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) February 28, 2017
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 February 28, 2017, reporting its financial results for the fourth quarter and year ending December 31, 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 "Fourth Quarter and Full Year 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: | February 28, 2017 | 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 FOURTH QUARTER AND FULL YEAR 2016 RESULTS
Reported 2016 Diluted EPS, Excluding Special Items, of $1.26
Provides 2017 EPS Guidance Range of $1.35 to $1.45 Per Share
BLOOMFIELD HILLS, Michigan, February 28, 2017 - TriMas (NASDAQ: TRS) today announced financial results for the year and quarter ended December 31, 2016.
TriMas reported fourth quarter net sales from continuing operations of $185.5 million, a decrease of 3.8% compared to fourth quarter 2015, as organic growth in the Packaging segment was more than offset by continued weakness in the oil and gas and general industrial end markets, and currency exchange. During the fourth quarter of 2016, the Company recorded pre-tax, non-cash goodwill and indefinite-lived intangible asset impairment charges of $98.9 million in its Aerospace segment. As a result, the Company reported a fourth quarter 2016 loss from continuing operations of $67.4 million, or $1.48 per diluted share, as compared to a loss of $60.8 million, or $1.35 per diluted share in the fourth quarter of 2015.
Excluding Special Items(1), which consisted primarily of the non-cash impairment charges and severance and business restructuring costs, fourth quarter 2016 diluted earnings per share (EPS) from continuing operations would have been $0.30, slightly higher than the fourth quarter of 2015 at $0.29.
For the full year, TriMas reported net sales from continuing operations of $794.0 million in 2016, a decrease of 8.1% as compared to $864.0 million in 2015. Sales from a recent acquisition and organic growth were more than offset by lower sales related to the oil and gas and general industrial end markets, and currency exchange. The Company reported a full year loss from continuing operations of $39.8 million, or $0.88 per diluted share, compared to a loss from continuing operations of $28.7 million, or $0.64 per diluted share, in 2015.
Excluding Special Items, full year 2016 income from continuing operations would have been $57.7 million, or $1.26 per diluted share, slightly lower than $58.7 million, or $1.29 per diluted share, in 2015.
TriMas 2016 Highlights
• | Achieved 2016 diluted EPS, excluding Special Items, of $1.26, at the mid-point of the Company's previously provided guidance range. |
• | Held 2016 operating profit margin relatively flat at 11.9%, excluding Special Items, by successfully implementing the Financial Improvement Plan, on-going continuous improvement and realignment initiatives, and a reduction in corporate expenses, thereby mitigating the impact of lower year-over-year sales levels. |
• | Increased Free Cash Flow(2) by 43.2% year-over-year to $72.8 million for 2016, resulting in Free Cash Flow conversion of approximately 126% of income from continuing operations, excluding Special Items. |
• | Despite challenging end markets, reduced total debt by $45.0 million, or 10.7%, to $374.7 million, as compared to December 31, 2015. |
"2016 was a transitional year at TriMas," said Thomas Amato, TriMas President and Chief Executive Officer. "After joining the Company in July, we ignited a new sense of urgency toward our operational and financial performance, implemented significant changes to our operating model, and began taking critical realignment actions given some of the challenging business conditions we faced. Despite market challenges, we achieved 2016 diluted EPS of $1.26, excluding Special Items, which was in line with our guidance. As we close out the year, we remain focused on reshaping TriMas and our family of businesses to better serve customers, while ensuring we take actions to drive improved performance for our shareholders. We have the right team, priorities and operating model in place to improve performance and begin the process to unleash value, particularly in our Energy and Aerospace segments."
"As we begin 2017, we believe we are better positioned to generate solid earnings growth, with a continued focus on generating strong cash flow. We sense that our most challenging end markets are stabilizing, and are confident we will benefit from the realignment actions taken throughout 2016. Sales growth is important to our success, and we anticipate sales will increase 2% to 4%, as the positive impact of our organic initiatives are expected to be partially offset by currency exchange impacts, as well as our decision to de-emphasize certain products in underperforming regions. As a result, we expect full-year 2017 diluted EPS to range between $1.35 to $1.45 per share, with the midpoint representing EPS growth of approximately 11% as compared to 2016. We will focus on executing our 2017 operating
1
plan and continue to take necessary adjustments to deliver improved profitability and returns for the benefit of our shareholders," Amato concluded.
Non-cash Impairment Charges
As previously disclosed, organic sales levels and operating profitability within the Aerospace segment have declined over the past 18 months, primarily as a result of: 1) lower demand from distribution customers; 2) scheduling and production challenges, which resulted in higher manufacturing costs; and 3) the current product sales mix. The Company implemented recovery plan actions to address the shorter-term production inefficiencies and to align its operating cost structure to be more consistent with current demand levels in each of its key product lines. However, as a result of current performance and lower future sales and operating profit expectations, the Company recorded pre-tax, non-cash goodwill and indefinite-lived intangible asset impairment charges of $98.9 million in the fourth quarter of 2016. These non-cash impairment charges will not impact the Company’s liquidity, cash flows, compliance with its debt covenants, or any future operations.
"Over the past several months, we have implemented key operational and organizational changes in our Aerospace segment to better focus and improve manufacturing efficiency and capacity utilization, largely in response to changing dynamics in the aerospace industry," commented Amato. "While I am pleased with our efforts to date, our operational execution challenges will require additional time to work through. We continue to believe our Aerospace segment is well positioned for growth and profit improvement, particularly given our market leading brands and product innovation."
Financial Position
TriMas exceeded its previously provided 2016 Free Cash Flow(2) guidance of $55 million to $65 million, generating $72.8 million of Free Cash Flow in 2016, as compared to $50.8 million in 2015, while continuing its capital investment in both future sales growth and cost productivity programs. Free Cash Flow was approximately 126% of income from continuing operations for 2016, excluding Special Items. Please see Appendix I for further details.
The Company reported total debt of $374.7 million as of December 31, 2016, a reduction of 10.7% as compared to $419.6 million as of December 31, 2015. TriMas ended 2016 with $147.2 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
Fourth Quarter Segment Results - From Continuing Operations
Packaging (Approximately 43% of TriMas 2016 sales)
The Packaging segment, which consists primarily of the Rieke® brand, develops and manufactures specialty dispensing and closure applications for the health, beauty and home care, food and beverage, and industrial markets. Net sales for the fourth quarter increased 6.4% as compared to the year ago period, with sales increases to all three end markets more than offsetting the impact of unfavorable currency exchange. Operating profit, excluding Special Items, for the quarter increased due to higher sales levels, while the related margin percentage decreased slightly due to continued investment in growth and global capabilities and unfavorable currency exchange.
