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) December 8, 2014
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-10716 | 38-2687639 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer 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) 631-5400
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):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
On December 8, 2014, TriMas Corporation (the “Company”) announced that its Board of Directors had approved a plan to pursue a tax-free spin-off of 100% of its Cequent businesses (the “Spin-off”) into a new stand-alone, publicly traded company (“Spinco”). Also on December 8, 2014, the Company held a conference call to discuss the proposed Spin-off. The Company’s presentation material for the conference call is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 7.01 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 8.01 | Other Events. |
In connection with the announcement of the proposed Spin-off, the Company also announced that, if the Spin-off is completed, Mark Zeffiro, the Company’s current Executive Vice President and Chief Financial Officer, would become the President and Chief Executive Officer of Spinco. The completion of the Spin-off is subject to customary conditions, including the final approval by the Company’s Board of Directors. The Company’s press release announcing the proposed Spin-off is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Spin-off of TriMas’ Cequent Businesses | |
| 99.2 | Press Release dated December 8, 2014 | |
-2-
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: December 8, 2014 | By: | /s/ Joshua A. Sherbin | ||||
| Name: | Joshua A. Sherbin | |||||
| Title: | Vice President, General Counsel and Corporate Secretary | |||||
-3-
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Spin-off of TriMas’ Cequent Businesses | |
| 99.2 | Press Release dated December 8, 2014 | |
 Spin-Off
of TriMas’ Cequent Businesses
Separation Will Create Two New, Industry-Leading Companies
December 8, 2014
NASDAQ
•
TRS
Exhibit 99.1 |
 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 the Company’s plans for
successfully executing the spin-off within the expected timeframe or at all, the taxable
nature of the spin-off, future prospects of the companies as independent
companies, general economic and currency conditions, various conditions specific
to the Company's business and industry, the Company’s ability to integrate Allfast and attain the expected
synergies, and the acquisition being accretive, the Company's leverage, liabilities imposed by
the Company's debt instruments, market demand, competitive factors, supply constraints,
material and energy costs, technology factors, litigation, government and regulatory
actions, the Company's accounting policies, future trends, and other risks which are
detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and in the
Company's Quarterly Reports on Form 10-Q. These risks and uncertainties may cause actual
results to differ materially from those indicated by the forward-looking
statements. All forward-looking statements made herein are based on information
currently available, and the Company assumes no obligation to update any forward-looking statements.
In this 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
•
Transaction Overview
•
New Stand-alone Cequent
•
New TriMas
•
Summary
•
Questions and Answers
•
Appendix
3 |
 Transaction
Overview |
 Strategic
Rationale •
Significant progress has been made over the last several years to improve
and
refine
the
portfolio
and
strengthen
TriMas’
financial
position
•
Thorough review of strategic options led to the decision to spin-off
Cequent businesses
•
Spin-off will result in two independent, publicly traded companies with
increased strategic flexibility
•
Value creation for shareholders, customers and employees:
•
Allows each company to pursue a more focused strategy that leverages its strengths
•
Optimizes the financial profiles of each company to pursue distinct investment,
growth and capital allocation strategies
•
Provides two different and compelling investment opportunities that can be
achieved in a tax efficient manner
5
We believe a tax-free spin-off will create value for shareholders, customers and
employees while accelerating strategic transformation. |
 Transaction
Overview •
Creates two strong, highly competitive stand-alone public
companies
•
Distribute 100% of shares to TriMas shareholders
•
Expected
to
be
tax-free
to
TriMas’
U.S.
shareholders
•
Completion targeted for mid-year 2015
•
Subject to customary closing conditions, final approval by the
TriMas Board of Directors and tax-free opinion
•
Third party and legal entity reorganization-related expenses
estimated to be approximately $20 million over the next several
quarters
6
Transaction will result in two companies better positioned to
increase long-term value for shareholders. |
 7
Creating Two Strong Public Companies
(TTM figures as 9/30/14; Dollars in millions; from continuing operations)
Two independent publicly traded companies with unique characteristics.
