TriMas Sales, Cash Flow Up; Acquisition Costs Hurt Profits

BLOOMFIELD HILLS — The diversified manufacturer TriMas Corp. (Nasdaq: TRS) reported higher sales and cash flow for the quarter and year ended Dec. 31. One-time expenses, most related to spinoffs and restructuring, resulted in lower profits from year-ago levels.

For the year, net income was $68.5 million or $1.51 a share, down from $75.6 million or $1.83 in 2013. Revenue was $1.5 billion, up from $1.39 billion a year earlier.

For the quarter, net income was $1.5 million or 3 cents a share, down from $6.9 million or 15 cents a share in the fourth quarter of 2013. Revenue was $350.6 million, up from $320.2 million a year earlier.

One-time expenses included those related to the acquisition of Allfast Fastening Systems, restructuring costs, a shutdown fo manufacturing in Brazil, the sale of a packaging business in Italy, and Cequent spinout costs. Withhout those one-time items, income from continuing operations would have been $87.1 million for the year, up from $84.7 million in 2013. For the quarter, income would have been $16.9 million, up from $13.3 million in the fourth quarter of 2013.

Free cash flow for the year was $89 million, up 85 percent from 2013.

The results were within the company’s guidance to investors.

Said riMas president and CEO David Wathen: “During the year, we intensified our efforts to improve our future margins across all of our businesses through a series of initiatives. We remain focused on reshaping the businesses to better serve our customers, optimizing our flexible global manufacturing footprint, implementing productivity and lean programs to reduce lead times, complexity and costs, and leveraging our recent acquisitions. Our actions taken in 2014 mark the beginning of a transformation for TriMas, as we continue our progress toward becoming a leading provider of high-margin, highly-engineered product solutions … During 2014, we invested in our higher-margin packaging and aerospace businesses with acquisitions which will drive further growth and margin expansion. We also exited our defense business, as well as other less profitable products and geographies, and will continue to evaluate additional opportunities to do so on an ongoing basis. Most notably, we announced the decision to spin-off our Cequent businesses, which we believe will provide both companies greater flexibility to focus on their distinct growth and margin improvement strategies, enable them to further improve competitiveness and create significant value for shareholders, customers and employees.”

In the company’s packaging business, fourth quarter sales rose 3.2 percent. The company said it continues to develop specialty dispensing and closure applications for growing end markets, including personal care, cosmetic, pharmaceutical, nutrition and food/beverage, and expand into complementary products.

Fourth quarter net sales rose 16.2 percent in the energy segment, primarily due to higher sales of standard gaskets and bolts resulting from increased order rates from North American refining and petrochemical customers.

In the aerospace, sales were up 28.5 percent from a year earlier, due mostly to the results of Allfast, which was acquired in October 2014. Fourth quarter 2014 operating profit and the related margin percentage declined as the increase in operating profit earned on the sales from Allfast was more than offset by lower margins at Martinic Engineering, improved but continuing manufacturing inefficiencies related to smaller customer order quantities and less predictable order patterns associated with large distribution customers, a less favorable product sales mix, and costs related to Allfast including purchase accounting adjustments. Operating profit was also impacted by a charge for the resolution of a customer claim. With recent additions to the management team of this business, the Company is focused on improving margins, developing and marketing highly-engineered products for aerospace applications and leveraging the recent acquisitions.

In the engineered components business, sales rose 35.5. percent in the fourth quarter from year-ago levels, primarily due to incremental sales resulting from the small cylinder asset acquisition in November 2013, increased sales into newer cylinder end markets and improved sales in gas compression products. Fourth quarter 2014 operating profit and the related margin percentage increased compared to the prior year period primarily due to the sales increases and improved leverage of the cost structures in these businesses. The company is responding to the dramatic drop in oil prices and the impact on the Arrow Engine business, while continuing to drive new product sales and expand its international sales efforts.

In the Cequent business, sales fell 6.8 percent overseas and rose 1 percent in the Americas. Sales were hit hard in Australia and Thailand.

The company is estimating that its 2015 sales will rise 3 to 5 percent from 2014, and expects full-year 2015 diluted earnings per share to be between $2.10 and $2.20 per share, excluding any one-time events. The company also said it expects 2015 free cash flow to be between $60 million and $70 million.

To listen to a replay of a conference call discussing these results, visit www.trimascorp.com or call (888) 203-1112, using replay pass code 3786796.

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