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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 March 31, 2022
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 April 21, 2022, the number of outstanding shares of the Registrant's common stock, $0.01 par value, was 42,495,065 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; inflationary pressures on our supply chain, including raw material and energy costs, and customers; interest rate volatility; 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 and shortages; changes to fiscal and tax policies; contingent liabilities relating to acquisition activities; the disruption of operations from catastrophic or extraordinary events, including natural disasters, geopolitical conflicts and public health crises; the amount and timing of future dividends and/or share repurchases, which remain subject to Board approval and depend on market and other conditions; 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, 2021 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.
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PART I. FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements
TriMas Corporation
Consolidated Balance Sheet
(Dollars in thousands)
March 31,
2022
December 31,
2021
Assets(unaudited)
Current assets:
Cash and cash equivalents$58,820 $140,740 
Receivables, net of reserves of approximately $1.3 million and $1.6 million as of March 31, 2022 and December 31, 2021, respectively150,500 125,630 
Inventories158,360 152,450 
Prepaid expenses and other current assets16,290 12,950 
Total current assets383,970 431,770 
Property and equipment, net279,840 265,630 
Operating lease right-of-use assets53,150 50,650 
Goodwill345,010 315,490 
Other intangibles, net204,260 196,730 
Deferred income taxes7,920 9,740 
Other assets34,900 33,630 
Total assets$1,309,050 $1,303,640 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$94,870 $87,800 
Accrued liabilities51,560 58,980 
Operating lease liabilities, current portion8,400 8,120 
Total current liabilities154,830 154,900 
Long-term debt, net394,040 393,820 
Operating lease liabilities46,390 43,780 
Deferred income taxes22,460 21,260 
Other long-term liabilities57,500 59,030 
Total liabilities675,220 672,790 
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: 42,620,656 shares at March 31, 2022 and 42,836,574 shares at December 31, 2021
430 430 
Paid-in capital723,540 732,490 
Accumulated deficit(88,130)(102,300)
Accumulated other comprehensive income (loss)(2,010)230 
Total shareholders' equity633,830 630,850 
Total liabilities and shareholders' equity$1,309,050 $1,303,640 


The accompanying notes are an integral part of these consolidated financial statements.
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TriMas Corporation
Consolidated Statement of Income
(Unaudited—dollars in thousands, except for per share amounts)
 Three months ended
March 31,
 20222021
Net sales$224,310 $206,730 
Cost of sales(170,600)(155,400)
Gross profit53,710 51,330 
Selling, general and administrative expenses(31,780)(30,220)
Operating profit21,930 21,110 
Other expense, net:
Interest expense(3,410)(3,550)
Debt financing and related expenses (200)
Other income (expense), net(280)(930)
Other expense, net(3,690)(4,680)
Income before income tax expense18,240 16,430 
Income tax expense(4,070)(3,370)
Net income$14,170 $13,060 
Basic earnings per share:
Net income per share$0.33 $0.30 
Weighted average common shares—basic42,799,206 43,185,007 
Diluted earnings per share:
Net income per share$0.33 $0.30 
Weighted average common shares—diluted43,109,693 43,634,876 


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
March 31,
20222021
Net income$14,170 $13,060 
Other comprehensive income (loss):
Defined benefit plans (Note 18)240 150 
Foreign currency translation(4,040)(3,420)
Derivative instruments (Note 11)1,560 3,900 
Total other comprehensive income (loss)(2,240)630 
Total comprehensive income$11,930 $13,690 


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)
Three months ended March 31,
20222021
Cash Flows from Operating Activities:
Net income$14,170 $13,060 
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact:
Loss on dispositions of assets20 20 
Depreciation8,470 7,850 
Amortization of intangible assets5,290 5,390 
Amortization of debt issue costs220 300 
Deferred income taxes3,000 2,200 
Non-cash compensation expense2,820 2,440 
Debt financing and related expenses 200 
Increase in receivables(22,330)(15,640)
Increase in inventories(910)(3,110)
Increase in prepaid expenses and other assets(680)(2,070)
Increase (decrease) in accounts payable and accrued liabilities(5,210)1,950 
Other operating activities810 3,150 
Net cash provided by operating activities, net of acquisition impact5,670 15,740 
Cash Flows from Investing Activities:
Capital expenditures(11,890)(9,370)
Acquisition of businesses, net of cash acquired(63,950) 
Net proceeds from disposition of property and equipment20  
Net cash used for investing activities(75,820)(9,370)
Cash Flows from Financing Activities:
Proceeds from issuance of senior notes 400,000 
Repayments of borrowings on revolving credit facilities (48,620)
Debt financing fees (6,150)
Payments to purchase common stock(9,060)(2,640)
Shares surrendered upon exercise and vesting of equity awards to cover taxes(970)(1,770)
Dividends paid(1,740) 
Net cash provided by (used for) financing activities(11,770)340,820 
Cash and Cash Equivalents:
Increase (decrease) for the period(81,920)347,190 
At beginning of period140,740 73,950 
At end of period$58,820 $421,140 
Supplemental disclosure of cash flow information:
Cash paid for interest$310 $520 
Cash paid for taxes$620 $1,160 
        



The accompanying notes are an integral part of these consolidated financial statements.
