TriMas Reports Third Quarter 2017 Results
Third Quarter 2017 Highlights
- Increased net sales by 3.5% to
$209.3 million - Increased operating profit by 58.1% to
$28.1 million , while operating profit, excluding Special Items,(1) increased by 2.3% to$28.8 million - Increased diluted EPS by 52.6% to
$0.29 , while diluted EPS, excluding Special Items, increased by 11.4% to$0.39 - Reduced Total Debt of
$336.6 million , less cash and cash equivalents of$24.8 million , by$68.1 million compared toSeptember 30, 2016
Third Quarter 2017
The Company reported third quarter 2017 net income of
"We are pleased with our sales and earnings growth, cash flow conversion and progress on operational improvements in the third quarter and year-to-date," said
"During the third quarter, we also proactively refinanced our debt and extended our maturities at favorable rates, providing enhanced flexibility for
Financial Position
During the third quarter, the Company issued
The Company reported net cash provided by operations of
Third Quarter Segment Results
Packaging (Approximately 42% of TriMas
The Packaging segment, which consists primarily of the
Aerospace (Approximately 23% of TriMas
The Aerospace segment, which is comprised of the
Energy (Approximately 20% of TriMas
The Energy segment, which consists of the Lamons® brand, designs, manufactures and distributes industrial sealing and fastener products for the petrochemical, petroleum refining, oil field and other industrial markets. Third quarter net sales increased by 5.8% compared to the year ago period, primarily due to higher demand as a result of improved delivery performance and responding to customers' immediate needs following Hurricane Harvey, partially offset by the impact of de-emphasizing less profitable geographic regions. Third quarter operating profit and the related margin percentage increased as a result of improved financial performance given the restructured footprint and fewer costs associated with business realignment in the third quarter of 2017. Excluding Special Items, operating profit margin declined slightly, as the expected performance improvements were tempered by higher production costs and less favorable product sales mix resulting from the impact of the hurricane.
Engineered Components (Approximately 15% of TriMas
The Engineered Components segment, which is comprised of the Norris Cylinder™ and Arrow® Engine brands, designs and manufactures highly-engineered steel cylinders, wellhead engines and compression products for use within the industrial, and oil and gas markets. Third quarter net sales increased by 17.0% compared to the year ago period, due to higher sales of small and mid-sized acetylene cylinders, as well as oil field-related products due to increased oil and gas well completions in the
Outlook
The Company is updating its full-year 2017 outlook provided on
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, on an after Special Items basis, 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) |
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2017 |
2016 |
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| Assets | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 24,760 | $ | 20,710 | ||||
| Receivables, net | 125,410 | 111,570 | ||||||
| Inventories | 160,180 | 160,460 | ||||||
| Prepaid expenses and other current assets | 8,800 | 16,060 | ||||||
| Total current assets | 319,150 | 308,800 | ||||||
| Property and equipment, net | 185,800 | 179,160 | ||||||
| 318,730 | 315,080 | |||||||
| Other intangibles, net | 199,150 | 213,920 | ||||||
| Other assets | 30,500 | 34,690 | ||||||
| Total assets | $ | 1,053,330 | $ | 1,051,650 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Current maturities, long-term debt | $ | — | $ | 13,810 | ||||
