Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - TRIMAS CORP | trs_063015xexhibit991.htm |
| 8-K - 8-K - TRIMAS CORP | trs_063015x8k.htm |
Second Quarter 2015 Earnings Presentation August 4, 2015
Forward-Looking Statement Forward-Looking Statement Any "forward-looking" statements contained herein, including those relating to market conditions or the Company's financial condition and results, expense reductions, liquidity expectations, business goals and sales growth, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect to the future prospects of the Company and the spin-off of Horizon Global Corporation as independent companies, general economic and currency conditions, various conditions specific to the Company's business and industry, the Company's leverage, liabilities imposed by the Company's debt instruments, market demand, competitive factors, supply constraints, material and energy costs, technology factors, litigation, government and regulatory actions, the Company's accounting policies, future trends, and other risks that are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014. 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 • Successfully completed the tax-free spin-off of Cequent businesses as newly formed company named Horizon Global Corporation • Second quarter sales of approximately $224.9 million – relatively flat year-over-year due to external headwinds • Attained $0.30(1) EPS for the quarter – including a $2.8 million charge to resolve an outstanding legal claim, which approximated $0.04 per share • Focused on mitigating external headwinds • Continued emphasis on margin improvement initiatives 4 Second quarter results consistent with previous guidance – increasing external headwinds impacting second half outlook. (1) Defined as diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” are provided in the Appendix.
External Headwinds and Tailwinds Headwinds • Oil and commodity price declines ‒ Drilling and well completion activity ‒ Capex reductions ‒ Resin and specialty steel prices • Distributor inventory de-stocking and consolidation ‒ Aerospace distributors continue to reduce inventory • U.S. West Coast port delay impact – Inventory imbalances as backlog becomes “available” – Increased costs to produce locally • Strength of U.S. dollar – Translation and transaction impacts – Norris and Arrow exports – Imports more competitive • Overall slow macroeconomic growth 5 Tailwinds • Commercial aircraft build rates and backlog • Asia still growing, albeit at lower rates – uncertainty around China Pressure on the top-line and margin – taking actions to mitigate.
Vision and Strategic Priorities VISION To be a trusted global leader in delivering innovative, engineered product solutions to our customers with superior quality, speed and value. 6 Strategies in place to drive increased shareholder value and returns. Be a Workplace of Choice for Great People Drive Profitable Growth Enhance Margins Optimize Resource and Capital Allocations
Key Business Initiatives 7 Profitable Growth Margin Packaging • Reorganize globally to end market focus • Develop new products • Optimize global footprint Aerospace • Leverage one aerospace platform • Develop new products and expand product lines • Improve operational efficiency at all locations Energy • Increase sales of higher margin products • Improve operational efficiency at all locations • Optimize global footprint Engineered Components Cylinders • Increase capacity to support continued growth • Expand product offering and end markets served • Maintain margins through ongoing productivity Engines and Related Products • Build upon broad range of quality products • “Right-size” business to reflect current market demand All • Further implement TriMas Operating System and Lean initiatives Focus on execution – right initiatives in place to achieve profitable growth and increased margins.
Financial Highlights
Second Quarter Summary • Q2 sales were relatively flat as compared to Q2 2014 – Acquisition and organic sales growth significantly offset by impact of lower oil prices and unfavorable currency exchange • Q2 operating profit dollars and margin percentage were impacted by a $2.8 million charge to resolve an outstanding legal claim and higher costs related to the West Coast port delays in Energy, and lower fixed cost absorption in Engineered Components • Q2 Free Cash Flow lower than prior year due to timing of tax payments and change in operating profit • Total debt increased as compared to Q2 2014 as a result of the Q4 2014 acquisition of Allfast, but lower than year end due to debt pay down resulting from dividend related to spin-off; ended Q2 with leverage ratio of 2.78x 9 (1) Defined as income from continuing operations and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “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, less Capital Expenditures. (Unaudited, excluding Special Items, dollars in millions, except per share amounts) ( fro m co ntinuing o perat io ns) Q2 2015 Q2 2014 Variance Revenue $224.9 $224.7 0.1% Operating profit $24.3 $27.7 -12.4% Operating profit margin 10.8% 12.3% -150 bps Income (1) $13.8 $16.7 -17.7% Diluted EPS(1) $0.30 $0.37 -18.9% Free Cash Flow (2) $9.4 $16.6 -43.0% Total debt $464.0 $362.5 28.0% Organic and acquisition growth offset by impact of lower oil prices and unfavorable currency.
