TriMas Reports First Quarter 2020 Results
TriMas Highlights
-
Increased first quarter net sales by 5.4%, driven by acquisitions and solid organic growth in
TriMas' Packaging group -
Delivered first quarter diluted EPS from continuing operations of
$0.30 , while adjusted diluted EPS from continuing operations(1) was$0.34 -
Completed the acquisitions of RSA Engineered Products, a manufacturer of complex, highly-engineered products used in aerospace and defense applications, on
February 27, 2020 , andRapak , a provider of bag-in-box packaging product lines, onApril 17, 2020 - Repurchased approximately 2.8% of its outstanding common stock during first quarter 2020
"Before we discuss our first quarter financial results, I would like to address the current global crisis resulting from the COVID-19 pandemic," said
"In late January, we began experiencing some headwinds associated with the outbreak of COVID-19. Our facilities experienced varying degrees of production inefficiencies, whether due to temporary idling of production, reduced staffing levels, increased absenteeism or lower efficiency due to social distancing and other proactive protective measures taken to ensure the safety of our employees. Despite these challenges, we were able to achieve a first quarter sales growth rate of 5.4%, and adjusted diluted EPS from continuing operations(1) of
"TriMas is a company that provides innovative product solutions into a diverse set of end markets, and we expect this diversity will help us navigate through these unprecedented times. We serve several end markets where demand is robust. For example, TriMas’ Packaging group manufactures dispensers and closures that are used in applications that help fight the spread of germs, improve personal hygiene, and advance home and industrial cleaning, as well as food and beverage, pharmaceutical and nutraceutical applications. In addition, our Specialty Products group supplies steel cylinders that are used for compressed gases in medical oxygen applications, where we have seen a meaningful uptick in orders during the first quarter. However, we also serve some end markets which are more challenged, or that we expect to become more challenged, such as commercial aerospace, oil & gas, and certain applications that ultimately are sold into the restaurant or retail end markets."
"Due to the COVID-19 pandemic and the resulting demand, operational and economic uncertainty caused by it, TriMas is withdrawing its guidance for full year 2020 as we are unable to forecast the impact of this crisis on certain of our businesses with any precision. Across our portfolio, we are managing production capacity to prevailing demand conditions and are taking steps to realign costs for volume shortfalls. We are approaching the uncertainty for the rest of 2020 from a position of strength given our strong balance sheet, ample liquidity and no near-term debt maturities."
"As we move forward, we are even more convinced the steps we took over the past few years to strengthen our balance sheet and de-emphasize certain end markets better position TriMas to manage through this uncertain period. While we, like other companies, are facing unprecedented challenges, we are continuing to monitor the situation carefully to ensure safety, minimize risk, avoid supply chain disruptions and provide continuity of supply to our customers. Despite any potential nearer-term impacts, we remain confident that we will navigate through this crisis and TriMas will become even stronger as a result," Amato concluded.
First Quarter 2020
TriMas reported first quarter net sales of
The Company reported first quarter 2020 income from continuing operations of
Financial Position
TriMas ended first quarter 2020 with
The Company reported net cash provided by operating activities from continuing operations of
During the first quarter 2020, the Company purchased 1,253,650 shares, or approximately 2.8% of its outstanding common stock, for
First Quarter Segment Results - From Continuing Operations
Packaging (Approximately 55% of TriMas
Aerospace (Approximately 27% of TriMas
Specialty Products (Approximately 18% of TriMas
TriMas' Specialty Products segment, which includes the Norris Cylinder™ and Arrow® Engine brands, designs, manufactures and distributes highly-engineered steel cylinders and wellhead engines and compressor systems, for use within the welding and HVAC, medical, military, industrial, and oil and gas end markets. First quarter net sales decreased 13.2% compared to the year ago period, as a result of lower sales of products for the oil and gas end market, and lower steel cylinder demand in the construction and HVAC end markets. First quarter operating profit and the related margin percentage decreased, as a result of the impact of lower sales and the related lower fixed cost absorption.
Discontinued Operations
On
2020 Modification to Reporting Segments
Effective with the first quarter of 2020, the Company began reporting its
Outlook
Due to the COVID-19 pandemic and the resulting economic uncertainty, TriMas is withdrawing its full year guidance for 2020, which was previously provided on
"While the current environment presents us with uncertainties and challenges, our longer-term growth strategy remains consistent. We believe TriMas is well positioned financially and strategically, and we are confident our TriMas Business Model, strong brands and innovative product solutions, talented and dedicated employees, and relentless commitment to cash conversion position us well for the long term," Amato added.
