The statements in the discussion and analysis regarding industry outlook, our
expectations regarding the performance of our business and the other
non-historical statements in the discussion and analysis are forward-looking
statements. These forward-looking statements are subject to numerous risks and
uncertainties, including, but not limited to, the risks and uncertainties
described in Item 1A "Risk Factors." Our actual results may differ materially
from those contained in or implied by any forward-looking statements. You should
read the following discussion together with Item 8, "Financial Statements and
Supplementary Data."

Introduction

TriMas designs, develops and manufactures a diverse set of products primarily
for the consumer products, aerospace & defense and industrial markets through
its TriMas Packaging, TriMas Aerospace and Specialty Products groups. Our wide
range of innovative products are designed and engineered to solve
application-specific challenges that our customers face. We believe our
businesses share important and distinguishing characteristics, including:
well-recognized and leading brand names in the focused markets we serve;
innovative product technologies and features; a high-degree of customer approved
processes and qualifications; established distribution networks; relatively low
ongoing capital investment requirements; strong cash flow conversion and
long-term growth opportunities. While the majority of our revenue is in the
United States, we manufacture and supply products globally to a wide range of
companies. We report our business activity in three segments: Packaging,
Aerospace and Specialty Products.

Key Factors Affecting Our Reported Results

Our business and operating results are subject to general economic conditions. We serve clients in industries that are highly competitive, cyclical and likely to be significantly affected by changes in economic or geopolitical conditions.

In March 2020, the President of the United States declared the coronavirus
("COVID-19") outbreak a national emergency, as the World Health Organization
determined it was a pandemic. In response to the COVID-19 pandemic, federal,
provincial, state, county and local governments and public health organizations
or authorities around the world implemented a variety of measures intended to
control the spread of the virus, including quarantines, "shelter-in-place" or
"stay-at-home" and similar orders, travel restrictions, business curtailments
and closures, social distancing, personal hygiene requirements, and other
measures.

We have been, and continue to be, focused on making sure the working
environments for our employees are safe so our operations have the ability to
deliver the products needed to support efforts to mitigate the COVID-19
pandemic. Nearly all of our manufacturing sites have been deemed essential
operations and remained open during the COVID-19 pandemic, at varying levels of
capacity and efficiency, experiencing only temporary shutdowns due to
country-specific government mandates or for thorough cleaning as a result of
suspected COVID-19 cases. The health of our employees, and the ability of our
facilities to remain operational in the current regulated environment, will be
critical to our future results of operations.

Our divisions were impacted in 2020 at differing levels and times, beginning
with our Asian facilities and strategic supply network, both primarily in China,
in late January, followed by our European (primarily Italy) and North American
facilities in February and March. We implemented new work rules and processes,
which promote social distancing and increased hygiene to ensure the safety of
our employees, particularly at our production facilities. These measures, while
not easily quantifiable, have increased the level of manufacturing
inefficiencies due to elevated levels of absenteeism, resulting in less
efficient production scheduling and, in certain cases, short-term idling of
production. We expect that we will continue to operate with these protocols in
place for the foreseeable future.

Overall, 2021 net sales increased approximately $87.1 million, or 11.3%,
compared to 2020, primarily as a result of increased industrial demand in our
Specialty Products segment, acquisitions in our Packaging segment and the impact
of customers' stocking orders within our Aerospace segment. These increases were
partially offset by a decline in sales of our Packaging segment's dispensing and
closure products that are used in applications to fight the spread of germs,
which sales reached record-high levels in 2020 when there was a significant
spike in demand following the onset of the COVID-19 pandemic, but now have
abated to what we believe is a new, and higher, normalized level.

The most significant drivers affecting our results of operations in 2021
compared with 2020, other than as directly impacted by demand level changes as a
result of the COVID-19 pandemic, were goodwill and intangible asset impairment
charges in 2020 in our Aerospace segment, our election to change our accounting
policy for asbestos-related defense costs in 2020, realignment actions we
undertook in response to reduced end-market demand following the outbreak of the
COVID-19 pandemic, the impact of our recent acquisitions, increases in the cost
of certain raw materials, the refinancing of our long term debt in 2021 and the
recognition of the benefit of certain tax planning strategies.

                                       28

————————————————– ——————————

Contents

During 2020, we determined there was a triggering event requiring an interim
quantitative impairment assessment for goodwill and indefinite-lived intangible
assets within our Aerospace segment. While third quarter 2020 operating results
were below pre-pandemic projected levels, the larger driver of the triggering
event was a significant reduction in the July 2020 financial projection update
for the remainder of 2020 compared with prior projections, and uncertainty
around the duration and magnitude of the impact of the COVID-19 pandemic on
future financial results given the dependence of our Aerospace segment reporting
units on future levels of air travel and new aircraft builds. We determined the
carrying value of both of our Aerospace reporting units, as well as of certain
trade names, exceeded the fair value, resulting in non-cash, pre-tax impairment
charges of approximately $126.8 million to goodwill and $7.8 million to
indefinite lived intangible assets.

During 2020, we elected to change our accounting policy for asbestos-related
defense costs from accruing for probable and reasonably estimable defense costs
associated with known claims expected to settle to accruing for all future
defense costs for both known and unknown claims, which we now believe can be
reasonably estimated. This accounting change has been reflected as a change in
accounting estimate effected by a change in accounting principle. We recorded a
non-cash, pre-tax charge in second quarter 2020 for asbestos-related costs of
approximately $23.4 million, which is included in selling, general and
administrative expenses. In 2021, we commissioned our actuary to update the
asbestos study based on data as of September 30, 2021, and recorded a non-cash,
pre-tax charge of $1.5 million, which is included in selling, general and
administrative expenses, to increase the liability estimate.

Beginning in second quarter 2020, we have been executing certain realignment
actions in response to reductions in current and expected future end market
demand following the onset of the COVID-19 pandemic. We recorded pre-tax
facility consolidation and employee separation costs of approximately
$3.5 million and $6.2 million, respectively, in 2021. In 2020, we recorded a
pre-tax charge of approximately $13.8 million related to inventory reductions,
primarily as a result of a strategic decision in our Arrow Engine division to
streamline its product line offering. We also recorded charges of approximately
$2.3 million related to certain production equipment removed from service given
reduced demand levels, and employee separation costs of approximately
$3.8 million.

In December 2021, we completed the acquisition of Omega Plastics ("Omega"),
which specializes in manufacturing custom components and devices for drug
delivery, diagnostic and orthopedic medical applications, as well as components
for industrial applications, for an aggregate amount of approximately
$22.5 million, net of cash acquired. Omega, which is reported in the Company's
Packaging segment, is located in Clinton Township, Michigan. Omega contributed
approximately $0.7 million of net sales during 2021.

In December 2021, we acquired TFI Aerospace ("TFI"), a manufacturer and supplier
of specialty fasteners used in a variety of applications, predominately for the
aerospace end market, for an aggregate amount of approximately $11.8 million,
with additional contingent consideration ranging from zero to approximately
$12.0 million to be paid based on 2023 and 2024 earnings per the purchase
agreement. TFI, which is reported in the Company's Aerospace segment, is located
near Toronto, Canada. TFI contributed approximately $0.3 million of net sales
during 2021.

In December 2020, we completed the acquisition of Affaba & Ferrari Srl ("Affaba
& Ferrari"), which specializes in the design, development and manufacture of
precision caps and closures for food & beverage and industrial product
applications, for an aggregate amount of approximately $98.4 million, net of
cash acquired. Affaba & Ferrari, which is reported in our Packaging segment,
operates out of a highly automated manufacturing facility and support office
located in Borgo San Giovanni, Italy. Affaba & Ferrari contributed approximately
$36.3 million of incremental net sales during 2021.

In April 2020, we acquired the Rapak brand, including certain bag-in-box product
lines and assets ("Rapak") for an aggregate amount of approximately $11.4
million. Rapak, which is reported in our Packaging segment, has two
manufacturing locations in the United States. Rapak contributed approximately
$5.3 million of incremental net sales resulting from the January through March
2021 sales. Rapak has been performing below break-even operating profit as
demand for its products, particularly those used in quick service restaurant
applications, has significantly declined from pre-acquisition levels in 2019 due
to the impact of the COVID-19 pandemic.

