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) October 27, 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 October 27, 2016, reporting its financial results for the third quarter ending September 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 "Third 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: | October 27, 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 REPORTS THIRD QUARTER 2016 RESULTS
Delivers Third Quarter 2016 Diluted EPS, Excluding Special Items, of $0.35
BLOOMFIELD HILLS, Michigan, October 27, 2016 - TriMas (NASDAQ: TRS) today announced financial results for the quarter ended September 30, 2016. The Company reported third quarter net sales from continuing operations of $202.3 million, a decrease of 9.0% compared to third quarter 2015. The Company reported third quarter 2016 income from continuing operations of $8.8 million, or $0.19 per diluted share, as compared to income of $11.7 million, or $0.26 per diluted share, in the third quarter of 2015. Excluding Special Items(1) related to severance and business restructuring, third quarter 2016 diluted earnings per share from continuing operations would have been $0.35, as compared to $0.39 in third quarter 2015.
TriMas Highlights
• | Delivered third quarter 2016 diluted earnings per share, excluding Special Items, of $0.35, despite lower sales levels. |
• | Increased operating profit margin, excluding Special Items, by 50 basis points, as compared to third quarter 2015. |
• | Achieved solid progress against a comprehensive recovery plan in the Aerospace segment which resulted in 530 basis points of sequential quarterly margin improvement, excluding Special Items. |
• | Generated Free Cash Flow(2) of $11.2 million for third quarter 2016, resulting in year-to-date Free Cash Flow of approximately 90% of income from continuing operations, excluding Special Items. |
• | Reduced total debt by 11% as compared to September 30, 2015. |
• | Initiated facility rationalization and infrastructure cost savings actions during the quarter to further streamline operations and drive improved performance. |
"We achieved third quarter diluted earnings per share of $0.35, excluding Special Items, despite softer sales levels primarily related to challenges in the oil and gas end markets," said Thomas Amato, TriMas President and Chief Executive Officer. "I am pleased with the renewed focus and sense of urgency to drive future performance improvements, as evidenced by the additional footprint rationalization actions taken during the quarter."
Amato continued, "During my first three months at TriMas, we implemented more detailed analytics and increased the frequency of management reviews to drive improved operational execution and make TriMas and its businesses more nimble and responsive to changes in our end markets, which we believe will ultimately provide a competitive advantage. After spending time with our teams in the businesses, I am convinced there are many opportunities to further enhance operating performance by embracing a culture of continuous improvement and accelerating growth in high potential areas."
"Regarding our 2016 outlook, we are tightening our full-year 2016 diluted EPS guidance range from $1.22 to $1.30, to $1.24 to $1.28 per share, excluding Special Items. While we continue to experience softer sales levels, we are taking actions to further streamline the businesses, enabling us to hold the midpoint of our previously provided EPS guidance range. We are currently working on our 2017 budget, as well as our longer-term strategic plan, in which we expect to achieve earnings expansion, despite anticipated continued oil and gas end market softness," Amato continued.
Third Quarter Financial Results - From Continuing Operations
• | TriMas reported third quarter net sales of $202.3 million, a decrease of 9.0% as compared to $222.2 million in third quarter 2015. The positive sales impacts of a recent acquisition and organic initiatives were more than offset by sales declines resulting primarily from weakness in the oil and gas end markets and the impact of unfavorable currency exchange. |
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• | The Company reported operating profit of $17.8 million in third quarter 2016 as compared to $21.6 million in third quarter 2015. Excluding Special Items related to severance and business restructuring, third quarter 2016 operating profit would have been $28.1 million as compared to $29.9 million during third quarter 2015. Third quarter 2016 operating profit margin, excluding Special Items, increased 50 basis points to 13.9%, as the favorable impact of the Company's Financial Improvement Plan, on-going continuous improvement initiatives and a reduction in corporate expenses, more than offset the unfavorable impact of sales declines as compared to third quarter 2015. |
• | Third quarter 2016 income from continuing operations was $8.8 million, or $0.19 per diluted share, as compared to $0.26 per diluted share in third quarter 2015. Excluding Special Items, third quarter 2016 income from continuing operations would have been $16.1 million, or $0.35 per diluted share, as compared to $0.39 in third quarter 2015, as a result of lower sales levels, which was partially offset by the Company's cost savings initiatives. |
• | The Company reported Free Cash Flow (defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of Special Items, less Capital Expenditures) of $11.2 million for third quarter 2016 as compared to $1.5 million in third quarter 2015. Please see Appendix I for further details. |
Financial Position
TriMas reported total debt of $402.4 million as of September 30, 2016, as compared to $419.6 million as of December 31, 2015, and $453.1 million as of September 30, 2015. TriMas ended third quarter 2016 with $100.9 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
Segment Results - From Continuing Operations
Packaging
The Packaging segment continues to develop specialty dispensing and closure applications for global markets, including industrial, food and beverage, and health, beauty and home care. Net sales for the third quarter increased 2.7% as compared to the year ago period, as sales increases to the health, beauty and home care, and industrial end markets more than offset the impact of unfavorable currency exchange. Third quarter operating profit and the related margin percentage, excluding Special Items, decreased due to a higher level of selling, general and administrative expenses related to continued investment in growth and global capabilities, and the reversal of acquisition-related liabilities in third quarter 2015 that did not recur in third quarter 2016, partially offset by the impact of continuous improvement initiatives.
Aerospace
The Aerospace segment is focused on increasing manufacturing throughput and manufacturing efficiency, developing and qualifying additional highly-engineered products, and leveraging broader capabilities to better serve its customers. Net sales for the third quarter increased 4.5% as compared to the year ago period, as a result of incremental sales related to the November 2015 acquisition of a machined components facility, partially offset by lower sales to distribution customers and production constraints. Third quarter operating profit and the related margin percentage, excluding Special Items, decreased due to a less favorable product sales mix and costs of recovery actions to address shorter-term production inefficiencies.
Energy
The Energy segment continues to leverage lower costs resulting from business restructuring, as well as operational and manufacturing improvements. Third quarter net sales decreased 25.9% as compared to the year ago period, due to reduced demand levels from downstream oil and gas customers, lower sales from international branches, lower levels of new facility engineering and construction activity and the impact of unfavorable currency exchange. Third quarter operating profit, excluding Special Items, decreased due to the impact of the reduced sales levels and lower fixed cost absorption. The related operating profit margin increased, however, as the impact of the sales decline was more than offset by savings achieved from cost reduction actions.