Conference Call Information
TriMas will host its first quarter 2020 earnings conference call today,
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 TriMas’ business, financial condition or future results, involve risks and uncertainties with respect to, including, but not limited to: the severity and duration of the ongoing coronavirus (“COVID-19”) pandemic on our operations, customers and suppliers, as well as related actions taken by governmental authorities and other third parties in response, each of which is uncertain, rapidly changing and difficult to predict; 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; information technology and other cyber-related risks; the performance of subcontractors and suppliers; supply constraints; market demand; 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; the disruption of operations from catastrophic or extraordinary events, including natural disasters and public health crises; 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 Net Debt as Total Debt less Cash and Cash Equivalents. Please see Appendix I for additional details. |
|
(3) |
The Company defines Free Cash Flow as Net Cash Provided by/Used for Operating Activities from Continuing Operations, excluding the cash impact of Special Items, less Capital Expenditures. Please see Appendix I for additional details. |
About TriMas
TriMas is a global manufacturer and provider of products for customers primarily in the consumer products, aerospace and industrial end markets, with approximately 3,500 dedicated employees in 11 countries. We provide customers with a wide range of innovative and quality product solutions through our market-leading businesses. Our TriMas family of businesses has strong brand names in the end markets served, and operates under a common set of values and strategic priorities under the TriMas Business Model. TriMas is publicly traded on the NASDAQ under the ticker symbol “TRS,” and is headquartered in
|
Condensed Consolidated Balance Sheet (Dollars in thousands) |
||||||||||
|
|
|
|
|
|
||||||
|
Assets |
|
(unaudited) |
|
|
||||||
|
Current assets: |
|
|
|
|
||||||
|
Cash and cash equivalents |
|
$ |
206,110 |
|
|
$ |
172,470 |
|
||
|
Receivables, net |
|
122,580 |
|
|
108,860 |
|
||||
|
Inventories |
|
140,420 |
|
|
132,660 |
|
||||
|
Prepaid expenses and other current assets |
|
16,230 |
|
|
20,050 |
|
||||
|
Total current assets |
|
485,340 |
|
|
434,040 |
|
||||
|
Property and equipment, net |
|
208,440 |
|
|
214,330 |
|
||||
|
Operating lease right-of-use assets |
|
29,490 |
|
|
27,850 |
|
||||
|
|
|
375,670 |
|
|
334,640 |
|
||||
|
Other intangibles, net |
|
193,260 |
|
|
161,390 |
|
||||
|
Deferred income taxes |
|
3,630 |
|
|
500 |
|
||||
|
Other assets |
|
24,590 |
|
|
19,950 |
|
||||
|
Total assets |
|
$ |
1,320,420 |
|
|
$ |
1,192,700 |
|
||
|
Liabilities and Shareholders' Equity |
|
|
|
|
||||||
|
Current liabilities: |
|
|
|
|
||||||
|
Current maturities, long-term debt |
|
$ |
— |
|
|
$ |
— |
|
||
|
Accounts payable |
|
59,460 |
|
|
72,670 |
|
||||
|
Accrued liabilities |
|
39,660 |
|
|
42,020 |
|
||||
|
Operating lease liabilities, current portion |
|
5,380 |
|
|
5,100 |
|
||||
|
Total current liabilities |
|
104,500 |
|
|
119,790 |
|
||||
|
Long-term debt, net |
|
444,980 |
|
|
294,690 |
|
||||
|
Operating lease liabilities |
