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 28, 2016
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 28, 2016, reporting its financial results for the second quarter ending June 30, 2016. 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 2016 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 28, 2016 | By: | /s/ Robert J. Zalupski | |||
Name: | Robert J. Zalupski | |||||
Title: | Chief Financial Officer | |||||
CONTACT: | |||
Sherry Lauderback | |||
VP, Investor Relations & Communications | |||
(248) 631-5506 | |||
sherrylauderback@trimascorp.com | |||
TRIMAS CORPORATION REPORTS SECOND QUARTER 2016 RESULTS
Achieved Second Quarter 2016 EPS, Excluding Special Items, of $0.34, an increase of 13.3%
Revised Full Year 2016 Guidance
BLOOMFIELD HILLS, Michigan, July 28, 2016 - TriMas Corporation (NASDAQ: TRS) today announced financial results for the quarter ended June 30, 2016. The Company reported second quarter net sales from continuing operations of $203.3 million, a decrease of 9.6% compared to second quarter 2015. The Company reported second quarter 2016 income from continuing operations of $10.5 million, or $0.23 per diluted share, as compared to income of $8.5 million, or $0.19 per diluted share, in the second quarter of 2015. Excluding Special Items(1) related to severance, business restructuring and 2015 debt extinguishment costs, second quarter 2016 diluted earnings per share from continuing operations would have been $0.34, an increase of 13.3% as compared to $0.30 in second quarter 2015.
TriMas Highlights
• | Today announced the appointment of Thomas Amato as TriMas President and Chief Executive Officer; brings more than 25 years of broad industrial experience and a track record of enhancing shareholder value. |
• | Increased second quarter 2016 diluted earnings per share by 13.3%, and operating profit margin by 180 basis points, both excluding Special Items, as compared to second quarter 2015. |
• | Completed execution of the cost savings actions included in the $22 million Financial Improvement Plan, which mitigated the impact of lower sales levels. |
• | Continued strong margin performance in Packaging, while investing in the sales organization and new products and related applications. |
• | Achieved approximately 210 basis points of sequential quarterly margin expansion in Energy, excluding Special Items, and significant margin improvement as compared to second quarter 2015, on lower revenue as a result of leveraging the business restructuring, and driving manufacturing and operational improvements. |
• | Developed and executed upon a comprehensive Aerospace recovery plan which resulted in 270 basis points of sequential quarterly margin improvement, excluding Special Items. |
• | Generated Free Cash Flow(2) of $34.2 million for second quarter 2016, yielding year-to-date Free Cash Flow of more than 100% of net income from continuing operations, excluding Special Items. |
"We achieved second quarter earnings per share of $0.34, excluding Special Items, representing a 13.3% increase over 2015, in spite of a 9.6% decline in sales," said Bob Zalupski, TriMas Chief Financial Officer. "During the quarter, we continued to experience top-line challenges, most notably in our energy-facing and industrial cylinder businesses, as well as continued short-term margin pressures in Aerospace. We were largely able to mitigate the impact of these items through cost reduction and productivity initiatives, driving an increase in year-over-year operating profit and related margin, excluding Special Items. We also significantly improved Free Cash Flow as compared to second quarter 2015 as a result of our working capital reductions."
Zalupski continued, "As we move forward through 2016, we will continue to focus on holding or improving margins in a challenging top-line environment. Our Energy restructuring efforts are working, as evidenced by expanded margins in the quarter despite a more than 20% reduction in sales year-over-year. Within Aerospace, we implemented recovery plan actions to address scheduling and manufacturing capacity challenges in two of our fastener facilities and to minimize the incremental costs related to the integration of an acquired facility. While these actions contributed to 270 basis points of sequential Aerospace margin improvement in the quarter, excluding Special Items, the second quarter margin level was lower than planned."
"Regarding our outlook, we are revising our full-year 2016 diluted EPS guidance range to $1.22 to $1.30 per share, excluding Special Items, as a result of lower than expected second quarter earnings and a reduction in our second half 2016 Aerospace guidance. We continue to focus our attention on the areas we can control and are intently focused on execution of the Aerospace improvement plan," Zalupski concluded.
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Second Quarter Financial Results - From Continuing Operations
• | TriMas reported second quarter net sales of $203.3 million, a decrease of 9.6% as compared to $224.9 million in second quarter 2015. The positive impacts of a recent acquisition and organic initiatives were more than offset by sales declines primarily resulting from the weakness in the energy-facing end markets, industrial softness, lower Aerospace distributor sales and the impact of unfavorable currency exchange. |
• | The Company reported operating profit of $18.7 million in second quarter 2016 as compared to $19.2 million in second quarter 2015. Excluding Special Items related to severance and business restructuring, second quarter 2016 operating profit would have been $25.7 million, an increase of 5.6% as compared to $24.3 million during second quarter 2015. Second quarter 2016 operating profit margin, excluding Special Items, increased 180 basis points to 12.6%, as margin improvements in Packaging and Energy, and a reduction in corporate expenses, more than offset the declines in Aerospace and Engineered Components as compared to second quarter 2015. These improvements are a result of successful execution of the Company's Financial Improvement Plan and on-going productivity initiatives. |
• | Second quarter 2016 income from continuing operations was $10.5 million, or $0.23 per diluted share, as compared to $0.19 per diluted share in second quarter 2015. Excluding Special Items, second quarter 2016 income from continuing operations would have been $15.6 million, or $0.34 per diluted share, an increase of 13.3% as compared to $0.30 in second quarter 2015, as a result of higher operating profit and currency gains. |
• | The Company reported Free Cash Flow (defined as Net Cash Provided by/Used for Operating Activities of Continuing Operations, excluding the cash impact of Special Items, less Capital Expenditures) of $34.2 million for second quarter 2016 as compared to $9.4 million in second quarter 2015. Please see Appendix I for further details. The Company expects to generate between $55 million and $65 million for full year 2016, excluding Special Items. |
Discontinued Operations
On June 30, 2015, the Company completed the spin-off of its Cequent businesses (comprised of the Cequent Americas and Cequent APEA reportable segments), creating a new independent publicly traded company, Horizon Global Corporation, through a distribution of 100% of the Company's interest in Horizon Global to holders of TriMas common shares. The results of operations of the Cequent businesses, as well as the one-time costs incurred in connection with the separation of the two companies, are included in discontinued operations.
Financial Position
TriMas reported total debt of $406.3 million as of June 30, 2016, as compared to $419.6 million as of December 31, 2015, and $457.3 million as of June 30, 2015. TriMas ended second quarter 2016 with $123.7 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
Business Segment Results - From Continuing Operations
Packaging
Net sales for the second quarter decreased 1.6% as compared to the year ago period, as sales increases in the industrial end market were more than offset by the impact of unfavorable currency exchange and lower product sales to the health, beauty and home care end market due to customer new program launches during the second quarter of 2015 that did not repeat in 2016. Second quarter operating profit and the related margin percentage, excluding Special Items, increased due to a more favorable product sales mix and the impact of ongoing productivity and automation initiatives, partially offset by unfavorable currency exchange and continued investment in global capabilities. The Company continues to develop specialty dispensing and closure applications for global markets, including industrial, food and beverage, and health, beauty and home care.
Aerospace
Net sales for the second quarter increased 2.0% as compared to the year ago period, as a result of incremental sales resulting from the November 2015 acquisition of certain assets related to Parker Hannifin’s Tolleson, Arizona, machined components facility, partially offset by lower demand from larger distribution customers. Second quarter operating profit and the related margin percentage, excluding Special Items, decreased due to a less favorable product mix, cost of recovery actions to address short-term production inefficiencies and higher costs of new product qualifications. The Company is focused on executing a comprehensive recovery plan to increase manufacturing throughput and reduce the costs of production-related inefficiencies, developing and qualifying additional highly-engineered products for aerospace applications, and leveraging its aerospace platform to better serve its customers.