| Accounts payable | 77,720 | 72,270 | ||||||
| Accrued liabilities | 41,600 | 47,190 | ||||||
| Total current liabilities | 119,320 | 133,270 | ||||||
| Long-term debt, net | 336,560 | 360,840 | ||||||
| Deferred income taxes | 5,750 | 5,910 | ||||||
| Other long-term liabilities | 44,740 | 51,910 | ||||||
| Total liabilities | 506,370 | 551,930 | ||||||
| Total shareholders' equity | 546,960 | 499,720 | ||||||
| Total liabilities and shareholders' equity | $ | 1,053,330 | $ | 1,051,650 | ||||
Consolidated Statement of Income (Unaudited - dollars in thousands, except per share amounts) |
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| Three months ended |
Nine months ended |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net sales | $ | 209,330 | $ | 202,290 | $ | 622,530 | $ | 608,490 | ||||||||
| Cost of sales | (150,500 | ) | (144,240 | ) | (452,530 | ) | (437,440 | ) | ||||||||
| Gross profit | 58,830 | 58,050 | 170,000 | 171,050 | ||||||||||||
| Selling, general and administrative expenses | (30,710 | ) | (40,260 | ) | (99,890 | ) | (118,150 | ) | ||||||||
| Operating profit | 28,120 | 17,790 | 70,110 | 52,900 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (3,390 | ) | (3,480 | ) | (10,360 | ) | (10,230 | ) | ||||||||
| Debt financing and related expenses | (6,640 | ) | — | (6,640 | ) | — | ||||||||||
| Other expense, net | (200 | ) | (200 | ) | (780 | ) | (130 | ) | ||||||||
| Other expense, net | (10,230 | ) | (3,680 | ) | (17,780 | ) | (10,360 | ) | ||||||||
| Income before income tax expense | 17,890 | 14,110 | 52,330 | 42,540 | ||||||||||||
| Income tax expense | (4,760 | ) | (5,330 | ) | (17,360 | ) | (14,980 | ) | ||||||||
| Net income | $ | 13,130 | $ | 8,780 | $ | 34,970 | $ | 27,560 | ||||||||
| Basic earnings per share: | ||||||||||||||||
| Net income per share | $ | 0.29 | $ | 0.19 | $ | 0.77 | $ | 0.61 | ||||||||
| Weighted average common shares—basic | 45,721,155 | 45,435,936 | 45,669,782 | 45,381,592 | ||||||||||||
| Diluted earnings per share: | ||||||||||||||||
| Net income per share | $ | 0.29 | $ | 0.19 | $ | 0.76 | $ | 0.60 | ||||||||
| Weighted average common shares—diluted | 46,029,361 | 45,760,455 | 45,953,578 | 45,713,873 | ||||||||||||
Consolidated Statement of Cash Flow (Unaudited - dollars in thousands) |
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| Nine months ended |
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| 2017 | 2016 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 34,970 | $ | 27,560 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Loss on dispositions of assets | 3,210 | 1,350 | ||||||
| Depreciation | 18,890 | 17,710 | ||||||
| Amortization of intangible assets | 14,920 | 15,330 | ||||||
| Amortization of debt issue costs | 1,030 | 1,000 | ||||||
| Deferred income taxes | 2,420 | 360 | ||||||
| Non-cash compensation expense | 5,090 | 5,240 | ||||||
| Tax effect from stock based compensation | — | (640 | ) | |||||
| Debt financing and related expenses | 6,640 | — | ||||||
| Increase in receivables | (12,700 | ) | (9,790 | ) | ||||
| Increase in inventories | (580 | ) | (4,560 | ) | ||||
| Decrease in prepaid expenses and other assets | 7,110 | 10,780 | ||||||
| Decrease in accounts payable and accrued liabilities | (8,590 | ) | (17,150 | ) | ||||
| Other operating activities | 240 | (780 | ) | |||||
| Net cash provided by operating activities | 72,650 | 46,410 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (24,120 | ) | (22,390 | ) | ||||
| Net proceeds from disposition of property and equipment | 1,800 | 120 | ||||||
| Net cash used for investing activities | (22,320 | ) | (22,270 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of senior notes | 300,000 | — | ||||||
