TriMas Corporation Reports Third Quarter 2015 Results
Company Reports Growth in Income(1) and EPS(1) of More Than 30%
Raises Full Year 2015 EPS and Free Cash Flow Guidance
TriMas Highlights
- Improved income and earnings per share from continuing operations by 30.9% and 34.5%, respectively, excluding the impact of Special Items(1), compared to the third quarter of 2014.
-
Announced and began implementing a broadly-focused Financial
Improvement Plan, targeting cost actions which are expected to yield
approximately
$15 million of annual savings, and improve the Company's profitability, cash flow conversion and operational efficiency. - Improved operating profit margin(1) by 300 basis points with improvements in Packaging, Aerospace and Energy, and a reduction in corporate expenses as compared to third quarter 2014.
- Continued to execute on reorganization and integration initiatives in Packaging and Aerospace, the Company's highest margin businesses, to drive future growth and margin expansion.
-
Launched the
TriMas Aerospace Engineering Research and Technology team to partner with the Company's aerospace customers to support innovation and application growth;TriMas Aerospace also recognized as the Embraer 2015 Hardware Supplier of the Year.
"While our third quarter sales were relatively flat year-over-year, we
achieved 300 basis points of margin expansion and an increase of 34.5%
in earnings per share(1)," said
"In addition, our team is aggressively implementing our Financial Improvement Plan announced in September, pursuing cost actions to accelerate business improvement initiatives that maintain or enhance margins across the company. With significant uncertainty in many end markets and economies, we continually assess and implement measures to improve our operations and financial position. We expect this broad-based set of cost reductions to position us for improved margins and free cash flow in 2016, in spite of top-line headwinds. While our immediate focus remains on cost reduction, we also continue to invest in initiatives that will drive future profitable growth," Wathen continued.
"Based on our third quarter performance and the current trends we are
experiencing, we are updating our full year 2015 outlook from continuing
operations, slightly lowering sales guidance, while increasing projected
earnings per share from
Third Quarter Financial Results - From Continuing Operations
-
TriMas reported third quarter net sales of$222.2 million , relatively flat as compared to$222.3 million in third quarter 2014. The positive impact of recent acquisitions and organic initiatives was offset by sales declines resulting from the impact of lower oil prices, macroeconomic uncertainty and$3.6 million of unfavorable currency exchange, primarily in Packaging and Energy. -
The Company reported operating profit of
$21.6 million in third quarter 2015, an increase of 5.1% as compared to third quarter 2014. Excluding Special Items(1) related to severance and business restructuring, third quarter 2015 operating profit would have been$29.9 million , an increase of 28.6% as compared to$23.2 million during third quarter 2014. Third quarter 2015 operating profit margin, excluding Special Items(1), increased 300 basis points to 13.4%, as a result of improvements in Packaging, Aerospace and Energy, and a reduction in corporate expenses as compared to third quarter 2014. -
Third quarter 2015 income from continuing operations attributable to
TriMas Corporation was$11.7 million , or$0.26 per diluted share, compared to$0.24 per diluted share in third quarter 2014. Excluding Special Items(1), third quarter 2015 income from continuing operations attributable toTriMas Corporation would have been$17.8 million , or$0.39 per diluted share, an improvement of 34.5% as compared to$0.29 in third quarter 2014. -
The Company reported Free Cash Flow (defined as Net Cash Provided by
Operating Activities of Continuing Operations, excluding the cash
impact of the Financial Improvement Plan, less Capital Expenditures)
of
$1.5 million for third quarter 2015 as compared to$8.0 million in third quarter 2014. On a year-to-date basis, the Company generated$9.1 million of Free Cash Flow and expects to generate between$50 million and$60 million for full year 2015.
