TriMas Reports Second Quarter 2018 Results
Second Quarter 2018 Highlights
- Increased net sales by 5.4% to
$224.9 million - Increased operating profit to
$31.5 million , while adjusted operating profit(1) increased by 5.3% to$32.1 million - Increased diluted EPS to
$0.42 , while adjusted diluted EPS(1) increased by 20.0% to$0.48 - Reduced total debt by
$53.5 million to $293.0 million compared to$346.5 million as of June 30, 2017
Second Quarter 2018
The Company reported second quarter 2018 net income of
"We are pleased to report another strong quarter, as our focused commercial efforts and improved market conditions, along with prior realignment actions, drove sales and earnings growth," said
"As a result of our strong first half, and despite uncertainty around the economic impact of tariff actions and increased commodity costs, we are raising our full year 2018 sales and earnings per share midpoint guidance. Our objective remains to execute our plan by driving the performance of our businesses 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
During second quarter 2018, the Company repurchased 100,947 shares of its outstanding common stock for approximately
Second Quarter Segment Results
Packaging (Approximately 42% of TriMas June 30, 2018 LTM sales)
Aerospace (Approximately 22% of TriMas June 30, 2018 LTM sales)
Specialty Products (Approximately 36% of TriMas June 30, 2018 LTM sales)
Outlook
The Company updated its full year 2018 guidance provided on
Amato commented, "We successfully overcame the impact of higher commodity costs in our businesses during the first half of the year through commercial actions, improved operating performance and incremental volume. During the remainder of the year, we will continue to aggressively manage the effects of increased commodity costs, as well as the impacts of tariffs, through commercial actions, supply chain management, leveraging our global manufacturing footprint and continued management of our businesses under the TriMas Business Model. Although we expect to mitigate the impact of these incremental costs, it will take some time to implement certain of these countermeasures. Even after the consideration of any potential unmitigated impact from these higher costs, we tightened our EPS guidance toward the higher end of our previously provided range, as a result of higher sales levels and our improved operational performance."
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, including, but not limited to, the impact of tariffs, quotas and surcharges; 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.
- 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.
- 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
| TriMas Corporation Condensed Consolidated Balance Sheet (Dollars in thousands) |
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| June 30, 2018 |
December 31, 2017 |
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| Assets | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 53,400 | $ | 27,580 | ||||
| Receivables, net | 132,500 | 112,220 | ||||||
| Inventories | 160,680 | 155,350 | ||||||
| Prepaid expenses and other current assets | 6,960 | 16,120 | ||||||
| Total current assets | 353,540 | 311,270 | ||||||
| Property and equipment, net | 187,070 | 190,250 | ||||||
| Goodwill | 317,700 | 319,390 | ||||||
| Other intangibles, net | 184,290 | 194,220 | ||||||
| Deferred income taxes | 2,270 | 9,100 | ||||||
| Other assets | 8,990 | 8,970 | ||||||
| Total assets | $ | 1,053,860 | $ | 1,033,200 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 80,970 | $ | 72,410 | ||||
| Accrued liabilities | 45,040 | 49,470 | ||||||
| Total current liabilities | 126,010 | 121,880 | ||||||
| Long-term debt, net | 293,010 | 303,080 | ||||||
| Deferred income taxes | 5,480 | 5,650 | ||||||
| Other long-term liabilities | 43,670 | 58,570 | ||||||
| Total liabilities | 468,170 | 489,180 | ||||||
| Total shareholders' equity | 585,690 | 544,020 | ||||||
| Total liabilities and shareholders' equity | $ | 1,053,860 | $ | 1,033,200 | ||||
| TriMas Corporation Consolidated Statement of Income (Unaudited - dollars in thousands, except per share amounts) |
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| Three months ended June 30, |
Six months ended June 30, |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net sales | $ | 224,910 | $ | 213,370 | $ | 442,010 | $ | 413,200 | ||||||||
| Cost of sales | (160,130 | ) | (153,900 | ) | (316,850 | ) | (301,910 | ) | ||||||||
| Gross profit | 64,780 | 59,470 | 125,160 | 111,290 | ||||||||||||
| Selling, general and administrative expenses | (33,260 | ) | (33,050 | ) | (58,430 | ) | (68,960 | ) | ||||||||
