Highlights From Equipment Manufacturer TriMas' S1 Filing

Includes: AA, CMI, GEF, NPO, TRS, TXT
by: Evelyn Rubin

Key details about the recent TriMas Corporation S1 filing. Proposed ticker: (NASDAQ:TRS). All excerpts are from the full SEC filing:

Company Description

We are a manufacturer of highly engineered products serving niche markets in a diverse range of commercial, industrial and consumer applications. Most of our businesses share important characteristics, including leading market shares, strong brand names, broad product offerings, established distribution networks, relatively high operating margins, relatively low capital investment requirements, product growth opportunities and strategic acquisition opportunities. We believe that a majority of our 2005 net sales were in markets in which our products have the number one or number two market position within their respective product categories. In addition, we believe that in many of our businesses, we are one of only a few manufacturers in the geographic markets where we currently compete. For the year ended December 31, 2005, our net sales were $1,010.1 million.

Our broad product portfolio and customer base, as well as diverse end-markets reduce our dependence on any one product, customer, distribution channel, geographic region or industry segment. We are led by an experienced management team that pursues the highest level of customer satisfaction. Our operating system allows us to build on the strengths of each of our operating segments and across our businesses as a whole. Our businesses are organized into five operating segments, each of which represents a distinct business platform: Packaging Systems, Energy Products, Industrial Specialties, RV& Trailer Products and Recreational Accessories.

Key Financial Data 2005 operating profit was $84 million, on net sales of $1 billion. For 2004, operating profit was $88.7 million on net sales of $940 million. For the first quarter of 2006, net sales were $275 million up from $263 million in the same period last year. Operating profit was $29 million, up over Q1 05's $25 million figure. In 2005, the Recreational Accessories category recorded the highest percentage of revenues with just over 30%; the lowest piece of the revenue pie was held by Energy Products with 13% of net sales. Gross profit was similarly evenly split between the five product categories.

Key Competitors Given the company's wide diversification among multiple industries, there is no pure play competitor to Trimas. In specific segments, competitors include:

  1. Industrial Steel Closure line: Greif Closure (NYSE:GEF), Technocraft
  2. Energy Products: EnPro (NYSE:NPO), Cummins (NYSE:CMI)
  3. Manufacturing: Textron (NYSE:TXT), Fairchild Fasteners (Alcoa) (NYSE:AA)
  4. RV and Trailers: Dutten-Lainson, Peterson
  5. Recreational Accessories: Valley Automotive, Putnam Hitch Products and Curt Manufacturing

Notable Issues To Watch For

Environmental Claims:

As of June 30, 2006, we were a party to approximately 1,568 pending active cases involving an aggregate of approximately 10,526 claimants alleging personal injury from exposure to asbestos-containing materials formerly used in gaskets (both encapsulated and otherwise) manufactured or distributed by certain of our subsidiaries for use primarily in the petrochemical refining and exploration industries. In addition, we acquired various companies to distribute our products that had distributed gaskets of other manufacturers prior to acquisition. We believe that many of our pending cases relate to locations at which none of our gaskets were distributed or used. Total settlement costs (exclusive of defense costs) for all such cases, some of which were filed over 18 years ago, have been approximately $3.5 million. All relief sought in the asbestos cases is monetary in nature. To date, approximately 50% of our costs related to settlement and defense of asbestos-related litigation have been covered by our primary insurance. Effective February 14, 2006, we entered into a coverage-in-place agreement with our first level excess carriers regarding the coverage to be provided to us for asbestos-related claims when the primary insurance is exhausted. The coverage-in-place agreement makes coverage available to us that might otherwise be disputed by the carriers and provides a methodology for the administration of asbestos-related defense and indemnity payments. The coverage-in-place agreement allocates payment responsibility among the primary carrier, excess carriers and our subsidiary.

Effectively One Shareholder Today:

The shareholding is currently split primarily between Heartland Industrial Partners (84.3%) and Metaldyne Corporation (23.2%), in which Heartland is an investor. According to the S1, the two can act as a 'group'.

Underwriters: Goldman Sachs, Merrill Lynch, Credit Suisse, JP Morgan.