BLOOMFIELD HILLS, Mich. — TriMas today announced financial results for the quarter ended Sept. 30. The company reported third quarter net sales from continuing operations of $202.3 million, a decrease of 9.0% compared to third quarter 2015.
The company reported third quarter 2016 income from continuing operations of $8.8 million, or $0.19 per diluted share, as compared to income of $11.7 million, or $0.26 per diluted share, in the third quarter of 2015.
Excluding Special Items related to severance and business restructuring, third quarter 2016 diluted earnings per share from continuing operations would have been $0.35, as compared to $0.39 in third quarter 2015.
- Delivered third quarter 2016 diluted earnings per share, excluding special items, of $0.35, despite lower sales levels.
- Increased operating profit margin, excluding special items, by 50 basis points, as compared to third quarter 2015.
- Achieved solid progress against a comprehensive recovery plan in the aerospace segment which resulted in 530 basis points of sequential quarterly margin improvement, excluding special items.
- Generated free cash flow of $11.2 million for third quarter 2016, resulting in year-to-date free cash flow of approximately 90% of income from continuing operations, excluding special items.
- Reduced total debt by 11% as compared to Sept. 30, 2015.
- Initiated facility rationalization and infrastructure cost savings actions during the quarter to further streamline operations and drive improved performance.
“We achieved third quarter diluted earnings per share of $0.35, excluding Special Items, despite softer sales levels primarily related to challenges in the oil and gas end markets,” said Thomas Amato, TriMas president and chief executive officer. “I am pleased with the renewed focus and sense of urgency to drive future performance improvements, as evidenced by the additional footprint rationalization actions taken during the quarter.”
Amato continued, “During my first three months at TriMas, we implemented more detailed analytics and increased the frequency of management reviews to drive improved operational execution and make TriMas and its businesses more nimble and responsive to changes in our end markets, which we believe will ultimately provide a competitive advantage. After spending time with our teams in the businesses, I am convinced there are many opportunities to further enhance operating performance by embracing a culture of continuous improvement and accelerating growth in high potential areas.”
“Regarding our 2016 outlook, we are tightening our full-year 2016 diluted EPS guidance range from $1.22 to $1.30, to $1.24 to $1.28 per share, excluding Special Items. While we continue to experience softer sales levels, we are taking actions to further streamline the businesses, enabling us to hold the midpoint of our previously provided EPS guidance range. We are currently working on our 2017 budget, as well as our longer-term strategic plan, in which we expect to achieve earnings expansion, despite anticipated continued oil and gas end market softness,” Amato continued.
Third quarter financial results – from continuing operations
- TriMas reported third quarter net sales of $202.3 million, a decrease of 9.0% as compared to $222.2 million in third quarter 2015. The positive sales impacts of a recent acquisition and organic initiatives were more than offset by sales declines resulting primarily from weakness in the oil and gas end markets and the impact of unfavorable currency exchange.
- The company reported operating profit of $17.8 million in third quarter 2016 as compared to $21.6 million in third quarter 2015. Excluding special items related to severance and business restructuring, third quarter 2016 operating profit would have been $28.1 million as compared to $29.9 million during third quarter 2015. Third quarter 2016 operating profit margin, excluding special items, increased 50 basis points to 13.9%, as the favorable impact of the company’s financial improvement plan, on-going continuous improvement initiatives and a reduction in corporate expenses, more than offset the unfavorable impact of sales declines as compared to third quarter 2015.
- Third quarter 2016 income from continuing operations was $8.8 million, or $0.19 per diluted share, as compared to $0.26 per diluted share in third quarter 2015. Excluding special items, third quarter 2016 income from continuing operations would have been $16.1 million, or $0.35 per diluted share, as compared to $0.39 in third quarter 2015, as a result of lower sales levels, which was partially offset by the company’s cost savings initiatives.
- The company reported free cash flow (defined as net cash provided by operating activities of continuing operations, excluding the cash impact of special items, less capital expenditures) of $11.2 million for third quarter 2016 as compared to $1.5 million in third quarter 2015. Please see Appendix I for further details.
TriMas reported total debt of $402.4 million as of Sept. 30, as compared to $419.6 million as of Dec. 31, 2015, and $453.1 million as of Sept. 30, 2015. TriMas ended third quarter 2016 with $100.9 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
Segment results – From continuing operations
The Packaging segment continues to develop specialty dispensing and closure applications for global markets, including industrial, food and beverage, and health, beauty and home care. Net sales for the third quarter increased 2.7% as compared to the year ago period, as sales increases to the health, beauty and home care, and industrial end markets more than offset the impact of unfavorable currency exchange. Third quarter operating profit and the related margin percentage, excluding Special Items, decreased due to a higher level of selling, general and administrative expenses related to continued investment in growth and global capabilities, and the reversal of acquisition-related liabilities in third quarter 2015 that did not recur in third quarter 2016, partially offset by the impact of continuous improvement initiatives.
The Aerospace segment is focused on increasing manufacturing throughput and manufacturing efficiency, developing and qualifying additional highly-engineered products, and leveraging broader capabilities to better serve its customers. Net sales for the third quarter increased 4.5% as compared to the year ago period, as a result of incremental sales related to the November 2015 acquisition of a machined components facility, partially offset by lower sales to distribution customers and production constraints. Third quarter operating profit and the related margin percentage, excluding Special Items, decreased due to a less favorable product sales mix and costs of recovery actions to address shorter-term production inefficiencies.
The Energy segment continues to leverage lower costs resulting from business restructuring, as well as operational and manufacturing improvements. Third quarter net sales decreased 25.9% as compared to the year ago period, due to reduced demand levels from downstream oil and gas customers, lower sales from international branches, lower levels of new facility engineering and construction activity and the impact of unfavorable currency exchange. Third quarter operating profit, excluding Special Items, decreased due to the impact of the reduced sales levels and lower fixed cost absorption. The related operating profit margin increased, however, as the impact of the sales decline was more than offset by savings achieved from cost reduction actions.
The Engineered Components segment has responded to the dramatic drop in oil prices by reducing its fixed cost structure. Third quarter net sales decreased 29.5% as compared to the year ago period, primarily due to lower sales of engines and compressors resulting from the impact of low oil prices and significantly reduced oil and gas drilling activity. Sales of industrial cylinders also decreased as a result of continued softness in general industrial end markets and customer consolidation. Third quarter operating profit, excluding Special Items, decreased primarily due to reduced sales levels and lower fixed cost absorption. However, the related operating profit margin increased, as the impact of the sales decline was more than offset by savings achieved from cost reduction actions and continuous improvement initiatives.
On June 30, 2015, the company completed the spin-off of its Cequent businesses (comprised of the Cequent Americas and Cequent APEA reportable segments), creating a new independent publicly traded company, Horizon Global Corporation, through a distribution of 100% of the Company’s interest in Horizon Global to holders of TriMas common shares. The results of operations of the Cequent businesses, as well as the one-time costs incurred in connection with the separation of the two companies, are included in discontinued operations.
SOURCE: TriMas press release