Aerospace (Approximately 22% of TriMas 2016 sales)
The Aerospace segment, which is comprised of the Monogram Aerospace Fasteners™, Allfast Fastening Systems®, Mac Fasteners™ and Martinic Engineering™ brands, is focused on developing, qualifying and manufacturing highly-engineered, precision fasteners and machined products to serve the aerospace market. Net sales for the fourth quarter increased 1.8% as compared to the year ago period, as a result of incremental sales related to the November 2015 acquisition of a machined components facility in Arizona. Fourth quarter 2016 operating profit and the related margin percentage, excluding Special Items, decreased due to less favorable sales mix, inventory variances and customer contractual adjustments. During the fourth quarter, the Company recorded pre-tax non-cash goodwill and intangible asset impairment charges of approximately $98.9 million related to this segment.
Energy (Approximately 20% of TriMas 2016 sales)
The Energy segment, which consists of the Lamons® brand, designs, manufactures and distributes industrial sealing products and fasteners for the petrochemical, petroleum refining, oil field and other industrial markets. Fourth quarter net sales decreased 10.9% as compared to the year ago period, primarily due to continued reduced demand levels from oil and gas customers, and consolidating locations and de-emphasizing less profitable regions. Fourth quarter
2
operating profit and the related margin percentage, excluding Special Items, increased as the impact of the sales decline was more than offset by savings achieved from cost reduction actions.
Engineered Components (Approximately 15% of TriMas 2016 sales)
The Engineered Components segment, which is comprised of the Norris Cylinder™ and Arrow® Engine Company brands, designs and manufactures highly-engineered steel cylinders, wellhead engines and compression products for use within the industrial, oil and gas markets. Net sales for fourth quarter decreased 26.5% as compared to the year ago period, primarily due to lower sales of cylinders as a result of continued softness in general industrial end markets and customer consolidation. Sales of oil field-related engines and compressors also decreased as a result of the impact of lower oil prices and reduced oil and natural gas drilling. Fourth quarter 2016 operating profit and the related margin percentage, excluding Special Items, decreased primarily due to reduced sales levels and lower fixed cost absorption, which were partially 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 for all periods presented.
2017 Outlook
The Company is estimating that 2017 sales will increase 2% to 4% as compared to 2016. The Company expects full-year 2017 diluted earnings per share to be between $1.35 to $1.45 per share, excluding any current or future events that may be considered Special Items. In addition, the Company is targeting 2017 Free Cash Flow(2) to be greater than 100% of net income.
Conference Call Information
TriMas will host its fourth quarter and full year 2016 earnings conference call today, Tuesday, February 28, 2017, at 10:00 a.m. Eastern Time. The call-in number is (888) 271-8595. Participants should request to be connected to the TriMas Corporation fourth quarter and full year 2016 earnings conference call (Conference ID #1865483). 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 #1865483) beginning February 28, 2017 at 1:00 p.m. Eastern Time through March 7, 2017 at 1:00 p.m. Eastern Time.
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, 2016. 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
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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. |
(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 have strong brand names in the markets they serve, and operate 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)
December 31, 2016 | December 31, 2015 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,710 | $ | 19,450 | ||||
Receivables, net | 111,570 | 121,990 | ||||||
Inventories | 160,460 | 167,370 | ||||||
Prepaid expenses and other current assets | 16,060 | 17,810 | ||||||
Total current assets | 308,800 | 326,620 | ||||||
Property and equipment, net | 179,160 | 181,130 | ||||||
Goodwill | 315,080 | 378,920 | ||||||
Other intangibles, net | 213,920 | 273,870 | ||||||
Other assets | 34,690 | 9,760 | ||||||
Total assets | $ | 1,051,650 | $ | 1,170,300 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 13,810 | $ | 13,850 | ||||
Accounts payable | 72,270 | 88,420 | ||||||
Accrued liabilities | 47,190 | 50,480 | ||||||
Total current liabilities | 133,270 | 152,750 | ||||||
Long-term debt, net | 360,840 | 405,780 | ||||||
Deferred income taxes | 5,910 | 11,260 | ||||||
Other long-term liabilities | 51,910 | 53,320 | ||||||
Total liabilities | 551,930 | 623,110 | ||||||
Total shareholders' equity | 499,720 | 547,190 | ||||||
Total liabilities and shareholders' equity | $ | 1,051,650 | $ | 1,170,300 | ||||
5
TriMas Corporation
Consolidated Statement of Operations
(dollars in thousands, except per share amounts)
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(unaudited) | ||||||||||||||||
Net sales | $ | 185,530 | $ | 192,760 | $ | 794,020 | $ | 863,980 | ||||||||
Cost of sales | (146,100 | ) | (143,760 | ) | (583,540 | ) | (627,870 | ) | ||||||||
Gross profit | 39,430 | 49,000 | 210,480 | 236,110 | ||||||||||||
Selling, general and administrative expenses | (36,910 | ) | (39,630 | ) | (153,710 | ) | (162,350 | ) | ||||||||
Net loss on dispositions of property and equipment | (520 | ) | (1,730 | ) | (1,870 | ) | (2,330 | ) | ||||||||
Impairment of goodwill and indefinite-lived intangible assets | (98,900 | ) | (75,680 | ) | (98,900 | ) | (75,680 | ) | ||||||||
Operating loss | (96,900 | ) | (68,040 | ) | (44,000 | ) | (4,250 | ) | ||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (3,490 | ) | (3,450 | ) | (13,720 | ) | (14,060 | ) | ||||||||
Debt financing and extinguishment costs | — | — | — | (1,970 | ) | |||||||||||
Other income (expense), net | (380 | ) | 490 | (510 | ) | (1,840 | ) | |||||||||
Other expense, net | (3,870 | ) | (2,960 | ) | (14,230 | ) | (17,870 | ) | ||||||||
Loss from continuing operations before income taxes | (100,770 | ) | (71,000 | ) | (58,230 | ) | (22,120 | ) | ||||||||
Income tax benefit (expense) | 33,410 | 10,200 | 18,430 | (6,540 | ) | |||||||||||
Loss from continuing operations | (67,360 | ) | (60,800 | ) | (39,800 | ) | (28,660 | ) | ||||||||
Loss from discontinued operations, net of income taxes | — | — | — | (4,740 | ) | |||||||||||
