Attached files
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| EX-99.1 - EXHIBIT 99.1 - TRIMAS CORP | trs_123115xexhibit991.htm |
| 8-K - 8-K - TRIMAS CORP | trs_123115x8k.htm |
Fourth Quarter and Full Year 2015 Earnings Presentation February 25, 2016
Forward-Looking Statement Forward-Looking Statement 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, but not limited to, those relating to the Company’s business, financial condition or future results, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect to: the Company's leverage; liabilities imposed by the Company's debt instruments; market demand; competitive factors; supply constraints; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other intangible asset impairment charges; technology factors; litigation; government and regulatory actions; the Company's accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company's business and industry; the Company’s ability to integrate Allfast and attain the expected synergies, including that the acquisition is accretive; the Company’s ability to attain the Financial Improvement Plan targeted savings and free cash flow amounts; future prospects of the Company; and other risks that are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015. 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. Non-GAAP Financial Measures In this presentation, certain non-GAAP financial measures may be used. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure may be found at the end of this presentation or in the earnings releases available on the Company’s website. Additional information is available at www.trimascorp.com under the “Investors” section. 2
Agenda • Opening Remarks • Financial Highlights • Segment Highlights • Outlook and Summary • Questions and Answers • Appendix 3
Opening Remarks • 2015 sales of approximately $864 million – significant external headwinds – Organic initiatives and acquisition growth were able to offset impact of lower oil prices and currency during first nine months of 2015 – Energy-facing and industrial markets weakened in Q4, resulting in 14% sales decline in Q4, and nearly 3% sales decline for 2015 • Achieved 2015 EPS(1) of $1.29 – high-end of previously provided guidance range • Achieved Free Cash Flow(2) of $50.8 million – within previously provided guidance range • Improved operating profit margin(1), despite top-line pressure, driven by Aerospace improvements and reduction in corporate expense • Increased Financial Improvement Plan to offset impact of continued top-line weakness 4 Continue to implement actions to mitigate external headwinds and drive improved performance. (1) Defined as diluted earnings per share and operating profit margin from continuing operations, excluding “Special Items.” “Special Items” are provided in the Appendix. (2) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of the Financial Improvement Plan, less Capital Expenditures.
External Headwinds and Tailwinds Headwinds • Macroeconomic conditions ‒ Industrial activity continues to slow ‒ Interest rate environment • Low oil and commodity prices ‒ Drilling and well completion activity ‒ Capex deferrals and reductions ‒ Resin and specialty steel prices • Inventory reductions at distributors ‒ Large aerospace distributors ‒ Overall supply chain reductions • Strength of U.S. dollar – Translation and transaction impacts – Exports in Engineered Components – Imports more competitive 5 Tailwinds • Commercial aircraft build rates and backlog – expect slight increase in 2016, with greater growth in 2017 • Asia still growing, albeit at lower rates – Uncertainty around China • Consumer spend remains solid – outpacing economic conditions Continued pressure on the top-line and margin – ongoing actions to mitigate.
Financial Improvement Plan Update • Recently increased target from $15 million to $22 million of annual savings on a full run-rate basis as top-line pressures intensified in fourth quarter • Includes reductions in fixed overhead and SG&A costs – all businesses and corporate included • Recognized savings of approximately $3.5 million during fourth quarter 2015 • Expect to realize incremental savings each quarter throughout 2016 – expected to help mitigate the impact of top-line weakness • Continue to evaluate throughout the year in response to top-line and conversion pressures • Focused on improving free cash flow conversion – targeting 100% of net income 6 Focused on the aspects of our business within our control.