| Repayments of borrowings on term loan facilities | (257,940 | ) | (10,380 | ) | ||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 353,710 | 314,860 | ||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (435,250 | ) | (324,780 | ) | ||||
| Debt financing fees | (6,070 | ) | — | |||||
| Shares surrendered upon options and restricted stock vesting to cover taxes | (480 | ) | (1,500 | ) | ||||
| Other financing activities | (250 | ) | 760 | |||||
| Net cash used for financing activities | (46,280 | ) | (21,040 | ) | ||||
| Cash and Cash Equivalents: | ||||||||
| Net increase for the period | 4,050 | 3,100 | ||||||
| At beginning of period | 20,710 | 19,450 | ||||||
| At end of period | $ | 24,760 | $ | 22,550 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 9,020 | $ | 8,870 | ||||
| Cash paid for taxes | $ | 13,140 | $ | 9,130 | ||||
Appendix I
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures (Unaudited - dollars in thousands) |
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| Three months ended |
Nine months ended |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Packaging | ||||||||||||||||
| Net sales | $ | 89,560 | $ | 90,330 | $ | 259,260 | $ | 258,550 | ||||||||
| Operating profit | $ | 23,090 | $ | 20,090 | $ | 61,480 | $ | 59,340 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | — | 1,660 | 1,670 | 2,720 | ||||||||||||
| Excluding Special Items, operating profit would have been | $ | 23,090 | $ | 21,750 | $ | 63,150 | $ | 62,060 | ||||||||
| Aerospace | ||||||||||||||||
| Net sales | $ | 48,550 | $ | 47,430 | $ | 141,550 | $ | 132,020 | ||||||||
| Operating profit | $ | 7,760 | $ | 6,660 | $ | 19,690 | $ | 13,670 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | — | 1,240 | — | 2,800 | ||||||||||||
| Excluding Special Items, operating profit would have been | $ | 7,760 | $ | 7,900 | $ | 19,690 | $ | 16,470 | ||||||||
| Energy | ||||||||||||||||
| Net sales | $ | 40,440 | $ | 38,230 | $ | 124,860 | $ | 122,930 | ||||||||
| Operating profit (loss) | $ | 1,240 | $ | (1,870 | ) | $ | (2,550 | ) | $ | (8,570 | ) | |||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | 470 | 3,640 | 10,800 | 13,230 | ||||||||||||
| Excluding Special Items, operating profit would have been | $ | 1,710 | $ | 1,770 | $ | 8,250 | $ | 4,660 | ||||||||
| Engineered Components | ||||||||||||||||
| Net sales | $ | 30,780 | $ | 26,300 | $ | 96,860 | $ | 94,990 | ||||||||
| Operating profit | $ | 3,310 | $ | 3,180 | $ | 13,000 | $ | 12,620 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Business restructuring and severance costs | — | 230 | — | 400 | ||||||||||||
| Excluding Special Items, operating profit would have been | $ | 3,310 | $ | 3,410 | $ | 13,000 | $ | 13,020 | ||||||||
| Corporate Expenses | ||||||||||||||||
| Operating loss | $ | (7,280 | ) | $ | (10,270 | ) | $ | (21,510 | ) | $ | (24,160 | ) | ||||
| Special Items to consider in evaluating operating loss: | ||||||||||||||||
| Business restructuring and severance costs | 180 | 3,560 | 360 | 3,560 | ||||||||||||
| Excluding Special Items, operating loss would have been | $ | (7,100 | ) | $ | (6,710 | ) | (21,150 | ) | (20,600 | ) | ||||||
| Net sales | $ | 209,330 | $ | 202,290 | $ | 622,530 | $ | 608,490 | ||||||||
| Operating profit | $ | 28,120 | $ | 17,790 | $ | 70,110 | $ | 52,900 | ||||||||
| Total Special Items to consider in evaluating operating profit | 650 | 10,330 | 12,830 | 22,710 | ||||||||||||
| Excluding Special Items, operating profit would have been | $ | 28,770 | $ | 28,120 | $ | 82,940 | $ | 75,610 | ||||||||
Appendix I
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 |