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TriMas Corporation
Consolidated Statement of Shareholders' Equity
Three Months Ended March 31, 2022 and 2021
(Unaudited—dollars in thousands)
Common
Stock
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balances, December 31, 2021$430 $732,490 $(102,300)$230 $630,850 
Net income— — 14,170 — 14,170 
Other comprehensive loss— — — (2,240)(2,240)
Purchase of common stock (9,060)— — (9,060)
Shares surrendered upon exercise and vesting of equity awards to cover taxes— (970)— — (970)
Non-cash compensation expense— 2,820 — — 2,820 
Dividends declared— (1,740)— — (1,740)
Balances, March 31, 2022$430 $723,540 $(88,130)$(2,010)$633,830 


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 


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”) as well as input cost inflation, supply chain disruptions, and shortages in global markets for commodities, logistics and labor. 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 2021 Annual Report on Form 10-K.
2. New Accounting Pronouncements
Recently Issued Accounting Pronouncements
In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance" ("ASU 2021-10"), which requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. ASU 2021-10 is effective for annual filings in fiscal years beginning after December 15, 2021, with early adoption permitted. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" ("ASU 2021-08"), which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, "Revenue from Contracts with Customers." ASU 2021-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022, with early adoption permitted. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.
3. Revenue
The following table presents the Company’s disaggregated net sales by primary market served (dollars in thousands):
Three months ended March 31,
Customer Markets20222021
Consumer Products$107,560 $105,120 
Aerospace & Defense44,520 44,610 
Industrial72,230 57,000 
Total net sales$224,310 $206,730 
The Company’s Packaging segment earns revenues from the consumer products (comprised of the beauty and personal care, food and beverage, home care, pharmaceutical, nutraceutical and medical 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.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
4. Realignment Actions
2022 Realignment Actions
During the three months ended March 31, 2022, the Company incurred realignment charges in its Packaging segment related to adjusting its labor force in facilities with lower demand, finalizing its Indianapolis, Indiana facility consolidation, costs incurred to reorganize its benefit plans in the United Kingdom, and for costs incurred as part of the Company's start-up and relocation to a new larger facility in New Albany, Ohio. The Company also completed the Aerospace segment footprint realignment which began in 2021. In connection with these actions, the Company recorded pre-tax realignment charges of approximately $2.3 million, of which $1.4 million were for employee-related costs and $0.9 million related to facility move and consolidation costs. For the three months ended March 31, 2022, approximately $0.9 million and $1.4 million of these charges were included in cost of sales and selling, general and administrative expenses, respectively, in the accompanying consolidated statement of income.
2021 Realignment Actions
During the three months ended March 31, 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 three leased Stanton, California facilities into its owned Tolleson, Arizona facility. In addition, the Company also reorganized and streamlined its corporate office legal group. The Company recorded pre-tax realignment charges of approximately $4.1 million during the three months ended March 31, 2021. Of these costs, approximately $1.5 million related to facility consolidations and approximately $2.6 million were for employee separation costs. As of March 31, 2021, approximately $0.4 million of the employee separation costs had been paid. For the three months ended March 31, 2021, approximately $1.8 million and $2.3 million of these charges were included in cost of sales and selling, general and administrative expenses, respectively, in the accompanying consolidated statement of income.