$0.37 $0.30 $(0.04) $(0.07) $0.03 $0.02 $(0.01) 2014 Q2 EPS (1) Energy legal claim Oil price impact Operations (excluding oil) Corporate expenses Interest, taxes & other 2015 Q2 EPS (1) EPS(1) Bridge from Q2 2014 to Q2 2015 10 Impact of low oil prices and challenges in Energy offsetting progress on other margin improvement initiatives. (1) Excludes the impact of “Special Items.” For a detailed reconciliation, excluding “Special Items,” please see the Appendix. • Significant headwinds related to oil prices year-over-year • Q2 2015 included a $2.8 million charge to settle outstanding legal claim • Corporate office lower due to reduced spend in response to macroeconomic challenges
Segment Highlights
Packaging 12 • Sales increased due to the acquisition of Lion Holdings and higher specialty product sales • Sales were impacted by $2.4 million of unfavorable currency exchange • Margin percentage declined slightly due to higher SG&A related to the acquisition and global initiatives Strategies • Launched new brand and reorganized globally to an end market focus to better service customers • Continuing ramp-up of manufacturing capabilities in India and Vietnam • Developing world-class product development team and customer innovation center in India focused on solving customer needs • 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. Q2 YTD 2015 Segment Contribution 37% By Revenue 58% By Operating Profit(1) High growth, high margin business positioned for the future. Financial Snapshot Q2 2015 Q2 2014 Variance Sales $89.6 $86.3 3.9% Operating profit (1) $21.0 $20.5 2.2% Operating profit margin (1) 23.4% 23.8% -40 bps
Aerospace 13 • Sales increased due to Allfast acquisition completed in Q4 2014 – margins still impacted by purchase accounting adjustments • Lower demand from distribution channel – inventory de-stocking continues with no improvement expected in back half of 2015 • Continued improvements in manufacturing efficiency with increases in throughput and quality Strategies • Integrating and leveraging separate aerospace platforms to better serve customers and enhance margins – launched “TriMas Aerospace” at Paris Airshow in June • Developing and qualifying additional highly-engineered products for aerospace applications • Improving manufacturing efficiency and productivity across the businesses (Unaudited, dollars in millions) Q2 YTD 2015 Segment Contribution 20% By Revenue 25% By Operating Profit(1) Quarterly Commentary Positioning TriMas Aerospace as aerospace fastening system supplier of choice. Financial Snapshot Q2 2015 Q2 2014 Variance Sales $43.2 $31.8 35.8% Operating profit (1) $8.1 $5.7 42.2% Operating profit margin (1) 18.6% 17.8% 80 bps (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix.
Energy 14 • Sales decreased due to the impact of lower oil prices on upstream customers, lower sales in China and Brazil due to restructuring, and $1.5 million of unfavorable currency exchange • Headwinds offset sales growth from international branches and new products • Incurred $2.8 million charge to resolve a previous legal claim – margin also negatively impacted by higher sourcing costs related to port delays Strategies • Implement further cost structure reductions and branch consolidation in light of current financial performance • Relocating a portion of Houston manufacturing to Mexico – targeting fourth quarter 2015 • Increase operational efficiency at all locations – achieved labor efficiency gains at the Houston hub facility • Increased focus on sales of more highly-engineered, specialty products (Unaudited, dollars in millions) Q2 YTD 2015 Segment Contribution 23% By Revenue -2% By Operating Profit(1) Quarterly Commentary Assessing broader restructuring of manufacturing footprint and additional cost-out actions to drive margin improvement. Financial Snapshot Q2 2015 Q2 2014 Variance Sales $50.2 $52.3 -4.1% Operating profit (1) -$3.3 $1.7 nm Operating profit margin (1) -6.5% 3.3% nm (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix.