New TriMas
New “Cequent”
•
TTM Revenue:
$855 million
•
TTM Segment Operating Profit
(1)
:
$131 million
•
Operating Margin
(1)
%:
~15%
•
President & CEO:
Dave Wathen
•
TTM Revenue:
$614 million
•
TTM Segment Operating Profit
(1)
: $48 million
•
Operating Margin
(1)
%:
~8%
•
Future President & CEO:
Mark Zeffiro
PACKAGING
Revenue: $335.2
Op.
profit
margin
(1)
:
23.4%
AEROSPACE
Revenue: $113.7
Op. profit margin: 18.8%
ENERGY
Revenue: $199.6
Op.
profit
margin
(1)
:
0.7%
ENGINEERED
COMPONENTS
Revenue: $206.6
Op. profit margin: 14.5%
CEQUENT
AMERICAS
Revenue: $445.8
Op.
profit
margin
(1)
:
7.8%
CEQUENT
APEA
Revenue: $167.8
Op.
profit
margin
(1)
:
7.7%
(1)
All figures are trailing twelve months (TTM) as of September 30, 2014. Operating
profit margin excludes “Special
Items.” TTM figures and Special Items are provided in the Appendix. |
 Two Strong
Companies with Unique Characteristics 8
Different approaches will accelerate value creation; spin-off will drive
enhanced focus on distinct growth and margin improvement initiatives.
TriMas
Cequent
Main Growth Drivers
New products; growing middle-class
economies; new geographies
Additional content in markets already
served; construction, agriculture and
consumer exposure
Market Share
High share; narrowly focused markets
High share in certain channels and
geographies; broad-line provider
Products
IP protected; highly-engineered; many
newer technologies
IP protected; full-line of products with
well-established brands
Margins
Higher margins; lower cost country
manufacturing opportunities
Opportunity with recent low cost country
moves
Customer Relationships
Business to business; longer-term
customer contracts
Closer to consumer
Auto Exposure
None
Medium
E-commerce Impact
Transactional
Growth platform
Outsourced Manufacturing
Low
Medium
Material Specifications
High
Medium |
 Strategic
Aspirations – Impact to “New”
TriMas
9
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
Neutral
Impact of Spin-off:
Neutral
Spin-off of Cequent accelerates TriMas’ achievement of its Strategic Aspirations.
|
 New
Stand-alone “Cequent” |
 Cequent
– A Growing Global Company
•
Margin expansion
•
“Heavy lifting”
complete –
optimization
•
Product line assessments
•
Acquisition improvement
•
Global/local customer-centric growth
platforms
•
Asia
•
South America
•
Europe
•
Africa
•
Capital allocation
11
Cequent Net Sales
(includes Cequent APEA and
Cequent Americas segments)
(1)
Operating
profit
excludes
“Special
Items”
and
corporate
expense
(in
calculation
of
segment
contribution).
Special
Items
and
separate
Cequent
APEA
and
Cequent
Americas
financial
data
for
each
period
are
provided
in
the
Appendix.
($ in millions)
Net
Sales
&
Operating
Profit
Margins
(1)
Key Initiatives
Financial Snapshot
Globalize presence; increase margins and return on invested capital.
$373
$529
5.1%
9.6%
9.9%
9.5%
$415
$478
8.2%
$589
$614
7.8%
2009
2010
2011
2012
2013
TTM
9/30/14 |
 Cequent
– A Unique Position as a Global Market Leader
12
•
Market leader in North America
and Asia
•
Footprint established for
emerging markets
•
Recent acquisitions to penetrate
the European market
•
Portfolio of well-established
brands serving each channel
•
Leverage existing product and
customer relationships for global
growth
•
Broadest product set available
•
Market-leading products
•
Flexibility to serve current and
future transportation trends
OES
Retail/
E-commerce
OEM
Aftermarket
Approximate
Revenue
(1)
By:
North
America
Asia
Pacific
Africa
Europe
South
America
Heavy Duty
Towing
Hitches
Trailer
Accessories
Towing
Accessories
Brake
Controllers
Cargo
Management
Vehicle
Protection
Electrical
Other
Channel
Geography
Product
Position
as
one
global
company
for
customers
–
only
global
provider
with
full
product
line.
(1)
Based on management estimates. |
 Cequent
– Opportunities for the Future
Following our major customers into key regional markets; opportunities to
drive enhanced growth, margins and ROIC.
