TriMas Corporation (NASDAQ:TRS) Q2 2021 Earnings Conference Call July 29, 2021 10:00 AM ET Company Participants Sherry Lauderback - VP, IR & Communications Thomas Amato - President, CEO & Director Scott Mell - CFO Conference Call Participants Brendan Popson - CJS Securities Steve Barger - KeyBanc Capital Markets Operator Good day, and welcome to the TriMas Second Quarter 2021 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Sherry Lauderback. Please ...

```markdown Part I. Financial Information [Item 1. Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) TriMas Corporation's unaudited consolidated financial statements for Q2 and H1 2021 detail financial position, operations, and cash flows [Consolidated Balance Sheet](index=5&type=section&id=Consolidated%20Balance%20Sheet) Consolidated Balance Sheet Highlights (unaudited) | Account | June 30, 2021 ($ thousands) | December 31, 2020 ($ thousands) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **1,244,950** | **1,193,880** | **+4.3%** | | Cash and cash equivalents | 117,410 | 73,950 | +58.8% | | Total current assets | 422,460 | 351,830 | +20.1% | | Goodwill | 301,430 | 303,970 | -0.8% | | **Total Liabilities** | **647,350** | **609,630** | **+6.2%** | | Long-term debt, net | 393,370 | 346,290 | +13.6% | | **Total Shareholders' Equity** | **597,600** | **584,250** | **+2.3%** | [Consolidated Statement of Operations](index=6&type=section&id=Consolidated%20Statement%20of%20Operations) Statement of Operations Summary (unaudited) | Metric ($ thousands, except EPS) | Q2 2021 | Q2 2020 | YoY Change | H1 2021 | H1 2020 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | **218,990** | **199,550** | **+9.7%** | **425,720** | **382,340** | **+11.3%** | | Gross Profit | 58,030 | 37,230 | +55.9% | 109,360 | 83,600 | +30.8% | | Operating Profit (Loss) | 25,570 | (18,150) | N/A | 46,680 | 1,680 | +2678.6% | | **Net Income (Loss)** | **11,840** | **(15,700)** | **N/A** | **24,900** | **(2,580)** | **N/A** | | Diluted EPS | **$0.27** | **$(0.36)** | N/A | **$0.57** | **$(0.06)** | N/A | - The significant improvement in operating and net income in Q2 and H1 2021 was largely driven by higher sales and the absence of significant realignment and asbestos-related charges that impacted 2020. However, Q2 2021 results were impacted by **$10.3 million** in debt financing expenses related to the redemption of senior notes[19](index=19&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) [Consolidated Statement of Cash Flows](index=8&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (unaudited) | Activity ($ thousands) | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 42,670 | 30,840 | +38.4% | | Net cash used for investing activities | (18,190) | (102,300) | -82.2% | | Net cash provided by (used for) financing activities | 18,980 | (35,760) | N/A | | **Increase (decrease) in Cash** | **43,460** | **(107,220)** | N/A | - The increase in operating cash flow was driven by higher net income. Investing activities were significantly lower in 2021 due to the absence of major acquisitions, which totaled **$95.2 million** in H1 2020. Financing activities in 2021 reflect the net positive impact of debt refinancing, compared to cash used for share repurchases in 2020[25](index=25&type=chunk)[177](index=177&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Net Sales by Primary Market (Six Months Ended June 30, $ thousands) | Customer Market | 2021 | 2020 | YoY Change | | :--- | :--- | :--- | :--- | | Consumer Products | 218,020 | 183,590 | +18.8% | | Aerospace & Defense | 89,170 | 91,530 | -2.6% | | Industrial | 118,530 | 107,220 | +10.5% | | **Total net sales** | **425,720** | **382,340** | **+11.3%** | - In March 2021, the company issued **$400.0 million** of **4.125%** Senior Notes due 2029. Proceeds were used to redeem the outstanding **$300.0 million** **4.875%** Senior Notes due 2025, pay related fees and premiums, and repay revolving credit facility borrowings[46](index=46&type=chunk) - As of June 30, 2021, the company had **4,725 pending asbestos-related claims**. In Q2 2020, the company changed its accounting method for asbestos-related defense costs, resulting in a one-time pre-tax charge of **$23.4 million**. The total asbestos-related liability was **$27.3 million** as of June 30, 2021[73](index=73&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2021 financial performance, highlighting sales growth, operating profit turnaround, and liquidity [Results of Operations](index=32&type=section&id=Results%20of%20Operations) The company's results improved significantly in Q2 and H1 2021, driven by sales growth and reduced charges, despite debt refinancing costs and material inflation - Q2 2021 net sales increased **9.7%** YoY to **$219.0 million**, with acquisitions contributing **$9.9 million**, favorable currency exchange adding **$4.6 million**, and organic sales growing by **$4.9 million**[133](index=133&type=chunk) - Operating profit increased by **$43.7 million** in Q2 2021 compared to Q2 2020. This was primarily due to a **$23.4 million** non-cash asbestos-related charge and **$14.3 million** in higher realignment costs recorded in Q2 2020 that did not repeat[135](index=135&type=chunk) - Rising material costs, primarily for resin, negatively impacted gross profit by an estimated **$4 million** in Q2 2021 and **$6 million** in H1 2021 due to the time lag in passing costs to customers[113](index=113&type=chunk)[134](index=134&type=chunk)[155](index=155&type=chunk) - The company incurred **$10.3 million** in debt financing and related expenses in Q2 2021 for the redemption of its 2025 Senior Notes[136](index=136&type=chunk) [Segment Analysis](index=30&type=section&id=Segment%20Analysis) Segment sales grew across Packaging, Aerospace, and Specialty Products, with improved operating profit largely due to non-recurring 2020 charges Net Sales by Segment (Q2, $ thousands) | Segment | Q2 2021 | Q2 2020 | YoY Change | | :--- | :--- | :--- | :--- | | Packaging | 139,630 | 128,830 | +8.4% | | Aerospace | 44,560 | 42,610 | +4.6% | | Specialty Products | 34,800 | 28,110 | +23.8% | Operating Profit (Loss) by Segment (Q2, $ thousands) | Segment | Q2 2021 | Q2 2020 | Change | | :--- | :--- | :--- | :--- | | Packaging | 27,850 | 24,040 | +$3,810 | | Aerospace | 2,120 | (4,210) | +$6,330 | | Specialty Products | 6,010 | (5,940) | +$11,950 | - Packaging sales growth was primarily driven by the **$9.9 million** contribution from the Affaba & Ferrari acquisition. Sales of products for fighting germs decreased by **$4.7 million** from peak levels in Q2 2020[141](index=141&type=chunk) - Aerospace sales were boosted by **$7.9 million** in stocking orders for specialized fasteners, which offset a decline in overall market demand due to reduced air travel[145](index=145&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position, with increased operating cash flow and a strengthened capital structure following debt refinancing - Cash flow from operations for the first six months of 2021 was **$42.7 million**, an increase from **$30.8 million** in the same period of 2020[177](index=177&type=chunk) - The company completed a major debt refinancing in Q1/Q2 2021, issuing new **4.125%** Senior Notes due 2029 and redeeming its **4.875%** Senior Notes due 2025[179](index=179&type=chunk) - As of June 30, 2021, the company had no amounts outstanding under its **$300.0 million** revolving credit facility and was in compliance with all financial covenants[186](index=186&type=chunk)[191](index=191&type=chunk) - During the first six months of 2021, the company purchased **440,218 shares** of its common stock for approximately **$14.2 million**[92](index=92&type=chunk)[178](index=178&type=chunk) [Outlook](index=46&type=section&id=Outlook) Management expects continued uncertainty, with mixed segment outlooks, but a strong capital structure provides sufficient liquidity for future obligations - Sales in the Packaging segment related to hygiene products are expected to remain strong but have declined from peak levels seen in Q2 2020[206](index=206&type=chunk) - The Aerospace segment sales are expected to be lower than historical levels for an indefinite period due to low new commercial aircraft