TriMas Corporation Reports First Quarter Results
TriMas Highlights
- Reported 22.5% net sales growth in first quarter 2011, as compared to 2010, due to overall improved economic conditions, positive results from 2010 bolt-on acquisitions and the successful execution of numerous key growth initiatives.
- Cequent Consumer Products, part of the
Cequent North America segment, achieved market share gains for its cargo management products at a large retailer. - Lamons, part of the Energy segment, successfully integrated South Texas Bolt & Fitting, acquired in fourth quarter 2010, and achieved incremental bolt revenue during the quarter by leveraging Lamons' extensive sales and service center network.
- Improved both income and diluted earnings per share from continuing operations by approximately 100%, compared to first quarter 2010.
- Decreased operating working capital as a percentage of last twelve months (LTM) sales from 17.5% in first quarter 2010 to 17.3% in first quarter 2011.
"Building upon the positive momentum of the past year, 2011 is off to a great start," said
Wathen continued, "Despite rapidly rising commodity inflation, the majority of our businesses were able to hold or improve their operating profit margins compared to first quarter 2010. We experienced a slight decline in operating profit margin overall, largely due to sales mix shift, as segments with lower margins, such as
"Based on our first quarter results and current expectations, we expect to deliver continued strong results in line with our strategic aspirations. We are now estimating 2011 top-line growth of 8% to 11%, compared to 2010, with full-year 2011 diluted earnings per share from continuing operations expected to range between
First Quarter Financial Results — From Continuing Operations
TriMas reported first quarter net sales of$269.7 million , as compared to$220.1 million in first quarter 2010, led by double-digit percentage increases in the Energy,Engineered Components and Cequent North America segments. Sales increased due to improved volumes resulting from the continued economic recovery, as well as additional sales from bolt-on acquisitions transacted in 2010, market share gains, new product introductions and geographic expansion. In addition, net sales were favorably impacted by approximately$2.7 million as a result of currency exchange.- The Company reported operating profit of
$30.0 million in first quarter 2011, as compared to operating profit of$25.1 million during first quarter 2010, primarily as a result of higher sales levels. First quarter 2011 operating profit margin was 11.1%, compared to 11.4% in first quarter 2010. This slight decline in operating margin was primarily due to a sales mix shift, as reportable segments with lower margins,Engineered Components and Cequent North America , comprised a greater percentage of sales in first quarter 2011. The Company continued to generate significant savings from productivity and lean initiatives which continued to fund investment in growth initiatives and offset economic cost increases. - First quarter 2011 income from continuing operations was
$11.8 million , or$0.34 per diluted share, an increase of approximately 100% compared to an income from continuing operations of$5.8 million , or$0.17 per diluted share, during first quarter 2010. - The Company reported a Free Cash Flow (defined as Cash Flow from Operating Activities less Capital Expenditures) use of
$33.8 million for first quarter 2011, compared to a use of$6.7 million in first quarter 2010. Operating working capital as a percentage of last twelve months (LTM) sales continued to improve, declining from 17.5% in first quarter 2010 to 17.3% in first quarter 2011. The Company expects to generate$50 to $60 million in Free Cash Flow for 2011.
Financial Position
Business Segment Results — From Continuing Operations
Packaging — (Consists of
Net sales for first quarter were relatively flat compared to the year ago period, as an increase in industrial closure product sales was substantially offset by lower specialty dispensing sales due to H1N1 flu virus product sales and two new product pipeline fills in first quarter 2010 that did not recur in first quarter 2011. Operating profit for the quarter was relatively flat, as increases in gross profit generated by capital, productivity and lean initiatives were essentially offset by an increase in selling, general and administrative costs in support of growth initiatives. The Company continues to diversify its product offering by developing specialty dispensing product applications for growing end markets, including pharmaceutical, personal care and food/beverage, and expanding geographically to generate long-term growth.
Energy — (Consists of Lamons)
First quarter net sales increased 26.7% compared to the year ago period due to increased sales of gaskets and related bolts and fasteners resulting from higher levels of turn-around activity at petrochemical refineries and increased demand from the chemical industry. This segment also benefited from incremental sales as a result of the acquisition of South Texas Bolt & Fitting completed in the fourth quarter of 2010, as well as sales resulting from newly opened branch facilities. Operating profit for the quarter increased due to higher sales volumes, partially offset by increased selling, general and administrative costs in support of sales growth initiatives. The Company continues to grow its sales and service branch network, capitalize on synergies related to the acquisition of South Texas Bolt & Fitting and expand its lines of complementary products.
Aerospace & Defense — (Consists of
Net sales for the first quarter increased 8.3% compared to the year ago period, due primarily to improved demand from aerospace distribution customers. Operating profit declined slightly, attributable to a less profitable product sales mix between years, largely offset by increased gross profit and lower selling, general and administrative expenses. Given the long-term prospects for its aerospace business, the Company continues to invest in this high-margin segment by developing and marketing highly-engineered products for aerospace applications, as well as expanding its offerings to military and defense customers.
