TriMas Corporation Reports Improved First Quarter Results
BLOOMFIELD HILLS, Mich., May 10, 2005 -- TriMas Corporation today announced its financial results for the three months ended March 31, 2005. Compared to the prior year first quarter period, sales increased 12.2% to $292.7 million from $260.9 million. First quarter operating profit improved to $23.3 million from $20.1 million in first quarter 2004 and net income increased 13.1% to $2,510 in 2005 from $2,220 in 2004. First quarter 2005 diluted earnings per share was $0.13 versus $0.11 in the comparable period a year ago.
First Quarter Highlights
* The Company's 2005 first quarter net sales increased 12.2% to $292.7 million, from $260.9 million for the three months ended March 31, 2004. Excluding the impact of steel price increases recovered from customers, sales increased 6.2% compared to the prior year's first quarter, as each of the Company's business segments maintained positive year-over-year sales momentum. After adjusting for steel price increases, sales at Rieke Packaging Systems increased 10.4%, at Cequent Transportation Accessories 1.9%, at Fastening Systems 3.5%, and at Industrial Specialties 15.0%, when compared to the first quarter a year ago.
* Operating profit improved 15.4% or $3.1 million as compared to the same period a year ago and reflected continued strong earnings momentum in three of the Company's four business segments. Operating profit margin as a percent of sales improved slightly at 7.9% for the first quarter 2005 compared to 7.7% for the same period a year ago.
* Expenses related to plant consolidation and restructuring activities were reduced $3.9 million compared to the first quarter of 2004. Additionally, labor and other variable costs were reduced in the quarter. These reductions in cost were offset by material margin erosion primarily in our Cequent segment.
* The Company reported net income of $2.5 million, or $0.13 per share in the quarter ended March 31, 2005, compared to net income of $2.2 million or $0.11 per share in the first quarter 2004. This represented an increase in reported net income of 13.1% in first quarter 2005 compared to first quarter 2004.
Grant Beard, TriMas' President and Chief Executive Officer commented, "The first quarter represented solid year-over-year growth in sales and we continued our positive earnings momentum in Rieke Packaging Systems, Fastening Systems and Industrial Specialties. The overall fundamentals within TriMas' businesses remain strong: our restructuring initiatives are behind us, steel prices appear to be stabilizing and we have aligned our cost structure consistent with expected customer demand levels. However, we encountered some difficult challenges within Cequent Transportation Accessories which negatively impacted our anticipated earnings performance. Specifically, we experienced a softening of demand for towing products in the wholesale distributor and installer markets due to the existence of adequate inventory levels in these channels. Additionally, sales in the first quarter of last year were extremely strong as our customers bought ahead of steel-related price increases, thus making the comparison between 2005 and 2004 less favorable. In 2005, we also saw significant competitor price pressure in certain of our markets, most severely with our aftermarket retail channel customers. Factors giving rise to these challenges have been identified and we are implementing aggressive actions to address the matters noted. That said, TriMas expects to drive earnings growth and debt reduction for the enterprise as we work through 2005."
The Company also announced that it was withdrawing its pending S-1 registration statement for the initial public offering of its equity securities at this time due to unfavorable market conditions. The registration statement had not been declared effective and no securities were sold.
First Quarter Financial Summary
(unaudited - in millions, except For the Quarter Ended March 31
per share amounts) 2005 2004 % Change
Sales $292.7 $260.9 12.2%
Operating income $23.3 $20.1 15.4%
Net income $2.5 $2.2 13.1%
Earnings per share $0.13 $0.11 18.2%
Other Data:
- Depreciation and amortization,
as reported $10.5 $10.2 2.7%
- Interest expense $18.2 $16.3 11.8%
- Other expense, net $1.1 $0.3 263.3%
- Income tax expense $1.4 $1.3 N/A
- Effective tax rate 36% 37% N/A
Segment Results
Rieke Packaging Systems
Rieke's 2005 first quarter sales of $34.1 million increased 12.2% compared to the 2004 first quarter (10.4% excluding the impact of steel recovery) as sales momentum established in the second half of 2004 continued in Rieke's core industrial closure products and consumer product dispensing applications. Operating profit increased 22.2% to $7.3 million during the first quarter 2005 from $5.9 million in first quarter 2004, as Rieke continued to benefit from the ramp-up and growth in sales of new products. Rieke launched another eight new pump dispensing products during the first quarter 2005 and expects to realize increasing sales from both recent and anticipated additional new product launches during the remainder of 2005.