5. Acquisitions
2022 Acquisitions
On February 28, 2022, the Company acquired Intertech Plastics LLC and related companies (collectively, "Intertech") for a purchase price of approximately $64.0 million, net of cash acquired, subject to a customary net working capital adjustment, which is expected to be completed in second quarter 2022. Intertech is a manufacturer of custom injection molded products used in medical applications, as well as products and assemblies for consumer and industrial applications. The fair value of assets acquired and liabilities assumed included approximately $32.2 million of goodwill, $13.5 million of intangible assets, $12.2 million of property and equipment and $6.1 million of net working capital. Intertech, which is reported in the Company's Packaging segment, has two manufacturing facilities located in the Denver, Colorado area and historically generated approximately $32 million in annual revenue.
2021 Acquisitions
On December 17, 2021, the Company acquired Omega Plastics ("Omega"), which specializes in manufacturing custom components and devices for drug delivery, diagnostic and orthopedic medical applications, as well as components for industrial applications, for an aggregate amount of approximately $22.5 million, net of cash acquired. Omega, which is reported in the Company's Packaging segment, is located in Clinton Township, Michigan and historically generated approximately $18 million in annual revenue.
On December 5, 2021, the Company acquired TFI Aerospace ("TFI"), a manufacturer and supplier of specialty fasteners used in a variety of applications, predominately for the aerospace end market, for an aggregate amount of approximately $11.8 million, with additional contingent consideration ranging from zero to approximately $12.0 million to be paid based on 2023 and 2024 earnings per the purchase agreement. The Company recorded $3.7 million as its best estimate of the additional contingent consideration, with such estimate based on Level 3 inputs under the fair value hierarchy, as defined. TFI, which is reported in the Company's Aerospace segment, is located near Toronto, Canada and historically generated approximately $6 million in annual revenue. As of March 31, 2022, the recorded contingent consideration liability was approximately $3.8 million.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
6. Cash and Cash Equivalents
Cash and cash equivalents consists of the following components (dollars in thousands):
 March 31,
2022
December 31,
2021
Cash and cash equivalents - unrestricted$53,690 $129,790 
Cash - restricted (a)
5,130 10,950 
Total cash and cash equivalents$58,820 $140,740 
__________________________
(a)     Includes cash placed on deposit with a financial institution to be held as cash collateral for the Company's outstanding letters of credit.
7. Goodwill and Other Intangible Assets
Goodwill
Changes in the carrying amount of goodwill for the three months ended March 31, 2022 are summarized as follows (dollars in thousands):
PackagingAerospaceSpecialty ProductsTotal
Balance, December 31, 2021$238,740 $70,190 $6,560 $315,490 
Goodwill from acquisitions32,210   32,210 
Foreign currency translation and other(2,770)80  (2,690)
Balance, March 31, 2022$268,180 $70,270 $6,560 $345,010 
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 March 31, 2022As of December 31, 2021
Intangible Category by Useful LifeGross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Finite-lived intangible assets:
   Customer relationships, 5 – 12 years$132,980 $(73,500)$124,310 $(71,150)
   Customer relationships, 15 – 25 years130,270 (69,750)130,190 (68,190)
Total customer relationships263,250 (143,250)254,500 (139,340)
   Technology and other, 1 – 15 years57,000 (36,900)57,060 (36,140)
   Technology and other, 17 – 30 years43,300 (40,030)43,300 (39,920)
Total technology and other100,300 (76,930)100,360 (76,060)
Indefinite-lived intangible assets:
 Trademark/Trade names60,890 — 57,270 — 
Total other intangible assets$424,440 $(220,180)$412,130 $(215,400)
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Amortization expense related to intangible assets as included in the accompanying consolidated statement of income is summarized as follows (dollars in thousands):
Three months ended March 31,
20222021
Technology and other, included in cost of sales$900 $950 
Customer relationships, included in selling, general and administrative expenses4,390 4,440 
Total amortization expense$5,290 $5,390 
8. Inventories
Inventories consist of the following components (dollars in thousands):
 March 31,
2022
December 31,
2021
Finished goods$73,350 $74,600 
Work in process32,550 28,790 
Raw materials52,460 49,060 
Total inventories$158,360 $152,450 
9. Property and Equipment, Net
Property and equipment consists of the following components (dollars in thousands):
 March 31,
2022
December 31,
2021
Land and land improvements$19,480 $19,630 
Buildings94,170 93,170 
Machinery and equipment443,130 422,500 
556,780 535,300 
Less: Accumulated depreciation276,940 269,670 
Property and equipment, net$279,840 $265,630 
Depreciation expense as included in the accompanying consolidated statement of income is as follows (dollars in thousands):
Three months ended March 31,
20222021
Depreciation expense, included in cost of sales$8,170 $7,560 
Depreciation expense, included in selling, general and administrative expenses300 290 
Total depreciation expense$8,470 $7,850 
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
10. Long-term Debt
The Company's long-term debt consists of the following (dollars in thousands):
 March 31,
2022
December 31,
2021
4.125% Senior Notes due April 2029$400,000 $400,000 
Debt issuance costs(5,960)(6,180)
Long-term debt, net$394,040 $393,820 
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 $1.0 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 $300.0 million principal amount 4.875% senior notes due October 15, 2025 ("2025 Senior Notes"). 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.