builds[206](index=206&type=chunk) - The company believes its capital structure is strong following the 2021 debt refinancing, with sufficient liquidity to meet future obligations[210](index=210&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company discusses its exposure to foreign currency and interest rate risks, and its use of derivatives to manage these exposures - The company is exposed to market risk from changes in foreign currency exchange rates and interest rates[215](index=215&type=chunk) - To mitigate currency risk, the company uses derivative instruments. As of June 30, 2021, it held foreign exchange forward and swap contracts with notional values of approximately **$126.5 million**[202](index=202&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal controls - Based on an evaluation as of June 30, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures are effective at a reasonable assurance level[217](index=217&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, the company's internal controls[218](index=218&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the financial statements for details on ongoing legal proceedings, primarily asbestos-related litigation - For details on legal proceedings, the report refers to Note 13, "Commitments and Contingencies," in the Notes to Consolidated Financial Statements[221](index=221&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) The company reports no significant changes to the risk factors previously disclosed in its 2020 Annual Report on Form 10-K - There have been no significant changes in risk factors from those disclosed in the 2020 Annual Report on Form 10-K[222](index=222&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details Q2 2021 share repurchases, including volume, average price, and remaining authorization Share Repurchases for Q2 2021 | Period (2021) | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April | 52,204 | **$30.92** | | May | 228,475 | **$32.78** | | June | 77,368 | **$31.96** | | **Total Q2** | **358,047** | **$32.33** | - As of the end of Q2 2021, approximately **$147.5 million** remained available for future repurchases under the company's publicly announced program[227](index=227&type=chunk) ```

Financial Data and Key Metrics Changes - Consolidated sales for Q1 2021 were $206.7 million, an increase of 13.1% compared to the prior year quarter, driven by acquisitions, organic sales increases, and currency effects [14] - Adjusted operating profit was $26.6 million, or 12.9% of sales, up $4.6 million from the prior year quarter [15] - Adjusted net income increased to $17.4 million, up $2.3 million year-over-year, with adjusted diluted EPS at $0.40, exceeding the top end of the outlook range [15] - Free cash flow was $10.3 million, significantly up from $1.8 million in the prior year quarter [18] - Net leverage was 1.7x, well below the long-range goal of 2x, with over $400 million of available cash and liquidity at quarter end [18] Business Line Data and Key Metrics Changes Packaging Segment - Packaging segment sales reached $132.1 million, a 32% increase year-over-year, with organic sales up nearly 16% [19] - Operating profit for the Packaging segment increased to $23.6 million, with an operating margin of 17.9% [21] - Adjusted EBITDA for the Packaging segment rose to $31 million, a 30% increase compared to the prior year [22] Aerospace Segment - Aerospace segment net sales declined by $4.3 million, or 8.8%, to $44.6 million, primarily due to low travel demand [25] - Operating profit was $5 million, with an operating margin of 11.1% [26] - Adjusted EBITDA for Aerospace was $9.5 million, representing a 70 basis point improvement year-over-year [26] Specialty Products Segment - Specialty Products segment net sales decreased by $3.8 million to $30 million, approximately 11.2% lower than the previous year [28] - Operating profit improved to $4.5 million, with an operating margin of 15.1% [28] - Adjusted EBITDA was $5.5 million, significantly better than the prior year's quarter [28] Market Data and Key Metrics Changes - The company anticipates a lesser organic sales demand in Q2 2021 compared to the same quarter in 2020 due to high pandemic-related sales in 2020 [24] - The Aerospace segment expects sales to increase in Q2 and for the full year 2021, driven by acquisition sales and stocking orders [27] Company Strategy and Development Direction - The company is focused on a disciplined capital allocation strategy, balancing organic growth, M&A opportunities, and share repurchases [36] - The introduction of innovative products, such as the Mono 2e Pump, is part of the strategy to enhance market position and sustainability [22] - The company is well-positioned to execute its long-range strategy following successful refinancing efforts [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing recovery in demand across various segments, particularly in Specialty Products and Aerospace [35] - The company is closely monitoring supply chain challenges and customer inventory levels, which may impact future sales [59][63] - For Q2 2021, the company expects consolidated sales to be 3% to 12% higher compared to the same quarter last year [34] Other Important Information - The company announced a change in CFO, with Scott Mell succeeding Bob Zalupski, who is retiring after nearly 20 years [11][30] - The company will redefine adjusted earnings per share to add back noncash acquisition-related amortization expense, providing a clearer view of cash earnings power [10] Q&A Session Summary Question: Outlook for Packaging segment - Management noted challenges in forecasting due to customer-specific inventory adjustments but remains optimistic about overall demand trends [42][44] Question: Specialty Products performance - Management highlighted positive surprises in Specialty Products but refrained from adjusting full-year views until more data is available [46] Question: Aerospace segment margins - Management indicated that Q1 margins were stronger than anticipated, but future margins may not be as favorable due to product mix [53] Question: Capital deployment preferences - Management stated a balanced approach to capital deployment between M&A and share repurchases, with no specific preference indicated [56] Question: Supply chain impacts - Management acknowledged real supply chain challenges and is working to secure input materials while managing costs [59][63]

Q1 2021 Financial Performance - Net sales increased by 13.1% due to acquisitions and organic growth in the TriMas Packaging segment[8] - Operating profit increased 21.3%, driven by higher sales offsetting increased input costs[8] - Q1 EPS reached $0.40, a 17.6% increase compared to Q1 2020[8] - Adjusted EBITDA increased by $5.3 million due to higher sales[8] Balance Sheet and Cash Flow - Total debt was $690.2 million[11] - Cash was $421.1 million[11] - Net debt was $269.1 million[11] - Q1 Free Cash Flow was $10.3 million[11, 12] Segment Results - TriMas Packaging net sales increased to $132.1 million in Q1 2021 from $100.1 million in Q1 2020[15] - TriMas Aerospace net sales decreased to $44.6 million in Q1 2021 from $48.9 million in Q1 2020[18] - TriMas Specialty Products net sales decreased to $30.0 million in Q1 2021 from $33.8 million in Q1 2020[22]