Other Key Business Initiatives 7 Initiatives remain consistent to achieve profitable growth and increased margins – balancing short and long-term objectives. • Packaging – Leverage global, end market focused sales force to drive incremental sales – Add lower-cost capacity to support global customers and growth • Aerospace – Leverage one aerospace platform – Achieve growth and cost synergies from acquisitions • Energy – Restructure global footprint and supply chain – Improve operational efficiency at all locations • Engineered Components – Continue to expand product lines for diversification – Expand long-term cylinder capacity to capitalize on North American market position
Financial Highlights
Fourth Quarter Summary • Q4 sales declined 13.7% as compared to Q4 2014 – increased weakness in the energy-facing and industrial end markets and unfavorable currency exchange more than offset organic initiatives and the results of acquisitions • Q4 operating profit dollars and margin percentage decreased as the impact of reduced sales and the related lower fixed cost absorption more than offset the positive impact of the Financial Improvement Plan, reductions in corporate expense and productivity initiatives • Income and diluted EPS both decreased due to lower operating profit and higher tax rate • Achieved Free Cash Flow(2) and EPS as planned • Total debt decreased as compared to Q4 2014 – used the cash distribution from Horizon Global in conjunction with the spin-off of the Cequent businesses to reduce outstanding borrowings 9 (1) “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of the Financial Improvement Plan, less Capital Expenditures. (Dollars in millions, except per share amounts) Achieved EPS as planned, despite intensified top-line pressures from external headwinds. ( fro m co ntinuing o perat io ns) Q4 2015 Q4 2014 Variance Revenue $192.8 $223.4 -13.7% Op r ting profit $22.1 $28.2 -21.9% Operating profit margin 11.4% 12.6% -120 bps Income $13.1 $20.2 -35.5% Diluted EPS $0.29 $0.44 -34.1% Free Cash Flow (2) $41.7 $35.2 18.4% Total debt $419.6 $630.8 -33.5% Unaudited, excluding Special Items(1)
Full Year 2015 Summary • Sales decreased 2.6% as organic and acquisition sales increases were more than offset by sales declines resulting from the impact of lower oil prices, macroeconomic uncertainty and unfavorable currency exchange • Operating profit margin increased slightly as increases in Packaging and Aerospace, and a reduction in corporate costs and expenses, more than offset the reductions in Energy and Engineered Components • Income and diluted EPS decreased due to lower operating profit and higher interest expense – achieved high end of previously provided guidance range • Free Cash Flow(2) was within the previously provided guidance range • Total debt decreased as compared to year end 2014 – used the cash distribution from Horizon Global in conjunction with the spin-off of the Cequent businesses to reduce outstanding borrowings 10 (Dollars in millions, except per share amounts) Actions taken to hold guidance range and margins in the face of a challenging macroeconomic environment. ( fro m co ntinuing o perat io ns) YTD 2015 YTD 2014 Variance Revenue $864.0 $887.3 -2.6% Op r ting profit $101.7 $103.3 -1.6% Operating profit margin 11.8% 11.6% 20 bps Income $58.7 $63.5 -7.6% Diluted EPS $1.29 $1.40 -7.9% Free Cash Flow (2) $50.8 $69.5 -26.9% Total debt $419.6 $630.8 -33.5% Unaudited, excluding Special Items(1) (1) “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of the Financial Improvement Plan, less Capital Expenditures.
Segment Highlights
Packaging 12 • Sales decreased due to unfavorable currency exchange and lower closure sales as a result of a weaker industrial end market • Profit declined slightly due to lower sales levels and unfavorable currency exchange • Margin consistent, as lower material costs, productivity and cost reduction actions offset the continued investment in global capabilities Strategies • Completed global reorganization to an end market focus to better serve customers • Continuing ramp-up of manufacturing capabilities in low- cost countries • Developing world-class product development team and customer innovation center in India • Implementing continuous pipeline of productivity initiatives to fund growth while maintaining margins Quarterly Commentary (Unaudited, dollars in millions) (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix. FY 2015 Segment Contribution 39% By Revenue 61% By Operating Profit(1) Positioning business for customer innovation and growth, while maintaining targeted margin levels. Financial Snapshot Q4 2015 Q4 2014 Variance Sales $77.8 $80.7 -3.6% Operating profit (1) $19.4 $20.4 -4.8% Operating profit margin (1) 25.0% 25.3% -30 bps