Engineered Components — (Consists of Arrow Engine, Hi-Vol Products, KEO Cutters, Norris Cylinder and Richards Micro-Tool)
First quarter net sales increased 57.8% compared to the year ago period, primarily due to increased international demand for industrial cylinders, new cylinder applications and the positive impact of the cylinder asset acquisition completed during second quarter 2010, as well as improved demand for engines, other well-site content and compression products. The specialty fittings and precision cutting tools businesses also experienced improved demand, primarily resulting from the upturn in the domestic economy and new product offerings. First quarter operating profit improved substantially and related margins improved 400 basis points compared to the prior year period, due to higher sales levels, increased absorption of fixed costs, and productivity and cost reduction efforts, partially offset by higher selling, general and administrative expenses supporting the increased sales levels. The Company continues to develop new products and expand its international sales efforts.
Cequent Asia Pacific — (Consists of Cequent Australia/
Net sales for the first quarter decreased 2.4% compared to first quarter 2010 due to reduced demand resulting from lower consumer spending levels in
Net sales for first quarter increased 29.0% compared to the year ago period, resulting from increased sales within the retail, original equipment, aftermarket and industrial channels. Sales increases were the result of improved customer demand, market share gains and new product introductions. First quarter operating profit increased substantially with a margin improvement of 100 basis points compared to first quarter 2010, due to improved sales levels, cost reduction actions, improved sourcing and productivity initiatives, partially offset by higher selling, general and administrative costs in support of the Company's growth initiatives. The Company continues to reduce fixed costs, minimize its investment in working capital and leverage Cequent's strong brand positions and new products for increased market share.
2011 Outlook
The Company raised its outlook for full-year 2011 diluted earnings per share (EPS) from continuing operations to be between
Conference Call Information
Cautionary Notice Regarding Forward-looking Statements
Any "forward-looking" statements contained herein, including those relating to market conditions or the Company's financial condition and results, expense reductions, liquidity expectations, business goals and sales growth, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect to general economic and currency conditions, various conditions specific to the Company's business and industry, the Company's substantial leverage, liabilities imposed by the Company's debt instruments, market demand, competitive factors, the Company's ability to maintain compliance with the listing requirements of NASDAQ, supply constraints, material and energy costs, technology factors, litigation, government and regulatory actions, the Company's accounting policies, future trends, and other risks which are detailed in the Company's Annual Report on Form 10-K for
the fiscal year ended
About
Headquartered in
TriMas Corporation | |||||
March 31, | December 31, | ||||
2011 | 2010 | ||||
Assets | (unaudited) | ||||
Current assets: | |||||
Cash and cash equivalents | $ 14,910 | $ 46,370 | |||
Receivables, net of reserves | 159,850 | 117,050 | |||
Inventories | 164,640 | 161,300 | |||
Deferred income taxes | 28,240 | 34,500 | |||
Prepaid expenses and other current assets | 9,350 | 7,550 | |||
Total current assets | 376,990 | 366,770 | |||
Property and equipment, net | 168,950 | 167,510 | |||
Goodwill | 207,910 | 205,890 | |||
Other intangibles, net | 156,570 | 159,930 | |||
Other assets | 24,900 | 24,060 | |||
Total assets | $ 935,320 | $ 924,160 | |||
Liabilities and Shareholders' Equity | |||||
Current liabilities: | |||||
Current maturities, long-term debt | $ 19,270 | $ 17,730 | |||
Accounts payable | 123,930 | 128,300 | |||
Accrued liabilities . | 64,160 | 68,400 | |||
Total current liabilities | 207,360 | 214,430 | |||
Long-term debt | 476,370 | 476,920 | |||
Deferred income taxes | 65,770 | 63,880 | |||
Other long-term liabilities | 54,880 | 56,610 | |||
Total liabilities | 804,380 | 811,840 | |||
Total shareholders' equity | 130,940 | 112,320 | |||
Total liabilities and shareholders' equity | $ 935,320 | $ 924,160 | |||
TriMas Corporation | |||||
Three months ended | |||||
March 31, | |||||
2011 | 2010 | ||||
Net sales | $ 269,670 | $ 220,060 | |||
Cost of sales | (194,990) | (157,000) | |||
Gross profit | 74,680 | 63,060 | |||