[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) Statements about future events are subject to risks and uncertainties, and the company does not commit to updating them - Forward-looking statements are identified by words such as "may," "could," "should," "estimate," "project," "forecast," "intend," "expect," "anticipate," "believe," "target," or "plan"[10](index=10&type=chunk) - These statements are subject to numerous risks and uncertainties, including the severity and duration of the COVID-19 pandemic, general economic and currency conditions, material and energy costs, competitive factors, and the ability to realize business strategies[11](index=11&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which speak only as of the report date, and the company does not undertake to update them except as required by law[12](index=12&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) TriMas Corporation's unaudited consolidated financial statements for Q1 2021 and comparative periods, including balance sheet, income statement, cash flows, and equity, are presented with detailed notes [Consolidated Balance Sheet](index=5&type=section&id=Consolidated%20Balance%20Sheet%20as%20of%20March%2031%2C%202021%20and%20December%2031%2C%202020) Presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2021, and December 31, 2020 | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (vs Dec 31, 2020) (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------------------- | | Total Assets | $1,543,300 | $1,193,880 | +$349,420 | | Cash and cash equivalents | $421,140 | $73,950 | +$347,190 | | Total Current Assets | $718,920 | $351,830 | +$367,090 | | Total Liabilities | $947,330 | $609,630 | +$337,700 | | Current portion, long-term debt | $300,000 | $— | +$300,000 | | Long-term debt, net | $390,190 | $346,290 | +$43,900 | | Total Shareholders' Equity | $595,970 | $584,250 | +$11,720 | [Consolidated Statement of Operations](index=6&type=section&id=Consolidated%20Statement%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Details the company's revenues, expenses, and net income for the three months ended March 31, 2021, and 2020 | Metric | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | Change (YoY) (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net sales | $206,730 | $182,790 | +$23,940 | | Cost of sales | $(155,400) | $(136,420) | -$18,980 | | Gross profit | $51,330 | $46,370 | +$4,960 | | Selling, general and administrative expenses | $(30,220) | $(26,540) | -$3,680 | | Operating profit | $21,110 | $19,830 | +$1,280 | | Income before income tax expense | $16,430 | $16,170 | +$260 | | Net income | $13,060 | $13,120 | -$60 | | Basic earnings per share | $0.30 | $0.30 | $0.00 | | Diluted earnings per share | $0.30 | $0.30 | $0.00 | [Consolidated Statement of Comprehensive Income](index=7&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Reports net income and other comprehensive income (loss) components for the three months ended March 31, 2021, and 2020 | Metric | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | Change (YoY) (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net income | $13,060 | $13,120 | -$60 | | Total other comprehensive income (loss) | $630 | $(3,680) | +$4,310 | | Total comprehensive income | $13,690 | $9,440 | +$4,250 | [Consolidated Statement of Cash Flows](index=8&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2021, and 2020 | Metric | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | Change (YoY) (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash provided by operating activities | $15,740 | $3,400 | +$12,340 | | Net cash used for investing activities | $(9,370) | $(86,320) | +$76,950 | | Net cash provided by financing activities | $340,820 | $116,560 | +$224,260 | | Cash and cash equivalents at end of period | $421,140 | $206,110 | +$215,030 | [Consolidated Statement of Shareholders' Equity](index=9&type=section&id=Consolidated%20Statement%20of%20Shareholders'%20Equity%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Details changes in shareholders' equity, including net income, other comprehensive income, and stock transactions, for the three months ended March 31, 2021, and 2020 | Metric | Balance, Dec 31, 2020 (in thousands) | Net Income (in thousands) | Other Comprehensive Income (in thousands) | Purchase of Common Stock (in thousands) | Balance, Mar 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------------- | :-------------------------------- | :---------------------------------------- | :-------------------------------------- | :----------------------------------- | | Total Shareholders' Equity | $584,250 | $13,060 | $630 | $(2,640) | $595,970 | | Metric | Balance, Dec 31, 2019 (in thousands) | Net Income (in thousands) | Other Comprehensive Loss (in thousands) | Purchase of Common Stock (in thousands) | Balance, Mar 31, 2020 (in thousands) | | :-------------------------------- | :----------------------------------- | :-------------------------------- | :---------------------------------------- | :-------------------------------------- | :----------------------------------- | | Total Shareholders' Equity | $697,480 | $13,120 | $(3,680) | $(31,570) | $675,460 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the consolidated financial statements [1. Basis of Presentation](index=10&type=section&id=1.%20Basis%20of%20Presentation) Describes the company's business and the accounting principles and assumptions used in preparing the financial statements - TriMas Corporation designs, engineers, and manufactures innovative products for customers primarily in the consumer products, aerospace & defense, and industrial markets[30](index=30&type=chunk) - The financial statements are unaudited and include management's estimates and assumptions, which may be affected by risks and uncertainties, including the ongoing COVID-19 pandemic[31](index=31&type=chunk) [2. New Accounting Pronouncements](index=10&type=section&id=2.%20New%20Accounting%20Pronouncements) Discusses the adoption and impact of new accounting standards on the company's financial statements - The Company adopted ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," on January 1, 2021[33](index=33&type=chunk) - The adoption of ASU 2019-12 did not have a material impact on the Company's consolidated financial statements[33](index=33&type=chunk) [3. Revenue](index=10&type=section&id=3.%20Revenue) Provides a breakdown of net sales by customer market segments and their respective revenue streams | Customer Markets | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | Change (YoY) (in thousands) | | :----------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Consumer Products | $105,120 | $76,270 | +$28,850 | | Aerospace & Defense | $44,610 | $48,920 | -$4,310 | | Industrial | $57,000 | $57,600 | -$600 | | Total net sales | $206,730 | $182,790 | +$23,940 | - The Packaging segment earns revenues from consumer products and industrial markets, the Aerospace segment from aerospace & defense, and the Specialty Products segment from industrial markets[34](index=34&type=chunk) [4. Realignment Actions](index=11&type=section&id=4.%20Realignment%20Actions) Details the strategic realignment initiatives undertaken by the company, including facility closures and consolidation, and associated pre-tax charges - In Q1 2021, the Company executed realignment actions, including closing a Packaging segment manufacturing facility and consolidating Aerospace segment activities[36](index=36&type=chunk) - Pre-tax realignment charges of **$4.1 million** were recorded, comprising approximately **$1.5 million** for facility consolidation and **$2.6 million** for employee separation costs[36](index=36&type=chunk) [5. Acquisitions](index=11&type=section&id=5.%20Acquisitions) Outlines recent acquisitions, including Affaba & Ferrari, Rapak, and RSA Engineered Products, and their strategic significance - On December 15, 2020, the Company acquired Affaba & Ferrari Srl for approximately **$98.4 million**, specializing in precision caps and closures for food & beverage and industrial products[37](index=37&type=chunk) - On April 17, 2020, the Company acquired the Rapak® brand for approximately **$11.4 million**, including bag-in-box product lines and assets[38](index=38&type=chunk) - On February 27, 2020, the Company acquired RSA Engineered Products for approximately **$83.7 million**, a manufacturer of highly-engineered ducting, connectors, and related products for aerospace and defense[39](index=39&type=chunk) [6. Cash and Cash Equivalents](index=11&type=section&id=6.%20Cash%20and%20Cash%20Equivalents) Presents the composition of cash and cash equivalents, distinguishing between unrestricted and restricted amounts | Component | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (vs Dec 31, 2020) (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------------------- | | Cash and cash equivalents - unrestricted | $409,980 | $62,790 | +$347,190 | | Cash - restricted | $11,160 | $11,160 | $0 | | Total cash and cash equivalents | $421,140 | $73,950 | +$347,190 | - Restricted cash is placed on deposit as collateral for the Company's outstanding letters of credit[40](index=40&type=chunk) [7. Goodwill and Other Intangible Assets](index=12&type=section&id=7.