In February 2020, we completed the acquisition of RSA Engineered Products
("RSA"), a provider of highly-engineered and proprietary components for air
management systems used in critical flight applications, for an aggregate amount
of approximately $83.7 million, net of cash acquired. RSA, located in Simi
Valley, California, designs, engineers and manufactures highly-engineered
components, including air ducting products, connectors and flexible joints,
predominantly used in aerospace and defense engine bleed air, anti-icing and
environmental control system applications. RSA contributed approximately
$4.3 million of incremental net sales resulting from January and February 2021
sales.
                                       29

————————————————– ——————————

Contents

In first quarter 2021, we began experiencing an increase in material costs
compared with 2020 levels, primarily for resin-based raw materials and
components, as well as for certain types of steel. These material costs further
increased throughout 2021. We have escalator/de-escalator clauses in our
commercial contracts with certain of our customers, or can modify prices based
on market conditions, and we have been taking actions to recover the increased
cost of raw materials. However, given the lag nature of the commercial pricing
mechanisms, we have and will continue to experience net earnings pressure until
resin costs begin to stabilize and/or decline for several consecutive months. We
estimate that due to the lag in timing between incurring the cost increases and
recovering via commercial actions, our operating profit was negatively impacted
by approximately $11 million in 2021, compared with 2020, primarily in our
Packaging segment.

In 2021, we refinanced our long-term debt, issuing $400 million aggregate
principal amount of 4.125% senior unsecured notes due April 15, 2029 ("2029
Senior Notes") at par value in a private placement under Rule 144A of the
Securities Act of 1933, as amended, and amending our existing credit agreement
("Credit Agreement"), extending the maturity to March 2026. We used the proceeds
from the 2029 Senior Notes offering to pay fees and expenses of approximately
$5.1 million related to the offering and approximately $1.1 million related to
amending the Credit Agreement. The remaining cash proceeds from the 2029 Senior
Notes were used for general corporate purposes, including repaying all
outstanding revolving credit facility borrowings and redeeming all of our
outstanding senior notes due October 2025 ("2025 Senior Notes"), paying cash for
the entire $300.0 million outstanding principal amount plus $7.3 million as a
redemption premium. The $5.1 million of fees and expenses related to the 2029
Senior Notes were capitalized as debt issuance costs, while the $7.3 million
redemption premium as well as approximately $3.0 million of unamortized debt
issuance costs associated with the 2025 Senior Notes were expensed in 2021.

In addition, our effective tax rate for 2021 was 17.1%, compared to 22.3% for
2020. We recorded income tax expense of approximately $11.9 million in 2021, as
compared to an income tax benefit of $23.0 million in 2020. During 2021, we
reported domestic and foreign pre-tax income of approximately $28.4 and $40.7
million, respectively, as compared to a 2020 domestic pre-tax loss of
approximately $134.6 million and foreign pre-tax income of approximately $31.9
million. The rate for 2021 includes the impact of income tax incentives in a
foreign jurisdiction, the impact of certain non-deductible expenses and an
increase in the statutory tax rate in another foreign jurisdiction which
increased the value of certain deferred tax assets. The effective tax rate for
2020 was impacted by a decrease in profitability in the U.S. resulting from
various one-time charges, including impairment of goodwill and indefinite-lived
intangible assets and a change in our accounting policy for asbestos-related
defense costs. During 2020, we also undertook certain tax-planning actions with
respect to restructuring our intercompany debt, resulting in the recognition of
a $6.4 million deferred tax benefit.

Key additional risks that could affect our reported results

We expect the COVID-19 pandemic will continue to impact us in the future at
varying degrees. We expect the robust customer demand, compared with
pre-pandemic demand levels, for our Packaging segment's dispensing pumps and
closure products used in personal care and home care applications will continue,
albeit with some reduction from the surge experienced in 2020 and early 2021, as
we believe there is a positive secular trend focused on consumers' desire to
stop the spread of germs and improve personal hygiene. Industrial demand in
North America was lower in 2020 compared to previous levels, and while demand
levels significantly increased in 2021, we are uncertain how and at what level
demand will be impacted as governmental, travel or other restrictions are
lifted, particularly in North America, where orders for our industrial
cylinders, for example, are heavily influenced by the levels of construction and
HVAC activity. We expect the aerospace market to continue to experience severe
dislocation going forward, as except for the significant stocking orders for
certain of our products received during 2021, our sales levels would be
significantly lower than historical levels. With the current travel restrictions
and sentiment, particularly low for international travel, aircraft manufacturers
have slowed production, and since second quarter 2020 we have experienced a
significant drop in aerospace-related sales related to new commercial airplane
builds compared to prior levels. We expect, except as favorably impacted by the
customers' stocking orders in 2021, lower levels of sales and related production
to continue for the foreseeable future.

We have executed significant realignment actions since the onset of the COVID-19
pandemic, primarily in our Aerospace and Specialty Products segments, and also
in certain Packaging product areas where demand has fallen, such as in the quick
service and restaurant applications, to protect against the uncertain end market
demand. We will continue to assess further actions if required. However, as a
result of the COVID-19 pandemic's impact on global economic activity, and the
continued potential impact to our future results of operations, as well if there
is an impact to TriMas' market capitalization, we may record additional cash and
non-cash charges related to incremental realignment actions, as well as for
uncollectible customer account balances, excess inventory and idle production
equipment.

Despite the potential decline in future demand levels and results of operations
as a result of the COVID-19 pandemic, at present, we believe our capital
structure is in a solid position. We have ample cash and available liquidity
under our revolving credit facility to meet our debt service obligations,
capital expenditure requirements and other short-term and long-term obligations
for the foreseeable future.

                                       30

————————————————– ——————————

Contents

The extent of the COVID-19 pandemic's effect on our operational and financial
performance will depend in large part on future
developments, which cannot be predicted with confidence at this time. Future
developments include the duration, scope and severity of the COVID-19 pandemic,
the actions taken to contain or mitigate its impact, timing of widespread
vaccine availability, and the resumption of normalized global economic activity.
Due to the inherent uncertainty of the unprecedented and rapidly evolving
situation, we are unable to predict with any confidence the likely impact of the
COVID-19 pandemic on our future operations.

Beyond the unique risks presented by the COVID-19 pandemic, other critical
factors affecting our ability to succeed include: our ability to create organic
growth through product development, cross-selling and extending product-line
offerings, and our ability to quickly and cost-effectively introduce and
successfully launch new products; our ability to acquire and integrate companies
or products that supplement existing product lines, add new distribution
channels or customers, expand our geographic coverage or enable better
absorption of overhead costs; our ability to manage our cost structure more
efficiently via supply chain management, internal sourcing and/or purchasing of
materials, selective outsourcing and/or purchasing of support functions, working
capital management, and greater leverage of our administrative functions.

Our overall business does not experience significant seasonal fluctuation, other
than our fourth quarter, which has tended to be the lowest net sales quarter of
the year due to holiday shutdowns at certain customers or other customers
deferring capital spending to the following year. Given the short-cycle nature
of most of our businesses, we do not consider sales order backlog to be a
material factor. A growing amount of our sales is derived from international
sources, which exposes us to certain risks, including currency risks.

We are sensitive to price movements and availability of our raw materials
supply. Our largest raw material purchases are for resins (such as polypropylene
and polyethylene), steel, aluminum and other oil and metal-based purchased
components. In addition to the factors affecting our 2021 results, there has
been some volatility over the past two years as a direct and indirect result of
foreign trade policy, where tariffs on certain of our commodity-based products
sourced from Asia have been instituted, and certain North American suppliers
have opportunistically increased their prices. We will continue to take actions
to mitigate such increases, including implementing commercial pricing
adjustments, resourcing to alternate suppliers and insourcing of previously
sourced products to better leverage our global manufacturing footprint. Although
we believe we are generally able to mitigate the impact of higher commodity
costs over time, we may experience additional material costs and disruptions in
supply in the future and may not be able to pass along higher costs to our
customers in the form of price increases or otherwise mitigate the impacts to
our operating results.

Although we have escalator/de-escalator clauses in commercial contracts with
certain of our customers, or can modify prices based on market conditions to
recover higher costs, our price increases generally lag the underlying material
cost increase, and we cannot be assured of full cost recovery in the open
market. If input costs increase at rapid rates, as they did during 2021, our
ability to recover cost increases on a timely basis, much less at all, is made
more difficult by the lag nature of these contracts.

Our Arrow Engine business in our Specialty Products segment is sensitive to the
demand for natural gas and crude oil in North America. For example, demand for
engine, pump jack and compressor products are impacted by active oil and gas rig
counts and wellhead investment activities. Separately, oil-based commodity costs
are a significant driver of raw materials and purchased components used within
our Packaging segment.

Each year, as a core tenet of the TriMas Business Model, our businesses target
cost savings from Kaizen and continuous improvement initiatives in an effort to
reduce, or otherwise offset, the impact of increased input and conversion costs
through increased throughput and yield rates, with a goal of at least covering
inflationary and market cost increases. In addition, we continuously review our
operating cost structures to ensure alignment with current market demand.

