TriMas Reports First Quarter 2018 Results
First Quarter 2018 Highlights
- Increased net sales by 8.6% to
$217.1 million , with organic sales growth in all segments - Increased operating profit to
$35.2 million , while adjusted operating profit(1) increased by 16.9% to$28.1 million - Increased diluted EPS to
$0.53 , while adjusted diluted EPS(1) increased by 36.7% to$0.41 - Reduced total debt by
$65.2 million , or 17.8%, to$301.7 million compared toMarch 31, 2017
First Quarter 2018
The Company reported first quarter 2018 net income of
"We are pleased with our strong performance and carried momentum into the first quarter, as we continue to benefit from our realignment actions and implementation of the TriMas Business Model," said
"In 2018, our objective remains to execute our plan of driving performance of our businesses by operating under the TriMas Business Model, continuing to assess opportunities to better
position our businesses and
Financial Position
The Company reported net cash provided by operations of
First Quarter Segment Results
Packaging (Approximately 42% of TriMas
The Packaging segment, which consists primarily of the
Aerospace
(Approximately 22% of TriMas
The Aerospace segment, which includes the
Specialty Products (Approximately 36% of TriMas
The Specialty Products segment, which includes the Norris Cylinder™, Lamons® and Arrow® Engine brands, designs, manufactures and distributes highly-engineered steel cylinders, sealing and fastener products, and wellhead engines and compression systems for use within the industrial, petrochemical, and oil and gas exploration and refining markets. First quarter net sales increased by 13.1% compared to the year ago period, with higher sales levels of all brands resulting from refocused commercial efforts and capturing increased end market demand. First quarter operating profit and the related margin percentage increased due to the impact of higher sales levels and continued realignment actions.
Effective with the first quarter of 2018, the Company realigned its reporting segment structure from four segments to three, combining the Energy and Engineered Components segments into a single segment, titled Specialty Products. This change better aligns with the Company's more streamlined operating structure and efforts to better leverage resources across the businesses. Please see the 8-K, Exhibit 99.2, filed
Outlook
The Company reaffirms its full year 2018 outlook provided on
"In addition to echoing the previous comments on our continued progress at
Conference Call Information
Notice Regarding Forward-Looking Statements
Any "forward-looking"
statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, contained herein, including those relating to the Company's business, financial condition or future results, involve risks and uncertainties with respect to, including, but not limited to: general economic and currency conditions; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other intangible asset impairment charges; competitive factors; future trends; the Company's ability to realize its business strategies; the Company's ability to identify attractive acquisition candidates, successfully integrate acquired operations or realize the intended benefits of such acquisitions; the performance of subcontractors and suppliers; supply constraints; market demand; technology factors; intellectual property
factors; litigation; government and regulatory actions; the Company's leverage; liabilities imposed by debt instruments; labor disputes; changes to fiscal and tax policies; contingent liabilities relating to acquisition activities; information technology factors; the disruption of operations from catastrophic or extraordinary events, including natural disasters; the potential impact of Brexit; tax considerations relating to the Cequent spin-off; the Company's future prospects; and other risks that are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended
Non-GAAP Financial Measures
In this release, certain non-GAAP financial measures are used. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure may be found in Appendix I at the end of this release. Additional information is available at www.trimascorp.com under the "Investors" section.
| (1) | Appendix I details certain costs, expenses and other amounts or charges, collectively described as "Special Items," that are included in the determination of net income, earnings per share and/or cash flows from operating activities under GAAP, but that management believes should be separately considered when evaluating the quality of the Company's core operating results, given they may not reflect the ongoing activities of the business. Management believes that presenting these non-GAAP financial measures, adjusted to remove the impact of Special Items, provides useful information to investors by helping them identify underlying trends in the Company's businesses and facilitating comparisons of performance with prior and future periods. These non-GAAP financial measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP financial measures. | |
