TriMas Corporation Reports First Quarter 2008 Results
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BLOOMFIELD HILLS, Mich., May 7, 2008 -- TriMas Corporation today announced financial results for the quarter ended March 31, 2008. The Company reported quarterly revenues of $279.6 million, down 1.7% from the first quarter of 2007. First quarter 2008 income from continuing operations was essentially flat at $7.8 million, in comparison to the first quarter of 2007. The Company reported first quarter 2008 diluted earnings per share from continuing operations of $0.23, within the previously disclosed first quarter guidance range of $0.21 to $0.24 per share.
"During the first quarter of 2008, our diverse group of businesses reported mixed results," said Grant H. Beard, TriMas' President and Chief Executive Officer. "Our Energy Products segment accomplished significant growth in sales and operating profit of 17.4% and 23.4%, respectively, as a result of increased demand and new product introductions. Sales in our Industrial Specialties segment increased 5.7%, led by growth in our aerospace fastener business. Our Packaging Systems segment was up slightly compared to the prior year quarter."
"Our RV & Trailer Products and Recreational Accessories segments, however, faced continued difficult end market conditions in the United States, resulting from the decline in consumer discretionary spending, consumer confidence and credit availability," Beard continued. "Despite the first quarter decline in sales and earnings in these segments, we believe these businesses continued to outperform the overall end market by increasing market share, cross-selling across channels and introducing new product content."
"While the economic outlook for most of our businesses remains positive," Beard noted, "we continue to experience weak end market demand within our RV & Trailer Products and Recreational Accessories businesses. We will continue to implement cost reduction and new product initiatives in an effort to build our market share and offset the economic headwinds. Looking forward, we will continue to focus on driving organic growth through new product development and geographic expansion initiatives, while remaining committed to diligently managing our costs to protect our earnings stream, generating cash flow and enhancing our balance sheet."
First Quarter Results - From Continuing Operations
-- Sales for the first quarter 2008 were down 1.7% to $279.6 million, as
compared to $284.4 million in the first quarter of 2007. Sales in the
Packaging Systems, Energy Products and Industrial Specialties segments
were up 1.5%, 17.4% and 5.7%, respectively. Sales in the RV & Trailer
Products and Recreational Accessories segments were down 5.1% and
15.3%, respectively, due to reductions in demand related to decreases
in consumer discretionary spending and current economic conditions in
the United States.
-- Operating profit decreased 12.9% to $28.1 million, as compared to
$32.3 million in the first quarter of 2007, due to lower sales
volumes, most notably in the RV & Trailer Products and Recreational
Accessories segments, lower absorption of fixed costs and a less
favorable product sales mix, specifically in the Packaging Systems and
RV & Trailer Product segments.
-- Adjusted EBITDA(1) for the first quarter of 2008 decreased 8.1% to
$37.6 million, as compared to $40.9 million in the first quarter of
2007.
-- Income from continuing operations was essentially flat at $7.8
million, as compared to the first quarter of 2007.
-- Diluted earnings per share decreased to $0.23 per share, as compared
to $0.37 per share in the first quarter of 2007. The number of
diluted weighted average common shares increased from 20.8 million as
of March 31, 2007 to 33.6 million as of March 31, 2008 due to the
Company's initial public offering in May 2007.
-- Aggregate availability under the Company's revolving credit and
receivables securitization facilities was $121.9 million as of March
31, 2008.
(1) See Appendix I for reconciliation of Non-GAAP financial measure
Adjusted EBITDA to the Company's reported results of operations
prepared in accordance with U.S. GAAP.
Packaging Systems - Sales for the first quarter increased 1.5% due to the continued demand for specialty dispensing products and other new products, as well as the favorable effects of currency exchange, partially offset by the decline in laminate and insulation product sales resulting from a weakening commercial construction end market. Sales of core industrial closure products were essentially flat for the first quarter of 2008, in comparison to the first quarter of 2007. Operating profit for the quarter declined slightly due to lower sales volumes and a less favorable product sales mix. The Company is focused on developing specialty dispensing product applications for growing end markets, including pharmaceutical, personal care and food/beverage markets, and expanding geographically to generate long-term growth.