We continue to evaluate alternatives to redeploy the cash generated by our
businesses, one of which includes returning capital to our shareholders. In
2020, our Board of Directors increased the authorization of share repurchases to
a cumulative amount of $250 million. During 2021, we purchased 596,084 shares of
our outstanding common stock for approximately $19.1 million. As of December 31,
2021, we had approximately $142.6 million remaining under the repurchase
authorization.

In addition, in 2021 our Board of Directors declared the first dividend since
our initial public offering in 2007. We declared dividends of $0.04 per share of
common stock and we paid dividends of $1.7 million for the year ended
December 31, 2021. We will continue to evaluate opportunities to return capital
to shareholders through the purchase of our common stock as well as dividends,
depending on market conditions and other factors.




                                       31

————————————————– ——————————

Contents

Segment information and additional analysis

The following table summarizes the financial information of our three reportable segments (in thousands of dollars):

                                                                                               Year ended December 31,
                                                               As a Percentage of                          As a Percentage of                          As a Percentage of
                                                2021               Net Sales                2020               Net Sales                2019               Net Sales
Net Sales
Packaging                                   $ 533,260                     62.2  %       $ 488,340                     63.4  %       $ 392,340                     54.2  %
Aerospace                                     183,340                     21.4  %         167,740                     21.8  %         194,110                     26.8  %
Specialty Products                            140,510                     16.4  %         113,890                     14.8  %         137,080                     19.0  %
Total                                       $ 857,110                    100.0  %       $ 769,970                    100.0  %       $ 723,530                    100.0  %
Gross Profit
Packaging                                   $ 145,750                     27.3  %       $ 142,410                     29.2  %       $ 116,180                     29.6  %
Aerospace                                      39,970                     21.8  %          27,020                     16.1  %          53,060                     27.3  %
Specialty Products                             31,470                     22.4  %          12,650                     11.1  %          24,660                     18.0  %
Total                                       $ 217,190                     25.3  %       $ 182,080                     23.6  %       $ 193,900                     26.8  %
Selling, General and Administrative
Packaging                                   $  49,110                      9.2  %       $  47,850                      9.8  %       $  35,340                      9.0  %
Aerospace                                      26,690                     14.6  %          25,550                     15.2  %          24,070                     12.4  %
Specialty Products                              8,950                      6.4  %           7,890                      6.9  %           8,620                      6.3  %
Corporate expenses                             37,220                         N/A          53,190                         N/A          34,500                         N/A
Total                                       $ 121,970                     14.2  %       $ 134,480                     17.5  %       $ 102,530                     14.2  %
Operating Profit (Loss)
Packaging                                   $  96,490                     18.1  %       $  93,990                     19.2  %       $  80,770                     20.6  %
Aerospace                                      13,270                      7.2  %        (133,440)                   (79.6) %          28,950                     14.9  %
Specialty Products                             22,550                     16.0  %           4,350                      3.8  %          16,000                     11.7  %
Corporate                                     (37,220)                        N/A         (53,190)                        N/A         (34,500)                        N/A
Total                                       $  95,090                     11.1  %       $ (88,290)                   (11.5) %       $  91,220                     12.6  %
Capital Expenditures
Packaging                                   $  34,080                      6.4  %       $  30,730                      6.3  %       $  16,400                      4.2  %
Aerospace                                       5,390                      2.9  %           5,770                      3.4  %           8,110                      4.2  %
Specialty Products                              5,500                      3.9  %           3,890                      3.4  %           5,090                      3.7  %
Corporate                                          90                         N/A              90                         N/A              70                         N/A
Total                                       $  45,060                      5.3  %       $  40,480                      5.3  %       $  29,670                      4.1  %
Depreciation
Packaging                                   $  20,950                      3.9  %       $  18,330                      3.8  %       $  15,070                      3.8  %
Aerospace                                       7,140                      3.9  %           7,110                      4.2  %           6,560                      3.4  %
Specialty Products                              3,670                      2.6  %           3,450                      3.0  %           2,960                      2.2  %
Corporate                                         130                         N/A             130                         N/A             280                         N/A
Total                                       $  31,890                      3.7  %       $  29,020                      3.8  %       $  24,870                      3.4  %
Amortization
Packaging                                   $   9,550                      1.8  %       $   9,270                      1.9  %       $   9,580                      2.4  %
Aerospace                                      11,560                      6.3  %          11,020                      6.6  %           8,530                      4.4  %
Specialty Products                                450                      0.3  %             460                      0.4  %             520                      0.4  %
Corporate                                           -                         N/A               -                         N/A               -                         N/A
Total                                       $  21,560                      2.5  %       $  20,750                      2.7  %       $  18,630                      2.6  %





                                       32

————————————————– ——————————

Contents

The following "Results of Operations Year Ended December 31, 2021 Compared with
Year Ended December 31, 2020" section presents an analysis of our consolidated
operating results displayed in the Consolidated Statement of Operations. A
discussion regarding our financial condition and results of operations for the
year ended December 31, 2020 compared to the year ended December 31, 2019 can be
found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2020, filed with the Securities and Exchange Commission on February
25, 2021.

Results of Operations

Year ended December 31, 2021 Compared to the year ended December 31, 2020

The main factors that affected us during the year ended December 31, 2021compared to the year ended December 31, 2020 were:

•the impact on global business activity of the COVID-19 pandemic;

•approximately $134.6 million impairment of goodwill and intangible assets with an indefinite useful life in 2020;

•a change in our accounting policy for asbestos-related defense costs in 2020;

•realignment expenditures in response to lower end-market demand following the outbreak of the COVID-19 pandemic;

•the impact of our debt refinancing activities;

•the impact of our recent acquisitions, mainly Affaba & Ferrari, in December 2020;

•the impact of the increase in the cost of materials, mainly related to resin; and

•the impact of a decrease in our effective tax rate from 2020 to 2021.

Overall, net sales increased approximately $87.1 million, or approximately
11.3%, to $857.1 million in 2021, as compared to $770.0 million in 2020,
primarily as a result of acquisitions, which added approximately $46.9 million
of sales. Organic sales, excluding the impact of currency exchange and
acquisitions, increased approximately $31.5 million, primarily due to increases
in sales of products used in food and beverage applications in our Packaging
segment and of industrial products in both our Specialty Products and Packaging
segments. These increases were partially offset by the expected decline in sales
of dispensing products that help fight the spread of germs in our Packaging
segment, as the demand levels decreased compared with the record-high levels in
2020. In addition, net sales increased approximately $8.7 million due currency
exchange, as our reported results in U.S. dollars were favorably impacted as a
result of the weakening U.S. dollar relative to foreign currencies.

Gross profit margin (gross profit as a percentage of sales) approximated 25.3%
and 23.6% in 2021 and 2020, respectively. Gross profit margin increased
primarily due the impact of lower realignment, contingent liability, and
purchase accounting charges of approximately $13.0 million, $2.0 million, and
$2.0 million, respectively, in 2021 than in 2020. These increases, plus a more
favorable product sales mix and leveraging of our prior realignment actions in
our Specialty Products segment were partially offset by approximately $11
million higher material costs than recovered via commercial actions (primarily
for resin) in our Packaging segment and lower fixed cost absorption and labor
inefficiencies within our Aerospace segment.

Operating profit (loss) margin (operating profit as a percentage of sales)
approximated 11.1% and (11.5)% in 2021 and 2020, respectively. Operating profit
(loss) increased $183.4 million, to an operating profit of approximately $95.1
million in 2021, as compared to an operating loss of approximately $88.3 million
in 2020, primarily due to approximately $134.6 million of goodwill and
indefinite-lived intangible asset impairment charges as well as the impact of
the $2.0 million pre-acquisition contingent liability charge within our
Aerospace segment, which were recorded in 2020 and did not repeat in 2021.
Operating profit and margin further increased due to higher sales levels and
lower realignment and purchase accounting costs in 2021 than in 2020. These
increases were partially offset by higher material costs (primarily resin) in
our Packaging segment and labor inefficiencies and lower fixed cost absorption
within our Aerospace segment.

Interest expense decreased approximately $0.2 million, to $14.5 million in 2021,
as compared to $14.7 million in 2020, as a lower effective interest rate more
than offset an increase in our weighted average borrowings.

We incurred approximately $10.5 million of debt financing and related expense in
2021, of which approximately $10.3 million was related to expenses incurred
associated with the redemption of our 2025 Senior Notes and approximately $0.2
million related to the write-off of previously capitalized deferred financing
fees associated with our Credit Agreement.

