TriMas Corporation Reports Record Second Quarter Results
Company Reports Growth in Sales of 12% and Income(1) of 20%
Company Reaffirms 2013 Outlook of
TriMas Highlights
-
Reported record second quarter net sales of
$378.0 million , an increase of 11.7% as compared to second quarter 2012, due to results from bolt-on acquisitions and the successful execution of numerous growth initiatives. -
Improved income from continuing operations attributable to
TriMas Corporation (1) by 19.7%, excluding the impact of Special Items, compared to second quarter 2012. Improved diluted earnings per share(1), while absorbing costs related to several acquisitions and approximately 6% higher weighted average shares outstanding for second quarter 2013, as compared to second quarter 2012. -
Completed five bolt-on acquisitions for approximately
$47 million , net of cash acquired, or approximately one-times revenue acquired, through second quarter year to date to expand and globalize existing product offerings, gain access to new customers and end markets, expand the geographic footprint internationally, further enhance management capacity, and capitalize on scale and cost efficiencies. - Reduced interest expense by more than 45% as compared with second quarter 2012.
- Continued to invest in a flexible manufacturing footprint to optimize manufacturing costs long-term, add necessary capacity, enhance customer service and support future growth.
-
Today announced the acquisition of substantially all of the assets of
a towbar manufacturer located in
Germany andFinland . These assets, combined with theApril 2013 acquisition ofC.P. Witter Limited , a leading manufacturer of highly-engineered towbars and cargo management products located in theUnited Kingdom , position Cequent to capitalize on growth opportunities in new markets through product and geographic expansion.
"Our second quarter results are as expected with 11.7% sales growth and
a 19.7% increase in income from continuing operations attributable to
"In the midst of a challenging global economic environment, we continue to identify the bright spots and successfully execute on new product introductions, geographic expansion and market share initiatives, as well as leverage our recent bolt-on acquisitions. These initiatives have contributed to our year-over-year sales increases in five of our six segments during the second quarter. We also continued with footprint consolidation projects within our Cequent segments, moving toward more efficient and flexible manufacturing facilities.
"In the short term, our margins are lower than our expected run rates due to the temporary costs related to our recent acquisitions, including diligence and integration costs, purchase accounting adjustments and lower initial margin rates of these businesses. We remain committed to increasing margins across our businesses and we will continue to implement productivity and Lean programs throughout the organization, improve the margins of our acquired businesses and leverage our flexible manufacturing footprint."
"As we look to the second half of the year, we maintain a conservative
macroeconomic outlook, while remaining confident in our ability to
deliver our previous guidance for full year 2013," added
Second Quarter Financial Results - From Continuing Operations
-
TriMas reported record second quarter net sales of$378.0 million , an increase of 11.7% as compared to$338.4 million in second quarter 2012. During second quarter, net sales increased in five of the six reportable segments, primarily as a result of additional sales from bolt-on acquisitions, market share gains, new product introductions, geographic expansion and increased market demand as compared to second quarter 2012. More than half of the sales increase was due to organic growth, while the remainder was the result of recent acquisitions, partially offset by approximately$1.2 million of unfavorable currency exchange. -
The Company reported operating profit of
$41.6 million in second quarter 2013. Excluding Special Items(1) related to facility consolidation and relocation projects within Cequent, second quarter 2013 operating profit would have been$43.6 million , as compared to$46.2 million during second quarter 2012. Second quarter 2013 operating profit and the related margin percentage were impacted by costs related to recent acquisitions including purchase accounting adjustments, higher costs associated with global growth initiatives and new plant and equipment ramp-up costs. The Company continued to generate significant savings from capital investments, productivity projects and Lean initiatives, which contributed to the funding of growth initiatives. -
Excluding noncontrolling interests related to
Arminak & Associates , second quarter 2013 income from continuing operations attributable toTriMas Corporation was$26.2 million , or$0.65 per diluted share, compared to income from continuing operations attributable toTriMas Corporation of$16.7 million , or$0.44 per diluted share, during second quarter 2012. Excluding Special Items(1), second quarter 2013 income from continuing operations attributable toTriMas Corporation would have been$27.6 million , an improvement of 19.7%, and diluted earnings per share from continuing operations would have been$0.69 , a 13.1% improvement from second quarter 2012, primarily due to lower interest expense, while absorbing approximately 6% higher weighted average shares outstanding. -
The Company reported Free Cash Flow (defined as
Cash Flow from Operating Activities less Capital Expenditures) of$39.5 million for second quarter 2013, compared to$19.3 million in second quarter 2012. The Company reported a year to date Free Cash Flow use of$12.4 million for 2013, compared to a use of$31.5 million year to date 2012. The Company expects to generate between$40 million and$50 million in Free Cash Flow for 2013, while continuing to invest in capital expenditures, working capital investments in acquisitions and future growth and productivity programs. -
Through June 30, 2013, the Company invested
$25.9 million in capital expenditures (included in Free Cash Flow above) primarily in support of future growth and productivity opportunities and$46.6 million , net of cash acquired, in bolt-on acquisitions.