13
Future Opportunities for Cequent Product Set
(1)
North America
Europe
Asia Pacific
Africa
South America
Aftermarket
Retail/
E-commerce
OEM/OES
Key Initiatives
•
Expand TriMotive
(OEM/OES) presence
•
Drive improvement in
manufacturing footprint
and costs
•
Participate in
E-commerce expansion
•
Foundation in place with
aftermarket and OE
product set
•
Expand presence into
Retail/E-commerce
•
Margin improvement of
acquisitions
•
Low cost footprint in place
•
New market growth in
China –
in infancy
•
Leverage existing OE
relationships
•
Leverage footprint in
South Africa
•
Towing common, also
driven by mining sector
•
Leverage footprint in
South America
•
Towing becoming more
popular
•
Opportunities for
tubular products
Market Indicator
(Approximate annual
vehicle sales)
16M units
11M units
23M units
2M units
7M units
(1)
Based on management estimates – for illustrative purposes only. Opportunity potential
indicated by white portion of pie.
|
 Cequent
– Advantages as One Global Company
•
Global platform for global customers
•
Local platform for local relevance and supply
•
Broadest product set
•
Strong brand equity
•
Leading technology
•
Talented, experienced management team
14
Opportunity to create significant shareholder value through growth,
productivity and capital allocation. |
 New
TriMas |
 New TriMas
– Positioned for the Future
•
Simplified portfolio of engineered and applied products
•
Well-positioned in attractive growth and higher margin markets
within Packaging and Aerospace
•
Multiple platforms for long-term organic and acquisition growth
•
Strong brand recognition and customer loyalty driven by quality,
speed, agility and innovation
•
Higher margins with opportunities for continued improvement
Spin-off better positions TriMas to drive its strategic initiatives
of organic revenue growth and margin expansion.
16 |
 Packaging
(1)
Operating
profit
excludes
“Special
Items”
and
corporate
expense
(in
calculation
of
segment
contribution).
Special
Items
for
each
period
are
provided
in
the
Appendix.
23.2%
28.5%
25.9%
21.8%
•
Target specialty dispensing and closure products
in higher growth end markets
•
Beverage, food, nutrition, personal care and
pharmaceutical
•
Increase focus on Asian market and other
emerging market opportunities
•
Ramp-up plants in Asia to improve cost structure
and flexibility
•
Provide customized solutions focused on
intellectual property, customer needs,
differentiation and delivery speed
•
Further integrate acquisitions into global sales
network, while expanding margins
Key Initiatives
Net Sales
Financial Snapshot
($ in millions)
Net
Sales
&
Operating
Profit
Margins
(1)
Proven model for product development and growth.
17 |
 Aerospace
•
Integrate Allfast Fastening Systems
•
Optimize Martinic Engineering and Mac
Fasteners acquisitions
•
Expand aerospace fastener product lines to
increase content and applications per aircraft
•
Leverage positive end market trends
including composite aircraft and robotic
assembly
•
Capture incremental opportunities in
emerging markets
•
Drive ongoing lean initiatives
18
(1)
Operating profit excludes “Special Items”
and corporate expense (in calculation of segment
contribution).
Special
Items
for
each
period
are
provided
in
the
Appendix.
Net Sales
Key Initiatives
Financial Snapshot
Combining four distinct businesses into TriMas Aerospace to drive
an integrated go-to-market strategy and margin expansion.
($ in millions)
Net Sales & Operating Profit Margins
(1) |
 Energy
Energy
•
Optimize and refine manufacturing footprint and
branch strategy
•
Reduce costs of standard products –
preliminary
decision to move portion of Houston facility to
new Lamons facility in Mexico
•
Design and sell additional highly-engineered
specialty products
•
Vertically integrate, maximize supply chain and
drive lean initiatives to lower costs and improve
margins
•
Install upgraded SIOP processes to reduce cycle
time and inventory
•
Expand business capabilities with major
customers globally
19
Net Sales
(1)
Operating profit excludes “Special Items”
and corporate expense (in calculation of segment
contribution).
Special
Items
for
each
period
are
provided
in
the
Appendix.
($ in millions)
Net
Sales
&
Operating
Profit
Margins
(1)
Key Initiatives
Financial Snapshot
Focus on increasing margins and optimizing the footprint. |
 Engineered
Components •
Expand complementary product lines at well-site
and grow compression products
•
Grow products to support the shift toward
increased use of natural gas and production in
shale formations
•
Further integrate cost structure of cylinder
acquisition
•
Continue to expand product offering and
geographies
20
Net Sales
(1)
Operating profit excludes “Special Items”
and corporate expense (in calculation of segment
contribution).
Special
Items
for
each
period
are
provided
in
the
Appendix.