Engineered Components
The Engineered Components segment has responded to the dramatic drop in oil prices by reducing its fixed cost structure. Third quarter net sales decreased 29.5% as compared to the year ago period, primarily due to lower sales of engines and compressors resulting from the impact of low oil prices and significantly reduced oil and gas drilling activity. Sales of industrial cylinders also decreased as a result of continued softness in general industrial end markets and customer consolidation. Third quarter operating profit, excluding Special Items, decreased primarily due to reduced sales levels and lower fixed cost absorption. However, the related operating profit margin increased, as the impact
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of the sales decline was more than offset by savings achieved from cost reduction actions and continuous improvement initiatives.
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.
2016 Outlook
The Company is refining its full year 2016 outlook from continuing operations. The Company now estimates that 2016 sales will decline by 6% to 8% as compared to 2015. The Company also expects full-year 2016 diluted earnings per share to be $1.24 to $1.28 per share (previously $1.22 to $1.30 per share), excluding any current or future events that may be considered Special Items. In addition, the Company continues to expect 2016 Free Cash Flow (defined as Net Cash Provided by Operating Activities of Continuing Operations, 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.
Conference Call Information
TriMas Corporation will host its third quarter 2016 earnings conference call today, Thursday, October 27, 2016, at 10 a.m. ET. The call-in number is (888) 601-3864. Participants should request to be connected to the TriMas Corporation third quarter 2016 earnings conference call (Conference ID #6532559). The conference call will also be simultaneously webcast via TriMas' website at www.trimascorp.com, under the "Investors" section, with an accompanying slide presentation. A replay of the conference call will be available on the TriMas website or by dialing (888) 203-1112 (Replay Passcode #6532559) beginning October 27, 2016 at 3 p.m. ET through November 3, 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 those relating to the Company’s business, financial condition or future results, involve risks and uncertainties with respect to, including, but not limited to: the Company's leverage; liabilities imposed by the Company's debt instruments; market demand; competitive factors; supply constraints; material and energy costs; 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; potential costs and savings related to facility consolidation activities; 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 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.
(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. |
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(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.
About TriMas
TriMas is a diversified, global manufacturer of engineered products with approximately 4,000 dedicated employees in 13 countries. We provide customers with innovative product solutions through our businesses which operate in four segments: Packaging, Aerospace, Energy and Engineered Components. The TriMas family of businesses has strong brand names in the markets served, and operates under a common set of values and strategic priorities under the TriMas Business Model. TriMas is publicly traded on the NASDAQ under the ticker symbol “TRS,” and is headquartered in Bloomfield Hills, Michigan. For more information, please visit www.trimascorp.com.
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TriMas Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands)
September 30, 2016 | December 31, 2015 | |||||||
Assets | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 22,550 | $ | 19,450 | ||||
Receivables, net | 130,440 | 121,990 | ||||||
Inventories | 171,260 | 167,370 | ||||||
Prepaid expenses and other current assets | 7,530 | 17,810 | ||||||
Total current assets | 331,780 | 326,620 | ||||||
Property and equipment, net | 182,000 | 181,130 | ||||||
Goodwill | 377,380 | 378,920 | ||||||
Other intangibles, net | 258,400 | 273,870 | ||||||
Other assets | 8,840 | 9,760 | ||||||
Total assets | $ | 1,158,400 | $ | 1,170,300 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 13,840 | $ | 13,850 | ||||
Accounts payable | 76,140 | 88,420 | ||||||
Accrued liabilities | 45,950 | 50,480 | ||||||
Total current liabilities | 135,930 | 152,750 | ||||||
Long-term debt, net | 388,580 | 405,780 | ||||||
Deferred income taxes | 9,530 | 11,260 | ||||||
Other long-term liabilities | 57,350 | 53,320 | ||||||
Total liabilities | 591,390 | 623,110 | ||||||
Total shareholders' equity | 567,010 | 547,190 | ||||||
Total liabilities and shareholders' equity | $ | 1,158,400 | $ | 1,170,300 | ||||
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TriMas Corporation
Consolidated Statement of Income
(Unaudited - dollars in thousands, except per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net sales | $ | 202,290 | $ | 222,190 | $ | 608,490 | $ | 671,220 | ||||||||
Cost of sales | (144,240 | ) | (159,720 | ) | (437,440 | ) | (484,110 | ) | ||||||||
Gross profit | 58,050 | 62,470 | 171,050 | 187,110 | ||||||||||||
Selling, general and administrative expenses | (40,260 | ) | (40,910 | ) | (118,150 | ) | (123,320 | ) | ||||||||
Operating profit | 17,790 | 21,560 | 52,900 | 63,790 | ||||||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (3,480 | ) | (3,440 | ) | (10,230 | ) | (10,610 | ) | ||||||||
Debt financing and extinguishment costs | — | — | — | (1,970 | ) | |||||||||||
Other expense, net | (200 | ) | (720 | ) | (130 | ) | (2,330 | ) | ||||||||
Other expense, net | (3,680 | ) | (4,160 | ) | (10,360 | ) | (14,910 | ) | ||||||||
Income from continuing operations before income tax expense | 14,110 | 17,400 | 42,540 | 48,880 | ||||||||||||
Income tax expense | (5,330 | ) | (5,690 | ) | (14,980 | ) | (16,740 | ) | ||||||||
Income from continuing operations | 8,780 | 11,710 | 27,560 | 32,140 | ||||||||||||
Loss from discontinued operations, net of tax | — | — | — | (4,740 | ) | |||||||||||
Net income | $ | 8,780 | $ | 11,710 | 27,560 | 27,400 | ||||||||||
Basic earnings per share: | ||||||||||||||||
Continuing operations | $ | 0.19 | $ | 0.26 | $ | 0.61 | $ | 0.71 | ||||||||
Discontinued operations | — | — | — | (0.10 | ) | |||||||||||
Net income per share | $ | 0.19 | $ | 0.26 | $ | 0.61 | $ | 0.61 | ||||||||
Weighted average common shares—basic | 45,435,936 | 45,157,412 | 45,381,592 | 45,102,067 | ||||||||||||
Diluted earnings per share: | ||||||||||||||||
