TriMas' Packaging Group Posts Record First
Quarter Sales and Operating Profit
TriMas (NASDAQ: TRS) today announced financial results for the
first quarter ended March 31, 2021.
TriMas Highlights
- Increased first quarter net sales by 13.1%, driven by record
first quarter sales in TriMas' Packaging segment
- Increased operating profit due to continued momentum in TriMas'
Packaging segment and margin expansion in the Specialty Products
segment
- Completed the successful refinancing of its capital structure,
extending maturities on both its credit facility and senior notes,
and locking in a historically low rate on its fixed rate debt
- Announced Chief Financial Officer transition as part of
succession planning
First Quarter 2021
TriMas reported first quarter net sales of $206.7 million, an
increase of 13.1% compared to $182.8 million in first quarter 2020,
as organic sales growth in Packaging and the impact of recent
acquisitions were partially offset by the impact of weaker demand
in the Company's aerospace and industrial businesses resulting from
the effects of the COVID-19 pandemic. The Company reported
operating profit of $21.1 million in first quarter 2021, compared
to an operating profit of $19.8 million in first quarter 2020.
Adjusting for Special Items(1) primarily related to realignment and
M&A costs, first quarter 2021 adjusted operating profit was
$26.6 million, a 21.3% increase compared to $22.0 million in the
prior year period, primarily as a result of higher overall sales
and improved profit margin within Specialty Products.
The Company reported a first quarter 2021 net income of $13.1
million, or $0.30 per diluted share, relatively flat compared to
first quarter 2020. First quarter 2021 adjusted net income(1) was
$17.4 million, or $0.40 per diluted share, an increase of 15.2%
compared to $15.1 million, or $0.34 per diluted share, in the prior
year period.
"Overall, we are off to an encouraging start to 2021 with first
quarter results that exceeded our initial expectations," said
Thomas Amato, TriMas President and Chief Executive Officer. "During
the first quarter, we achieved a sales growth rate of 13.1%, and
adjusted diluted EPS(1) of $0.40, resulting primarily from the
positive momentum in TriMas' Packaging segment and
better-than-expected performance in the TriMas' Specialty Products
segment. We demonstrated yet again TriMas' ability to navigate
varying economic cycles, while delivering strong financial
performance through our multi-industry family of businesses and our
dedicated global team.
"Our solid execution in the quarter was complemented by our
disciplined and balanced approach to capital allocation and
managing our balance sheet. We continue to balance investing in our
businesses for long-term growth, augmenting organic growth with
M&A and providing shareholder returns through share
repurchases. During the quarter, we also successfully completed the
refinancing of our revolver and fixed rate debt by extending
maturities and taking advantage of historically low rates.
"One year removed from the global pandemic's initial impact,
through our proactive actions, we believe we are a stronger company
and well-positioned for the future when demand recovers in several
of our businesses. We are a leaner organization and are poised to
capitalize on new market opportunities as they arise. While there
are still continued market uncertainties arising from the global
COVID-19 pandemic, we remain focused on leveraging our TriMas
Business Model to improve all of our businesses, thereby creating
long-term shareholder value," Amato concluded.
Financial Position
The Company reported net cash provided by operating activities
of $15.7 million for first quarter 2021, compared to $3.4 million
in first quarter 2020, driven by higher earnings, as well as the
timing of net working capital investments. As a result, the Company
reported Free Cash Flow(2) of $10.3 million for first quarter 2021,
an increase of $8.5 million compared to $1.8 million in first
quarter 2020. Please see Appendix I for further details.
In addition, during the first quarter of 2021, the Company
repurchased approximately $2.6 million of its outstanding common
stock, bringing the total to $90.9 million in share repurchases
since 2018, or approximately 7.3% of outstanding shares. Share
repurchases continue to be a core part of the Company’s capital
allocation strategy. As of March 31, 2021, $159.1 million remained
available under the Company's repurchase authorization.
TriMas also refinanced its capital structure during the first
quarter, closing on its offering of $400 million in aggregate
principal of senior unsecured notes due 2029 at a fixed annual rate
of 4.125%. The Company also amended its $300 million senior secured
credit facility to extend the maturity to March 2026, with a
consistent interest rate of LIBOR plus 1.50%.
