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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)  
 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2021
Or
 Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from                  to                  .
Commission file number 001-10716
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware38-2687639
(State or other jurisdiction of
incorporation or organization)
 (IRS Employer
Identification No.)
38505 Woodward Avenue, Suite 200
Bloomfield Hills, Michigan 48304
(Address of principal executive offices, including zip code)
(248631-5450
(Registrant's telephone number, including area code)
Title of each classTrading symbol(s)Name of exchange on which registered
Common stock, $0.01 par valueTRSThe NASDAQ Stock Market LLC
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No .
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
As of October 21, 2021, the number of outstanding shares of the Registrant's common stock, $0.01 par value, was 42,856,947 shares.


Table of Contents
TriMas Corporation
Index
 
   
  
   
   
  
  
  
  
 
  
 
  
  
  
  
  
  
  
 

1

Table of Contents
Forward-Looking Statements
This report may contain 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 about our financial condition, results of operations and business. These forward-looking statements can be identified by the use of forward-looking words, such as “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan” or other comparable words, or by discussions of strategy that may involve risks and uncertainties.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties which could materially affect our business, financial condition or future results including, but not limited to: the severity and duration of the ongoing coronavirus (“COVID-19”) pandemic on our operations, customers and suppliers, as well as related actions taken by governmental authorities and other third parties in response, each of which is uncertain, rapidly changing and difficult to predict; general economic and currency conditions; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other intangible asset impairment charges; competitive factors; future trends; our ability to realize our business strategies; our ability to identify attractive acquisition candidates, successfully integrate acquired operations or realize the intended benefits of such acquisitions; information technology and other cyber-related risks; the performance of our subcontractors and suppliers; supply constraints, including the availability and cost of raw materials; market demand; intellectual property factors; litigation; government and regulatory actions, including, without limitation, climate change legislation and other environmental regulations, as well as the impact of tariffs, quotas and surcharges; our leverage; liabilities imposed by our debt instruments; labor disputes; changes to fiscal and tax policies; contingent liabilities relating to acquisition activities; the disruption of operations from catastrophic or extraordinary events, including natural disasters and public health crises; the potential impact of Brexit; our future prospects; and other risks that are discussed in Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2020 and elsewhere in this report. The risks described in our Annual Report on Form 10-K and elsewhere in this report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows.
The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We caution readers not to place undue reliance on the statements, which speak only as of the date of this report. We do not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law.
We disclose important factors that could cause our actual results to differ materially from our expectations implied by our forward-looking statements under Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this report. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other conditions, results of operations, prospects and ability to service our debt.
2

Table of Contents
PART I. FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements
TriMas Corporation
Consolidated Balance Sheet
(Dollars in thousands)
September 30,
2021
December 31,
2020
Assets(unaudited)
Current assets:
Cash and cash equivalents$136,960 $73,950 
Receivables, net of reserves of approximately $1.4 million and $2.1 million as of September 30, 2021 and December 31, 2020, respectively135,010 113,410 
Inventories154,330 149,380 
Prepaid expenses and other current assets17,070 15,090 
Total current assets443,370 351,830 
Property and equipment, net254,330 253,060 
Operating lease right-of-use assets37,360 37,820 
Goodwill299,040 303,970 
Other intangibles, net187,770 206,200 
Deferred income taxes9,190 19,580 
Other assets27,200 21,420 
Total assets$1,258,260 $1,193,880 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$71,990 $69,910 
Accrued liabilities59,820 60,540 
Operating lease liabilities, current portion6,600 6,740 
Total current liabilities138,410 137,190 
Long-term debt, net393,600 346,290 
Operating lease liabilities31,860 31,610 
Deferred income taxes19,250 24,850 
Other long-term liabilities60,820 69,690 
Total liabilities643,940 609,630 
Preferred stock, $0.01 par: Authorized 100,000,000 shares;
Issued and outstanding: None
  
Common stock, $0.01 par: Authorized 400,000,000 shares;
Issued and outstanding: 42,841,573 shares at September 30, 2021 and 43,178,165 shares at December 31, 2020
430 430 
Paid-in capital733,520 749,050 
Accumulated deficit(115,120)(159,610)
Accumulated other comprehensive loss(4,510)(5,620)
Total shareholders' equity614,320 584,250 
Total liabilities and shareholders' equity$1,258,260 $1,193,880 