| (2) | The Company defines Free Cash Flow as Net Cash Provided by/Used for Operating Activities, excluding the cash impact of Special Items, less Capital Expenditures. Please see Appendix I for additional details. |
About
| Condensed Consolidated Balance Sheet | ||||||||
| (Dollars in thousands) | ||||||||
2018 | 2017 | |||||||
| Assets | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 36,670 | $ | 27,580 | ||||
| Receivables, net | 128,850 | 112,220 | ||||||
| Inventories | 156,560 | 155,350 | ||||||
| Prepaid expenses and other current assets | 10,840 | 16,120 | ||||||
| Total current assets | 332,920 | 311,270 | ||||||
| Property and equipment, net | 188,440 | 190,250 | ||||||
| 320,210 | 319,390 | |||||||
| Other intangibles, net | 189,260 | 194,220 | ||||||
| Deferred income taxes | 5,280 | 9,100 | ||||||
| Other assets | 9,020 | 8,970 | ||||||
| Total assets | $ | 1,045,130 | $ | 1,033,200 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 73,020 | $ | 72,410 | ||||
| Accrued liabilities | 44,720 | 49,470 | ||||||
| Total current liabilities | 117,740 | 121,880 | ||||||
| Long-term debt, net | 301,710 | 303,080 | ||||||
| Deferred income taxes | 5,710 | 5,650 | ||||||
| Other long-term liabilities | 54,190 | 58,570 | ||||||
| Total liabilities | 479,350 | 489,180 | ||||||
| Total shareholders' equity | 565,780 | 544,020 | ||||||
| Total liabilities and shareholders' equity | $ | 1,045,130 | $ | 1,033,200 | ||||
| Consolidated Statement of Income | ||||||||
| (Unaudited - dollars in thousands, except per share amounts) | ||||||||
| Three months ended | ||||||||
| 2018 | 2017 | |||||||
| Net sales | $ | 217,100 | $ | 199,830 | ||||
| Cost of sales | (156,720 | ) | (148,010 | ) | ||||
| Gross profit | 60,380 | 51,820 | ||||||
| Selling, general and administrative expenses | (25,170 | ) | (35,910 | ) | ||||
| Operating profit | 35,210 | 15,910 | ||||||
| Other expense, net: | ||||||||
| Interest expense | (3,700 | ) | (3,550 | ) | ||||
| Other expense, net | (560 | ) | (780 | ) | ||||
| Other expense, net | (4,260 | ) | (4,330 | ) | ||||
| Income before income tax expense | 30,950 | 11,580 | ||||||
| Income tax expense | (6,630 | ) | (4,590 | ) | ||||
| Net income | $ | 24,320 | $ | 6,990 | ||||
| Basic earnings per share: | ||||||||
| Net income per share | $ | 0.53 | $ | 0.15 | ||||
| Weighted average common shares—basic | 45,779,966 | 45,570,495 | ||||||
| Diluted earnings per share: | ||||||||
| Net income per share | $ | 0.53 | $ | 0.15 | ||||
| Weighted average common shares—diluted | 46,229,337 | 45,908,958 | ||||||
| Consolidated Statement of Cash Flow | ||||||||
| (Unaudited - dollars in thousands) | ||||||||
| Three months ended | ||||||||
| 2018 | 2017 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 24,320 | $ | 6,990 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| (Gain) loss on dispositions of assets | (10 | ) | 4,170 | |||||
| Depreciation | 6,330 | 5,800 | ||||||
| Amortization of intangible assets | 4,910 | 4,990 | ||||||
| Amortization of debt issue costs | 470 | 350 | ||||||
| Deferred income taxes | 5,010 | 1,870 | ||||||
| Non-cash compensation expense | 1,220 | 1,470 | ||||||
| Increase in receivables | (16,160 | ) | (7,590 | ) | ||||
| Increase in inventories | (840 | ) | (420 | ) | ||||
| Decrease in prepaid expenses and other assets | 5,330 | 8,070 | ||||||
| Decrease in accounts payable and accrued liabilities | (15,140 | ) | (3,160 | ) | ||||
| Other operating activities | 800 | (570 | ) | |||||
| Net cash provided by operating activities | 16,240 | 21,970 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (3,170 | ) | (10,740 | ) | ||||
| Net proceeds from disposition of property and equipment | 250 | 30 | ||||||
| Net cash used for investing activities | (2,920 | ) | (10,710 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Repayments of borrowings on term loan facilities | — | (3,470 | ) | |||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 32,040 | 186,640 | ||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (33,970 | ) | (191,760 | ) | ||||
| Shares surrendered upon exercise and vesting of equity awards to cover taxes | (2,300 | ) | (450 | ) | ||||
| Other financing activities | — | (290 | ) | |||||
| Net cash used for financing activities | (4,230 | ) | (9,330 | ) | ||||