Continuing operations | $ | 0.19 | $ | 0.26 | $ | 0.60 | $ | 0.70 | ||||||||
Discontinued operations | — | — | — | (0.10 | ) | |||||||||||
Net income per share | $ | 0.19 | $ | 0.26 | $ | 0.60 | $ | 0.60 | ||||||||
Weighted average common shares—diluted | 45,760,455 | 45,499,104 | 45,713,873 | 45,439,618 | ||||||||||||
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TriMas Corporation
Consolidated Statement of Cash Flow
(Unaudited - dollars in thousands)
Nine months ended September 30, | ||||||||
2016 | 2015 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 27,560 | $ | 27,400 | ||||
Loss from discontinued operations | — | (4,740 | ) | |||||
Income from continuing operations | 27,560 | 32,140 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Loss on dispositions of property and equipment | 1,350 | 590 | ||||||
Depreciation | 17,710 | 16,430 | ||||||
Amortization of intangible assets | 15,330 | 15,790 | ||||||
Amortization of debt issue costs | 1,000 | 1,360 | ||||||
Deferred income taxes | 360 | (4,220 | ) | |||||
Non-cash compensation expense | 5,240 | 4,590 | ||||||
Excess tax benefits from stock based compensation | (640 | ) | (300 | ) | ||||
Debt financing and extinguishment costs | — | 1,970 | ||||||
Increase in receivables | (9,790 | ) | (15,790 | ) | ||||
Increase in inventories | (4,560 | ) | (7,010 | ) | ||||
(Increase) decrease in prepaid expenses and other assets | 10,780 | (1,020 | ) | |||||
Decrease in accounts payable and accrued liabilities | (17,150 | ) | (15,540 | ) | ||||
Other, net | (780 | ) | (250 | ) | ||||
Net cash provided by operating activities of continuing operations | 46,410 | 28,740 | ||||||
Net cash used for operating activities of discontinued operations | — | (14,030 | ) | |||||
Net cash provided by operating activities | 46,410 | 14,710 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (22,390 | ) | (20,360 | ) | ||||
Net proceeds from disposition of property and equipment | 120 | 1,680 | ||||||
Net cash used for investing activities of continuing operations | (22,270 | ) | (18,680 | ) | ||||
Net cash used for investing activities of discontinued operations | — | (2,510 | ) | |||||
Net cash used for investing activities | (22,270 | ) | (21,190 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from borrowings on term loan facilities | — | 275,000 | ||||||
Repayments of borrowings on term loan facilities | (10,380 | ) | (441,410 | ) | ||||
Proceeds from borrowings on revolving credit and accounts receivable facilities | 314,860 | 995,620 | ||||||
Repayments of borrowings on revolving credit and accounts receivable facilities | (324,780 | ) | (1,006,490 | ) | ||||
Payments for deferred purchase price | — | (5,810 | ) | |||||
Debt financing fees | — | (1,850 | ) | |||||
Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (1,500 | ) | (2,620 | ) | ||||
Proceeds from exercise of stock options | 120 | 430 | ||||||
Excess tax benefits from stock based compensation | 640 | 300 | ||||||
Cash transferred to the Cequent businesses | — | (17,050 | ) | |||||
Net cash used for financing activities of continuing operations | (21,040 | ) | (203,880 | ) | ||||
Net cash provided by financing activities of discontinued operations | — | 208,400 | ||||||
Net cash provided by (used for) financing activities | (21,040 | ) | 4,520 | |||||
Cash and Cash Equivalents: | ||||||||
Net increase (decrease) for the period | 3,100 | (1,960 | ) | |||||
At beginning of period | 19,450 | 24,420 | ||||||
At end of period | $ | 22,550 | $ | 22,460 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 8,870 | $ | 12,320 | ||||
Cash paid for taxes | $ | 9,130 | $ | 22,260 | ||||
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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 September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Packaging | ||||||||||||||||
Net sales | $ | 90,330 | $ | 87,930 | $ | 258,550 | $ | 256,470 | ||||||||
Operating profit | $ | 20,090 | $ | 21,870 | $ | 59,340 | $ | 60,090 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 1,660 | $ | 280 | $ | 2,720 | $ | 710 | ||||||||
Excluding Special Items, operating profit would have been | $ | 21,750 | $ | 22,150 | $ | 62,060 | $ | 60,800 | ||||||||
Aerospace | ||||||||||||||||
Net sales | $ | 47,430 | $ | 45,380 | $ | 132,020 | $ | 134,340 | ||||||||
Operating profit | $ | 6,660 | $ | 7,110 | $ | 13,670 | $ | 22,410 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 1,240 | $ | 1,120 | $ | 2,800 | $ | 2,740 | ||||||||
Excluding Special Items, operating profit would have been | $ | 7,900 | $ | 8,230 | $ | 16,470 | $ | 25,150 | ||||||||
Energy | ||||||||||||||||
Net sales | $ | 38,230 | $ | 51,600 | $ | 122,930 | $ | 152,910 | ||||||||
Operating loss | $ | (1,870 | ) | $ | (3,560 | ) | $ | (8,570 | ) | $ | (10,390 | ) | ||||
Special Items to consider in evaluating operating profit (loss): | ||||||||||||||||
Severance and business restructuring costs | $ | 3,640 | $ | 5,860 | $ | 13,230 | $ | 11,200 | ||||||||
Excluding Special Items, operating profit would have been | $ | 1,770 | $ | 2,300 | $ | 4,660 | $ | 810 | ||||||||
Engineered Components | ||||||||||||||||
Net sales | $ | 26,300 | $ | 37,280 | $ | 94,990 | $ | 127,500 | ||||||||
Operating profit | $ | 3,180 | $ | 4,380 | $ | 12,620 | $ | 16,570 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 230 | $ | 90 | $ | 400 | $ | 230 | ||||||||
Excluding Special Items, operating profit would have been | $ | 3,410 | $ | 4,470 | $ | 13,020 | $ | 16,800 | ||||||||
Corporate Expenses | ||||||||||||||||
Operating loss | $ | (10,270 | ) | $ | (8,240 | ) | $ | (24,160 | ) | $ | (24,890 | ) | ||||
Special Items to consider in evaluating operating loss: | ||||||||||||||||
Severance and business restructuring costs | $ | 3,560 | $ | 940 | 3,560 | 940 | ||||||||||
Excluding Special Items, operating loss would have been | $ | (6,710 | ) | $ | (7,300 | ) | (20,600 | ) | (23,950 | ) | ||||||
Total Continuing Operations | ||||||||||||||||
Net sales | $ | 202,290 | $ | 222,190 | $ | 608,490 | $ | 671,220 | ||||||||
Operating profit | $ | 17,790 | $ | 21,560 | $ | 52,900 | $ | 63,790 | ||||||||
Total Special Items to consider in evaluating operating profit | $ | 10,330 | $ | 8,290 | $ | 22,710 | $ | 15,820 | ||||||||
Excluding Special Items, operating profit would have been | $ | 28,120 | $ | 29,850 | $ | 75,610 | $ | 79,610 | ||||||||
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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 September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Income from continuing operations, as reported | $ | 8,780 | $ | 11,710 | $ | 27,560 | $ | 32,140 | ||||||||
After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 7,350 | 6,120 | 16,570 | 12,050 | ||||||||||||