($ in millions)
Net
Sales
&
Operating
Profit
Margins
(1)
Key Initiatives
Financial Snapshot
Create new products and new applications; capture emerging market growth.
|
 Summary |
 Summary
•
We believe the decision to spin-off the Cequent businesses is the
next step in transforming and improving TriMas
•
We believe this transaction will create value for shareholders,
customers and employees
•
Spin-off will result in two independent, publicly traded companies
with increased strategic flexibility
•
We have established a comprehensive plan which we are focused
on executing
•
More information to come; plan on a mid-2015 completion
22
We believe a tax-free spin-off of our Cequent businesses will accelerate our strategic
transformation and create value for shareholders, customers and employees.
|
 Strategic
Aspirations 23
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 |
 Questions
and Answers |
 Appendix |
 Business
Segment TTM Financial Information 26
(Unaudited, dollars in thousands)
Trailing
Twelve
Months
12/31/2013
3/31/2014
6/30/2014
9/30/2014
9/30/2014
Packaging
Net
sales......................................................................................................
78,220
$
81,430
$
86,250
$
89,320
$
335,220
$
Operating
profit..............................................................................................
18,220
$
18,360
$
20,540
$
20,770
$
77,890
$
Special Items to consider in evaluating operating profit:
Severance and business restructuring
costs.............................................. -
$
-
$
-
$
620
$
620
$
Excluding Special Items, operating profit would have
been………….. 18,220
$
18,360
$
20,540
$
21,390
$
78,510
$
Energy
Net
sales......................................................................................................
44,160
$
52,780
$
52,320
$
50,290
$
199,550
$
Operating profit
(loss).....................................................................................
(3,910)
$
2,600
$
(630)
$
(1,100)
$
(3,040)
$
Special Items to consider in evaluating operating profit:
Severance and business restructuring
costs.............................................. -
$
-
$
2,350
$
2,080
$
4,430
$
Excluding Special Items, operating profit would have
been……………….. (3,910)
$
2,600
$
1,720
$
980
$
1,390
$
Aerospace
Net
sales......................................................................................................
27,300
$
27,180
$
31,820
$
27,410
$
113,710
$
Operating
profit..............................................................................................
7,010
$
4,850
$
5,690
$
3,870
$
21,420
$
Engineered Components
Net
sales......................................................................................................
41,540
$
55,430
$
54,320
$
55,310
$
206,600
$
Operating
profit..............................................................................................
5,000
$
7,880
$
8,950
$
8,090
$
29,920
$
"New
TriMas"
Net sales
191,220
$
216,820
$
224,710
$
222,330
$
855,080
$
Operating profit
26,320
$
33,690
$
34,550
$
31,630
$
126,190
$
Total Special Items to consider in evaluating operating profit
-
$
-
$
2,350
$
2,700
$
5,050
$
Excluding Special Items, operating profit would have been
26,320
$
33,690
$
36,900
$
34,330
$
131,240
$
Operating profit margin excluding special items
13.8%
15.5%
16.4%
15.4%
15.3%
Quarter To Date
………………………………………………………………………….
…………………………………………………………………
…………..
………….
(2)
(1) |
 Business
Segment TTM Financial Information (cont.) 27
(Unaudited, dollars in thousands)
Cequent APEA
Net
sales......................................................................................................
40,290
$
39,470
$
43,800
$
44,290
$
167,850
$
Operating
profit..............................................................................................
4,620
$
2,500
$
2,220
$
3,210
$
12,550
$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs..................................................
-
$
-
$
-
$
380
$
380
$
Excluding Special Items, operating profit would have been............................
4,620
$
2,500
$
2,220
$
3,590
$
12,930
$
Cequent Americas
Net
sales......................................................................................................
88,680
$
109,090
$
134,490
$
113,500
$
445,760
$
Operating profit
(loss).....................................................................................
(12,180)
$
5,710
$
16,940
$
8,660
$
19,130
$
Special Items to consider in evaluating operating profit (loss):
Severance and business restructuring costs..................................................
13,000
$
980
$
1,460
$
360
$
15,800
$
Excluding Special Items, operating profit would have been............................
820
$
6,690
$
18,400
$
9,020
$
34,930
$
"New Cequent"
(2)
Net
sales......................................................................................................
128,970
$
148,560
$
178,290
$
157,790
$
613,610
$
Operating
profit...........................................................................................
(7,560)
$
8,210
$
19,160
$
11,870
$
31,680
$
Total Special Items to consider in evaluating operating profit....................
13,000
$
980
$
1,460
$
740
$
16,180
$
Excluding Special Items, operating profit would have been..................
5,440
$
9,190
$
20,620
$
12,610
$
47,860
$
Operating profit margin excluding special items
4.2%
6.2%
11.6%
8.0%
7.8%
Corporate Expenses
Operating
loss...............................................................................................
