TriMas Corporation Reports Record Third Quarter Results
Company Reports Growth in Sales of 21% and Income(1) of 18%
TriMas Highlights
-
Reported record third quarter net sales of
$335.9 million , an increase of 21.0% as compared to third quarter 2011, due to the successful execution of numerous growth initiatives and results from bolt-on acquisitions. - Improved income from continuing operations(1) by 18.3%, excluding the impact of Special Items, compared to third quarter 2011. Improved diluted earnings per share,(1) while absorbing incremental costs related to several acquisitions and approximately 13% higher weighted average shares outstanding for third quarter 2012, as compared to third quarter 2011.
- Amended credit facilities to reduce borrowing rates, extend maturities and enhance liquidity and capital structure flexibility to best position the Company for future growth with significantly reduced borrowing costs.
- Continued to invest in a flexible manufacturing footprint to optimize manufacturing costs long-term, increase capacity, enhance customer service and drive future growth.
-
Expanded geographic reach and related sales in faster growing end
markets including China,
Thailand ,Brazil ,South Africa ,Australia and New Zealand .
"Our record third quarter sales demonstrates we are successfully
executing on our growth strategies," said
"Our ongoing productivity and lean programs continue to generate savings
that provide a source of funding for our growth initiatives," Wathen
stated. "We are investing for the future as we expand our footprint to
not only reduce our costs, but also secure additional business and
better serve our global customers. While increasing investments in our
businesses and absorbing costs related to several acquisitions, we
generated
Wathen continued, "We also significantly improved our capital structure. Following our May equity offering which enabled us to accelerate the pace of our initiatives, we recently refinanced our debt, significantly lowering our annual cash interest costs, extending our credit facility maturities and enhancing our liquidity and capital structure flexibility. We are committed to continuous improvement in all we do, including continued focus on debt and leverage ratio reductions and strong cash flow generation."
"Looking forward, we continue to expect economic uncertainty and choppy
end market demand. Based on our results to date and current
expectations, we are increasing our 2012 top-line growth estimate to be
between 15% to 17% compared to 2011. We reaffirm our full-year 2012
diluted earnings per share outlook range of
Third Quarter Financial Results - From Continuing Operations
-
TriMas reported record third quarter net sales of$335.9 million , an increase of 21.0% as compared to$277.7 million in third quarter 2011. During third quarter, net sales increased in all six reportable segments, primarily as a result of additional sales from bolt-on acquisitions, market share gains, new product introductions and geographic expansion as compared to third quarter 2011. The net sales increase was partially offset by approximately$2.7 million of unfavorable currency exchange, primarily in our Packaging, Energy and Cequent Asia Pacific segments. -
The Company reported operating profit of
$36.6 million in third quarter 2012. Excluding Special Items(1) related to facility consolidation and relocation projects within the Cequent segments, third quarter 2012 operating profit would have been$38.7 million , as compared to$35.8 million during third quarter 2011, primarily as a result of higher sales levels. Third quarter 2012 operating profit margin was impacted by a less favorable product sales mix, costs related to recent acquisitions including purchase accounting related adjustments, and higher costs associated with our global growth initiatives. The Company continued to generate significant savings from capital investments, productivity projects and Lean initiatives, which funded growth initiatives and offset economic cost increases. -
Excluding noncontrolling interests related to
Arminak & Associates , third quarter 2012 income from continuing operations was$18.7 million , or$0.47 per diluted share, compared to income from continuing operations of$17.0 million , or$0.49 per diluted share, during third quarter 2011. Excluding Special Items(1), third quarter 2012 income from continuing operations would have been$20.1 million , an improvement of 18.3%, and diluted earnings per share would have been$0.51 , a 4.1% improvement from third quarter 2011. -
The Company reported Free Cash Flow (defined as
Cash Flow from Operating Activities less Capital Expenditures) of$10.5 million for third quarter 2012, compared to$30.7 million in third quarter 2011. The Company expects to generate between$30 million and $40 million in Free Cash Flow for 2012, while increasing its capital expenditures and working capital investments in acquisitions and future growth and productivity programs.