The Company received the $400 million in funds from the 4.125%
notes due 2029 during the first quarter of 2021, while the
redemption of the $300 million 4.875% notes due 2025 did not occur
until April 15, 2021. Therefore, due to this timing, TriMas ended
first quarter 2021 with $410.0 million of unrestricted cash on
hand, no amounts outstanding on its revolving credit facility and a
leverage ratio of 1.8x as defined in the Company's credit
agreement. TriMas reported total debt of $690.2 million as of March
31, 2021, compared to $346.3 million as of December 31, 2020, and
$445.0 million as of March 31, 2020. The Company ended the quarter
with Net Debt(3), an important measure the Company tracks under its
deleveraging model, of $269.1 million, a decrease compared to
$272.3 million at December 31, 2020.
First Quarter Segment
Results
Packaging (Approximately 65% of TriMas March 31, 2021 LTM
sales)
TriMas' Packaging segment, which consists primarily of the
Rieke®, Taplast™, Affaba & Ferrari™ and Rapak® brands, develops
and manufactures specialty dispensing and closure products for
applications in the beauty & personal care, food &
beverage, pharmaceutical & nutraceutical, industrial, and home
care markets. Net sales for the first quarter increased 32.0%
compared to the year ago period, primarily as a result of higher
demand for dispensing pumps and closure products sold into
applications that help fight the spread of germs or are used in
cleaning. Higher sales of products used in food & beverage, and
industrial applications, as well as acquisition-related sales, also
contributed to the increase. First quarter operating profit
increased, as the impact of higher sales more than offset a less
favorable product sales mix and higher input costs. The Company
remains committed to building out TriMas' packaging platform
through commercializing new innovative products and expanding the
product set through acquisitions.
Aerospace (Approximately 21% of TriMas March 31, 2021 LTM
sales)
TriMas' Aerospace segment, which includes the Monogram Aerospace
Fasteners™, Allfast Fastening Systems®, Mac Fasteners™, RSA
Engineered Products™ and Martinic Engineering™ brands, develops,
qualifies and manufactures highly-engineered, precision fasteners
and machined components to serve the aerospace, including military
and defense, end market. Net sales for the first quarter decreased
8.8% compared to the year ago period, primarily due the impact of
significantly lower air travel and reduced commercial and business
jet production as a result of the global pandemic, partially offset
by the sales increase related to the acquisition of RSA in February
2020. First quarter operating profit and the related margin
decreased due to the reduced sales and lower absorption of fixed
costs, as well as the higher amortization expense from intangible
assets related to the acquisition. The Company continues to focus
on adjusting cost structures to better align with lower demand in
the end markets impacted by the pandemic, while balancing its
priority of investing in new and innovative products to support its
global customers.
Specialty Products (Approximately 14% of TriMas March 31,
2021 LTM sales)
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,
military, industrial, and oil and gas end markets. Norris Cylinder
is the only remaining steel cylinder manufacturer in North America,
and represents the majority of sales in this segment. First quarter
net sales decreased 11.2% compared to the year ago period, as a
result of lower steel cylinder demand in the construction and
packaged gas end markets, and low demand for oil and gas products,
all related to the impact of the pandemic. First quarter operating
profit and the related margin increased as a result the positive
impact of previous realignment and factory floor improvement
actions implemented in the businesses. The Company has taken
actions to better align cost structures with sales demand in the
end markets impacted by the global pandemic, and expects these
businesses to continue to leverage well.