Net loss | (67,360 | ) | (60,800 | ) | (39,800 | ) | (33,400 | ) | ||||||||
Basic loss per share: | ||||||||||||||||
Continuing operations | $ | (1.48 | ) | $ | (1.35 | ) | $ | (0.88 | ) | $ | (0.64 | ) | ||||
Discontinued operations | — | — | — | (0.10 | ) | |||||||||||
Net loss per share | $ | (1.48 | ) | $ | (1.35 | ) | $ | (0.88 | ) | $ | (0.74 | ) | ||||
Weighted average common shares - basic | 45,484,485 | 45,188,303 | 45,407,316 | 45,123,626 | ||||||||||||
Diluted loss per share: | ||||||||||||||||
Continuing operations | $ | (1.48 | ) | $ | (1.35 | ) | $ | (0.88 | ) | $ | (0.64 | ) | ||||
Discontinued operations | — | — | — | (0.10 | ) | |||||||||||
Net loss per share | $ | (1.48 | ) | $ | (1.35 | ) | $ | (0.88 | ) | $ | (0.74 | ) | ||||
Weighted average common shares - diluted | 45,484,485 | 45,188,303 | 45,407,316 | 45,123,626 | ||||||||||||
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TriMas Corporation
Consolidated Statement of Cash Flow
(dollars in thousands)
Twelve months ended December 31, | ||||||||
2016 | 2015 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net loss | $ | (39,800 | ) | $ | (33,400 | ) | ||
Loss from discontinued operations | — | (4,740 | ) | |||||
Loss from continuing operations | (39,800 | ) | (28,660 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Impairment of goodwill and indefinite-lived intangible assets | 98,900 | 75,680 | ||||||
Loss on dispositions of property and equipment | 1,870 | 2,330 | ||||||
Depreciation | 24,390 | 22,570 | ||||||
Amortization of intangible assets | 20,470 | 20,970 | ||||||
Amortization of debt issue costs | 1,370 | 1,710 | ||||||
Deferred income taxes | (32,160 | ) | (8,750 | ) | ||||
Non-cash compensation expense | 6,940 | 6,340 | ||||||
Excess tax benefits from stock based compensation | (640 | ) | (590 | ) | ||||
Debt financing and extinguishment expenses | — | 1,970 | ||||||
Decrease in receivables | 7,990 | 5,300 | ||||||
Decrease in inventories | 5,180 | 3,250 | ||||||
Decrease in prepaid expenses and other assets | 2,550 | 4,730 | ||||||
Decrease in accounts payable and accrued liabilities | (18,120 | ) | (29,530 | ) | ||||
Other, net | 1,530 | (750 | ) | |||||
Net cash provided by operating activities of continuing operations | 80,470 | 76,570 | ||||||
Net cash used for operating activities of discontinued operations | — | (14,030 | ) | |||||
Net cash provided by operating activities | 80,470 | 62,540 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (31,330 | ) | (28,660 | ) | ||||
Acquisition of businesses, net of cash acquired | — | (10,000 | ) | |||||
Net proceeds from dispositions of property and equipment | 220 | 1,700 | ||||||
Net cash used for investing activities of continuing operations | (31,110 | ) | (36,960 | ) | ||||
Net cash used for investing activities of discontinued operations | — | (2,510 | ) | |||||
Net cash used for investing activities | (31,110 | ) | (39,470 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from borrowings on term loan facilities | — | 275,000 | ||||||
Repayments of borrowings on term loan facilities | (13,850 | ) | (444,890 | ) | ||||
Proceeds from borrowings on revolving credit and accounts receivable facilities | 402,420 | 1,129,840 | ||||||
Repayments of borrowings on revolving credit and accounts receivable facilities | (433,350 | ) | (1,169,370 | ) | ||||
Payments for deferred purchase price | (2,530 | ) | (6,440 | ) | ||||
Debt financing fees | — | (1,850 | ) | |||||
Shares surrendered upon options and restricted stock vesting to cover taxes | (1,590 | ) | (2,770 | ) | ||||
Proceeds from exercise of stock options | 160 | 500 | ||||||
Excess tax benefits from stock based compensation | 640 | 590 | ||||||
Cash transferred to the Cequent businesses | — | (17,050 | ) | |||||
Net cash used for financing activities of continuing operations | (48,100 | ) | (236,440 | ) | ||||
Net cash provided by financing activities of discontinued operations | — | 208,400 | ||||||
Net cash used for financing activities | (48,100 | ) | (28,040 | ) | ||||
Cash and Cash Equivalents: | ||||||||
Increase (decrease) for the year | 1,260 | (4,970 | ) | |||||
At beginning of year | 19,450 | 24,420 | ||||||
At end of year | $ | 20,710 | $ | 19,450 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 11,800 | $ | 15,170 | ||||
Cash paid for income taxes | $ | 17,210 | $ | 30,580 | ||||
7
TriMas Corporation
Company and Business Segment Financial Information
Continuing Operations
(Unaudited - dollars in thousands)
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Packaging | ||||||||||||||||
Net sales | $ | 82,790 | $ | 77,800 | $ | 341,340 | $ | 334,270 | ||||||||
Operating profit | $ | 18,500 | $ | 18,380 | $ | 77,840 | $ | 78,470 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 1,870 | $ | 1,050 | $ | 4,590 | $ | 1,760 | ||||||||
Excluding Special Items, operating profit would have been: | $ | 20,370 | $ | 19,430 | $ | 82,430 | $ | 80,230 | ||||||||
Aerospace | ||||||||||||||||
Net sales | $ | 42,900 | $ | 42,140 | $ | 174,920 | $ | 176,480 | ||||||||
Operating profit (loss) | $ | (104,480 | ) | $ | 5,910 | $ | (90,810 | ) | $ | 28,320 | ||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 6,900 | $ | 870 | $ | 9,700 | $ | 3,610 | ||||||||
Impairment of goodwill and indefinite-lived intangible assets | $ | 98,900 | $ | — | $ | 98,900 | $ | — | ||||||||
Excluding Special Items, operating profit would have been: | $ | 1,320 | $ | 6,780 | $ | 17,790 | $ | 31,930 | ||||||||
Energy | ||||||||||||||||
Net sales | $ | 36,060 | $ | 40,480 | $ | 158,990 | $ | 193,390 | ||||||||
Operating loss | $ | (5,270 | ) | $ | (86,770 | ) | $ | (13,840 | ) | $ | (97,160 | ) | ||||
Special Items to consider in evaluating operating profit (loss): | ||||||||||||||||
Severance and business restructuring costs | $ | 6,230 | $ | 11,940 | $ | 19,460 | $ | 23,140 | ||||||||
Impairment of goodwill and indefinite-lived intangible assets | $ | — | $ | 72,500 | $ | — | $ | 72,500 | ||||||||
Excluding Special Items, operating profit (loss) would have been: | $ | 960 | $ | (2,330 | ) | $ | 5,620 | $ | (1,520 | ) | ||||||
Engineered Components | ||||||||||||||||
Net sales | $ | 23,780 | $ | 32,340 | $ | 118,770 | $ | 159,840 | ||||||||
Operating profit | $ | 2,680 | $ | 1,670 | $ | 15,300 | $ | 18,240 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 130 | $ | 50 | $ | 530 | $ | 280 | ||||||||
Impairment of goodwill and indefinite-lived intangible assets | $ | — | $ | 3,180 | $ | — | $ | 3,180 | ||||||||
Excluding Special Items, operating profit would have been: | $ | 2,810 | $ | 4,900 | $ | 15,830 | $ | 21,700 | ||||||||