Cequent Transportation Accessories
Cequent's 2005 first quarter sales of $140.6 million represented an increase of 8.6% compared to the first quarter 2004. After adjusting for steel price increases recovered from customers, sales increased approximately 1.9% compared with the first quarter 2004, as demand for towing products softened in the wholesale distributor and installer channels. Also, in first quarter 2004, Cequent experienced unusually strong demand as customers bought ahead in anticipation of pricing surcharges during the second half of 2004 due to rising steel costs. Operating profit declined $1.5 million to $12.3 million, or 8.7% of sales in the three months ended March 31, 2005 from $13.8 million, or 10.7% of sales in the same period a year ago due principally to severe competitor pricing pressure in the retail channel.
Industrial Specialties Group
In the first quarter 2005, sales within Industrial Specialties increased 18.4% to $73.8 million from $62.4 million during the first quarter 2004. After adjusting for steel price increases recovered from customers, sales were still 15.0% higher compared to the same period a year ago as four of the group's six businesses continued to experience strong demand driven by new products, market share gains and economic expansion. Notably, we achieved record quarterly sales (18.2% increase year-over-year) within our specialty gasket business which benefited from significant oil refinery "turnaround" activity at several major customers, while sales in our specialty engine and replacement parts business increased 56.1% compared to first quarter 2004 as a result of high levels of drilling activity in the U.S. and Canada. Operating profit in the first quarter 2005 increased 10.6% to $8.5 million (11.5% of sales) from $7.7 million (12.3% of sales) in first quarter 2004.
Fastening Systems Group
Sales of the Fastening Systems group in first quarter 2005 increased 14.2% to $44.2 million from $38.7 million in first quarter 2004. After adjusting for steel price increases recovered from customers, sales increased approximately 3.5% as compared to the first quarter 2004. Sales within our aerospace fasteners business during the quarter improved 8.9% compared to first quarter 2004 as manufacturers and distributors replenish inventory stocks. Sales of industrial fasteners in the quarter increased approximately 18% or $4.6 million compared to the first quarter 2004, due primarily to steel price increases now being recovered from customers. Operating profit improved $2.4 million to $0.8 million from an operating loss of $1.6 million in first quarter 2004. During first quarter 2004, the Company incurred approximately $3.0 million of increased costs related to the consolidation of its Lakewood, Ohio manufacturing facility into our Frankfort, Indiana facility, which was largely completed by the fourth quarter 2004.
Financial Position
TriMas ended the first quarter with total assets of $1,539.9 million, debt of $753.9 million and $59.5 million outstanding under its receivables securitization facility. Net cash used by operating activities for the quarter ended March 31, 2005, was $11.4 million, which funded the increase in accounts receivable due to higher sales in the quarter. In the first quarter 2004, net cash provided by operating activities was $21.6 million, as the sale of receivables into the Company's securitization facility more than offset the net increase in working capital associated higher sales and increased inventory levels.
TriMas Corporation
Consolidated Balance Sheet
March 31, 2005 and December 31, 2004
(Unaudited - dollars in thousands)
March 31, 2005 December 31, 2004
Assets
Current assets:
Cash and cash equivalents $3,920 $3,090
Receivables 127,370 93,390
Inventories 176,600 180,040
Deferred income taxes 17,530 17,530
Prepaid expenses and other current
assets 7,320 8,450
Total current assets 332,740 302,500
Property and equipment, net 193,330 198,610
Goodwill 655,650 657,980
Other intangibles, net 300,930 304,910
Other assets 57,280 58,200
Total assets $1,539,930 $1,522,200
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities, long-term debt $2,890 $2,990
Accounts payable 132,900 135,230
Accrued liabilities 74,640 68,180
Due to Metaldyne 2,740 2,650
Total current liabilities 213,170 209,050
Long-term debt 750,960 735,030
Deferred income taxes 133,390 133,540
Other long-term liabilities 34,190 35,160
Due to Metaldyne 4,260 4,260
Total liabilities 1,135,970 1,117,040
Commitments and contingencies (Note 9)
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: 20,010,000 shares 200 200
Paid-in capital 399,530 399,450
Retained deficit (37,920) (40,430)