Outlook
Given the continued market and related demand uncertainties
arising from the global COVID-19 pandemic, the Company is providing
second quarter outlook only at this time, with the objective of
reverting to full year outlook as the impacts of the pandemic and
related economic recovery are better understood and visibility
improves. For the second quarter of 2021, the Company expects
TriMas’ consolidated sales to range between $205 million and $223
million, with sales in all three segments anticipated to increase
year-over-year. The Company expects second quarter 2021 adjusted
diluted earnings per share(4) in the range of $0.50 to $0.57 per
share. The Company is prospectively modifying the adjusted earnings
per share definition to add back intangible amortization expense
related to acquisitions. Please see Exhibit 99.2 of the Form 8-K
filed in connection with this earnings release for the historical
adjusted diluted earnings per share amounts reflecting this
modification. In addition, the Company is continuing to forecast
2021 Free Cash Flow(2) to be greater than 100% of net income.
All of the above amounts considered as 2021 guidance are after
adjusting for any current or future amounts that may be considered
Special Items, and in the case of adjusted diluted earnings per
share, acquisition-related intangible asset amortization expense
for deals that have not yet been consummated. The inability to
predict the amount and timing of the impacts of these Special Items
makes a detailed reconciliation of these forward-looking non-GAAP
financial measures impracticable.(4)
Conference Call
Information
TriMas will host its first quarter 2021 earnings conference call
today, Thursday, April 29, 2021, at 10 a.m. ET. The call-in number
is (866) 248-8441. Participants should request to be connected to
the TriMas first quarter 2021 earnings conference call
(Confirmation Code 7033534). The conference call will also be
simultaneously webcast via TriMas' website at www.trimascorp.com, under the "Investors" section,
with an accompanying slide presentation. A replay of the conference
call will be available on the TriMas website or by dialing (888)
203-1112 (Replay Passcode 7033534) beginning April 29, 2021 at 3
p.m. ET through May 6, 2021 at 3 p.m. ET.
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; our ability to realize our business strategies; our
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 our subcontractors and suppliers; supply
constraints; market demand; intellectual property factors;
litigation; government and regulatory actions, including, without
limitation, climate change legislation and other environmental
regulations, as well as the impact of tariffs, quotas and
surcharges; our leverage; liabilities imposed by our 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; our future prospects; and other risks that are
detailed in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2020. 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, except as required by law.
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. Management believes that presenting
these non-GAAP financial measures 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 and to the Company’s peers. These
non-GAAP financial measures should be considered in addition to,
and not as a replacement for or superior to, the comparable GAAP
measure, and may not be comparable to similarly titled measures
reported by other companies.
Reconciliations of forward-looking non-GAAP financial measures
to the most directly comparable GAAP financial measures are
provided only for the expected impact of amortization of
acquisition-related intangible assets for completed acquisitions,
as the Company is unable to provide estimates of future Special
Items(1) or amortization from future acquisitions without
unreasonable effort, due to the uncertainty and inherent difficulty
of predicting the occurrence and the financial impact of such items
impacting comparability and the periods in which such items may be
recognized. For the same reasons, the Company is unable to address
the probable significance of the unavailable information, which
could be material to future results.
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.
(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.
(3)
The Company defines Net Debt as Total Debt
less Cash and Cash Equivalents. Please see Appendix I for
additional details.
(4)
The Company defines adjusted diluted
earnings per share as net income (per GAAP), plus or minus the
after-tax impact of Special Items(1), plus the after-tax impact of
non-cash acquisition-related intangible asset amortization expense.
While the acquisition-related intangible assets aid in the
Company’s revenue generation, the Company adjusts for the non-cash
amortization expense because the Company believes it (i) enhances
management’s and investors’ ability to analyze underlying business
performance, (ii) facilitates comparisons of financial results over
multiple periods, and (iii) provides more relevant comparisons of
financial results with the results of other companies as the
amortization expense associated with these assets may fluctuate
significantly from period to period based on the timing, size,
nature, and number of acquisitions.
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 3,200 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 Bloomfield Hills,
Michigan. For more information, please visit www.trimascorp.com.
