Why Is TriMas (TRS) Down 2.4% Since Last Earnings Report?

A month has gone by since the last earnings report for TriMas (TRS). Shares have lost about 2.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is TriMas due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

TriMas Q2 Earnings & Sales Top Estimates, View Up

 

TriMas Corporation delivered adjusted earnings of 48 cents per share in second-quarter 2018, up 20% from 40 cents reported in the prior-year period. Earnings beat the Zacks Consensus Estimate of 46 cents. The company benefited from its focus on commercial efforts, improved market conditions and realignment actions.

 

On a reported basis, TriMas reported earnings per share of 42 cents compared with 32 cents in second-quarter 2017.

 

TriMas generated revenues of $225 million in the second quarter, outpacing the Zacks Consensus Estimate of $220 million. The top-line figure also improved 5% year over year.

 

Cost and Margins

 

Cost of sales rose 4% year over year to $160 million in the second quarter. Gross profit increased 9% year over year to $64.8 million. Gross margin expanded 90 basis points (bps) to 28.8%.

 

Selling, general and administrative expenses inched up 0.6% year over year to $33.3 million. Adjusted operating profit improved 5% to $32 million from the prior-year quarter. Adjusted operating margin remained flat year over year at 14.3% in the quarter.

 

Segment Performance

 

Packaging: Net sales increased 7% year over year to $95.1 million as a result of higher sales of health, beauty and home care, and industrial products, related to product introductions, continued growth in Asia, elevated demand and favorable currency exchange. Adjusted operating profit climbed 5.7% year over year to $22.8 million.

 

Aerospace: Net sales decreased 4% year over year to $45.6 million from $47.6 million recorded in the year-earlier quarter, as a result of the impact of TriMas’ decision to exit less profitable components and the benefit realized in second-quarter 2017 from reductions against past due orders. The segment reported adjusted operating profit of $7.3 million, up 4.6% year over year as benefits from continued improved production efficiencies and a more favorable product sales mix offset the impact of lower sales levels.

 

Specialty Products: The segment reported revenues of $84 million, a 9% improvement from $77 million recorded in the prior-year quarter, primarily driven by higher sales levels of cylinders and oil and gas related products due to refocused commercial efforts and increased end-market demand. Adjusted operating profit climbed 7% year over year to $9.8 million on higher sales levels and continued realignment actions.

 

Financial Performance

 

TriMas reported cash and cash equivalents of $53.4 million as of Jun 30, 2018, considerably up from $27.6 million as of Dec 31, 2017. The company generated $51.6 million of cash from operating activities during the six-month period ended Jun 30, 2018, compared with $49.6 million reported in the comparable period last year. At the end of the reported quarter, net debt was approximately $240 million, down from $276 million as of Dec 31, 2017.

 

Guidance

 

TriMas raised its full-year 2018 organic sales growth estimate to around 5% year over year from the previous guidance of around 3%. It also lifted its earnings per share guidance to $1.65-$1.75 from the previous projection of $1.60-$1.75. Mid-point of the guidance reflects year-over-year increase of approximately 21%. Free cash flow in 2018 is expected to be greater than 120% of net income.

 

During the remainder of 2018, TriMas will continue to aggressively manage the effects of increased commodity costs, as well as the impact of tariffs, through commercial actions, supply-chain management, leveraging global manufacturing footprint, and continued management of its businesses under the TriMas Business Model.






 

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, TriMas has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise TriMas has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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