The accompanying notes are an integral part of these consolidated financial statements.
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TriMas Corporation
Consolidated Statement of Operations
(Unaudited—dollars in thousands, except for per share amounts)
 Three months ended
September 30,
Nine months ended
September 30,
 2021202020212020
Net sales$222,420 $199,460 $648,140 $581,800 
Cost of sales(163,980)(147,530)(480,340)(446,270)
Gross profit58,440 51,930 167,800 135,530 
Selling, general and administrative expenses(27,620)(25,650)(90,300)(107,570)
Impairment of goodwill and indefinite-lived intangible assets (134,600) (134,600)
Operating profit (loss)30,820 (108,320)77,500 (106,640)
Other expense, net:  
Interest expense(3,440)(3,450)(11,110)(11,260)
Debt financing and related expenses  (10,520) 
Other income (expense), net(540)(1,200)(800)(150)
Other expense, net(3,980)(4,650)(22,430)(11,410)
Income (loss) before income tax expense26,840 (112,970)55,070 (118,050)
Income tax benefit (expense)(7,250)12,100 (10,580)14,600 
Net income (loss)$19,590 $(100,870)$44,490 $(103,450)
Basic earnings (loss) per share:  
Net income (loss) per share$0.46 $(2.32)$1.03 $(2.37)
Weighted average common shares—basic42,889,922 43,457,704 43,061,707 43,707,331 
Diluted earnings (loss) per share:  
Net income (loss) per share$0.45 $(2.32)$1.03 $(2.37)
Weighted average common shares—diluted43,094,099 43,457,704 43,345,777 43,707,331 


The accompanying notes are an integral part of these consolidated financial statements.
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TriMas Corporation
Consolidated Statement of Comprehensive Income
(Unaudited—dollars in thousands)
Three months ended
September 30,
Nine months ended
September 30,
2021202020212020
Net income (loss)$19,590 $(100,870)$44,490 $(103,450)
Other comprehensive income (loss):
Defined benefit plans (Note 17)160 160 470 470 
Foreign currency translation(4,550)5,740 (6,570)(1,210)
Derivative instruments (Note 10)3,880 (4,580)7,210 (2,280)
Total other comprehensive income (loss)(510)1,320 1,110 (3,020)
Total comprehensive income (loss)$19,080 $(99,550)$45,600 $(106,470)


The accompanying notes are an integral part of these consolidated financial statements.


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TriMas Corporation
Consolidated Statement of Cash Flows
(Unaudited—dollars in thousands)
Nine months ended September 30,
20212020
Cash Flows from Operating Activities:
Net income (loss)$44,490 $(103,450)
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact:
Impairment of goodwill and indefinite-lived intangible assets 134,600 
Loss on dispositions of assets130 1,080 
Depreciation23,740 21,700 
Amortization of intangible assets16,150 15,460 
Amortization of debt issue costs740 860 
Deferred income taxes3,480 (17,790)
Non-cash compensation expense7,320 5,610 
Non-cash change in legacy liability estimate 23,400 
Debt financing and related expenses10,520  
Increase in receivables(23,260)(6,210)
(Increase) decrease in inventories(5,850)4,510 
(Increase) decrease in prepaid expenses and other assets(3,830)5,500 
Increase (decrease) in accounts payable and accrued liabilities450 (7,410)
Other operating activities3,660 1,250 
Net cash provided by operating activities, net of acquisition impact77,740 79,110 
Cash Flows from Investing Activities:
Capital expenditures(29,850)(17,670)
Acquisition of businesses, net of cash acquired (95,160)
Net proceeds from disposition of business, property and equipment160 1,930 
Net cash used for investing activities(29,690)(110,900)
Cash Flows from Financing Activities:
Retirement of senior notes(300,000) 
Proceeds from issuance of senior notes400,000  
Proceeds from borrowings on revolving credit facilities 300,950 
Repayments of borrowings on revolving credit facilities(48,620)(303,240)
Debt financing fees and senior notes redemption premium(13,570) 
Shares surrendered upon exercise and vesting of equity awards to cover taxes(4,690)(2,600)
Payments to purchase common stock(18,160)(36,050)
Net cash provided by (used for) financing activities14,960 (40,940)
Cash and Cash Equivalents:
Increase (decrease) for the period63,010 (72,730)
At beginning of period73,950 172,470 
At end of period$136,960 $99,740 
Supplemental disclosure of cash flow information:
Cash paid for interest$6,490 $7,490 
Cash paid for taxes$8,250 $6,660 
        