Energy Products - Sales increased 17.4% for the first quarter due to the continued strong demand for specialty gaskets and related fastening hardware to the refinery and petrochemical industries, as well as robust growth in engines and related products resulting from increased engine demand in the Western United States and Canada oil and natural gas markets and new product introductions. Operating profit for the quarter increased in line with higher sales volumes. The Company plans to continue to launch new products to complement its engine business, while expanding its gasket business internationally.
Industrial Specialties - Sales for the first quarter increased 5.7% due to increased demand, most notably in the aerospace fastener business. The segment also benefited from sales growth in the industrial cylinder and precision cutting tools businesses and the August 2007 acquisition of a medical device manufacturer. Operating profit for the quarter was flat as profits related to higher sales volumes were offset by increased expenditures to invest in growth initiatives and lower absorption of fixed costs in the specialty fittings business. The Company plans to drive growth in this segment by developing specialty products for growing end markets such as medical and aerospace, while continuing to expand international sales efforts.
RV & Trailer Products - Sales for the first quarter declined 5.1% due to continued weak demand in certain end markets and higher customer inventory levels across the majority of the U.S. market channels. Sales from Australia, Southeast Asia and Canada were up in the first quarter of 2008, compared to the first quarter of 2007. Operating profit decreased 57.4% due to the decline in sales, a less favorable product sales mix and lower absorption of fixed costs as the Company reduced production to manage inventory levels. The Company's focus in this segment is to aggressively manage costs, while continuing to leverage strong brand positions for increased market share, cross-sell the product portfolio into all channels and expand internationally.
Recreational Accessories - Sales decreased 15.3% for the first quarter, as the Company continued to experience weak consumer demand for towing products and accessories. In addition, the first quarter of 2007 was positively impacted by an inventory pipeline fill in support of a new retail program that did not recur in the first quarter of 2008. Operating profit declined 48.8% as a result of lower sales volumes and the lower absorption of fixed costs as the Company reduced production to manage inventory levels. The Company plans to continue to manage costs, increase market share in the United States and Canada, and pursue new market opportunities in select international markets.
Financial Position
TriMas ended the quarter with total debt of $616.5 million and funding under its receivables securitization facility of $56.3 million for a total of $672.8 million. Total debt and receivables securitization decreased by $95.1 million when compared to March 31, 2007. TriMas ended the quarter with cash of $5.5 million and $121.9 million of aggregate availability under its revolving credit and receivables securitization facilities.
Outlook
In its March 13, 2008 fourth quarter earnings release, TriMas provided a full year 2008 diluted earnings per share from continuing operations guidance range of $0.85 to $0.95 per share. The Company also provided a full year 2008 net income from continuing operations range of $28.5 million to $31.9 million. First quarter results met the Company's expectations, and 2008 guidance remains as previously announced.
This outlook does not include the impact of any future unidentified restructuring charges and divestitures or acquisitions of operating assets that may occur from time to time due to management decisions and changing business circumstances. The outlook above also does not include the impact of any potential future non-cash impairment charges of goodwill, intangibles and fixed assets. This outlook also excludes benefit costs related to contractual obligations to Metaldyne or discontinued operations. The Company is currently unable to forecast the likelihood of occurrence, timing and/or magnitude of any such amounts or events. See also "Cautionary Notice Regarding Forward-Looking Statements" below.
Conference Call Information
TriMas Corporation will host its first quarter 2008 earnings conference call today, Wednesday, May 7, 2008 at 10:00 a.m. EDT. The call-in number is (866) 802-4355. Participants should request to be connected to the TriMas Corporation first quarter conference call (reservation number 1235805). The presentation that will accompany the call will be available on the Company's website at www.trimascorp.com prior to the call.
The conference call will also be webcast simultaneously on the Company's website at www.trimascorp.com. A replay of the conference call will be available on the TriMas website or by dialing (866) 837-8032 (reservation number 1235805) beginning May 7th at 1:00 p.m. EDT through May 14th at 11:59 p.m. EDT.
