TriMas Corporation Reports First Quarter Results
BLOOMFIELD HILLS, Mich., May 12, 2003 -- TriMas Corporation ("TriMas") today announced first quarter 2003 net sales of $213.8 million, an increase of $22.8 million or 12.0% from the first quarter of 2002. The Company also completed the restructuring of its Cequent Transportation Accessories Group and closed two previously announced acquisitions during the quarter -- HammerBlow, a manufacturer of towing and trailer accessories, and Highland Industries, a leader in cargo-management products.
Commenting on the Company's performance, TriMas president and CEO, Grant Beard said, "Management is pleased with the first quarter results. The Company made significant progress integrating our strategic acquisitions and completing the consolidation of our transportation accessories assets into one best-in-class facility in Goshen, Indiana."
In addition to the consolidation of the Elkhart, Indiana and Canton, Michigan facilities into the Goshen facility, TriMas also expanded its Reynosa, Mexico operations. "TriMas continues to focus on growth initiatives and is making great strides on its restructuring initiatives. We expect our newly integrated sites to begin to drive performance enhancements as planned," Beard continued.
"We are concentrating on cash flow generation, the restructuring of our businesses and investment in world-class operations," Beard said. "Our internally generated cash flow continues to be strong and will allow us to fund our restructuring activities and capital investments."
Operating profit for the three months ended March 30, 2003 was $16.3 million, a decrease of $7.9 million compared to the 2002 period. Excluding the $1.2 million favorable impact on sales of $27.1 million from acquisitions, operating profit decreased $9.1 million. The reduction in operating profit is primarily attributable to costs and inefficiencies incurred in connection with the restructuring activities mentioned above, including severance and relocation expenses, in our Cequent Transportation Accessories and Fastening Systems Groups.
Other expense, net was $28.4 million for the three months ended March 30, 2003. The Company recorded an $11.8 million loss, net from the sale and disposition of fixed assets in the first quarter of 2003. This loss was primarily from the sale and leaseback, at a price below book value, of certain manufacturing equipment and certain manufacturing facilities during the first quarter of 2003. In connection with these transactions, the Company received $35.4 million of net proceeds that were used to pay down amounts outstanding on our revolving credit facility. TriMas also experienced a $1.4 million reduction in interest expense that was primarily due to a reduction in total indebtedness resulting from the recapitalization of the Company in June 2002.
Net loss for the three months ended March 30, 2003 was $7.3 million as compared to a net loss of $33.1 million for the three months ended March 31, 2002. The results for the three months ended March 31, 2002 include a charge of $36.6 million for the cumulative effect on prior years of a change in recognition and measurement of goodwill impairment.
EBITDA Discussion
The Company has established Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") as an indicator of operating performance and as a measure of cash generating ability. The Company defines Adjusted EBITDA as operating profit plus depreciation and amortization plus legacy stock award expenses. Adjusted EBITDA for the first quarter 2003 was $28.6 million, a decrease of $8.0 million from the prior year's comparable quarter. The decrease in Adjusted EBITDA is primarily attributable to $6.5 million of incremental costs, inefficiencies and restructuring charges related to our restructuring activities, $1.3 million of incremental lease expense, and $2.4 million of additional corporate costs. A reconciliation of our Adjusted EBITDA, a non-GAAP financial measure, to U.S. GAAP operating profit, our most comparable GAAP figure, is set out in the attached EBITDA reconciliation schedule. EBITDA (before or after legacy stock award expenses) should not be construed as a replacement for income from operations, net income (loss) or cash flow from operating activities as determined by generally accepted accounting principles.
At March 30, 2003, total debt was $720.8 million and $57.4 million was outstanding under the Company's accounts receivable securitization program. The Company had $25.0 million of cash and cash equivalents at March 30, 2003. Capital expenditures in the first quarter of 2003 were $4.0 million versus $4.6 million in the first quarter of 2002.
Recent Events
On May 9, 2003, the Company completed the acquisition of an automotive fasteners manufacturing business from Metaldyne Corporation for approximately $24 million on a debt-free basis. The acquired business is a leading manufacturer of specialized fittings and cold-headed parts used in automotive and industrial applications. Customers of the acquired business include automotive OEMs as well as an array of global Tier 1 suppliers. The transaction was funded by a combination of borrowings under the Company's revolving credit facility and a cash equity contribution by Heartland Industrial Partners. This operation had 2002 revenues of approximately $16.7 million.