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. The payment of principal and interest is jointly and severally guaranteed, on a senior unsecured basis, by certain subsidiaries of the Company. 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 (Continued)
(unaudited)
Credit Agreement
In March 2021, the Company amended its existing 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 $1.0 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.
In November 2021, the Company amended the Credit Agreement to replace LIBOR with a benchmark interest rate determined based on the currency denomination of borrowings. Effective January 1, 2022, the amendment replaced the reference rate terms for U.S. dollar LIBOR borrowings to the Secured Overnight Financing Rate ("SOFR"), British pound sterling LIBOR borrowings to the Sterling Overnight Index Average ("SONIA") and Euro LIBOR borrowings to the Euro Short Term Rate ("ESTR"), all plus a spread of 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 March 31, 2022 and December 31, 2021, the Company had no letters of credit issued against its revolving credit facility. See Note 6, "Cash and Cash Equivalents," for further information on its cash deposit. At March 31, 2022 and December 31, 2021, the Company had no amounts outstanding under its revolving credit facility and had $300.0 million potentially available. The Company's borrowing capacity was not reduced by leverage restrictions contained in the Credit Agreement as of March 31, 2022 and December 31, 2021.
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 March 31, 2022, 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 were no borrowings outstanding on this loan facility as of March 31, 2022 and December 31, 2021.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(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):
March 31, 2022December 31, 2021
Carrying AmountFair ValueCarrying AmountFair Value
4.125% Senior Notes due April 2029$400,000 $365,000 $400,000 $399,000 
11. 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 March 31, 2022, 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 March 31, 2022 and December 31, 2021, 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 instrumentsBalance Sheet CaptionMarch 31,
2022
December 31,
2021
Net Investment Hedges    
Cross-currency swapsOther assets$9,680 $7,590 
The following table summarizes the income recognized in accumulated other comprehensive income (loss) ("AOCI") on derivative contracts designated as hedging instruments as of March 31, 2022 and December 31, 2021, and the amounts reclassified from AOCI into earnings for the three months ended March 31, 2022 and 2021 (dollars in thousands):
Amount of Income Recognized
in AOCI on Derivatives
(Effective Portion, net of tax)
Amount of Income (Loss) Reclassified
from AOCI into Earnings
Three months ended
March 31,
As of
March 31,
2022
As of December 31, 2021Location of Income Reclassified from AOCI into Earnings (Effective Portion)20222021
Net Investment Hedges
Cross-currency swaps$7,470 $5,910 Other income (expense), net$ $ 
Over the next 12 months, the Company does not expect to reclassify any pre-tax deferred amounts from AOCI into earnings.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Derivatives Not Designated as Hedging Instruments
As of March 31, 2022, the Company was party to foreign currency exchange forward contracts to economically hedge changes in foreign currency rates with notional amounts of approximately $135.8 million. The Company uses foreign exchange contracts to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to certain of its receivables, payables and intercompany transactions denominated in foreign currencies. The foreign exchange contracts primarily mitigate currency exposures between the U.S. dollar and the Euro, Canadian dollar, Chinese yuan, and the Mexican peso, as well as between the Euro and British pound, and have various settlement dates through December 2022. These contracts are not designated as hedge instruments; therefore, gains and losses on these contracts are recognized each period directly into the consolidated statement of income.