Discontinued Operations
On
Financial Position
Business Segment Results - From Continuing Operations(2)
Packaging
Net sales for the third quarter decreased 1.6% as compared to the year
ago period, primarily as a result of unfavorable currency exchange,
partially offset by increased specialty systems product sales due to the
acquisition of
Aerospace
Net sales for the third quarter increased 65.6% as compared to the year
ago period, primarily due to the results of Allfast, which was acquired
in
Energy
Third quarter net sales increased 2.6% as compared to the year ago
period, as increased North American sales, primarily related to higher
levels of engineering and construction activity, more than offset
reduced demand levels from upstream customers related to lower oil
prices, lower sales in
Engineered Components
Third quarter net sales decreased 32.6% as compared to the year ago period, primarily due to lower sales of engines and compressors resulting from the impact of lower oil prices, as well as decreased sales of industrial cylinders related to weaker demand in industrial end markets and lower levels of export sales due to the strong U.S. dollar. Third quarter operating profit and the related margin percentage also decreased, primarily due to the reduced sales level and lower fixed cost absorption related to engine and compression products, which were partially offset by cost reductions and productivity initiatives. The Company has responded to the dramatic drop in oil prices and the impact on engine and compressor demand by reducing its fixed cost structure, and continues to drive new product sales and expand its international sales efforts.
2015 Outlook
The Company is updating its full year 2015 outlook from continuing
operations, slightly lowering sales outlook, while increasing earnings
per share and Free Cash Flow guidance. Given external headwinds related
to continued low levels of oil activity, lower macroeconomic growth and
weakness in industrial end markets, the Company is estimating that 2015
sales will be relatively flat on a year-over-year basis. The Company is
increasing its full-year 2015 diluted earnings per share outlook, from
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, but not limited to, those
relating to the Company's business, financial condition or future
results, involve risks and uncertainties, including, but not limited to,
risks and uncertainties with respect to: the Company's leverage;
liabilities imposed by the Company's debt instruments; market demand;
competitive factors; supply constraints; material and energy costs;
risks and uncertainties associated with intangible assets, including
goodwill or other intangible asset impairment charges; technology
factors; litigation; government and regulatory actions; the Company's
accounting policies; future trends; general economic and currency
conditions; various conditions specific to the Company's business and
industry; the Company's ability to integrate Allfast and attain the
expected synergies, including that the acquisition is accretive; the
Company's ability to attain the Financial Improvement Plan targeted
savings and free cash flow amounts; future prospects of the Company; and
other risks that are detailed in the Company's Annual Report on Form
10-K for the fiscal year ended
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
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(1) |
Appendix I details certain costs, expenses and other charges,
collectively described as "Special Items," that are included in the
determination of net income from continuing operations attributable
to |
|
|
(2) |
Business Segment Results include Operating Profit that excludes the impact of Special Items. For a complete schedule of Special Items by segment, see "Company and Business Segment Financial Information - Continuing Operations." |
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|||||||
| Condensed Consolidated Balance Sheet | |||||||
| (Dollars in thousands) | |||||||
|
|
|
||||||
| 2015 | 2014 | ||||||
| Assets | (unaudited) | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 22,460 | $ | 24,420 | |||
| Receivables, net | 144,600 | 132,800 | |||||
| Inventories | 176,410 | 171,260 | |||||
| Deferred income taxes | 24,030 | 24,030 | |||||