Aerospace 13 • Sales increased due to acquisitions of Allfast in Q4 2014 and Parker Hannifin’s machined components facility in Q4 2015 • Higher demand from large OE customers, while lower demand from large distributors reducing inventory levels • Margin improved 450 basis points due to higher sales, favorable product mix, manufacturing efficiencies and cost reduction initiatives Strategies • Leveraging one aerospace platform to better serve customers and enhance margins • Launched Engineering Research and Technology group to develop and qualify new highly-engineered products • Qualifying existing products for new applications or new customers • Improving manufacturing efficiencies and productivity across the businesses (Unaudited, dollars in millions) FY 2015 Segment Contribution 20% By Revenue 24% By Operating Profit(1) Quarterly Commentary Positioning TriMas Aerospace as a supplier of choice. (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix. Financial Snapshot Q4 2015 Q4 2014 Variance Sales $42.1 $35.1 20.1% Operating profit (1) $6.8 $4.1 67.0% Operating profit margin (1) 16.1% 11.6% 450 bps
Energy 14 • Sales decreased due to capex reductions and deferrals at large refinery and chemical customers, reduced demand levels from upstream oil customers and the impact of unfavorable currency exchange • Cost savings achieved due to the restructuring were more than offset by the impact of the reduced sales levels and the related lower fixed cost absorption • Recorded pre-tax, non-cash goodwill and indefinite-lived intangible asset impairment charges(1) of $72.5 million in Q4 2015 Strategies • Implemented further cost structure reductions and branch consolidation • Consolidated Houston operations and relocated a portion of Houston manufacturing to Mexico • Improve operational efficiency at all locations • Increase sales of higher-margin, specialty products (Unaudited, dollars in millions) FY 2015 Segment Contribution 22% By Revenue -1% By Operating Profit(1) Quarterly Commentary Accelerated broader restructuring and additional fixed and variable cost-out actions to drive margin improvement. (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix. Financial Snapshot Q4 2015 Q4 2014 Variance Sales $40.5 $51.3 -21.1% Operating profit (1) -$2.3 $1.2 n/m Operating profit margin (1) -5.8% 2.3% n/m
Engineered Components 15 • Engine and compressor sales decreased more than 60% as a result of lower oil prices – remained breakeven by aligning cost structure • Cylinder sales declined due to softness in industrial end markets and lower export sales due to stronger U.S. dollar • Margins declined primarily due to lower sales and fixed cost absorption Strategies • Implemented cost reduction actions to mitigate top-line pressures and remain profitable in engine business • Adding incremental cylinder capabilities and longer- term capacity • Expanding engine and compressor product lines to diversify and reduce end-market cyclicality (Unaudited, dollars in millions) FY 2015 Segment Contribution [VA LUE ] By Revenue 16% By Operating Profit(1) Quarterly Commentary Focused on mitigating top-line headwinds by reducing costs to better reflect end market demand. (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix. Financial Snapshot Q4 2015 Q4 2014 Variance Sales $32.3 $56.3 -42.6% Operating profit (1) $4.9 $9.2 -46.5% Operating profit margin (1) 15.2% 16.3% -110 bps
Segment Performance Summary 16 (Unaudited, excluding Special Items, dollars in millions) Sales Operating Profit Margin(1) (1) Excludes the impact of “Special Items.” For a detailed reconciliation, excluding “Special Items,” please see the Appendix. Q4 2015 Q3 2015 Q4 2014 FY 2015 FY 2014 Packaging $77.8 $87.9 $80.7 $334.3 $337.7 Aerospace $42.1 $45.4 $35.1 $176.5 $121.5 Energy $40.5 $51.6 $51.3 $193.4 $206.7 Engineered Components $32.3 $37.3 $56.3 $159.8 $221.4 Q4 2015 Q3 2015 Q4 2014 FY 2015 FY 2014 Packaging 25.0% 25.2% 25.3% 24.0% 23.9% Aerospace 16.1% 18.1% 11.6% 18.1% 15.2% Energy -5.8% 4.5% 2.3% -0.8% 3.1% Engineered Components 15.2% 12.0% 16.3% 13.6% 15.4% Top-line pressures intensified during fourth quarter 2015 – taking actions to hold and improve margins.
Outlook and Summary
FY 2016 Segment Assumptions 18 Sales Growth(1) Operating Profit Margin(2) 2016 Commentary Packaging 4% – 8% 22% – 24% • Organic growth driven primarily by new products and increased share in emerging markets • Expected growth primarily in specialty dispensing products; continued weakness expected in industrial end markets • Continuous pipeline of productivity initiatives to fund growth while maintaining margins Aerospace 9% – 11% 18% – 20% • Steady OE build rates and share gains expected to boost top-line • Q4 2015 acquisition of Parker Hannifin facility will add to growth • Major distributors expected to continue to reduce inventory levels • Leverage one aerospace platform, improve manufacturing efficiencies and grow top-line to expand margins Energy (10%) – (15%) 3% – 6% • Sales impacted by reduced downstream channel spending and exiting lower margin business • Improve margin level by continued restructuring of footprint and supply chain, cost-out actions and operational efficiencies Engineered Components (7%) – (10%) 13% – 15% • Industrial market slowdown expected to continue to impact cylinder sales – sales expected to be relatively flat • Maintain cylinder business margins through productivity initiatives • Continue to mitigate engine-related top-line pressure to breakeven – entered Q1 2015 with backlog resulting in higher sales, as compared to expected Q1 2016 sales levels Grow higher margin Packaging and Aerospace businesses – while expanding margins and mitigating continued top-line pressures, most notably in the energy-facing businesses. (1) 2016 revenue growth versus 2015. (2) Defined as operating profit margin, excluding “Special Items.”