About TriMas
Headquartered in Bloomfield Hills, Michigan, TriMas is a diversified growth company of high-end, specialty niche businesses manufacturing a variety of products for commercial, industrial and consumer markets worldwide. TriMas consists of 10 companies and employs nearly 5,000 employees at 80 different facilities in 10 countries. TriMas is organized into four strategic business groups: Cequent Transportation Accessories, Rieke Packaging Systems, Fastening Systems and Industrial Specialties. For more information, visit www.trimascorp.com .
TRIMAS CORPORATION
STATEMENT OF OPERATIONS
For the Three Months Ended March 30, 2003 and March 31, 2002
(Unaudited - in thousands)
Three Months Ended March
2003 2002
Consolidated Combined
Net sales $213,780 $190,940
Cost of sales (162,120) (135,380)
Gross profit 51,660 55,560
Selling, general and
administrative expenses (35,320) (31,310)
Operating profit 16,340 24,250
Other income (expense), net:
Interest expense (16,040) (17,400)
Other, net (12,400) (1,390)
Other expense, net (28,440) (18,790)
Income (loss) before income taxes
and cumulative effect of change in
accounting principle (12,100) 5,460
Income tax (expense) credit 4,780 (1,910)
Income (loss) before cumulative effect
of change in accounting principle (7,320) 3,550
Cumulative effect of change in
recognition and measurement of
goodwill impairment - (36,630)
Net loss $(7,320) $(33,080)
TRIMAS CORPORATION
CONSOLIDATED BALANCE SHEET
March 30, 2003 and December 31, 2002
(Dollars in thousands)
March 30, 2003 December 31, 2002
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $24,990 $100,440
Receivables 88,490 95,580
Inventories 122,260 91,410
Deferred income taxes 18,740 18,290
Prepaid expenses and other
current assets 12,110 9,810
Total current assets 266,590 315,530
Property and equipment, net 207,860 234,990
Excess of cost over net assets of
acquired companies 621,930 511,840
Other intangibles 361,690 286,270
Other assets 64,820 62,140
Total assets $1,522,890 $1,410,770
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities, long-term debt $10,640 $2,990
Accounts payable 74,360 54,480
Accrued liabilities 83,590 63,140
Due to Metaldyne Corporation 11,790 9,960
Total current liabilities 180,380 130,570
Long-term debt 707,910 693,190
Deferred income taxes 187,270 155,920
Other long-term liabilities 21,940 31,080
Due to Metaldyne Corporation 7,230 11,960
Total liabilities 1,104,730 1,022,720
Commitment and contingencies (Note 13) - -
Preferred stock $0.01 par: Authorized
100,000,000 shares; Issued and
outstanding: None - -
Common stock, $0.01 par: Authorized
400,000,000 shares; Issued and
outstanding 20,750,000 and
19,250,000 shares, respectively 210 190
Paid-in capital 418,110 387,500
Retained deficit (14,260) (6,940)
Accumulated other comprehensive income 14,100 7,300
Total shareholders' equity 418,160 388,050
Total liabilities and
shareholders' equity $1,522,890 $1,410,770
TRIMAS CORPORATION
SUPPLEMENTAL DATA - EBITDA RECONCILIATION SCHEDULE
For the Three Months Ended March 30, 2003 and March 31, 2002
(Unaudited - in thousands)
Three Months Ended March
2003 2002
Consolidated Combined
Operating profit $16,340 $24,250
Depreciation and amortization 10,950 11,500
EBITDA(1) 27,290 35,750
Legacy stock award expenses(2) 1,270 800
Adjusted EBITDA(1) $28,560 $36,550
Notes to Supplemental Data-EBITDA Reconciliation Schedule
(1) EBITDA or Adjusted EBITDA does not represent and should not be considered as an alternative to net income (loss), operating profit, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with generally accepted accounting principles. Further, EBITDA or Adjusted EBITDA, as we calculate them, is not likely to be comparable to similarly titled measures by other companies.
(2) Represents an adjustment for legacy stock award expenses, a contractual obligation resulting from the separation from Metaldyne Corporation in 2002 that will run off completely in 2003.