(8,320)
$
(9,640)
$
(9,270)
$
(11,230)
$
(38,460)
$
TriMas Total Company
Net
sales......................................................................................................
320,190
$
365,380
$
403,000
$
380,120
$
1,468,690
$
Operating
profit...........................................................................................
10,440
$
32,260
$
44,440
$
32,270
$
119,410
$
Total Special Items to consider in evaluating operating profit....................
13,000
$
980
$
3,810
$
3,440
$
21,230
$
Excluding Special Items, operating profit would have been..................
23,440
$
33,240
$
48,250
$
35,710
$
140,640
$
Operating profit margin excluding special items
7.3%
9.1%
12.0%
9.4%
9.6%
(1)
Results have been adjusted for the discontinued operations of NI in the third quarter 2014
(2)
Represents operating results before corporate expense allocations
Discontinued Operations
(1)
Net
sales.........................................................................................................................................
3,240
$
2,360
$
980
$
-
$
6,580
$
Operating
profit...............................................................................................................................
1,420
$
330
$
(400)
$
-
$
1,350
$
Trailing
Twelve
Months
12/31/2013
3/31/2014
6/30/2014
9/30/2014
9/30/2014
Quarter To Date |
 Cequent
– Historical Breakdown by Segment
28
(Unaudited, dollars in thousands)
Trailing
Twelve
Months
12/31/2009
12/31/2010
12/31/2011
12/31/2012
12/31/2013
9/30/2014
Cequent APEA
Net sales.......................................................................................
63,930
$
75,990
$
94,290
$
128,560
$
151,620
$
167,850
$
Operating profit...............................................................................
7,990
$
12,050
$
13,900
$
12,300
$
13,920
$
12,550
$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs...................................
270
$
-
$
-
$
3,150
$
-
$
380
$
Excluding Special Items, operating profit would have been.............
8,260
$
12,050
$
13,900
$
15,450
$
13,920
$
12,930
$
Cequent Americas
Net sales.......................................................................................
309,020
$
339,270
$
383,710
$
400,400
$
437,280
$
445,760
$
Operating profit (loss)......................................................................
(3,160)
$
27,840
$
32,730
$
27,420
$
8,850
$
19,130
$
Special Items to consider in evaluating operating profit (loss):
Severance and business restructuring costs...................................
13,820
$
-
$
520
$
7,530
$
25,570
$
15,800
$
Excluding Special Items, operating profit would have been.............
10,660
$
27,840
$
33,250
$
34,950
$
34,420
$
34,930
$
"New Cequent"
(1)
Net sales......................................................................................
372,950
$
415,260
$
478,000
$
528,960
$
588,900
$
613,610
$
Operating profit............................................................................
4,830
$
39,890
$
46,630
$
39,720
$
22,770
$
31,680
$
Total Special Items to consider in evaluating operating profit....
14,090
$
-
$
520
$
10,680
$
25,570
$
16,180
$
Excluding Special Items, operating profit would have been...
18,920
$
39,890
$
47,150
$
50,400
$
48,340
$
47,860
$
Operating profit margin excluding special items
5.1%
9.6%
9.9%
9.5%
8.2%
7.8%
(1)
Represents operating results before corporate expense allocations
Year To Date |
Exhibit 99.2
| FOR IMMEDIATE RELEASE | CONTACT: | Sherry Lauderback | ||
| VP, Investor Relations & Communications (248) 631-5506 | ||||
| sherrylauderback@trimascorp.com |
TRIMAS ANNOUNCES PLAN FOR TAX-FREE SPIN-OFF OF CEQUENT BUSINESSES
Resulting in Two Independent Publicly Traded Companies
| • | Plan to create two separate, stand-alone companies via a tax-free spin-off of Cequent businesses; expected completion during mid-2015. |
| • | Mark Zeffiro to serve as President and CEO of the new stand-alone Cequent company; Dave Wathen will remain President and CEO of TriMas. |
| • | Conference call for investors to be held today, December 8, at 10 a.m. ET. |
BLOOMFIELD HILLS, Michigan, December 8, 2014 – TriMas Corporation (NASDAQ: TRS) – a diversified global manufacturer of engineered and applied products – today announced its Board of Directors has unanimously approved a plan to pursue a tax-free spin-off of 100% of its Cequent businesses into a new stand-alone, publicly traded company. Cequent is a leading designer, manufacturer and distributor of custom-engineered towing, trailer and cargo management products and other accessories. This transaction is expected to be completed during mid-2015.