FY 2016 Outlook Full Year Outlook (as of 2/25/16) Comments Sales Growth (2%) – 2% • Continued global macroeconomic and industrial end market weakness • Currency not expected to be a significant driver year-over- year – except strong USD dampens export sales and facilitates foreign import competition • Organic growth driven by Packaging and Aerospace • Expect ~1% growth from existing acquisition • Oil-related activity expected to remain weak, with energy- facing businesses’ sales consistent with Q4 2015 levels Earnings Per Share, diluted(1) $1.35 – $1.45 • Savings from Financial Improvement Plan expected to help mitigate impact of weak end markets • Productivity and margin enhancement programs drive EPS growth • Leverage from the restructured Energy footprint expected to be muted by expected sales decline Free Cash Flow(2) $60 – $70 million • Managing working capital and capital expenditures consistent with environment, while still funding growth programs • Target ~ 100% of net income (1) Defined as diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” (2) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of “Special Items,” less Capital Expenditures. 19 Increasing year-over-year EPS in a challenging macroeconomic environment. From Continuing Operations
FY 2016 Outlook – Additional Assumptions Full Year Outlook as of 2/25/16 Comments Interest Expense $14 – $16 million • Effective July 1, 2016, interest expense on the majority of variable-rate debt in the Credit Agreement fixed via interest rate swap agreements (through 2020) • Impact of higher interest rates expected to more than offset interest savings from debt reduction • Debt reduction remains a priority Capital Expenditures 4% – 5% of sales • Continuing to invest in Packaging and Aerospace for top-line growth and margin expansion • Planning additional low-cost country capacity in Packaging to serve global customers • Expanding capacity of cylinder business to capitalize on North American market position Tax Rate 31% – 33% • Income more heavily weighted toward United States based on planned income mix and due to restructuring actions within the Energy segment Corporate Expense – Cash Costs Stock Compensation $25 – $27 million $10 million • Expected annual run rate of cash spend reduced following the Cequent spin-off in June 2015 • Lower attainment of performance-based equity awards resulted in lower stock compensation expense in 2014 and 2015 • Target awards and metrics reset following the spin-off • Includes long term incentive compensation for all of TriMas 20 From Continuing Operations
View into Q1 2016 • Expect similar environment to Q4 2015 – Macroeconomic uncertainty remains – Packaging’s industrial products sales remain soft given end market weakness – Low oil prices continue to impact energy-facing businesses’ sales – No change in Aerospace build rates • “Pluses” versus Q4 2015 – Packaging’s dispensing product sales improve (Q4 historically lower) – Increase industrial gas cylinder sales (Q4 seasonally lower) – Sales related to Aerospace’s Q4 asset acquisition – Incremental Financial Improvement Plan savings • “Minuses” versus Q4 2015 – Higher incentive compensation expense (cash and stock) due to reset of metrics and targets in 2016 – Currency transaction gains in Q4 2015 (due to weaker USD) not expected to repeat – Insurance recovery in Q4 2015 related to previously settled claim does not repeat 21 Expect Q1 2016 EPS(1) to range between $0.24 and $0.27. $0.29 …………………………………...….……….. (1) Defined as diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” Special Items for Q4 2015 may be found in the Appendix. ~ $0.03 – $0.04 ~ ($0.06) – ($0.08) ………..……………………….………………………….... ……………………….……………………………...