%20Goodwill%20and%20Other%20Intangible%20Assets) Provides details on goodwill by segment and the amortization of other intangible assets, including customer relationships and technology | Segment | Balance, Dec 31, 2020 (in thousands) | Foreign currency translation and other (in thousands) | Balance, Mar 31, 2021 (in thousands) | | :-------- | :----------------------------------- | :---------------------------------------------------- | :----------------------------------- | | Packaging | $234,560 | $(3,360) | $231,200 | | Aerospace | $62,850 | $— | $62,850 | | Specialty Products | $6,560 | $— | $6,560 | | Total | $303,970 | $(3,360) | $300,610 | - The Company amortizes other intangible assets over periods ranging from one to 30 years, including customer relationships and technology[42](index=42&type=chunk) | Amortization Expense | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :------------------------------------------------- | :------------------------------------- | :------------------------------------- | | Technology and other, included in cost of sales | $950 | $1,210 | | Customer relationships, included in SG&A | $4,440 | $3,640 | | Total amortization expense | $5,390 | $4,850 | [8. Inventories](index=12&type=section&id=8.%20Inventories) Breaks down inventory components, including finished goods, work in process, and raw materials | Component | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (vs Dec 31, 2020) (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | :-------------------------------- | | Finished goods | $78,390 | $78,010 | +$380 | | Work in process | $31,500 | $29,680 | +$1,820 | | Raw materials | $41,930 | $41,690 | +$240 | | Total inventories | $151,820 | $149,380 | +$2,440 | [9. Property and Equipment, Net](index=13&type=section&id=9.%20Property%20and%20Equipment%2C%20Net) Details the composition of property and equipment, net of accumulated depreciation, and associated depreciation expenses | Component | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (vs Dec 31, 2020) (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | :-------------------------------- | | Land and land improvements | $19,810 | $20,040 | -$230 | | Buildings | $91,080 | $91,970 | -$890 | | Machinery and equipment | $389,390 | $384,010 | +$5,380 | | Less: Accumulated depreciation | $249,130 | $242,960 | +$6,170 | | Property and equipment, net | $251,150 | $253,060 | -$1,910 | | Depreciation Expense | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :------------------------------------------------- | :------------------------------------- | :------------------------------------- | | Depreciation expense, included in cost of sales | $7,560 | $6,360 | | Depreciation expense, included in SG&A | $290 | $300 | | Total depreciation expense | $7,850 | $6,660 | [10. Long-term Debt](index=13&type=section&id=10.%20Long-term%20Debt) Describes the company's long-term debt instruments, including senior notes and credit agreements, and recent refinancing activities | Debt Instrument | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (vs Dec 31, 2020) (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------------------- | | 4.125% Senior Notes due April 2029 | $400,000 | $— | +$400,000 | | 4.875% Senior Notes due October 2025 | $300,000 | $300,000 | $0 | | Credit Agreement | $— | $50,450 | -$50,450 | | Debt issuance costs | $(9,810) | $(4,160) | -$5,650 | | Long-term debt, net | $390,190 | $346,290 | +$43,900 | - In March 2021, the Company issued **$400.0 million** of 4.125% senior notes due April 15, 2029, using proceeds to pay offering fees, amend its credit agreement, and redeem its outstanding 2025 Senior Notes[47](index=47&type=chunk) - The **$300.0 million** principal amount of 4.875% Senior Notes due October 2025 was redeemed subsequent to quarter end, on April 15, 2021[52](index=52&type=chunk) [11. Derivative Instruments](index=16&type=section&id=11.%20Derivative%20Instruments) Explains the use of derivative instruments, such as cross-currency swaps and foreign currency exchange forward contracts, to manage market risks - The Company uses cross-currency swap contracts to hedge its net investment in Euro-denominated assets, synthetically converting a portion of its U.S. dollar-based long-term debt into Euro-denominated debt[62](index=62&type=chunk) - As of March 31, 2021, cross-currency swap agreements totaled **$200.0 million** notional amount, declining to **$25.0 million** over various contract periods ending between October 2023 and April 2027[63](index=63&type=chunk) - The Company also uses foreign currency exchange forward contracts (notional amounts of approximately **$132.7 million** as of March 31, 2021) to mitigate risk from currency fluctuations impacting receivables, payables, and intercompany transactions[66](index=66&type=chunk) | Derivative Type | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Cross-currency swaps (Asset) | $190 | $— | | Cross-currency swaps (Liability) | $— | $(5,000) | | Foreign exchange contracts (Asset) | $330 | $140 | [12. Leases](index=17&type=section&id=12.%20Leases) Presents lease cost components, weighted-average remaining lease term, and discount rate for the company's operating leases | Lease Cost Component | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Operating lease cost | $2,140 | $1,650 | | Short-term, variable and other lease costs | $430 | $310 | | Total lease cost | $2,570 | $1,960 | - The weighted-average remaining lease term of the Company's operating leases as of March 31, 2021, is approximately **6.6 years**[71](index=71&type=chunk) - The weighted-average discount rate as of March 31, 2021, is approximately **4.3%**[71](index=71&type=chunk) [13. Other long-term liabilities](index=18&type=section&id=13.%20Other%20long-term%20liabilities) Details the composition of other long-term liabilities, including non-current asbestos-related liabilities | Component | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (vs Dec 31, 2020) (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------------------- | | Non-current asbestos-related liabilities | $25,420 | $26,170 | -$750 | | Other long-term liabilities | $35,870 | $43,520 | -$7,650 | | Total other long-term liabilities | $61,290 | $69,690 | -$8,400 | [14. Commitments and Contingencies](index=19&type=section&id=14.%20Commitments%20and%20Contingencies) Discusses legal proceedings, particularly asbestos-related claims, and the associated liabilities and defense costs - As of March 31, 2021, the Company was a party to **347 pending cases** involving **4,676 claimants** primarily alleging personal injury from asbestos exposure[75](index=75&type=chunk) | Metric | Three Months Ended March 31, 2021 | Fiscal Year Ended December 31, 2020 | | :-------------------------------- | :---------------------------------- | :---------------------------------- | | Claims pending at beginning of period | 4,655 | 4,759 | | Claims filed during period | 62 | 219 | | Claims dismissed during period | 35 | 287 | | Claims settled during period | 6 | 36 | | Claims pending at end of period | 4,676 | 4,655 | | Average settlement amount per claim | $37,917 | $18,314 | | Total defense costs during period | $530,000 | $2,130,000 | - In Q2 2020, the Company changed its accounting method for asbestos-related defense costs to accrue for all future costs (known and unknown), recording a **$23.4 million** charge to increase the liability estimate to **$31.5 million** (low-end of actuarial range)[80](index=80&type=chunk)[81](index=81&type=chunk) - As of March 31, 2021, the total asbestos-related liability is **$27.9 million**[81](index=81&type=chunk) [15. Segment Information](index=21&type=section&id=15.