| Prepaid expenses and other current assets | 12,550 | 8,690 | |||||
| Current assets, discontinued operations | — | 197,420 | |||||
| Total current assets | 380,050 | 558,620 | |||||
| Property and equipment, net | 174,320 | 177,470 | |||||
|
|
455,430 | 460,080 | |||||
| Other intangibles, net | 281,230 | 297,420 | |||||
| Other assets | 21,930 | 27,960 | |||||
| Non-current assets, discontinued operations | — | 140,200 | |||||
| Total assets | $ | 1,312,960 | $ | 1,661,750 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Current maturities, long-term debt | $ | 13,860 | $ | 23,400 | |||
| Accounts payable | 84,060 | 103,510 | |||||
| Accrued liabilities | 61,870 | 63,110 | |||||
| Current liabilities, discontinued operations | — | 119,900 | |||||
| Total current liabilities | 159,790 | 309,920 | |||||
| Long-term debt | 445,560 | 615,170 | |||||
| Deferred income taxes | 42,350 | 46,320 | |||||
| Other long-term liabilities | 57,400 | 64,450 | |||||
| Non-current liabilities, discontinued operations | — | 35,260 | |||||
| Total liabilities | 705,100 | 1,071,120 | |||||
| Total shareholders' equity | 607,860 | 590,630 | |||||
| Total liabilities and shareholders' equity | $ | 1,312,960 | $ | 1,661,750 | |||
|
|
||||||||||||||||
| Consolidated Statement of Income | ||||||||||||||||
| (Unaudited - dollars in thousands, except per share amounts) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
|
|
|
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net sales | $ | 222,190 | $ | 222,330 | $ | 671,220 | $ | 663,870 | ||||||||
| Cost of sales | (159,720 | ) | (162,460 | ) | (484,110 | ) | (480,800 | ) | ||||||||
| Gross profit | 62,470 | 59,870 | 187,110 | 183,070 | ||||||||||||
| Selling, general and administrative expenses | (40,910 | ) | (39,350 | ) | (123,320 | ) | (113,070 | ) | ||||||||
| Operating profit | 21,560 | 20,520 | 63,790 | 70,000 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (3,440 | ) | (2,080 | ) | (10,610 | ) | (6,310 | ) | ||||||||
| Debt financing and extinguishment costs | — | — | (1,970 | ) | — | |||||||||||
| Other expense, net | (720 | ) | (1,730 | ) | (2,330 | ) | (3,450 | ) | ||||||||
| Other expense, net | (4,160 | ) | (3,810 | ) | (14,910 | ) | (9,760 | ) | ||||||||
| Income from continuing operations before income tax expense | 17,400 | 16,710 | 48,880 | 60,240 | ||||||||||||
| Income tax expense | (5,690 | ) | (5,620 | ) | (16,740 | ) | (21,020 | ) | ||||||||
| Income from continuing operations | 11,710 | 11,090 | 32,140 | 39,220 | ||||||||||||
| Income (loss) from discontinued operations, net of tax | — | 11,140 | (4,740 | ) | 28,590 | |||||||||||
| Net income | 11,710 | 22,230 | 27,400 | 67,810 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | — | — | — | 810 | ||||||||||||
|
Net income attributable to |
$ | 11,710 | $ | 22,230 | $ | 27,400 | $ | 67,000 | ||||||||
|
Basic earnings per share attributable to |
||||||||||||||||
| Continuing operations | $ | 0.26 | $ | 0.24 | $ | 0.71 | $ | 0.85 | ||||||||
| Discontinued operations | — | 0.25 | (0.10 | ) | 0.64 | |||||||||||
| Net income per share | $ | 0.26 | $ | 0.49 | $ | 0.61 | $ | 1.49 | ||||||||
| Weighted average common shares—basic | 45,157,412 | 44,919,340 | 45,102,067 | 44,863,008 | ||||||||||||
|
Diluted earnings per share attributable to |
||||||||||||||||
| Continuing operations | $ | 0.26 | $ | 0.24 | $ | 0.70 | $ | 0.85 | ||||||||
| Discontinued operations | — | 0.25 | (0.10 | ) | 0.63 | |||||||||||
| Net income per share | $ | 0.26 | $ | 0.49 | $ | 0.60 | $ | 1.48 | ||||||||
| Weighted average common shares—diluted | 45,499,104 | 45,276,199 | 45,439,618 | 45,231,058 | ||||||||||||
|
|
||||||||
| Consolidated Statement of Cash Flow | ||||||||
| (Unaudited - dollars in thousands) | ||||||||
| Nine months ended | ||||||||
|
|
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| 2015 | 2014 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 27,400 | $ | 67,810 | ||||
| Income (loss) from discontinued operations | (4,740 | ) | 28,590 | |||||
| Income from continuing operations | 32,140 | 39,220 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: | ||||||||
| Loss on dispositions of property and equipment | 590 | 430 | ||||||
| Depreciation | 16,430 | 15,350 | ||||||
| Amortization of intangible assets | 15,790 | 10,900 | ||||||