Financial Targets Grow Packaging and Aerospace sales 2x other businesses; improve Aerospace and Energy margins to historical levels. Segment Target Revenue Growth Target 2018 Operating Profit Margin Packaging • Mid single-digit organic growth, complemented by acquisitions 22% – 24% Aerospace • Mid-to-high single-digit organic growth, complemented by acquisitions 24% – 26% Energy • GDP+ organic growth 10% – 12% Engineered Components • GDP+ organic growth 14% – 16% Corporate • N/A < 3% of Sales Key Assumptions: • No economic recession • Real GDP 1.5% - 2.5% • Currency rates held constant at Q1 2015 rates • Aircraft build rates meet current industry forecasts • Oil price and rig counts rise to 2014 levels by 2018 • Corporate excludes non- cash long-term equity incentive expense 22
Summary • Mitigate impact of external headwinds via Financial Improvement Plan – continue to evaluate end markets and costs • Grow higher-margin Packaging and Aerospace – continue to invest and leverage • Drive improved profitability from restructured Energy business • Improve cash flow conversion and ROIC • Drive continuous productivity pipeline • Consider opportunistic and value-accretive bolt-on acquisitions • Realigned long-term incentive compensation with shareholders – Total Shareholder Return (TSR) metric 23 Firm understanding of the challenges and external factors – focused on execution for remainder of 2016 and beyond.
Questions and Answers
Appendix
Condensed Consolidated Balance Sheet 26 December 31, December 31, 2015 2014 Assets Current assets: Cash and cash equivalents............................................................ 19,450$ 24,420$ Receivables, net........................................................................... 121,990 132,800 Inventories.................................................................................... 167,370 171,260 Prepaid expenses and other current assets..................................... 17,810 8,690 Current assets, discontinued operations.......................................... - 192,580 Total current assets................................................................... 326,620 529,750 Property and equipment, net.............................................................. 181,130 177,470 Goodwill........................................................................................... 378,920 460,080 Other intangibles, net........................................................................ 273,870 297,420 Other assets.................................................................................... 9,760 20,030 Non-current assets, discontinued operations....................................... - 140,680 Total assets.............................................................................. 1,170,300$ 1,625,430$ Liabilities and Shareholders' Equity Current liabilities: Current maturities, long-term debt................................................... 13,850$ 23,400$ Accounts payable......................................................................... 88,420 103,510 Accrued liabilities.......................................................................... 50,480 60,150 Current liabilities, discontinued operations....................................... - 119,900 Total current liabilities................................................................ 152,750 306,960 Long-term debt, net........................................................................... 405,780 607,410 Deferred income taxes...................................................................... 11,260 22,120 Other long-term liabilities................................................................... 53,320 67,410 Non-current liabilities, discontinued operations.................................... - 30,900 Total liabilities........................................................................... 623,110 1,034,800 Total shareholders' equity........................................................... 547,190 590,630 Total liabilities and shareholders' equity....................................... 1,170,300$ 1,625,430$ (Dollars in thousands)
Three months ended Twelve months ended 2015 2014 2015 2014 Net sales................................................................................................. 192,760$ 223,430$ 863,980$ 887,300$ Cost of sales............................................................................................ (143,760) (169,490) (627,870) (650,290) Gross profit........................................................................................... 49,000 53,940 236,110 237,010 Selling, general and administrative expenses............................................... (39,630) (33,960) (162,350) (146,590) Net loss on dispositions of property and equipment...................................... (1,730) (3,330) (2,330) (3,770) Impairment of goodwill and indefinite-lived intangible assets.......................... (75,680) - (75,680) - Operating profit (loss)............................................................................ (68,040) 16,650 (4,250) 86,650 Other expense, net: Interest expense................................................................................... (3,450) (3,280) (14,060) (9,590) Debt financing and extinguishment costs................................................. - (3,360) (1,970) (3,360) Other income (expense), net.................................................................. 490 (650) (1,840) (4,100) Other expense, net............................................................................ (2,960) (7,290) (17,870) (17,050) Income (loss) from continuing operations before income tax expense............. (71,000) 9,360 (22,120) 69,600 Income tax benefit (expense)..................................................................... 10,200 (1,690) (6,540) (22,710) Income (loss) from continuing operations..................................................... (60,800) 7,670 (28,660) 46,890 Income (loss) from discontinued operations, net of tax.................................. - (6,200) (4,740) 22,390 Net income (loss)...................................................................................... (60,800) 1,470 (33,400) 69,280 Less: Net income attributable to noncontrolling interests.............................. - - - 810 Net income (loss) attributable to TriMas Corporation..................................... (60,800)$ 1,470$ (33,400)$ 68,470$ Earnings (loss) per share attributable to TriMas Corporation - basic: Continuing operations............................................................................ (1.35)$ 0.17$ (0.64)$ 1.03$ Discontinued operations......................................................................... - (0.14) (0.10) 0.50 Net income (loss) per share................................................................... (1.35)$ 0.03$ (0.74)$ 1.53$ - Weighted average common shares - basic 45,188,303 44,938,675 45,123,626 44,881,925 Earnings (loss) per share attributable to TriMas Corporation - diluted: Continuing operations............................................................................ (1.35)$ 0.17$ (0.64)$ 1.02$ Discontinued operations......................................................................... - (0.14) (0.10) 0.49 Net income (loss) per share................................................................... (1.35)$ 0.03$ (0.74)$ 1.51$ Weighted average common shares - diluted 45,188,303 45,384,460 45,123,626 45,269,409 December 31, December 31, Consolidated Statement of Operations 27 (Unaudited, dollars in thousands, except for per share amounts)