%20Segment%20Information) Provides financial performance data, including net sales and operating profit, for the company's Packaging, Aerospace, and Specialty Products segments - TriMas reports its operations in three segments: Packaging, Aerospace, and Specialty Products[86](index=86&type=chunk) | Segment | Net Sales (Q1 2021, in thousands) | Net Sales (Q1 2020, in thousands) | Operating Profit (Q1 2021, in thousands) | Operating Profit (Q1 2020, in thousands) | | :----------------- | :-------------------------------- | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Packaging | $132,090 | $100,050 | $21,300 | $18,280 | | Aerospace | $44,610 | $48,920 | $4,500 | $5,080 | | Specialty Products | $30,030 | $33,820 | $4,520 | $3,430 | | Corporate | N/A | N/A | $(9,210) | $(6,960) | | Total | $206,730 | $182,790 | $21,110 | $19,830 | [16. Equity Awards](index=22&type=section&id=16.%20Equity%20Awards) Details stock-based compensation expense, restricted stock units (RSUs) awarded, and unrecognized compensation costs - No stock-based compensation expense related to stock options was recognized during the three months ended March 31, 2021 and 2020[89](index=89&type=chunk) - The Company awarded **234,021 Restricted Stock Units (RSUs)** in Q1 2021, including service-based and performance-based awards[90](index=90&type=chunk)[92](index=92&type=chunk) - Stock-based compensation expense related to RSUs was approximately **$2.4 million** in Q1 2021, up from **$1.9 million** in Q1 2020[93](index=93&type=chunk) - As of March 31, 2021, approximately **$12.5 million** of unrecognized compensation cost related to unvested RSUs is expected to be recorded over a weighted average period of **2.4 years**[92](index=92&type=chunk) [17. Earnings per Share](index=23&type=section&id=17.%20Earnings%20per%20Share) Presents basic and diluted earnings per share calculations and information on common stock repurchases | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Weighted average common shares—basic | 43,185,007 | 44,201,053 | | Dilutive effect of restricted stock units | 400,685 | 217,074 | | Dilutive effect of stock options | 49,184 | 52,345 | | Weighted average common shares—diluted | 43,634,876 | 44,470,472 | - Basic and diluted earnings per share remained flat at **$0.30** for both the three months ended March 31, 2021 and 2020[19](index=19&type=chunk) - The Company purchased **82,171 shares** of its outstanding common stock for approximately **$2.6 million**, with approximately **$159.1 million** remaining under the repurchase authorization[94](index=94&type=chunk) [18. Defined Benefit Plans](index=24&type=section&id=18.%20Defined%20Benefit%20Plans) Outlines the components of net periodic benefit cost and company contributions to defined benefit pension plans | Component | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :------------------------ | :------------------------------------- | :------------------------------------- | | Service costs | $330 | $320 | | Interest costs | $200 | $240 | | Expected return on plan assets | $(390) | $(370) | | Amortization of net loss | $230 | $220 | | Net periodic benefit cost | $370 | $410 | - The Company contributed approximately **$1.5 million** to its defined benefit pension plans during Q1 2021 and expects to contribute approximately **$3.6 million** for the full year 2021[98](index=98&type=chunk) [19. Other Comprehensive Income (Loss)](index=25&type=section&id=19.%20Other%20Comprehensive%20Income%20%28Loss%29) Details the components of other comprehensive income (loss), including defined benefit plans, derivative instruments, and foreign currency translation | Component | Balance, Dec 31, 2020 (in thousands) | Net unrealized gains (losses) arising during the period (in thousands) | Net realized losses reclassified to net income (in thousands) | Net current-period other comprehensive income (loss) (in thousands) | Balance, Mar 31, 2021 (in thousands) | | :-------------------------- | :----------------------------------- | :----------------------------------------------------------------- | :---------------------------------------------------------- | :---------------------------------------------------------------- | :----------------------------------- | | Defined Benefit Plans | $(8,620) | $— | $(150) | $150 | $(8,470) | | Derivative Instruments | $(3,580) | $3,900 | $— | $3,900 | $320 | | Foreign Currency Translation | $6,580 | $(3,420) | $— | $(3,420) | $3,160 | | Total | $(5,620) | $480 | $(150) | $630 | $(4,990) | | Component | Balance, Dec 31, 2019 (in thousands) | Net unrealized gains (losses) arising during the period (in thousands) | Net realized losses reclassified to net income (in thousands) | Net current-period other comprehensive income (loss) (in thousands) | Balance, Mar 31, 2020 (in thousands) | | :-------------------------- | :----------------------------------- | :----------------------------------------------------------------- | :---------------------------------------------------------- | :---------------------------------------------------------------- | :----------------------------------- | | Defined Benefit Plans | $(9,930) | $— | $(150) | $150 | $(9,780) | | Derivative Instruments | $4,230 | $4,430 | $— | $4,430 | $8,660 | | Foreign Currency Translation | $(300) | $(8,260) | $— | $(8,260) | $(8,560) | | Total | $(6,000) | $(3,830) | $(150) | $(3,680) | $(9,680) | [20. Subsequent Events](index=25&type=section&id=20.%20Subsequent%20Events) Reports significant events occurring after the balance sheet date, such as the redemption of outstanding senior notes - On April 15, 2021, the Company completed the redemption of all its outstanding 2025 Senior Notes[102](index=102&type=chunk) - The redemption involved a cash payment of **$314.6 million**, including a **$7.3 million** redemption premium and **$7.3 million** of accrued interest[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on TriMas Corporation's financial condition and results for Q1 2021, covering key factors, risks, segment performance, liquidity, and outlook [Introduction](index=26&type=section&id=Introduction) Provides an overview of TriMas Corporation as a diversified manufacturer and its business characteristics across key segments - TriMas is a diversified manufacturer and provider of products for customers primarily in the consumer products, aerospace & defense, and industrial markets[105](index=105&type=chunk) - The company's businesses share characteristics such as well-recognized brands, innovative product technologies, established distribution networks, relatively low ongoing capital investment requirements, strong cash flow conversion, and long-term growth opportunities[105](index=105&type=chunk) - Business activity is reported in three segments: Packaging, Aerospace, and Specialty Products[105](index=105&type=chunk) [Key Factors Affecting Our Reported Results](index=26&type=section&id=Key%20Factors%20Affecting%20Our%20Reported%20Results) Discusses primary drivers of financial performance, including sales growth, acquisitions, raw material costs, and realignment actions - Overall net sales increased approximately **$23.9 million (13.1%)** in Q1 2021 compared to Q1 2020, primarily due to robust organic sales growth and acquisitions in the Packaging segment, particularly for products used to fight the spread of germs[110](index=110&type=chunk) - These increases were partially offset by sales declines in the Aerospace and Specialty Products segments, mainly due to the effects of the COVID-19 pandemic[110](index=110&type=chunk) - Significant factors affecting results included the refinancing of long-term debt, recent acquisitions (Affaba & Ferrari, Rapak, RSA), increases in raw material costs, and Q1 2021 realignment actions[111](index=111&type=chunk) - Increased material costs, primarily for resin-based raw materials, negatively impacted operating profit by approximately **$2.0 million** in Q1 2021, mainly in the Packaging segment, due to a lag in price recovery[116](index=116&type=chunk) - Pre-tax realignment charges of approximately **$4.1 million** were recorded in Q1 2021, including facility consolidation costs (**$1.5 million**) and employee separation costs (**$2.6 million**)[117](index=117&type=chunk) [Additional Key Risks that May Affect Our Reported Results](index=28&type=section&id=Additional%20Key%20Risks%20that%20May%20Affect%20Our%20Reported%20Results) Identifies significant risks, including the ongoing impact of the COVID-19 pandemic, capital structure, and operational challenges - The COVID-19 pandemic is expected to continue impacting the company, with robust demand for Packaging's germ-fighting products, uncertain