizing” footprint in Brazil – market smaller/slower than anticipated • Closed less profitable branch in China; opened branch in Belgium Aerospace and Defense • Acquired Martinic Engineering – broadened product offering to machined components • Acquired Mac Fasteners – added aftermarket channel • Exiting less-profitable product line – lower technology; free-up equipment • Winding down defense business Engineered Components • Acquired additional small cylinder assets and volume – leverages existing plant Cequent • Acquired businesses in Europe – expanded products and geography • Acquired businesses in Brazil – increased geographic market penetration
Financial Highlights
Second Quarter Summary • Sales increased 6.9% as compared to Q2 2013 as a result of acquisitions and organic growth initiatives, offsetting challenges in energy end markets and the Q3 2013 disposition of the Italian rings and levers business • Q2 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 • Q2 income(1) increased 6.6%, while Q2 EPS(1) decreased due to a higher tax rate and more than 13% higher weighted average shares outstanding in Q2 2014 as compared to Q2 2013 • Q2 Free Cash Flow(2) on plan and YTD Q2 Free Cash Flow(2) ahead of last year by $14.9 million • Total debt decreased by 23.3% as compared to Q2 2013 11(1) Defined as operating profit, excluding “Special Items,” and income from continuing operations and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Cash Flows from Operating Activities less Capital Expenditures. (Unaudited, dollars in millions, except per share amounts) ( fro m co ntining o perat io ns) Q2 2014 Q2 2013 % Chg Revenue 404.0$ 378.0$ 6.9% Operating Profit 44.0$ 41.6$ 5.8% Excl. Total Special Items (1) , Operating Profit would have been: 47.9$ 43.6$ 9.7% Excl. Total Special Items (1) , Operating Profit margin would have been: 11.8% 11.5% 30 bps Income 26.2$ 27.1$ -3.3% Income attributable to TriM as Corporation (1) 26.2$ 26.2$ - Excl. Total Special Items (1) , Income attributable to TriM as Corporation would have been: 29.4$ 27.6$ 6.6% Diluted earnings per share, attributable to TriMas Corporation 0.58$ 0.65$ -10.8% Excl. Total Special Items (1) , diluted earnings per share attributable to TriM as Corporation would have been: 0.65$ 0.69$ -5.8% Free Cash Flow (2) 36.2$ 39.5$ -8.4% Total Debt 368.5$ 480.7$ -23.3%
Segment Highlights
Packaging Q2 2014 Results: • Sales increased primarily as a result of specialty systems product sales gains — Increased demand from North American, European and Asian dispensing customers — Improved demand for industrial closures, offset by the divestiture of the Italian industrial rings and levers business during Q3 2013 • New facilities in Asia will have a positive impact on margins over time reducing outsourced capacity and increasing efficiency • On July 25, 2014, acquired Lion Holdings, a manufacturer of highly engineered dispensing solutions with locations in India and Vietnam (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 • Leverage responsive and flexible manufacturing footprint • Ensure new products continue to have barriers to entry 13 Net Sales Q2-13 Q2-14 $78.6 $86.3 9.7% Operating Profit Q2-13 Q2-14 $19.6 $20.5 24.9% 23.8% 4.8%
Energy Q2 2014 Results: • Sales decreased from record prior year quarter due to the lower levels of turnaround and maintenance activity combined with reduced sales to engineering and construction customers • Operating profit and margin were negatively impacted by the slow down, which resulted in a less favorable product mix toward standard gaskets and bolts, challenges in Brazil and increased SG&A expenses from recent acquisitions • Increased focus on productivity and margin improvement initiatives • Announced the restructuring of the Brazilian business, including the closure of the São Paulo manufacturing facility, in June 2014 due to lower than expected demand Key Initiatives: • Optimize and refine branch strategy and manufacturing footprint • Vertically integrate, maximize supply chain and drive lean initiatives to lower costs and improve margins • Expand business capabilities with major customers globally • Increase sales of highly-engineered specialty products • Execute on profitability and growth initiatives in emerging markets, including Brazil 14 (Unaudited, dollars in millions) Net Sales Q2-13 Q2-14 $58.8 $52.3 -11.1% Operating Profit(1) Q2-13 Q2-14 -67.0% $5.2 $1.7 8.9% 3.3% (1) Excluding “Special Items” for each period which are provided in the Appendix.