Financial Position
As of
On
Business Segment Results - From Continuing Operations(2)
Packaging - (Consists of
Net sales for third quarter increased 67.6% compared to the year ago
period primarily as a result of the acquisitions of Arminak in
Energy - (Consists of Lamons including South Texas Bolt & Fitting and CIFAL)
Third quarter net sales increased 6.5% compared to the year ago period
due to continued market share gains within the highly-engineered bolt
product line, the acquisition of CIFAL in
Aerospace & Defense - (Consists of
Net sales for the third quarter increased 2.4% compared to the year ago
period primarily due to improved demand for blind bolts and temporary
fasteners from aerospace distribution customers resulting from new
programs with airplane frame manufacturers, the recent introduction of
new products and sales growth in
Engineered Components - (Consists of Arrow Engine and Norris Cylinder)
Third quarter net sales increased 12.8% compared to the year ago period primarily due to improved demand for engines, gas compression products and other well site content related to increased levels of oil drilling activity as compared to 2011, and the successful introduction of additional products for the well-site. Sales of industrial cylinders also increased primarily due to continued market share gains. Third quarter operating profit and the related margin percentage decreased compared to the prior year period primarily due to a less favorable product sales mix and lower fixed cost absorption in the engine business. The Company continues to develop new products and expand its international sales efforts.
Cequent Asia Pacific - (Consists of Cequent operations
in
Net sales for third quarter increased 44.0% compared to the year ago
period, due to new business awards in
Cequent Americas - (Consists of
The Company renamed the "
Net sales for third quarter increased 6.7% compared to the year ago
period, resulting primarily from increased sales within the original
equipment and retail channels. Sales increases were the result of newer
product launches and continued market share gains. Third quarter
operating profit increased compared to the prior year period as a result
of higher sales levels, excluding the costs incurred related to the
relocation of certain production to a lower cost country. Third quarter
operating profit margin declined slightly primarily due to an increase
in selling, general and administrative expenses in support of an
acquisition in
2012 Outlook
The Company provided updated expectations for full-year 2012 and raised
its 2012 sales outlook from an increase of 10% to 14% to a range of 15%
to 17% compared to 2011. The Company reaffirmed its 2012 diluted
earnings per share (EPS) from continuing operations range 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, 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 December 31, 2011, and in the Company's Quarterly Reports on Form 10-Q. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements.
In this release, certain non-GAAP financial measures are used. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure may be found at the end of this release. Additional information is available at www.trimascorp.com under the "Investors" section.
About
Headquartered in
| (1) |
Appendix I provides income and diluted earnings per share from
continuing operations attributable to |
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| (2) | Business Segment Results include Operating Profit that excludes the impact of Special Items. For a complete schedule of Special Items by segment, see Appendix "Company and Business Segment Financial Information - Continuing Operations." | |
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Condensed Consolidated Balance Sheet |
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(Unaudited - dollars in thousands) |
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December 31, | ||||||
| 2012 | 2011 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 26,090 | $ | 88,920 | |||
| Receivables, net | 185,040 | 135,610 | |||||
| Inventories | 220,450 | 178,030 | |||||
| Deferred income taxes | 18,510 | 18,510 | |||||