The following table summarizes the effects of derivatives not designated as hedging instruments on the Company's consolidated statement of income (dollars in thousands):
Amount of Income Recognized in
Earnings on Derivatives
Three months ended
March 31,
Location of Income
Recognized in
Earnings on Derivatives
20222021
Derivatives not designated as hedging instruments
Foreign exchange contractsOther income (expense), net$810 $4,020 
Fair Value of Derivatives
The fair value of the Company's derivatives are estimated using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. Estimates of the fair value of the Company's cross-currency swaps and foreign exchange contracts use observable inputs such as interest rate yield curves and forward currency exchange rates. Fair value measurements and the fair value hierarchy level for the Company's assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 are shown below (dollars in thousands):  
DescriptionFrequencyAsset / (Liability)Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
March 31, 2022
Cross-currency swapsRecurring$9,680 $ $9,680 $ 
Foreign exchange contractsRecurring$90 $ $90 $ 
December 31, 2021
Cross-currency swapsRecurring$7,590 $ $7,590 $ 
Foreign exchange contractsRecurring$(110)$ $(110)$ 
12. Leases
The Company leases certain equipment and facilities under non-cancelable operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet; expense related to these leases is recognized on a straight-line basis over the lease term.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The components of lease expense are as follows (dollars in thousands):
Three months ended March 31,
20222021
Operating lease cost$2,310 $2,140 
Short-term, variable and other lease costs690 430 
Total lease cost$3,000 $2,570 
Maturities of lease liabilities are as follows (dollars in thousands):
Year ended December 31,
Operating Leases(a)
2022 (excluding the three months ended March 31, 2022)$7,690 
20239,760 
20248,900 
20257,610 
20267,500 
Thereafter20,760 
Total lease payments62,220 
Less: Imputed interest(7,430)
Present value of lease liabilities$54,790 
__________________________
(a)     The maturity table excludes cash flows associated with exited lease facilities. Liabilities for exited lease facilities are included in accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheet.
The weighted-average remaining lease term of the Company's operating leases as of March 31, 2022 is approximately 7.2 years. The weighted-average discount rate as of March 31, 2022 is approximately 3.7%.
Cash paid for amounts included in the measurement of operating lease liabilities was approximately $2.3 million and $2.2 million during the three months ended March 31, 2022 and 2021, respectively, and is included in cash flows provided by operating activities in the consolidated statement of cash flows.
Right-of-use assets obtained in exchange for lease liabilities were approximately $4.8 million and $1.9 million during the three months ended March 31, 2022 and 2021, respectively.
13. Other long-term liabilities
Other long-term liabilities consist of the following components (dollars in thousands):
 March 31,
2022
December 31,
2021
Non-current asbestos-related liabilities$24,760 $25,210 
Other long-term liabilities32,740 33,820 
Total other long-term liabilities$57,500 $59,030 
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
14. Commitments and Contingencies
Asbestos
As of March 31, 2022, the Company was a party to 407 pending cases involving an aggregate of 4,782 claimants primarily alleging personal injury from exposure to asbestos containing materials formerly used in gaskets (both encapsulated and otherwise) manufactured or distributed by its former Lamons division and certain other related subsidiaries for use primarily in the petrochemical, refining and exploration industries. The following chart summarizes the number of claims, number of claims filed, number of claims dismissed, number of claims settled, the average settlement amount per claim and the total defense costs, at the applicable date and for the applicable periods:
 Claims
pending at
beginning of
period
Claims filed
during
period
Claims
dismissed
during
period
Claims
settled
during
period
Claims
pending at
end of
period
Average
settlement
amount per
claim during
period
Total defense
costs during
period
Three Months Ended March 31, 20224,754 54 25 1 4,782 $3,000 $430,000 
Fiscal Year Ended December 31, 20214,655 265 134 32 4,754 $16,819 $1,950,000 
In addition, the Company acquired various companies to distribute its products that had distributed gaskets of other manufacturers prior to acquisition. The Company believes that many of its pending cases relate to locations at which none of its gaskets were distributed or used.
