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TriMas (TRS) Q4 Earnings In Line, Revenues Miss Estimates

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TriMas Corporation (TRS - Free Report) posted adjusted earnings of 30 cents per share for fourth-quarter 2016, in line with the Zacks Consensus Estimate. However, earnings increased 3.4% year over year.

On a reported basis, including special items, TriMas’ reported a loss of $1.48 per share in the reported quarter compared to a loss of $1.35 in the prior-year quarter.

TriMas posted revenues of $185.5 million for the fourth quarter, falling short of the Zacks Consensus Estimate of $191 million. Revenues declined 3.8% year over year as organic growth in the Packaging segment was more than offset by prolonged weakness in the oil and gas, and general industrial end markets, and foreign currency exchange.

TriMas Corporation Price, Consensus and EPS Surprise

 

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

Cost and Margins

Cost of sales inched up 1.6% to $146 million in the quarter from $143.8 million in the year-ago quarter. Gross profit fell 19% year over year to $39.4 million. Gross margin contracted 400 basis points (bps) to 21%.

Selling, general and administrative expenses descended 6.9% year over year to $36.9 million. Adjusted operating profit dipped 13.6% to $19 million from the prior-year quarter. Adjusted operating margin declined 110 basis points year over year to 10.3% in the quarter.

Segment Performance

Packaging: Net sales increased 6.4% year over year to $82.8 million, driven by sales increases in all the three end markets, more than offsetting the impact of unfavorable currency exchange. Adjusted operating profit climbed 4.8% to $20.4 million due to higher sales levels.

Energy: Net sales dropped 10.9% year over year to $36 million, chiefly due to persistently lower demand levels from the oil and gas customers, and consolidating locations and de-emphasizing less profitable regions. The segment reported adjusted operating profit of $0.96 million, compared to a loss of $2.3 million in the year-ago quarter as the impact of the sales decline was more than offset by savings achieved from cost-reduction actions.

Aerospace: Net sales increased 1.8% to $42.9 million from $42 million in the year-earlier quarter as a result of incremental sales related to the Nov 2015 acquisition of a machined components facility in Arizona. The segment reported adjusted operating profit of $1.3 million, an 80.5% slump from $6.8 million in the comparable quarter last year. A less favorable product mix, inventory variances and customer contractual adjustments led to the decline.

Engineered Components: The segment reported revenues of $23.8 million, plunging 26.5% from $32.3 million in the prior-year quarter, due to poor cylinder sales resulting from sustained softness in general industrial end markets and customer consolidation. Sales of oil field-related engines and compressors also decreased due to the impact of lower oil prices, and reduced oil and natural gas drilling. Adjusted operating profit tanked 42.6% to $2.8 million due to reduced sales levels and lower fixed cost absorption.

Financial Performance

TriMas had cash and cash equivalents of $20.7 million as of Dec 31, 2016 compared with $19.5 million at the end of 2015. The company recorded cash flow from operations of $80.5 million as of Dec 31, 2016 compared with $76.6 million as of Dec 31, 2015.

In 2016, the company recorded adjusted free cash flow of $72.8 million, a substantial improvement from $50.8 million in the prior-year period. As of quarter end, TriMas’ total debt decreased to $360.8 million from $405.8 million as of Dec 31, 2015.

2016 Performance

TriMas posted adjusted earnings of $1.26 per share for 2016, down 2.3% year over year. Earnings came in line with the Zacks Consensus Estimate. On a reported basis, including special items, TriMas’ reported a loss of 88 cents per share in the reported quarter compared to a loss of 64 cents in the prior-year quarter.

Revenues for full-year 2016 dropped 8% year over year to $794 million. In addition, revenues missed the Zacks Consensus Estimate of $801 million.

Guidance

TriMas guided 2017 sales to increase 2% to 4% as compared to 2016 as the positive impact of its organic initiatives are expected to be partially offset by currency exchange impacts. The company projects full-year 2017 diluted earnings per share to be in the range of $1.35–$1.45 per share, excluding any current or future events that may be considered special items. The midpoint represents EPS growth of approximately 11% as compared to 2016. In addition, the company is targeting 2017 Free Cash Flow to be greater than 100% of net income.

TriMas remains focused on reshaping its businesses to better serve customers. The company’s exclusive operating model will help improve its performance, particularly in its Energy and Aerospace segments. TriMas is well poised to generate solid earnings growth, with a consistent focus on generating solid cash flow. Moreover, the company will benefit from the realignment actions taken throughout 2016.

Share Price Performance

In the last one year, TriMas has underperformed the Zacks classified Metal Products & Fabrication sub-industry with respect to price performance. The stock gained around 33%, while the industry rose 43.6% over the same time frame.


 

Zacks Rank & Key Picks

TriMas currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the sector include The Timken Company (TKR - Free Report) , ACCO Brands Corporation (ACCO - Free Report) and Brady Corporation (BRC - Free Report) . All three stocks boast a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Timken has an earnings ESP of 7.62% for the trailing four quarters. ACCO Brands has an average earnings surprise of 24.74% for the last four quarters, while Brady Corporation has an average earnings surprise of 20.84% for the past four quarters.

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