Yahoo Finance TriMas (TRS) Up 2.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for TriMas (TRS). Shares have added about 2.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TriMas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
TriMas Q1 Earnings & Revenues Top Estimates, Rise Y/Y
TriMas reported first-quarter 2024 adjusted earnings per share (EPS) of 37 cents, surpassing the Zacks Consensus Estimate of 28 cents. Compared with adjusted earnings of 35 cents (including non-cash compensation expense) in the year-ago quarter, the bottom-line figure indicates a 5.7% increase. This reflects improved results in the Aerospace and Packaging segments, gains from recent acquisitions, and operational improvements, which offset the impacts of higher interest and tax expenses.
Including the impacts of one-time items, the company reported an EPS of 12 cents, which was flat with the year-ago quarter.
Revenues increased 5.4% year over year to $227 million. The top line beat the Zacks Consensus Estimate of $217 million. The increase was attributed to organic growth in aerospace and defense, some packaging product lines, and contributions from acquisitions. However, weak market demand for products used in certain industrial, and oil and gas applications negated some of these tailwinds.
Costs & Margins
The cost of sales increased 3.9% year over year to $174 million. Gross profit increased 10.5% year over year to around $53 million. The gross margin was 23.2% compared with 22.1% in the prior-year quarter.
Selling, general and administrative expenses moved up 6.8% year over year to $40 million. Adjusted operating profit increased 4.7% year over year to $16.3 million. An increase in sales volumes, gains from recent acquisitions and operational improvements helped offset the impact of lower absorption within Specialty Products and higher non-cash stock compensation, resulting in an improvement in the operating profit. The adjusted operating margin was 7.2%, flat compared with the prior-year quarter.
Segment Performance
Packaging: Net sales were $127 million, up 9.3% from the year-ago quarter’s $116 million. Organic growth in the personal care, beauty and industrial end markets, and acquisition-related sales offset weak demand in some beverage-related applications. We had predicted net sales at $117.5 million.
Adjusted operating profit increased 18.2% year over year to $18 million driven by higher sales and prior structural cost reductions that offset the impact of the allocation of certain information technology costs to the segment. The figure was higher than our estimate of $11.6 million.
Aerospace: Net sales increased 34.7% year over year to $67 million attributed to demand stemming from higher aerospace production, easing of production constraints and acquisition-related sales. The figure surpassed our estimate of $55.5 million.
The segment reported an adjusted operating profit of $7 million, marking a substantial jump from the year-ago quarter’s $1.4 million, driven by the company’s operational excellence initiatives and higher conversion rates. We had projected the segment’s adjusted operating profit at $3.9 million.
Specialty Products: The segment's revenues decreased 33.5% year over year to $32.7 million as industrial customers continued to rebalance inventories. We predicted net sales to be $44.2 million.
Adjusted operating profit slumped 73% year over year to $2.6 million owing to decreased sales and the related lower absorption of costs. The figure missed our estimate of $4.9 million.
Cash Flow & Balance Sheet Updates
TriMas repurchased approximately 540,037 shares of its outstanding common stock for $13.3 million. As of the quarter’s end, $73.6 million remained authorized for further repurchases.
As of Mar 31, 2024, the company had $30.5 million of cash on hand and $257.4 million of available borrowing capacity under its revolving credit facility. TriMas used $3.7 million of cash in operating activities against $9.7 million of cash flow generated in the prior-year quarter.
TriMas ended the first quarter with a total debt of $424.9 million compared with $395.7 million at the fiscal 2023 end. Net debt was $394.5 million as of Mar 31, 2024, higher than $360.8 million as of Dec 31,2023.
2024 Guidance
TriMas expects adjusted EPS to be in the range of $1.95 to $2.15 in 2024. It foresees continued strong demand in the aerospace and defense markets throughout the year. Improved performances in both TriMas Packaging and TriMas Aerospace segments are anticipated to offset any potential decrease in demand within the Specialty Products segment.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, TriMas has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 B. 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 has been net zero. Notably, TriMas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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TriMas Corporation (TRS) : Free Stock Analysis Report