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 and optimize Martinic Engineering and Mac Fasteners • Consider other complementary bolt-on acquisitions Q2 2014 Results: • Sales increased primarily as a result of the Q4 2013 Mac Fasteners acquisition, which expanded our content on aircraft, and higher blind bolt and collar sales • Experienced choppy order demand and smaller lot sizes in the aerospace distribution channel • Operating profit and margin decreased due to a less favorable product sales mix, lower margins associated with the recent acquisitions, manufacturing inefficiencies and higher SG&A as a result of growth initiatives • In the process of winding down NI business 15 (Unaudited, dollars in millions) Net Sales Q2-13 Q2-14 $23.7 $32.8 38.2% Operating Profit Q2-13 Q2-14 -4.2% $5.5 $5.3 23.3% 16.1%
Engineered Components Key Initiatives: • Expand complementary product lines at well-sites and grow compression products • 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 Q2 2014 Results: • Sales of industrial cylinders increased primarily due to the November 2013 small cylinder asset acquisition • Sales of slow speed engines decreased, partially offset by increased sales in gas compression products • Operating profit increased and margin improved 470 basis points due to increased sales levels, continued productivity and cost reduction initiatives, and operating leverage from relatively flat SG&A spending 16 (Unaudited, dollars in millions) Net Sales Q2-13 Q2-14 $50.0 $54.3 8.6% Operating Profit Q2-13 Q2-14 52.0% $5.9 $9.0 11.8% 16.5%
Cequent (APEA & Americas) $46.4 Q2 2014 Results: • Sales in Americas increased to a record level, with increases in the aftermarket and retail channels • Americas operating profit(1) improved and margin percentage increased 210 basis points due to labor savings generated from the manufacturing move to Mexico, productivity projects and vendor cost reductions • APEA sales increased due to continued geographic expansion including its recent acquisitions, partially offset by the lower demand in Australia • APEA operating profit and margin percentage decreased as profit from higher sales volumes was more than offset by a less favorable product sales mix, and the ongoing SG&A related to the recent acquisitions Key Initiatives: • Globalize product lines and 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 • Optimize opportunistic, bolt-on acquisitions • Utilize lean to continue to reduce fixed costs and simplify the businesses for better customer service and operating effectiveness • Continue to reduce working capital requirements APEA Americas 17 APEA Americas (1) Excluding “Special Items” for each period which are provided in the Appendix. (Unaudited, dollars in millions) $43.8 $134.5 Net Sales $38.3 $128.5 Q2-13 Q2-14 $178.3 $166.8 6.9% $2.2 $18.4 Operating Profit(1) $2.6 $14.9 Q2-13 Q2-14 $20.6 18.5% $17.5 11.6% 13.7% 6.7% 5.1%
Outlook and Summary
2014 Outlook Outlook as of 7/31/14 Tailwinds Headwinds Sales Growth 6% to 8% • Packaging • Energy • Cequent Australia/ Thailand Earnings Per Share, diluted(1) $2.15 to $2.25 • Packaging growth • Engineered Components margin improvement • Cequent Americas margin improvement • Energy volumes/ product mix • Choppy orders from aerospace distributors • Tax rate Free Cash Flow(2) $55 to $65 million • Better working capital performance • Customer required inventories (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. 19 Focused on capturing opportunities and mitigating risks; Maintained outlook, but trending toward lower end of EPS guidance range.
Future Aspirations 20 • Ongoing organic and acquisition growth • Disciplined focus on higher growth markets • Business mix, ongoing productivity and cost leverage • Deploy cash for growth and productivity • Hurdle rate goal We are working toward these performance metrics of success.