2
Energy
Second quarter net sales decreased 20.3% as compared to the year ago period, due to reduced demand levels from upstream oil and gas customers related to lower oil production activity, lower sales from international branches due to restructuring activities in those regions, and the impact of unfavorable currency exchange. Second quarter operating profit and the related margin percentage, excluding Special Items, improved as the cost savings achieved due to the restructuring and cost reduction initiatives more than offset by the impact of the reduced sales levels and related lower fixed cost absorption. The Company continues to leverage lower costs resulting from the business restructuring, accelerate the manufacturing of products in Reynosa, Mexico, and drive operational and manufacturing improvements.
Engineered Components
Second quarter net sales decreased 25.7% as compared to the year ago period, primarily due to lower sales of engines and compressors resulting from the impact of lower oil prices and significantly reduced oil production activity. Sales of industrial cylinders also decreased as a result of continued softness in industrial end markets. Second quarter operating profit and the related margin percentage, excluding Special Items, decreased primarily due to reduced sales levels and lower fixed cost absorption related to engine and compression products partially offset by savings achieved from cost reduction actions and ongoing productivity initiatives. The Company has responded to the dramatic drop in oil prices and the impact on engine and compressor demand by reducing its fixed cost structure, and continues to drive new product sales and expand its international sales efforts.
2016 Outlook
The Company is revising its full year 2016 outlook from continuing operations. The Company is now estimating that 2016 sales will decline from 4% to 7% as compared to 2015. The Company also expects full-year 2016 diluted earnings per share to be $1.22 to $1.30 per share, excluding any current or future events that may be considered Special Items, a reduction from the previous outlook of $1.35 to $1.45 per share. In addition, the Company expects 2016 Free Cash Flow (defined as Cash Flow from Operating Activities, excluding the cash impact of Special Items, less Capital Expenditures) to be between $55 million and $65 million, or approximately 100% of net income, excluding Special Items.
"While we believe we will be able to offset the majority of the impact of our lowered sales outlook through continued cost management and productivity savings," said Zalupski, "the combined impact of the reduced level of higher margin distributor sales and the more gradual improvement of fastener production within Aerospace is tempering our previously expected profitability for the back half of 2016. We have taken actions to effectively address these challenges and remain positive on the longer-term prospects for revenue and earnings growth in our businesses."
Conference Call Information
TriMas Corporation will host its second quarter 2016 earnings conference call today, Thursday, July 28, 2016, at 10 a.m. ET. The call-in number is (888) 329-8893. Participants should request to be connected to the TriMas Corporation second quarter 2016 earnings conference call (Conference ID #4304981). 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 #4304981) beginning July 28, 2016 at 3 p.m. ET through August 4, 2016 at 3 p.m. ET.
Notice Regarding Forward-Looking Statements
Any "forward-looking" statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, contained herein, including, but not limited to, those relating to the Company’s business, financial condition or future results, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect to: the Company's leverage; liabilities imposed by the Company's debt instruments; market demand; competitive factors; supply constraints; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other intangible asset impairment charges; technology factors; litigation; government and regulatory actions; the Company's accounting policies; future trends; general economic and currency conditions; the potential impact of Brexit; various conditions specific to the Company's business and industry; the Company’s ability to identify attractive acquisition candidates, successfully integrate acquired operations or realize the intended benefits of such acquisitions; the Company’s ability to attain the Financial Improvement Plan targeted savings and free cash flow amounts; future prospects of the Company; and other risks that are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-
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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 in Appendix I 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 four reportable segments: Packaging, Aerospace, Energy and Engineered Components. TriMas has approximately 4,000 employees in 13 countries. For more information, visit www.trimascorp.com.
(1) | Appendix I details certain costs, expenses and other amounts or charges, collectively described as "Special Items," that are included in the determination of net income, earnings per share and/or cash flows from operating activities under GAAP, but that management believes should be separately considered when evaluating the quality of the Company’s core operating results, given they may not reflect the ongoing activities of the business. Management believes that presenting these non-GAAP financial measures, on an after Special Items basis, provides useful information to investors by helping them identify underlying trends in the Company’s businesses and facilitating comparisons of performance with prior and future periods. These non-GAAP financial measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP financial measures. |
(2) The Company defines Free Cash Flow as Net Cash Provided by/Used for Operating Activities of Continuing Operations, excluding the cash impact of Special Items, less Capital Expenditures. Please see Appendix I for additional details.
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TriMas Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands)
June 30, 2016 | December 31, 2015 | |||||||
Assets | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 23,660 | $ | 19,450 | ||||
Receivables, net | 124,620 | 121,990 | ||||||
Inventories | 165,800 | 167,370 | ||||||
Prepaid expenses and other current assets | 7,440 | 17,810 | ||||||
Total current assets | 321,520 | 326,620 | ||||||
Property and equipment, net | 178,660 | 181,130 | ||||||
Goodwill | 377,430 | 378,920 | ||||||
Other intangibles, net | 263,510 | 273,870 | ||||||
Other assets | 9,080 | 9,760 | ||||||
Total assets | $ | 1,150,200 | $ | 1,170,300 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 13,820 | $ | 13,850 | ||||
Accounts payable | 77,820 | 88,420 | ||||||
Accrued liabilities | 41,690 | 50,480 | ||||||
Total current liabilities | 133,330 | 152,750 | ||||||
Long-term debt, net | 392,460 | 405,780 | ||||||
Deferred income taxes | 8,320 | 11,260 | ||||||
Other long-term liabilities | 57,890 | 53,320 | ||||||
Total liabilities | 592,000 | 623,110 | ||||||
Total shareholders' equity | 558,200 | 547,190 | ||||||
Total liabilities and shareholders' equity | $ | 1,150,200 | $ | 1,170,300 | ||||
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TriMas Corporation
Consolidated Statement of Income
(Unaudited - dollars in thousands, except per share amounts)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net sales | $ | 203,320 | $ | 224,900 | $ | 406,200 | $ | 449,030 | ||||||||
Cost of sales | (146,240 | ) | (163,180 | ) | (293,200 | ) | (324,390 | ) | ||||||||
Gross profit | 57,080 | 61,720 | 113,000 | 124,640 | ||||||||||||
Selling, general and administrative expenses | (38,420 | ) | (42,510 | ) | (77,890 | ) | (82,410 | ) | ||||||||
Operating profit | 18,660 | 19,210 | 35,110 | 42,230 | ||||||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (3,310 | ) | (3,720 | ) | (6,750 | ) | (7,170 | ) | ||||||||