Under this plan, the new, stand-alone Cequent company will operate as an independent, publicly held company. The Cequent businesses generated revenue of approximately $614 million in the aggregate for the trailing 12 month period ended September 30, 2014. Mark Zeffiro, the current Executive Vice President and Chief Financial Officer of TriMas, will serve as President and Chief Executive Officer of this new entity upon completion of the transaction. TriMas Corporation (excluding Cequent) generated revenue of approximately $855 million in the trailing 12 month period ended September 30, 2014, and will continue to be led by President and Chief Executive Officer, Dave Wathen. Current TriMas Chairman of the Board, Samuel Valenti III, will also participate on the new company’s board of directors to support the transition. The Company plans to provide further details about the board and management teams of the separated companies at a later date.
“Our announcement today reflects our continued commitment to enhance shareholder value through the active management of our business portfolio and organizational focus,” said Dave Wathen, President and Chief Executive Officer. “Over the past five years, we have transformed TriMas from a leveraged holding company into a diversified, global manufacturer of engineered and applied products with a track record of consistent growth and operating results. We have delivered improved financial performance by expanding customer markets and product lines, integrating accretive acquisitions, introducing new capabilities for our customers around the world, and instilling a culture of continuous improvement.”
“We believe the spin-off will provide both companies greater flexibility to focus on their distinct growth and margin improvement strategies within their respective core markets, enabling them to further improve competitiveness and create significant value for shareholders, customers and employees,” Wathen continued. “Following the separation, each company will be able to better allocate resources to meet the needs of their respective businesses, pursue distinct capital allocation strategies, intensify focus on growth and margin improvement priorities, and provide a clearer investment thesis to attract a long-term investor base best-suited to each company.”
The New Stand-Alone Cequent
Upon completion of the transaction, the new stand-alone Cequent company will consist of TriMas’ current Cequent Americas and Cequent APEA segments, with a combined annual revenue of $614 million for the trailing 12 month period ended September 30, 2014. This set of businesses is expected to have strong prospects for growth and margin improvement, as it leverages its broad product portfolio, global footprint and diverse customer base of aftermarket, original equipment manufacturers and suppliers, and retail customers within the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets. Cequent’s leading brands and product lines are among the most recognized in the end markets that these businesses serve.
Over the past several years, the Cequent businesses have implemented changes that are driving increased margins. At the same time, Cequent has expanded its global presence through both organic initiatives and bolt-on acquisitions, creating significant opportunities for future global growth. The new stand-alone Cequent company will focus on leveraging its broad product offering through innovation and global penetration, while remaining committed to improved operational performance, margin expansion and enhanced cash flow and returns.
The New TriMas Corporation
Post separation, TriMas is expected to have a higher growth and margin profile and will be a more focused, diversified engineered products company, consisting of the current Packaging, Aerospace, Energy and Engineered Components segments. These segments reported annual revenue of approximately $855 million in the trailing 12 month period ended September 30, 2014. As a result of the separation, the margin profile of this company will significantly improve with a current segment operating profit margin percentage, excluding Special Items(1), exceeding 15%. TriMas will continue to focus on investment in its higher-growth, higher-margin businesses, while employing capital allocation strategies to maximize returns to shareholders.
TriMas will remain a company that concentrates on its proprietary, highly engineered products, focused markets with leading market positions and well-established customer relationships. TriMas will continue to serve its global customers with quality, speed and agility to capture additional growth opportunities, while enhancing margins through continuous productivity and lean initiatives. Following the separation, TriMas’ common stock will continue to be listed on NASDAQ under the symbol “TRS” and will remain headquartered in Bloomfield Hills, Michigan.
Planned Capital Structures
Although the capital structures are not finalized and specific terms remain to be determined, following the spin-off transaction, both companies are expected to be well capitalized with sufficient liquidity and flexibility to pursue future growth opportunities. Additionally, the capital allocation policy at both companies is expected to remain disciplined with a focus on the highest return opportunities.
Transaction Details
TriMas anticipates completing the transaction by distributing all of the shares of the new stand-alone, publicly traded Cequent company to TriMas shareholders, who will initially own 100% of the shares. It is expected that the transaction will be tax-free to TriMas’ U.S. shareholders, subject to the receipt of an opinion regarding the tax-free nature of the transaction. TriMas currently expects the transaction to be completed during mid-2015. The Company estimates third party and legal entity reorganization-related expenses of approximately $20 million to effect the transaction. Such costs will be incurred over the next several quarters.