Nine months ended |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net Income, as reported | $ | 13,130 | $ | 8,780 | $ | 34,970 | $ | 27,560 | ||||||||
| Special Items to consider in evaluating quality of net income: | ||||||||||||||||
| Business restructuring and severance costs | 440 | 10,560 | 12,550 | 23,350 | ||||||||||||
| Debt financing and related expenses | 6,640 | — | 6,640 | — | ||||||||||||
| Income tax effect of Special Items(1) | (2,480 | ) | (3,210 | ) | (4,280 | ) | (6,780 | ) | ||||||||
| Excluding Special Items, net income would have been | $ | 17,730 | $ | 16,130 | $ | 49,880 | $ | 44,130 | ||||||||
| Three months ended |
Nine months ended |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Diluted earnings per share, as reported | $ | 0.29 | $ | 0.19 | $ | 0.76 | $ | 0.60 | ||||||||
| Special Items to consider in evaluating quality of EPS: | ||||||||||||||||
| Business restructuring and severance costs | 0.01 | 0.23 | 0.28 | 0.51 | ||||||||||||
| Debt financing and related expenses | 0.14 | — | 0.14 | — | ||||||||||||
| Income tax effect of Special Items(1) | (0.05 | ) | (0.07 | ) | (0.09 | ) | (0.15 | ) | ||||||||
| Excluding Special Items, diluted EPS would have been | $ | 0.39 | $ | 0.35 | $ | 1.09 | $ | 0.96 | ||||||||
| Weighted-average shares outstanding | 46,029,361 | 45,760,455 | 45,953,578 | 45,713,873 | ||||||||||||
| (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 nine month periods ended |
Appendix I
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures (Unaudited - dollars in thousands) |
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| Three months ended |
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| 2017 | 2016 | |||||||||||||||||||||||
| As reported |
Special Items |
Excluding Special Items |
As reported |
Special Items |
Excluding Special Items |
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| Net cash provided by operating activities | $ | 23,060 | $ | 6,170 | $ | 29,230 | $ | 13,470 | $ | 7,160 | $ | 20,630 | ||||||||||||
| Less: Capital expenditures | (7,210 | ) | — | (7,210 | ) | (9,430 | ) | — | (9,430 | ) | ||||||||||||||
| Free Cash Flow | 15,850 | 6,170 | 22,020 | 4,040 | 7,160 | 11,200 | ||||||||||||||||||
| Net Income | 13,130 | 4,600 | 17,730 | 8,780 | 7,350 | 16,130 | ||||||||||||||||||
| Free Cash Flow as a percentage of net income | 121 | % | 124 | % | 46 | % | 69 | % | ||||||||||||||||
| Nine months ended |
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| 2017 | 2016 | |||||||||||||||||||||||
| As reported |
Special Items |
Excluding Special Items |
As reported |
Special Items |
Excluding Special Items |
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| Net cash provided by operating activities | $ | 72,650 | $ | 15,000 | $ | 87,650 | 46,410 | $ | 15,520 | $ | 61,930 | |||||||||||||
| Less: Capital expenditures | (24,120 | ) | — | (24,120 | ) | (22,390 | ) | — | (22,390 | ) | ||||||||||||||
| Free Cash Flow | 48,530 | 15,000 | 63,530 | 24,020 | 15,520 | 39,540 | ||||||||||||||||||
| Net Income | 34,970 | 14,910 | 49,880 | 27,560 | 16,570 | 44,130 | ||||||||||||||||||
| Free Cash Flow as a percentage of net income | 139 | % | 127 | % | 87 | % | 90 | % | ||||||||||||||||
2017 |
2016 |
2016 |
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| Current maturities, long-term debt | $ | — | $ | 13,810 | $ | 13,840 | ||||||
| Long-term debt, net | 336,560 | 360,840 | 388,580 | |||||||||
| Total Debt | 336,560 | 374,650 | 402,420 | |||||||||
| Less: Cash and cash equivalents | 24,760 | 20,710 | 22,550 | |||||||||
| Net Debt | $ | 311,800 | $ | 353,940 | $ | 379,870 | ||||||
| CONTACT: |
| VP, Investor Relations |
| (248) 631-5506 |
| sherrylauderback@trimascorp.com |
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