TriMas Corporation 2021 Form 10-K Summary
Business context and reporting period
TriMas designs and manufactures engineered products for consumer products, aerospace and defense, and industrial markets through its Packaging, Aerospace, and Specialty Products segments. The filing covers the fiscal year ended December 31, 2021; it is an annual Form 10-K rather than a standalone fourth-quarter filing. TriMas had approximately 3,500 employees, 38 manufacturing and support locations in 12 countries, and generated approximately 70% of sales in North America.
- Packaging: $533.3 million of sales and $96.5 million of operating profit.
- Aerospace: $183.3 million of sales and $13.3 million of operating profit.
- Specialty Products: $140.5 million of sales and $22.6 million of operating profit.
Financial performance and key metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Net sales | $857.1 million | $770.0 million | Up 11.3% |
| Gross profit | $217.2 million | $182.1 million | Up $35.1 million |
| Gross margin | 25.3% | 23.6% | Up 170 basis points |
| Operating profit (loss) | $95.1 million | $(88.3) million | Improved $183.4 million |
| Operating margin | 11.1% | (11.5)% | Improved 22.6 percentage points |
| Net income (loss) | $57.3 million | $(79.8) million | Improved $137.1 million |
| Diluted EPS | $1.32 | $(1.83) | Improved $3.15 |
| Cash flow from operations | $134.2 million | $127.4 million | Up $6.8 million |
| Capital expenditures | $45.1 million | $40.5 million | Up $4.6 million |
Cash and cash equivalents were $140.7 million at year-end, including $129.8 million unrestricted cash. Long-term debt, net of issuance costs, was $393.8 million, consisting primarily of $400.0 million of 4.125% senior notes due 2029. The company had no revolving credit borrowings and reported $300.0 million of available revolver capacity. Actual net leverage was 1.60x versus a 4.00x covenant limit, and interest coverage was 13.31x versus a 3.00x requirement. Total assets were $1.304 billion and shareholders’ equity was $630.9 million.
TriMas refinanced its debt in 2021 by issuing the 2029 Senior Notes, redeeming the $300.0 million of 2025 Senior Notes, and extending the revolving credit facility maturity to March 2026. Debt financing and related expenses were $10.5 million, including the redemption premium and write-off of prior debt issuance costs.
Material changes versus the prior comparable period
- Sales growth reflected approximately $46.9 million of acquisition-related revenue, $31.5 million of organic growth excluding currency and acquisitions, and $8.7 million of favorable currency effects. These benefits were partly offset by a $42.4 million decline in pandemic-related dispensing sales from 2020 peak levels.
- Packaging sales increased 9.2% to $533.3 million, but segment margin declined to 18.1% from 19.2%, primarily because resin and other input-cost increases exceeded recovered pricing by approximately $11 million.
- Aerospace sales increased 9.3% to $183.3 million, helped by approximately $29.4 million of customer stocking orders for fasteners. Management stated that underlying aerospace demand remained substantially below historical levels because of reduced commercial aircraft production.
- Specialty Products sales increased 23.4% to $140.5 million as industrial, steel-cylinder, and oilfield activity recovered from depressed 2020 levels. Operating margin increased to 16.0% from 3.8%.
- The 2020 results included approximately $134.6 million of aerospace goodwill and indefinite-lived intangible impairment charges, which did not recur in 2021. The 2020 results also included a $23.4 million non-cash asbestos-related charge and larger realignment and inventory charges.
- TriMas acquired Omega Plastics for approximately $22.5 million and TFI Aerospace for approximately $11.8 million in December 2021. The acquisitions contributed $0.7 million and $0.3 million of 2021 sales, respectively, and TFI included estimated contingent consideration of $3.7 million.
- Realignment charges were $9.7 million in 2021, including facility consolidation and employee separation costs, compared with approximately $19.9 million of identified 2020 realignment charges.
- The company initiated a cash dividend in 2021, declaring $0.04 per share and paying $1.7 million. It repurchased 596,084 shares for approximately $19.1 million, leaving approximately $142.6 million under its authorization.
Guidance, outlook, commentary, risks, and unusual items
TriMas did not provide specific numerical full-year 2022 revenue or earnings guidance in the filing. Management expects continued uncertainty related to COVID-19, supply-chain availability, inflation, material costs, and the timing of aerospace recovery. Packaging demand for hygiene-related dispensing and closure products remained above pre-pandemic levels but had normalized from 2020 peaks. Specialty Products benefited from improving industrial activity, while Aerospace was expected to remain below historical levels for an indefinite period aside from the effect of 2021 stocking orders.
- Management expects pricing actions, sourcing changes, insourcing, and continuous-improvement initiatives to mitigate inflation, but pricing recovery may lag input-cost increases.
- COVID-19 may cause labor shortages, facility disruptions, supply delays, customer demand changes, higher costs, and additional impairment or restructuring charges.
- Goodwill and intangible assets totaled approximately $512.2 million, or 39.3% of total assets. No 2021 impairment was recorded, but weaker sales, operating profit, market capitalization, or aerospace forecasts could trigger future impairment.
- Asbestos liabilities totaled $27.6 million at year-end, with 4,754 claimants pending in 389 cases. The company recorded a $1.5 million 2021 non-cash charge and disclosed an actuarial estimated future liability range of $28.2 million to $38.6 million.
- Raw-material, freight, energy, tariff, foreign-currency, interest-rate, customer-concentration, cybersecurity, environmental, product-liability, and acquisition-integration risks remain material.
- In February 2022, TriMas announced the acquisition of Intertech Plastics for approximately $65 million, subject to customary closing conditions. Intertech had approximately $32 million of annual sales and was expected to join Packaging.
- Deloitte issued unqualified opinions on the financial statements and internal control over financial reporting. The internal-control assessment excluded Omega and TFI because they were acquired in December 2021.
Most important facts for an investor to verify
- Whether aerospace demand and aircraft production recover without relying on non-recurring customer stocking orders.
- The extent to which resin, steel, freight, labor, energy, and other inflationary costs are recovered through customer pricing.
- Current unrestricted cash, revolver availability, debt covenant headroom, and the effect of variable interest rates after the LIBOR transition.
- The carrying value and impairment sensitivity of aerospace goodwill and other intangible assets.
- Future cash requirements for asbestos claims, realignment actions, operating leases, acquisitions, dividends, and share repurchases.
- Integration progress and performance of Omega, TFI, and the subsequently announced Intertech acquisition.
- Whether COVID-19 variants, supply-chain disruptions, labor availability, tariffs, or customer concentration materially affect sales and margins.