TriMas Value Proposition 21 Clear goals, high-performance teams and streamlined processes drive enhanced results. S T A B I L I T Y • Industrial • Aerospace • Agricultural • Consumer • Energy • Geographic diversity • Customer diversity BALANCED PORTFOLIO M A R G I N E X P A N S I O N F U N D S G R O W T H • Rationalization • Optimization of global supply chain • Lean initiatives • Better cost positions • Non-operational efficiencies • Redesigns PRODUCTIVITY G R O W T H > E N D M A R K E T S • Multiple projects in all businesses • Geographic • Product • Customer penetration • Acquisitions • Growing middle classGROWTH S H A R E H O L D E R R E T U R N • Earnings growth > sales growth • Strong cash flow dynamics • Increased return on capital • Margin expansion I NCREASED ENTERPRI SE VALUE
Questions and Answers
Appendix
First Half 2014 Summary • Sales increased 7.8% as compared to YTD 2013 as a result of acquisitions and organic growth initiatives, offsetting challenges in energy end markets and the Q3 2013 disposition of the Italian rings and levers business • YTD 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 • YTD income(1) increased 8.2%, while YTD EPS(1) decreased due to a higher tax rate and more than 13% higher weighted average shares outstanding in YTD 2014 as compared to YTD 2013 • YTD Free Cash Flow(2) is ahead of last year by $14.9 million and total debt decreased by 23.3% as compared to Q2 2013 – both as expected 24(1) Defined as operating profit, excluding “Special Items,” and income from continuing operations and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Cash Flows from Operating Activities less Capital Expenditures. (Unaudited, dollars in millions, except per share amounts) ( f ro m co ntinuing o perat io ns) Q2 YTD 2014 Q2 YTD 2013 % Chg Revenue 771.7$ 715.8$ 7.8% Operating Profit 76.6$ 65.4$ 17.2% Excl. To tal Special Items (1) , Operating Pro fit would have been: 81.4$ 73.2$ 11.3% Excl. To tal Special Items (1) , Operating Pro fit margin would have been: 10.6% 10.2% 40 bps Income 45.6$ 41.1$ 10.8% Income attributable to TriM as Corporation (1) 44.8$ 39.4$ 13.7% Excl. To tal Special Items (1) , Income attributable to TriM as Corporation would have been: 48.6$ 45.0$ 8.2% Diluted earnings per share, attributable to TriMas Corporation 0.99$ 0.99$ - Excl. To tal Special Items (1) , diluted earnings per share attributable to TriM as Corporation would have been: 1.08$ 1.13$ -4.4% Free Cash Flow (2) 2.5$ (12.4)$ 120.2% Total Debt 368.5$ 480.7$ -23.3%
Condensed Consolidated Balance Sheet 25 (Dollars in thousands) June 30, December 31, 2014 2013 (unaudited) Assets Current assets: Cash and cash equivalents............................................................. 38,380$ 27,000$ Receivables, net............................................................................ 246,340 180,210 Inventories..................................................................................... 260,950 270,690 Deferred income taxes................................................................... 18,340 18,340 Prepaid expenses and other current assets...................................... 18,780 18,770 Total current assets.................................................................... 582,790 515,010 Property and equipment, net.............................................................. 212,130 206,150 Goodwill........................................................................................... 312,270 309,660 Other intangibles, net........................................................................ 209,910 219,530 Other assets.................................................................................... 47,540 50,430 Total assets............................................................................... 1,364,640$ 1,300,780$ Liabilities and Shareholders' Equity Current liabilities: Current maturities, long-term debt................................................... 14,570$ 10,290$ Accounts payable.......................................................................... 175,300 166,090 Accrued liabilities.......................................................................... 79,440 85,130 Total current liabilities................................................................. 269,310 261,510 Long-term debt................................................................................. 353,910 295,450 Deferred income taxes...................................................................... 54,180 64,940 Other long-term liabilities................................................................... 100,980 99,990 Total liabilities............................................................................ 778,380 721,890 Redeemable noncontrolling interests............................................ - 29,480 Total shareholders' equity............................................................ 586,260 549,410 Total liabilities and shareholders' equity........................................ 1,364,640$ 1,300,780$
Consolidated Statement of Income 26 Three months ended Six months ended 2014 2013 2014 2013 Net sales................................................................................................. 403,980$ 378,030$ 771,720$ 715,810$ Cost of sales............................................................................................ (294,220) (274,720) (565,380) (529,100) Gross profit........................................................................................... 109,760 103,310 206,340 186,710 Selling, general and administrative expenses............................................... (65,720) (61,670) (129,710) (121,330) Operating profit...................................................................................... 44,040 41,640 76,630 65,380 Other expense, net: Interest expense.................................................................................... (3,440) (5,540) (6,910) (10,750) Other income (expense), net................................................................... (1,910) 300 (2,930) (1,930) Other expense, net............................................................................. (5,350) (5,240) (9,840) (12,680) Income from continuing operations before income tax expense...................... 38,690 36,400 66,790 52,700 Income tax expense.................................................................................. (12,490) (9,300) (21,210) (11,560) Income from continuing operations.............................................................. 26,200 27,100 45,580 41,140 Income from discontinued operations, net of income tax expense.................. - 700 - 700 Net income............................................................................................... 26,200 27,800 45,580 41,840 Less: Net income attributable to noncontrolling interests.............................. - 910 810 1,770 Net income attributable to TriMas Corporation.............................................. 