| Amortization of debt issue costs | 1,360 | 1,430 | ||||||
| Deferred income taxes | (4,220 | ) | (7,120 | ) | ||||
| Non-cash compensation expense | 4,590 | 6,450 | ||||||
| Excess tax benefits from stock based compensation | (300 | ) | (1,100 | ) | ||||
| Debt financing and extinguishment costs | 1,970 | — | ||||||
| Increase in receivables | (15,790 | ) | (24,610 | ) | ||||
| Increase in inventories | (7,010 | ) | (1,970 | ) | ||||
| (Increase) decrease in prepaid expenses and other assets | (1,020 | ) | 1,320 | |||||
| Increase (decrease) in accounts payable and accrued liabilities | (15,540 | ) | 11,970 | |||||
| Other, net | (250 | ) | 370 | |||||
| Net cash provided by operating activities of continuing operations, net of acquisition impact | 28,740 | 52,640 | ||||||
| Net cash provided by (used for) operating activities of discontinued operations | (14,030 | ) | 12,260 | |||||
| Net cash provided by operating activities, net of acquisition impact | 14,710 | 64,900 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (20,360 | ) | (18,320 | ) | ||||
| Acquisition of businesses, net of cash acquired | — | (27,510 | ) | |||||
| Net proceeds from disposition of property and equipment | 1,680 | 50 | ||||||
| Net cash used for investing activities of continuing operations | (18,680 | ) | (45,780 | ) | ||||
| Net cash used for investing activities of discontinued operations | (2,510 | ) | (2,510 | ) | ||||
| Net cash used for investing activities | (21,190 | ) | (48,290 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from borrowings on term loan facilities | 275,000 | — | ||||||
| Repayments of borrowings on term loan facilities | (441,410 | ) | (6,660 | ) | ||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 995,620 | 732,480 | ||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (1,006,490 | ) | (687,520 | ) | ||||
| Payments for deferred purchase price | (5,810 | ) | — | |||||
| Debt financing fees | (1,850 | ) | — | |||||
| Distributions to noncontrolling interests | — | (580 | ) | |||||
| Payment for noncontrolling interests | — | (51,000 | ) | |||||
| Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (2,620 | ) | (2,780 | ) | ||||
| Proceeds from exercise of stock options | 430 | 480 | ||||||
| Excess tax benefits from stock based compensation | 300 | 1,100 | ||||||
| Cash transferred to the Cequent businesses | (17,050 | ) | — | |||||
| Net cash used for financing activities of continuing operations | (203,880 | ) | (14,480 | ) | ||||
| Net cash provided by financing activities of discontinued operations | 208,400 | 940 | ||||||
| Net cash provided by (used for) financing activities | 4,520 | (13,540 | ) | |||||
| Cash and Cash Equivalents: | ||||||||
| Net increase (decrease) for the period | (1,960 | ) | 3,070 | |||||
| At beginning of period | 24,420 | 27,000 | ||||||
| At end of period | $ | 22,460 | $ | 30,070 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 12,320 | $ | 7,960 | ||||
| Cash paid for taxes | $ | 22,260 | $ | 25,610 | ||||
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| Company and Business Segment Financial Information | ||||||||||||||||
| Continuing Operations | ||||||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
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| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Packaging | ||||||||||||||||
| Net sales | $ | 87,930 | $ | 89,320 | $ | 256,470 | $ | 257,000 | ||||||||
| Operating profit | $ | 21,870 | $ | 20,770 | $ | 60,090 | $ | 59,670 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 280 | $ | 620 | $ | 710 | $ | 620 | ||||||||
| Excluding Special Items, operating profit would have been | $ | 22,150 | $ | 21,390 | $ | 60,800 | $ | 60,290 | ||||||||
| Aerospace | ||||||||||||||||
| Net sales | $ | 45,380 | $ | 27,410 | 134,340 | 86,420 | ||||||||||
| Operating profit | $ | 7,110 | $ | 3,870 | 22,410 | 14,390 | ||||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 1,120 | $ | — | 2,740 | — | ||||||||||
| Excluding Special Items, operating profit would have been | $ | 8,230 | $ | 3,870 | 25,150 | 14,390 | ||||||||||
| Energy | ||||||||||||||||
| Net sales | $ | 51,600 | $ | 50,290 | $ | 152,910 | $ | 155,390 | ||||||||