Debt financing and extinguishment costs | — | (1,970 | ) | — | (1,970 | ) | ||||||||||
Other income (expense), net | 130 | (290 | ) | 70 | (1,610 | ) | ||||||||||
Other expense, net | (3,180 | ) | (5,980 | ) | (6,680 | ) | (10,750 | ) | ||||||||
Income from continuing operations before income tax expense | 15,480 | 13,230 | 28,430 | 31,480 | ||||||||||||
Income tax expense | (5,000 | ) | (4,740 | ) | (9,650 | ) | (11,050 | ) | ||||||||
Income from continuing operations | 10,480 | 8,490 | 18,780 | 20,430 | ||||||||||||
Loss from discontinued operations, net of tax | — | (6,780 | ) | — | (4,740 | ) | ||||||||||
Net income | $ | 10,480 | $ | 1,710 | 18,780 | 15,690 | ||||||||||
Basic earnings per share: | ||||||||||||||||
Continuing operations | $ | 0.23 | $ | 0.19 | $ | 0.41 | $ | 0.45 | ||||||||
Discontinued operations | — | (0.15 | ) | — | (0.10 | ) | ||||||||||
Net income per share | $ | 0.23 | $ | 0.04 | $ | 0.41 | $ | 0.35 | ||||||||
Weighted average common shares—basic | 45,429,851 | 45,150,827 | 45,354,421 | 45,074,394 | ||||||||||||
Diluted earnings per share: | ||||||||||||||||
Continuing operations | $ | 0.23 | $ | 0.19 | $ | 0.41 | $ | 0.45 | ||||||||
Discontinued operations | — | (0.15 | ) | — | (0.10 | ) | ||||||||||
Net income per share | $ | 0.23 | $ | 0.04 | $ | 0.41 | $ | 0.35 | ||||||||
Weighted average common shares—diluted | 45,726,348 | 45,418,907 | 45,690,582 | 45,409,875 | ||||||||||||
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TriMas Corporation
Consolidated Statement of Cash Flow
(Unaudited - dollars in thousands)
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 18,780 | $ | 15,690 | ||||
Loss from discontinued operations | — | (4,740 | ) | |||||
Income from continuing operations | 18,780 | 20,430 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Loss on dispositions of property and equipment | 1,120 | 300 | ||||||
Depreciation | 11,980 | 10,830 | ||||||
Amortization of intangible assets | 10,190 | 10,580 | ||||||
Amortization of debt issue costs | 670 | 1,020 | ||||||
Deferred income taxes | 230 | (250 | ) | |||||
Non-cash compensation expense | 4,140 | 2,870 | ||||||
Excess tax benefits from stock based compensation | (170 | ) | (270 | ) | ||||
Debt financing and extinguishment costs | — | 1,970 | ||||||
Increase in receivables | (3,660 | ) | (8,930 | ) | ||||
(Increase) decrease in inventories | 1,130 | (9,210 | ) | |||||
Decrease in prepaid expenses and other assets | 10,650 | 510 | ||||||
Decrease in accounts payable and accrued liabilities | (21,710 | ) | (8,550 | ) | ||||
Other, net | (410 | ) | (820 | ) | ||||
Net cash provided by operating activities of continuing operations | 32,940 | 20,480 | ||||||
Net cash used for operating activities of discontinued operations | — | (14,030 | ) | |||||
Net cash provided by operating activities | 32,940 | 6,450 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (12,960 | ) | (12,890 | ) | ||||
Net proceeds from disposition of property and equipment | 120 | 690 | ||||||
Net cash used for investing activities of continuing operations | (12,840 | ) | (12,200 | ) | ||||
Net cash used for investing activities of discontinued operations | — | (2,510 | ) | |||||
Net cash used for investing activities | (12,840 | ) | (14,710 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from borrowings on term loan facilities | — | 275,000 | ||||||
Repayments of borrowings on term loan facilities | (6,950 | ) | (441,360 | ) | ||||
Proceeds from borrowings on revolving credit and accounts receivable facilities | 216,580 | 697,890 | ||||||
Repayments of borrowings on revolving credit and accounts receivable facilities | (225,050 | ) | (703,390 | ) | ||||
Payments for deferred purchase price | — | (5,710 | ) | |||||
Debt financing fees | — | (1,850 | ) | |||||
Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (650 | ) | (2,620 | ) | ||||
Proceeds from exercise of stock options | 10 | 430 | ||||||
Excess tax benefits from stock based compensation | 170 | 270 | ||||||
Cash transferred to the Cequent businesses | — | (17,050 | ) | |||||
Net cash used for financing activities of continuing operations | (15,890 | ) | (198,390 | ) | ||||
Net cash provided by financing activities of discontinued operations | — | 208,400 | ||||||
Net cash provided by (used for) financing activities | (15,890 | ) | 10,010 | |||||
Cash and Cash Equivalents: | ||||||||
Net increase for the period | 4,210 | 1,750 | ||||||
At beginning of period | 19,450 | 24,420 | ||||||
At end of period | $ | 23,660 | $ | 26,170 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 5,860 | $ | 9,690 | ||||
Cash paid for taxes | $ | 3,170 | $ | 17,390 | ||||
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Appendix I
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
Continuing Operations
(Unaudited - dollars in thousands)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Packaging | ||||||||||||||||
Net sales | $ | 88,110 | $ | 89,580 | $ | 168,220 | $ | 168,540 | ||||||||
Operating profit | $ | 21,410 | $ | 20,710 | $ | 39,250 | $ | 38,220 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 590 | $ | 280 | $ | 1,060 | $ | 430 | ||||||||
Excluding Special Items, operating profit would have been | $ | 22,000 | $ | 20,990 | $ | 40,310 | $ | 38,650 | ||||||||
Aerospace | ||||||||||||||||
Net sales | $ | 44,090 | $ | 43,220 | $ | 84,590 | $ | 88,960 | ||||||||
Operating profit | $ | 3,550 | $ | 7,220 | $ | 7,010 | $ | 15,300 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 1,490 | $ | 830 | $ | 1,560 | $ | 1,620 | ||||||||
Excluding Special Items, operating profit would have been | $ | 5,040 | $ | 8,050 | $ | 8,570 | $ | 16,920 | ||||||||
Energy | ||||||||||||||||
Net sales | $ | 39,950 | $ | 50,150 | $ | 84,700 | $ | 101,310 | ||||||||
Operating loss | $ | (3,090 | ) | $ | (7,170 | ) | $ | (6,700 | ) | $ | (6,830 | ) | ||||
Special Items to consider in evaluating operating profit (loss): | ||||||||||||||||
Severance and business restructuring costs | $ | 4,890 | $ | 3,910 | $ | 9,590 | $ | 5,340 | ||||||||
Excluding Special Items, operating profit (loss) would have been | $ | 1,800 | $ | (3,260 | ) | $ | 2,890 | $ | (1,490 | ) | ||||||
Engineered Components | ||||||||||||||||
Net sales | $ | 31,170 | $ | 41,950 | $ | 68,690 | $ | 90,220 | ||||||||
Operating profit | $ | 3,860 | $ | 6,220 | $ | 9,440 | $ | 12,190 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 20 | $ | 60 | $ | 170 | $ | 140 | ||||||||
Excluding Special Items, operating profit would have been | $ | 3,880 | $ | 6,280 | $ | 9,610 | $ | 12,330 | ||||||||
Corporate Expenses | ||||||||||||||||
Operating loss | $ | (7,070 | ) | $ | (7,770 | ) | $ | (13,890 | ) | $ | (16,650 | ) | ||||
Total Continuing Operations | ||||||||||||||||
Net sales | $ | 203,320 | $ | 224,900 | $ | 406,200 | $ | 449,030 | ||||||||
Operating profit | $ | 18,660 | $ | 19,210 | $ | 35,110 | $ | 42,230 | ||||||||
Total Special Items to consider in evaluating operating profit | $ | 6,990 | $ | 5,080 | $ | 12,380 | $ | 7,530 | ||||||||
Excluding Special Items, operating profit would have been | $ | 25,650 | $ | 24,290 | $ | 47,490 | $ | 49,760 | ||||||||
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Appendix I
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited - dollars in thousands, except per share amounts)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Income from continuing operations, as reported | $ | 10,480 | $ | 8,490 | $ | 18,780 | $ | 20,430 | ||||||||
After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 5,130 | 4,030 | 9,220 | 5,930 | ||||||||||||
Debt extinguishment costs | — | 1,240 | — | 1,240 | ||||||||||||
Excluding Special Items, income from continuing operations would have been | $ | 15,610 | $ | 13,760 | $ | 28,000 | $ | 27,600 | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Diluted earnings per share from continuing operations, as reported | $ | 0.23 | $ | 0.19 | $ | 0.41 | $ | 0.45 | ||||||||
After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 0.11 | 0.08 | 0.20 | 0.13 | ||||||||||||
Debt extinguishment costs | — | 0.03 | — | 0.03 | ||||||||||||