Debt extinguishment costs | — | — | — | 1,240 | ||||||||||||
Excluding Special Items, income from continuing operations would have been | $ | 16,130 | $ | 17,830 | $ | 44,130 | $ | 45,430 | ||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Diluted earnings per share from continuing operations, as reported | $ | 0.19 | $ | 0.26 | $ | 0.60 | $ | 0.70 | ||||||||
After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 0.16 | 0.13 | 0.36 | 0.27 | ||||||||||||
Debt extinguishment costs | — | — | — | 0.03 | ||||||||||||
Excluding Special Items, diluted EPS from continuing operations would have been | $ | 0.35 | $ | 0.39 | $ | 0.96 | $ | 1.00 | ||||||||
Weighted-average shares outstanding | 45,760,455 | 45,499,104 | 45,713,873 | 45,439,618 | ||||||||||||
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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 September 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 | $ | 13,470 | $ | 7,160 | $ | 20,630 | $ | 8,260 | $ | 730 | $ | 8,990 | ||||||||||||
Less: Capital expenditures of continuing operations | (9,430 | ) | — | (9,430 | ) | (7,470 | ) | — | (7,470 | ) | ||||||||||||||
Free Cash Flow from continuing operations | 4,040 | 7,160 | 11,200 | 790 | 730 | 1,520 | ||||||||||||||||||
Income from continuing operations | 8,780 | 7,350 | 16,130 | 11,710 | 6,120 | 17,830 | ||||||||||||||||||
Free Cash Flow as a percentage of income from continuing operations | 46 | % | 69 | % | 7 | % | 9 | % | ||||||||||||||||
Nine months ended September 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 | $ | 46,410 | $ | 15,520 | $ | 61,930 | 28,740 | $ | 730 | $ | 29,470 | |||||||||||||
Less: Capital expenditures of continuing operations | (22,390 | ) | — | (22,390 | ) | (20,360 | ) | — | (20,360 | ) | ||||||||||||||
Free Cash Flow from continuing operations | 24,020 | 15,520 | 39,540 | 8,380 | 730 | 9,110 | ||||||||||||||||||
Income from continuing operations | 27,560 | 16,570 | 44,130 | 32,140 | 13,290 | 45,430 | ||||||||||||||||||
Free Cash Flow as a percentage of income from continuing operations | 87 | % | 90 | % | 26 | % | 20 | % | ||||||||||||||||
10
Third Quarter 2016 Earnings
Presentation
October 27, 2016
Forward-Looking Statement
2
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 those relating to the Company’s business, financial condition or
future results, involve risks and uncertainties with respect to, including, but not limited to: the Company's leverage; liabilities
imposed by the Company's debt instruments; market demand; competitive factors; supply constraints; material and energy costs;
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; potential
costs and savings related to facility consolidation activities; 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.
Agenda
3
• Opening Remarks
• Financial Highlights
• Segment Highlights
• Outlook and Summary
• Questions and Answers
• Appendix
Presenters Include:
• Thomas Amato, President and Chief Executive Officer
• Robert Zalupski, Chief Financial Officer
• Sherry Lauderback, Vice President, Investor Relations
Opening Remarks
5
Implementing a data-driven, fact-based review process to set TriMas’ future direction.
Opening Remarks – First 100 Days
First 100 Days Focus Actions
Visited 17 facilities and performed on-site
operational assessments
Accelerating opportunities to further optimize
cost structure and improve operations
Reviewed existing business model and
cadence of leadership interaction
Introducing new TriMas Business Model with
increased connectivity and improved analytics
Initiated customer visits
Reviewing capacity and process technology to
position TriMas for growth opportunities and
exceeding customer expectations
Reviewed annual budget and strategic
planning processes
Implementing a more rigorous 2017 budget
process with better linkage to the long-term
strategic plan
Met with and listened to many TriMas
investors
Received excellent input and look forward to
continued dialogue
6
TriMas has strong brand names, innovative products and process technologies, and dedicated employees.
TriMas’ businesses brand names are well-recognized and respected
within the end markets we serve
Our product technology and processing know-how, customer and
regulatory approvals, and established asset base provide unique barriers
to entry
Our business performance and capital structure allow for solid cash flow
to re-invest and de-leverage, even in softer markets
TriMas employees demonstrate a deep pride in our businesses
There are many opportunities available to further enhance performance
by driving a culture of continuous improvement and accelerating growth in
high potential areas
Opening Remarks – Key Observations
Financial Highlights
8
Third Quarter Summary
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
(Unaudited, dollars in millions, except per share amounts)
Expanded operating profit margin, excluding Special Items, despite continued end market weakness.
( fro m co ntinuing o perat io ns) Q3 2016 Q3 2015 Variance
Net S les $202.3 $222.2 (9.0%)
Operating Profit $17.8 $21.6 (17.5%)
Excluding Special Items, Operating Profit would have been: $28.1 $29.9 (5.8%)
Excluding Special Items, Operating profit margin would have been: 13.9% 13.4% 50 bps
Income $8.8 $11.7 (25.0%)
Excluding Special Items, Income would have been: $16.1 $17.8 (9.5%)
Diluted Earnings Per Share $0.19 $0.26 (26.9%)
Excluding Special Items, Diluted Earnings Per Share would have been: $0.35 $0.39 (10.3%)
• Q3 2016 sales declined 9% as compared to Q3 2015; however, sales were consistent with Q1 and
Q2 2016
̶ Slightly higher year-over-year sales in our Packaging and Aerospace segments were more
than offset due primarily to continued weakness in the oil and gas end markets
• Q3 operating profit margin, excluding Special Items, increased 50 bps, as the positive impact of the
Financial Improvement Plan more than offset the impact of reduced sales
• Achieved Q3 EPS, excluding Special Items, of $0.35, driven primarily by streamlining costs
9
• Significant year-over-year impact related to lower energy-facing business volume
• Cost reduction actions, including impacts of the Financial Improvement Plan, helping to offset
lower sales volumes
• Tax rate higher due to mix of more income in the United States versus lower-tax foreign
jurisdictions
EPS Bridge from Q3 2015 to Q3 2016
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
$0.39
$0.35
2015 Q3 EPS,
excluding Special
Items
Energy-facing
business volume
FIP savings /
operating
improvements
Other, primarily tax
rate
2016 Q3 EPS,
excluding Special
Items
Mitigated the majority of end market challenges through aggressive cost reduction actions.