industrial demand, and severe dislocation in the aerospace market[118](index=118&type=chunk) - The company's capital structure is in a solid position, with ample cash and available liquidity to meet debt service and other obligations, especially after the Q1 2021 debt refinancing[120](index=120&type=chunk) - Other critical factors include the ability to create organic growth, successfully integrate acquisitions, manage cost structure efficiently, and mitigate raw material price volatility[122](index=122&type=chunk)[124](index=124&type=chunk) [Segment Information and Supplemental Analysis](index=30&type=section&id=Segment%20Information%20and%20Supplemental%20Analysis) Presents detailed financial performance data for the Packaging, Aerospace, and Specialty Products segments | Segment | Net Sales (Q1 2021, in thousands) | Net Sales (Q1 2020, in thousands) | Operating Profit (Q1 2021, in thousands) | Operating Profit (Q1 2020, in thousands) | | :----------------- | :-------------------------------- | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Packaging | $132,090 | $100,050 | $21,300 | $18,280 | | Aerospace | $44,610 | $48,920 | $4,500 | $5,080 | | Specialty Products | $30,030 | $33,820 | $4,520 | $3,430 | | Corporate | N/A | N/A | $(9,210) | $(6,960) | | Total | $206,730 | $182,790 | $21,110 | $19,830 | | Segment | Gross Profit (Q1 2021, in thousands) | Gross Profit (Q1 2020, in thousands) | SG&A (Q1 2021, in thousands) | SG&A (Q1 2020, in thousands) | | :----------------- | :-------------------------------- | :-------------------------------- | :----------------------------- | :----------------------------- | | Packaging | $33,870 | $28,680 | $12,570 | $10,400 | | Aerospace | $10,970 | $11,910 | $6,470 | $6,830 | | Specialty Products | $6,490 | $5,780 | $1,970 | $2,350 | | Corporate | N/A | N/A | $9,210 | $6,960 | | Total | $51,330 | $46,370 | $30,220 | $26,540 | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Analyzes the company's overall financial performance, including net sales, gross profit, operating profit, and net income [Overall](index=32&type=section&id=Overall) Summarizes the company's consolidated financial performance, highlighting changes in net sales, profit margins, and net income - Net sales increased by **$23.9 million (13.1%)** to **$206.7 million**, with acquisitions contributing **$17.7 million** and organic sales increasing **$3.5 million**, primarily in the Packaging segment[132](index=132&type=chunk) - Gross profit margin decreased from **25.4% to 24.8%**, impacted by approximately **$2.0 million** in higher material costs and **$1.8 million** in realignment costs[133](index=133&type=chunk) - Operating profit increased by **$1.3 million** to **$21.1 million**, but net income remained relatively flat at **$13.1 million** due to higher other expenses and income tax expense[134](index=134&type=chunk)[139](index=139&type=chunk) - The effective income tax rate for Q1 2021 was **20.5%**, up from **18.9%** in Q1 2020, primarily due to higher non-deductible expenses[138](index=138&type=chunk) [Packaging](index=33&type=section&id=Packaging) Analyzes the Packaging segment's sales growth, driven by acquisitions and increased demand for personal hygiene products, and its operating profit - Net sales increased approximately **$32.0 million (32.0%)** to **$132.1 million**[141](index=141&type=chunk) - Acquisition-related sales growth was approximately **$13.4 million**, and organic sales of dispensing products for personal hygiene increased by approximately **$8.8 million** due to COVID-19 demand[141](index=141&type=chunk) - Operating profit increased by **$3.0 million** to **$21.3 million**, but operating profit margin decreased from **18.3% to 16.1%** due to higher material costs, realignment charges, and purchase accounting adjustments[142](index=142&type=chunk)[144](index=144&type=chunk) [Aerospace](index=33&type=section&id=Aerospace) Discusses the Aerospace segment's sales decline due to reduced air travel, partially offset by acquisitions, and its operating profit - Net sales decreased approximately **$4.3 million (8.8%)** to **$44.6 million**, despite a **$4.3 million** contribution from the RSA acquisition[145](index=145&type=chunk) - Sales of fastener and engineered components declined due to lower demand from reduced air travel caused by the COVID-19 pandemic[145](index=145&type=chunk) - Operating profit decreased by **$0.6 million** to **$4.5 million**, impacted by lower sales and realignment charges[148](index=148&type=chunk) - Gross profit margin improved from **24.3% to 24.6%** due to a more favorable product sales mix and the non-recurrence of a prior year purchase accounting charge[146](index=146&type=chunk) [Specialty Products](index=35&type=section&id=Specialty%20Products) Examines the Specialty Products segment's sales decrease due to lower demand, alongside an improvement in operating profit and margin - Net sales decreased approximately **$3.8 million (11.2%)** to **$30.0 million**, primarily due to lower demand for steel cylinders and reduced oil-field activity[149](index=149&type=chunk) - Operating profit increased by **$1.1 million** to **$4.5 million**, with operating profit margin improving from **10.1% to 15.1%**[152](index=152&type=chunk) - Profit improvement was driven by a favorable product sales mix, higher profit conversion from prior fixed cost reductions, and lower selling, general and administrative expenses[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) [Corporate](index=35&type=section&id=Corporate) Details the increase in corporate expenses, primarily due to realignment charges related to legal group reorganization | Component | Three months ended March 31, 2021 (in millions) | Three months ended March 31, 2020 (in millions) | | :------------------------ | :------------------------------------ | :------------------------------------ | | Corporate operating expenses | $6.4 | $5.4 | | Non-cash stock compensation | $2.4 | $1.9 | | Legacy expenses | $0.4 | $(0.3) | | Corporate expenses | $9.2 | $7.0 | - Corporate expenses increased by approximately **$2.3 million** to **$9.2 million**, primarily due to realignment charges related to the corporate office legal group reorganization[152](index=152&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's cash flows, debt structure, and overall capital resources to meet financial obligations and support operations [Cash Flows](index=36&type=section&id=Cash%20Flows) Provides an overview of cash generated from operating, investing, and financing activities, and changes in cash and cash equivalents - Net cash provided by operating activities increased to approximately **$15.7 million** in Q1 2021, compared to **$3.4 million** in Q1 2020[154](index=154&type=chunk) - Net cash used for investing activities decreased significantly to approximately **$9.4 million** in Q1 2021 from **$86.3 million** in Q1 2020, primarily due to the absence of large acquisitions[154](index=154&type=chunk) - Net cash provided by financing activities increased to approximately **$340.8 million** in Q1 2021 from **$116.6 million** in Q1 2020, mainly driven by the issuance of **$400.0 million** in senior notes[155](index=155&type=chunk) - In Q1 2021, the Company made net repayments of approximately **$48.6 million** on its revolving credit facilities and purchased approximately **$2.6 million** of common stock[155](index=155&type=chunk) [Our Debt and Other Commitments](index=37&type=section&id=Our%20Debt%20and%20Other%20Commitments) Details the company's debt instruments, compliance with financial covenants, and available liquidity - In March 2021, the Company issued **$400.0 million** of 4.125% Senior Notes due April 2029 and amended its Credit Agreement, extending its maturity date[156](index=156&type=chunk)[160](index=160&type=chunk) - The 2025 Senior Notes were redeemed subsequent to quarter end, on April 15, 2021[156](index=156&type=chunk) - As of March 31, 2021, the Company was in compliance with its financial covenants, with a total net leverage ratio of **1.77x** (covenant **4.00x**) and an interest expense coverage ratio of **12.78x** (covenant **3.00x**)[163](index=163&type=chunk)[175](index=175&type=chunk) - At March 31, 2021, the