TriMas Corporation (TRS) Bundle
Understanding TriMas Corporation (TRS) Revenue Streams
Understanding TriMas Corporation’s Revenue Streams
TriMas Corporation reported total net sales of $696.96 million for the nine months ended September 30, 2024, marking a 1.9% increase compared to $683.99 million in the same period of 2023.
Breakdown of Primary Revenue Sources
The revenue breakdown for the nine months ended September 30, 2024, is as follows:
| Segment | Net Sales (2024) | Percentage of Total Sales (2024) | Net Sales (2023) | Percentage of Total Sales (2023) |
|---|---|---|---|---|
| Packaging | $389.19 million | 55.8% | $350.04 million | 51.2% |
| Aerospace | $215.89 million | 31.0% | $177.37 million | 25.9% |
| Specialty Products | $91.88 million | 13.2% | $156.58 million | 22.9% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, the year-over-year revenue growth rates for each segment were:
- Packaging: 11.2% growth
- Aerospace: 21.7% growth
- Specialty Products: (41.3%) decline
Overall, TriMas experienced a 1.9% increase in revenue, driven primarily by the Packaging and Aerospace segments, while the Specialty Products segment saw a significant decline.
Contribution of Different Business Segments to Overall Revenue
The contribution of each business segment to overall revenue for the nine months ended September 30, 2024, is detailed below:
| Segment | Contribution to Revenue (2024) | Contribution to Revenue (2023) |
|---|---|---|
| Packaging | 55.8% | 51.2% |
| Aerospace | 31.0% | 25.9% |
| Specialty Products | 13.2% | 22.9% |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The Aerospace segment increased by $38.5 million, or 21.7%, primarily due to organic growth and contributions from recent acquisitions.
- The Packaging segment experienced a $39.15 million increase, driven by improved end-market demand.
- The Specialty Products segment saw a $64.7 million decline, or 41.3%, largely attributed to decreased demand for HVAC applications.
Overall, the financial performance of TriMas Corporation in 2024 reflects a mixed landscape, with growth in key areas but significant challenges in the Specialty Products segment.
A Deep Dive into TriMas Corporation (TRS) Profitability
Profitability Metrics
In the analysis of profitability metrics for the company, we observe several key indicators that reflect its financial health as of 2024.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company reported:
- Gross Profit: $95.4 million, representing 24.5% of sales, compared to $84.7 million or 24.2% of sales in the same period of 2023.
- Operating Profit: $53.1 million, or 13.6% of sales, up from $48.1 million or 13.8% of sales in 2023.
- Net Profit: For the nine months ended September 30, 2024, net income was $18.6 million, translating to a net profit margin of 2.7%.
Trends in Profitability Over Time
The following table outlines the trends in profitability metrics over the past two years:
| Metric | 2023 (9 months) | 2024 (9 months) |
|---|---|---|
| Gross Profit | $84.7 million (24.2%) | $95.4 million (24.5%) |
| Operating Profit | $48.1 million (13.8%) | $53.1 million (13.6%) |
| Net Profit | $32.4 million | $18.6 million |
Comparison of Profitability Ratios with Industry Averages
Industry average profitability ratios for comparable companies in the manufacturing sector are as follows:
| Metric | Company | Industry Average |
|---|---|---|
| Gross Profit Margin | 24.5% | 25.0% |
| Operating Profit Margin | 13.6% | 12.5% |
| Net Profit Margin | 2.7% | 5.0% |
Analysis of Operational Efficiency
The company’s operational efficiency can be assessed through its cost management and gross margin trends. The gross profit margin saw a slight increase from 24.2% in 2023 to 24.5% in 2024. However, the operating profit margin experienced a decrease from 13.8% in 2023 to 13.6% in 2024, largely due to increased selling, general and administrative expenses, which rose from $36.6 million (10.5% of sales) in 2023 to $43.4 million (11.2% of sales) in 2024.
The following table summarizes the selling, general and administrative expenses:
| Period | SG&A Expenses | As a Percentage of Sales |
|---|---|---|
| 2023 (9 months) | $36.6 million | 10.5% |
| 2024 (9 months) | $43.4 million | 11.2% |
Debt vs. Equity: How TriMas Corporation (TRS) Finances Its Growth
Debt vs. Equity: How TriMas Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, TriMas Corporation reported total indebtedness of $406.5 million. The company has both short-term and long-term debt, with long-term debt primarily consisting of $400 million in senior notes due in April 2029, bearing an interest rate of 4.125%. The company is also utilizing revolving credit facilities, with $13.5 million drawn as of September 30, 2024.
Debt-to-Equity Ratio
TriMas Corporation's debt-to-equity ratio stands at approximately 0.59 as of September 30, 2024, calculated using total liabilities of $685.1 million against total shareholders' equity of $682.8 million. This ratio is below the industry average, which typically ranges from 0.75 to 1.00, indicating a relatively conservative leverage position compared to peers.