(For illustrative purposes)
10
Third Quarter Summary
(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)
Increased attention on Free Cash Flow as part of the new TriMas Business Model.
• Generated Free Cash Flow of $11.2 million in Q3 2016 after considering investment in capex
̶ Capital investment included new lower-cost capacity for the Packaging segment and the
installation of a second cylinder forge in Engineered Components to improve manufacturing
flexibility and efficiency, as well as provide incremental capacity
̶ Intensified focus on increasing cash flow through operating performance improvements and
reduced investments in inventory
• Reduced total debt by $50.7 million in the LTM period ended Q3 2016
̶ Committed to ensuring we have adequate capital to invest in growth opportunities, while
continuing to de-lever
• Ended the quarter with cash and available liquidity of approximately $100.9 million
( fro m co ntinuing o perat io ns) Q3 2016 Q3 2015 Variance
Free Cash Flow (1) $11.2 $1.5 $9.7
Capital Expenditures $9.4 $7.4 $2.0
Inventories $171.3 $176.4 ($5.1)
Total Debt $402.4 $453.1 ($50.7)
Cash $22.5 $22.5 $0.0
Net Debt $379.9 $430.6 ($50.7)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Segment Highlights
12
Packaging Segment
• Excluding the impact of unfavorable currency exchange,
sales increased more than 5% as compared to prior year
• Increased sales to the health, beauty and home care, and
industrial end markets
• Profit and related margin, excluding Special Items,
declined slightly due to higher SG&A spending related to
growth initiatives and the reversal of acquisition-related
liabilities in Q3 2015 that did not recur in Q3 2016
Quarterly Comments
(Unaudited, dollars in millions)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Positioning business for customer innovation and continued growth.
• Aligning global marketing and sales force with end
markets and customers
• Establishing new manufacturing site in Mexico to
expand capacity serving the Americas
• Leveraging product innovation centers to support
global customers (United Kingdom, United States and
India)
• Executing on productivity initiatives to fund global
growth and product expansion
Actions Markets, Products & Brands
Financial Summary Q3 2016 Q3 2015 Variance
Sales $90.3 $87.9 2.7%
Operating Profit, excluding
Special Items
$21.8 $22.2 -1.8%
Margin, excluding Special Items 24.1% 25.2% -110 bps
13
Aerospace Segment
Quarterly Comments
(Unaudited, dollars in millions)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Intensifying focus on manufacturing performance and delivery improvements.
Actions Markets, Products & Brands
• Executing plan to increase manufacturing throughput
and improve production efficiencies
• Developing and qualifying new highly-engineered
products; qualifying existing products for new
applications and new customers
• Leveraging a single aerospace platform to better serve
customers and enhance margins
• Sales increased due to the acquisition of a machined
components facility in Q4 2015; partially offset by lower
demand from distribution customers
• Increased production throughput in the Monogram
facilities and reduced the number of past due orders
• Profit and related margin, excluding Special Items,
declined due to incremental costs related to shorter-term
production inefficiencies and a less favorable product mix
Financial Summary Q3 2016 Q3 2015 Variance
Sales $47.4 $45.4 4.5%
Operating Profit, excluding
Special Items
$7.9 $8.2 -4.0%
Margin, excluding Special Items 16.7% 18.1% -140 bps
14
Energy Segment
Quarterly Comments
(Unaudited, dollars in millions)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Accelerating performance improvement plans.
Actions Markets, Products & Brands
• Sales decreased due to reduced demand from
downstream oil and gas customers, lower levels of new
facility engineering and construction activity and lower
international branch sales
• Cost savings achieved from restructuring actions mostly
offset the impact of the reduced sales levels and lower
related fixed cost absorption
• Driving continued manufacturing and operational
improvements across all locations
• Accelerating and broadening the move of the
manufacture of standard products from Houston to
Reynosa
• On-going assessment of the global footprint to optimize
fixed and SG&A cost structure given continued soft end
markets
Financial Summary Q3 2016 Q3 2015 Variance
Sales $38.2 $51.6 -25.9%
Operating Profit, excluding
Special Items
$1.8 $2.3 -23.0%
Margin, excluding Special Items 4.6% 4.5% 10 bps
15
Engineered Components Segment
Quarterly Comments
(Unaudited, dollars in millions)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Tight cost management mitigating impact of lower end market volume.
Actions Markets, Products & Brands
• Cylinder sales declined due to weaker industrial end
markets and customer consolidation
• Engine and compressor sales decreased as a result of
continued low oil prices and related reduced oil and gas
drilling activities
• Operating profit, excluding Special Items, decreased as
a result of reduced sales levels and lower fixed cost
absorption, while margin improved due to further
reductions in cost structure and productivity initiatives
• Re-assessing fixed and SG&A cost structure given
continued soft end markets
• Adding incremental cylinder capabilities and longer-term
capacity
• Seeking to enter new product-use markets such as
hydrogen applications
• Expanding engine and compressor product lines to
diversify and reduce end-market cyclicality
Financial Summary Q3 2016 Q3 2015 Variance
Sales $26.3 $37.3 -29.5%
Operating Profit, excluding
Special Items
$3.4 $4.5 -23.7%
Margin, excludi g Sp ci l Items 13.0% 12.0% 100 bps
16
Segment Performance Summary
(Unaudited, dollars in millions)
Operating Profit Margin
(excluding Special Items)
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.
Strong or improving operating profit margins in each segment, despite continued soft sales activity.