The Company may be subjected to significant additional asbestos-related claims in the future, and will aggressively defend or reasonably resolve, as appropriate. The cost of settling cases in which product identification can be made may increase, and the Company may be subjected to further claims in respect of the former activities of its acquired gasket distributors. The cost of claims varies as claims may be initially made in some jurisdictions without specifying the amount sought or by simply stating the requisite or maximum permissible monetary relief, and may be amended to alter the amount sought. The large majority of claims do not specify the amount sought. Of the 4,782 claims pending at March 31, 2022, 35 set forth specific amounts of damages (other than those stating the statutory minimum or maximum). At March 31, 2022, of the 35 claims that set forth specific amounts, there were zero claims seeking more than $5 million for punitive damages. Below is a breakdown of the compensatory damages sought for those claims seeking specific amounts:
Compensatory
Range of damages sought (dollars in millions)$0.0 to $0.6$0.6 to $5.0$5.0+
Number of claims233
Relatively few claims have reached the discovery stage and even fewer claims have gone past the discovery stage. Total settlement costs (exclusive of defense costs) for all such cases, some of which were filed over 30 years ago, have been approximately $10.6 million. All relief sought in the asbestos cases is monetary in nature. Based on the settlements made to date and the number of claims dismissed or withdrawn for lack of product identification, the Company believes that the relief sought (when specified) does not bear a reasonable relationship to its potential liability.
The Company records a liability for asbestos-related claims, which includes both known and unknown claims, based on a study from the Company’s third-party actuary, the Company's review of the study, as well as the Company’s own review of asbestos claims and claim resolution activity.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
In the fourth quarter of 2021, the Company commissioned its actuary to update the study, based on data as of September 30, 2021, which yielded a range of possible future liability of $28.2 million to $38.6 million. The Company did not believe any amount within the range of potential outcomes represented a better estimate than another given the many factors and assumptions inherent in the projections, and therefore recorded a non-cash, pre-tax charge of $1.5 million to increase the liability estimate to $28.2 million, at the low-end of the range. As of March 31, 2022, the Company’s total asbestos-related liability is $27.2 million, and is included in accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheet.
The Company’s primary insurance, which covered approximately 40% of historical costs related to settlement and defense of asbestos litigation, expired in November 2018, upon which the Company became solely responsible for defense costs and indemnity payments. The Company is party to a coverage-in-place agreement (entered into in 2006) with its first level excess carriers regarding the coverage to be provided to the Company for asbestos-related claims. The coverage-in-place agreement makes asbestos defense costs and indemnity insurance coverage available to the Company that might otherwise be disputed by the carriers and provides a methodology for the administration of such expenses. The Company will continue to be solely responsible for defense costs and indemnity payments prior to the commencement of coverage under this agreement, the duration of which would be subject to the scope of damage awards and settlements paid. Based upon the Company’s review of the actuarial study, the Company does not believe it is probable that it will reach the threshold of qualified future settlements required to commence excess carrier insurance coverage under the coverage-in-place agreement.
Based upon the Company's experience to date, including the trend in annual defense and settlement costs incurred to date, and other available information (including the availability of excess insurance), the Company does not believe these cases will have a material adverse effect on its financial position, results of operations, or cash flows.
Claims and Litigation
The Company is subject to other claims and litigation in the ordinary course of business, but does not believe that any such claim or litigation will have a material adverse effect on its financial position and results of operations or cash flows.
15. Segment Information
TriMas reports its operations in three segments: Packaging, Aerospace, and Specialty Products. Each of these segments has discrete financial information that is regularly evaluated by TriMas' president and chief executive officer (chief operating decision maker) in determining resource, personnel and capital allocation, as well as assessing strategy and performance. The Company utilizes its proprietary TriMas Business Model as its platform which is based upon a standardized set of processes to manage and drive results and strategy across its multi-industry businesses.
Within each of the Company's reportable segments, there are no individual products or product families for which reported net sales accounted for more than 10% of the Company's consolidated net sales. See below for more information regarding the types of products and services provided within each reportable segment:
Packaging – TriMas' Packaging segment consists primarily of the Rieke® brand, as well as more recently acquired brands which include the Affaba & Ferrari™, Taplast™, Rapak®, Plastic Srl, Intertech and Omega brands. TriMas Packaging develops and manufactures a broad array of dispensing products (such as foaming pumps, lotion and hand soaps and sanitizer pumps, beverage dispensers, perfume sprayers, nasal sprayers and trigger sprayers), polymeric and steel caps and closures (such as food lids, flip-top closures, child resistance caps, beverage closures, drum and pail closures, and flexible spouts), polymeric jar products, fully integrated dispensers for fill-ready bag-in-box applications, and consumable vascular delivery and diagnostic test components, all for a variety of consumer products submarkets including, but not limited to, beauty and personal care, food and beverage, home care, and life sciences, including but not limited to pharmaceutical, nutraceutical, and medical, as well as industrial markets (including agricultural).