| Cash and Cash Equivalents: | ||||||||
| Net increase for the period | 9,090 | 1,930 | ||||||
| At beginning of period | 27,580 | 20,710 | ||||||
| At end of period | $ | 36,670 | $ | 22,640 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 470 | $ | 3,050 | ||||
| Cash paid for taxes | $ | 970 | $ | 1,230 | ||||
| Appendix I | ||||||||
| Additional Information Regarding Special Items Impacting | ||||||||
| Reported GAAP Financial Measures | ||||||||
| (Unaudited - dollars in thousands) | ||||||||
| Three months ended | ||||||||
| 2018 | 2017 | |||||||
| Packaging | ||||||||
| Net sales | $ | 88,200 | $ | 80,960 | ||||
| Operating profit | $ | 19,580 | $ | 16,900 | ||||
| Special Items to consider in evaluating operating profit: | ||||||||
| Business restructuring and severance costs | — | 1,670 | ||||||
| Adjusted operating profit | $ | 19,580 | $ | 18,570 | ||||
| Aerospace | ||||||||
| Net sales | $ | 45,810 | $ | 45,420 | ||||
| Operating profit | $ | 5,080 | $ | 5,060 | ||||
| Specialty Products | ||||||||
| Net sales | $ | 83,090 | $ | 73,450 | ||||
| Operating profit | $ | 9,650 | $ | 1,510 | ||||
| Special Items to consider in evaluating operating profit: | ||||||||
| Business restructuring and severance costs | 1,030 | 6,440 | ||||||
| Adjusted operating profit | $ | 10,680 | $ | 7,950 | ||||
| Corporate Expenses | ||||||||
| Operating profit (loss) | $ | 900 | $ | (7,560 | ) | |||
| Special Items to consider in evaluating operating loss: | ||||||||
| Reversal of legacy related party liability | (8,150 | ) | — | |||||
| Adjusted operating loss | $ | (7,250 | ) | $ | (7,560 | ) | ||
| Net sales | $ | 217,100 | $ | 199,830 | ||||
| Operating profit | $ | 35,210 | $ | 15,910 | ||||
| Total Special Items to consider in evaluating operating profit | (7,120 | ) | 8,110 | |||||
| Adjusted operating profit | $ | 28,090 | $ | 24,020 | ||||
| Appendix I | ||||||||
| Additional Information Regarding Special Items Impacting | ||||||||
| Reported GAAP Financial Measures | ||||||||
| (Unaudited - dollars in thousands, except per share amounts) | ||||||||
| Three months ended | ||||||||
| 2018 | 2017 | |||||||
| Net Income, as reported | $ | 24,320 | $ | 6,990 | ||||
| Special Items to consider in evaluating quality of net income: | ||||||||
| Business restructuring and severance costs | 1,210 | 8,110 | ||||||
| Reversal of legacy related party liability | (8,150 | ) | — | |||||
| Income tax effect of Special Items(1) | 1,650 | (1,110 | ) | |||||
| Adjusted net income | $ | 19,030 | $ | 13,990 | ||||
| Three months ended | ||||||||
| 2018 | 2017 | |||||||
| Diluted earnings per share, as reported | $ | 0.53 | $ | 0.15 | ||||
| Special Items to consider in evaluating quality of EPS: | ||||||||
| Business restructuring and severance costs | 0.03 | 0.18 | ||||||
| Reversal of legacy related party liability | (0.18 | ) | — | |||||
| Income tax effect of Special Items(1) | 0.03 | (0.03 | ) | |||||
| Adjusted diluted EPS | $ | 0.41 | $ | 0.30 | ||||
| Weighted-average shares outstanding | 46,229,337 | 45,908,958 | ||||||
| (1) | Income tax effect of Special Items is calculated on an item-by-item basis, utilizing the tax rate in the jurisdiction where the Special Item occurred. For the three month periods ended | |
| Appendix I | ||||||||||||||||||||||||
| Additional Information Regarding Special Items Impacting | ||||||||||||||||||||||||
| Reported GAAP Financial Measures | ||||||||||||||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||||||||||||||
| Three months ended
| ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
| As reported | Special Items | As adjusted | As reported | Special Items | As adjusted | |||||||||||||||||||
| Net cash provided by operating activities | $ | 16,240 | $ | 1,350 | $ | 17,590 | $ | 21,970 | $ | 6,490 | $ | 28,460 | ||||||||||||
| Less: Capital expenditures | (3,170 | ) | — | (3,170 | ) | (10,740 | ) | — | (10,740 | ) | ||||||||||||||
| Free Cash Flow | 13,070 | 1,350 | 14,420 | 11,230 | 6,490 | 17,720 | ||||||||||||||||||
| Net Income | 24,320 | (5,290 | ) | 19,030 | 6,990 | 7,000 | 13,990 | |||||||||||||||||
| Free Cash Flow as a percentage of net income | 54 | % | 76 | % | 161 | % | 127 | % | ||||||||||||||||
2018 | 2017 | 2017 | ||||||||||
| Current maturities, long-term debt | $ | — | $ | — | $ | 13,770 | ||||||
| Long-term debt, net | 301,710 | 303,080 | 353,110 | |||||||||
| Total Debt | 301,710 | 303,080 | 366,880 | |||||||||
| Less: Cash and cash equivalents | 36,670 | 27,580 | 22,640 | |||||||||
| Net Debt | $ | 265,040 | $ | 275,500 | $ | 344,240 | ||||||
CONTACT:
VP, Investor Relations
(248) 631-5506
sherrylauderback@trimascorp.com
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