| Prepaid expenses and other current assets | 10,150 | 10,620 | |||||
| Total current assets | 460,240 | 431,690 | |||||
| Property and equipment, net | 180,100 | 159,210 | |||||
| Goodwill | 269,260 | 215,360 | |||||
| Other intangibles, net | 208,910 | 155,670 | |||||
| Other assets | 26,780 | 24,610 | |||||
| Total assets | $ | 1,145,290 | $ | 986,540 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Current maturities, long-term debt | $ | 17,950 | $ | 7,290 | |||
| Accounts payable | 148,890 | 146,930 | |||||
| Accrued liabilities | 79,480 | 70,140 | |||||
| Total current liabilities | 246,320 | 224,360 | |||||
| Long-term debt | 412,040 | 462,610 | |||||
| Deferred income taxes | 66,340 | 64,780 | |||||
| Other long-term liabilities | 78,780 | 61,000 | |||||
| Total liabilities | 803,480 | 812,750 | |||||
| Redeemable noncontrolling interests | 26,370 | — | |||||
| Total shareholders' equity | 315,440 | 173,790 | |||||
| Total liabilities and shareholders' equity | $ | 1,145,290 | $ | 986,540 | |||
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Consolidated Statement of Operations |
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(Unaudited - dollars in thousands, except per share amounts) |
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| Three months ended | Nine months ended | |||||||||||||||
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September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net sales | $ | 335,870 | $ | 277,660 | $ | 971,870 | $ | 824,310 | ||||||||
| Cost of sales | (245,730 | ) | (195,720 | ) | (706,930 | ) | (582,260 | ) | ||||||||
| Gross profit | 90,140 | 81,940 | 264,940 | 242,050 | ||||||||||||
| Selling, general and administrative expenses | (53,550 | ) | (46,170 | ) | (156,730 | ) | (137,180 | ) | ||||||||
| Net gain on dispositions of property and equipment | 10 | 20 | 330 | 50 | ||||||||||||
| Operating profit | 36,600 | 35,790 | 108,540 | 104,920 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (9,450 | ) | (10,730 | ) | (30,420 | ) | (34,370 | ) | ||||||||
| Debt extinguishment costs | — | — | (6,560 | ) | (3,970 | ) | ||||||||||
| Other income (expense), net | 140 | 540 | (2,410 | ) | (1,170 | ) | ||||||||||
| Other expense, net | (9,310 | ) | (10,190 | ) | (39,390 | ) | (39,510 | ) | ||||||||
| Income from continuing operations before income tax expense | 27,290 | 25,600 | 69,150 | 65,410 | ||||||||||||
| Income tax expense | (7,330 | ) | (8,620 | ) | (19,770 | ) | (21,730 | ) | ||||||||
| Income from continuing operations | 19,960 | 16,980 | 49,380 | 43,680 | ||||||||||||
| Income from discontinued operations, net of income tax expense | — | 1,290 | — | 3,430 | ||||||||||||
| Net income | 19,960 | 18,270 | 49,380 | 47,110 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | 1,290 | — | 1,560 | — | ||||||||||||
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Net income attributable to |
$ | 18,670 | $ | 18,270 | $ | 47,820 | $ | 47,110 | ||||||||
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Basic earnings per share attributable to |
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| Continuing operations | $ | 0.48 | $ | 0.49 | $ | 1.29 | $ | 1.28 | ||||||||
| Discontinued operations | — | 0.04 | — | 0.10 | ||||||||||||
| Net income per share | $ | 0.48 | $ | 0.53 | $ | 1.29 | $ | 1.38 | ||||||||
| Weighted average common shares—basic | 39,045,282 | 34,417,879 | 36,994,192 | 34,182,592 | ||||||||||||
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Diluted earnings per share attributable to |
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| Continuing operations | $ | 0.47 | $ | 0.49 | $ | 1.28 | $ | 1.26 | ||||||||
| Discontinued operations | — | 0.03 | — | 0.10 | ||||||||||||
| Net income per share | $ | 0.47 | $ | 0.52 | $ | 1.28 | $ | 1.36 | ||||||||
| Weighted average common shares—diluted | 39,508,503 | 34,901,277 | 37,379,292 | 34,736,307 | ||||||||||||
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Consolidated Statement of |
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(Unaudited - dollars in thousands) |
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| Nine months ended | ||||||||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 49,380 | $ | 47,110 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: | ||||||||