Financial Position
As of
Business Segment Results(2) - From Continuing Operations
Packaging - (Consists of
Net sales for second quarter increased 11.2% compared to the year ago
period primarily due to increases in specialty systems product sales
resulting from additional demand from North American and European
dispensing customers, as well as new customer opportunities in
Energy - (Consists of Lamons including South Texas Bolt & Fitting, CIFAL, Gasket Vedações Técnicas and Wulfrun)
Second quarter net sales increased 24.7% compared to the year ago period
primarily due to increased sales to engineering and construction
customers, recent acquisitions and higher sales levels from the European
branches. Second quarter operating profit increased, while the related
margin percentage decreased as incremental margin driven by increased
sales and manufacturing productivity was more than offset by higher
selling, general and administrative expenses in support of branch
expansion and acquisition costs incurred during the second quarter of
2013. The Company continues to grow its sales and service branch network
in support of its global customers. The Company acquired the assets of
Aerospace & Defense - (Consists of
Net sales for the second quarter increased 22.8% compared to the year ago period primarily due to the acquisition of Martinic Engineering and higher sales levels in the blind bolt fastener product lines, partially offset by a decrease in sales from the defense business. Second quarter operating profit increased, while the related margin percentage decreased primarily due to the impact of Martinic, including purchase accounting adjustments, additional selling, general and administrative costs and a less favorable product mix, as well as new equipment and plant ramp-up costs in the legacy aerospace business during the second quarter of 2013. The Company continues to invest in this segment by developing and marketing highly-engineered products for aerospace applications, as well as bidding on new projects for defense customers.
Engineered Components - (Consists of Arrow Engine and Norris Cylinder)
Second quarter net sales decreased 4.9% compared to the year ago period primarily due to lower demand for engines, gas compression products and other well-site content related to decreased levels of drilling activity and well completions as compared to second quarter 2012. However, sales of industrial cylinders increased primarily due to growth in international markets and continued domestic market share gains. Second quarter operating profit and the related margin percentage decreased compared to the prior year period primarily due to the decreased sales and lower fixed cost absorption in the engine business, which was partially offset by improvements in the industrial cylinder business. The Company continues to develop new products and expand its international sales efforts.
Cequent APEA - (Consists of Cequent operations in
The Company renamed its former Cequent Asia Pacific segment to Cequent APEA (Cequent Asia Pacific Europe Africa) effective in the second quarter of 2013 following the Company's recent acquisitions to more appropriately reflect the expanding geography covered by this segment.
Net sales for second quarter increased 34.1% compared to the year ago
period, primarily due to the
Cequent Americas - (Consists of
Net sales for second quarter increased 7.0% compared to the year ago
period, resulting primarily from increased sales within the retail, auto
original equipment and aftermarket channels, as well as the sales
related to the
2013 Outlook
The Company reaffirmed its expectations for full year 2013. The Company
is estimating that 2013 sales will increase 6% to 8% compared to 2012.
The Company expects full year 2013 diluted earnings per share from
continuing operations to be between
Conference Call Information
Cautionary Notice Regarding Forward-Looking Statements
Any "forward-looking" statements contained herein, including those relating to market conditions or the Company's financial condition and results, expense reductions, liquidity expectations, business goals and sales growth, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect to general economic and currency conditions, various conditions specific to the Company's business and industry, the Company's substantial leverage, liabilities imposed by the Company's debt instruments, market demand, competitive factors, supply constraints, material and energy costs, technology factors, litigation, government and regulatory actions, the Company's accounting policies, future trends, and other risks which are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and in the Company's Quarterly Reports on Form 10-Q. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements.