Company had no amounts outstanding under its revolving credit facility and had approximately **$300.0 million** potentially available[168](index=168&type=chunk) [Market Risk](index=41&type=section&id=Market%20Risk) Discusses the company's exposure to foreign currency exchange rates and interest rate fluctuations, and its use of derivative instruments for hedging - The Company is exposed to market risk due to fluctuations in foreign currency exchange rates and interest rate changes on its long-term debt[177](index=177&type=chunk)[179](index=179&type=chunk) - Derivative financial instruments, such as foreign exchange forward and cross-currency swap contracts, are used to manage currency risks[178](index=178&type=chunk) - As of March 31, 2021, the Company had foreign exchange forward and swap contracts with notional amounts of approximately **$132.7 million**[178](index=178&type=chunk) [Common Stock](index=41&type=section&id=Common%20Stock) Provides information on TriMas common stock listing and recent share repurchase activities - TriMas common stock is listed on the NASDAQ Global Select Market under the symbol "TRS"[180](index=180&type=chunk) - In Q1 2021, the Company purchased **82,171 shares** of its common stock for approximately **$2.6 million**, with approximately **$159.1 million** remaining under the repurchase authorization[176](index=176&type=chunk) [Credit Rating](index=41&type=section&id=Credit%20Rating) Presents the company's credit ratings from Moody's and Standard & Poor's, and potential impacts of rating changes - Moody's assigned a **Ba3 rating** to the 2029 Senior Notes and affirmed a **Ba2 Corporate Family Rating** with a stable outlook[180](index=180&type=chunk) - Standard & Poor's assigned a **BB- rating** to the 2029 Senior Notes and affirmed a **BB corporate credit rating** with a stable outlook[180](index=180&type=chunk) - A decline in credit ratings could limit access to financial markets, increase borrowing costs, and negatively impact the perception of the company[180](index=180&type=chunk) [Outlook](index=41&type=section&id=Outlook) Outlines the company's expectations for future demand, strategic plans for growth and efficiency, and capital structure strength - The Company expects a continued period of uncertainty regarding demand levels across its markets due to the COVID-19 pandemic[182](index=182&type=chunk) - Plans include mitigating lower volumes in challenged markets through realignment actions and leveraging the TriMas Business Model for growth, cost efficiency, and supply chain optimization[182](index=182&type=chunk)[185](index=185&type=chunk) - The capital structure remains strong, with sufficient liquidity to meet obligations, following the 2029 Senior Notes issuance and Credit Agreement amendment[184](index=184&type=chunk) [Impact of New Accounting Standards](index=42&type=section&id=Impact%20of%20New%20Accounting%20Standards) Refers to specific notes for details on the effects of recently adopted accounting standards - Refer to Note 2, "New Accounting Pronouncements," for details on the impact of new accounting standards[186](index=186&type=chunk) [Critical Accounting Policies](index=42&type=section&id=Critical%20Accounting%20Policies) Highlights the company's accounting policies requiring significant management judgment and confirms no material changes in Q1 2021 - The Company's accounting policies require significant management judgment in selecting appropriate assumptions for financial estimates[187](index=187&type=chunk) - There were no material changes to the critical accounting policies disclosed in the 2020 Annual Report on Form 10-K during Q1 2021[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Refers to other sections for detailed disclosures on market risks, including foreign currency and interest rate exposures, and management strategies - The Company is exposed to market risk associated with fluctuations in foreign currency exchange rates and interest risk related to long-term debt[190](index=190&type=chunk) - Further details on primary market risks, objectives, and management strategies are provided in Part I, Item 2 and Notes 10 and 11[190](index=190&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management's assessment of the effectiveness of disclosure controls and procedures, confirming their efficacy and no material changes to internal controls - Management, with the participation of the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2021[192](index=192&type=chunk) - No material changes in internal control over financial reporting occurred during Q1 2021, despite some employees working from home due to the COVID-19 pandemic[193](index=193&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 14 for detailed information regarding the company's legal proceedings - Refer to Note 14, "Commitments and Contingencies," included in Part I, Item 1, "Notes to Unaudited Consolidated Financial Statements," for information on legal proceedings[196](index=196&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) Refers to the 2020 Annual Report on Form 10-K for a comprehensive discussion of risk factors, with no significant changes reported - Refer to Part 1, Item 1A, "Risk Factors," in the 2020 Annual Report on Form 10-K for factors that could materially affect the business[197](index=197&type=chunk) - There have been no significant changes in the Company's risk factors as disclosed in its 2020 Annual Report on Form 10-K[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the company's common stock repurchases under its publicly announced program and the remaining authorization | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program | | :-------------------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :-------------------------------------------------------------------------- | | January 1, 2021 to January 31, 2021 | — | $— | — | $161,705,818 | | February 1, 2021 to February 28, 2021 | — | $— | — | $161,705,818 | | March 1, 2021 to March 31, 2021 | 82,171 | $32.10 | 82,171 | $159,068,327 | | Total | 82,171 | $32.10 | 82,171 | $159,068,327 | - In March 2020, the Board of Directors authorized an increase in common stock repurchases up to **$250 million** in aggregate[202](index=202&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company's current financial status - Not applicable[199](index=199&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[200](index=200&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company's current disclosures - Not applicable[201](index=201&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) Lists all supporting documents filed with the Form 10-Q, including corporate governance, debt agreements, and certifications - Exhibits include the Fourth Amended and Restated Certificate of Incorporation and Third Amended and Restated By-laws[203](index=203&type=chunk) - The Indenture for the 2029 Senior Notes and the Second Replacement Revolving Facility Amendment are listed[203](index=203&type=chunk) - Forms of Performance Stock Units Agreement and Restricted Stock Units Agreements are included[203](index=203&type=chunk) - Certifications pursuant to 18 U.S.C. Sections 1350 and 906 of the Sarbanes-Oxley Act of 2002 are provided[203](index=203&type=chunk) [Signatures](index=46&type=section&id=Signatures) Confirms the official signing of the report by the Chief Financial Officer - The report was signed by Robert J. Zalupski, Chief Financial Officer of TriMas Corporation[208](index=208&type=chunk) - The signature date is April 29, 2021[208](index=208&type=chunk)

TriMas Corporation (NASDAQ:TRS) Q4 2020 Earnings Conference Call February 25, 2021 10:00 AM ET Company Participants Sherry Lauderback - Investor Relations Tom Amato - President and Chief Executive Officer Bob Zalupski - Chief Financial Officer Conference Call Participants Brendan Popson - CJS Securities Ken Newman - KeyBanc Capital Markets Operator Good day and welcome to the TriMas Fourth Quarter and Full Year 2020 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 __________________________________________________________________________________________________ Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-10716 _____________________________ ...