Consolidated Statement of Cash Flow (Unaudited, dollars in thousands) 28 2015 2014 Cash Flows from Operating Activities: Net income (loss)..................................................................................................................... (33,400)$ 69,280$ Income (loss) from discontinued operations................................................................................ (4,740) 22,390 Income (loss) from continuing operations.................................................................................... (28,660) 46,890 Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of acquisition impact: Impairment of goodwill and indefinite-lived intangible assets...................................................... 75,680 - Loss on dispositions of property and equipment...................................................................... 2,330 3,770 Depreciation......................................................................................................................... 22,570 21,380 Amortization of intangible assets........................................................................................... 20,970 16,060 Amortization of debt issue costs............................................................................................ 1,710 1,940 Deferred income taxes.......................................................................................................... (8,750) (6,530) Non-cash compensation expense.......................................................................................... 6,340 7,110 Excess tax benefits from stock based compensation............................................................... (590) (1,180) Debt financing and extinguishment costs................................................................................ 1,970 3,360 (Increase) decrease in receivables.......................................................................................... 5,300 (9,790) (Increase) decrease in inventories.......................................................................................... 3,250 (6,010) Decrease in prepaid expenses and other assets...................................................................... 4,730 5,250 Increase (decrease) in accounts payable and accrued liabilities................................................ (29,530) 11,830 Other, net............................................................................................................................ (750) (1,560) Net cash provided by operating activities of continuing operations, net of acquisition impact.... 76,570 92,520 Net cash provided by (used for) operating activities of discontinued operations........................ (14,030) 30,880 Net cash provided by operating activities, net of acquisition impact.................................... 62,540 123,400 Cash Flows from Investing Activities: Capital expenditures............................................................................................................. (28,660) (23,000) Acquisition of businesses, net of cash acquired...................................................................... (10,000) (382,880) Net proceeds from disposition of assets................................................................................. 1,700 200 Net cash used for investing activities of continuing operations............................................... (36,960) (405,680) Net cash used for investing activities of discontinued operations............................................ (2,510) (4,410) Net cash used for investing activities............................................................................... (39,470) (410,090) Cash Flows from Financing Activities: Proceeds from borrowings on term loan facilities..................................................................... 275,000 275,000 Repayments of borrowings on term loan facilities..................................................................... (444,890) (8,910) Proceeds from borrowings on revolving credit and accounts receivable facilities.......................... 1,129,840 1,063,960 Repayments of borrowings on revolving credit and accounts receivable facilities......................... (1,169,370) (989,090) Payments for deferred purchase price..................................................................................... (6,440) - Debt financing fees............................................................................................................... (1,850) (3,840) Distributions to noncontrolling interests.................................................................................. - (580) Payment for noncontrolling interests....................................................................................... - (51,000) Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations…...…………………………………………………………………………………….……… (2,770) (2,910) Proceeds from exercise of stock options................................................................................ 500 640 Excess tax benefits from stock based compensation............................................................... 590 1,180 Cash transferred to the Cequent businesses........................................................................... (17,050) - Net cash provided by (used for) financing activities of continuing operations............................ (236,440) 284,450 Net cash provided by (used for) financing activities of discontinued operations........................ 208,400 (340) Net cash provided by (used for) financing activities........................................................... (28,040) 284,110 Cash and Cash Equivalents: Decrease for the year............................................................................................................ (4,970) (2,580) At beginning of year.............................................................................................................. 24,420 27,000 At end of year................................................................................................................... 19,450$ 24,420$ Supplemental disclosure of cash flow information: Cash paid for interest........................................................................................................ 15,170$ 10,870$ Cash paid for taxes........................................................................................................... 30,580$ 41,110$ Year ended December 31,