The accompanying notes are an integral part of these consolidated financial statements.
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TriMas Corporation
Consolidated Statement of Shareholders' Equity
Nine Months Ended September 30, 2021 and 2020
(Unaudited—dollars in thousands)
Common
Stock
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Balances, December 31, 2020$430 $749,050 $(159,610)$(5,620)$584,250 
Net income— — 13,060 — 13,060 
Other comprehensive income— — — 630 630 
Purchase of common stock (2,640)— — (2,640)
Shares surrendered upon exercise and vesting of equity awards to cover taxes— (1,770)— — (1,770)
Non-cash compensation expense— 2,440 — — 2,440 
Balances, March 31, 2021$430 $747,080 $(146,550)$(4,990)$595,970 
Net income— — 11,840 — 11,840 
Other comprehensive income— — — 990 990 
Purchase of common stock— (11,570)— — (11,570)
Shares surrendered upon exercise and vesting of equity awards to cover taxes— (2,850)— — (2,850)
Non-cash compensation expense 3,220 — — 3,220 
Balances, June 30, 2021$430 $735,880 $(134,710)$(4,000)$597,600 
Net income— — 19,590 — 19,590 
Other comprehensive loss— — — (510)(510)
Purchase of common stock— (3,950)— — (3,950)
Shares surrendered upon exercise and vesting of equity awards to cover taxes— (70)— — (70)
Non-cash compensation expense— 1,660 — — 1,660 
Balances, September 30, 2021$430 $733,520 $(115,120)$(4,510)$614,320 


The accompanying notes are an integral part of these consolidated financial statements.












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TriMas Corporation
Consolidated Statement of Shareholders' Equity (Continued)
Nine Months Ended September 30, 2021 and 2020
(Unaudited—dollars in thousands)
Common
Stock
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Balances, December 31, 2019$450 $782,880 $(79,850)$(6,000)$697,480 
Net income— — 13,120 — 13,120 
Other comprehensive loss— — — (3,680)(3,680)
Purchase of common stock(20)(31,550)— — (31,570)
Shares surrendered upon exercise and vesting of equity awards to cover taxes— (1,830)— — (1,830)
Non-cash compensation expense— 1,940 — — 1,940 
Balances, March 31, 2020$430 $751,440 $(66,730)$(9,680)$675,460 
Net loss— — (15,700)— (15,700)
Other comprehensive loss— — — (660)(660)
Shares surrendered upon exercise and vesting of equity awards to cover taxes— (740)— — (740)
Non-cash compensation expense10 2,730 — — 2,740 
Balances, June 30, 2020$440 $753,430 $(82,430)$(10,340)$661,100 
Net loss— — (100,870)— (100,870)
Other comprehensive income— — — 1,320 1,320 
Purchase of common stock(10)(4,470)— — (4,480)
Shares surrendered upon exercise and vesting of equity awards to cover taxes— (30)— — (30)
Non-cash compensation expense— 930 — — 930 
Balances, September 30, 2020$430 $749,860 $(183,300)$(9,020)$557,970 