Excluding Special Items, diluted EPS from continuing operations would have been | $ | 0.34 | $ | 0.30 | $ | 0.61 | $ | 0.61 | ||||||||
Weighted-average shares outstanding | 45,726,348 | 45,418,907 | 45,690,582 | 45,409,875 | ||||||||||||
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Appendix I
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited - dollars in thousands)
Three months ended June 30, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
As reported | Special Items | Excluding Special Items | As reported | Special Items | Excluding Special Items | |||||||||||||||||||
Net cash provided by operating activities of continuing operations | $ | 36,280 | $ | 4,920 | $ | 41,200 | $ | 16,620 | $ | — | $ | 16,620 | ||||||||||||
Less: Capital expenditures of continuing operations | (6,980 | ) | — | (6,980 | ) | (7,200 | ) | — | (7,200 | ) | ||||||||||||||
Free Cash Flow from continuing operations | 29,300 | 4,920 | 34,220 | 9,420 | — | 9,420 | ||||||||||||||||||
Income from continuing operations | 10,480 | 5,130 | 15,610 | 8,490 | 5,270 | 13,760 | ||||||||||||||||||
Free Cash Flow as a percentage of income from continuing operations | 280 | % | 219 | % | 111 | % | 68 | % | ||||||||||||||||
Six months ended June 30, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
As reported | Special Items | Excluding Special Items | As reported | Special Items | Excluding Special Items | |||||||||||||||||||
Net cash provided by operating activities of continuing operations | $ | 32,940 | $ | 8,360 | $ | 41,300 | 20,480 | $ | — | $ | 20,480 | |||||||||||||
Less: Capital expenditures of continuing operations | (12,960 | ) | — | (12,960 | ) | (12,890 | ) | — | (12,890 | ) | ||||||||||||||
Free Cash Flow from continuing operations | 19,980 | 8,360 | 28,340 | 7,590 | — | 7,590 | ||||||||||||||||||
Income from continuing operations | 18,780 | 9,220 | 28,000 | 20,430 | 7,170 | 27,600 | ||||||||||||||||||
Free Cash Flow as a percentage of income from continuing operations | 106 | % | 101 | % | 37 | % | 28 | % | ||||||||||||||||
10
Second Quarter 2016 Earnings
Presentation
July 28, 2016
Forward-Looking Statement
Forward-Looking Statement
Any “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, contained herein, including, but not limited to, those relating to the Company’s business,
financial condition or future results, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect
to: the Company's leverage; liabilities imposed by the Company's debt instruments; market demand; competitive factors; supply
constraints; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other
intangible asset impairment charges; technology factors; litigation; government and regulatory actions; the Company's accounting
policies; future trends; general economic and currency conditions; the potential impact of Brexit; various conditions specific to the
Company's business and industry; the Company’s ability to identify attractive acquisition candidates, successfully integrate
acquired operations or realize the intended benefits of such acquisitions; the Company’s ability to attain the Financial
Improvement Plan targeted savings and free cash flow amounts; future prospects of the Company; and other risks that are
detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015. 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.
Non-GAAP Financial Measures
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 in the Appendix 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.
Please see the Appendix for details regarding certain costs, expenses and other amounts or charges, collectively described as
“Special Items,” that are included in the determination of net income, earnings per share and/or cash flows from operating
activities under GAAP, but that management believes should be separately considered when evaluating the quality of the
Company’s core operating results, given they may not reflect the ongoing activities of the business. Management believes that
presenting these non-GAAP financial measures, on an after Special Items basis, provides useful information to investors by
helping them identify underlying trends in the Company’s businesses and facilitating comparisons of performance with prior and
future periods. These non-GAAP financial measures should be considered in addition to, and not as a replacement for or superior
to, the comparable GAAP financial measures.
2
Agenda
• Introductions and Opening Remarks
• Financial Highlights
• Segment Highlights
• Outlook and Summary
• Questions and Answers
• Appendix
3
Introductions and Opening Remarks
New CEO – Thomas Amato
• Comprehensive search conducted using external firm
• Experienced leader of global, multi-billion dollar, diversified
businesses
• Understanding of TriMas businesses as a result of prior roles
• Proven track record in:
– Driving operational improvements through a relentless focus on
performance and continuous improvement
– Developing sound strategies to adapt to dynamic markets and customer
needs globally
– Enhancing growth both organically and through strategic acquisitions
– Creating and operating in a fact-based culture with mutual respect for
enterprise-wide employees
5
Ability to leverage past experiences to drive future shareholder value.
Initial Observations of TriMas
• Great portfolio of diversified
businesses
• Market-leading brands and positions
• Valued “blue-chip” customers with
critical supply positions and solid
relationships
• Highly-engineered, proprietary
products
• Significant opportunities for organic
growth and bolt-on acquisitions
• Strong cash flow with opportunities for
margin enhancement
6
Key Focus Areas During “First 100 Days”
• Visit high-impact manufacturing
operations
• Engage with the business leadership
teams and review strategic plans
• Meet with key customers to ensure a
smooth transition
• Identify and assess near and longer
term opportunities to enhance
performance and growth
All in the spirit of developing and sharing with
stakeholders a solid game plan to drive
improved results
Engage with the TriMas team to identify opportunities
and implement actions to drive improved performance.
New CEO – Thomas Amato
Opening Remarks – Second Quarter
• Second quarter sales of approximately $203 million – external top-line
pressures continued
– Organic initiatives and acquisition growth were more than offset by the impact of
lower oil prices, lower aerospace distributor sales and unfavorable currency exchange
– Sequential sales improvement in Packaging and Aerospace
• Achieved Q2 EPS, excluding Special Items(1), of $0.34 – solid performance in
spite of nearly 10% sales decline
• Aerospace recovery actions resulted in sequential improvement – more work
to do
• Improved operating profit margin, excluding Special Items, by 180 basis points
as compared to Q2 2015
• Completed the cost actions related to the $22 million Financial Improvement
Plan
7
Cost savings actions mitigating impact of lower sales levels and Aerospace challenges.
(1) Please see the Appendix for a detailed reconciliation to GAAP results.
External Headwinds and Tailwinds
Headwinds
• Macroeconomic conditions
‒ Low industrial activity levels
‒ Interest rate environment
• Low oil and commodity prices
‒ Drilling and well completion activity
‒ Capex deferrals and reductions
‒ Resin and specialty steel prices
• Inventory reductions in channel
‒ Overall supply chain reductions
‒ Large aerospace distributors
• Strength of U.S. dollar
– Translation and transaction impacts
– Exports in Engineered Components
– Imports more competitive
• Brexit
– Uncertainty in Europe
– Consumer confidence in the United Kingdom
8
Tailwinds
• Commercial aircraft build rates and backlog
– expect slight increase in 2016, with greater
growth in 2017
• Asia still growing, albeit at lower rates
– Uncertainty around China
• Consumer spend remains solid in the U.S. –
outpacing economic conditions
Headwinds continue – focused on execution to mitigate external challenges.
Business Update
9
Initiatives to drive profitable growth and increased margins –
balancing short and long-term objectives.