Engineered Components 15 • Norris Cylinder sales and margin levels increased • Arrow Engine sales decreased more than 60% as a result of lower oil prices – remained profitable by aligning cost structure • Lower export sales for cylinders due to stronger U.S. dollar Strategies • Continue to mitigate top-line pressures with cost reductions at Arrow Engine • Adding incremental capabilities and capacity for cylinder business • Expanding engine product lines to diversify and reduce end-market cyclicality (Unaudited, dollars in millions) Q2 YTD 2015 Segment Contribution 20% By Revenue 19% By Operating Profit(1) Quarterly Commentary Maintain margins at Norris Cylinder, while mitigating risks at Arrow Engine. Financial Snapshot Q2 2015 Q2 2014 Variance Sales $42.0 $54.3 -22.8% Operating profit (1) $6.3 $9.0 -29.8% Operating profit margin (1) 15.0% 16.5% -150 bps (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix.
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. Q2 2015 Q1 2015 FY 2014 Q2 2014 Packaging $89.6 $79.0 $337.7 $86.3 Aerospace $43.2 $45.7 $121.5 $31.8 Energy $50.2 $51.2 $206.7 $52.3 Engineered Components $42.0 $48.3 $221.4 $54.3 Q2 2015 Q1 2015 FY 2014 Q2 2014 Packaging 23.4% 22.4% 23.9% 23.8% Aerospace 18.6% 19.4% 15.2% 17.8% Energy -6.5% 3.5% 3.1% 3.3% Engineered Components 15.0% 12.5% 15.4% 16.5% Productivity and margin improvement initiatives taking hold despite soft top-line – assessing broader improvement actions in Energy.
Outlook and Summary
2015 Updated Segment Assumptions 18 Segment Revenue Margin Current Commentary Packaging • Low single-digit growth after considering 2% to 3% currency headwind • Maintain 22% to 24% operating margins – trending to low to mid portion of range • Lower industrial closure volumes impacting top-line and mix • Continued growth investments in Asia Aerospace • Growth of 45% to 50% due to Allfast acquisition • Major distributors overstocked • Full year operating profit margins of 18% to 20% • Operational efficiencies offset by lower distribution orders • Lower sales through distribution impacting top-line and mix Energy • Down low to mid single- digits due to impact of lower oil prices on upstream volume, reduced refinery capex spending and currency headwind • Low single-digit operating profit margin due to lower volume, port strike cost impact and settlement of legal claim • Assessing broader restructuring of manufacturing footprint and additional cost-out actions • Achieving labor efficiency gains at Houston hub Engineered Components • Lower oil prices reducing Arrow revenue more than expected; ~ 50% to 60% • GDP growth for Norris, offset by lower exports due to stronger U.S. dollar • Operating profit margin in 10% to 12% range • Margin headwind due to lower oil prices • Mitigating Arrow top-line pressure with cost reductions • Expected Arrow back half volume shortfall challenges margins • Norris maintains margin levels due to productivity gains Increasing external headwinds in second half expected to continue to pressure revenue growth and product mix – focus on margin improvement initiatives.
2015 Outlook Updated TriMas Full Year Outlook as of 8/4/15 Comments Sales Growth Earnings Per Share, diluted(1) $1.15 to $1.25 • Result of spin-off • Many margin initiatives taking hold • Impact of lower oil prices • Energy margin improvement initiatives require more time • Mix impact of some top-line pressure in Packaging and Aerospace Free Cash Flow(2) $30 to $35 million • Result of spin-off • Managing working capital and capital expenditures consistent with environment (1) Defined as diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” (2) Defined as Net Cash Provided by Operating Activities of Continuing Operations, less Capital Expenditures. 19 Organic 3% to 4% Acquisitions 6% to 7% Oil Price Decline ~ (7.5%) Currency ~ (1%) 0% to 2% Updated 2015 outlook post spin-off of Cequent. • Organic initiatives on track • Acquisition percentage increases post spin-off • Impact of declining oil prices worsened • Currency impact is less post spin-off From Continuing Operations
2015 Outlook – Additional Assumptions Full Year Outlook as of 8/4/15 Comments Interest expense ~ $15 to $16 million • Dividend from spin used to reduce debt Capital expenditures ~ 3% to 4% of sales • Continuing to invest in growth businesses Tax rate ~ 30% to 32% • Income more heavily weighted toward North America • Q3 tax rate is expected to be favorably impacted by one-time item Corporate expense ~ 4% of sales • Spend consistent with first half as TriMas is providing transition services for Horizon Global; targeting 3% over time 20 Providing updated guidance given the significant impact of the Cequent spin-off.