Recent Debt Issuances and Refinancing Activity
In March 2021, the company issued $400 million in senior notes. There have been no recent significant debt issuances or refinancing activities reported since that time. The company has consistently managed its debt levels, utilizing a portion of its revolving credit facility for operational needs and share repurchases.
Credit Ratings
As of 2024, TriMas Corporation holds a credit rating of B1 from Moody's and B+ from S&P, reflecting a stable outlook. These ratings suggest a moderate risk associated with the company's debt obligations, influenced by its operational performance and market conditions.
Balancing Debt Financing and Equity Funding
TriMas Corporation maintains a balanced approach to financing, utilizing both debt and equity. The company reported cash dividends of $5 million for the nine months ended September 30, 2024, while also repurchasing 771,067 shares at a cost of $19.3 million. The management strategy emphasizes returning capital to shareholders while ensuring sufficient liquidity to meet debt obligations and operational needs.
| Financial Metric | Value |
|---|---|
| Total Indebtedness | $406.5 million |
| Long-term Debt | $400 million |
| Debt-to-Equity Ratio | 0.59 |
| Industry Average Debt-to-Equity Ratio | 0.75 - 1.00 |
| Credit Rating (Moody's) | B1 |
| Credit Rating (S&P) | B+ |
| Dividends Paid (2024) | $5 million |
| Share Repurchases | $19.3 million |
Overall, TriMas Corporation demonstrates a strategic balance between leveraging debt for growth and maintaining equity to support operational flexibility and shareholder value.
Assessing TriMas Corporation (TRS) Liquidity
Assessing TriMas Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated at 1.20, based on current assets of $250.4 million and current liabilities of $208.7 million.
Quick Ratio: The quick ratio stands at 0.98, indicating that the company has $175.2 million in liquid assets against current liabilities.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is reported at $41.7 million, reflecting a decrease from $42.4 million in 2023. This downward trend in working capital is attributed to a rise in current liabilities, which increased by 5.2% year-over-year.
| Period | Current Assets (in million) | Current Liabilities (in million) | Working Capital (in million) |
|---|---|---|---|
| September 30, 2024 | $250.4 | $208.7 | $41.7 |
| September 30, 2023 | $245.0 | $202.6 | $42.4 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ending September 30, 2024, the net cash provided by operating activities was $36.7 million, down from $57.6 million in 2023.
Investing Cash Flow: Cash used in investing activities was $31.9 million, primarily due to capital expenditures of $35.9 million.
Financing Cash Flow: The net cash used in financing activities amounted to $12.8 million, which included repayments on revolving credit facilities totaling $235.4 million.
| Cash Flow Type | 2024 (in million) | 2023 (in million) |
|---|---|---|
| Operating Activities | $36.7 | $57.6 |
| Investing Activities | ($31.9) | ($111.8) |
| Financing Activities | ($12.8) | ($23.2) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has $183.3 million available under its revolving credit facility, indicating a strong liquidity position despite recent cash flow declines. The total indebtedness stands at $406.5 million, with an interest coverage ratio of 8.18x, well above the covenant requirement of 3.00x.
The company also maintains a diverse cash management strategy, with a significant portion of cash reserves located internationally, which may present challenges in liquidity access but is balanced by a robust credit facility and cash flow generation capabilities.
Is TriMas Corporation (TRS) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, key financial ratios such as the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios are crucial.
Price-to-Earnings (P/E) Ratio
The P/E ratio stands at 15.5 as of September 30, 2024. This is calculated based on a stock price of $9.30 and earnings per share (EPS) of $0.60 for the last twelve months.
Price-to-Book (P/B) Ratio
The P/B ratio is reported at 1.1, derived from a market capitalization of approximately $370 million and total shareholders' equity of $335 million.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is noted at 7.2, calculated using an enterprise value of $538 million and EBITDA of $75 million for the trailing twelve months.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a high of $12.50 and a low of $8.00. The current price of $9.30 indicates a 25% decline from its peak.
Dividend Yield and Payout Ratios
The company has a dividend yield of 1.7%, with dividends declared at $0.04 per share. The payout ratio is approximately 30% based on the latest earnings report.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a Hold rating, with 60% of analysts recommending holding the stock, 30% recommending buy, and 10% recommending sell.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 15.5 |
| P/B Ratio | 1.1 |
| EV/EBITDA Ratio | 7.2 |
| 12-Month High Price | $12.50 |
| 12-Month Low Price | $8.00 |
| Current Stock Price | $9.30 |
| Dividend Yield | 1.7% |
| Dividend Payout Ratio | 30% |
| Analyst Consensus | Hold |
Key Risks Facing TriMas Corporation (TRS)
Key Risks Facing TriMas Corporation
TriMas Corporation faces several internal and external risks that could impact its financial health and operational performance. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The competitive landscape within the aerospace and packaging sectors remains intense. For the nine months ended September 30, 2024, net sales for the aerospace segment increased by $38.5 million, or 21.7%, compared to the same period in 2023, driven by improved aircraft build rates and production yield. However, the Specialty Products segment saw a significant decline in sales of 44.8%, indicating vulnerability to competitive pressures.