Other income (expenses) decreased by approximately $1.2 million to other expenses of approximately $1.0 million in 2021, other revenues of approximately $0.2 million in 2020, primarily due to a year-over-year increase in losses on foreign currency denominated transactions.

                                       33

————————————————– ——————————

Contents

The effective income tax rate for 2021 was 17.1%, compared to 22.3% for 2020. We
recorded income tax expense of approximately $11.8 million in 2021, as compared
to an income tax benefit of $23.0 million in 2020. During 2021, we reported
domestic and foreign pre-tax income of approximately $28.4 million and $40.7
million, respectively, as compared to a 2020 domestic pre-tax loss of
approximately $134.6 million and foreign pre-tax income of approximately $31.9
million. The effective tax rate for 2021 varied from the U.S. federal statutory
rate primarily as a result of income tax incentives in a foreign jurisdiction,
the impact of certain non-deductible expenses and an increase in the statutory
tax rate in another foreign jurisdiction which increased the value of certain
deferred tax assets. Our effective tax rate for 2020 was impacted by a decrease
in profitability in the U.S. resulting from various one-time charges, including
impairment of goodwill and indefinite-lived intangible assets and a change in
our accounting policy for asbestos-related defense costs. During 2020, we also
undertook certain tax-planning actions with respect to restructuring our
intercompany debt, resulting in the recognition of a $6.4 million deferred tax
benefit.

Net income (loss) increased approximately $137.1 million to net income of
approximately $57.3 million in 2021, compared to a net loss of $79.8 million in
2020. This increase was primarily a result of an increase in operating profit of
approximately $183.4 million and a decrease in interest expense of $0.2 million,
partially offset by debt financing and related expenses of approximately $10.5
million, an increase in tax expense of approximately $34.8 million and an
increase in other expense of $1.2 million.

See below for an analysis of operating results by segment.

Packaging. Net sales increased approximately $44.9 million, or 9.2%, to $533.3
million in 2021, as compared to $488.3 million in 2020. Acquisition-related
sales growth was approximately $42.3 million, comprised of $36.3 million of
sales from our December 2020 acquisition of Affaba & Ferrari, $5.3 million
resulting from the January through March 2021 sales of our April 2020
acquisition of Rapak and $0.7 million of sales from our December 2021
acquisition of Omega. Sales of products used in food and beverage markets
increased by approximately $19.1 million, primarily due to increased demand for
caps and closures and flexible packaging as the hospitality sector began to
rebound from prior COVID-19 pandemic-related shutdowns. Sales of products used
in industrial markets increased by approximately $13.5 million, primarily as a
result of higher demand for closure products in North America. Sales of
dispensing products used in beauty and personal care as well as home care
applications that help fight the spread of germs decreased by approximately
$42.4 million, as demand has abated for these products from the peak levels in
2020 as a result of the COVID-19 pandemic. Net sales also increased by
approximately $8.7 million due to currency exchange, as our reported results in
U.S. dollars were favorably impacted as a result of the weakening U.S. dollar
relative to foreign currencies.

Packaging's gross profit increased approximately $3.3 million to $145.8 million,
or 27.3% of sales, in 2021, as compared to $142.4 million, or 29.2% of sales, in
2020, primarily due to the higher sales levels, plus approximately $3.1 million
of currency exchange, as our reported results in U.S. dollars were favorably
impacted as a result of the weakening U.S. dollar relative to foreign
currencies. Although gross profit dollars increased, gross profit margin
decreased as the impact of a more favorable product sales mix, as higher margin
industrial and food and beverage products comprised a larger percentage of total
sales, was offset by approximately $11 million of higher material costs
(primarily resin) than were recovered via sales price increases during 2021.
Gross profit margin was also unfavorably impacted by inflationary headwinds on
utilities costs, higher labor costs driven by pandemic-related shortages and
higher freight costs driven by increased container costs and freight lane rates.
In addition, we recognized approximately $1.6 million of realignment costs
during 2021 primarily related to the closure of our Union City, California
manufacturing facility and consolidation into our Indianapolis, Indiana and
Woodridge, Illinois facilities as compared to $1.1 million of realignment costs
in 2020, primarily related to the disposal of certain equipment removed from
service.

Packaging's selling, general and administrative expenses increased approximately
$1.3 million to $49.1 million, or 9.2% of sales, in 2021, as compared to $47.9
million, or 9.8% of sales, in 2020, primarily due to higher ongoing selling,
general and administrative costs associated with our acquisitions, partially
offset by approximately $1.2 million in charges associated with realignment
actions in 2020, primarily for severance, that did not repeat in 2021.

Packaging's operating profit increased approximately $2.5 million to $96.5
million, or 18.1% of sales, in 2021, as compared to $94.0 million, or 19.2% of
sales, in 2020, primarily due to higher sales levels, a more favorable product
sales mix and favorable currency exchange, which were partially offset by the
impact of higher material and other manufacturing input costs, incremental
realignment charges and higher selling, general and administrative expenses.

Aerospace.  Net sales increased approximately $15.6 million, or 9.3%, to $183.3
million in 2021, as compared to $167.7 million in 2020. RSA, acquired in
February 2020, added approximately $4.3 million of sales for January and
February 2021 and TFI, acquired in December 2021, added approximately
$0.3 million of sales. Sales of our fastener products increased approximately
$11.2 million, as approximately $29.4 million of sales of customers' stocking
orders for highly-engineered fasteners in 2021 were partially offset by lower
year-over-year sales resulting from current and expected future reduced air
travel due to the COVID-19 pandemic. Sales of our engineered components products
declined by approximately $0.2 million.

                                       34

————————————————– ——————————

Contents

Gross profit within Aerospace increased approximately $13.0 million to $40.0
million, or 21.8% of sales, in 2021, from $27.0 million, or 16.1% of sales, in
2020, primarily due to charges recorded in 2020 that did not repeat in 2021.
First, we recorded approximately $4.5 million lower realignment charges in 2021
compared with 2020, which were principally related to inventory reductions and
facility consolidations in response to the COVID-19 pandemic. In addition, in
2020, we recorded a $2.0 million charge related to an updated estimate of a
pre-acquisition contingent liability, as well as an approximate $2.0 million
purchase accounting non-cash charge related to the step-up of RSA's inventory to
fair value and subsequent amortization, each of which did not repeat in 2021.
Gross profit margin was further aided by a more favorable product sales mix in
2021, as the stocking orders were primarily for highly-engineered fasteners that
command above-average profit margins. All of these factors were partially offset
by lower absorption of fixed costs and labor inefficiencies during 2021 driven
by the COVID-19 pandemic.

Selling, general and administrative expenses increased by approximately $1.1 million for $26.7 millioni.e. 14.6% of sales, in 2021, compared to $25.6 millionor 15.2% of sales, in 2020, primarily due to the impact of the continued increase in selling, general and administrative expenses associated with our acquisitions.

Operating profit (loss) within Aerospace increased approximately $146.7 million
to an operating profit of $13.3 million, or 7.2% of sales, in 2021, as compared
to an operating loss of $133.4 million, or 79.6% of sales, in 2020, primarily
due to approximately $134.6 million of goodwill and indefinite-lived intangible
asset impairment charges during 2020. Operating profit also improved due to
realignment and other charges recorded in 2020 that did not repeat in 2021, as
well as through a more favorable product sales mix, partially offset by labor
inefficiencies, lower absorption of fixed costs and higher selling, general and
administrative expenses.

Specialty Products.  Net sales increased approximately $26.6 million, or 23.4%,
to $140.5 million in 2021, as compared to $113.9 million in 2020. Sales of our
cylinder products increased by approximately $17.9 million due to a higher
demand for steel cylinders in North America as industrial activity continues to
rebound following significantly depressed demand in 2020 as result of the
COVID-19 pandemic. Sales of engines, compressors and related parts used in
upstream oil and gas applications increased by approximately $8.7 million
primarily as a result of higher oil-field activity in North America. Our 2020
sales included approximately $0.7 million related to the liquidation of non-core
inventory following our strategic decision to streamline Arrow Engine's product
line offering.

Gross profit within Specialty Products increased approximately $18.8 million to
$31.5 million, or 22.4% of sales, in 2021, as compared to $12.7 million, or
11.1% of sales, in 2020. During 2020, we executed certain realignment actions in
response to reduced end market demand as a result of the COVID-19 pandemic,
resulting in approximately $9.0 million of non-cash charges, primarily related
to Arrow Engine streamlining its product line offering and liquidating its
non-core inventory, which did not repeat in 2021. In addition, gross profit
increased in 2021 due to higher sales levels, while margins improved due to
favorable product sales mix and leveraging previous realignment actions.