Corporate Expenses | ||||||||||||||||
Operating loss | $ | (8,330 | ) | $ | (7,230 | ) | $ | (32,490 | ) | $ | (32,120 | ) | ||||
Special Items to consider in evaluating operating loss: | ||||||||||||||||
Severance and business restructuring costs | $ | 1,910 | $ | 500 | $ | 5,470 | $ | 1,440 | ||||||||
Excluding Special Items, operating loss would have been: | $ | (6,420 | ) | $ | (6,730 | ) | $ | (27,020 | ) | $ | (30,680 | ) | ||||
Total Company | ||||||||||||||||
Net sales | $ | 185,530 | $ | 192,760 | $ | 794,020 | $ | 863,980 | ||||||||
Operating loss | $ | (96,900 | ) | $ | (68,040 | ) | $ | (44,000 | ) | $ | (4,250 | ) | ||||
Total Special Items to consider in evaluating operating profit: | $ | 115,940 | $ | 90,090 | $ | 138,650 | $ | 105,910 | ||||||||
Excluding Special Items, operating profit would have been: | $ | 19,040 | $ | 22,050 | $ | 94,650 | $ | 101,660 | ||||||||
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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 December 31, | Twelve months ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Loss from continuing operations, as reported | $ | (67,360 | ) | $ | (60,800 | ) | $ | (39,800 | ) | $ | (28,660 | ) | ||||
After-tax impact of Special Items to consider in evaluating quality of income (loss) from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 13,050 | 9,760 | 29,620 | 21,810 | ||||||||||||
Impairment of goodwill and indefinite-lived intangible assets | 67,910 | 64,260 | 67,910 | 64,260 | ||||||||||||
Debt financing and extinguishment costs | — | — | — | 1,240 | ||||||||||||
Excluding Special Items, income from continuing operations would have been | $ | 13,600 | $ | 13,220 | $ | 57,730 | $ | 58,650 | ||||||||
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Diluted loss per share from continuing operations, as reported | $ | (1.48 | ) | $ | (1.35 | ) | $ | (0.88 | ) | $ | (0.64 | ) | ||||
Dilutive impact (a) | 0.01 | 0.02 | 0.01 | 0.01 | ||||||||||||
After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 0.29 | 0.21 | 0.65 | 0.48 | ||||||||||||
Impairment of goodwill and indefinite-lived intangible assets | 1.48 | 1.41 | 1.48 | 1.41 | ||||||||||||
Debt financing and extinguishment costs | — | — | — | 0.03 | ||||||||||||
Excluding Special Items, diluted EPS from continuing operations would have been | $ | 0.30 | $ | 0.29 | $ | 1.26 | $ | 1.29 | ||||||||
Weighted-average shares outstanding for the three and twelve months ended December 31, 2016 and 2015 | 45,786,801 | 45,613,000 | 45,732,105 | 45,482,964 | ||||||||||||
(a) Impact of 302,316 and 424,697 shares for the three months ended December 31, 2016 and 2015, respectively, and 324,789 and 359,338 shares for the twelve months ended December 31, 2016 and 2015, respectively, which would have been dilutive to the computation of earnings per share in an income position. | ||||||||||||||||
9
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 December 31, | ||||||||||||||||||||||||
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 | $ | 34,060 | $ | 8,090 | $ | 42,150 | $ | 47,830 | $ | 2,160 | $ | 49,990 | ||||||||||||
Less: Capital expenditures of continuing operations | (8,940 | ) | — | (8,940 | ) | (8,300 | ) | — | (8,300 | ) | ||||||||||||||
Free Cash Flow from continuing operations | 25,120 | 8,090 | 33,210 | 39,530 | 2,160 | 41,690 | ||||||||||||||||||
Income (loss) from continuing operations | (67,360 | ) | 80,960 | 13,600 | (60,800 | ) | 74,020 | 13,220 | ||||||||||||||||
Free Cash Flow as a percentage of income from continuing operations | (37 | )% | 244 | % | (65 | )% | 315 | % | ||||||||||||||||
Twelve months ended December 31, | ||||||||||||||||||||||||
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 | $ | 80,470 | $ | 23,610 | $ | 104,080 | 76,570 | $ | 2,890 | $ | 79,460 | |||||||||||||
Less: Capital expenditures of continuing operations | (31,330 | ) | — | (31,330 | ) | (28,660 | ) | — | (28,660 | ) | ||||||||||||||
Free Cash Flow from continuing operations | 49,140 | 23,610 | 72,750 | 47,910 | 2,890 | 50,800 | ||||||||||||||||||
Income (loss) from continuing operations | (39,800 | ) | 97,530 | 57,730 | (28,660 | ) | 87,310 | 58,650 | ||||||||||||||||
Free Cash Flow as a percentage of income from continuing operations | (123 | )% | 126 | % | (167 | )% | 87 | % | ||||||||||||||||
10
Fourth Quarter and Full Year 2016
Earnings Presentation
February 28, 2017
2
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 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, 2016. 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.
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
Agenda
Opening Remarks
5
2016…A Transitional Year for TriMas
• New leadership in Q3, followed by a renewed focus to drive results
• Many changes were implemented:
- Implemented a new operating and financial model – concentrating on current and prospective
challenges and opportunities
- Leveraged data to drive a sense of urgency on operational improvement and customer satisfaction
- Upgraded organization in a number of key positions
- Streamlined and reduced non-critical infrastructure costs
- Began realigning manufacturing footprint to leverage structural costs
• Notable results:
- Solid progress on relieving constraints and improving flexibility
- Culture of performance excellence taking hold
- Exited/exiting six non-core facilities
- Increased operating profit margin slightly through cost containment actions, despite lower sales
- Reduced net debt even in challenging end markets
• Solid foundation in place, however, more to do in 2017
Opening Remarks
Actions taken and underway to unleash opportunities and value.
6
Opening Remarks
Actions taken and underway to unleash opportunities and value.
Introduced New TriMas Business Model (TBM) – Some Examples
Results-
Driven
Continuous
Improvement
TBM Focus
Environmental, Health and Safety
Annual Goal Setting and
Measurement
Flawless Launches
Continuous Improvement
Talent Development
• Example #1: Plant challenged with past due
orders
• Data-driven analysis to identify and remediate root
causes
• Key Actions: Visual management on factory floor
and daily analytics
• Results:
̶ Through team effort, past due orders down ~75%
• Example #2: Plant experienced shipment delays
and off standard costs
• Data-driven analysis to identify and remediate root
causes
• Key Actions: Significantly improved production order
and manufacturing flow
• Results:
̶ Through team effort, on-time delivery up ~25%
with overtime down ~50%
Financial Highlights
8
Fourth 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.