| Gain on dispositions of property and equipment | (330 | ) | (30 | ) | ||||
| Depreciation | 18,990 | 19,160 | ||||||
| Amortization of intangible assets | 14,460 | 10,780 | ||||||
| Amortization of debt issue costs | 2,240 | 2,230 | ||||||
| Deferred income taxes | (3,480 | ) | 14,420 | |||||
| Debt extinguishment costs | 6,560 | 3,970 | ||||||
| Non-cash compensation expense | 6,640 | 2,580 | ||||||
| Excess tax benefits from stock based compensation | (2,310 | ) | (3,840 | ) | ||||
| Increase in receivables | (38,750 | ) | (39,080 | ) | ||||
| Increase in inventories | (31,440 | ) | (13,500 | ) | ||||
| Increase in prepaid expenses and other assets | (600 | ) | (2,320 | ) | ||||
| Decrease in accounts payable and accrued liabilities | (6,130 | ) | (4,750 | ) | ||||
| Other, net | 170 | (1,180 | ) | |||||
| Net cash provided by operating activities, net of acquisition impact | 15,400 | 35,550 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (36,440 | ) | (23,520 | ) | ||||
| Acquisition of businesses, net of cash acquired | (84,600 | ) | (28,620 | ) | ||||
| Net proceeds from disposition of assets | 2,950 | 2,240 | ||||||
| Net cash used for investing activities | (118,090 | ) | (49,900 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of common stock in connection with the Company's equity offering, net of issuance costs | 79,040 | — | ||||||
| Proceeds from borrowings on term loan facilities | 140,370 | 226,520 | ||||||
| Repayments of borrowings on term loan facilities | (130,850 | ) | (250,170 | ) | ||||
| Proceeds from borrowings on revolving credit facilities and accounts receivable facility | 555,300 | 551,900 | ||||||
| Repayments of borrowings on revolving credit facilities and accounts receivable facility | (555,300 | ) | (547,020 | ) | ||||
| Repurchase of 9¾% senior secured notes | (50,000 | ) | — | |||||
| Senior secured notes redemption premium and debt financing fees | (4,880 | ) | (6,680 | ) | ||||
| Distributions to noncontrolling interests | (820 | ) | — | |||||
| Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (990 | ) | (830 | ) | ||||
| Proceeds from exercise of stock options | 5,680 | 960 | ||||||
| Excess tax benefits from stock based compensation | 2,310 | 3,840 | ||||||
| Net cash provided by (used for) financing activities | 39,860 | (21,480 | ) | |||||
| Cash and Cash Equivalents: | ||||||||
| Decrease for the period | (62,830 | ) | (35,830 | ) | ||||
| At beginning of period | 88,920 | 46,370 | ||||||
| At end of period | $ | 26,090 | $ | 10,540 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 20,990 | $ | 25,350 | ||||
| Cash paid for taxes | $ | 23,000 | $ | 12,140 | ||||
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Company and Business Segment Financial Information |
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Continuing Operations |
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(Unaudited - dollars in thousands) |
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| Three months ended | Nine months ended | |||||||||||||||
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September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Packaging | ||||||||||||||||
| Net sales | $ | 77,240 | $ | 46,090 | $ | 202,250 | $ | 137,890 | ||||||||
| Operating profit | $ | 18,240 | $ | 10,240 | $ | 44,700 | $ | 37,140 | ||||||||
| Energy | ||||||||||||||||
| Net sales | $ | 45,460 | $ | 42,690 | $ | 143,220 | $ | 125,810 | ||||||||
| Operating profit | $ | 3,780 | $ | 4,560 | $ | 14,520 | $ | 14,920 | ||||||||
| Aerospace & Defense | ||||||||||||||||
| Net sales | $ | 20,810 | $ | 20,330 | $ | 58,000 | $ | 60,160 | ||||||||
| Operating profit | $ | 6,030 | $ | 5,420 | $ | 15,710 | $ | 14,000 | ||||||||
| Engineered Components | ||||||||||||||||
| Net sales | $ | 51,880 | $ | 46,010 | $ | 154,180 | $ | 126,870 | ||||||||
| Operating profit | $ | 6,310 | $ | 7,730 | $ | 22,620 | $ | 19,010 | ||||||||
| Cequent Asia Pacific | ||||||||||||||||
| Net sales | $ | 37,480 | $ | 26,020 | $ | 94,230 | $ | 67,390 | ||||||||
