TriMas (TRS) Q1 Earnings and Revenues Beat Estimates, Up Y/Y
TriMas Corporation TRS reported first-quarter 2021 adjusted earnings of 40 cents per share, which beat the Zacks Consensus Estimate of 38 cents. The bottom line also improved 18% from the prior-year quarter and came in higher than the company’s guidance of adjusted earnings per share between 34 cents and 39 cents. Strong sales in the Packaging group and contribution from recent acquisitions drove results in the quarter under review. Despite the earnings beat, the company’s share price has appreciated a meager 1% since the earnings release on Apr 29 due to the ongoing weakness in aerospace and lower steel cylinder demand amid the pandemic.
Including the impact of one-time items, the company reported earnings per share of 30 cents, flat compared with the year-ago quarter’s earnings.
The company’s revenues of $207 million surpassed the Zacks Consensus Estimate of $197 million and also increased 13% year over year. This was driven by record sales in the Packaging segment and contribution from recent acquisitions. The Packaging segment has been benefiting from high demand for dispensing pumps and closure products sold into applications that help fight the spread of germs or are used in cleaning. Acquisitions, higher sales of products utilized in food and beverage applications, and industrial applications have also aided the segment’s performance in the reported quarter.
However, weak performance in the aerospace segment can be attributed to lower air travel, and reduced commercial and business jet production on account of the pandemic. Also, demand in industrial businesses remained weak amid the coronavirus crisis. Lower steel cylinder demand in the construction and packaged gas end markets, and decreased demand for oil and gas products, thanks to the pandemic, continued to impact sales in the Specialty Products.
TriMas Corporation Price, Consensus and EPS Surprise
TriMas Corporation price-consensus-eps-surprise-chart | TriMas Corporation Quote
Costs & Margins
Cost of sales increased 14% year over year to $155 million in the reported quarter. Gross profit rose 11% year over year to $51 million. Gross margin was 24.8% compared with 25.4% in the prior-year quarter.
Selling, general and administrative expenses went up 14% year over year to $30 million. Adjusted operating profit increased 21% year over year to $27 million driven by strong sales performance in the Packaging segment and margin expansion in the Specialty Products segment. Adjusted operating margin expanded 90 basis points year over year to 12.9% in the reported quarter.
Segment Performance
Packaging: Net sales improved 32% year over year to $132 million. Adjusted operating profit surged 27% year over year to $23.6 million in the reported quarter.
Aerospace: Net sales declined 9% year over year to $45 million in the reported quarter. The segment reported adjusted operating profit of $5 million, which was 19% lower than the year-ago figure. .
Specialty Products: The segment’s revenues declined 11% year over year to $30 million. Adjusted operating profit climbed 32% year over year to $4.5 million.
Financial Performance
During the quarter, TriMas repurchased approximately $2.6 million of its outstanding common stock. As of Mar 31, 2021, $159.1 million remained available under its repurchase authorization. The company also refinanced its capital structure during the quarter, closing on its offering of $400 million in aggregate principal of senior unsecured notes due 2029 at a fixed annual rate of 4.125%. TriMas also amended its $300 million senior secured credit facility to extend the maturity to March 2026, with a consistent interest rate of LIBOR plus 1.50%.
TriMas generated $15.7 million of cash flow from operations in first-quarter 2021 compared with $3.4 million in the prior-year quarter. The company ended the first quarter with $410 million of unrestricted cash and aggregate availability. As of Mar 31, 2021, net debt was $269.1 million compared with $272 million as of Dec 31, 2020.
Outlook
TriMas expects year-over-year sales in second-quarter 2021 to range between $205 million and $223 million with all the three segments anticipated deliver sales growth. Adjusted earnings per share is anticipated between 50 cents and 57 cents.
Share Price Performance
In the past year, shares of TriMas have gained 38.1% compared with the industry’s rally of 103%.
Zacks Rank & Stocks to Consider
TriMas currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Industrial Products sector include Dover Corporation DOV, Caterpillar Inc. CAT and Pentair plc PNR, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 65%.
Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 112% in the past year.
Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 87% in a year’s time.
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