• Q4 2016 sales declined 3.8% as compared to Q4 2015
̶ Higher year-over-year sales in our Packaging and Aerospace segments were more than
offset by prolonged weakness in the oil & gas and industrial end markets
• Results impacted by pre-tax, non-cash goodwill and indefinite-lived intangible asset impairment
charges of $98.9 million in Q4
• Q4 operating profit margin, excluding Special Items, decreased as the positive impacts of
restructuring and cost savings initiatives were more than offset by reduced sales and less
favorable product mix
• Achieved Q4 EPS, excluding Special Items, of $0.30, as tax planning strategies completed in Q4
resulted in a lower effective tax rate
(from continuing operations) Q4 2016 Q4 2015 Variance
Net Sales $185.5 $192.8 (3.8%)
Operating Loss ($96.9) ($68.0) n/m
Excluding Special Items, Operating Profit would have been: $19.0 $22.1 (13.7%)
Excluding Special Items, Operating profit margin would have been: 10.3% 11.4% -110 bps
Net Loss ($67.4) ($60.8) n/m
Excluding Special Items, Income would have been: $13.6 $13.2 2.9%
Diluted Loss Per Share ($1.48) ($1.35) n/m
Excluding Special Items, Diluted Earnings Per Share would have been: $0.30 $0.29 3.4%
Increased EPS, excluding Special Items, year-over-year despite challenges.
9
Fourth 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)
• Generated Free Cash Flow(1) of $33.2 million in Q4 2016 after considering investment in
capex
̶ Capital investment included capacity expansions for the Packaging and Aerospace
segments, and the installation of an additional forging line for high pressure steel
cylinder production
̶ Intensified focus on increasing cash flow through performance improvements and
reductions in inventory
• Reduced net debt by $46.2 million, as compared to December 31, 2015
• Ended the quarter with cash and available liquidity of approximately $147.2 million, and a
leverage ratio of 2.6x
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
(from continuing operations) Q4 2016 Q4 2015 Variance
Free Cash Flow(1) $33.2 $41.7 ($8.5)
Capital Expenditures $8.9 $8.3 $0.6
Inventories $160.5 $167.4 ($6.9)
Total Debt $374.7 $419.6 ($45.0)
Cash $20.7 $19.5 $1.3
Net Debt $353.9 $400.2 ($46.2)
Increased focus on cash flow as part of the new TriMas Business Model.
10
Full Year 2016 Summary
• Sales decreased 8% as organic and acquisition sales increases were more than offset by
declines resulting from the impact of lower oil prices and related production activity, industrial
end market softness and unfavorable currency exchange
• Operating profit margin, excluding Special Items, increased slightly as the impact of lower sales
was more than offset by the positive impact of restructuring and cost saving initiatives
• Free Cash Flow(1) exceeded the previously provided guidance range and approximated 126%
of net income (excluding Special Items)
(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.
(from continuing operations) YTD 2016 YTD 2015 Variance
Net Sales $794.0 $864.0 (8.1%)
Operating Loss ($44.0) ($4.3) n/m
Excluding Special Items, Operating Profit would have been: $94.7 $101.7 (6.9%)
Excluding Special Items, Operating profit margin would have been: 11.9% 11.8% 10 bps
Net Loss ($39.8) ($28.7) n/m
Excluding Special Items, Income would have been: $57.7 $58.7 (1.6%)
Diluted Loss Per Share ($0.88) ($0.64) n/m
Excluding Special Items, Diluted Earnings Per Share would have been: $1.26 $1.29 (2.3%)
Free Cash Flow(1) $72.8 $50.8 43.2%
Capital Expenditures $31.3 $28.7 9.3%
Held operating profit margin flat despite weak end markets.
Segment Highlights
12
Packaging Segment
• Sales increased 9.7% on a constant currency basis
• Continued to drive and gain traction on sales by focusing
technical and commercial resources in the health, beauty
& home care, food & beverage, and industrial end
markets
• Profit increased while margins remained strong
Quarterly Comments
(Unaudited, dollars in millions)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Positioning business for product innovation to drive future growth.
• Leveraging innovation resources and support teams in
India, the United Kingdom and the United States to
drive new product growth
• Continuing to support customers’ new product
launches to drive growth
• Ramping up new facility and expanded capacity in San
Miguel, Mexico
• Executing on productivity initiatives to fund sales
growth initiatives and development of new products
and applications
Actions Markets, Products & Brands
Financial Summary Q4 2016 Q4 2015 Variance
Sales $82.8 $77.8 6.4%
Operating Profit, excluding
Special Items
$20.4 $19.4 4.8%
Margin, excluding Sp ci l Items 24.6% 25.0% -40 bps
13
Aerospace Segment
Quarterly Comments
(Unaudited, dollars in millions)
Note: Please see the Appendix for a detailed reconciliation to GAAP results.
Focusing on manufacturing performance and delivery improvements to leverage platform.
Actions Markets, Products & Brands
• Added new leader of Aerospace segment in December
• Executing plans to increase manufacturing throughput
and improve production efficiencies
• Seeking to drive additional synergies across fastener
businesses and further integrate platform
• Continuing efforts to better align product mix and
production capacity to eliminate off-standard costs and
improve financial performance
• Developing and qualifying new highly-engineered
products; qualifying existing products for new
applications and new customers
• Sales increased slightly due to the acquisition of a
machined components facility in November 2015
• Profit and related margin, excluding Special Items,
declined due to a less favorable sales mix, customer
contractual adjustments and unfavorable inventory
quantity and spending variances
• Recorded pre-tax, non-cash goodwill and indefinite-lived
intangible asset impairment charges of $98.9 million
Financial Summary Q4 2016 Q4 2015 Variance
Sales $42.9 $42.1 1.8%
Operating Profit, excluding
Special Items
$1.3 $6.8 -80.5%
Margin, exclu ing Special Items 3.1% 16.1% -1300 bps
14
Aerospace Segment – Recovery Update
• Improved operational performance at Commerce, California plant
- Manufacturing environment stabilizing; key performance indicators demonstrating progress
- Continued strong order intake provides solid demand to start 2017
• Improved order intake of rivets suggests end market demand may be stabilizing
• Focused on increased manufacturing efficiencies in our Ottawa, Kansas standard fasteners plant
- Working through a backlog of smaller lot size orders which has impacted efficiencies
- Replaced plant manager in February 2017 to drive manufacturing performance
Expecting improved operational and financial performance to continue into 2017.