The accompanying notes are an integral part of these consolidated financial statements.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Basis of Presentation
TriMas Corporation ("TriMas" or the "Company"), and its consolidated subsidiaries, designs, engineers and manufactures innovative products under leading brand names for customers primarily in the consumer products, aerospace & defense, and industrial markets.
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries and, in the opinion of management, contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of financial position and results of operations. The preparation of financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results may differ from such estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the ongoing outbreak of the coronavirus and related variants (“COVID-19”). While the full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated at this time, the Company has made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, the Company's consolidated financial statements may be materially affected.
Results of operations for interim periods are not necessarily indicative of results for the full year. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the Company's 2020 Annual Report on Form 10-K.
2. Revenue
The following table presents the Company’s disaggregated net sales by primary market served (dollars in thousands):
Three months ended September 30,Nine months ended September 30,
Customer Markets2021202020212020
Consumer Products$110,200 $114,220 $328,220 $298,060 
Aerospace & Defense46,510 39,130 135,680 130,670 
Industrial65,710 46,110 184,240 153,070 
Total net sales$222,420 $199,460 $648,140 $581,800 
The Company’s Packaging segment earns revenues from the consumer products (comprised of the beauty and personal care, home care, food and beverage, pharmaceutical and nutraceutical submarkets) and industrial markets. The Aerospace segment earns revenues from the aerospace & defense market (comprised of commercial, regional and business jet and military submarkets). The Specialty Products segment earns revenues from a variety of submarkets within the industrial market.
3. Realignment Actions
2021 Realignment Actions
During the nine months ended September 30, 2021, the Company executed certain realignment actions in response to reductions in current and expected future end market demand. First, the Company closed its Packaging segment's Union City, California manufacturing facility, consolidating the operation into its Indianapolis, Indiana and Woodridge, Illinois facilities. The Company also realigned its Aerospace segment footprint, consolidating certain activities previously in its Stanton, California facilities into its Tolleson, Arizona facility. In addition, the Company also reorganized its corporate office legal and finance groups. The Company recorded pre-tax realignment charges of approximately $0.6 million and $8.8 million during the three and nine months ended September 30, 2021, respectively. Of these costs, approximately $0.5 million and $2.7 million during the three and nine months ended September 30, 2021, respectively, related to facility consolidations, and approximately $0.1 million and $6.1 million, respectively, were for employee separation costs. As of September 30, 2021, approximately $1.5 million of the employee separation costs had been paid. For the three months ended September 30, 2021, $0.6 million of these charges were included in costs of sales. For the nine months ended September 30, 2021, approximately $3.3 million and $5.5 million of these charges were included in cost of sales and selling, general and administrative expenses, respectively, in the accompanying consolidated statement of operations.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
2020 Realignment Actions
In the three and nine months ended September 30, 2020, the Company executed certain realignment actions, primarily in its Aerospace and Specialty Products segments, in response to reductions in current and expected future end market demand. During the nine months ended September 30, 2020, the Company recorded a non-cash charge of approximately $13.2 million related to inventory reductions, primarily as a result of a strategic decision in its Arrow Engine division to narrow its product line focus. During the three and nine months ended September 30, 2020, the Company also recorded non-cash charges of approximately $0.1 million and $2.3 million, respectively, related to certain production equipment removed from service given reduced demand levels. In addition, the Company reduced its employment levels given lower customer demand incurring approximately $0.5 million and $3.6 million during the three and nine months ended September 30, 2020, respectively, in severance charges, of which approximately $2.9 million was paid by September 30, 2020. For the three and nine months ended September 30, 2020, approximately $0.4 million and $16.4 million of these charges were included in cost of sales, respectively, and approximately $0.2 million and $2.7 million were included in selling, general and administrative expenses, respectively, in the accompanying consolidated statement of operations.
4. Acquisitions
2020 Acquisitions
On December 15, 2020, the Company acquired Affaba & Ferrari Srl ("Affaba & Ferrari"), which specializes in the design, development and manufacture of precision caps and closures for food & beverage and industrial product applications, for an aggregate amount of approximately $98.4 million, net of cash acquired. The fair value of assets acquired and liabilities assumed included approximately $49.1 million of goodwill, $35.1 million of intangible assets, $9.4 million of net working capital, $17.4 million of property and equipment, and $12.6 million of net deferred tax liabilities. Affaba & Ferrari, which is reported in the Company's Packaging segment, operates out of a highly automated manufacturing facility and support office located in Borgo San Giovanni, Italy and historically generated approximately $34 million in annual revenue.
