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TriMas (TRS) Q2 Earnings Beat Estimates, Affirms Guidance

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TriMas Corporation (TRS - Free Report) posted adjusted earnings of 40 cents per share for second-quarter 2017, beating the Zacks Consensus Estimate of 36 cents. Earnings also improved 18% year over year. On a reported basis, including special items, TriMas’ reported earnings of 32 cents per share in the reported quarter compared with 23 cents in the prior-year quarter.

TriMas posted revenues of $213 million for the quarter, outpacing the Zacks Consensus Estimate of $206 million. Revenues also went up 4.9% year over year. Organic growth in all four segments helped counter lower sales related to the de-emphasis of less profitable geographic regions in the Energy segment as well unfavorable currency impact.

Cost and Margins

Cost of sales rose 5.3% to $154 million in the quarter from $146 million in the year-ago quarter. Gross profit increased 4% year over year to $59.4 million. Gross margin contracted 30 basis points (bps) to 27.8%.

Selling, general and administrative expenses declined 14% year over year to $33 million. Adjusted operating profit improved 18% to $30.3 million from the prior-year quarter. Adjusted operating margin expanded 160 basis points year over year to 14.2% in the quarter.

TriMas Corporation Price, Consensus and EPS Surprise
 

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

Segment Performance

Packaging: Net sales edged up 0.7% year over year to $88.7 million, driven by sales increases in all the three end markets negated the impact of unfavorable currency exchange. Adjusted operating profit dipped 2% to $21.5 million.

Aerospace: Net sales increased 8% to $47.6 million from $44.1 million in the year-earlier quarter as a result of improved production throughput and strong order demand. The segment reported adjusted operating profit of $6.9 million, a 38% rise from $5 million in the comparable quarter last year.

Energy: Net sales improved 9% year over year to $43.5 million, benefiting from higher demand resulting from improved delivery performance. This helped offset the impact of de-emphasizing less profitable geographic regions. The segment reported adjusted operating profit of $4 million compared with $1.8 million in the year-ago quarter primarily as a result of its extensive realignment efforts and manufacturing productivity improvements.

Engineered Components: The segment reported revenues of $33.6 million, an 8% improvement from $31.2 million in the prior-year quarter, primarily owing to higher sales of oil field-related products as a result of increased oil and natural gas activity within the U. S. Adjusted operating profit improved 21% to $4.7 million due to increased sales levels and continued cost management.

Financial Performance

TriMas had cash and cash equivalents of $22.7 million as of Jun 30, 2017, compared with $20.7 million at the end of 2016. The company recorded cash from operations of $49.6 million in first-half 2017 compared with cash usage of $32.9 million recorded in the prior-year comparable period. As of quarter end, TriMas’ net debt was $323.8 million, compared with $353.9 million as of Dec 31, 2016.

Guidance

TriMas reaffirmed full-year 2017 earnings per share range of $1.35–$1.45 on the back of 2–4% growth in sales compared with 2016.

TriMas’ realignment efforts initiated towards the end of last year and earlier this year are starting to reap anticipated benefits. Meanwhile, the company will continue to focus on leveraging the TriMas Business Model to drive performance improvements, particularly within Aerospace and Energy segments.

Share Price Performance



In the last one year, TriMas has outperformed the industry with respect to price performance. The stock gained around 35.4%, while the industry rose 29.7%.

Zacks Rank & Other Key Picks

TriMas currently carries a Zacks Rank #2 (Buy).

Some other stocks worth considering in the sector include AGCO Corporation (AGCO - Free Report) , Terex Corporation (TEX - Free Report) and Deere & Company (DE - 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.

AGCO has an earnings ESP of 39.70% for the trailing four quarters. Terex has an average earnings surprise of 122.61% for the last four quarters, while Deere has an average earnings surprise of 70.41% in the past four quarters.

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