| Operating profit (loss) | $ | (3,560 | ) | $ | (1,100 | ) | $ | (10,390 | ) | $ | 870 | |||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 5,860 | $ | 2,080 | $ | 11,200 | $ | 4,430 | ||||||||
| Excluding Special Items, operating profit would have been | $ | 2,300 | $ | 980 | $ | 810 | $ | 5,300 | ||||||||
| Engineered Components | ||||||||||||||||
| Net sales | $ | 37,280 | $ | 55,310 | $ | 127,500 | $ | 165,060 | ||||||||
| Operating profit | $ | 4,380 | $ | 8,090 | $ | 16,570 | $ | 24,920 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 90 | $ | — | 230 | — | ||||||||||
| Excluding Special Items, operating profit would have been | $ | 4,470 | $ | 8,090 | 16,800 | 24,920 | ||||||||||
| Corporate Expenses | ||||||||||||||||
| Operating loss | $ | (8,240 | ) | $ | (11,110 | ) | $ | (24,890 | ) | $ | (29,850 | ) | ||||
| Special Items to consider in evaluating operating loss: | ||||||||||||||||
| Severance and business restructuring costs | $ | 940 | $ | — | 940 | — | ||||||||||
|
Excluding Special Items, operating loss would have been |
$ | (7,300 | ) | $ | (11,110 | ) | (23,950 | ) | (29,850 | ) | ||||||
| Total Continuing Operations | ||||||||||||||||
| Net sales | $ | 222,190 | $ | 222,330 | $ | 671,220 | $ | 663,870 | ||||||||
| Operating profit | $ | 21,560 | $ | 20,520 | $ | 63,790 | $ | 70,000 | ||||||||
| Total Special Items to consider in evaluating operating profit | $ | 8,290 | $ | 2,700 | $ | 15,820 | $ | 5,050 | ||||||||
| Excluding Special Items, operating profit would have been | $ | 29,850 | $ | 23,220 | $ | 79,610 | $ | 75,050 | ||||||||
| Appendix I | ||||||||||||||||
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| Additional Information Regarding Special Items Impacting | ||||||||||||||||
| Reported GAAP Financial Measures | ||||||||||||||||
| (Unaudited - dollars in thousands, except per share amounts) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
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| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Income from continuing operations, as reported | $ | 11,710 | $ | 11,090 | $ | 32,140 | $ | 39,220 | ||||||||
| Less: Net income attributable to noncontrolling interests | — | — | — | 810 | ||||||||||||
|
Income from continuing operations attributable to |
11,710 | 11,090 | 32,140 | 38,410 | ||||||||||||
| After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | ||||||||||||||||
| Severance and business restructuring costs | 6,120 | 2,530 | 12,050 | 4,800 | ||||||||||||
| Debt extinguishment costs | — | — | 1,240 | — | ||||||||||||
|
Excluding Special Items, income from continuing operations
attributable to |
$ | 17,830 | $ | 13,620 | $ | 45,430 | $ | 43,210 | ||||||||
| Three months ended | Nine months ended | |||||||||||||||
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| 2015 | 2014 | 2015 | 2014 | |||||||||||||
|
Diluted earnings per share from continuing operations attributable
to |
$ | 0.26 | $ | 0.24 | $ | 0.70 | $ | 0.85 | ||||||||
| After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | ||||||||||||||||
| Severance and business restructuring costs | 0.13 | 0.05 | 0.27 | 0.10 | ||||||||||||
| Debt extinguishment costs | — | — | 0.03 | — | ||||||||||||
| Excluding Special Items, EPS from continuing operations would have been | $ | 0.39 | $ | 0.29 | $ | 1.00 | $ | 0.95 | ||||||||
| Weighted-average shares outstanding | 45,499,104 | 45,276,199 | 45,439,618 | 45,231,058 | ||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
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| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net cash provided by operating activities of continuing operations | $ | 8,260 | $ | 13,410 | $ | 28,740 | $ | 52,640 | ||||||||
| Add: Cash impact of Financial Improvement Plan | 730 | — | 730 | — | ||||||||||||
| Cash Flows from operating activities excluding special items | 8,990 | 13,410 | 29,470 | 52,640 | ||||||||||||
| Less: Capital expenditures of continuing operations | (7,470 | ) | (5,380 | ) | (20,360 | ) | (18,320 | ) | ||||||||
| Free Cash Flow from continuing operations | $ | 1,520 | $ | 8,030 | $ | 9,110 | $ | 34,320 | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20151029005177/en/
VP, Investor Relations
(248) 631-5506
sherrylauderback@trimascorp.com
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