26,200$ 26,890$ 44,770$ 40,070$ Earnings per share attributable to TriMas Corporation - basic: Continuing operations............................................................................. $ 0.58 $ 0.66 $ 1.00 $ 1.00 Discontinued operations......................................................................... - 0.02 - 0.02 Net income per share............................................................................. $ 0.58 $ 0.68 $ 1.00 $ 1.02 Weighted average common shares - basic 44,901,090 39,425,471 44,834,842 39,330,125 Earnings per share attributable to TriMas Corporation - diluted: Continuing operations............................................................................. $ 0.58 $ 0.65 $ 0.99 $ 0.99 Discontinued operations......................................................................... - 0.02 - 0.02 Net income per share............................................................................. $ 0.58 $ 0.67 $ 0.99 $ 1.01 Weighted average common shares - diluted 45,230,862 39,886,593 45,208,488 39,790,349 June 30, June 30, (Unaudited, dollars in thousands, except for per share amounts)
Consolidated Statement of Cash Flow (Unaudited, dollars in thousands) 27 2014 2013 Cash Flows from Operating Activities: Net income......................................................................................................................... 45,580$ 41,840$ Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: Loss on dispositions of property and equipment.................................................................. 240 10 Depreciation..................................................................................................................... 16,320 14,560 Amortization of intangible assets....................................................................................... 10,990 10,230 Amortization of debt issue costs........................................................................................ 960 870 Deferred income taxes...................................................................................................... (2,420) (3,470) Non-cash compensation expense...................................................................................... 4,360 4,750 Excess tax benefits from stock based compensation........................................................... (1,030) (1,180) Increase in receivables...................................................................................................... (63,500) (54,460) Decrease in inventories..................................................................................................... 11,520 1,320 (Increase) decrease in prepaid expenses and other assets................................................... 1,250 (2,240) Increase (decrease) in accounts payable and accrued liabilities............................................ (1,880) 2,320 Other, net........................................................................................................................ 600 (1,010) Net cash provided by operating activities, net of acquisition impact.................................... 22,990 13,540 Cash Flows from Investing Activities: Capital expenditures......................................................................................................... (20,490) (25,920) Acquisition of businesses, net of cash acquired.................................................................. - (46,610) Net proceeds from disposition of assets............................................................................. 240 700 Net cash used for investing activities............................................................................... (20,250) (71,830) Cash Flows from Financing Activities: Proceeds from borrowings on term loan facilities................................................................. 89,730 106,420 Repayments of borrowings on term loan facilities................................................................. (91,030) (104,830) Proceeds from borrowings on revolving credit and accounts receivable facilities...................... 552,110 475,890 Repayments of borrowings on revolving credit and accounts receivable facilities..................... (489,310) (418,900) Distributions to noncontrolling interests.............................................................................. (580) (1,350) Payment for noncontrolling interests................................................................................... (51,000) - Proceeds from contingent consideration related to disposition of businesses......................... - 1,030 Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations…...………………………………………………………………………………………… (2,740) (3,760) Proceeds from exercise of stock options............................................................................ 430 860 Excess tax benefits from stock based compensation........................................................... 1,030 1,180 Net cash provided by financing activities.......................................................................... 8,640 56,540 Cash and Cash Equivalents: Increase (decrease) for the period...................................................................................... 11,380 (1,750) At beginning of period....................................................................................................... 27,000 20,580 At end of period............................................................................................................. 38,380$ 18,830$ Supplemental disclosure of cash flow information: Cash paid for interest..................................................................................................... 5,550$ 8,280$ Cash paid for taxes........................................................................................................ 10,740$ 13,830$ Six months ended June 30,