Bridge to Updated EPS Outlook Post Spin-off 21 (1) See Company’s First Quarter Earnings Presentation dated April 28, 2015. (2) See Appendix for calculation for estimate of EPS related to Cequent businesses and interest savings in cash dividend received in the spin-off. (3) Based on 2015 Engine business revenue guidance update from 35-45% reduction in April 2015 to 50-60% reduction in August 2015. (4) Includes impact of lower sales from upstream customers due to lower oil prices, manufacturing inefficiencies due to U.S. West Coast port strike, delays in project to move production to new facility in Mexico and resolution of a legal claim. (5) Considers updated guidance for packaging, aerospace and cylinder business, as well as corporate expenses, interest and other expenses. All amounts based on management estimates • Change in guidance primarily related to spin-off of Cequent businesses; approximately $0.75 EPS net impact • Oil prices are lower than in April 2015, and expected to continue at low levels, further pressuring engine business profitability • Assessing additional restructuring and cost actions given profitability of energy business • Net favorability from cylinder business and corporate office and other expense reductions more than offsetting slight headwinds in packaging and aerospace businesses
Financial Targets – 3 Year Horizon Grow Packaging and Aerospace sales 2x other businesses; improve Aerospace and Energy margins to historical levels. Segment Target Revenue Growth Target 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 • Oil price and rig counts rise to 2014 levels by 2018 • Corporate excludes non- cash long-term equity incentive expense 22
Summary • Operational initiatives – Focus on margins in all businesses – Energy and Aerospace are highest priority – Mitigate external headwinds – Capitalize on profitable growth opportunities • Portfolio management – Continue to simplify – willing to exit lower margin products and geographies – Consider opportunistic and value-accretive acquisitions – focus M&A on Packaging and Aerospace • Capital allocation – Focus on investments with highest returns – Continue to reduce leverage in shorter-term • Governance and compensation – Align compensation with value drivers – Maintain transparency, high compliance and ethical standards 23 Firm understanding of the challenges and external factors – focused on execution for remainder of 2015 and beyond.
Questions and Answers
Appendix
June 30, December 31, 2015 2014 (unaudited) Assets Current assets: Cash and cash equivalents............................................................ 26,170$ 24,420$ Receivables, net........................................................................... 140,150 132,800 Inventories.................................................................................... 179,670 171,260 Deferred income taxes................................................................... 24,030 24,030 Prepaid expenses and other current assets..................................... 18,850 8,690 Current assets, discontinued operations.......................................... - 197,420 Total current assets................................................................... 388,870 558,620 Property and equipment, net.............................................................. 176,970 177,470 Goodwill........................................................................................... 457,720 460,080 Other intangibles, net........................................................................ 286,700 297,420 Other assets.................................................................................... 24,750 27,960 Non-current assets, discontinued operations....................................... - 140,200 Total assets.............................................................................. 1,335,010$ 1,661,750$ Liabilities and Shareholders' Equity Current liabilities: Current maturities, long-term debt................................................... 10,460$ 23,400$ Accounts payable......................................................................... 106,380 103,510 Accrued liabilities.......................................................................... 59,850 63,110 Current liabilities, discontinued operations....................................... - 119,900 Total current liabilities................................................................ 176,690 309,920 Long-term debt................................................................................. 453,490 615,170 Deferred income taxes...................................................................... 46,130 46,320 Other long-term liabilities................................................................... 56,560 64,450 Non-current liabilities, discontinued operations.................................... - 35,260 Total liabilities........................................................................... 732,870 1,071,120 Total shareholders' equity........................................................... 602,140 590,630 Total liabilities and shareholders' equity....................................... 1,335,010$ 1,661,750$ Condensed Consolidate Balan e Sheet 26 (Dollars in thousands)
Three months ended Six months ended 2015 2014 2015 2014 Net sales................................................................................................. 224,900$ 224,710$ 449,030$ 441,540$ Cost of sales............................................................................................ (163,180) (161,950) (324,390) (318,340) Gross profit........................................................................................... 61,720 62,760 124,640 123,200 Selling, general and administrative expenses............................................... (42,510) (37,390) (82,410) (73,720) Operating profit..................................................................................... 19,210 25,370 42,230 49,480 Other expense, net: Interest expense................................................................................... (3,720) (2,120) (7,170) (4,230) Debt financing and extinguishment costs................................................. (1,970) - (1,970) - Other expense, net................................................................................ (290) (1,380) (1,610) (1,720) Other expense, net............................................................................ (5,980) (3,500) (10,750) (5,950) Income from continuing operations before income tax expense...................... 