On April 17, 2020, the Company acquired the Rapak® brand, including certain bag-in-box product lines and assets ("Rapak"), for an aggregate amount of approximately $11.4 million. Rapak, which is reported in the Company's Packaging segment, has manufacturing locations in Indiana and Illinois and historically generated approximately $30 million in annual revenue.
On February 27, 2020, the Company acquired RSA Engineered Products ("RSA"), a manufacturer of complex, highly-engineered and proprietary ducting, connectors and related products for air management systems used in aerospace and defense applications, for an aggregate amount of approximately $83.7 million, net of cash acquired. The fair value of assets acquired and liabilities assumed included approximately $43.3 million of goodwill, $36.9 million of intangible assets, $10.1 million of net working capital, $2.1 million of property and equipment, and $8.7 million of net deferred tax liabilities. RSA, which is reported in the Company's Aerospace segment, is located in Simi Valley, California and historically generated approximately $30 million in annual revenue.
5. Cash and Cash Equivalents
Cash and cash equivalents consists of the following components (dollars in thousands):
 September 30,
2021
December 31,
2020
Cash and cash equivalents - unrestricted$125,800 $62,790 
Cash - restricted (a)
11,160 11,160 
Total cash and cash equivalents$136,960 $73,950 
__________________________
(a)     Includes cash placed on deposit with a financial institution to be held as cash collateral for the Company's outstanding letters of credit.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
6. Goodwill and Other Intangible Assets
Goodwill
Changes in the carrying amount of goodwill for the nine months ended September 30, 2021 are summarized as follows (dollars in thousands):
PackagingAerospaceSpecialty ProductsTotal
Balance, December 31, 2020$234,560 $62,850 $6,560 $303,970 
Foreign currency translation and other(4,930)  (4,930)
Balance, September 30, 2021$229,630 $62,850 $6,560 $299,040 
The Company assesses goodwill and other indefinite-lived intangible assets for impairment on an annual basis as of October 1, and more frequently if there are changes in the business climate or as a result of a triggering event taking place. During the third quarter of 2020, as a result of a decline in its aerospace-related business' financial results, a significant reduction in its financial projections for the remainder of 2020 compared with prior projections, and uncertainty around the duration and magnitude of the impact of the COVID-19 pandemic on future financial results given their dependence on future levels of air travel and new aircraft builds, the Company determined there was a triggering event requiring an interim quantitative goodwill impairment assessment of each of its two aerospace-related reporting units: Aerospace Fasteners and Aerospace Engineered Products.
Upon completion of the quantitative goodwill impairment tests, the Company determined that the carrying values of the Aerospace Fasteners and Aerospace Engineered Products reporting units exceeded their fair values, resulting in goodwill impairment charges of approximately $70.8 million in its Aerospace Fasteners reporting unit and approximately $56.0 million in its Aerospace Engineered Products reporting unit during the three and nine month periods ended September 30, 2020.
Other Intangible Assets
The Company amortizes its other intangible assets over periods ranging from one to 30 years. The gross carrying amounts and accumulated amortization of the Company's other intangibles are summarized below (dollars in thousands):
As of September 30, 2021As of December 31, 2020
Intangible Category by Useful LifeGross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Finite-lived intangible assets:
   Customer relationships, 5 – 12 years$121,340 $(68,280)$122,970 $(59,470)
   Customer relationships, 15 – 25 years122,280 (66,720)122,280 (62,450)
Total customer relationships243,620 (135,000)245,250 (121,920)
   Technology and other, 1 – 15 years57,110 (35,290)57,180 (32,800)
   Technology and other, 17 – 30 years43,300 (39,800)43,300 (39,450)
Total technology and other100,410 (75,090)100,480 (72,250)
Indefinite-lived intangible assets:
 Trademark/Trade names53,830 — 54,640 — 
Total other intangible assets$397,860 $(210,090)$400,370 $(194,170)
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Amortization expense related to intangible assets as included in the accompanying consolidated statement of operations is summarized as follows (dollars in thousands):
Three months ended September 30,Nine months ended September 30,
2021202020212020
Technology and other, included in cost of sales$950 $1,240 $2,850 $3,710 
Customer relationships, included in selling, general and administrative expenses4,420 4,070 13,300 11,750 
Total amortization expense$5,370 $5,310 $16,150 $15,460 
As a result of the significant forecast reduction in the Company's aerospace-related businesses in third quarter 2020, the Company also performed an interim quantitative assessment for the indefinite-lived intangible assets within the Aerospace segment, using the relief-from-royalty method. Significant management assumptions used under the relief-from-royalty method reflected the Company's current assessment of the risks and uncertainties associated with the aerospace industry. Upon completion of the quantitative impairment test, the Company determined that certain of the Company's aerospace-related trade names had carrying values that exceeded their fair values, and therefore recorded impairment charges of approximately $7.8 million during the three and nine month periods ended September 30, 2020.