Packaging
• Completed staffing of sales team – added leaders with end market expertise
• Selected site in Mexico to add manufacturing capacity in support of growth in the
Americas
• Accelerating new product development and applications with technology center in Asia
Aerospace
• Executing comprehensive recovery plan to improve manufacturing throughput and cost
efficiencies to increase sales and margins
• Leveraging recent acquisitions to add product qualifications for new and existing
customers
Energy
• Reconfiguring Houston facility for dedicated manufacture of quick-turn customer orders
• Accelerating and broadening move of standard products from Houston to Reynosa
Engineered Components
• Expanding cylinder capacity to capitalize on North American market position
• Maintaining oil field engine/compressor business cost structure to reflect current market
demand
Financial Highlights
( fro m co ntinuing o perat io ns) Q2 2016 Q2 2015 Variance
Revenue $203.3 $224.9 -9.6%
Operating profit $18.7 $19.2 -2.9%
Excl. Total Special Items, Operating profit would have been: $25.7 $24.3 5.6%
Excl. Total Special Items, Operating profit margin would have been: 12.6% 10.8% 180 bps
Income $10.5 $8.5 23.4%
Excl. Total Special Items, Income would have been: $15.6 $13.8 13.4%
Diluted earnings per share $0.23 $0.19 21.1%
Excl. Total Special Items, Diluted earnings per share would have been: $0.34 $0.30 13.3%
Free Cash Flow (1) $34.2 $9.4 263.3%
Total debt $406.3 $457.3 -11.2%
Second Quarter Summary
• Q2 sales declined nearly 10% as compared to Q2 2015 – weakness in the oil-related and industrial end markets,
lower aerospace distributor volumes and unfavorable currency exchange more than offset organic initiatives and the
results of a recent acquisition
• Q2 operating profit dollars and margin percentage, excluding Special Items, increased as the positive impact of the
Financial Improvement Plan and productivity initiatives more than offset the impact of reduced sales and related
lower fixed cost absorption
• Income and diluted EPS, excluding Special Items, both increased due to higher operating profit and currency gains
• Solid Free Cash Flow generation in Q2 2016; total debt decreased as compared to Q2 2015
11
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
(1) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of Special Items, less Capital Expenditures.
(Unaudited, dollars in millions, except per share amounts)
Grew EPS year-over-year, despite external top-line pressures and the impact of challenges in Aerospace.
$0.30
$0.34
2015 Q2 EPS, excluding
Special Items
2015 Energy legal claim Energy-facing business
volume
Aerospace operating
profit
FIP savings / operating
improvements
Corporate costs and non-
cash stock compensation
Interest / taxes / other 2016 Q2 EPS, excluding
Special Items
EPS Bridge from Q2 2015 to Q2 2016
12
• Significant year-over-year impact related to lower energy-facing business volume and reduced Aerospace
profitability
• Executing plan to remedy short-term production and integration inefficiencies in Aerospace
• Cost savings actions (including the Financial Improvement Plan) helping offset external headwinds
• Corporate spend reduced following the Cequent spin-off and in response to macroeconomic challenges
Offsetting the majority of the external headwinds; continue to execute on margin enhancement plans.
(For illustrative purposes)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Segment Highlights
Packaging
14
• Sales were relatively flat, excluding the impact of
unfavorable currency exchange
• Profit and the related margin, excluding Special Items,
increased due to a more favorable product mix and
ongoing productivity initiatives, offsetting the continued
investment in global capabilities
Initiatives
• Aligned global marketing and sales force with end
markets and customers
• Selected new site in Mexico to expand manufacturing
capacity serving the Americas
• Developing world-class product development team and
customer innovation centers in locations close to
customers
• Executing on productivity initiatives to fund global
growth while maintaining margins
Quarterly Commentary
(Unaudited, dollars in millions)
Q2 2016 Segment Contribution
43%
By Revenue
67%
By Operating Profit
(excluding Special Items and
Corporate Expense)
Positioning business for customer innovation and continued growth,
while maintaining targeted margin levels.
Financial Snapshot Q2 2016 Q2 2015 Variance
Sales $88.1 $89.6 -1.6%
Operating profit (excl. Special Items) $22.0 $21.0 4.8
25.0% 23.4% 160 bps
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Aerospace
15
• Sales increased due to the acquisition of Parker
Hannifin’s machined components facility in Q4 2015;
partially offset by lower demand from certain larger
distribution customers
• Profit and the related margin, excluding Special Items,
declined due to incremental costs due to short-term
production inefficiencies, a less favorable product mix
and higher costs of new product qualifications
Initiatives
• Executing plan to increase manufacturing throughput
and address costs of production inefficiencies to
enhance margins
• Developing and qualifying new highly-engineered
products; qualifying existing products for new
applications or new customers
• Leveraging a single aerospace platform to better serve
customers and enhance margins
(Unaudited, dollars in millions)
Quarterly Commentary
Immediate focus on sales and margin improvement.
Q2 2016 Segment Contribution
22%
By Revenue
15%
By Operating Profit
(excluding Special Items and
Corporate Expense)
Financial Snapshot Q2 2016 Q2 2015 Variance
Sales $44.1 $43.2 2.0%
Operating profit (excl. Special Items) $5.0 $8.1 -37.4
11.4% 18.6% -720 bps
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Aerospace Macro Environment
Macro Changes
• Supply chain disruption
‒ BASN-driven inventory reductions in channel
Large aerospace distributors
OE warehouse consolidation
‒ Increased focus on “just in time” inventory
• Build rate increases
• Shift to composite aircraft
16
Impacts on TriMas
• Min/max programs and inventory
management
• Less predictable order patterns and smaller
lot sizes
• Reduced sales volumes of certain higher
margin distributor products
• Increased price competitiveness – OE long-
term agreement negotiations and increased
supplier competitiveness
• Expanded product offerings and increased
manufacturing complexity
• Additional capacity and automation required
Good business with solid, long-term fundamentals –
addressing shorter-term impact of current supply chain disruptions.
17
Monogram Aerospace Fasteners
• Executing comprehensive recovery plan to
meet current order demand, eliminate past
dues and improve profitability
• Implemented revised scheduling and
production recovery plans for both fastener
and collar facilities for remainder of year
• Added capacity to improve manufacturing
throughput
• Integrating burndown plan for current past due
orders based on existing order backlog
• Tracking key performance indicators to
measure progress
– Schedule attainment
– Sales/shipment dollars per day
– Order intake
– Aging/amount of past due orders
• Added experienced resources to supplement
team
• Leverage additional collar opportunities
Executing comprehensive plans to improve performance.
Martinic Engineering (Machined Components)
• Completed facility-integration activities mid-Q2
• Transitioning Tolleson facility to a profit center
– Addressing pricing fundamentals on certain LTA part
numbers in cooperation with customer
• Qualified nearly 50 incremental part numbers
under current LTA
• Qualified 14 additional part numbers with new
customers under contracts
• Combined potential value of newly qualified
parts in excess of $6 million annually – expect
some orders to begin in 2016
Aerospace Improvement Initiatives
Energy
18
• Sales decreased due to reduced demand from
upstream oil customers and the impact of lower levels
of downstream capex spending
• Cost savings achieved from restructuring actions more
than offset the impact of the reduced sales levels and
lower related fixed cost absorption
Initiatives
• Leveraging lower costs of business restructuring to
capitalize on end market opportunities
• Driving continued manufacturing and operational
improvements across locations
• Accelerating and broadening the move of the
manufacture of standard products from Houston to
Reynosa
(Unaudited, dollars in millions)
Quarterly Commentary
Leveraging lower cost structure to drive margin improvement.
