Company Achieves Sales and Earnings Growth; Reaffirms 2017 Full-Year Outlook

TriMas (NASDAQ:TRS) on July 27 announced financial results for the quarter ended June 30, 2017.

Second Quarter 2017 Highlights

· Net sales increased 4.9% to $213.4 million

· Operating profit increased 40.7% to $26.3 million, while operating profit, excluding Special Items,(1) increased 18.2% to $30.3 million

· Diluted EPS increased 39.1% to $0.32, while diluted EPS, excluding Special Items, increased 17.6% to $0.40

· Total Debt was reduced by $59.8 million to $346.5 million, compared to June 30, 2016

Second Quarter 2017

TriMas reported second quarter net sales of $213.4 million, an increase of 4.9% compared to $203.3 million in second quarter 2016. Organic growth in all four segments more than offset lower sales related to the de-emphasis of less profitable geographic regions in the Energy segment and the unfavorable impact of currency exchange. The Company reported operating profit of $26.3 million in second quarter 2017, an increase of 40.7% compared to $18.7 million in second quarter 2016. Excluding Special Items related to business restructuring and severance costs primarily associated with previously announced facility exits, second quarter 2017 operating profit would have been $30.3 million, an increase of 18.2% compared to $25.7 million in the prior year period.

The Company reported second quarter 2017 net income of $14.9 million, or $0.32 per diluted share, compared to net income of $10.5 million, or $0.23 per diluted share, in second quarter 2016. Excluding Special Items, second quarter 2017 net income would have been $18.2 million, resulting in diluted earnings per share of $0.40, an increase of 17.6% compared to $0.34 in the prior year period.

"We are pleased with our sales growth, earnings expansion and cash flow conversion in the second quarter and year to date," said Thomas Amato, TriMas President and Chief Executive Officer. "Our realignment efforts initiated toward the end of last year and earlier this year are starting to provide the tangible benefits we anticipated. We are optimistic about future opportunities to improve, and remain excited about the long-term prospects for TriMas and our family of businesses."

"We will continue to focus on leveraging the TriMas Business Model to drive performance improvements, particularly within the Aerospace and Energy segments. While we will be kicking off our 2018 budget and strategic planning process in the near future, we remain committed to achieving our 2017 operating plan and are reaffirming our full year outlook provided in February," Amato concluded.

Financial Position

TriMas reported total Debt of $346.5 million as of June 30, 2017, compared to $374.7 million as of December 31, 2016, and $406.3 million as of June 30, 2016. In addition, the Company reduced Net Debt(2) by $58.8 million to $323.8 million, compared to $382.6 million as of June 30, 2016. TriMas ended second quarter 2017 with $199.4 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.

The Company reported net cash provided by operations of $27.6 million which drove Free Cash Flow(3) of $23.8 million for second quarter 2017, compared to net cash provided by operations of $36.3 million and Free Cash

Flow of $34.2 million in second quarter 2016. Free Cash Flow was approximately 144% of net income, and 131% of net income, excluding Special Items, for second quarter 2017. Please see Appendix I for further details.

Second Quarter Segment Results

Packaging (Approximately 43% of TriMas June 30, 2017 LTM sales)

The Packaging segment, which consists primarily of the Rieke® brand, develops and manufactures specialty dispensing and closure applications for the health, beauty and home care, food and beverage, and industrial markets. Net sales for the second quarter increased 0.7% compared to the year ago period, with sales increases in each of Packaging's end markets more than offsetting the impact of $1.5 million of unfavorable currency exchange. Second quarter operating profit and the related margin percentage were relatively flat.

Aerospace (Approximately 23% of TriMas June 30, 2017 LTM sales)

The Aerospace segment, which is comprised of the Monogram Aerospace Fasteners™, Allfast Fastening Systems®, Mac Fasteners™ and Martinic Engineering™ brands, develops, qualifies and manufactures highly-engineered, precision fasteners and machined products to serve the aerospace market. Net sales for the second quarter increased 7.9% compared to the year ago period, driven primarily by improved production throughput and solid order demand. Second quarter operating profit and the related margin percentage improved as a result of accelerated performance improvement actions. 

Energy (Approximately 20% of TriMas June 30, 2017 LTM sales)

The Energy segment, which consists of the Lamons® brand, designs, manufactures and distributes industrial sealing and fastener products for the petrochemical, petroleum refining, oil field and other industrial markets. Second quarter net sales increased by 8.9% compared to the year ago period, primarily due to higher demand resulting from improved delivery performance, offsetting the impact of de-emphasizing less profitable geographic regions. Second quarter operating profit and the related margin percentage increased, primarily as a result of extensive realignment efforts and manufacturing productivity improvements.

Engineered Components (Approximately 14% of TriMas June 30, 2017 LTM sales)

The Engineered Components segment, which is comprised of the Norris Cylinder™ and Arrow® brands, designs and manufactures highly-engineered steel cylinders, wellhead engines and compression products for use within the industrial, and oil and gas markets. Second quarter net sales increased by 7.7% compared to the year ago period, primarily due to higher sales of oil field-related products as a result of increased oil and natural gas activity within the United States. Sales of high-pressure cylinders also increased during the quarter. Second quarter operating profit and the related margin percentage increased primarily due to increased sales levels and continued cost management.

Outlook

The Company reaffirms its full-year 2017 outlook provided on February 28, 2017. The Company estimates that 2017 sales will increase 2% to 4% compared to 2016. The Company expects full-year 2017 diluted earnings per share to be between $1.35 to $1.45 per share, excluding any current or future events that may be considered Special Items. In addition, the Company is targeting 2017 Free Cash Flow(3) to be greater than 100% of net income.

Source: Trimas Group