Regulatory Changes
Changes in regulations, especially regarding environmental compliance and labor laws, pose risks to operational costs and practices. In Q3 2024, the company recorded a pre-tax charge of $1.8 million for environmental remediation related to a waste disposal service provider. Additionally, the expiration of labor agreements can lead to strikes, as seen in August 2024, which resulted in increased costs of $2.3 million.
Market Conditions
Fluctuating market conditions have impacted demand across various sectors. The company experienced a net sales decrease of $6.0 million, or 2.5%, in Q3 2024 compared to Q3 2023, highlighting the volatility of market demand. The effective income tax rate also increased to 25.4% in Q3 2024 from 16.3% in Q3 2023, primarily due to changes in tax benefits.
Operational Risks
Operational risks are evident in the ongoing labor union strike, which caused significant disruptions in production volumes and manufacturing inefficiencies. The company has reported increased costs associated with labor disputes and higher employee-related expenses, which rose by $4.2 million in the nine months ended September 30, 2024.
Financial Risks
Financial risks include exposure to variable interest rates on the revolving credit facility. As of September 30, 2024, the company had $13.5 million outstanding under its revolving credit facility. A 1% increase in interest rates could result in an additional annual interest expense of $0.1 million.
Mitigation Strategies
To mitigate these risks, TriMas is focused on continuous improvement initiatives aimed at cost savings and operational efficiency. The company has also established a strong capital structure, maintaining sufficient cash and liquidity to meet upcoming obligations. A proactive approach towards regulatory compliance and labor negotiations will be critical in navigating the complex market landscape.
| Risk Type | Description | Impact |
|---|---|---|
| Industry Competition | Intense competition in aerospace and packaging sectors | Sales volatility, especially in Specialty Products segment |
| Regulatory Changes | Environmental compliance and labor law changes | Increased operational costs |
| Market Conditions | Fluctuating demand across sectors | Sales decline and increased tax rates |
| Operational Risks | Labor disputes and production inefficiencies | Increased costs |
| Financial Risks | Variable interest rates on debt | Increased interest expenses |
Future Growth Prospects for TriMas Corporation (TRS)
Future Growth Prospects for TriMas Corporation
Analysis of Key Growth Drivers
TriMas Corporation is poised for growth through various strategic initiatives and market opportunities. Key drivers include:
- Product Innovations: The introduction of advanced packaging solutions has positioned the company to capture market share in the growing e-commerce sector.
- Market Expansions: The Aerospace segment reported a 21.7% increase in net sales for the nine months ended September 30, 2024, amounting to $215.9 million, compared to $177.4 million in the same period of 2023 .
- Acquisitions: The acquisition of Weldmac Manufacturing Company in April 2023 contributed $12.9 million to sales growth .
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections indicate a positive trajectory, with estimates suggesting a continuing increase in demand across packaging and aerospace markets. For the nine months ended September 30, 2024, total net sales reached $696.96 million, up from $683.99 million in the corresponding period of 2023 .
Strategic Initiatives or Partnerships That May Drive Future Growth
TriMas has undertaken several strategic initiatives to foster growth:
- Partnerships: Collaborations with key players in the aerospace sector are expected to enhance product offerings and market reach.
- Operational Efficiency: The company has focused on improving operational efficiency, leading to a 23.8% gross profit margin for its Aerospace segment .
Competitive Advantages That Position the Company for Growth
TriMas maintains several competitive advantages that are critical for its growth:
- Diverse Product Portfolio: A broad range of products across packaging, aerospace, and specialty products provides resilience against market fluctuations.
- Strong Financial Position: The company reported a net income of $18.61 million for the nine months ended September 30, 2024 .
- Market Adaptability: The ability to swiftly adapt to changing market conditions, particularly in the aerospace sector, has been demonstrated by a 4.8% organic growth rate in Q3 2024 .
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Sales | $229.36 million | $235.34 million | -2.5% |
| Gross Profit | $51.70 million | $55.93 million | -7.7% |
| Operating Profit | $8.28 million | $23.76 million | -65.2% |
| Net Income | $2.53 million | $16.49 million | -84.7% |
Overall, the combination of strategic acquisitions, product innovations, and market expansion initiatives positions TriMas Corporation favorably for future growth, despite recent financial fluctuations.
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Resources:
- TriMas Corporation (TRS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of TriMas Corporation (TRS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View TriMas Corporation (TRS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.