Q2 2016 Segment Contribution
20%
By Revenue
Financial Snapshot Q2 2016 Q2 2015 Variance
Sales $40.0 $50.2 -20.3%
Operating profit (excl. Special Items) $1.8 ($3.3) n/m
4.5% -6.5% n/
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
6%
By Operating Profit
(excluding Special Items and
Corporate Expense)
Engineered Components
19
• Cylinder sales declined due to weaker industrial end
markets
• Engine and compressor sales decreased more than
50% as a result of lower oil prices – operated at a
slight loss due to reduced demand
• Operating profit, excluding Special Items, decreased
as a result of reduced sales levels and related lower
fixed cost absorption
Initiatives
• Implemented cost reduction actions to mitigate top-line
pressures and remain breakeven in engine business
• Adding incremental cylinder capabilities and longer-
term capacity
• Expanding engine and compressor product lines to
diversify and reduce end-market cyclicality
(Unaudited, dollars in millions)
Quarterly Commentary
Focused on mitigating top-line pressures by reducing costs and increasing efficiencies.
Q2 2016 Segment Contribution
15%
By Revenue
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Financial Snapshot Q2 2016 Q2 2015 Variance
Sales $31.2 $42.0 -25.7%
Operating profit (excl. Special Items) $3.9 $6.3 -38.2
12.4% 15.0% -260 bps
12%
By Operating Profit
(excluding Special Items and
Corporate Expense)
Segment Performance Summary
20
(Unaudited, dollars in millions)
Sales
Operating Profit Margin
(excluding Special Items)
Q2
2016
Q1
2016
Q2
2015
FY
2015
Packaging $88.1 $80.1 $89.6 $334.3
Aerospace $44.1 $40.5 $43.2 $176.5
Energy $40.0 $44.8 $50.2 $193.4
Engineered
Components
$31.2 $37.5 $42.0 $159.8
Q2
2016
Q1
2016
Q2
2015
FY
2015
Packaging 25.0% 22.9% 23.4% 24.0%
Aerospace 11.4% 8.7% 18.6% 18.1%
Energy 4.5% 2.4% -6.5% -0.8%
Engineered
Components
12.4% 15.3% 15.0% 13.6%
Cost savings actions being realized in a challenging top-line environment.
Note: Please see the Appendix for a detailed reconciliation to GAAP results. Historical figures may be found in the corresponding earnings releases located on
www.trimascorp.com under the “Investors” section.
Outlook and Summary
Updated FY 2016 Segment Assumptions
22
Sales(1)
Operating
Profit Margin
(excl. Special Items) Full Year 2016 Commentary
Packaging
Previous
3% – 5%
4% – 8%
23% – 24%
22% – 24%
• Organic growth driven primarily by new products and increased
share in emerging markets – anticipate some customer launch
delays into 2017
• Executing on pipeline of productivity initiatives to fund growth while
maintaining margins
• Expect pressure resulting from currency moves following Brexit
Aerospace
Previous
0% – 2%
9% – 11%
11% – 13%
16% – 18%
• Distributor orders trending lower than expected – significant
impact on margin given resulting less favorable product sales mix
• Short-term production inefficiencies and integration costs impact
sales and profitability – recovery plan demonstrating improvement
• Steady OE build rates and the Q4 2015 acquisition of Parker
Hannifin facility expected to aid top-line
Energy
Previous
(15%) – (20%)
(10%) – (15%)
4% – 6%
3% – 6%
• Sales impacted by reduced upstream and downstream channel
spending and exiting of lower margin business
• Margin level positively impacted by restructuring of footprint and
supply chain, cost-out actions and operational efficiencies
Engineered
Components
Previous
(15%) – (20%)
(7%) – (10%)
13% – 15%
13% – 15%
• Industrial market slowdown expected to continue to impact
cylinder sales – sales expected to be down year-over-year
• Mitigate impact of lower cylinder sales via productivity initiatives
• Further engine-related top-line pressure – focused on offsetting to
remain near breakeven
Top-line pressures more significant than planned –
holding or improving margin rates in three out of four of the segments.
Note: All of the figures and comments on this slide exclude any current and future Special Items.
(1) 2016 revenue growth versus 2015.
Updated FY 2016 Additional Assumptions
Full Year Outlook
(Updated as of 7/28/16) Comments
Interest Expense
Previous
$13 – $15 million
$14 – $16 million
• Effective July 1, 2016, interest expense on the majority of
variable-rate debt in the Credit Agreement fixed via interest
rate swap agreements (through 2020)
• Impact of higher interest rates expected to more than offset
interest savings from debt reduction
• Debt reduction remains a priority
Capital Expenditures
Previous
3% – 4% of sales
4% – 5%
• Continuing to invest in Packaging and Aerospace for top-line
growth and margin expansion
• Planning additional low-cost country capacity in Packaging to
serve global customers
• Expanding capacity of cylinder business to capitalize on North
American market position
Tax Rate 31% – 33%
• Income more heavily weighted toward United States based on
planned income mix and due to restructuring actions within
the Energy segment
Corporate Expense –
• Cash Costs
• Stock Compensation
Previous
$22 – $24 million
$9 million
$25 – $27 million
$10 million
• Expected annual run rate of cash spend reduced following the
Cequent spin-off in June 2015
• Lower attainment of performance-based equity awards
resulted in lower stock compensation expense in 2014 and
2015
• Target awards and metrics reset following the spin-off
• Includes long term incentive compensation for all of TriMas
23
From Continuing Operations
Note: All of the figures and comments on this slide exclude any current and future Special Items.
Updated FY 2016 Outlook
Full Year
Outlook
(as of 4/28/16)(1)
Full Year
Outlook
(as of 7/28/16) Comments
Net Sales
(2%) – 2%
(4%) – (7%)
• Top-line pressure across all segments
• Expect some pressure resulting from currency moves
following Brexit
• Expect ~1% growth from existing acquisition
Earnings Per
Share, diluted
(excl. Special Items)
$1.35 – $1.45 $1.22 – $1.30
• Reduction in EPS driven by weaker top-line and more gradual
Aerospace margin improvement
• Savings from Financial Improvement Plan and productivity
initiatives expected to help mitigate impact of weak end
markets
Free Cash Flow(2)
(excl. Special Items)
$60 – $70
million
$55 – $65
million
• Managing working capital and capital expenditures consistent
with environment, while still funding growth programs
• Reduction in FCF outlook as a result of lower earnings; target
remains at ~ 100% of net income
Note: All of the figures and comments on this slide exclude any current and future Special Items.
(1) Original guidance provided on 2/25/16.
(2) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of Special Items, less Capital Expenditures.
24
Focused on execution of sales and margin improvement plans.
From Continuing Operations
Summary
• Focus on managing what we can control – align cost structure with
expected end market demand
• Grow higher-margin Packaging and Aerospace platforms – continue to
invest and leverage
– Immediate focus on achieving Aerospace’s operational improvements
• Drive improved profitability from restructured Energy business
• Improve cash flow conversion and ROIC
• Drive continuous productivity pipeline
25
Focused on operational execution for the remainder of 2016.
Questions and Answers
Appendix
Second Quarter YTD Summary
28
(Unaudited, dollars in millions, except per share amounts)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
(1) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of Special Items, less Capital Expenditures.