| Operating profit | 31,520 | 26,420 | 66,730 | 42,330 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (3,480 | ) | (3,420 | ) | (7,180 | ) | (6,970 | ) | ||||||||
| Other expense, net | (2,180 | ) | (140 | ) | (2,740 | ) | (920 | ) | ||||||||
| Other expense, net | (5,660 | ) | (3,560 | ) | (9,920 | ) | (7,890 | ) | ||||||||
| Income before income tax expense | 25,860 | 22,860 | 56,810 | 34,440 | ||||||||||||
| Income tax expense | (6,260 | ) | (8,010 | ) | (12,890 | ) | (12,600 | ) | ||||||||
| Net income | $ | 19,600 | $ | 14,850 | $ | 43,920 | $ | 21,840 | ||||||||
| Basic earnings per share: | ||||||||||||||||
| Net income per share | $ | 0.43 | $ | 0.32 | $ | 0.96 | $ | 0.48 | ||||||||
| Weighted average common shares—basic | 45,920,307 | 45,717,697 | 45,850,137 | 45,644,096 | ||||||||||||
| Diluted earnings per share: | ||||||||||||||||
| Net income per share | $ | 0.42 | $ | 0.32 | $ | 0.95 | $ | 0.48 | ||||||||
| Weighted average common shares—diluted | 46,200,757 | 45,922,416 | 46,215,047 | 45,915,687 | ||||||||||||
| TriMas Corporation Consolidated Statement of Cash Flow (Unaudited - dollars in thousands) |
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| Six months ended June 30, |
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| 2018 | 2017 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 43,920 | $ | 21,840 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Loss on dispositions of assets | 70 | 3,030 | ||||||
| Depreciation | 12,870 | 13,050 | ||||||
| Amortization of intangible assets | 9,740 | 9,990 | ||||||
| Amortization of debt issue costs | 740 | 690 | ||||||
| Deferred income taxes | 6,340 | 2,060 | ||||||
| Non-cash compensation expense | 2,620 | 3,340 | ||||||
| Increase in receivables | (20,380 | ) | (11,490 | ) | ||||
| (Increase) decrease in inventories | (5,880 | ) | 2,850 | |||||
| Decrease in prepaid expenses and other assets | 8,970 | 6,280 | ||||||
| Decrease in accounts payable and accrued liabilities | (7,530 | ) | (1,930 | ) | ||||
| Other operating activities | 140 | (120 | ) | |||||
| Net cash provided by operating activities | 51,620 | 49,590 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (11,320 | ) | (16,910 | ) | ||||
| Net proceeds from disposition of property and equipment | 250 | 1,780 | ||||||
| Net cash used for investing activities | (11,070 | ) | (15,130 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Repayments of borrowings on term loan facilities | — | (6,910 | ) | |||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 59,060 | 300,050 | ||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (68,490 | ) | (324,900 | ) | ||||
| Shares surrendered upon exercise and vesting of equity awards to cover taxes | (2,380 | ) | (480 | ) | ||||
| Payments to purchase common stock | (2,920 | ) | — | |||||
| Other financing activities | — | (250 | ) | |||||
| Net cash used for financing activities | (14,730 | ) | (32,490 | ) | ||||
| Cash and Cash Equivalents: | ||||||||
| Net increase for the period | 25,820 | 1,970 | ||||||
| At beginning of period | 27,580 | 20,710 | ||||||
| At end of period | $ | 53,400 | $ | 22,680 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 7,630 | $ | 6,060 | ||||
| Cash paid for taxes | $ | 3,210 | $ | 10,600 | ||||
| Appendix I | ||||||||||||||||
| TriMas Corporation Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures (Unaudited - dollars in thousands) |
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| Three months ended June 30, |
Six months ended June 30, |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Packaging | ||||||||||||||||
| Net sales | $ | 95,090 | $ | 88,740 | $ | 183,290 | $ | 169,700 | ||||||||
| Operating profit | $ | 22,810 | $ | 21,590 | $ | 42,390 | $ | 38,490 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | — | — | — | 1,670 | ||||||||||||
| Adjusted operating profit | $ | 22,810 | $ | 21,590 | $ | 42,390 | $ | 40,160 | ||||||||
| Aerospace | ||||||||||||||||
| Net sales | $ | 45,620 | $ | 47,580 | $ | 91,430 | $ | 93,000 | ||||||||
| Operating profit | $ | 7,310 | $ | 6,990 | $ | 12,390 | $ | 12,050 | ||||||||
| Specialty Products | ||||||||||||||||
| Net sales | $ | 84,200 | $ | 77,050 | $ | 167,290 | $ | 150,500 | ||||||||
| Operating profit | $ | 9,240 | $ | 5,260 | $ | 18,890 | $ | 6,770 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | 580 | 3,890 | 1,610 | 10,330 | ||||||||||||
| Adjusted operating profit | $ | 9,820 | $ | 9,150 | $ | 20,500 | $ | 17,100 | ||||||||
| Corporate Expenses | ||||||||||||||||
| Operating loss | $ | (7,840 | ) | $ | (7,420 | ) | $ | (6,940 | ) | $ | (14,980 | ) | ||||
| Special Items to consider in evaluating operating loss: | ||||||||||||||||
| Business restructuring and severance costs | — | 180 | — | 180 | ||||||||||||