Q3
2016
Q2
2016
Q3
2015
FY
2015
Packaging $90.3 $88.1 $87.9 $334.3
Aerospace $47.4 $44.1 $45.4 $176.5
Energy $38.2 $40.0 $51.6 $193.4
Engineered
Components
$26.3 $31.2 $37.3 $159.8
TriMas $202.3 $203.3 $222.2 $864.0
Q3
2016
Q2
2016
Q3
2015
FY
2015
Packaging 24.1% 25.0% 25.2% 24.0%
Aerospace 16.7% 11.4% 18.1% 18.1%
Energy 4.6% 4.5% 4.5% -0.8%
Engineered
Components
13.0% 12.4% 12.0% 13.6%
Segment 17.2% 16.1% 16.7% 15.3%
Sales
Outlook and Summary
18
Updated FY 2016 Segment Assumptions
Sales(1)
Operating
Profit Margin
(excl. Special Items) Full Year 2016 Commentary
Packaging
2% – 3%
Previous
3% – 5%
23% – 24%
• Stronger U.S. dollar and customer product launch delays into 2017
are moderating sales growth expectations
• Maintaining targeted profit margin levels
Aerospace
0% – 2%
11% – 13%
• Stable OE build rates and acquisition-related sales increases,
largely offset by the impact of lower distribution orders
• Near-term production inefficiencies, integration costs and less
favorable product sales mix impacting sales and profitability
Energy
(15%) – (20%)
4% – 6%
• Sales impacted by reduced upstream and downstream channel
spending and exiting of lower margin business
• Margin level positively impacted by restructuring activities
Engineered
Components
(20%) – (25%)
Previous
(15%) – (20%)
13% – 15%
• Industrial market slowdown and customer consolidation impacting
cylinder sales
• Maintaining operating profit margins despite lower cylinder, engine
and compressor sales
(1) 2016 sales growth versus 2015.
Continue to experience top-line pressures, but holding margin rates through cost reduction.
Note: Segment assumptions did not change from previous guidance unless otherwise indicated. All of the figures and comments on this slide exclude any
current and future Special Items.
19
Updated FY 2016 Outlook
Full Year Outlook
(as of 7/28/16)
Full Year Outlook
(as of 10/27/16)
Net Sales (4%) – (7%)
(6%) – (8%)
Earnings Per
Share, diluted
(excl. Special Items)
$1.22 – $1.30 $1.24 – $1.28
Free Cash Flow(1)
(excl. Special Items)
$55 – $65 million $55 – $65 million
(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.
From Continuing Operations
Focused on protecting earnings and cash flow despite challenging end markets.
Note: All of the figures on this slide exclude any current and future Special Items.
20
2017 Preliminary Thoughts
Anticipate earnings expansion in the face of end market challenges.
TriMas
Segment
Preliminary Comments
Packaging
• Anticipate low to mid single-digit sales growth dependent on GDP growth, ramp of customer new
product launches and the impact of currency exchange
• Continue to focus on manufacturing productivity to maintain targeted operating margin
Aerospace
• Anticipate low to mid single-digit sales growth dependent on aerospace build rates, ramp of
awarded products/programs and changes in distribution customer demand
• Continue to focus on driving manufacturing efficiencies and improved operating profitability
Energy
• Anticipate continued sales softness related to oil and gas end markets; improvement may provide
additional sales opportunities
• Continue to improve margin performance by leveraging cost reductions; may seek to de-
emphasize certain underperforming regions
Engineered
Components
• Anticipate continued sales softness related to oil and gas end markets; improvement may provide
additional sales opportunities
• Anticipate customer consolidation will continue to pressure industrial cylinder demand
• Continued focus on cost structure to maintain margins in light of end market softness
Enterprise-wide
Costs
• Continued management focus on cash interest costs and tax rate
• Renewed focus on appropriate corporate structure to support operational needs
21
Summary
Focused on operational execution for the remainder of 2016 and into the new year.
• Operate under the new TriMas Business Model, with a nearer-term focus
on driving performance improvement within the Energy and Aerospace
segments
• Focus on managing cash flow and optimizing operational structure
• Continue to assess capacity, process technology and innovation pipeline
to enhance growth
• Ensure all facility rationalization steps are well-executed and continue to
assess manufacturing footprint
• Drive a culture of continuous improvement through employee
engagement
Questions and Answers
Appendix
24
Third Quarter YTD Summary
(Unaudited, dollars in millions, except per share amounts)
• YTD 2016 sales declined approximately 9% 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 50 basis points as the positive
impact of the Financial Improvement Plan and continuous improvement initiatives more than offset the impact of
reduced sales and related lower fixed cost absorption
• Solid Free Cash Flow generation in YTD 2016; reduced total debt by $50.7 million as compared to Q3 2015
Mitigating impact of lower sales by reducing costs and driving continuous improvement.
( f ro m co ntinuing o perat io ns) Q3 YTD 2016 Q3 YTD 2015 Variance
Net Sales $608.5 $671.2 (9.3%)
Operating Profit $52.9 $63.8 (17.1%)
Excluding Special Items, Operating Profit would have been: $75.6 $79.6 (5.0%)
Excluding Special Items, Operating profit margin would have been: 12.4% 11.9% 50 bps
Income $27.6 $32.1 (14.3%)
Excluding Special Items, Income would have been: $44.1 $45.4 (2.9%)
Diluted Earnings Per Share $0.60 $0.70 (14.3%)
Excluding Special Items, Diluted Earnings Per Share would have been: $0.96 $1.00 (4.0%)
Free Cash Flow (1) $39.5 $9.1 334.0%
Total Debt $402.4 $453.1 (11.2%)
(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.
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Updated FY 2016 Additional Assumptions
25
Full Year Outlook
(Updated as of 10/27/16)
Interest Expense
$13 – $15 million
Capital Expenditures
~4% of sales
Tax Rate
32% – 33%
Corporate Expense –
• Cash Costs
• Stock Compensation
$21 – $22 million
$7 million
From Continuing Operations
Note: All of the figures and comments on this slide exclude any current and future Special Items.