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
(1) Appendix I details certain costs, expenses and other
charges, collectively described as "Special Items," that are included in
the determination of 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 |
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(Unaudited - dollars in thousands) |
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| 2013 | 2012 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 18,830 | $ | 20,580 | |||
| Receivables, net | 207,860 | 150,390 | |||||
| Inventories | 246,060 | 238,020 | |||||
| Deferred income taxes | 17,990 | 18,270 | |||||
| Prepaid expenses and other current assets | 12,770 | 10,530 | |||||
| Total current assets | 503,510 | 437,790 | |||||
| Property and equipment, net | 200,330 | 185,030 | |||||
| Goodwill | 285,360 | 270,940 | |||||
| Other intangibles, net | 208,850 | 206,160 | |||||
| Other assets | 41,270 | 31,040 | |||||
| Total assets | $ | 1,239,320 | $ | 1,130,960 | |||
| Liabilities and Shareholders' Equity | |||||||
| Current liabilities: | |||||||
| Current maturities, long-term debt | $ | 20,840 | $ | 14,370 | |||
| Accounts payable | 163,830 | 158,410 | |||||
| Accrued liabilities | 74,120 | 74,420 | |||||
| Total current liabilities | 258,790 | 247,200 | |||||
| Long-term debt | 459,810 | 408,070 | |||||
| Deferred income taxes | 65,160 | 60,370 | |||||
| Other long-term liabilities | 87,140 | 84,960 | |||||
| Total liabilities | 870,900 | 800,600 | |||||
| Redeemable noncontrolling interests | 27,200 | 26,780 | |||||
| Total shareholders' equity | 341,220 | 303,580 | |||||
| Total liabilities and shareholders' equity | $ | 1,239,320 | $ | 1,130,960 | |||
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Consolidated Statement of Income |
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(Unaudited - dollars in thousands, except per share amounts) |
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| Three months ended | Six months ended | |||||||||||||||
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net sales | $ | 378,030 | $ | 338,430 | $ | 715,810 | $ | 636,000 | ||||||||
| Cost of sales | (274,720 | ) | (242,540 | ) | (529,100 | ) | (461,200 | ) | ||||||||
| Gross profit | 103,310 | 95,890 | 186,710 | 174,800 | ||||||||||||
| Selling, general and administrative expenses | (61,670 | ) | (52,710 | ) | (121,320 | ) | (103,180 | ) | ||||||||
| Net gain (loss) on dispositions of property and equipment | — | 20 | (10 | ) | 320 | |||||||||||
| Operating profit | 41,640 | 43,200 | 65,380 | 71,940 | ||||||||||||
| Other expense, net: | ||||||||||||||||
| Interest expense | (5,540 | ) | (10,300 | ) | (10,750 | ) | (20,970 | ) | ||||||||
| Debt extinguishment costs | — | (6,560 | ) | — | (6,560 | ) | ||||||||||
| Other income (expense), net | 300 | (910 | ) | (1,930 | ) | (2,550 | ) | |||||||||
| Other expense, net | (5,240 | ) | (17,770 | ) | (12,680 | ) | (30,080 | ) | ||||||||
| Income from continuing operations before income tax expense | 36,400 | 25,430 | 52,700 | 41,860 | ||||||||||||
| Income tax expense | (9,300 | ) | (8,260 | ) | (11,560 | ) | (12,440 | ) | ||||||||
| Income from continuing operations | 27,100 | 17,170 | 41,140 | 29,420 | ||||||||||||
| Income from discontinued operations, net of income tax expense | 700 | — | 700 | — | ||||||||||||
| Net income | 27,800 | 17,170 | 41,840 | 29,420 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | 910 | 510 | 1,770 | 270 | ||||||||||||
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Net income attributable to |
$ | 26,890 | $ | 16,660 | $ | 40,070 | $ | 29,150 | ||||||||
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Basic earnings per share attributable to |
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| Continuing operations | $ | 0.66 | $ | 0.45 | $ | 1.00 | $ | 0.81 | ||||||||
| Discontinued operations | 0.02 | — | 0.02 | — | ||||||||||||
| Net income per share | $ | 0.68 | $ | 0.45 | $ | 1.02 | $ | 0.81 | ||||||||
| Weighted average common shares—basic | 39,425,471 | 37,345,026 | 39,330,125 | 35,968,646 | ||||||||||||
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Diluted earnings per share attributable to |
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| Continuing operations | $ | 0.65 | $ | 0.44 | $ | 0.99 | $ | 0.80 | ||||||||