13,230 21,870 31,480 43,530 Income tax expense.................................................................................. (4,740) (7,430) (11,050) (15,400) Income from continuing operations.............................................................. 8,490 14,440 20,430 28,130 Income (loss) from discontinued operations, net of tax.................................. (6,780) 11,760 (4,740) 17,450 Net income............................................................................................... 1,710 26,200 15,690 45,580 Less: Net income attributable to noncontrolling interests.............................. - - - 810 Net income attributable to TriMas Corporation.............................................. 1,710$ 26,200$ 15,690$ 44,770$ Earnings per share attributable to TriMas Corporation - basic: Continuing operations............................................................................ 0.19$ 0.32$ 0.45$ 0.61$ Discontinued operations......................................................................... (0.15) 0.26 (0.10) 0.39 Net income per share............................................................................ 0.04$ 0.58$ 0.35$ 1.00$ Weighted average common shares - basic 45,150,827 44,901,090 45,074,394 44,834,842 Earnings per share attributable to TriMas Corporation - diluted: Continuing operations............................................................................ 0.19$ 0.32$ 0.45$ 0.60$ Discontinued operations......................................................................... (0.15) 0.26 (0.10) 0.39 Net income per share............................................................................ 0.04$ 0.58$ 0.35$ 0.99$ Weighted average common shares - diluted 45,418,907 45,230,862 45,409,875 45,208,488 June 30, June 30, Consolidated Statement of Income 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......................................................................................................................... 15,690$ 45,580$ Income (loss) from discontinued operations............................................................................ (4,740) 17,450 Income from continuing operations........................................................................................ 20,430 28,130 Adjustments to reconcile net income to net cash provided by operating activities: Loss on dispositions of property and equipment.................................................................. 300 180 Depreciation.................................................................................................................... 10,830 10,380 Amortization of intangible assets....................................................................................... 10,580 7,180 Amortization of debt issue costs....................................................................................... 1,020 960 Deferred income taxes..................................................................................................... (250) (3,110) Non-cash compensation expense...................................................................................... 2,870 4,190 Excess tax benefits from stock based compensation.......................................................... (270) (1,030) Debt financing and extinguishment costs........................................................................... 1,970 - Increase in receivables..................................................................................................... (8,930) (22,370) (Increase) decrease in inventories...................................................................................... (9,210) 2,030 Decrease in prepaid expenses and other assets................................................................. 510 1,380 Increase (decrease) in accounts payable and accrued liabilities........................................... (8,550) 10,750 Other, net....................................................................................................................... (820) 560 Net cash provided by operating activities of continuing operations..................................... 20,480 39,230 Net cash used for operating activities of discontinued operations...................................... (14,030) (16,240) Net cash provided by operating activities.................................................................... 6,450 22,990 Cash Flows from Investing Activities: Capital expenditures........................................................................................................ (12,890) (12,940) Net proceeds from disposition of assets............................................................................. 690 40 Net cash used for investing activities of continuing operations.......................................... (12,200) (12,900) Net cash used for investing activities of discontinued operations....................................... (2,510) (7,350) Net cash used for investing activities.......................................................................... (14,710) (20,250) Cash Flows from Financing Activities: Proceeds from borrowings on term loan facilities................................................................. 275,000 - Repayments of borrowings on term loan facilities................................................................ (441,360) (4,440) Proceeds from borrowings on revolving credit and accounts receivable facilities..................... 697,890 552,110 Repayments of borrowings on revolving credit and accounts receivable facilities..................... (703,390) (489,310) Payments for deferred purchase price................................................................................ (5,710) - Debt financing fees.......................................................................................................... (1,850) - 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…...…………………………………………………………………………………….…… (2,620) (2,740) Proceeds from exercise of stock options............................................................................ 430 430 Excess tax benefits from stock based compensation.......................................................... 270 1,030 Cash transferred to the Cequent businesses...................................................................... (17,050) - Net cash provided by (used for) financing activities of continuing operations....................... (198,390) 5,500 Net cash provided by financing activities of discontinued operations.................................. 