Selling, general and administrative expenses within Specialty Products increased
approximately $1.1 million to $9.0 million, or 6.4% of sales, in 2021, as
compared to $7.9 million, or 6.9% of net sales, in 2020. Our 2021 selling,
general and administrative expenses have increased primarily due to higher
employment and spending levels incurred to support the increase in sales levels.
We incurred selling, general and administrative realignment expenses of
approximately $0.7 million in 2020 related to severance that did not repeat in
2021.

Operating profit within Specialty Products increased approximately $18.2 million
to $22.6 million, or 16.0% of sales, in 2021, as compared to $4.4 million, or
3.8% of sales, in 2020, primarily due to the impact of 2020 realignment costs
that did not repeat in 2021, as well as higher sales and related profit
conversion leveraging the 2020 realignment actions without the need to add
significant incremental fixed costs.

Business expenses. Corporate expenses included in operating income include the following (in millions of dollars):

                                          Year ended December 31,
                                             2021                 2020
Corporate operating expenses       $       26.1                 $ 20.8
Non-cash stock compensation                 9.5                    8.2
Legacy (income) expenses, net               1.6                   24.2
   Corporate expenses              $       37.2                 $ 53.2


                                       35

————————————————– ——————————

Contents

Corporate expenses included in operating profit decreased approximately $16.0
million to $37.2 million in 2021, from $53.2 million in 2020, primarily as a
result of the $23.4 million non-cash charge recorded in 2020 due to the change
of our accounting policy for asbestos-related defense costs. In 2021, we
commissioned our actuary to update the asbestos study, and recorded a non-cash
charge of $1.5 million to increase the liability estimate. Corporate operating
expenses increased primarily as a result of realignment charges related to the
corporate office legal and finance groups in 2021 as well as an increase in
professional fees related to corporate development activities.

Cash and capital resources

Cash flow

Cash flows provided by operating activities in 2021 were approximately $134.2
million, as compared to approximately $127.4 million in 2020. Significant
changes in cash flows provided by operating activities and the reasons for such
changes are as follows:

•In 2021, the Company generated approximately $139.2 million in cash flows,
based on the reported net income of approximately $57.3 million and after
considering the effects of non-cash items related to depreciation, amortization,
loss on dispositions of assets, changes in deferred income taxes, debt financing
and related expenses, stock-based compensation, change in legacy liability
estimate, and other operating activities. In 2020, the Company generated
approximately $105.0 million in cash flows based on the reported net loss of
approximately $79.8 million and after considering the effects of similar
non-cash items and the impairment of goodwill and indefinite-lived intangible
assets.

•Increases in accounts receivable resulted in a use of cash of approximately
$11.2 million in 2021, while decreases in accounts receivable resulted in a
source of cash of approximately $9.6 million 2020, primarily due to timing of
net sales and related cash collections. Days sales outstanding of receivables
remained relatively consistent in 2021 compared to 2020, and decreased by
approximately four days through 2020 compared to 2019, as we placed a
significant focus on our credit and collections process, particularly in those
businesses most impacted by the pandemic where credit risk was heightened.

•We increased our investment in inventory by approximately $1.0 million in 2021,
while decreasing our investment in inventory by approximately $4.0 million in
2020. Our days sales in inventory decreased by approximately nine days in 2021
compared with 2020 through active inventory management and selling through
certain inventory items that were at elevated levels at the end of 2020 due to
lower demand as a result of the COVID-19 pandemic. Our days sales in inventory
decreased by approximately eight days in 2020 compared to 2019, primarily as a
result of the strategic decision in our Arrow Engine division to streamline its
product line offering during 2020. We continue to moderate inventory levels in
line with sales levels.

•Decreases in prepaid expenses and other assets resulted in a source of cash of
approximately $5.0 million and $4.4 million in 2021 and 2020, respectively. The
changes in 2021 and 2020 are primarily as a result of the timing of payments
made for income taxes and certain operating expenses.

•Increases in accounts payable and accrued liabilities resulted in a source of
cash of approximately $2.1 million and $4.5 million in 2021 and 2020,
respectively. Our days accounts payable on hand increased by approximately five
days in 2021 due to timing and mix of payments terms in 2021 while days payables
decreased by approximately 15 days in 2020, primarily as we paid certain key
Packaging vendors more quickly in 2020 to ensure our orders remained a top
priority for them given our robust demand levels and minimal available capacity
in the marketplace. This decrease was more than offset by our increase in
accrued liabilities in 2020, primarily as a result of the timing and amount of
wage-related accruals.

Net cash used for investing activities was approximately $79.2 million and
$232.1 million in 2021 and 2020, respectively. During 2021, we paid
approximately $34.3 million, net of cash acquired, to acquire Omega and TFI. We
invested approximately $45.1 million in capital expenditures as we have
continued our investment in growth, capacity and productivity-related capital
projects. During 2020, we paid approximately $193.5 million, net of cash
acquired, to acquire RSA, Rapak and Affaba & Ferrari. In 2020, we invested
approximately $40.5 million in capital expenditures and received cash from the
disposition of business, property and equipment of approximately $2.0 million.

                                       36

————————————————– ——————————

Contents

Net cash provided by financing activities was approximately $11.8 million and
$6.1 million in 2021 and 2020, respectively. During 2021, we issued $400.0
million principal amount of senior notes, made net repayments of approximately
$48.6 million on our revolving credit facilities, and redeemed $300.0 million
principal amount of senior notes. In connection with refinancing our long-term
debt, we paid approximately $13.6 million of debt financing fees and redemption
premium. We also purchased approximately $19.1 million of outstanding common
stock, used a net cash amount of approximately $5.2 million related to our stock
compensation arrangements and paid dividends of approximately $1.7 million.
During 2020, we received proceeds from borrowings, net of repayments, of
approximately $48.2 million on our revolving credit facilities, purchased
approximately $39.4 million of outstanding common stock and used a net cash
amount of approximately $2.6 million related to our stock compensation
arrangements.

Our debt and other commitments

In March 2021, we issued the 2029 Senior Notes in a private placement under Rule
144A of the Securities Act of 1933, as amended. We used the proceeds from the
2029 Senior Notes offering to pay fees and expenses of approximately
$5.1 million related to the offering and pay fees and expenses of $1.1 million
related to amending our Credit Agreement. In connection with the issuance, we
completed the redemption of our 2025 Senior Notes, paying $300.0 million to
retire the outstanding principal amount plus $7.3 million as a redemption
premium. The remaining cash proceeds from the 2029 Senior Notes were used for
general corporate purposes, including repaying all outstanding revolving credit
facility borrowings. The $5.1 million of fees and expenses related to the 2029
Senior Notes were capitalized as debt issuance costs, while the $7.3 million
redemption premium, as well as approximately $3.0 million of unamortized debt
issuance costs associated with the 2025 Senior Notes were recorded as expense
within debt financing and related expenses in the accompanying consolidated
statement of operations.

The 2029 Senior Notes accrue interest at a rate of 4.125% per annum, payable
semi-annually in arrears on April 15 and October 15, commencing on October 15,
2021. The payment of principal and interest is jointly and severally guaranteed,
on a senior unsecured basis by certain named subsidiaries of the Company. The
2029 Senior Notes are pari passu in right of payment with all existing and
future senior indebtedness and subordinated to all existing and future secured
indebtedness to the extent of the value of the assets securing such
indebtedness. In 2021, our consolidated subsidiaries that do not guarantee the
Senior Notes represented approximately 28% of the total of guarantor and
non-guarantor net sales, treating each as a consolidated group and excluding
intercompany transactions between guarantor and non-guarantor subsidiaries. In
addition, our non-guarantor subsidiaries represented approximately 42% and 50%
of the total guarantor and non-guarantor assets and liabilities, respectively,
as of December 31, 2021, treating the guarantor and non-guarantor subsidiaries
each as a consolidated group.

Prior to April 15, 2024, we may redeem up to 40% of the principal amount of the
2029 Senior Notes at a redemption price of 104.125% of the principal amount,
plus accrued and unpaid interest, if any, to the redemption date, with the net
cash proceeds of one or more equity offerings provided that each such redemption
occurs within 90 days of the date of closing of each such equity offering. In
addition, prior to April 15, 2024, we may redeem all or part of the 2029 Senior
Notes at a redemption price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the redemption date, plus a "make whole"
premium.

In March 2021, we amended our Credit Agreement in connection with the issuance
of the 2029 Senior Notes to extend the maturity date. We incurred fees and
expenses of approximately $1.1 million related to the amendment, all of which
were capitalized as debt issuance costs. We also recorded approximately
$0.2 million of non-cash expense related to the write-off of previously
capitalized deferred financing fees.