|
24,440 |
|
|
23,100 |
|
||||
|
Deferred income taxes |
|
32,820 |
|
|
16,830 |
|
||||
|
Other long-term liabilities |
|
38,220 |
|
|
40,810 |
|
||||
|
Total liabilities |
|
644,960 |
|
|
495,220 |
|
||||
|
Total shareholders' equity |
|
675,460 |
|
|
697,480 |
|
||||
|
Total liabilities and shareholders' equity |
|
$ |
1,320,420 |
|
|
$ |
1,192,700 |
|
||
|
Consolidated Statement of Income (Unaudited - dollars in thousands, except per share amounts) |
||||||||||
|
|
|
Three months ended
|
||||||||
|
|
|
2020 |
|
2019 |
||||||
|
Net sales |
|
$ |
182,790 |
|
|
$ |
173,370 |
|
||
|
Cost of sales |
|
(136,420 |
) |
|
(126,580 |
) |
||||
|
Gross profit |
|
46,370 |
|
|
46,790 |
|
||||
|
Selling, general and administrative expenses |
|
(26,540 |
) |
|
(26,990 |
) |
||||
|
Operating profit |
|
19,830 |
|
|
19,800 |
|
||||
|
Other expense, net: |
|
|
|
|
||||||
|
Interest expense |
|
(3,580 |
) |
|
(3,440 |
) |
||||
|
Other expense, net |
|
(80 |
) |
|
(570 |
) |
||||
|
Other expense, net |
|
(3,660 |
) |
|
(4,010 |
) |
||||
|
Income before income tax expense |
|
16,170 |
|
|
15,790 |
|
||||
|
Income tax expense |
|
(3,050 |
) |
|
(1,240 |
) |
||||
|
Income from continuing operations |
|
13,120 |
|
|
14,550 |
|
||||
|
Income from discontinued operations, net of tax |
|
— |
|
|
4,540 |
|
||||
|
Net income |
|
$ |
13,120 |
|
|
$ |
19,090 |
|
||
|
Basic earnings per share: |
|
|
|
|
||||||
|
Continuing operations |
|
$ |
0.30 |
|
|
$ |
0.32 |
|
||
|
Discontinued operations |
|
— |
|
|
0.10 |
|
||||
|
Net income per share |
|
$ |
0.30 |
|
|
$ |
0.42 |
|
||
|
Weighted average common shares—basic |
|
44,201,053 |
|
|
45,578,815 |
|
||||
|
Diluted earnings per share: |
|
|
|
|
||||||
|
Continuing operations |
|
$ |
0.30 |
|
|
$ |
0.32 |
|
||
|
Discontinued operations |
|
— |
|
|
0.10 |
|
||||
|
Net income per share |
|
$ |
0.30 |
|
|
$ |
0.42 |
|
||
|
Weighted average common shares—diluted |
|
44,470,472 |
|
|
45,992,182 |
|
||||
|
Consolidated Statement of Cash Flow (Unaudited - dollars in thousands) |
||||||||
|
|
|
Three months ended
|
||||||
|
|
|
2020 |
|
2019 |
||||
|
Cash Flows from Operating Activities: |
|
|
|
|
||||
|
Net income |
|
$ |
13,120 |
|
|
$ |
19,090 |
|
|
Income from discontinued operations |
|
— |
|
|
4,540 |
|
||
|
Income from continuing operations |
|
13,120 |
|
|
14,550 |
|
||
|
Adjustments to reconcile income from continuing operations to net cash provided by operating activities, net of acquisition impact: |
|
|
|
|
||||
|
Loss on dispositions of assets |
|
50 |
|
|
10 |
|
||
|
Bargain purchase gain |
|
— |
|
|
— |
|
||
|
Depreciation |
|
6,660 |
|
|
5,690 |
|
||
|
Amortization of intangible assets |
|
4,850 |
|
|
4,630 |
|
||
|
Amortization of debt issue costs |
|
290 |
|
|
280 |
|
||
|
Deferred income taxes |
|
2,570 |
|
|
2,210 |
|
||
|
Non-cash compensation expense |
|
1,940 |
|
|
1,320 |
|
||
|
Increase in receivables |
|
(10,610 |
) |
|
(4,530 |
) |
||
|
Increase in inventories |
|
(110 |
) |
|
(420 |
) |
||
|
Increase in prepaid expenses and other assets |
|
(110 |
) |
|
(860 |
) |
||
|
Decrease in accounts payable and accrued liabilities |
|
(14,780 |
) |
|
(7,980 |
) |
||
|
Other operating activities |
|
(470 |
) |
|
150 |
|
||
|
Net cash provided by operating activities of continuing operations |
|
3,400 |
|
|
15,050 |
|
||
|