Condensed Consolidated Balance Sheet
26
(Dollars in thousands)
September 30, December 31,
2016 2015
(unaudited)
Assets
Current assets:
Cash and cash equivalents............................................................ 22,550$ 19,450$
Receivables, net........................................................................... 130,440 121,990
Inventories.................................................................................... 171,260 167,370
Prepaid expenses and other current assets..................................... 7,530 17,810
Total current assets................................................................... 331,780 326,620
Property and equipment, net.............................................................. 182,000 181,130
Goodwill........................................................................................... 377,380 378,920
Other intangibles, net........................................................................ 258,400 273,870
Other assets.................................................................................... 8,840 9,760
Total assets.............................................................................. 1,158,400$ 1,170,300$
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities, long-term debt................................................... 13,840$ 13,850$
Accounts payable......................................................................... 76,140 88,420
Accrued liabilities.......................................................................... 45,950 50,480
Total current liabilities................................................................ 135,930 152,750
L ng-term d bt, net........................................................................... 388,580 405,780
Deferred income taxes...................................................................... 9,530 11,260
Other long-term liabilities................................................................... 57,350 53,320
Total liabilities........................................................................... 591,390 623,110
Total shareholders' equity........................................................... 567,010 547,190
Total liabilities and shareholders' equity....................................... 1,158,400$ 1,170,300$
Consolidated Statement of Operations
27
(Unaudited, dollars in thousands, except for per share amounts)
Three months ended Nine months ended
2016 2015 2016 2015
Net sales................................................................................................. 202,290$ 222,190$ 608,490$ 671,220$
Cost of sales............................................................................................ (144,240) (159,720) (437,440) (484,110)
Gross profit........................................................................................... 58,050 62,470 171,050 187,110
Selling, general and administrative expenses............................................... (40,260) (40,910) (118,150) (123,320)
Operating profit..................................................................................... 17,790 21,560 52,900 63,790
Other expense, net:
Interest expense................................................................................... (3,480) (3,440) (10,230) (10,610)
Debt financing and extinguishment costs................................................. - - - (1,970)
Other expense, net................................................................................ (200) (720) (130) (2,330)
Other expense, net............................................................................ (3,680) (4,160) (10,360) (14,910)
Income from continuing operations before income tax expense...................... 14,110 17,400 42,540 48,880
Income tax expense.................................................................................. (5,330) (5,690) (14,980) (16,740)
Income from continuing operations.............................................................. 8,780 11,710 27,560 32,140
Loss from discontinued operations, net of tax.............................................. - - - (4,740)
Net income............................................................................................... 8,780 11,710 27,560 27,400
Earnings per share - basic:
Continuing operations............................................................................ 0.19$ 0.26$ 0.61$ 0.71$
Discontinued operations......................................................................... - - - (0.10)
Net income per share............................................................................ 0.19$ 0.26$ 0.61$ 0.61$
Weighted average common shares - basic 45,435,936 45,157,412 45,381,592 45,102,067
E rni gs per share - diluted:
Continuing operations............................................................................ 0.19$ 0.26$ 0.60$ 0.70$
Discontinued operations......................................................................... - - - (0.10)
Net income per share............................................................................ 0.19$ 0.26$ 0.60$ 0.60$
Weighted average common shares - diluted 45,760,455 45,499,104 45,713,873 45,439,618
September 30, September 30,
Consolidated Statement of Cash Flow
28
(Unaudited, dollars in thousands)
2016 2015
Cash Flows from Operating Activities:
Net income.............................................................................................................................. 27,560$ 27,400$
Loss from discontinued operations............................................................................................. - (4,740)
Income from continuing operations............................................................................................. 27,560 32,140
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on dispositions of property and equipment...................................................................... 1,350 590
Depreciation......................................................................................................................... 17,710 16,430
Amortization of intangible assets........................................................................................... 15,330 15,790
Amortization of debt issue costs............................................................................................ 1,000 1,360
Deferred income taxes.......................................................................................................... 360 (4,220)
Non-cash compensation expense.......................................................................................... 5,240 4,590
Excess tax benefits from stock based compensation............................................................... (640) (300)
Debt financing and extinguishment costs................................................................................ - 1,970
Increase in receivables.......................................................................................................... (9,790) (15,790)
Increase in inventories........................................................................................................... (4,560) (7,010)
(Increase) decrease in prepaid expenses and other assets....................................................... 10,780 (1,020)
Decrease in accounts payable and accrued liabilities............................................................... (17,150) (15,540)
Other, net............................................................................................................................ (780) (250)
Net cash provided by operating activities of continuing operations.......................................... 46,410 28,740
Net cash used for operating activities of discontinued operations........................................... - (14,030)
Net cash provided by operating activities......................................................................... 46,410 14,710
Cash Flows from Investing Activities:
Capital expenditures............................................................................................................. (22,390) (20,360)
Net proceeds from disposition of property and equipment......................................................... 120 1,680
Net cash used for investing activities of continuing operations............................................... (22,270) (18,680)
Net cash used for investing activities of discontinued operations............................................ - (2,510)
Net cash used for investing activities............................................................................... (22,270) (21,190)
Cash Flows from Financing Activities:
Proceeds from borrowings on term loan facilities..................................................................... - 275,000
Repayments of borrowings on term loan facilities..................................................................... (10,380) (441,410)
Proceeds from borrowings on revolving credit and accounts receivable facilities.......................... 314,860 995,620
Repayments of borrowings on revolving credit and accounts receivable facilities......................... (324,780) (1,006,490)
Payments for deferred purchase price..................................................................................... - (5,810)
Debt financing fees............................................................................................................... - (1,850)
Shares surrendered upon vesting of options and restricted stock awards to cover tax
obligations…...…………………………………………………………………………………….……… (1,500) (2,620)
Proceeds from exercise of stock options................................................................................ 120 430
Excess tax benefits from stock based compensation............................................................... 640 300
Cash transferred to the Cequent businesses........................................................................... - (17,050)
Net cash used for financing activities of continuing operations............................................... (21,040) (203,880)
Net cash provided by financing activities of discontinued operations....................................... - 208,400
Net cash provided by (used for) financing activities........................................................... (21,040) 4,520
Cash and Cash Equivalents:
Net increase (decrease) for the period.................................................................................... 3,100 (1,960)
At beginning of period........................................................................................................... 19,450 24,420
At end of period................................................................................................................ 22,550$ 22,460$
Supplemental disclosure of cash flow information:
Cash paid for interest........................................................................................................ 8,870$ 12,320$
Cash paid for taxes........................................................................................................... 9,130$ 22,260$
September 30,
Nine months ended
Company & Business Segment Financial Information
29
(Unaudited, dollars in thousands, from continuing operations)
Three months ended
2016 2015 2016 2015