Below is a summary of key terms under the Credit Agreement as of December 31,
2021, compared to the key terms prior to the amendment (showing gross
availability):

                                                  Amount                  Maturity
Instrument                                   ($ in millions)                Date             Interest Rate
Credit Agreement (as amended)
Senior secured revolving credit
facility                                          $300.0                  

03/29/2026 LIBOR(a) plus 1.500%(b)

Credit Agreement (prior to
amending)
Senior secured revolving credit
facility                                          $300.0                  

09/20/2022 LIBOR(a) plus 1.500%(b)

__________________________

(a) London Interbank Offered Rate (“LIBOR”)

(a) The interest rate differential is based on the leverage ratio, as defined, at the most recent date of determination.

                                       37

————————————————– ——————————

Contents

The senior secured revolving credit facility under the Credit Agreement permits
borrowings denominated in specific foreign currencies, subject to a $125.0
million sub limit. The Credit Agreement also provides for incremental revolving
credit commitments in an amount not to exceed the greater of $200 million and an
amount such that, after giving effect to such incremental commitments and the
incurrence of any other indebtedness substantially simultaneously with the
making of such commitments, the senior secured net leverage ratio, as defined in
the Credit Agreement, is no greater than 3.00 to 1.00. The terms and conditions
of any incremental revolving credit facility commitments must be no more
favorable than the existing credit facility.

Amounts drawn under our revolving credit facility fluctuate daily based upon our
working capital and other ordinary course needs. Availability under our
revolving credit facility depends upon, among other things, compliance with our
Credit Agreement's financial covenants. Our Credit Agreement contains various
negative and affirmative covenants and other requirements affecting us and our
subsidiaries, including the ability to, subject to certain exceptions and
limitations, incur debt, liens, mergers, investments, loans, advances, guarantee
obligations, acquisitions, assets dispositions, sale-leaseback transactions,
hedging agreements, dividends and other restricted payments, transactions with
affiliates, restrictive agreements and amendments to charters, bylaws, and other
material documents. The terms of our Credit Agreement require us and our
subsidiaries to meet certain restrictive financial covenants and ratios computed
quarterly, including a maximum total net leverage ratio (total consolidated
indebtedness plus outstanding amounts under any accounts receivable
securitization facility, less the aggregate amount of certain unrestricted cash
and unrestricted permitted investments, as defined, over consolidated EBITDA, as
defined) and a minimum interest expense coverage ratio (consolidated EBITDA, as
defined, over the sum of consolidated cash interest expense, as defined, and
preferred dividends, as defined). Our permitted total net leverage ratio under
the Credit Agreement is 4.00 to 1.00 as of December 31, 2021. If we were to
complete an acquisition which qualifies for a Covenant Holiday Period, as
defined in our Credit Agreement, then our permitted total net leverage ratio
cannot exceed 4.50 to 1.00 during that period. Our actual total net leverage
ratio was 1.60 to 1.00 at December 31, 2021. Our permitted interest expense
coverage ratio under the Credit Agreement is 3.00 to 1.00, and our actual
interest expense coverage ratio was 13.31 to 1.00 as of December 31, 2021. At
December 31, 2021, we were in compliance with our financial and other covenants
contained in the Credit Agreement.

The following is a reconciliation of net income (loss), as reported, which is a
GAAP measure of our operating results, to Consolidated Bank EBITDA, as defined
in our Credit Agreement, for the year ended December 31, 2021. We present
Consolidated Bank EBITDA to show our performance under our financial covenants.
Dollars are in thousands in the below tables.

                                                                       Year ended
                                                                    December 31, 2021
Net income                                                        $           57,310
Bank stipulated adjustments:
Interest expense, net (as defined)                                            14,510
Income tax expense                                                            11,800
Depreciation and amortization                                                 53,450

Non-cash compensation expense(1)                                            

9,500

Non-cash charges for deferred tax asset valuation allowances                

250

Other non-cash expenses or losses                                           

1,210

Non-recurring expenses or costs(2)                                          

19,290

Extraordinary, non-recurring or unusual gains or losses                     

2,000

Effects of purchase accounting adjustments                                  

830

Business and asset dispositions                                             

130

Net losses on early extinguishment of debt                                     3,000
Permitted acquisitions                                                         3,290

Currency gains and losses                                                        890
Consolidated Bank EBITDA, as defined                              $         

177,460

                                       38

————————————————– ——————————

Contents

                                             December 31, 2021

Total debt, as defined(3) $283,960 Consolidated bank EBITDA, as defined

                 177,460
Actual total net leverage ratio                         1.60   x
Covenant requirement                                    4.00   x


                                                                                        Year ended
                                                                                     December 31, 2021
Interest expense, as defined                                                      $            14,510
Bank stipulated adjustments:
Interest income                                                                                  (210)
Non-cash amounts attributable to amortization of financing costs                                 (960)

Total Consolidated Cash Interest Expense, as defined                              $            13,340


                                                           December 31, 2021
Consolidated Bank EBITDA, as defined                      $          

177,460

Total Consolidated Cash Interest Expense, as defined                  

13,340

Actual interest expense coverage ratio                                 13.31   x
Covenant requirement                                                    3.00   x

________________________________________

(1) Non-cash compensation expense resulting from the grant of stock awards.

(2) One-time costs and expenses related to due diligence and transaction fees, purchase accounting fees, severance, relocation and restructuring costs.

(3) Includes approx. $3.8 million of the contingent consideration related to the acquisition December 31, 2021.

The Credit Agreement allows issuance of letters of credit, not to exceed $40.0
million in aggregate, against revolving credit facility commitments. We placed
cash on deposit with a financial institution to be held as cash collateral for
our outstanding letters of credit; therefore, as of December 31, 2021 and
December 31, 2020, we had no letters of credit issued against our revolving
credit facility. At December 31, 2021, we had no amounts outstanding under our
revolving credit facility and had $300.0 million potentially available after
giving effect to letters of credit issued and outstanding. At December 31, 2020,
we had $50.5 million amounts outstanding under our revolving credit facility and
had $249.5 million potentially available after giving effect to letters of
credit issued and outstanding. Our restricted cash deposits are used for a
variety of purposes, including support of certain operating lease agreements,
vendor payment terms and other subsidiary operating activities, and to meet
various states' requirements to self-insure workers' compensation claims,
including incurred but not reported claims. Our borrowing capacity was not
reduced by leverage restrictions contained in the Credit Agreement as of
December 31, 2021 and December 31, 2020.

We rely upon our cash flow from operations and available liquidity under our
revolving credit facility to fund our debt service obligations and other
contractual commitments, working capital and capital expenditure requirements.
At the end of each quarter, we have historically used cash on hand from our
domestic and certain foreign subsidiaries to pay down amounts outstanding under
our revolving credit facility, as applicable.

Our weighted average borrowings approached $401.9 million in 2021, compared to $368.9 million in 2020, primarily due to a higher aggregate principal balance on our Senior Notes due to the issuance of the 2029 Senior Notes and the redemption of the 2025 Senior Notes in 2021.

In May 2021, we, through one of our non-U.S. subsidiaries, entered into a
revolving loan facility with a borrowing capacity of $4 million. The facility is
guaranteed by TriMas Corporation. There were no borrowings on this loan facility
as of December 31, 2021.

Cash management related to our revolving credit facility is centralized. We
monitor our cash position and available liquidity on a daily basis and forecast
our cash needs on a weekly basis within the current quarter and on a monthly
basis outside the current quarter over the remainder of the year. Our business
and related cash forecasts are updated monthly.

                                       39

————————————————– ——————————

Contents

In considering the economic uncertainty surrounding the potential business
impacts from the COVID-19 pandemic with respect to our operations, supply
chains, distribution channels, and end-market customers, we took certain
defensive actions during 2020 as we monitored our cash position and available
liquidity. These actions included suspending our repurchase of our common stock,
borrowing on our revolving credit facility, tightening our capital expenditures,
advanced monitoring of our accounts receivable balances and flexing cost
structures of operations expected to be most impacted by COVID-19. Given strong
cash generation and our current liquidity position, we subsequently relaxed
certain of these actions, choosing to further invest in capital expenditures,
resume purchasing shares of our common stock and initiating a cash dividend.

The majority of our cash on hand as of December 31, 2021 is located within the
United States, and given available funding under our revolving credit facility
of $300.0 million at December 31, 2021 (after consideration of the
aforementioned leverage restrictions) and based on forecasted cash sources and
requirements inherent in our business plans, we believe that our liquidity and
capital resources, including anticipated cash flows from operations, will be
sufficient to meet our debt service, capital expenditure and other short-term
and long-term obligation needs for the foreseeable future, as well as dividends
and share repurchases.