Fasteners (approximately 85% of Aerospace segment sales)
Machined Components (approximately 15% of Aerospace segment sales)
• Prolonged challenges assimilating Tolleson, Arizona plant into TriMas Aerospace
- Balancing customer demands and lot sizes with capacity, and need for improved production execution
- Addressing pricing fundamentals on certain part numbers
- Replaced general manager in October 2016 to drive increased focus on meeting delivery, quality and
performance expectations
15
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 in oil & gas
end markets and de-emphasizing certain
underperforming regions
• Cost savings achieved from restructuring actions
starting to take hold, offsetting the impact of the reduced
sales levels
• On-going assessment of the global footprint to optimize
fixed and SG&A cost structure given continued soft end
markets
• Driving continued manufacturing and operational
improvements across all locations
• Expanding sales and development efforts of specialty
products and new applications
Financial Summary Q4 2016 Q4 2015 Variance
Sales $36.1 $40.5 -10.9%
Operating Profit (Los ),
excluding Speci l It s
$1.0 ($2.3) n/m
Margin, excluding Speci l Items 2.7% -5.8% 850 bps
16
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
• Sales declined due to softer industrial end markets,
customer consolidation, and continued low oil prices and
related reduced oil and gas drilling activities
• Profit and related margin, excluding Special Items,
decreased as a result of reduced sales levels and lower
fixed cost absorption, partially offset by 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 Q4 2016 Q4 2015 Variance
Sales $23.8 $32.3 -26.5%
Operating Profit, excluding
Special Items
$2.8 $4.9 -42.7%
Margin, excluding Sp cial Items 11.8% 15.2% -340 bps
Outlook and Summary
18
FY 2017 Segment Assumptions
(1) 2017 sales growth versus 2016.
Note: All of the figures and comments on this slide exclude any current and future Special Items.
From Continuing Operations
Segment Sales(1)
Operating
Profit Margin
(excl. Special Items) Full Year 2017 Commentary
Packaging 2% – 4% 23% – 24%
• Organic growth driven primarily by anticipated ramp of customers’ new
products
• Sales impact related to unfavorable currency exchange of ~1% to 2%
• Relentless focus on our continuous improvement culture while investing in
innovation to drive future growth
Aerospace
4% – 6%
13% – 15%
• Steady build rates and continued progress against backlog expected to
drive top-line
• Distribution customer demand levels appear to be stabilizing
• Less favorable product sales mix continues to impact profitability
Energy (2%) – (5%) 5% – 7%
• Sales levels impacted by de-emphasizing certain underperforming regions
and continued weakness in oil and gas end markets
• Margin level positively impacted as a result of restructuring actions
Engineered
Components
2% – 5% 13% – 15%
• Sales growth expected from improvements in general industrial end market
demand
• Expect flat sales related to oil and gas end markets
• Focused on cost structure and productivity to maintain and improve margins
Expect sales growth in three segments and improvement in overall segment margin.
19
FY 2017 Outlook
(1) Free Cash Flow is defined as Net Cash Provided by/Used for Operating Activities of Continuing
Operations, excluding the cash impact of Special Items, less Capital Expenditures.
From Continuing Operations
Sales and margin expansion expected to drive year-over-year EPS growth.
Note: All of the figures on this slide exclude any current and future Special Items.
Full Year Outlook
(as of 2/28/17)
Sales Growth
2% – 4%
Earnings Per Share, diluted $1.35 – $1.45
Free Cash Flow(1) > 100% of net income
20
FY 2017 Additional Assumptions
From Continuing Operations
Note: All of the figures and comments on this slide exclude any current and future Special Items.
Full Year Outlook
(as of 2/28/17)
Interest Expense $13 – $15 million
Capital Expenditures ~ 4% of sales
Tax Rate 30% – 32%
Corporate Cash Expense
Non-Cash Stock Compensation
~ $22 million
~ $7 million
21
2017 Near-Term Focus
Focused on operational execution and improved performance.
• Operate under the new TriMas Business Model, with a nearer-term focus on:
- Driving growth in the Packaging and Engineered Components segments
- Continuing to execute turnaround plans in the Energy and Aerospace
segments
• Relentless focus on managing cash flow and optimizing operational structure
• Continue to assess capacity, process technology and innovation pipeline to
enhance growth
• Ensure all facility rationalization steps are well-executed and continue to
assess manufacturing footprint
• Drive a culture of continuous improvement through employee engagement
22
Closing Comments
TriMas has many attractive investment attributes.
Well-established brands with leading market
positions in niche markets
Majority of products with high barriers to
entry through production innovation or
customer qualifications
Strong cash flow with options to drive
shareholder value
Potential to unlock value through focus on
performance criteria and improvement
actions
Well-positioned to take advantage of
operating leverage with even modest
improvements in economic environment or
market spending
Questions and Answers
Appendix
25
Condensed Consolidated Balance Sheet
(Dollars in thousands)
December 31, December 31,
2016 2015
Assets
Current assets:
Cash and cash equivalents............................................... 20,710$ 19,450$
Receivables, net.............................................................. 111,570 121,990
Inventories...................................................................... 160,460 167,370
Prepaid expenses and other current assets....................... 16,060 17,810
Total current assets...................................................... 308,800 326,620
Property and equipment, net................................................ 179,160 181,130
Goodwill............................................................................. 315,080 378,920
Other intangibles, net........................................................... 213,920 273,870
Other assets....................................................................... 34,690 9,760
Total assets................................................................. 1,051,650$ 1,170,300$
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities, long-term debt..................................... 13,810$ 13,850$
Accounts payable............................................................ 72,270 88,420
Accrued liabilities............................................................ 47,190 50,480
Total current liabilities................................................... 133,270 152,750
L ng-term debt, net............................................................. 360,840 405,780
Deferred income taxes........................................................ 5,910 11,260
Other long-term liabilities...................................................... 51,910 53,320
Total liabilities.............................................................. 551,930 623,110
Total shareholders' equity............................................. 499,720 547,190
Total liabilities and shareholders' equity.......................... 1,051,650$ 1,170,300$
26
Consolidated Statement of Operations
(Unaudited, dollars in thousands, except for per share amounts)
Three months ended Twelve months ended
2016 2015 2016 2015
Net sales......................................................................................... 185,530$ 192,760$ 794,020$ 863,980$
Cost of sales.................................................................................... (146,100) (143,760) (583,540) (627,870)
Gross profit.................................................................................. 39,430 49,000 210,480 236,110
Selling, general and administrative expenses...................................... (36,910) (39,630) (153,710) (162,350)
Net loss on dispositions of property and equipment............................. (520) (1,730) (1,870) (2,330)
Impairment of goodwill and indefinite-lived intangible assets................. (98,900) (75,680) (98,900) (75,680)
Operating loss.............................................................................. (96,900) (68,040) (44,000) (4,250)
Other expense, net:
Interest expense........................................................................... (3,490) (3,450) (13,720) (14,060)
Debt financing and extinguishment costs........................................ - - - (1,970)
Other income (expense), net.......................................................... (380) 490 (510) (1,840)
Other expense, net.................................................................... (3,870) (2,960) (14,230) (17,870)
Loss from continuing operations before income taxes.......................... (100,770) (71,000) (58,230) (22,120)
Income tax benefit (expense)............................................................. 33,410 10,200 18,430 (6,540)
Loss from continuing operations........................................................ (67,360) (60,800) (39,800) (28,660)
Loss from discontinued operations, net of tax..................................... - - - (4,740)
Net loss........................................................................................... (67,360) (60,800) (39,800) (33,400)
Net loss per share - basic:
Continuing operations................................................................... (1.48)$ (1.35)$ (0.88)$ (0.64)$
Discontinued operations................................................................ - - - (0.10)
Net loss per share......................................................................... (1.48)$ (1.35)$ (0.88)$ (0.74)$
Weighted average common shares - basic 45,484,485 45,188,303 45,407,316 45,123,626
L s per share - diluted:
Continuing operations................................................................... (1.48)$ (1.35)$ (0.88)$ (0.64)$
Discontinued operations................................................................ - - - (0.10)