TriMas Corporation
Condensed Consolidated Balance
Sheet
(Dollars in thousands)
March 31, 2021
December 31,
2020
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
421,140
$
73,950
Receivables, net
128,000
113,410
Inventories
151,820
149,380
Prepaid expenses and other current
assets
17,960
15,090
Total current assets
718,920
351,830
Property and equipment, net
251,150
253,060
Operating lease right-of-use assets
36,450
37,820
Goodwill
300,610
303,970
Other intangibles, net
199,010
206,200
Deferred income taxes
15,700
19,580
Other assets
21,460
21,420
Total assets
$
1,543,300
$
1,193,880
Liabilities and Shareholders'
Equity
Current liabilities:
Current portion, long-term debt
$
300,000
$
—
Accounts payable
$
76,650
$
69,910
Accrued liabilities
57,490
60,540
Operating lease liabilities, current
portion
6,350
6,740
Total current liabilities
440,490
137,190
Long-term debt, net
390,190
346,290
Operating lease liabilities
30,520
31,610
Deferred income taxes
24,840
24,850
Other long-term liabilities
61,290
69,690
Total liabilities
947,330
609,630
Total shareholders' equity
595,970
584,250
Total liabilities and shareholders'
equity
$
1,543,300
$
1,193,880
TriMas Corporation
Consolidated Statement of
Income
(Unaudited - dollars in
thousands, except per share amounts)
Three months ended
March 31,
2021
2020
Net sales
$
206,730
$
182,790
Cost of sales
(155,400
)
(136,420
)
Gross profit
51,330
46,370
Selling, general and administrative
expenses
(30,220
)
(26,540
)
Operating profit
21,110
19,830
Other expense, net:
Interest expense
(3,550
)
(3,580
)
Debt financing and related expenses
(200
)
—
Other expense, net
(930
)
(80
)
Other expense, net
(4,680
)
(3,660
)
Income before income tax expense
16,430
16,170
Income tax expense
(3,370
)
(3,050
)
Net income
$
13,060
$
13,120
Basic earnings per share:
Net income per share
$
0.30
$
0.30
Weighted average common shares—basic
43,185,007
44,201,053
Diluted earnings per share:
Net income per share
$
0.30
$
0.30
Weighted average common shares—diluted
43,634,876
44,470,472
TriMas Corporation
Consolidated Statement of Cash
Flow
(Unaudited - dollars in
thousands)
Three months ended March
31,
2021
2020
Cash Flows from Operating
Activities:
Net income
$
13,060
$
13,120
Adjustments to reconcile net income to net
cash provided by operating activities, net of acquisition
impact:
Loss on dispositions of assets
20
50
Depreciation
7,850
6,660
Amortization of intangible assets
5,390
4,850
Amortization of debt issue costs
300
290
Deferred income taxes
2,200
2,570
Non-cash compensation expense
2,440
1,940
Debt financing and related expenses
200
—
Increase in receivables
(15,640
)
(10,610
)
Increase in inventories
(3,110
)
(110
)
Increase in prepaid expenses and other
assets
(2,070
)
(110
)
Increase (decrease) in accounts payable
and accrued liabilities
1,950
(14,780
)
Other operating activities
3,150
(470
)
Net cash provided by operating activities,
net of acquisition impact
15,740
3,400
Cash Flows from Investing
Activities:
Capital expenditures
(9,370
)
(3,930
)
Acquisition of businesses, net of cash
acquired
—
(84,270
)
Net proceeds from disposition of business,
property and equipment
—
1,880
Net cash used for investing activities
(9,370
)
(86,320
)
Cash Flows from Financing
Activities:
Proceeds from issuance of senior notes
400,000
—
Proceeds from borrowings on revolving
credit facilities
—
198,290
Repayments of borrowings on revolving
credit facilities
(48,620
)
(48,330
)
Debt financing fees
(6,150
)
—
Shares surrendered upon exercise and
vesting of equity awards to cover taxes
(1,770
)
(1,830
)
Payments to purchase common stock
(2,640
)
(31,570
)
Net cash provided by financing
activities
340,820
116,560
Cash and Cash Equivalents:
Increase for the period
347,190
33,640
At beginning of period
73,950
172,470
At end of period
$
421,140
$
206,110
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
520
$
370
Cash paid for taxes
$
1,160
$
1,850
Appendix I
TriMas Corporation
Additional Information
Regarding Special Items Impacting
Reported GAAP Financial
Measures
(Unaudited - dollars in
thousands)
Three months ended March
31,
2021
2020
Packaging
Net sales
$
132,090
$
100,050
Operating profit
$
21,300
$
18,280
Special Items to consider in evaluating
operating profit:
Purchase accounting costs
830
—
Business restructuring and severance
costs
1,510
320
Adjusted operating profit
$
23,640
$
18,600