Aerospace – TriMas' Aerospace segment, which includes the Monogram Aerospace Fasteners, Allfast Fastening Systems®, Mac Fasteners, TFI Aerospace, RSA Engineered Products and Martinic Engineering brands, develops, qualifies and manufactures highly-engineered, precision fasteners, tubular products and assemblies for fluid conveyance, and machined products and assemblies to serve the aerospace and defense market.
Specialty Products – TriMas' Specialty Products segment, which includes the Norris Cylinder and Arrow® Engine brands, designs, manufactures and distributes highly-engineered steel cylinders, wellhead engines and compression systems for use within industrial markets.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Segment activity is as follows (dollars in thousands):
 Three months ended
March 31,
 20222021
Net Sales
Packaging$138,490 $132,090 
Aerospace44,520 44,610 
Specialty Products41,300 30,030 
Total$224,310 $206,730 
Operating Profit (Loss)
Packaging$21,330 $21,300 
Aerospace1,840 4,500 
Specialty Products7,240 4,520 
Corporate(8,480)(9,210)
Total$21,930 $21,110 
16. Equity Awards
Restricted Stock Units
The Company awarded the following restricted stock units ("RSUs") during the three months ended March 31, 2022:
granted 195,398 RSUs to certain employees, which are subject only to a service condition and vest ratably over three years so long as the employee remains with the Company;
granted 22,554 RSUs to its non-employee independent directors, which fully vest one year from date of grant so long as the director and/or Company does not terminate the director's service prior to the vesting date; and
issued 337 RSUs related to director fee deferrals as certain of the Company's directors elected to defer all or a portion of their directors fees and to receive the amount in Company common stock at a future date.
issued 58 RSUs to certain employees related to dividend equivalent rights on existing equity awards.
During 2022, the Company also awarded 85,156 performance-based RSUs to certain Company key employees which vest three years from the grant date as long as the employee remains with the Company. These awards are earned 50% based upon the Company's achievement of an earnings per share compound annual growth rate ("EPS CAGR") metric over a period beginning January 1, 2022 and ending December 31, 2024. The remaining 50% of the awards are earned based on the Company's total shareholder return ("TSR") relative to the TSR of the common stock of a pre-defined industry peer-group, measured over the performance period. TSR is calculated as the Company's average closing stock price for the 20 trading days at the end of the performance period plus Company dividends, divided by the Company's average closing stock price for the 20 trading days prior to the start of the performance period. The Company estimates the grant-date fair value subject to a market condition using a Monte Carlo simulation model, using the following weighted average assumptions: risk-free rate of 1.88% and annualized volatility of 36.5%. Depending on the performance achieved for these two metrics, the amount of shares earned, if any, can vary for each metric from 0% of the target award to a maximum of 200% of the target award. For similar performance-based RSUs awarded in 2019, the Company attained 65.4% of the target on a weighted average basis, resulting in a decrease of 24,975 shares during the three months ended March 31, 2022.
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TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Information related to RSUs at March 31, 2022 is as follows:
Number of Unvested RSUsWeighted Average Grant Date Fair ValueAverage Remaining Contractual Life (Years)Aggregate Intrinsic Value
Outstanding at January 1, 2022673,732 $27.38 
  Granted303,503 33.19 
  Vested(97,258)28.52 
  Cancelled(36,607)35.91 
Outstanding at March 31, 2022843,370 $28.97 1.3$27,063,743 
As of March 31, 2022, there was approximately $13.2 million of unrecognized compensation cost related to unvested RSUs that is expected to be recorded over a weighted average period of 2.0 years.
The Company recognized stock-based compensation expense related to RSUs of approximately $2.8 million and $2.4 million during the three months ended March 31, 2022 and 2021, respectively. The stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statement of income.
17. Earnings per Share
Net income is divided by the weighted average number of common shares outstanding during the period to calculate basic earnings per share. Diluted earnings per share is calculated to give effect to stock options and RSUs.