Net loss per share......................................................................... (1.48)$ (1.35)$ (0.88)$ (0.74)$
Weighted average common shares - diluted 45,484,485 45,188,303 45,407,316 45,123,626
December 31, December 31,
27
Consolidated Statement of Cash Flow
(Unaudited, dollars in thousands)
2016 2015
Cash Flows from Operating Activities:
Net loss.......................................................................................................................... (39,800)$ (33,400)$
Loss from discontinued operations................................................................................... - (4,740)
Loss from continuing operations....................................................................................... (39,800) (28,660)
Adjustments to reconcile net loss to net cash provided by operating activities:
Impairment of goodwill and indefinite-lived intangible assets............................................ 98,900 75,680
Loss on dispositions of property and equipment............................................................. 1,870 2,330
Depreciation............................................................................................................... 24,390 22,570
Amortization of intangible assets................................................................................... 20,470 20,970
Amortization of debt issue costs.................................................................................... 1,370 1,710
Deferred income taxes................................................................................................. (32,160) (8,750)
Non-cash compensation expense.................................................................................. 6,940 6,340
Excess tax benefits from stock based compensation....................................................... (640) (590)
Debt financing and extinguishment expenses................................................................. - 1,970
Decrease in receivables............................................................................................... 7,990 5,300
Decrease in inventories............................................................................................... 5,180 3,250
Decrease in prepaid expenses and other assets............................................................ 2,550 4,730
Decrease in accounts payable and accrued liabilities..................................................... (18,120) (29,530)
Other, net................................................................................................................... 1,530 (750)
Net cash provided by operating activities of continuing operations............................... 80,470 76,570
Net cash used for operating activities of discontinued operations................................. - (14,030)
Net cash provided by operating activities................................................................ 80,470 62,540
Cash Flows from Investing Activities:
Capital expenditures.................................................................................................... (31,330) (28,660)
Acquisition of businesses, net of cash acquired............................................................. - (10,000)
Net proceeds from dispositions of property and equipment............................................. 220 1,700
Net cash used for investing activities of continuing operations..................................... (31,110) (36,960)
Net cash used for investing activities of discontinued operations.................................. - (2,510)
Net cash used for investing activities...................................................................... (31,110) (39,470)
Cash Flows from Financing Activities:
Proceeds from borrowings on term loan facilities........................................................... - 275,000
Repayments of borrowings on term loan facilities........................................................... (13,850) (444,890)
Proceeds from borrowings on revolving credit and accounts receivable facilities............... 402,420 1,129,840
Repayments of borrowings on revolving credit and accounts receivable facilities.............. (433,350) (1,169,370)
Payments for deferred purchase price.......................................................................... (2,530) (6,440)
Debt financing fees..................................................................................................... - (1,850)
Shares surrendered upon options and restricted stock vesting to cover taxes................... (1,590) (2,770)
Proceeds from exercise of stock options....................................................................... 160 500
Excess tax benefits from stock based compensation....................................................... 640 590
Cash transferred to the Cequent businesses.................................................................. - (17,050)
Net cash used for financing activities of continuing operations..................................... (48,100) (236,440)
Net cash provided by financing activities of discontinued operations............................ - 208,400
Net cash used for financing activities..................................................................... (48,100) (28,040)
Cash and Cash Equivalents:
Net increase (decrease) for the period.......................................................................... 1,260 (4,970)
At beginning of period.................................................................................................. 19,450 24,420
At end of period....................................................................................................... 20,710$ 19,450$
Supplemental disclosure of cash flow information:
Cash paid for interest............................................................................................... 11,800$ 15,170$
Cash paid for taxes.................................................................................................. 17,210$ 30,580$
December 31,
Year ended
28
Company & Segment Financial Information
(Unaudited, dollars in thousands, from continuing operations)
Three months ended
2016 2015 2016 2015
Packaging
Net sales................................................................................................... 82,790$ 77,800$ 341,340$ 334,270$
Operating profit.......................................................................................... 18,500$ 18,380$ 77,840$ 78,470$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs............................................. 1,870$ 1,050$ 4,590$ 1,760$
Excluding Special Items, operating profit would have been..................... 20,370$ 19,430$ 82,430$ 80,230$
Aerospace
Net sales................................................................................................... 42,900$ 42,140$ 174,920$ 176,480$
Operating profit (loss)................................................................................. (104,480)$ 5,910$ (90,810)$ 28,320$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs............................................. 6,900$ 870$ 9,700$ 3,610$
Impairment of goodwill and indefinite-lived intangible assets....................... 98,900$ -$ 98,900$ -$
Excluding Special Items, operating profit would have been..................... 1,320$ 6,780$ 17,790$ 31,930$
Energy
Net sales................................................................................................... 36,060$ 40,480$ 158,990$ 193,390$
Operating loss............................................................................................ (5,270)$ (86,770)$ (13,840)$ (97,160)$
Special Items to consider in evaluating operating profit (loss):
Severance and business restructuring costs............................................. 6,230$ 11,940$ 19,460$ 23,140$
Impairment of goodwill and indefinite-lived intangible assets....................... -$ 72,500$ -$ 72,500$
Excluding Special Items, operating profit (loss) would have been............ 960$ (2,330)$ 5,620$ (1,520)$
Engineered Components
Net sales................................................................................................... 23,780$ 32,340$ 118,770$ 159,840$
Operating profit.......................................................................................... 2,680$ 1,670$ 15,300$ 18,240$
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs............................................. 130$ 50$ 530$ 280$
Impairment of goodwill and indefinite-lived intangible assets....................... -$ 3,180$ -$ 3,180$
Excluding Special Items, operating profit would have been..................... 2,810$ 4,900$ 15,830$ 21,700$
Corporate expenses
Operating loss............................................................................................ (8,330)$ (7,230)$ (32,490)$ (32,120)$
Special Items to consider in evaluating operating loss:
Severance and business restructuring costs............................................. 1,910$ 500$ 5,470$ 1,440$
Excluding Special Items, operating loss would have been....................... (6,420)$ (6,730)$ (27,020)$ (30,680)$
Total Continuing Operations
Net sales................................................................................................... 185,530$ 192,760$ 794,020$ 863,980$
Operating loss............................................................................................ (96,900)$ (68,040)$ (44,000)$ (4,250)$
Total Special Items to consider in evaluating operating profit.......................... 115,940$ 90,090$ 138,650$ 105,910$
Excluding Special Items, operating profit would have been..................... 19,040$ 22,050$ 94,650$ 101,660$
December 31, December 31,
Twelve months ended
29
Segment Performance Summary
(Unaudited, dollars in millions)
Operating Profit Margin
(excluding Special Items)
Note: Please see the detailed reconciliation to GAAP results in this Appendix. Historical figures may be found in the corresponding earnings releases located on
www.trimascorp.com under the “Investors” section.