7. Inventories
Inventories consist of the following components (dollars in thousands):
 September 30,
2021
December 31,
2020
Finished goods$76,930 $78,010 
Work in process30,880 29,680 
Raw materials46,520 41,690 
Total inventories$154,330 $149,380 
8. Property and Equipment, Net
Property and equipment consists of the following components (dollars in thousands):
 September 30,
2021
December 31,
2020
Land and land improvements$19,730 $20,040 
Buildings92,520 91,970 
Machinery and equipment404,450 384,010 
516,700 496,020 
Less: Accumulated depreciation262,370 242,960 
Property and equipment, net$254,330 $253,060 
Depreciation expense as included in the accompanying consolidated statement of operations is as follows (dollars in thousands):
Three months ended September 30,Nine months ended September 30,
2021202020212020
Depreciation expense, included in cost of sales$7,660 $6,680 $22,890 $20,870 
Depreciation expense, included in selling, general and administrative expenses250 250 850 830 
Total depreciation expense$7,910 $6,930 $23,740 $21,700 
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
9. Long-term Debt
The Company's long-term debt consists of the following (dollars in thousands):
 September 30,
2021
December 31,
2020
4.125% Senior Notes due April 2029$400,000 $ 
4.875% Senior Notes due October 2025 300,000 
Credit Agreement 50,450 
Debt issuance costs(6,400)(4,160)
Long-term debt, net$393,600 $346,290 
Senior Notes due 2029
In March 2021, the Company issued $400.0 million aggregate principal amount of 4.125% senior notes due April 15, 2029 ("2029 Senior Notes") at par value in a private placement under Rule 144A of the Securities Act of 1933, as amended ("Securities Act"). The Company used the proceeds from the 2029 Senior Notes offering to pay fees and expenses of approximately $5.1 million related to the offering and pay fees and expenses of $1.1 million related to amending its existing credit agreement. In connection with the issuance, during the second quarter of 2021, the Company completed the redemption of its outstanding 4.875% senior notes due October 15, 2025 ("2025 Senior Notes"), paying $300.0 million to retire the outstanding principal amount plus $7.3 million as a redemption premium. The remaining cash proceeds from the 2029 Senior Notes were used for general corporate purposes, including repaying all outstanding revolving credit facility borrowings. The $5.1 million of fees and expenses related to the 2029 Senior Notes were capitalized as debt issuance costs, while the $7.3 million redemption premium, as well as approximately $3.0 million of unamortized debt issuance costs associated with the 2025 Senior Notes, were included in debt financing and related expenses in the accompanying statement of operations in the nine months ended September 30, 2021.
The 2029 Senior Notes accrue interest at a rate of 4.125% per annum, payable semi-annually in arrears on April 15 and October 15, commencing on October 15, 2021. The payment of principal and interest is jointly and severally guaranteed, on a senior unsecured basis, by certain subsidiaries of the Company (each a "Guarantor" and collectively the "Guarantors"). The 2029 Senior Notes are pari passu in right of payment with all existing and future senior indebtedness and effectively subordinated to all existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness.
Prior to April 15, 2024, the Company may redeem up to 40% of the principal amount of the 2029 Senior Notes at a redemption price of 104.125% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds of one or more equity offerings provided that each such redemption occurs within 90 days of the date of closing of each such equity offering. In addition, prior to April 15, 2024, the Company may redeem all or part of the 2029 Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus a "make whole" premium. On or after April 15, 2024, the Company may redeem all or part of the 2029 Senior Notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, to the redemption date, if redeemed during the twelve-month period beginning on April 15 of the years indicated below:
YearPercentage
2024102.063 %
2025101.031 %
2026 and thereafter100.000 %
Senior Notes due 2025
In September 2017, the Company issued $300.0 million aggregate principal amount of its 2025 Senior Notes at par value in a private placement under Rule 144A of the Securities Act. During the second quarter of 2021, and in connection with the issuance of the 2029 Senior Notes, the Company redeemed all of the outstanding 2025 Senior Notes, as permitted under the indenture, at a price of 102.438% of the principal amount.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Credit Agreement
During the first quarter of 2021, the Company amended its credit agreement ("Credit Agreement") in connection with the issuance of the 2029 Senior Notes to extend the maturity date. The Company incurred fees and expenses of approximately $1.1 million related to the amendment, all of which was capitalized as debt issuance costs. The Company also recorded approximately $0.2 million of non-cash expense related to the write-off of previously capitalized deferred financing fees. The Credit Agreement consists of a $300.0 million senior secured revolving credit facility, which permits borrowings denominated in specific foreign currencies, subject to a $125.0 million sub limit, maturing on March 29, 2026 and is subject to interest at London Interbank Offered Rate ("LIBOR") plus 1.50%. The interest rate spread is based upon the leverage ratio, as defined, as of the most recent determination date.