We are subject to variable interest rates on our revolving credit facility. At
December 31, 2021, 1-Month LIBOR approximated 0.10%. At December 31, 2021, we
had no amounts outstanding on our revolving credit facility and, therefore, no
variable rate-based borrowings outstanding.

In November 2021we amended the credit agreement to replace LIBOR with a reference interest rate determined according to the currency in which the borrowings are denominated, effective January 1, 2022.

In addition to our long-term debt, we have other cash commitments related to
leases. We account for these lease transactions as operating leases, and
incurred rent expense for continuing operations related thereto of approximately
$11.0 million in 2021. We continue to be party to non-cancelable leases for
certain facilities we have exited as part of restructuring activities, and have
entered into sublease agreements to minimize our net lease payments. We expect
leasing will continue to be an available financing option to fund future capital
expenditure requirements.

In March 2020, we announced our Board of Directors had authorized us to increase
the purchase of our common stock up to $250 million in the aggregate, an
increase of $100 million from the previous authorization. During 2021, 2020 and
2019, we purchased 596,084, 1,582,049 and 1,230,050 shares of our outstanding
common stock for approximately $19.1 million, $39.4 million and $36.7 million,
respectively. Since the initial authorization through December 31, 2021, we have
purchased 3,850,815 shares of our outstanding common stock for an aggregate
purchase price of approximately $107.4 million. We will continue to evaluate
opportunities to return capital to shareholders through the purchase of our
common stock, depending on market conditions, including the potential impact of
the COVID-19 pandemic, and other factors.

Under various agreements, we are obligated to make future cash payments in fixed
amounts. These include payments under our long-term debt agreements, rent
payments required under operating lease agreements, certain benefit obligations
and interest obligations on our long-term debt. The following table summarizes
our material contractual cash obligations as of December 31, 2021 (dollars in
thousands).

                                                                                      Payments Due by Periods
                                                                       Less than                                                      More than
                                                      Total             One Year           1 - 3 Years           3 - 5 Years           5 Years
Contractual cash obligations:
Long-term debt                                     $ 400,000          $       -          $          -          $          -          $ 400,000
Operating lease obligations                           57,500              8,500                16,860                13,210             18,930
Benefit obligations                                   14,220              1,170                 2,470                 2,660              7,920
Interest obligations (a)                             123,750             16,500                33,000                33,000             41,250
Contingent consideration                               3,760                  -                 3,760                     -                  -

Total contractual obligations                      $ 599,230          $  26,170          $     56,090          $     48,870          $ 468,100


__________________________

(a)  Our Senior Notes bear interest at 4.125%. The future interest obligations
calculation excludes the impact of our cross-currency swap agreements. See Note
14, "Derivative Instruments," included in Item 8, "Financial Statements and
Supplementary Data," within this Form 10-K for additional information.

The liability related to unrecognized tax benefits has been excluded from the
contractual obligations table because a reasonable estimate of the timing and
amount of cash flows from future tax settlements cannot be determined. For
additional information, refer to Note 23, "Income Taxes," included in Item 8,
"Financial Statements and Supplementary Data," within this Form 10-K.

                                       40

————————————————– ——————————

Contents

Market risk

We conduct business in various locations throughout the world and are subject to
market risk due to changes in the value of foreign currencies. The functional
currencies of our foreign subsidiaries are primarily the local currency in the
country of domicile. We manage these operating activities at the local level and
revenues and costs are generally denominated in local currencies; however,
results of operations and assets and liabilities reported in U.S. dollars will
fluctuate with changes in exchange rates between such local currencies and the
U.S. dollar.

We have historically used derivative financial instruments to manage currency
risks, as we seek to mitigate the risk associated with fluctuations in currency
rates impacting cash flows related to certain receivables, payables and
intercompany transactions denominated in foreign currencies. We also use
cross-currency swap agreements to mitigate currency risks associated with the
net investment in certain of our foreign subsidiaries. See Note 14, "Derivative
Instruments," included in Item 8, "Financial Statements and Supplementary Data,"
within this Form 10-K for additional information.

We are also subject to interest risk as it relates to our long-term debt. We
have historically used interest rate swap agreements to fix the variable portion
of our debt to manage this risk. See Note 14, "Derivative Instruments," included
in Item 8, "Financial Statements and Supplementary Data," within this Form 10-K
for additional information.

Common Stock

TriMas is listed on the NASDAQ Global Select MarketSM. Our shares trade under the symbol “TRS”.

Credit Rating

We and certain of our outstanding debt obligations are rated by Standard &
Poor's and Moody's. On March 24, 2021, Moody's assigned a Ba3 rating to our 2029
Senior Notes, as presented in Note 13, "Long-term Debt" included in Item 8,
"Financial Statements and Supplementary Data" within this Form 10-K. Moody's
also affirmed a Ba2 Corporate Family Rating and maintained its outlook as
stable. On March 15, 2021, Standard & Poor's assigned a BB- rating to our 2029
Senior Notes. On February 26, 2021 Standard & Poor's affirmed a BB corporate
credit rating and maintained its outlook as stable. If our credit ratings were
to decline, our ability to access certain financial markets may become limited,
our cost of borrowings may increase, the perception of us in the view of our
customers, suppliers and security holders may worsen and as a result, we may be
adversely affected.

Outlook

Over the past two years, the COVID-19 pandemic has significantly affected each
of our businesses and how we operate, albeit in different ways and magnitudes.
Sales in our Packaging segment for dispensing and closure products we supply
that are used in applications to fight the spread of germs have continued to be
much stronger than before the COVID-19 pandemic, although, as expected, have
abated from peak levels in 2020 at the onset of the COVID-19 pandemic. Sales in
our Specialty Products segment had been depressed by low levels of industrial
activity in the U.S. during 2020, but have since strongly rebounded in the last
nine months of 2021. Sales in our Aerospace segment are expected to be lower
than historical levels for an indefinite period as a result of low new
commercial aircraft builds, but have been significantly boosted by customers'
stocking orders throughout 2021.

We believe our 2021 financial results demonstrate our ability to effectively
leverage our TriMas Business Model, working across our businesses with a high
degree of connectivity to respond to changing market conditions, including the
ongoing challenges presented by the COVID-19 pandemic. We have capitalized on
opportunities where market demand was high, while also taking swift actions
where market demand was sharply reduced. We have continued to take proactive
realignment actions to mitigate the effects of lower demand from the COVID-19
pandemic as much as practical, while at the same time growing our businesses
through organic new products as well as via bolt-on acquisitions.

Looking forward, we believe there will be a continued period of uncertainty
related to demand levels for our products, whether it be when production rates
for new aircraft builds, which require our fasteners and engineered products,
will ramp-up, or whether general industrial activity will continue to increase
toward pre-pandemic levels. We expect to continue to mitigate, as much as
practical, the impact of low volumes in the most challenged end markets,
executing realignment actions as necessary so we are positioned to gain
operating leverage when these end markets recover. We believe we remain well
positioned to capitalize on the recovery of the aerospace market, just as we
have with the improvement in the industrial markets in the back half of 2021, as
well as capture available market growth opportunities. We believe the continued
effectiveness of vaccines, as well as continued measures intended to control the
spread of the virus and future variants thereof, are among the most significant
factors that could impact demand for our products.

                                       41

————————————————– ——————————

Contents

As a result of continued uncertainties resulting from the COVID-19 pandemic, and
their potential impact to our future results of operations, as well as to
TriMas' market capitalization, we may record additional cash and non-cash
charges related to further realignment actions, as well for uncollectible
customer account balances, excess inventory and idle production equipment. At
this time, we are not able to estimate the extent or amount of any such
potential cash and non-cash charges.

Following the issuance of our 2029 Senior Notes and the amendment of our Credit
Agreement in 2021, we believe our capital structure remains strong and that we
have sufficient headroom under our financial covenants, and ample cash and
available liquidity under our revolving credit facility, to meet our debt
service, capital expenditure and other short-term and long-term obligations for
the foreseeable future, as well as dividends and share repurchases.

We expect to continue to leverage the tenets of our TriMas Business Model to
manage our multi-industry businesses and address the ongoing challenges
presented by the COVID-19 pandemic, and on a longer-term basis, achieve our
growth plans, execute continuous improvement initiatives to offset inflationary
pressures, and seek lower-cost sources for input costs, all while continuously
assessing the appropriateness of our manufacturing footprint and fixed-cost
structure.

Impact of new accounting standards

See Note 2, “New Accounting Pronouncements,” included in Item 8, “Financial Statements and Supplementary Data,” in this Form 10-K.