Sales
Q4
2016
Q3
2016
Q4
2015
FY
2016
FY
2015
Packaging $82.8 $90.3 $77.8 $341.3 $334.3
Aerospace $42.9 $47.4 $42.1 $174.9 $176.5
Energy $36.1 $38.2 $40.5 $159.0 $193.4
Engineered
Components
$23.8 $26.3 $32.3 $118.8 $159.8
TriMas $185.5 $202.3 $192.8 $794.0 $864.0
Q4
2016
Q3
2016
Q4
2015
FY
2016
FY
2015
Packaging 24.6% 24.1% 25.0% 24.1% 24.0%
Aerospace 3.1% 6.7% 16.1% 10.2% 18.1%
Energy 2.7% 4.6% -5.8% 3.5% -0.8%
Engineered
Components
11.8% 13.0% 15.2% 13.3% 13.6%
Segment 13.7% 17.2% 14.9% 15.3% 15.3%
30
Additional Information Regarding Special Items
(Unaudited, dollars in thousands, except for per share amounts)
Three months ended Twelve months ended
December 31, December 31,
2016 2015 2016 2015
Loss from continuing operations, as reported....................................................................... (67,360)$ (60,800)$ (39,800)$ (28,660)$
After-tax impact of Special Items to consider in evaluating quality of income (loss)
from continuing operations:
Severance and business restructuring costs........................................................................... 13,050 9,760 29,620 21,810
Impairment of goodwill and indefinite-lived intangible assets..................................................... 67,910 64,260 67,910 64,260
Debt financing and extinguishment costs................................................................................ - - - 1,240
Excluding Special Items, income from continuing operations would have been.................. 13,600$ 13,220$ 57,730$ 58,650$
Three months ended Twelve months ended
December 31, December 31,
2016 2015 2016 2015
Diluted loss per share from continuing operations, as reported............................................ (1.48)$ (1.35)$ (0.88) (0.64)$
Dilutive impact(a)………………………………………………………………………………………………………………………………………… 0.01 0.02 0.01 0.01
After-tax impact of Special Items to consider in evaluating quality of EPS
from continuing operations:
Severance and business restructuring costs........................................................................... 0.29 0.21 0.65 0.48
Impairment of goodwill and indefinite-lived intangible assets..................................................... 1.48 1.41 1.48 1.41
Debt financing and extinguishment costs................................................................................ - - - 0.03
Excluding Special Items, EPS from continuing operations would have been....................... 0.30$ 0.29$ 1.26$ 1.29$
Weighted-average shares outstanding .............................................................................. 45,786,801 45,613,000 45,732,105 45,482,964
2016 2015 2016 2015
Operating profit from continuing operations (excluding Special Items).................................. 19,040$ 22,050$ 94,650$ 101,660$
Corporate expenses (excluding Special Items)........................................................................ 6,420 6,730 27,020 30,680
Segment operating profit (excluding Special Items)............................................................... 25,460$ 28,780$ 121,670$ 132,340$
Segment operating profit margin (excluding Special Items).................................................... 13.7% 14.9% 15.3% 15.3%
(a) Impact of 302,316 and 424,697 shares for the three months ended December 31, 2016 and 2015, resepctively, and 324,789 and 359,338 shares for the twelve months
ended December 31, 2016 and 2015, respectively, which would have been dilutive to the computation of earnings per share in an income position.
December 31, December 31,
Three months ended Twelve months ended
31
Additional Information Regarding Special Items
(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.......................... 34,060$ 8,090$ 42,150$ 47,830$ 2,160$ 49,990$
Less: Capital expenditures of continuing operations............................................... (8,940) - (8,940) (8,300) - (8,300)
Free Cash Flow from continuing operations.......................................................... 25,120 8,090 33,210 39,530 2,160 41,690
Income (loss) from continuing operations.............................................................. (67,360) 80,960 13,600 (60,800) 74,020 13,220
Free Cash Flow as a percentage of income from continuing operations.................. -37% 244% -65% 315%
As reported Special Items
Excluding
Special Items As reported Special Items
Excluding
Special Items
Net cash provided by operating activities of continuing operations.......................... 80,470$ 23,610$ 104,080$ 76,570$ 2,890$ 79,460$
Less: Capital expenditures of continuing operations............................................... (31,330) - (31,330) (28,660) - (28,660)
Free Cash Flow from continuing operations.......................................................... 49,140 23,610 72,750 47,910 2,890 50,800
Income (loss) from continuing operations.............................................................. (39,800) 97,530 57,730 (28,660) 87,310 58,650
Free Cash Flow as a percentage of income from continuing operations.................. -123% 126% -167% 87%
Twelve months ended December 31,
2016 2015
Three months ended December 31,
2016 2015
32
Current Debt Structure
(Unaudited, dollars in thousands)
TriMas had $147.2 million of cash and available liquidity under its revolving
credit and accounts receivable facilities.
December 31, December 31,
2016 2015
Cash and Cash Equivalents……………………………..………………… 20,710$ 19,450$
Credit Agreement……………………………………….. 333,720 371,820
Receivables facility and other……………………………….. 45,650 53,860
Debt issuance costs…………………………………… (4,720) (6,050)
Total Debt………………………...………………………...………………………… 374,650 419,630
Key Ratios:
Bank LTM EBITDA……………………………………………………………………………….……………………………………… 145,660$ 154,180$
Inter st Coverage Ratio………………………………………………………………… 11.94 x 12.77 x
Leverage Ratio…………………………………………………………………... 2.63 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
33
LTM Bank EBITDA
(Unaudited, dollars in thousands)
(1) As defined in the Credit Agreement dated June 30, 2015.
(39,800)$
Interest expense.................................................................................. 13,720
Depreciation and amortization.............................................................. 44,860
Extraordinary non-cash charges........................................................... 98,900
Non-cash compensation expense.......................................................... 6,940
Other non-cash expenses or losses....................................................... 8,180
Non-recurring expenses or costs ......................................................... 11,400
Acquisition integration costs................................................................. 1,460
145,660$
Net loss for the year ended December 31, 2016........................................
Bank EBITDA - LTM Ended December 31, 2016 (1)…………………………………………………………………