208,400 3,140 Net cash provided by financing activities..................................................................... 10,010 8,640 Cash and Cash Equivalents: Net increase for the period................................................................................................ 1,750 11,380 At beginning of period....................................................................................................... 24,420 27,000 At end of period........................................................................................................... 26,170$ 38,380$ Supplemental disclosure of cash flow information: Cash paid for interest................................................................................................... 9,690$ 5,550$ Cash paid for taxes...................................................................................................... 17,390$ 10,740$ Six months ended June 30,
Company and Business Segment Financial Information 29 (Unaudited, dollars in thousands, from continuing operations) Three months ended 2015 2014 2015 2014 Packaging Net sales................................................................................................................................................ 89,580$ 86,250$ 168,540$ 167,680$ Operating profit........................................................................................................................................ 20,710$ 20,540$ 38,220$ 38,900$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 280$ -$ 430$ -$ Excluding Special Items, operating profit would have been................................................................... 20,990$ 20,540$ 38,650$ 38,900$ Aerospace Net sales................................................................................................................................................ 43,220$ 31,820$ 88,960$ 59,010$ Operating profit........................................................................................................................................ 7,220$ 5,660$ 15,300$ 10,520$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 830$ -$ 1,620$ -$ Excluding Special Items, operating profit would have been................................................................... 8,050$ 5,660$ 16,920$ 10,520$ Energy Net sales................................................................................................................................................ 50,150$ 52,320$ 101,310$ 105,100$ Operating profit (loss)............................................................................................................................... (7,170)$ (630)$ (6,830)$ 1,970$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 3,910$ 2,350$ 5,340$ 2,350$ Excluding Special Items, operating profit (loss) would have been.......................................................... (3,260)$ 1,720$ (1,490)$ 4,320$ Engineered Components Net sales................................................................................................................................................ 41,950$ 54,320$ 90,220$ 109,750$ Operating profit........................................................................................................................................ 6,220$ 8,950$ 12,190$ 16,830$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 60$ -$ 140$ -$ Excluding Special Items, operating profit would have been................................................................... 6,280$ 8,950$ 12,330$ 16,830$ Corporate Expense Operating loss......................................................................................................................................... (7,770)$ (9,150)$ (16,650)$ (18,740)$ Total Continuing Operations Net sales................................................................................................................................................ 224,900$ 224,710$ 449,030$ 441,540$ Operating profit........................................................................................................................................ 19,210$ 25,370$ 42,230$ 49,480$ Total Special Items to consider in evaluating operating profit........................................................................ 5,080$ 2,350$ 7,530$ 2,350$ Excluding Special Items, operating profit would have been................................................................... 24,290$ 27,720$ 49,760$ 51,830$ June 30, June 30, Six months ended
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures 30 (Unaudited, dollars in thousands, except for per share amounts) Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Income from continuing operations, as reported............................................................................................................................... 8,490$ 14,440$ 20,430$ 28,130$ Less: Net income attributable to noncontrolling interests.......................................................................................................................... - - - 810 Income from continuing operations attributable to TriMas Corporation........................................................................................................ 8,490 14,440 20,430 27,320 After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: Severance and business restructuring costs....................................................................................................................................... 4,030 2,270 5,930 2,270 Debt extinguishment costs................................................................................................................................................................ 1,240 - 1,240 - Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been..................... 13,760$ 16,710$ 27,600$ 29,590$ Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Diluted earnings per share from continuing operations attributable to TriMas Corporation, as reported.......................................... 0.19$ 0.32$ 0.45$ 0.60$ After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: Severance and business restructuring costs....................................................................................................................................... 0.08$ 0.05 0.13 0.05 Debt extinguishment costs................................................................................................................................................................ 