The completion of the spin-off is subject to customary conditions, including effectiveness of appropriate filings with the U.S. Securities and Exchange Commission and final approval of the spin-off by the TriMas Board of Directors. No shareholder approval is necessary to complete the transaction.
Wells Fargo Securities is serving as financial advisor and Jones Day is serving as legal advisor to TriMas.
Conference Call and Webcast
TriMas Corporation will host a conference call today, Monday, December 8, 2014 at 10 a.m. ET to discuss the proposed transaction. The call-in number is (888) 466-4509. Participants should request to be connected to the TriMas Corporation Update Call (Passcode #578320). 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 #1180560).
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 the Company’s plans for successfully executing the spin-off within the expected timeframe or at all, the taxable nature of the spin-off, future prospects of the companies as independent companies, general economic and currency conditions, various conditions specific to the Company’s business and industry, the Company’s ability to integrate Allfast and attain the expected synergies, and the acquisition being accretive, the Company’s leverage, liabilities imposed by the Company’s debt instruments, market demand, competitive factors, supply constraints, material and energy costs, technology factors, litigation, government and regulatory actions, the Company’s accounting policies, future trends, and other risks which are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and in the Company’s Quarterly Reports on Form 10-Q. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements.
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, Engineered Components, Cequent APEA and Cequent Americas. TriMas has approximately 7,000 employees at more than 60 facilities in 19 countries. For more information, visit www.trimascorp.com.
| (1) | Operating profit margin excludes “Special Items.” Special Items for each period are provided in the Appendix. |
# # #
Appendix
Company and Business Segment TTM Financial Information
Continuing Operations
(Unaudited - dollars in thousands)
| Trailing | ||||||||||||||||||||
| Twelve | ||||||||||||||||||||
| Quarter To Date | Months | |||||||||||||||||||
| 12/31/2013 | 3/31/2014 | 6/30/2014 | 9/30/2014 | 9/30/2014 | ||||||||||||||||
| Packaging |
||||||||||||||||||||
| Net sales |
$ | 78,220 | $ | 81,430 | $ | 86,250 | $ | 89,320 | $ | 335,220 | ||||||||||
| Operating profit |
$ | 18,220 | $ | 18,360 | $ | 20,540 | $ | 20,770 | $ | 77,890 | ||||||||||
| Special Items to consider in evaluating operating profit: |
||||||||||||||||||||
| Severance and business restructuring costs |
$ | — | $ | — | $ | — | $ | 620 | $ | 620 | ||||||||||
| Excluding Special Items, operating profit would have been |
$ | 18,220 | $ | 18,360 | $ | 20,540 | $ | 21,390 | $ | 78,510 | ||||||||||
| Energy |
||||||||||||||||||||
| Net sales |
$ | 44,160 | $ | 52,780 | $ | 52,320 | $ | 50,290 | $ | 199,550 | ||||||||||
| Operating profit (loss) |
$ | (3,910 | ) | $ | 2,600 | $ | (630 | ) | $ | (1,100 | ) | $ | (3,040 | ) | ||||||
| Special Items to consider in evaluating operating profit: |
||||||||||||||||||||
| Severance and business restructuring costs |
$ | — | $ | — | $ | 2,350 | $ | 2,080 | $ | 4,430 | ||||||||||
| Excluding Special Items, operating profit would have been |
$ | (3,910 | ) | $ | 2,600 | $ | 1,720 | $ | 980 | $ | 1,390 | |||||||||
| Aerospace (1) |
||||||||||||||||||||
| Net sales |
$ | 27,300 | $ | 27,180 | $ | 31,820 | $ | 27,410 | $ | 113,710 | ||||||||||
| Operating profit |
$ | 7,010 | $ | 4,850 | $ | 5,690 | $ | 3,870 | $ | 21,420 | ||||||||||
| Engineered Components |