Company and Business Segment Financial Information 28 Three months ended 2014 2013 2014 2013 Packaging Net sales......................................................................................................... 86,250$ 78,640$ 167,680$ 152,990$ Operating profit................................................................................................. 20,540$ 19,600$ 38,900$ 34,230$ Energy Net sales......................................................................................................... 52,320$ 58,820$ 105,100$ 113,740$ Operating profit (loss)........................................................................................ (630)$ 5,210$ 1,970$ 11,080$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs.................................................... 2,350$ -$ 2,350$ -$ Excluding Special Items, operating profit would have been.............................. 1,720$ 5,210$ 4,320$ 11,080$ Aerospace & Defense Net sales......................................................................................................... 32,800$ 23,740$ 62,340$ 44,710$ Operating profit................................................................................................. 5,290$ 5,520$ 10,470$ 9,270$ Engineered Components Net sales......................................................................................................... 54,320$ 50,020$ 109,750$ 96,290$ Operating profit................................................................................................. 8,950$ 5,890$ 16,830$ 11,590$ Cequent APEA Net sales......................................................................................................... 43,800$ 38,290$ 83,270$ 70,380$ Operating profit................................................................................................. 2,220$ 2,550$ 4,720$ 5,730$ Cequent Americas Net sales......................................................................................................... 134,490$ 128,520$ 243,580$ 237,700$ Operating profit................................................................................................. 16,940$ 12,890$ 22,650$ 13,590$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs.................................................... 1,460$ 1,960$ 2,440$ 7,790$ Excluding Special Items, operating profit would have been.............................. 18,400$ 14,850$ 25,090$ 21,380$ Corporate Expenses Operating loss.................................................................................................. (9,270)$ (10,020)$ (18,910)$ (20,110)$ Total Company Net sales......................................................................................................... 403,980$ 378,030$ 771,720$ 715,810$ Operating profit................................................................................................. 44,040$ 41,640$ 76,630$ 65,380$ Total Special Items to consider in evaluating operating profit................................. 3,810$ 1,960$ 4,790$ 7,790$ Excluding Special Items, operating profit would have been.............................. 47,850$ 43,600$ 81,420$ 73,170$ June 30, June 30, Six months ended(Unaudited, dollars in thousands)
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures 29 Three months ended Six months ended June 30, June 30, 2014 2013 2014 2013 Income from continuing operations, as reported............................................................ 26,200$ 27,100$ 45,580$ 41,140$ Less: Net income attributable to noncontrolling interests...................................................... - 910 810 1,770 Income from continuing operations attributable to TriMas Corporation..................................... 26,200 26,190 44,770 39,370 After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: Severance and business restructuring costs..................................................................... 3,190 1,390 3,860 5,590 Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been………………………………………………………………………………. 29,390$ 27,580$ 48,630$ 44,960$ Three months ended Six months ended June 30, June 30, 2014 2013 2014 2013 Diluted earnings per share from continuing operations attributable to TriMas Corporation, as reported................................................................................................ 0.58$ 0.65$ 0.99$ 0.99$ After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: Severance and business restructuring costs..................................................................... 0.07 0.04 0.09 0.14 Excluding Special Items, EPS from continuing operations would have been….......... 0.65$ 0.69$ 1.08$ 1.13$ Weighted-average shares outstanding for the three and six months ended June 30, 2014 and 2013................................................................................................ 45,230,862 39,886,593 45,208,488 39,790,349 2014 2013 2014 2013 Operating profit (excluding Special Items)……………………….………............................. 47,850$ 43,600$ 81,420$ 73,170$ Corporate expenses……………………………………………………………............................ 9,270 10,020 18,910 20,110 Segment operating profit (excluding Special Items)…………………............................... 57,120$ 53,620$ 100,330$ 93,280$ Segment operating profit margin (excluding Special Items)…...……............................. 14.1% 14.2% 13.0% 13.0% June 30, June 30, Three months ended Six months ended (Unaudited, dollars in thousands, except for per share amounts)
Enhanced Debt Structure 30 (Unaudited, dollars in thousands) As of June 30, 2014, TriMas had $394.8 million of cash and available liquidity under its revolving credit and accounts receivable facilities. June 30, December 31, 2014 2013 Cash and Cash Equivalents……………………………..………………… 38,380$ 27,000$ Credit Agreement……………………………………….. 272,970 246,130 Receivables facility and other……………………………….. 95,510 59,610 368,480 305,740 Total Debt………………………...………………………...………………………… 368,480$ 305,740$ Key Ratios: Bank LTM EBITDA……………………………………………………………………………….……………………………………… 213,290$ 196,990$ Interest Coverage Ratio………………………………………………………………… 16.72 x 11.08 x Leverage Ratio…………………………………………………………………... 1.83 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 31 (Unaudited, dollars in thousands) 83,810$ Interest expense, net (as defined)............................................................................................... 14,490 Income tax expense.................................................................................................................. 28,040 Depreciation and amortization.................................................................................................... 53,100 Non-cash compensation expense............................................................................................... 8,810 Other non-cash expenses or losses........................................................................................... 4,780 Non-recurring expenses or costs in connection with acquisition integration.................................... 15,000 Acquisition integration costs...................................................................................................... 1,060 Debt extinguishment costs........................................................................................................ 2,460 Permitted dispositions............................................................................................................... (510) Permitted acquisitions............................................................................................................... 2,250 213,290$ (1) As defined in the Credit Agreement dated October 16, 2013 Net income for the twelve months ended June 30, 2014 .................................................................. Bank EBITDA - LTM Ended June 30, 2014 (1)…………………………………………………………………