TriMas Corporation (NASDAQ:TRS) Q3 2020 Earnings Conference Call October 29, 2020 10:00 AM ET Company Participants Sherry Lauderback - Vice President, Investor Relations & Communications Tom Amato - President & Chief Executive Officer Bob Zalupski - Chief Financial Officer Conference Call Participants Operator Thank you and welcome to the TriMas Third Quarter 2020 Earnings Call. Participating on the call today are Tom Amato, TriMas's President and CEO; and Bob Zalupski, our Chief Financial Officer. After ou ...

Financial Performance - TriMas reported LTM Sales of $7527 million, Adjusted EBITDA of $1541 million, or 205% of sales, and Segment Adjusted EBITDA of $1739 million, or 231% of sales as of 9/30/20[8] - Q3 2020 net sales increased to $1995 million from $1884 million in Q3 2019[17] - Q3 2020 operating profit increased 203% to $296 million[18] - Q3 2020 Adjusted EBITDA increased to $416 million, with the related margin increasing 100 bps[18] - YTD net sales increased 53% to $5818 million[23] - YTD Adjusted EBITDA increased by approximately $75 million[23] - Q3 2020 Free Cash Flow was $416 million, compared to $193 million in Q3 2019[27] Segment Results - TriMas Packaging net sales in Q3 2020 increased to $1351 million from $1055 million in Q3 2019[32] - TriMas Aerospace net sales decreased to $391 million in Q3 2020 from $506 million in Q3 2019[35] - TriMas Specialty Products net sales decreased to $252 million in Q3 2020 from $324 million in Q3 2019[39] Outlook - The company anticipates consolidated TriMas sales between $752 million and $767 million, representing a 4% to 6% change vs FY 2019[43] - The company expects TriMas Packaging Group sales between $475 million and $483 million, representing a 21% to 23% change vs FY 2019[44] - The company anticipates TriMas Aerospace Group sales between $165 million and $171 million, representing a -15% to -12% change vs FY 2019[45] - The company expects Specialty Products Group sales between $110 million and $114 million, representing a -20% to -17% change vs FY 2019[45] - The company projects diluted EPS between $145 and $150 and Free Cash Flow greater than $90 million[45]

Financial Performance - Net sales for Q3 2020 were $199.46 million, a 5.5% increase from $188.41 million in Q3 2019[19] - Gross profit for Q3 2020 was $51.93 million, compared to $48.99 million in Q3 2019, reflecting a gross margin improvement[19] - The company reported a net loss of $100.87 million for Q3 2020, compared to a net income of $19.11 million in Q3 2019[22] - Basic earnings per share for continuing operations were $(2.32) in Q3 2020, down from $0.34 in Q3 2019[19] - For the three months ended September 30, 2020, total net sales increased to $199.46 million, compared to $188.41 million in the same period of 2019, representing a growth of 0.56%[46] - For the nine months ended September 30, 2020, total net sales reached $581.80 million, compared to $552.61 million in the same period of 2019, an increase of 5.3%[46] - The total operating loss for the Company was $108.32 million in Q3 2020, compared to an operating profit of $23.57 million in Q3 2019[106] - Income from continuing operations decreased by approximately $116.1 million, resulting in a net loss of $100.9 million for the three months ended September 30, 2020, compared to net income of $15.2 million in the same period of 2019[165] Segment Performance - The Consumer Products segment generated $114.22 million in sales for the three months ended September 30, 2020, up from $82.50 million in 2019, reflecting a significant increase of 38.5%[46] - Aerospace & Defense sales decreased to $39.13 million in Q3 2020 from $50.56 million in Q3 2019, a decline of 22.5%[46] - Industrial segment sales also declined to $46.11 million in Q3 2020 from $55.35 million in Q3 2019, a decrease of 16.7%[46] - Net sales for the Packaging segment increased to $135.12 million in Q3 2020 from $105.48 million in Q3 2019, while Aerospace segment sales decreased to $39.13 million from $50.56 million[106] - Net sales in the Packaging segment increased approximately $65.7 million, or 22.0%, to $364.0 million for the nine months ended September 30, 2020, driven by increased demand for personal hygiene applications[188] Assets and Liabilities - Total assets decreased to $1,075.52 million as of September 30, 2020, from $1,192.70 million as of December 31, 2019[17] - Total liabilities increased to $517.55 million as of September 30, 2020, compared to $495.22 million as of December 31, 2019[17] - Cash and cash equivalents decreased to $99.74 million at the end of Q3 2020, down from $172.47 million at the beginning of the year[24] - Long-term debt, net, increased slightly to $295.55 million as of September 30, 2020, from $294.69 million as of December 31, 2019[66] Impairment and Charges - The company incurred an impairment charge of $134.60 million related to goodwill and indefinite-lived intangible assets in Q3 2020[19] - Goodwill impairment charges totaled approximately $70.8 million for the Aerospace Fasteners unit and approximately $56.0 million for the Aerospace Engineered Products unit during the three and nine months ended September 30, 2020[59] - The Aerospace segment experienced goodwill and intangible asset impairment charges of approximately $126.8 million and $7.8 million, respectively, due to reduced financial projections and uncertainty from the COVID-19 pandemic[134] - The Company recorded a non-cash, pre-tax charge of approximately $23.4 million for asbestos-related costs in the second quarter of 2020[99] Cash Flow and Financing - Operating cash flow from continuing operations was $79.11 million for the nine months ended September 30, 2020, compared to $60.61 million for the same period in 2019[24] - Cash flows provided by operating activities were approximately $79.1 million for the nine months ended September 30, 2020, compared to approximately $60.6 million for the same period in 2019[202] - Net cash used for investing activities was approximately $110.9 million for the nine months ended September 30, 2020, compared to $89.1 million in the same period of 2019, with significant investments in acquisitions and capital expenditures[202] - The company generated approximately $82.7 million of cash for the nine months ended September 30, 2020, based on a reported net loss of approximately $103.5 million after considering non-cash items[202] Acquisitions and Divestitures - The company completed the sale of its Lamons division for approximately $135 million in cash on December 20, 2019, which is now classified as discontinued operations[36] - The Company acquired the Rapak® brand for approximately $11.4 million, which historically generated approximately $30 million in annual revenue[48] - The acquisition of RSA Engineered Products was completed for approximately $83.7 million, also generating approximately $30 million in annual revenue[49] - The Company signed an agreement to acquire Affaba & Ferrari Srl for approximately €84 million, expected to close by the end of 2020[123] Stock and Compensation - The Company did not grant any stock option awards during the nine months ended September 30, 2020, with 150,000 stock options outstanding at an average price of $17.87[108] - The Company awarded 189,349 RSUs to employees, vesting over three years, and 31,816 RSUs vesting fully at the end of three years[110] - The Company recognized stock-based compensation expense of approximately $5.6 million for the nine months ended September 30, 2020, compared to $3.9 million in the same period of 2019[116] - The Company repurchased 1,441,678 shares of its common stock for approximately $36.0 million during the nine months ended September 30, 2020[118] Market and Economic Conditions - The company expects continued robust demand for its Packaging segment's products used in personal care and home care applications[141] - The company anticipates that the aerospace market will experience significant dislocation due to ongoing travel restrictions and a drop in passenger miles[141] - The company has taken defensive actions in response to COVID-19, including tightening capital expenditures and monitoring accounts receivable balances[215]