| Reversal of legacy related party liability | — | — | (8,150 | ) | — | |||||||||||
| Adjusted operating loss | $ | (7,840 | ) | $ | (7,240 | ) | $ | (15,090 | ) | $ | (14,800 | ) | ||||
| Total Company | ||||||||||||||||
| Net sales | $ | 224,910 | $ | 213,370 | $ | 442,010 | $ | 413,200 | ||||||||
| Operating profit | $ | 31,520 | $ | 26,420 | $ | 66,730 | $ | 42,330 | ||||||||
| Total Special Items to consider in evaluating operating profit | 580 | 4,070 | (6,540 | ) | 12,180 | |||||||||||
| Adjusted operating profit | $ | 32,100 | $ | 30,490 | $ | 60,190 | $ | 54,510 | ||||||||
| Appendix I | ||||||||||||||||
| TriMas Corporation Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures (Unaudited - dollars in thousands, except per share amounts) |
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| Three months ended June 30, |
Six months ended June 30, |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net Income, as reported | $ | 19,600 | $ | 14,850 | $ | 43,920 | $ | 21,840 | ||||||||
| Special Items to consider in evaluating quality of net income: | ||||||||||||||||
| Business restructuring and severance costs | 660 | 4,000 | 1,870 | 12,110 | ||||||||||||
| Reversal of legacy related party liability | — | — | (8,150 | ) | — | |||||||||||
| Defined benefit pension plan settlement charge | 2,500 | — | 2,500 | — | ||||||||||||
| Income tax effect of Special Items(1) | (610 | ) | (690 | ) | 1,040 | (1,800 | ) | |||||||||
| Adjusted net income | $ | 22,150 | $ | 18,160 | $ | 41,180 | $ | 32,150 | ||||||||
| Three months ended June 30, |
Six months ended June 30, |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Diluted earnings per share, as reported | $ | 0.42 | $ | 0.32 | $ | 0.95 | $ | 0.48 | ||||||||
| Special Items to consider in evaluating quality of EPS: | ||||||||||||||||
| Business restructuring and severance costs | 0.01 | 0.09 | 0.04 | 0.26 | ||||||||||||
| Reversal of legacy related party liability | — | — | (0.18 | ) | — | |||||||||||
| Defined benefit pension plan settlement charge | 0.06 | — | 0.06 | — | ||||||||||||
| Income tax effect of Special Items(1) | (0.01 | ) | (0.01 | ) | 0.02 | (0.04 | ) | |||||||||
| Adjusted diluted EPS | $ | 0.48 | $ | 0.40 | $ | 0.89 | $ | 0.70 | ||||||||
| Weighted-average shares outstanding | 46,200,757 | 45,922,416 | 46,215,047 | 45,915,687 | ||||||||||||
(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 and six month periods ended
| Appendix I | ||||||||||||||||||||||||
| TriMas Corporation Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures (Unaudited - dollars in thousands) |
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| Three months ended June 30, | ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
| As reported |
Special Items |
As adjusted |
As reported |
Special Items |
As adjusted |
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| Net cash provided by operating activities | $ | 35,380 | $ | 1,630 | $ | 37,010 | $ | 27,620 | $ | 2,340 | $ | 29,960 | ||||||||||||
| Less: Capital expenditures | (8,150 | ) | — | (8,150 | ) | (6,170 | ) | — | (6,170 | ) | ||||||||||||||
| Free Cash Flow | 27,230 | 1,630 | 28,860 | 21,450 | 2,340 | 23,790 | ||||||||||||||||||
| Net Income | 19,600 | 2,550 | 22,150 | 14,850 | 3,310 | 18,160 | ||||||||||||||||||
| Free Cash Flow as a percentage of net income | 139 | % | 130 | % | 144 | % | 131 | % | ||||||||||||||||
| Six months ended June 30, | ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
| As reported |
Special Items |
As adjusted |
As reported |
Special Items |
As adjusted |
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| Net cash provided by operating activities | $ | 51,620 | $ | 2,980 | $ | 54,600 | 49,590 | $ | 8,830 | $ | 58,420 | |||||||||||||
| Less: Capital expenditures | (11,320 | ) | — | (11,320 | ) | (16,910 | ) | — | (16,910 | ) | ||||||||||||||
| Free Cash Flow | 40,300 | 2,980 | 43,280 | 32,680 | 8,830 | 41,510 | ||||||||||||||||||
| Net Income | 43,920 | (2,740 | ) | 41,180 | 21,840 | 10,310 | 32,150 | |||||||||||||||||
| Free Cash Flow as a percentage of net income | 92 | % | 105 | % | 150 | % | 129 | % | ||||||||||||||||
| June 30, 2018 |
December 31, 2017 |
June 30, 2017 |
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| Current maturities, long-term debt | $ | — | $ | — | $ | 13,760 | |||
| Long-term debt, net | 293,010 | 303,080 | 332,740 | ||||||
| Total Debt | 293,010 | 303,080 | 346,500 | ||||||
| Less: Cash and cash equivalents | 53,400 | 27,580 | 22,680 | ||||||
| Net Debt | $ | 239,610 | $ | 275,500 | $ | 323,820 | |||
| CONTACT: |
| Sherry Lauderback |
| VP, Investor Relations & Communications |
| (248) 631-5506 |
| sherrylauderback@trimascorp.com |
Source: TriMas Corporation
