TriMas (TRS) Meets Q3 Earnings, Beats Sales, Updates View

TriMas Corporation (NASDAQ:TRS) posted adjusted earnings of 39 cents per share in third-quarter 2017, up 11.4% from 35 cents reported in the prior-year period. Earnings came in line with the Zacks Consensus Estimate.

On a reported basis, including special items, TriMas’ earnings surged 52.6% year over year to 29 cents per share.

TriMas generated revenues of $209.3 million for the quarter, outpacing the Zacks Consensus Estimate of $208.8 million. Revenues also went up 3.5% year over year.

Cost and Margins

Cost of sales rose 4.3% to $150.5 million in the quarter from $144 million in the year-ago quarter. Gross profit inched up 1.3% year over year to $58.8 million. Gross margin contracted 60 basis points (bps) to 28%.

Selling, general and administrative expenses plunged 23.7% year over year to $30.7 million. Adjusted operating profit improved 2.3% to $28.8 million from the prior-year quarter. Adjusted operating margin declined 20 bps year over year to 13.7% in the quarter.

Segment Performance

Packaging: Net sales edged down 0.9% year over year to $89.6 million. An increase in food and beverage product sales was more than offset by lower sales of beauty and home care, and industrial products in North America. Adjusted operating profit climbed 6.2% to $23.1 million.

Aerospace: Net sales increased 2.4% to $48.6 million from $47.4 million recorded in the year-earlier quarter, driven primarily by continued improved production throughput and deliveries, and solid order demand. The segment reported adjusted operating profit of $7.8 million compared to $7.9 million in the prior-year quarter.

Energy: Net sales jumped 5.8% year over year to $40.4 million, benefiting from elevated demand as a result of improved delivery performance and responding to customers' immediate needs following Hurricane Harvey. The segment reported adjusted operating profit of $1.7 million compared with $1.8 million recorded in the year-ago quarter.

Engineered Components: The segment reported revenues of $30.8 million, a 17% improvement from $31.2 million in the prior-year quarter, primarily owing to higher sales of small and mid-sized acetylene cylinders, as well as oil field-related products due to increased oil and gas well completions in the United States and Canada. Adjusted operating profit dropped 2.9% year over year to $3.3 million.

Financial Performance

TriMas had cash and cash equivalents of $24.8 million as of Sep 30, 2017, compared with $20.7 million reported at the end of 2016. The company recorded cash from operations of $72.7 million for the nine-month period ended Sep 30, 2017, compared with $46.4 million recorded in the prior-year period. As of quarter end, TriMas’ net debt was $336.6 million, down from $374.6 million as of Dec 31, 2016.

Guidance

TriMas will continue to focus on leveraging the TriMas Business Model to drive performance improvements which will result in long-term growth. The company is working diligently to mitigate near-term matters impacting its businesses and remain focused on achieving 2017 operating plan. TriMas updated its full-year earnings per share outlook to the range of $1.37-$1.43 from the prior band of $1.35-$1.45 per share. It continues to estimate that 2017 sales will increase 2-4% compared to 2016.

Share Price Performance

In the last year, TriMas has outperformed the industry with respect to price performance. The stock has gained around 46.8%, while the industry recorded growth of 33%.

Zacks Rank & Key Picks

TriMas currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same sector are Lakeland Industries, Inc. (NASDAQ:LAKE) , China National Materials Company Limited (OTC:CASDY) and Caterpillar Inc. (NYSE:CAT) . All three stocks flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lakeland Industries has an expected long-term earnings growth rate of 10%.

China National Materials has an expected long-term earnings growth rate of 20%.

Caterpillar has an expected long-term earnings growth rate of 9.5%.

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