Aerospace
Net sales
$
44,610
$
48,920
Operating profit
$
4,500
$
5,080
Special Items to consider in evaluating
operating profit:
Purchase accounting costs
—
510
Business restructuring and severance
costs
450
500
Adjusted operating profit
$
4,950
$
6,090
Specialty Products
Net sales
$
30,030
$
33,820
Operating profit
$
4,520
$
3,430
Corporate Expenses
Operating loss
$
(9,210
)
$
(6,960
)
Special Items to consider in evaluating
operating loss:
M&A diligence and transaction
costs
490
810
Business restructuring and severance
costs
2,250
—
Adjusted operating loss
$
(6,470
)
$
(6,150
)
Total Company
Net sales
$
206,730
$
182,790
Operating profit
$
21,110
$
19,830
Total Special Items to consider in
evaluating operating profit
5,530
2,140
Adjusted operating profit
$
26,640
$
21,970
Appendix I
TriMas Corporation
Additional Information
Regarding Special Items Impacting
Reported GAAP Financial
Measures
(Unaudited - dollars in
thousands, except per share amounts)
Three months ended March
31,
2021
2020
Net income, as reported
$
13,060
$
13,120
Special Items to consider in evaluating
quality of net income:
Business restructuring and severance
costs
4,210
820
Purchase accounting costs
830
510
M&A diligence and transaction
costs
490
1,110
Debt financing and related expenses
200
—
Income tax effect of Special Items(1)
(1,390
)
(460
)
Adjusted net income
$
17,400
$
15,100
Three months ended March
31,
2021
2020
Diluted earnings per share, as
reported
$
0.30
$
0.30
Special Items to consider in evaluating
quality of EPS:
Business restructuring and severance
costs
0.10
0.02
Purchase accounting costs
0.02
0.01
M&A diligence and transaction
costs
0.01
0.02
Debt financing and related expenses
—
—
Income tax effect of Special Items(1)
(0.03
)
(0.01
)
Adjusted diluted EPS
$
0.40
$
0.34
Weighted-average shares
outstanding
43,634,876
44,470,472
(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 March 31, 2021 and 2020, the income tax effect of
Special Items varied from the tax rate inherent in the Company's
reported GAAP results, primarily as a result of certain discrete
items that occurred during the period for GAAP reporting
purposes.
Appendix I
TriMas Corporation
Additional Information
Regarding Special Items Impacting
Reported GAAP Financial
Measures
(Unaudited - dollars in
thousands)
Three months ended March
31,
2021
2020
As reported
Special Items
As adjusted
As reported
Special Items
As adjusted
Net cash provided by operating
activities
$
15,740
$
3,920
$
19,660
$
3,400
$
2,290
$
5,690
Less: Capital expenditures
(9,370
)
—
(9,370
)
(3,930
)
—
(3,930
)
Free Cash Flow
6,370
3,920
10,290
(530
)
2,290
1,760
Net income
13,060
4,340
17,400
13,120
1,980
15,100
Free Cash Flow as a percentage of net
income
49
%
59
%
(4
)
%
12
%
March 31, 2021
December 31,
2020
March 31, 2020
Current portion, long-term debt
$
300,000
$
—
$
—
Long-term debt, net
390,190
346,290
444,980
Total Debt
690,190
346,290
444,980
Less: Cash and cash equivalents
421,140
73,950
206,110
Net Debt
$
269,050
$
272,340
$
238,870
Appendix I
TriMas Corporation
Reconciliation of GAAP to
Non-GAAP Financial Measures
Forecasted Diluted Earnings
Per Share Guidance
(Unaudited - dollars per
share)
Three months ended
June 30, 2021
Low
High
Diluted earnings per share (GAAP)
$
0.41
$
0.48
Pre-tax amortization of
acquisition-related intangible assets(1)
0.12
0.12
Income tax benefit on amortization of
acquisition-related intangible assets
(0.03
)
(0.03
)
Impact of Special Items(2)
—
—
Adjusted diluted earnings per share
$
0.50
$
0.57
(1)
These amounts relate to acquisitions
completed prior to March 31, 2021. The Company is unable to provide
forward-looking estimates of future acquisitions, if any, that have
not yet been consummated.
(2)
The Company is unable to provide
forward-looking estimates of Special Items without unreasonable
effort, due to the uncertainty and inherent difficulty of
predicting the occurrence and the financial impact of such items
and the periods in which such items may be recognized. For the same
reasons, the Company is unable to address the probable significance
of the unavailable information, which could be material to future
results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210429005363/en/
Sherry Lauderback VP, Investor Relations & Communications
(248) 631-5506 sherrylauderback@trimascorp.com
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