• YTD 2016 sales declined nearly 10% as compared to YTD 2015 – weakness in the oil-related and industrial end
markets, aerospace distributor volumes and unfavorable currency exchange more than offset organic initiatives
and the results of a recent acquisition
• YTD 2016 operating profit margin percentage, excluding Special Items, increased 60 basis points as the positive
impact of the Financial Improvement Plan and productivity initiatives more than offset the impact of reduced
sales and related lower fixed cost absorption
• Income and diluted EPS, excluding Special Items, were relatively flat year-over-year
• Solid Free Cash Flow generation in YTD 2016; total debt decreased as compared to Q2 2015
Held EPS year-over-year, despite external top-line pressures and the impact of challenges in Aerospace.
( f ro m co ntinuing o perat io ns) Q2 YTD 2016 Q2 YTD 2015 Variance
Revenue $406.2 $449.0 -9.5%
Operating Profit $35.1 $42.2 -16.9%
Excl. Total Special Items, Operating Profit would have been: $47.5 $49.8 -4.6%
Excl. Total Special Items, Operating Profit margin would have been: 11.7% 11.1% 60 bps
Income $18.8 $20.4 -8.1%
Excl. Total Special Items, Income would have been: $28.0 $27.6 1.4%
Diluted earnings per share $0.41 $0.45 -8.9%
Excl. Total Special Items, diluted earnings per share would have been: $0.61 $0.61 0.0%
Free Cash Flow (1) $28.3 $7.6 273.4%
Total Debt $406.3 $457.3 -11.2%
Condensed Consolidated Balance Sheet
29
(Dollars in thousands)
June 30, December 31,
2016 2015
(unaudited)
Assets
Current assets:
Cash and cash equivalents............................................................ 23,660$ 19,450$
Receivables, net........................................................................... 124,620 121,990
Inventories.................................................................................... 165,800 167,370
Prepaid expenses and other current assets..................................... 7,440 17,810
Total current assets................................................................... 321,520 326,620
Property and equipment, net.............................................................. 178,660 181,130
Goodwill........................................................................................... 377,430 378,920
Other intangibles, net........................................................................ 263,510 273,870
Other assets.................................................................................... 9,080 9,760
Total assets.............................................................................. 1,150,200$ 1,170,300$
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities, long-term debt................................................... 13,820$ 13,850$
Accounts payable......................................................................... 77,820 88,420
Accrued liabilities.......................................................................... 41,690 50,480
Total current liabilities................................................................ 133,330 152,750
Long-term debt, net........................................................................... 392,460 405,780
Deferred income taxes...................................................................... 8,320 11,260
Other long-term liabilities................................................................... 57,890 53,320
Total liabilities........................................................................... 592,000 623,110
Total shareholders' equity........................................................... 558,200 547,190
Total liabilities and shareholders' equity....................................... 1,150,200$ 1,170,300$
Consolidated Statement of Operations
30
(Unaudited, dollars in thousands, except for per share amounts)
Three months ended Six months ended
2016 2015 2016 2015
Net sales................................................................................................. 203,320$ 224,900$ 406,200$ 449,030$
Cost of sales............................................................................................ (146,240) (163,180) (293,200) (324,390)
Gross profit........................................................................................... 57,080 61,720 113,000 124,640
Selling, general and administrative expenses............................................... (38,420) (42,510) (77,890) (82,410)
Operating profit..................................................................................... 18,660 19,210 35,110 42,230
Other expense, net:
Interest expense................................................................................... (3,310) (3,720) (6,750) (7,170)
Debt financing and extinguishment costs................................................. - (1,970) - (1,970)
Other income (expense), net.................................................................. 130 (290) 70 (1,610)
Other expense, net............................................................................ (3,180) (5,980) (6,680) (10,750)
Income from continuing operations before income tax expense...................... 15,480 13,230 28,430 31,480
Income tax expense.................................................................................. (5,000) (4,740) (9,650) (11,050)
Income from continuing operations.............................................................. 10,480 8,490 18,780 20,430
Loss from discontinued operations, net of tax.............................................. - (6,780) - (4,740)
Net income............................................................................................... 10,480 1,710 18,780 15,690
Earnings per share - basic:
Continuing operations............................................................................ 0.23$ 0.19$ 0.41$ 0.45$
Discontinued operations......................................................................... - (0.15) - (0.10)
Net income per share............................................................................ 0.23$ 0.04$ 0.41$ 0.35$
Weighted average common shares - basic 45,429,851 45,150,827 45,354,421 45,074,394
Earnings per share - diluted:
Continuing operations............................................................................ 0.23$ 0.19$ 0.41$ 0.45$
Discontinued operations......................................................................... - (0.15) - (0.10)
Net income per share............................................................................ 0.23$ 0.04$ 0.41$ 0.35$
Weighted average common shares - diluted 45,726,348 45,418,907 45,690,582 45,409,875
June 30, June 30,
Consolidated Statement of Cash Flow
(Unaudited, dollars in thousands)
31
2016 2015
Cash Flows from Operating Activities:
Net income.............................................................................................................................. 18,780$ 15,690$
Loss from discontinued operations............................................................................................. - (4,740)
Income from continuing operations............................................................................................. 18,780 20,430
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on dispositions of property and equipment...................................................................... 1,120 300
Depreciation......................................................................................................................... 11,980 10,830
Amortization of intangible assets........................................................................................... 10,190 10,580
Amortization of debt issue costs............................................................................................ 670 1,020
Deferred income taxes.......................................................................................................... 230 (250)
Non-cash compensation expense.......................................................................................... 4,140 2,870
Excess tax benefits from stock based compensation............................................................... (170) (270)
Debt financing and extinguishment costs................................................................................ - 1,970
Increase in receivables.......................................................................................................... (3,660) (8,930)
(Increase) decrease in inventories.......................................................................................... 1,130 (9,210)
Decrease in prepaid expenses and other assets...................................................................... 10,650 510
Decrease in accounts payable and accrued liabilities............................................................... (21,710) (8,550)
Other, net............................................................................................................................ (410) (820)
Net cash provided by operating activities of continuing operations.......................................... 32,940 20,480
Net cash used for operating activities of discontinued operations........................................... - (14,030)
Net cash provided by operating activities......................................................................... 32,940 6,450
Cash Flows from Investing Activities:
Capital expenditures............................................................................................................. (12,960) (12,890)
Net proceeds from disposition of property and equipment......................................................... 120 690
Net cash used for investing activities of continuing operations............................................... (12,840) (12,200)
Net cash used for investing activities of discontinued operations............................................ - (2,510)
Net cash used for investing activities............................................................................... (12,840) (14,710)
Cash Flows from Financing Activities:
Proceeds from borrowings on term loan facilities..................................................................... - 275,000
Repayments of borrowings on term loan facilities..................................................................... (6,950) (441,360)
Proceeds from borrowings on revolving credit and accounts receivable facilities.......................... 216,580 697,890
Repayments of borrowings on revolving credit and accounts receivable facilities......................... (225,050) (703,390)
Payments for deferred purchase price..................................................................................... - (5,710)
Debt financing fees............................................................................................................... - (1,850)
Shares surrendered upon vesting of options and restricted stock awards to cover tax
obligations…...…………………………………………………………………………………….……… (650) (2,620)
Proceeds from exercise of stock options................................................................................ 10 430
Excess tax benefits from stock based compensation............................................................... 170 270
Cash transferred to the Cequent businesses........................................................................... - (17,050)
Net cash used for financing activities of continuing operations............................................... (15,890) (198,390)
Net cash provided by financing activities of discontinued operations....................................... - 208,400
Net cash provided by (used for) financing activities........................................................... (15,890) 10,010
Cash and Cash Equivalents:
Net increase for the period..................................................................................................... 4,210 1,750