| Operating profit | $ | 3,950 | $ | 5,250 | $ | 9,000 | $ | 9,720 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 600 | $ | — | $ | 2,880 | $ | — | ||||||||
| Excluding Special Items, operating profit would have been | $ | 4,550 | $ | 5,250 | $ | 11,880 | $ | 9,720 | ||||||||
| Cequent Americas | ||||||||||||||||
| Net sales | $ | 103,000 | $ | 96,520 | $ | 319,990 | $ | 306,190 | ||||||||
| Operating profit | $ | 8,430 | $ | 9,580 | $ | 28,090 | $ | 30,630 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 1,500 | $ | — | $ | 3,840 | $ | — | ||||||||
| Excluding Special Items, operating profit would have been | $ | 9,930 | $ | 9,580 | $ | 31,930 | $ | 30,630 | ||||||||
| Corporate Expenses | ||||||||||||||||
| Operating loss | $ | (10,140 | ) | $ | (6,990 | ) | $ | (26,100 | ) | $ | (20,500 | ) | ||||
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| Net sales | $ | 335,870 | $ | 277,660 | $ | 971,870 | $ | 824,310 | ||||||||
| Operating profit | $ | 36,600 | $ | 35,790 | $ | 108,540 | $ | 104,920 | ||||||||
| Total Special Items to consider in evaluating operating profit: | $ | 2,100 | $ | — | $ | 6,720 | $ | — | ||||||||
| Excluding Special Items, operating profit would have been | $ | 38,700 | $ | 35,790 | $ | 115,260 | $ | 104,920 | ||||||||
Appendix I
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Additional Information Regarding Special Items Impacting |
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Reported GAAP Financial Measures |
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(Unaudited - dollars in thousands, except per share amounts) |
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| Three months ended | Nine months ended | ||||||||||||||
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September 30, | ||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Income from continuing operations, as reported | $ | 19,960 | $ | 16,980 | $ | 49,380 | $ | 43,680 | |||||||
| Less: Net income attributable to noncontrolling interests | 1,290 | — | 1,560 | — | |||||||||||
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Income from continuing operations attributable to |
18,670 | 16,980 | 47,820 | 43,680 | |||||||||||
| After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | |||||||||||||||
| Severance and business restructuring costs | 1,420 | — | 4,520 | — | |||||||||||
| Debt extinguishment costs | — | — | 4,400 | 2,460 | |||||||||||
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Excluding Special Items, income from continuing operations
attributable to |
$ | 20,090 | $ | 16,980 | $ | 56,740 | $ | 46,140 | |||||||
| Three months ended | Nine months ended | ||||||||||||||
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September 30, | ||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||
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Diluted earnings per share from continuing operations attributable
to |
$ | 0.47 | $ | 0.49 | $ | 1.28 | $ | 1.26 | |||||||
| After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | |||||||||||||||
| Severance and business restructuring costs | 0.04 | — | 0.12 | — | |||||||||||
| Debt extinguishment costs | — | — | 0.12 | 0.07 | |||||||||||
| Excluding Special Items, EPS from continuing operations would have been | $ | 0.51 | $ | 0.49 | $ | 1.52 | $ | 1.33 | |||||||
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Weighted-average shares outstanding for the three and nine months
ended |
39,508,503 | 34,901,277 | 37,379,292 | 34,736,307 | |||||||||||
| Three months ended | Nine months ended | ||||||||||||||
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September 30, | ||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Operating profit from continuing operations, as reported | $ | 36,600 | $ | 35,790 | $ | 108,540 | $ | 104,920 | |||||||
| Special Items to consider in evaluating quality of earnings: | |||||||||||||||
| Severance and business restructuring costs | 2,100 | — | 6,720 | — | |||||||||||
| Excluding Special Items, operating profit from continuing operations would have been | $ | 38,700 | $ | 35,790 | $ | 115,260 | $ | 104,920 | |||||||
VP, Investor Relations
(248) 631-5506
sherrylauderback@trimascorp.com
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News Provided by Acquire Media