| Discontinued operations | 0.02 | — | 0.02 | — | ||||||||||||
| Net income per share | $ | 0.67 | $ | 0.44 | $ | 1.01 | $ | 0.80 | ||||||||
| Weighted average common shares—diluted | 39,886,593 | 37,694,221 | 39,790,349 | 36,421,387 | ||||||||||||
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Consolidated Statement of |
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(Unaudited - dollars in thousands) |
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| Six months ended | ||||||||
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| 2013 | 2012 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | 41,840 | 29,420 | ||||||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities, net of acquisition impact: | ||||||||
| (Gain) loss on dispositions of property and equipment | 10 | (320 | ) | |||||
| Depreciation | 14,560 | 12,690 | ||||||
| Amortization of intangible assets | 10,230 | 9,180 | ||||||
| Amortization of debt issue costs | 870 | 1,600 | ||||||
| Deferred income taxes | (3,470 | ) | 200 | |||||
| Debt extinguishment costs | — | 6,560 | ||||||
| Non-cash compensation expense | 4,750 | 3,510 | ||||||
| Excess tax benefits from stock based compensation | (1,180 | ) | (2,130 | ) | ||||
| Increase in receivables | (54,460 | ) | (41,630 | ) | ||||
| (Increase) decrease in inventories | 1,320 | (31,270 | ) | |||||
| Increase in prepaid expenses and other assets | (2,240 | ) | (1,740 | ) | ||||
| Increase in accounts payable and accrued liabilities | 2,320 | 8,470 | ||||||
| Other, net | (1,010 | ) | 580 | |||||
| Net cash provided by (used for) operating activities, net of acquisition impact | 13,540 | (4,880 | ) | |||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (25,920 | ) | (26,640 | ) | ||||
| Acquisition of businesses, net of cash acquired | (46,610 | ) | (61,820 | ) | ||||
| Net proceeds from disposition of assets | 700 | 2,770 | ||||||
| Net cash used for investing activities | (71,830 | ) | (85,690 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of common stock in connection with the Company's equity offering, net of issuance costs | — | 79,040 | ||||||
| Proceeds from borrowings on term loan facilities | 106,420 | 69,530 | ||||||
| Repayments of borrowings on term loan facilities | (104,830 | ) | (69,150 | ) | ||||
| Proceeds from borrowings on revolving credit and accounts receivable facilities | 475,890 | 412,900 | ||||||
| Repayments of borrowings on revolving credit and accounts receivable facilities | (418,900 | ) | (412,900 | ) | ||||
| Repurchase of 9¾% senior secured notes | — | (50,000 | ) | |||||
| Senior secured notes redemption premium and debt financing fees | — | (4,880 | ) | |||||
| Distributions to noncontrolling interests | (1,350 | ) | (410 | ) | ||||
| Proceeds from contingent consideration related to disposition of businesses | 1,030 | — | ||||||
| Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (3,760 | ) | (990 | ) | ||||
| Proceeds from exercise of stock options | 860 | 5,660 | ||||||
| Excess tax benefits from stock based compensation | 1,180 | 2,130 | ||||||
| Net cash provided by financing activities | 56,540 | 30,930 | ||||||
| Cash and Cash Equivalents: | ||||||||
| Decrease for the period | (1,750 | ) | (59,640 | ) | ||||
| At beginning of period | 20,580 | 88,920 | ||||||
| At end of period | $ | 18,830 | $ | 29,280 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 8,280 | $ | 17,790 | ||||
| Cash paid for taxes | $ | 13,830 | $ | 13,840 | ||||
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Company and Business Segment Financial Information |
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Continuing Operations |
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(Unaudited - dollars in thousands) |
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| Three months ended | Six months ended | |||||||||||||||
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Packaging | ||||||||||||||||
| Net sales | $ | 78,640 | $ | 70,700 | $ | 152,990 | $ | 125,010 | ||||||||
| Operating profit | $ | 19,600 | $ | 16,570 | $ | 34,230 | $ | 26,460 | ||||||||
| Energy | ||||||||||||||||
| Net sales | $ | 58,820 | $ | 47,170 | $ | 113,740 | $ | 97,760 | ||||||||
| Operating profit | $ | 5,210 | $ | 4,350 | $ | 11,080 | $ | 10,740 | ||||||||
