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TriMas (TRS) Earnings and Revenues Beat Estimates in Q2

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TriMas Corporation (TRS - Free Report) reported second-quarter 2020 adjusted earnings of 43 cents per share, which beat the Zacks Consensus Estimate of 32 cents. Notably, the bottom line remained flat compared with the prior-year quarter. Although some end-markets remained challenged due to the impact of the coronavirus pandemic, strong sales in the Packaging group drove earnings in the quarter.

Including the impact of an accounting policy change and realignment charges, the company reported a loss per share of 36 cents, against the year-ago quarter’s earnings of 41 cents per share.

The company’s revenues of $200 million surpassed the Zacks Consensus Estimate of $193 million. The top line improved 4.6% year over year, driven by record sales in the Packaging segment and recent acquisitions. However, weak demand in certain businesses resulting from the effects of the COVID-19 pandemic and unfavorable currency exchange offset some of the gains.

TriMas Corporation Price, Consensus and EPS Surprise TriMas Corporation Price, Consensus and EPS Surprise

TriMas Corporation price-consensus-eps-surprise-chart | TriMas Corporation Quote

Costs & Margins

Cost of sales increased 18% year over year to $162 million in the reported quarter. Gross profit slumped 31% year over year to $37 million. Gross margin contracted 950 basis points year over year to 18.7%.
 
Selling, general and administrative expenses soared 107% year over year to $55 million. Adjusted operating profit declined 2% year over year to around $27.5 million as impact of higher sales were offset by a less favorable product sales mix, production inefficiencies related to the pandemic, and higher non-cash depreciation and amortization. Adjusted operating margin contracted 90 basis points year over year to 13.8% in the reported quarter.

Segment Performance

Packaging: Net sales improved 24% year over year to $129 million. Adjusted operating profit was $27.2 million in the reported quarter, up 19% from the prior-year quarter.

Aerospace: Net sales declined 14% year over year to $43 million from the prior-year quarter. The segment reported adjusted operating profit of $4.3 million, down 43.5% year over year.
 
Specialty Products: The segment’s revenues declined 13% year over year to $28 million. Adjusted operating profit plunged 31% year over year to $3.8 million.

Financial Performance

TriMas ended second-quarter 2020 with $349.4 million of cash and aggregate availability under its revolving credit facility, $65.3 million of cash on hand. As of Jun 30, 2020, total debt was approximately $295 million, down from $445 million as of Mar 31, 2020. During the reported quarter, the company proactively repaid $150 million previously drawn on its revolving credit facility during the first quarter in light of the uncertainty surrounding the impact of COVID-19 and as a precautionary measure against any potential credit market tightening.

The company generated around $31 million of cash from operating activities in the first half of 2020 compared with $33 million in the prior-year comparable period. Additionally, during the timeframe, TriMas utilized $95.2 million for acquisitions and repurchased approximately $31.6 million of its outstanding common stock. The company did not repurchase any shares during the second quarter and as of Jun 30, 2020, $169.5 million remained available under its repurchase authorization.

Outlook

Citing the uncertainty related to the COVID-19 pandemic, TriMas had earlier withdrawn guidance for 2020. The Packaging segment’s sales is expected to go up 15-20% in the back half of 2020 driven by strong demand. While the Specialty Products segment is likely to witness a decrease of 15% to 25%, the Aerospace segment’s sales is anticipated to fall 20% to 30% in the second half of the year from the prior year levels.  Thus, total sales for TriMas is anticipated to be relatively flat for the back half of 2020 compared with the prior year.

Share Price Performance

Over the past year, shares of TriMas have gained 7.1% compared with the industry’s growth of 28.6%.

Zacks Rank & Other Stocks to Consider

TriMas currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated (IIVI - Free Report) and Energous Corporation (WATT - Free Report) . While Silgan and IIVI sport a Zacks Rank #1, Energous carries a Zacks Rank of 2, at present.

Silgan has a projected earnings growth rate of 31.5% for the current year. The company’s shares have gained 13% in the past three months.

IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 54% in three months’ time.

Energous has an expected earnings growth rate of 44% for 2020. The stock has surged 46% over the past three months.

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