0.03$ - 0.03 - Excluding Special Items, EPS from continuing operations would have been................................................................................ 0.30$ 0.37$ 0.61$ 0.65$ Weighted-average shares outstanding .......................................................................................................................................... 45,418,907 45,230,862 45,409,875 45,208,488 2015 2014 2015 2014 Operating profit from continuing operations (excluding Special Items)……………………….……….................................................... 24,290$ 27,720$ 49,760$ 51,830$ Corporate expenses (excluding Special Items)…………………………………………................................................................................ 7,770 9,150 16,650 18,740 Segment operating profit (excluding Special Items)…………………................................................................................................... 32,060$ 36,870$ 66,410$ 70,570$ Segment operating profit margin (excluding Special Items)…...……................................................................................................ 14.3% 16.4% 14.8% 16.0% 2015 2014 2015 2014 Net cash provided by Operating Activities of continuing operations............................................................................................................ 16,640$ 24,250$ 20,480$ 39,230$ Less: Capital expenditures of continuing operations................................................................................................................................. (7,200) (7,700) (12,890) (12,940) Free Cash Flow of continuing operations................................................................................................................................................ 9,440$ 16,550$ 7,590$ 26,290$ Three months ended June 30, Six months ended June 30, June 30, June 30, Three months ended Six months ended
Estimated 2015 Cequent-related Operating EPS 31 (Amount in thousands, except per share amounts) (1) As presented in the TriMas Fourth Quarter Earnings Presentation dated February 25, 2015. (2) As per the Horizon Global Registration Statement filed on June 22, 2015. (3) TriMas approximate effective interest rate as of June 30, 2015. (4) As per the TriMas 2014 10-K filed February 26, 2015. Cequent operating profit (excluding Special Items) for the year ended December 31, 2014(1)………………………………………………………………...43,390$ Guidance of 100 basis point margin improvement on $612M of net sales in 2015(1)…………………………………….. 6,120 Expected 2015 Cequent operating profit excluding any assumptions for sales growth............................ 49,510 Cequent 2014 income tax rate(2)………………………………………………………………………………………………………………………...…..… 25.4% Estimated 2015 Cequent net income................................................................................................. 36,910 Weighted average shares outstanding for the year ended December 31, 2014....................................... 45,269 Estimated 2015 EPS from Cequent operations.............................................................................. 0.82$ Cash distribution received from Horizon............................................................................................. 214,500$ Estimated interest rate(3)…………………………………………………………………………………………………..………. 2.0% Interest savings resulting from debt paydown..................................................................................... 4,290 TriMas 2014 income tax rate(4)………………………………………………………………………………………. 26.8% Expected 2015 net income from interest savings................................................................................ 3,140 Weighted average shares outstanding for the year ended December 31, 2014....................................... 45,269 Estimated EPS impact of Horizon cash distribution...................................................................... 0.07$ Estimated 2015 net EPS impact of Cequent.................................................................................. 0.75$
Current Debt Structure 32 (Unaudited, dollars in thousands) As of June 30, 2015, TriMas had $149.2 million of cash and available liquidity under its revolving credit and accounts receivable facilities. June 30, December 31, 2015 2014 Cash and Cash Equivalents……………………………..………………… 26,170$ 24,420$ Credit Agreement……………………………………….. 403,280 559,530 Receivables facility and other……………………………….. 60,670 79,040 463,950 638,570 Total Debt………………………...………………………...………………………… 463,950$ 638,570$ Key Ratios: Bank LTM EBITDA……………………………………………………………………………….……………………………………… 169,830$ 243,610$ Interest Coverage Ratio………………………………………………………………… 13.99 x 13.02 x Leverage Ratio…………………………………………………………………... 2.78 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 33 (Unaudited, dollars in thousands) 39,390$ Interest expense....................................................................................................................... 12,530 Income tax expense.................................................................................................................. 19,630 Depreciation and amortization.................................................................................................... 41,280 Non-cash compensation expense............................................................................................... 5,790 Other non-cash expenses or losses........................................................................................... 15,390 Non-recurring expenses or costs relating to cost saving projects .................................................. 9,310 Acquisition integration costs...................................................................................................... 8,190 Debt extinguishment costs........................................................................................................ 5,330 Permitted dispositions............................................................................................................... 2,780 Permitted acquisitions............................................................................................................... 8,450 Negative EBITDA from discontinued operations............................................................................ 1,760 169,830$ Net income for the twelve months ended June 30, 2015 .................................................................. Bank EBITDA - LTM Ended June 30, 2015 (1)………………………………………………………………… (1) As defined in the Credit Agreement dated June 30, 2015.