Selling, general and administrative expenses.. | (44,710) | (37,700) | |||
Gain (loss) on dispositions of property and equipment | 60 | (310) | |||
Operating profit | 30,030 | 25,050 | |||
Other income (expense), net: | |||||
Interest expense | (12,020) | (14,140) | |||
Other, net | (1,160) | (510) | |||
Other income (expense), net | (13,180) | (14,650) | |||
Income from continuing operations before income taxes | 16,850 | 10,400 | |||
Income tax expense | (5,100) | (4,650) | |||
Income from continuing operations | 11,750 | 5,750 | |||
Loss from discontinued operations, net of income taxes | - | (320) | |||
Net income | $ 11,750 | $ 5,430 | |||
Earnings (loss) per share - basic: | |||||
Continuing operations | $ 0.35 | $ 0.17 | |||
Discontinued operations, net of income taxes | - | (0.01) | |||
Net income per share | $ 0.35 | $ 0.16 | |||
Weighted average common shares - basic | 33,913,610 | 33,569,677 | |||
Earnings (loss) per share - diluted: | |||||
Continuing operations | $ 0.34 | $ 0.17 | |||
Discontinued operations, net of income taxes | - | (0.01) | |||
Net income per share | $ 0.34 | $ 0.16 | |||
Weighted average common shares - diluted | 34,599,076 | 34,314,020 | |||
TriMas Corporation | |||||
Three months ended March 31, | |||||
2011 | 2010 | ||||
Cash Flows from Operating Activities: | |||||
Net income | $ 11,750 | $ 5,430 | |||
Adjustments to reconcile net income to net cash used for operating activities, net of acquisition impact: | |||||
(Gain) loss on dispositions of property and equipment | (60) | 310 | |||
Depreciation | 6,230 | 6,020 | |||
Amortization of intangible assets | 3,500 | 3,590 | |||
Amortization of debt issue costs | 760 | 730 | |||
Deferred income taxes | 8,020 | (380) | |||
Non-cash compensation expense | 860 | 480 | |||
Net proceeds from sale of receivables | 1,570 | 3,830 | |||
Increase in receivables | (43,280) | (38,960) | |||
(Increase) decrease in inventories | (2,760) | 6,060 | |||
(Increase) decrease in prepaid expenses and other assets | (3,240) | 270 | |||
Increase (decrease) in accounts payable and accrued liabilities | (11,550) | 7,910 | |||
Other, net | 1,200 | 620 | |||
Net cash used for operating activities, net of acquisition impact | (27,000) | (4,090) | |||
Cash Flows from Investing Activities: | |||||
Capital expenditures | (6,810) | (2,590) | |||
Net proceeds from disposition of assets | 500 | 30 | |||
Net cash used for investing activities | (6,310) | (2,560) | |||
Cash Flows from Financing Activities: | |||||
Proceeds from borrowings on term loan facilities | 1,530 | - | |||
Repayments of borrowings on term loan facilities | (650) | (4,320) | |||
Proceeds from borrowings on revolving credit facilities | 135,700 | 134,940 | |||
Repayments of borrowings on revolving credit facilities | (135,700) | (127,000) | |||
Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (720) | (160) | |||
Proceeds from exercise of stock options | 180 | 60 | |||
Excess tax benefits from stock based compensation | 1,510 | 280 | |||
Net cash provided by financing activities | 1,850 | 3,800 | |||
Cash and Cash Equivalents: | |||||
Decrease for the period | (31,460) | (2,850) | |||
At beginning of period | 46,370 | 9,480 | |||
At end of period | $ 14,910 | $ 6,630 | |||
Supplemental disclosure of cash flow information: | |||||
Cash paid for interest | $ 4,730 | $ 5,250 | |||
Cash paid for taxes | $ 2,600 | $ 1,250 | |||
TriMas Corporation | ||||||
Company and Business Segment Financial Information | ||||||
Continuing Operations | ||||||
(Unaudited, dollars in thousands) | ||||||
Three months ended | ||||||
March 31, | ||||||
2011 | 2010 | |||||
Packaging | ||||||
Net sales | $ 43,900 | $ 43,600 | ||||
Operating profit | $ 11,830 | $ 11,860 | ||||
Energy | ||||||
Net sales | $ 40,950 | $ 32,320 | ||||
Operating profit | $ 5,340 | $ 4,190 | ||||
Aerospace & Defense | ||||||
Net sales | $ 18,500 | $ 17,080 | ||||
Operating profit | $ 3,720 | $ 3,860 | ||||
Engineered Components | ||||||
Net sales | $ 48,110 | $ 30,480 | ||||
Operating profit | $ 6,340 | $ 2,800 | ||||
Cequent Asia Pacific | ||||||
Net sales | $ 19,810 | $ 20,300 | ||||
Operating profit | $ 2,530 | $ 3,660 | ||||
Cequent North America | ||||||
Net sales | $ 98,400 | $ 76,280 | ||||
Operating profit | $ 6,670 | $ 4,460 | ||||
Corporate Expenses | ||||||
Operating loss | $ (6,400) | $ (5,780) | ||||
Total Company | ||||||
Net sales | $ 269,670 | $ 220,060 | ||||
Operating profit | $ 30,030 | $ 25,050 | ||||
CONTACT: | ||
Sherry Lauderback | ||
VP, Investor Relations & Communications | ||
(248) 631-5506 | ||
sherrylauderback@trimascorp.com | ||
SOURCE
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