TriMas (TRS) Packaging Segment Invests in Manufacturing Unit
TriMas Corporation TRS recently announced that Rieke, part of its Packaging segment, is investing in advanced manufacturing technology and expanding its North American manufacturing presence. The segment witnessed record growth last year due to robust demand for its products, and the new facility will help it capitalize on this momentum.
It is constructing a new highly automated 230,000 square foot facility in New Albany, OH, which is expected to commence operations in the second quarter of 2022. The facility will produce foaming and traditional dispensers, as well as some of TriMas Packaging’s latest innovative products, to cater to customers predominantly in the beauty and personal care end market.
The new plant will be located near Rieke’s current New Albany manufacturing facility, which will eventually be relocated into the larger facility upon completion. Rieke plans to install some of the most advanced injection molding and assembly capabilities available at the facility, while focusing on sustainability. The facility will not only support future growth of the business but also ensure operational excellence, while cutting down lead times to customers. It will enable TriMas Packaging to locally produce a variety of products that are currently produced outside the United States.
TriMas’ Packaging segment that generated around 63% of the company’s total sales in 2020 comprises the Rieke, Taplast, Affaba & Ferrari and Rapak brands. It manufactures dispensing products, polymeric and steel caps and closures, polymeric jar products and fully integrated dispensers for fill-ready bag-in-box applications for a variety of consumer product markets including beauty and personal care, home care, food and beverage, and pharmaceutical and nutraceutical, as well as the industrial markets. Through the years, the company has strengthened the segment through strategic acquisitions of Affaba & Ferrari and Rapak in 2020, and Plastic Srl and Taplast in 2019.
In late 2019, TriMas divested the Lamons business, significantly reducing its exposure to the volatile oil and gas end markets and enhancing its focus on the Packaging segment. This came at an opportune time as the pandemic that shook the world in 2020, triggered strong demand in the company’s product lines that support personal hygiene and cleaning to help fight the spread of germs. Through the year, the company continued to invest organically in the Packaging segment, investing in commercial and technical resources, capacity and innovative new products. Backed by these efforts and strong demand, the Packaging segment delivered 24% growth in revenues and 21% in adjusted operating profit in 2020 that helped offset the impact of weak demand in the Aerospace and Specialty Products segments. This, in turn, led to overall higher sales, adjusted earnings and cash flow for the company.
The Packaging segment will continue to gain from this momentum until the situation stabilizes. However, weak performance in the aerospace segment due to lower air travel, and reduced steel cylinder demand that is impacting sales in the Specialty Products remain headwinds. The company’s cost reduction efforts will help negate higher input costs. TriMas continues to focus on leveraging the TriMas Business Model to improve management and performance of its businesses, which is commendable. Its strong pipeline of both product and process innovation, and focus on acquisitions will drive growth.
Price Performance
In the past year, shares of TriMas have gained 23.4% compared with the industry’s rally of 55.6%.
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Zacks Rank & Stocks to Consider
TriMas currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Greif, Inc. GEF, Lindsay Corporation LNN and Pentair plc PNR. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 67% over the past year.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. Over the past year, the company’s shares have rallied 66%.
Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 65% in a year.
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