Accumulated other comprehensive income 42,150 45,940
Total shareholders' equity 403,960 405,160
Total liabilities and shareholders'
equity $1,539,930 $1,522,200
TriMas Corporation
Consolidated Statement of Operations
For the Three Months Ended March 31, 2005 and 2004
(Unaudited - in thousands, except for per share amounts)
Three Months Ended March 31,
2005 2004
Net sales $292,750 $260,900
Cost of sales (227,210) (196,800)
Gross profit 65,540 64,100
Selling, general and administrative expenses (42,530) (43,710)
Gain (loss) on dispositions of property and
equipment 240 (250)
Operating profit 23,250 20,140
Other expense, net:
Interest expense (18,240) (16,310)
Other expense, net (1,090) (300)
Other expense, net (19,330) (16,610)
Income (loss) before income tax (expense) benefit 3,920 3,530
Income tax (expense) benefit (1,410) (1,310)
Net income $2,510 $2,220
Basic earnings per share $0.13 $0.11
Diluted earnings per share $0.13 $0.11
Weighted average common shares - basic 20,010,000 20,010,000
Weighted average common shares - diluted 20,010,000 20,431,050
TriMas Corporation
Consolidated Statement of Cash Flows
For the Three Months Ended March 31, 2005 and 2004
(Unaudited - in thousands)
Three Months Ended March 31,
2005 2004
Cash Flows from Operating Activities:
Net income $2,510 $2,220
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 (240) 250
Depreciation and amortization 10,510 10,230
Non-cash compensation expense 80 -
Amortization of debt issue costs 1,230 1,180
Net proceeds from accounts receivable
securitization 26,560 56,890
Payment to Metaldyne to fund contractual
liabilities - (1,980)
Increase in receivables (60,540) (44,910)
Decrease (increase) in inventories 3,440 (10,460)
Decrease (increase) in prepaid expenses
and other assets 860 (2,630)
Increase in accounts payable and accrued
liabilities 3,820 12,460
Other, net 420 (1,620)
Net cash provided by (used for) operating
activities, net of acquisition impact (11,350) 21,630
Cash Flows from Investing Activities:
Capital expenditures (4,550) (14,820)
Proceeds from sales of fixed assets 940 200
Acquisition of businesses, net of cash
acquired - (5,430)
Net cash used for investing activities (3,610) (20,050)
Cash Flows from Financing Activities:
Repayments of borrowings on senior credit
facility (720) (720)
Proceeds from borrowings on revolving
credit facility 286,810 164,500
Repayments of borrowings on revolving
credit facility (270,200) (157,500)
Payments on notes payable (100) (7,720)
Net cash provided by (used for) financing
activities 15,790 (1,440)
Cash and Cash Equivalents:
Increase for the period 830 140
At beginning of period 3,090 6,780
At end of period $3,920 $6,920
Supplemental disclosure of cash flow
information:
Cash paid for interest $5,780 $5,070
Cash paid for taxes $3,600 $2,000
TriMas Corporation
Company and Business Segment Financial Information
For the Three and Twelve Months Ended
March 31, 2005 and 2004
Three Months Ended LTM Ended
(unaudited - in thousands) March 31, March 31,
2005 2004 2005 2004
Rieke Packaging Systems
Net sales $34,070 $30,370 $132,920 $119,200
Operating profit $7,270 $5,950 $31,290 $24,510
Cequent Transportation Accessories
Net sales $140,650 $129,480 $522,470 $458,000
Operating profit $12,280 $13,820 $50,070 $44,200
Industrial Specialties Group
Net sales $73,840 $62,360 $260,160 $226,420
Operating profit $8,510 $7,690 $21,020 $15,160
Fastening Systems
Net sales $44,190 $38,690 $161,460 $144,710
Operating profit (loss) $820 $(1,550) $(15,050) $(14,590)
Total Company
Net sales $292,750 $260,900 $1,077,010 $948,330
Operating profit $23,250 $20,140 $65,470 $43,910
Corporate expenses and
management fee $5,630 $5,770 $21,860 $25,370
Other Data:
- Depreciation and
amortization,
as reported $10,510 $10,230 $44,790 $53,950
- Customer intangible
adjustments $ - $ - $(4,490) $(11,000)
$10,510 $10,230 $40,300 $42,950
- Interest expense $18,240 $16,310 $69,580 $64,710
- Other expense, net $1,090 $300 $1,980 $560
- Income tax expense
(benefit) $1,410 $1,310 $(4,190) $330
- Impairments and Other Charges:
* Asbestos litigation
defense costs $400 $ - $3,100 $ -
* Asset impairment $ - $ - $10,650 $ -
* Customer intangible
adjustments $ - $ - $4,490 $11,000
* Goodwill impairment $ - $ - $ - $7,600
* Loss on sale-leaseback
of property & equipment $ - $ - $ - $5,660
About TriMas
Headquartered in Bloomfield Hills, Mich., 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 is organized into four strategic business groups: Cequent Transportation Accessories, Rieke Packaging Systems, Fastening Systems, and Industrial Specialties. TriMas has nearly 5,000 employees at 80 different facilities in 10 countries. For more information, visit http://www.trimascorp.com/ .