Critical accounting policies

The following discussion of accounting policies is intended to supplement the
accounting policies presented in Note 3, "Summary of Significant Accounting
Policies" included in Item 8, "Financial Statements and Supplementary Data,"
within this Form 10-K. Certain of our accounting policies require the
application of significant judgment by management in selecting the appropriate
assumptions for calculating financial estimates. By their nature, these
judgments are subject to an inherent degree of uncertainty. These judgments are
based on our historical experience, our evaluation of business and macroeconomic
trends, and information from other outside sources, as appropriate.

Receivables.  Receivables are presented net of allowances for doubtful accounts
of approximately $1.6 million and $2.1 million at December 31, 2021 and 2020,
respectively. We monitor our exposure for credit losses and maintain adequate
allowances for doubtful accounts. We determine these allowances based on our
historical write-off experience and/or specific customer circumstances and
provide such allowances when amounts are reasonably estimable and it is probable
a loss has been incurred. Although we have been growing business with certain of
our larger customers, and there has been some industry consolidation where
certain of our customers are merging, we do not believe that significant credit
risk exists or that we have a significant concentration of accounts receivable
with a single customer or group of customers due to our diverse customer base.
See Item 1A, "Risk Factors," for additional information regarding risks
associated with a concentrated customer base.

Depreciation and Amortization.  Depreciation is computed principally using the
straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: building and land/building improvements three
to 40 years, and machinery and equipment, three to 15 years. Capitalized debt
issuance costs are amortized over the underlying terms of the related debt
securities. Customer relationship intangibles are amortized over periods ranging
from five to 25 years, while technology and other intangibles are amortized over
periods ranging from one to 30 years.

Impairment of Long-Lived Assets and Definite-Lived Intangible Assets.  We
review, on at least a quarterly basis, the financial performance of each
business unit for indicators of impairment. In reviewing for impairment
indicators, we also consider events or changes in circumstances such as business
prospects, customer retention, market trends, potential product obsolescence,
competitive activities and other economic factors. An impairment loss is
recognized when the carrying value of an asset group exceeds the future net
undiscounted cash flows expected to be generated by that asset group. The
impairment loss recognized is the amount by which the carrying value of the
asset group exceeds its fair value.

Goodwill and Indefinite-Lived Intangibles.  We assess goodwill and
indefinite-lived intangible assets for impairment at the reporting unit level on
an annual basis as of October 1, by reviewing relevant qualitative and
quantitative factors. More frequent evaluations may be required if we experience
changes in our business climate or as a result of other triggering events that
take place. An impairment loss is recognized when the carrying value of the
asset exceeds its fair value.

We determine our reporting units at the individual operating segment level, or
one level below, when there is discrete financial information available that is
regularly reviewed by segment management for evaluating operating results. For
purposes of our 2021 goodwill impairment test, we had five reporting units,
three of which had goodwill, within our three reportable segments.

                                       42

————————————————– ——————————

Contents

We first perform a qualitative assessment for our annual goodwill impairment
test and for our indefinite-lived intangible asset impairment test, which
involves significant use of management's judgment and assumptions to determine
whether it is more likely than not that the fair value of a reporting unit or
indefinite-lived intangible asset is less than its carrying amount. In
conducting the qualitative assessment, we consider macroeconomic conditions,
industry and market considerations, overall financial performance, entity and
reporting unit specific events, capital markets pricing, recent fair value
estimates and carrying amounts, as well as legal, regulatory, and contractual
factors. These factors are all considered in reaching a conclusion about whether
it is more likely than not that the fair values of the intangible assets are
less than the carrying values. If we conclude that further testing is required,
we would perform a quantitative valuation to estimate the fair value of our
intangible assets.

For purposes of the 2021 annual impairment tests, based on the qualitative
assessments, we determined there were no indications that the fair value of a
reporting unit or indefinite-lived intangible asset was less than its carrying
amount; therefore, we determined that quantitative assessments were not
required.

Future declines in sales and/or operating profit, declines in our stock price,
or other changes in our business or the markets for our products could result in
further impairments of our goodwill and indefinite-lived intangible assets.

Pension Benefits.  We engage independent actuaries to compute the amounts of
liabilities and expenses under defined benefit pension plans, subject to the
assumptions that we determine are appropriate based on historical trends,
current market rates and future projections as of the measurement date.
Annually, we review the actual experience compared to the most significant
assumptions used and makes adjustments to the assumptions, if warranted.
Discount rates are based upon an expected benefit payments duration analysis and
the equivalent average yield rate for high-quality fixed-income investments.
Pension benefits are funded through deposits with trustees and the expected
long-term rate of return on plan assets is based upon actual historical returns
modified for known changes in the market and any expected change in investment
policy. Certain accounting guidance, including the guidance applicable to
pensions, does not require immediate recognition of the effects of a deviation
between actual and assumed experience or the revision of an estimate. This
approach allows the favorable and unfavorable effects that fall within an
acceptable range to be netted.

Income Taxes.  We compute income taxes using the asset and liability method,
whereby deferred income taxes using current enacted tax rates are provided for
the temporary differences between the financial reporting basis and the tax
basis of assets and liabilities and for operating loss and tax credit
carryforwards. We determine valuation allowances based on an assessment of
positive and negative evidence on a jurisdiction-by-jurisdiction basis and
record a valuation allowance to reduce deferred tax assets to the amount more
likely than not to be realized. Recognized income tax positions are measured at
the largest amount that is greater than 50% likely of being realized. Changes in
recognition or measurement are reflected in the period in which the change in
judgment occurs. We record interest and penalties related to unrecognized tax
benefits in income tax expense.

Asbestos-related Matters. We accrue loss reserves for asbestos-related matters
based upon an estimate of the ultimate liability for claims incurred, whether
reported or not, including an estimate of future settlement costs and costs to
defend. We utilize known facts and historical trends for Company-specific and
general market asbestos-related activity, as well as an actuarial valuation in
determining estimated required reserves which we believe are probable and
reasonably estimable. Asbestos-related accruals are assessed at each balance
sheet date to determine if the liability remains reasonably stated. Accruals for
asbestos-related matters are included in the consolidated balance sheet in
"Accrued liabilities" and "Other long-term liabilities."

Other Loss Reserves.  We have other loss exposures related to insurance,
litigation and environmental claims. Establishing loss reserves for these
matters requires the use of estimates and judgment in regard to risk exposure
and ultimate liability. We are generally party to high deductible insurance
programs for losses and liabilities related principally to workers'
compensation, health and welfare claims and comprehensive general, product and
vehicle liability. Generally, we are responsible for up to $0.8 million per
occurrence under our retention program for workers' compensation, up to $1.5
million per occurrence under our retention programs for comprehensive general,
product and vehicle liability, and have a $0.4 million per occurrence stop-loss
limit with respect to our self-insured group medical plan. We accrue loss
reserves up to our retention amounts based upon our estimates of the ultimate
liability for claims incurred, including an estimate of related litigation
defense costs, and an estimate of claims incurred but not reported using
actuarial assumptions about future events. We accrue for such items when such
amounts are reasonably estimable and probable. We utilize known facts and
historical trends, as well as actuarial valuations in determining estimated
required reserves. Changes in assumptions for factors such as medical costs and
actual experience could cause these estimates to change significantly.


                                       43

————————————————– ——————————

Contents

Item 7A. Quantitative and qualitative information on market risk

In the normal course of our business, we are exposed to market risk associated with fluctuations in commodity prices, insurable risks due to property damage, employee and liability claims, and other uncertainties in the financial markets. and credit, which may affect demand for our products.

We conduct business in various locations throughout the world and are subject to
market risk due to changes in the value of foreign currencies. The functional
currencies of our foreign subsidiaries are primarily the local currency in the
country of domicile. We manage these operating activities at the local level and
revenues and costs are generally denominated in local currencies; however,
results of operations and assets and liabilities reported in U.S. dollars will
fluctuate with changes in exchange rates between such local currencies and the
U.S. dollar. We use derivative financial instruments to manage currency risks
associated with our procurement activities denominated in currencies other than
the functional currency of our subsidiaries and the impact of currency rate
volatility on our earnings.

We may also be subject to interest risk as it relates to long-term debt, for
which we have historically and may prospectively employ derivative instruments
such as interest rate swaps to mitigate the risk of variable interest rates. See
Item 7 "Management's Discussion and Analysis of Financial Condition and Results
of Operations" for details about our primary market risks, and the objectives
and strategies used to manage these risks. Also see Note 13, "Long-term Debt,"
and Note 14, "Derivative Instruments," included in Item 8, "Financial Statements
and Supplementary Data," within this Form 10-K for additional information.




                                       44

————————————————– ——————————

Contents

© Edgar Online, source Previews