| Aerospace & Defense | ||||||||||||||||
| Net sales | $ | 23,740 | $ | 19,330 | $ | 44,710 | $ | 37,190 | ||||||||
| Operating profit | $ | 5,520 | $ | 4,820 | $ | 9,270 | $ | 9,680 | ||||||||
| Engineered Components | ||||||||||||||||
| Net sales | $ | 50,020 | $ | 52,620 | $ | 96,290 | $ | 102,300 | ||||||||
| Operating profit | $ | 5,890 | $ | 8,600 | $ | 11,590 | $ | 16,310 | ||||||||
| Cequent APEA | ||||||||||||||||
| Net sales | $ | 38,290 | $ | 28,550 | $ | 70,380 | $ | 56,750 | ||||||||
| Operating profit | $ | 2,550 | $ | 2,010 | $ | 5,730 | $ | 5,050 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | — | $ | 1,560 | $ | — | $ | 2,280 | ||||||||
| Excluding Special Items, operating profit would have been | $ | 2,550 | $ | 3,570 | $ | 5,730 | $ | 7,330 | ||||||||
| Cequent Americas | ||||||||||||||||
| Net sales | $ | 128,520 | $ | 120,060 | $ | 237,700 | $ | 216,990 | ||||||||
| Operating profit | $ | 12,890 | $ | 15,500 | $ | 13,590 | $ | 19,660 | ||||||||
| Special Items to consider in evaluating operating profit: | ||||||||||||||||
| Severance and business restructuring costs | $ | 1,960 | $ | 1,390 | $ | 7,790 | $ | 2,340 | ||||||||
| Excluding Special Items, operating profit would have been | $ | 14,850 | $ | 16,890 | $ | 21,380 | $ | 22,000 | ||||||||
| Corporate Expenses | ||||||||||||||||
| Operating loss | $ | (10,020 | ) | $ | (8,650 | ) | $ | (20,110 | ) | $ | (15,960 | ) | ||||
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| Net sales | $ | 378,030 | $ | 338,430 | $ | 715,810 | $ | 636,000 | ||||||||
| Operating profit | $ | 41,640 | $ | 43,200 | $ | 65,380 | $ | 71,940 | ||||||||
| Total Special Items to consider in evaluating operating profit: | $ | 1,960 | $ | 2,950 | $ | 7,790 | $ | 4,620 | ||||||||
| Excluding Special Items, operating profit would have been | $ | 43,600 | $ | 46,150 | $ | 73,170 | $ | 76,560 | ||||||||
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Appendix I |
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Additional Information Regarding Special Items Impacting |
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Reported GAAP Financial Measures |
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(Unaudited - dollars in thousands, except per share amounts) |
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| Three months ended | Six months ended | ||||||||||||||
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| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Income from continuing operations, as reported | $ | 27,100 | $ | 17,170 | $ | 41,140 | $ | 29,420 | |||||||
| Less: Net income attributable to noncontrolling interests | 910 | 510 | 1,770 | 270 | |||||||||||
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Income from continuing operations attributable to |
26,190 | 16,660 | 39,370 | 29,150 | |||||||||||
| After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | |||||||||||||||
| Severance and business restructuring costs | 1,390 | 1,980 | 5,590 | 3,100 | |||||||||||
| Debt extinguishment costs | — | 4,400 | — | 4,400 | |||||||||||
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Excluding Special Items, income from continuing operations
attributable to |
$ | 27,580 | $ | 23,040 | $ | 44,960 | $ | 36,650 | |||||||
| Three months ended | Six months ended | ||||||||||||||
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| 2013 | 2012 | 2013 | 2012 | ||||||||||||
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Diluted earnings per share from continuing operations attributable
to |
$ | 0.65 | $ | 0.44 | $ | 0.99 | $ | 0.80 | |||||||
| After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | |||||||||||||||
| Severance and business restructuring costs | 0.04 | 0.05 | 0.14 | 0.09 | |||||||||||
| Debt extinguishment costs | — | 0.12 | — | 0.12 | |||||||||||
| Excluding Special Items, EPS from continuing operations would have been | $ | 0.69 | $ | 0.61 | $ | 1.13 | $ | 1.01 | |||||||
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Weighted-average shares outstanding for the three and six months
ended |
39,886,593 | 37,694,221 | 39,790,349 | 36,421,387 | |||||||||||
VP, Investor Relations
(248) 631-5506
sherrylauderback@trimascorp.com
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