Net cash used for operating activities of discontinued operations |
|
— |
|
|
(6,970 |
) |
||
|
Net cash provided by operating activities, net of acquisition impact |
|
3,400 |
|
|
8,080 |
|
||
|
Cash Flows from Investing Activities: |
|
|
|
|
||||
|
Capital expenditures |
|
(3,930 |
) |
|
(6,230 |
) |
||
|
Acquisition of businesses, net of cash acquired |
|
(84,270 |
) |
|
(22,270 |
) |
||
|
Net proceeds from disposition of business, property and equipment |
|
1,880 |
|
|
— |
|
||
|
Net cash used for investing activities of continuing operations |
|
(86,320 |
) |
|
(28,500 |
) |
||
|
Net cash used for investing activities of discontinued operations |
|
— |
|
|
(410 |
) |
||
|
Net cash used for investing activities |
|
(86,320 |
) |
|
(28,910 |
) |
||
|
Cash Flows from Financing Activities: |
|
|
|
|
||||
|
Proceeds from borrowings on revolving credit facilities |
|
198,290 |
|
|
26,250 |
|
||
|
Repayments of borrowings on revolving credit facilities |
|
(48,330 |
) |
|
(25,870 |
) |
||
|
Shares surrendered upon exercise and vesting of equity awards to cover taxes |
|
(1,830 |
) |
|
(2,620 |
) |
||
|
Payments to purchase common stock |
|
(31,570 |
) |
|
(670 |
) |
||
|
Net cash provided by (used for) financing activities of continuing operations |
|
116,560 |
|
|
(2,910 |
) |
||
|
Net cash provided by financing activities of discontinued operations |
|
— |
|
|
— |
|
||
|
Net cash provided by (used for) financing activities |
|
116,560 |
|
|
(2,910 |
) |
||
|
Cash and Cash Equivalents: |
|
|
|
|
||||
|
Increase (decrease) for the period |
|
33,640 |
|
|
(23,740 |
) |
||
|
At beginning of period |
|
172,470 |
|
|
108,150 |
|
||
|
At end of period |
|
$ |
206,110 |
|
|
$ |
84,410 |
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
||||
|
Cash paid for interest |
|
$ |
370 |
|
|
$ |
300 |
|
|
Cash paid for taxes |
|
$ |
1,850 |
|
$ |
1,870 |
||
|
Appendix I |
||||||||||
|
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures Continuing Operations (Unaudited - dollars in thousands) |
||||||||||
|
|
|
Three months ended
|
||||||||
|
|
|
2020 |
|
|
2019 |
|||||
|
Packaging |
|
|
|
|
||||||
|
Net sales |
|
$ |
100,050 |
|
|
$ |
88,840 |
|
||
|
Operating profit |
|
$ |
18,280 |
|
|
$ |
17,640 |
|
||
|
Special Items to consider in evaluating operating profit: |
|
|
|
|
||||||
|
Purchase accounting costs |
|
— |
|
|
1,020 |
|
||||
|
Business restructuring and severance costs |
|
320 |
|
|
— |
|
||||
|
Adjusted operating profit |
|
$ |
18,600 |
|
|
$ |
18,660 |
|
||
|
|
|
|
|
|
||||||
|
Aerospace |
|
|
|
|
||||||
|
Net sales |
|
$ |
48,920 |
|
|
$ |
45,580 |
|
||
|
Operating profit |
|
$ |
5,080 |
|
|
$ |
5,810 |
|
||
|
Special Items to consider in evaluating operating profit: |
|
|
|
|
||||||
|
Purchase accounting costs |
|
510 |
|
|
— |
|
||||
|
Business restructuring and severance costs |
|
500 |
|
|
440 |
|
||||
|
Adjusted operating profit |
|
$ |
6,090 |
|
|
$ |
6,250 |
|
||
|
|
|
|
|
|
||||||
|
Specialty Products |
|
|
|
|
||||||
|
Net sales |
|
$ |
33,820 |
|
|
$ |
38,950 |
|
||
|
Operating profit |
|
$ |
3,430 |
|
|
$ |
4,700 |
|
||
|
|
|
|
|
|
||||||
|
Corporate Expenses |
|
|
|
|
||||||
|
Operating loss |
|
$ |
(6,960 |
) |
|
$ |
(8,350 |
) |
||
|
Special Items to consider in evaluating operating loss: |
|
|
|
|
||||||
|
M&A diligence and transaction costs |
