TriMas has announced the financial results for the quarter ended 31 March 2017.
TriMas reported first quarter net sales of $199.8 million, a decrease of 1.5% compared to $202.9 million in first quarter 2016. Organic growth in the Aerospace and Packaging segments was more than offset by lower sales related to continued softness in the oil and gas, and general industrial end markets, de-emphasis of less profitable regions in the Energy segment and currency exchange. The Company reported operating profit of $15.7 million in first quarter 2017 compared to $16.5 million in first quarter 2016.
Excluding Special Items related to business restructuring and severance costs primarily associated with previously announced facility exits, first quarter 2017 operating profit would have been $23.9 million, an increase of 9.2% compared to $21.8 million in the prior year period.
The Company reported first quarter 2017 net income of $7.0 million, or $0.15 per diluted share, compared to net income of $8.3 million, or $0.18 per diluted share, in first quarter 2016. Excluding Special Items, first quarter 2017 net income would have been $14.0 million, resulting in diluted earnings per share of $0.30, an increase of 11.1% compared to $0.27 in the prior year period.
Increased first quarter operating profit, excluding Special Items, by 9.2% compared to the prior year period.
Generated Free Cash Flow of $17.7 million for first quarter 2017, compared to a use of cash of $5.9 million in the prior year period.
Reduced Net Debt by $68.2 million, or 16.5%, to $344.2 million, compared to March 31, 2016.
Reaffirmed 2017 outlook of full-year diluted earnings per share to be between $1.35 to $1.45, excluding any current or future events that may be considered Special Items, and Free Cash Flow to be greater than 100% of net income.
"Our accelerated realignment efforts and renewed operating discipline have started to boost our performance," said Thomas Amato, TriMas President and Chief Executive Officer. "While we are pleased with our start to 2017, we still have many opportunities to improve and are committed to enhancing our performance. We remain excited about the long-term prospects for TriMas and our family of businesses."
"In the near-term, we will continue our relentless attention to the performance improvement plans in the Energy and Aerospace segments, while continuing to take actions to drive future growth and product and process innovation in our Packaging and Engineered Components segments. We are committed to achieving our 2017 operating plan and are reaffirming our full year outlook provided in February," Amato concluded.
The Company reported Free Cash Flow of $17.7 million for first quarter 2017, compared to a use of $5.9 million in first quarter 2016, driven primarily by enhanced focus on net working capital management. Free Cash Flow conversion was approximately 127% of net income for first quarter 2017, excluding Special Items. Please see Appendix I for further details.
TriMas reported total debt of $366.9 million as of March 31, 2017, compared to $374.7 million as of December 31, 2016, and $437.9 million as of March 31, 2016. In addition, the Company reduced Net Debt by $68.2 million, or 16.5%, to $344.2 million, compared to $412.4 million as of March 31, 2016. TriMas ended first quarter 2017 with $169.1 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
First Quarter Segment Results
Packaging (Approximately 43% of TriMas March 31, 2017 LTM sales)
The Packaging segment, which consists primarily of the Rieke brand, develops and manufactures specialty dispensing and closure applications for the health, beauty and home care, food and beverage, and industrial markets. Net sales for the first quarter increased 1.1% compared to the year ago period, with sales increases in each of Packaging's end markets more than offsetting the impact of $1.8 million of unfavorable currency exchange.
Excluding Special Items, first quarter operating profit increased slightly, while the related margin percentage was relatively flat as the impact of higher sales levels was offset by continued investment in growth and global capabilities, and unfavorable currency exchange.
Aerospace (Approximately 23% of TriMas March 31, 2017 LTM sales)
The Aerospace segment, which is comprised of the Monogram Aerospace Fasteners, Allfast Fastening Systems, Mac Fasteners and Martinic Engineering brands, develops, qualifies and manufactures highly-engineered, precision fasteners and machined products to serve the aerospace market.
Net sales for the first quarter increased 12.1% compared to the year ago period, driven primarily by improved production throughput and strong order demand. First quarter operating profit increased $1.5 million and the related margin percentage improved by 230 basis points, as a result of accelerated operational performance actions.
Energy (Approximately 20% of TriMas March 31, 2017 LTM sales)
The Energy segment, which consists of the Lamons brand, designs, manufactures and distributes industrial sealing and fastener products for the petrochemical, petroleum refining, oil field and other industrial markets. First quarter net sales were lower by 8.5% compared to the year ago period, primarily due to the impact of de-emphasizing less profitable regions and lower demand levels from oil and gas customers.
Excluding Special Items, first quarter operating profit increased by $1.4 million and the related margin percentage increased by 380 basis points, primarily as a result of extensive realignment efforts and manufacturing productivity improvements.
Engineered Components (Approximately 14% of TriMas March 31, 2017 LTM sales)
The Engineered Components segment, which is comprised of the Norris Cylinder and Arrow brands, designs and manufactures highly-engineered steel cylinders, wellhead engines and compression products for use within the industrial, and oil and gas markets.
First quarter net sales were lower by 13.3% compared to the year ago period, primarily due to lower sales of high-pressure cylinders as a result of continued softness in general industrial end markets and the impact of customer consolidations. Sales of oil field-related products also decreased as a result of lower levels of oil and natural gas well completions. While first quarter operating profit decreased $0.7 million primarily due to reduced sales levels and lower fixed cost absorption, the related operating profit margin remained flat at 15.3%.