At beginning of period........................................................................................................... 19,450 24,420
At end of period................................................................................................................ 23,660$ 26,170$
Supplemental disclosure of cash flow information:
Cash paid for interest........................................................................................................ 5,860$ 9,690$
Cash paid for taxes........................................................................................................... 3,170$ 17,390$
June 30,
Six months ended
Company and Business Segment
Financial Information
32
(Unaudited, dollars in thousands, from continuing operations)
Three months ended
2016 2015 2016 2015
Packaging
Net sales................................................................................................................................................ 88,110$ 89,580$ 168,220$ 168,540$
Operating profit........................................................................................................................................ 21,410$ 20,710$ 39,250$ 38,220$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs........................................................................................... 590$ 280$ 1,060$ 430$
Excluding Special Items, operating profit would have been................................................................... 22,000$ 20,990$ 40,310$ 38,650$
Aerospace
Net sales................................................................................................................................................ 44,090$ 43,220$ 84,590$ 88,960$
Operating profit........................................................................................................................................ 3,550$ 7,220$ 7,010$ 15,300$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs........................................................................................... 1,490$ 830$ 1,560$ 1,620$
Excluding Special Items, operating profit would have been................................................................... 5,040$ 8,050$ 8,570$ 16,920$
Energy
Net sales................................................................................................................................................ 39,950$ 50,150$ 84,700$ 101,310$
Operating loss......................................................................................................................................... (3,090)$ (7,170)$ (6,700)$ (6,830)$
Special Items to consider in evaluating operating profit (loss):
Severance and business restructuring costs........................................................................................... 4,890$ 3,910$ 9,590$ 5,340$
Excluding Special Items, operating profit (loss) would have been.......................................................... 1,800$ (3,260)$ 2,890$ (1,490)$
Engineered Components
Net sales................................................................................................................................................ 31,170$ 41,950$ 68,690$ 90,220$
Operating profit........................................................................................................................................ 3,860$ 6,220$ 9,440$ 12,190$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs........................................................................................... 20$ 60$ 170$ 140$
Excluding Special Items, operating profit would have been................................................................... 3,880$ 6,280$ 9,610$ 12,330$
Corporate expenses
Operating loss......................................................................................................................................... (7,070)$ (7,770)$ (13,890)$ (16,650)$
Total Continuing Operations
Net sales................................................................................................................................................ 203,320$ 224,900$ 406,200$ 449,030$
Operating profit........................................................................................................................................ 18,660$ 19,210$ 35,110$ 42,230$
Total Special Items to consider in evaluating operating profit........................................................................ 6,990$ 5,080$ 12,380$ 7,530$
Excluding Special Items, operating profit would have been................................................................... 25,650$ 24,290$ 47,490$ 49,760$
June 30, June 30,
Six months ended
Additional Information Regarding Special Items
Impacting Reported GAAP Financial Measures
33
(Unaudited, dollars in thousands, except for per share amounts)
Three months ended Six months ended
June 30, June 30,
2016 2015 2016 2015
Income from continuing operations, as reported.............................................................................................................. 10,480$ 8,490$ 18,780$ 20,430$
After-tax impact of Special Items to consider in evaluating quality of income from continuing operations:
Severance and business restructuring costs....................................................................................................................... 5,130 4,030 9,220 5,930
Debt extinguishment costs............................................................................................................................................... - 1,240 - 1,240
Excluding Special Items, income from continuing operations would have been........................................................... 15,610$ 13,760$ 28,000$ 27,600$
Three months ended Six months ended
June 30, June 30,
2016 2015 2016 2015
Diluted earnings per share from continuing operations, as reported................................................................................ 0.23$ 0.19$ 0.41$ 0.45$
After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations:
Severance and business restructuring costs....................................................................................................................... 0.11 0.08 0.20 0.13
Debt extinguishment costs............................................................................................................................................... - 0.03 - 0.03
Excluding Special Items, EPS from continuing operations would have been................................................................ 0.34$ 0.30$ 0.61$ 0.61$
Weighted-average shares outstanding ......................................................................................................................... 45,726,348 45,418,907 45,690,582 45,409,875
2016 2015 2016 2015
Operating profit from continuing operations (excluding Special Items)……………………….……….................................... 25,650$ 24,290$ 47,490$ 49,760$
Corporate expenses (excluding Special Items)…………………………………………................................................................ 7,070 7,770 13,890 16,650
Segment operating profit (excluding Special Items)………………….................................................................................. 32,720$ 32,060$ 61,380$ 66,410$
Segment operating profit margin (excluding Special Items)…...……................................................................................ 16.1% 14.3% 15.1% 14.8%
June 30, June 30,
Three months ended Six months ended
Additional Information Regarding Special Items
Impacting Reported GAAP Financial Measures
34
(Unaudited, dollars in thousands)
As reported
Special
Items
Excluding
Special
Items As reported
Special
Items
Excluding
Special
Items
Net cash provided by operating activities of continuing operations............................................................................................. 36,280$ 4,920$ 41,200$ 16,620$ -$ 16,620$
Less: Capital expenditures of continuing operations................................................................................................................ (6,980) - (6,980) (7,200) - (7,200)
Free Cash Flow from continuing operations............................................................................................................................ 29,300 4,920 34,220 9,420 - 9,420
Income from continuing operations........................................................................................................................................ 10,480 5,130 15,610 8,490 5,270 13,760
Free Cash Flow as a percentage of income from continuing operations..................................................................................... 280% 219% 111% 68%
As reported
Special
Items
Excluding
Special
Items As reported
Special
Items
Excluding
Special
Items
Net cash provided by operating activities of continuing operations............................................................................................. 32,940$ 8,360$ 41,300$ 20,480$ -$ 20,480$
Less: Capital expenditures of continuing operations................................................................................................................ (12,960) - (12,960) (12,890) - (12,890)
Free Cash Flow from continuing operations............................................................................................................................ 19,980 8,360 28,340 7,590 - 7,590
Income from continuing operations........................................................................................................................................ 18,780 9,220 28,000 20,430 7,170 27,600
Free Cash Flow as a percentage of income from continuing operations..................................................................................... 106% 101% 37% 28%
Three months ended June 30,
20152016
Six months ended June 30,
2016 2015
Current Debt Structure
35
(Unaudited, dollars in thousands)
As of June 30, 2016, TriMas had $123.7 million of cash and available liquidity
under its revolving credit and accounts receivable facilities.
June 30, December 31,
2016 2015
Cash and Cash Equivalents……………………………..………………… 23,660$ 19,450$
Credit Agreement……………………………………….. 347,870 371,820
Receivables facility and other……………………………….. 63,790 53,860
Debt issuance costs…………………………………… (5,380) (6,050)
Total Debt………………………...………………………...………………………… 406,280 419,630
Key Ratios:
B nk LTM EBITDA……………………………………………………………………………….……………………………………… 147,470$ 154,180$
Interest Coverage Ratio………………………………………………………………… 12.40 x 12.77 x
Leverage Ratio…………………………………………………………………... 2.82 x 2.80 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
36
(Unaudited, dollars in thousands)
(1) As defined in the Credit Agreement dated June 30, 2015.
(30,310)$
Interest expense....................................................................................................................... 13,640
Income tax expense.................................................................................................................. 5,140
Depreciation and amortization.................................................................................................... 44,310
Extraordinary non-cash charges................................................................................................. 75,680
Non-cash compensation expense............................................................................................... 7,610
Other non-cash expenses or losses........................................................................................... 14,990
Non-recurring expenses or costs relating to cost saving projects .................................................. 15,000
Acquisition integration costs...................................................................................................... 1,410
147,470$
Net income (loss) for the twelve months ended June 30, 2016..........................................................
Bank EBITDA - LTM Ended June 30, 2016 (1)…………………………………………………………………