|
810 |
|
|
1,120 |
|
||||
|
Adjusted operating loss |
|
$ |
(6,150 |
) |
|
$ |
(7,230 |
) |
||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
Net sales |
|
$ |
182,790 |
|
|
$ |
173,370 |
|
||
|
Operating profit |
|
$ |
19,830 |
|
|
$ |
19,800 |
|
||
|
Total Special Items to consider in evaluating operating profit |
|
2,140 |
|
|
2,580 |
|
||||
|
Adjusted operating profit |
|
$ |
21,970 |
|
|
$ |
22,380 |
|
||
|
Appendix I |
||||||||||
|
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures (Unaudited - dollars in thousands, except per share amounts) |
||||||||||
|
|
|
Three months ended
|
||||||||
|
|
|
2020 |
|
|
2019 |
|||||
|
Income from continuing operations, as reported |
|
$ |
13,120 |
|
|
$ |
14,550 |
|
||
|
Special Items to consider in evaluating quality of income from continuing operations: |
|
|
|
|
||||||
|
M&A diligence and transaction costs |
|
1,110 |
|
|
1,120 |
|
||||
|
Purchase accounting costs |
|
510 |
|
|
1,020 |
|
||||
|
Business restructuring and severance costs |
|
820 |
|
|
440 |
|
||||
|
Income tax effect of Special Items(1) |
|
(460 |
) |
|
(560 |
) |
||||
|
Adjusted income from continuing operations |
|
$ |
15,100 |
|
|
$ |
16,570 |
|
||
|
|
|
|
|
|
||||||
|
|
|
Three months ended
|
||||||||
|
|
|
2020 |
|
2019 |
||||||
|
Diluted earnings per share from continuing operations, as reported |
|
$ |
0.30 |
|
|
$ |
0.32 |
|
||
|
Special Items to consider in evaluating quality of EPS from continuing operations: |
|
|
|
|
||||||
|
M&A diligence and transaction costs |
|
0.02 |
|
|
0.02 |
|
||||
|
Purchase accounting costs |
|
0.01 |
|
|
0.02 |
|
||||
|
Business restructuring and severance costs |
|
0.02 |
|
|
0.01 |
|
||||
|
Income tax effect of Special Items(1) |
|
(0.01 |
) |
|
(0.01 |
) |
||||
|
Adjusted diluted EPS from continuing operations |
|
$ |
0.34 |
|
|
$ |
0.36 |
|
||
|
Weighted-average shares outstanding |
|
44,470,472 |
|
|
45,992,182 |
|
||||
|
(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 |
||||||||||||||||||||||
|
|
|
2020 |
|
2019 |
||||||||||||||||||||
|
|
|
As reported |
|
Special Items |
|
As adjusted |
|
As reported |
|
Special Items |
|
As adjusted |
||||||||||||
|
Net cash provided by operating activities
|
|
$ |
3,400 |
|
|
$ |
2,290 |
|
|
$ |
5,690 |
|
|
$ |
15,050 |
|
|
$ |
1,130 |
|
|
$ |
16,180 |
|
|
Less: Capital expenditures |
|
(3,930 |
) |
|
— |
|
|
(3,930 |
) |
|
(6,230 |
) |
|
— |
|
|
(6,230 |
) |
||||||
|
Free Cash Flow |
|
(530 |
) |
|
2,290 |
|
|
1,760 |
|
|
8,820 |
|
|
1,130 |
|
|
9,950 |
|
||||||
|
Income from continuing operations |
|
13,120 |
|
|
1,980 |
|
|
15,100 |
|
|
14,550 |
|
|
2,020 |
|
|
16,570 |
|
||||||
|
Free Cash Flow as a percentage of income
|
|
(4 |
)% |
|
|
|
12 |
% |
|
61 |
% |
|
|
|
60 |
% |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
||||||
|
Current maturities, long-term debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
90 |
|
|
Long-term debt, net |
|
444,980 |
|
|
294,690 |
|
|
293,840 |
|
|||
|
Total Debt |
|
444,980 |
|
|
294,690 |
|
|
293,930 |
|
|||
|
Less: Cash and cash equivalents |
|
206,110 |
|
|
172,470 |
|
|
84,410 |
|
|||
|
Net Debt |
|
$ |
238,870 |
|
|
$ |
122,220 |
|
|
$ |
209,520 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200430005127/en/
VP, Investor Relations
(248) 631-5506
sherrylauderback@trimascorp.com
Source: TriMas