Three months ended 2015 2014 2015 2014 Packaging Net sales................................................................................................................................................ 77,800$ 80,710$ 334,270$ 337,710$ Operating profit........................................................................................................................................ 18,380$ 18,180$ 78,470$ 77,850$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 1,050$ 2,220$ 1,760$ 2,840$ Excluding Special Items, operating profit would have been................................................................... 19,430$ 20,400$ 80,230$ 80,690$ Aerospace Net sales................................................................................................................................................ 42,140$ 35,090$ 176,480$ 121,510$ Operating profit........................................................................................................................................ 5,910$ 3,440$ 28,320$ 17,830$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 870$ 620$ 3,610$ 620$ Excluding Special Items, operating profit would have been................................................................... 6,780$ 4,060$ 31,930$ 18,450$ Energy Net sales................................................................................................................................................ 40,480$ 51,330$ 193,390$ 206,720$ Operating loss......................................................................................................................................... (86,770)$ (7,530)$ (97,160)$ (6,660)$ Special Items to consider in evaluating operating profit (loss): Severance and business restructuring costs........................................................................................... 11,940$ 7,460$ 23,140$ 11,890$ Release of historical translation adjustments related to the closure of Brazilian manufacturing facility.......... -$ 1,270$ -$ 1,270$ Impairment of goodwill and indefinite-lived intangible assets..................................................................... 72,500$ -$ 72,500$ -$ Excluding Special Items, operating profit (loss) would have been.......................................................... (2,330)$ 1,200$ (1,520)$ 6,500$ Engineered Components Net sales................................................................................................................................................ 32,340$ 56,300$ 159,840$ 221,360$ Operating profit........................................................................................................................................ 1,670$ 9,160$ 18,240$ 34,080$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 50$ -$ 280$ -$ Impairment of goodwill and indefinite-lived intangible assets..................................................................... 3,180$ -$ 3,180$ -$ Excluding Special Items, operating profit would have been................................................................... 4,900$ 9,160$ 21,700$ 34,080$ Corporate expenses Operating loss......................................................................................................................................... (7,230)$ (6,600)$ (32,120)$ (36,450)$ Special Items to consider in evaluating operating loss: Severance and business restructuring costs........................................................................................... 500$ -$ 1,440$ -$ Excluding Special Items, operating loss would have been.................................................................... (6,730)$ (6,600)$ (30,680)$ (36,450)$ Total Continuing Operations Net sales................................................................................................................................................ 192,760$ 223,430$ 863,980$ 887,300$ Operating profit (loss)............................................................................................................................... (68,040)$ 16,650$ (4,250)$ 86,650$ Total Special Items to consider in evaluating operating profit (loss)............................................................... 90,090$ 11,570$ 105,910$ 16,620$ Excluding Special Items, operating profit would have been................................................................... 22,050$ 28,220$ 101,660$ 103,270$ December 31, December 31, Twelve months ended Company and Business Segment Financial Information 29 (Unaudited, dollars in thousands, from continuing operations)
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures 30 Three months ended Twelve months ended December 31, December 31, 2015 2014 2015 2014 Income (loss) from continuing operations, as reported...................................................................................................................... (60,800)$ 7,670$ (28,660)$ 46,890$ Less: Net income attributable to noncontrolling interests.......................................................................................................................... - - - 810 Income (loss) from continuing operations attributable to TriMas Corporation............................................................................................... (60,800) 7,670 (28,660) 46,080 After-tax impact of Special Items to consider in evaluating quality of income (loss) from continuing operations: Release of historical translation adjustments related to the closure of Brazilian manufacturing facility....................................................... - 1,270 - 1,270 Severance and business restructuring costs....................................................................................................................................... 9,760 9,180 21,810 13,980 Impairment of goodwill and indefinite-lived intangible assets.................................................................................................................. 