Packaging
Net sales................................................................................................................................................ 90,330$ 87,930$ 258,550$ 256,470$
Operating profit........................................................................................................................................ 20,090$ 21,870$ 59,340$ 60,090$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs........................................................................................... 1,660$ 280$ 2,720$ 710$
Excluding Special Items, operating profit would have been................................................................... 21,750$ 22,150$ 62,060$ 60,800$
Aerospace
Net sales................................................................................................................................................ 47,430$ 45,380$ 132,020$ 134,340$
Operating profit........................................................................................................................................ 6,660$ 7,110$ 13,670$ 22,410$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs........................................................................................... 1,240$ 1,120$ 2,800$ 2,740$
Excluding Special Items, operating profit would have been................................................................... 7,900$ 8,230$ 16,470$ 25,150$
Energy
Net sales................................................................................................................................................ 38,230$ 51,600$ 122,930$ 152,910$
Operating loss......................................................................................................................................... (1,870)$ (3,560)$ (8,570)$ (10,390)$
Special Items to consider in evaluating operating profit (loss):
Severance and business restructuring costs........................................................................................... 3,640$ 5,860$ 13,230$ 11,200$
Excluding Special Items, operating profit would have been................................................................... 1,770$ 2,300$ 4,660$ 810$
Engineered Components
Net sales................................................................................................................................................ 26,300$ 37,280$ 94,990$ 127,500$
Operating profit........................................................................................................................................ 3,180$ 4,380$ 12,620$ 16,570$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs........................................................................................... 230$ 90$ 400$ 230$
Excluding Special Items, operating profit would have been................................................................... 3,410$ 4,470$ 13,020$ 16,800$
Corporate expenses
Operating loss......................................................................................................................................... (10,270)$ (8,240)$ (24,160)$ (24,890)$
Special Items to consider in evaluating operating loss:
Severance and business restructuring costs........................................................................................... 3,560$ 940$ 3,560$ 940$
Excluding Special Items, operating loss would have been.................................................................... (6,710)$ (7,300)$ (20,600)$ (23,950)$
Total Continuing Operations
Net sales................................................................................................................................................ 202,290$ 222,190$ 608,490$ 671,220$
Operating profit........................................................................................................................................ 17,790$ 21,560$ 52,900$ 63,790$
Total Special Items to consider in evaluating operating profit........................................................................ 10,330$ 8,290$ 22,710$ 15,820$
Excluding Special Items, operating profit would have been................................................................... 28,120$ 29,850$ 75,610$ 79,610$
September 30, September 30,
Nine months ended
Additional Information Regarding Special Items
30
(Unaudited, dollars in thousands, except for per share amounts)
Three months ended Nine months ended
September 30, September 30,
2016 2015 2016 2015
Income from continuing operations, as reported.............................................................................................................. 8,780$ 11,710$ 27,560$ 32,140$
After-tax impact of Special Items to consider in evaluating quality of income from continuing operations:
Severance and business restructuring costs....................................................................................................................... 7,350 6,120 16,570 12,050
Debt extinguishment costs............................................................................................................................................... - - - 1,240
Excluding Special Items, income from continuing operations would have been........................................................... 16,130$ 17,830$ 44,130$ 45,430$
Three months ended Nine months ended
September 30, September 30,
2016 2015 2016 2015
Diluted earnings per share from continuing operations, as reported................................................................................ 0.19$ 0.26$ 0.60 0.70$
After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations:
Severance and business restructuring costs....................................................................................................................... 0.16 0.13 0.36 0.27
Debt extinguishment costs............................................................................................................................................... - - - 0.03
Excluding Special Items, EPS from continuing operations would have been................................................................ 0.35$ 0.39$ 0.96$ 1.00$
Weighted-average shares outstanding ......................................................................................................................... 45,760,455 45,499,104 45,713,873 45,439,618
2016 2015 2016 2015
Operating profit from continuing operations (excluding Special Items)……………………….……….................................... 28,120$ 29,850$ 75,610$ 79,610$
Corporate expenses (excluding Special Items)…………………………………………................................................................ 6,710 7,300 20,600 23,950
Segment operating profit (excluding Special Items)………………….................................................................................. 34,830$ 37,150$ 96,210$ 103,560$
Segment operating profit margin (excluding Special Items)…...……................................................................................ 17.2% 16.7% 15.8% 15.4%
September 30, September 30,
Three months ended Nine months ended
Additional Information Regarding Special Items
31
(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............................................................................................. 13,470$ 7,160$ 20,630$ 8,260$ 730$ 8,990$
Less: Capital expenditures of continuing operations................................................................................................................ (9,430) - (9,430) (7,470) - (7,470)
Free Cash Flow from continuing operations............................................................................................................................ 4,040 7,160 11,200 790 730 1,520
Income from continuing operations........................................................................................................................................ 8,780 7,350 16,130 11,710 6,120 17,830
Free Cash Flow as a percentage of income from continuing operations..................................................................................... 46% 69% 7% 9%
As reported
Special
Items
Excluding
Special
Items As reported
Special
Items
Excluding
Special
Items
Net cash provided by operating activities of continuing operations............................................................................................. 46,410$ 15,520$ 61,930$ 28,740$ 730$ 29,470$
Less: Capital expenditures of continuing operations................................................................................................................ (22,390) - (22,390) (20,360) - (20,360)
Free Cash Flow from continuing operations............................................................................................................................ 24,020 15,520 39,540 8,380 730 9,110
Income from continuing operations........................................................................................................................................ 27,560 16,570 44,130 32,140 13,290 45,430
Free Cash Flow as a percentage of income from continuing operations..................................................................................... 87% 90% 26% 20%
Nine months ended September 30,
2016 2015
Three months ended September 30,
20152016
32
Current Debt Structure
(Unaudited, dollars in thousands)
TriMas had $100.9 million of cash and available liquidity under its revolving credit and accounts receivable facilities.
September 30, December 31,
2016 2015
Cash and Cash Equivalents……………………………..………………… 22,550$ 19,450$
Credit Agreement……………………………………….. 358,480 371,820
Receivables facility and other……………………………….. 48,990 53,860
Debt issuance costs…………………………………… (5,050) (6,050)
Total Debt………………………...………………………...………………………… 402,420 419,630
Key Ratios:
Bank LTM EBITDA……………………………………………………………………………….……………………………………… 140,070$ 154,180$
Interest Coverage Ratio………………………………………………………………… 11.65 x 12.77 x
Leverage Ratio…………………………………………………………………... 2.94 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
33
(Unaudited, dollars in thousands)
(1) As defined in the Credit Agreement dated June 30, 2015.
(33,240)$
Interest expense....................................................................................................................... 13,680
Income tax expense.................................................................................................................. 4,780
Depreciation and amortization.................................................................................................... 44,370
Extraordinary non-cash charges................................................................................................. 75,680
Non-cash compensation expense............................................................................................... 6,990
Other non-cash expenses or losses........................................................................................... 11,710
Non-recurring expenses or costs relating to cost saving projects .................................................. 14,860
Acquisition integration costs...................................................................................................... 1,240
140,070$
Net income (loss) for the twelve months ended September 30, 2016.................................................
Bank EBITDA - LTM Ended September 30, 2016 (1)…………………………………………………………………