||||||||||||||||||||
| Net sales |
$ | 41,540 | $ | 55,430 | $ | 54,320 | $ | 55,310 | $ | 206,600 | ||||||||||
| Operating profit |
$ | 5,000 | $ | 7,880 | $ | 8,950 | $ | 8,090 | $ | 29,920 | ||||||||||
| “New TriMas” (2) |
||||||||||||||||||||
| Net sales |
$ | 191,220 | $ | 216,820 | $ | 224,710 | $ | 222,330 | $ | 855,080 | ||||||||||
| Operating profit |
$ | 26,320 | $ | 33,690 | $ | 34,550 | $ | 31,630 | $ | 126,190 | ||||||||||
| Total Special Items to consider in evaluating operating profit |
$ | — | $ | — | $ | 2,350 | $ | 2,700 | $ | 5,050 | ||||||||||
| Excluding Special Items, operating profit would have been |
$ | 26,320 | $ | 33,690 | $ | 36,900 | $ | 34,330 | $ | 131,240 | ||||||||||
| Operating profit margin excluding special items |
13.8 | % | 15.5 | % | 16.4 | % | 15.4 | % | 15.3 | % | ||||||||||
| Cequent APEA |
||||||||||||||||||||
| Net sales |
$ | 40,290 | $ | 39,470 | $ | 43,800 | $ | 44,290 | $ | 167,850 | ||||||||||
| Operating profit |
$ | 4,620 | $ | 2,500 | $ | 2,220 | $ | 3,210 | $ | 12,550 | ||||||||||
| Special Items to consider in evaluating operating profit: |
||||||||||||||||||||
| Severance and business restructuring costs |
$ | — | $ | — | $ | — | $ | 380 | $ | 380 | ||||||||||
| Excluding Special Items, operating profit would have been |
$ | 4,620 | $ | 2,500 | $ | 2,220 | $ | 3,590 | $ | 12,930 | ||||||||||
| Cequent Americas |
||||||||||||||||||||
| Net sales |
$ | 88,680 | $ | 109,090 | $ | 134,490 | $ | 113,500 | $ | 445,760 | ||||||||||
| Operating profit (loss) |
$ | (12,180 | ) | $ | 5,710 | $ | 16,940 | $ | 8,660 | $ | 19,130 | |||||||||
| Special Items to consider in evaluating operating profit (loss): |
||||||||||||||||||||
| Severance and business restructuring costs |
$ | 13,000 | $ | 980 | $ | 1,460 | $ | 360 | $ | 15,800 | ||||||||||
| Excluding Special Items, operating profit would have been |
$ | 820 | $ | 6,690 | $ | 18,400 | $ | 9,020 | $ | 34,930 | ||||||||||
| “New Cequent” (2) |
||||||||||||||||||||
| Net sales |
$ | 128,970 | $ | 148,560 | $ | 178,290 | $ | 157,790 | $ | 613,610 | ||||||||||
| Operating profit |
$ | (7,560 | ) | $ | 8,210 | $ | 19,160 | $ | 11,870 | $ | 31,680 | |||||||||
| Total Special Items to consider in evaluating operating profit |
$ | 13,000 | $ | 980 | $ | 1,460 | $ | 740 | $ | 16,180 | ||||||||||
| Excluding Special Items, operating profit would have been |
$ | 5,440 | $ | 9,190 | $ | 20,620 | $ | 12,610 | $ | 47,860 | ||||||||||
| Operating profit margin excluding special items |
4.2 | % | 6.2 | % | 11.6 | % | 8.0 | % | 7.8 | % | ||||||||||
| Corporate Expenses |
||||||||||||||||||||
| Operating loss |
$ | (8,320 | ) | $ | (9,640 | ) | $ | (9,270 | ) | $ | (11,230 | ) | $ | (38,460 | ) | |||||
| TriMas Total Company |
||||||||||||||||||||
| Net sales |
$ | 320,190 | $ | 365,380 | $ | 403,000 | $ | 380,120 | $ | 1,468,690 | ||||||||||
| Operating profit |
$ | 10,440 | $ | 32,260 | $ | 44,440 | $ | 32,270 | $ | 119,410 | ||||||||||
| Total Special Items to consider in evaluating operating profit |
$ | 13,000 | $ | 980 | $ | 3,810 | $ | 3,440 | $ | 21,230 | ||||||||||
| Excluding Special Items, operating profit would have been |
$ | 23,440 | $ | 33,240 | $ | 48,250 | $ | 35,710 | $ | 140,640 | ||||||||||
| Operating profit margin excluding special items |
7.3 | % | 9.1 | % | 12.0 | % | 9.4 | % | 9.6 | % | ||||||||||
|
(1) Results have been adjusted for the discontinued operations of NI in the third quarter 2014 (2) Represents operating results before corporate expense allocations |
| |||||||||||||||||||
| Discontinued Operations (1) |
||||||||||||||||||||
| Net sales |
$ | 3,240 | $ | 2,360 | $ | 980 | $ | — | $ | 6,580 | ||||||||||
| Operating profit |
$ | 1,420 | $ | 330 | $ | (400 | ) | $ | — | $ | 1,350 | |||||||||