64,260 - 64,260 - Debt financing and extinguishment costs............................................................................................................................................ - 2,120 1,240 2,120 Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been..................... 13,220$ 20,240$ 58,650$ 63,450$ Three months ended Twelve months ended December 31, December 31, 2015 2014 2015 2014 Basic earnings (loss) per share from continuing operations attributable to TriMas Corporation, as reported.................................... (1.35)$ 0.17$ (0.64)$ 1.02$ Dilutive impact(a)………………………………………………………………………………………………………………………………………… 0.02 - 0.01 - After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: Release of historical translation adjustments related to the closure of Brazilian manufacturing facility....................................................... - 0.03 - 0.03 Severance and business restructuring costs....................................................................................................................................... 0.21 0.20 0.48$ 0.31 Impairment of goodwill and indefinite-lived intangible assets.................................................................................................................. 1.41 - 1.41 - Debt financing and extinguishment costs............................................................................................................................................ - 0.04 0.03$ 0.04 Excluding Special Items, EPS from continuing operations would have been................................................................................ 0.29$ 0.44$ 1.29$ 1.40$ Weighted-average shares outstanding .......................................................................................................................................... 45,613,000 45,384,460 45,482,964 45,269,409 2015 2014 2015 2014 Operating profit from continuing operations (excluding Special Items)……………………….……….................................................... 22,050$ 28,220$ 101,660$ 103,270$ Corporate expenses (excluding Special Items)…………………………………………................................................................................ 6,730 6,600 30,680 36,450 Segment operating profit (excluding Special Items)…………………................................................................................................... 28,780$ 34,820$ 132,340$ 139,720$ Segment operating profit margin (excluding Special Items)…...……................................................................................................ 14.9% 15.6% 15.3% 15.7% 2015 2014 2015 2014 Net cash provided by operating activities of continuing operations............................................................................................................. 47,830$ 39,880$ 76,570$ 92,520$ Add: Cash impact of Financial Improvement Plan.................................................................................................................................... 2,160 - 2,890 - Cash Flows from operating activities excluding special items................................................................................................................... 49,990 39,880 79,460 92,520 Less: Capital expenditures of continuing operations................................................................................................................................. (8,300) (4,680) (28,660) (23,000) Free Cash Flow from continuing operations............................................................................................................................................. 41,690$ 35,200$ 50,800$ 69,520$ December 31, Twelve months ended December 31, (a) Impact of 424,697 and 359,338 shares for the three months and twelve months ended December 31, 2015, respectively, which would have been dilutive to the computation of earnings per share in an income position. December 31, December 31, Three months ended Twelve months ended Three months ended (Unaudited, dollars in thousands, except for per share amounts)
Current Debt Structure 31 (Unaudited, dollars in thousands) As of December 31, 2015, TriMas had $126.9 million of cash and available liquidity under its revolving credit and accounts receivable facilities. December 31, December 31, 2015 2014 Cash and Cash Equivalents……………………………..………………… 19,450$ 24,420$ Credit Agreement……………………………………….. 371,820 559,530 Receivables facility and other……………………………….. 53,860 79,040 Debt issuance costs………………………………….. (6,050) (7,760) Total Debt………………………...………………………...………………………… 419,630 630,810 Key Ratios: Bank LTM EBITDA……………………………………………………………………………….……………………………………… 154,180$ 243,610$ Interest Coverage Ratio………………………………………………………………… 12.77 x 13.02 x Leverage Ratio…………………………………………………………………... 2.80 x 2.71 x Bank Covenants: Minimum Interest Coverage Ratio………………………………………………………………… 3.00 x 3.00 x Maximum Leverage Ratio………………………………………………………………………………… 3.50 x 3.50 x
LTM Bank EBITDA as Defined in Credit Agreement 32 (Unaudited, dollars in thousands) (1) As defined in the Credit Agreement dated June 30, 2015. (33,400)$ Interest expense....................................................................................................................... 14,060 Income tax expense.................................................................................................................. 6,540 Depreciation and amortization.................................................................................................... 43,540 Extraordinary non-cash charges................................................................................................. 75,680 Non-cash compensation expense............................................................................................... 6,340 Other non-cash expenses or losses........................................................................................... 17,830 Non-recurring expenses or costs................................................................................................ 15,000 Acquisition integration costs...................................................................................................... 1,880 Debt financing and extinguishment costs.................................................................................... 1,970 Permitted dispositions............................................................................................................... 4,740 154,180$ Net income (loss) for the year ended December 31, 2015 ............................................................... Bank EBITDA - LTM Ended December 31, 2015 (1)…………………………………………………………………