The Credit Agreement also provides incremental revolving credit facility commitments in an amount not to exceed the greater of $200.0 million and an amount such that, after giving effect to such incremental commitments and the incurrence of any other indebtedness substantially simultaneously with the making of such commitments, the senior secured net leverage ratio, as defined, is no greater than 3.00 to 1.00. The terms and conditions of any incremental revolving credit facility commitments must be no more favorable than the existing credit facility.
The Company's revolving credit facility allows for the issuance of letters of credit, not to exceed $40.0 million in aggregate. The Company places cash on deposit with a financial institution to be held as cash collateral for the Company's outstanding letters of credit; therefore, as of September 30, 2021 and December 31, 2020, the Company had no letters of credit issued against its revolving credit facility. See Note 5, "Cash and Cash Equivalents," for further information on its cash deposit. At September 30, 2021, the Company had no amounts outstanding under its revolving credit facility and had $300.0 million available. At December 31, 2020, the Company had $50.5 million outstanding under its revolving credit facility and had approximately $249.5 million available. The Company's borrowing capacity was not reduced by leverage restrictions contained in the Credit Agreement as of September 30, 2021 and December 31, 2020.
The debt under the Credit Agreement is an obligation of the Company and certain of its domestic subsidiaries and is secured by substantially all of the assets of such parties. Borrowings under the $125.0 million (equivalent) foreign currency sub limit of the $300.0 million senior secured revolving credit facility are secured by a cross-guarantee amongst, and a pledge of the assets of, the foreign subsidiary borrowers that are a party to the agreement.  The Credit Agreement also contains various negative and affirmative covenants and other requirements affecting the Company and its subsidiaries, including the ability, subject to certain exceptions and limitations, to incur debt, liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, assets dispositions, sale-leaseback transactions, hedging agreements, dividends and other restricted payments, transactions with affiliates, restrictive agreements and amendments to charters, bylaws, and other material documents. The terms of the Credit Agreement also require the Company and its restricted subsidiaries to meet certain restrictive financial covenants and ratios computed quarterly, including a maximum total net leverage ratio (total consolidated indebtedness plus outstanding amounts under the accounts receivable securitization facility, less the aggregate amount of certain unrestricted cash and unrestricted permitted investments, as defined, over consolidated EBITDA, as defined), a maximum senior secured net leverage ratio (total consolidated senior secured indebtedness, less the aggregate amount of certain unrestricted cash and unrestricted permitted investments, as defined, over consolidated EBITDA, as defined) and a minimum interest expense coverage ratio (consolidated EBITDA, as defined, over the sum of consolidated cash interest expense, as defined, and preferred dividends, as defined). At September 30, 2021, the Company was in compliance with its financial covenants contained in the Credit Agreement.
Other Revolving Loan Facility
In May 2021, the Company, through one of its non-U.S. subsidiaries, entered into a revolving loan facility with a borrowing capacity of $4 million. The facility is guaranteed by TriMas Corporation. There are no borrowings outstanding on this loan facility as of September 30, 2021.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Fair Value of Debt
The valuations of the Senior Notes and revolving credit facility were determined based on Level 2 inputs under the fair value hierarchy, as defined. The carrying amounts and fair values were as follows (dollars in thousands):
September 30, 2021December 31, 2020
Carrying AmountFair ValueCarrying AmountFair Value
4.125% Senior Notes due April 2029$400,000 $408,500 $ $ 
4.875% Senior Notes due October 2025  300,000 305,630 
Revolving credit facility  50,450 50,450 
10. Derivative Instruments
Derivatives Designated as Hedging Instruments
The Company uses cross-currency swap contracts to hedge its net investment in Euro-denominated assets against future volatility in the exchange rate between the U.S. dollar and the Euro. By doing so, the Company synthetically converts a portion of its U.S. dollar-based long-term debt into Euro-denominated long-term debt. At inception, the Company designates its cross-currency swaps as net investment hedges.
As of September 30, 2021, the Company had cross-currency swap agreements at notional amounts totaling $250.0 million, which declines to $25.0 million over various contract periods ending between April 15, 2022 and April 15, 2027. Under the terms of the agreements, the Company is to receive net interest payments at fixed rates ranging from approximately 0.8% to 2.9% of the notional amounts.
As of September 30, 2021 and December 31, 2020, the fair value carrying amount of the Company's derivatives designated as hedging instruments are recorded as follows (dollars in thousands):
  Asset / (Liability) Derivatives
Derivatives designated as hedging instruments