BLOOMFIELD HILLS—TriMas Corp. (Nasdaq: TRS) posted a loss of $15.7 million or 36 cents a share in the second quarter ended June 30, compared to net income of $18.7 million or 41 cents a share in the same quarter of 2019.
The company did manage a modest sales increase of 4.6 percent to $199.6 million, from $190.8 million a year earlier, driven by record sales in its packaging group. But sharp increases in both the cost of sales, up 18 percent to $162.3 million, and selling, general, and administrative expenses, which more than doubled to $55.4 million, produced the loss. The company’s financial release blamed the loss on “an accounting policy change and realignment charges.” In the company’s financial statement, there’s a $23.4 million charge for “Change in accounting policy for asbestos-related costs.” There’s also $7 million in restructuring charges.
For the six months, revenue was $382.3 million, up from $384.2 million in the first half of 2019. The company posted a loss for the period of $2.6 million or 6 cents a share, vs. net income of $41.1 million or 73 cents a share in the first half of 2019.
The company also reported an “adjusted diluted earnings per share from continuing operations” of 43 cents a share, which excluded what. The “adjusted operating profit” was $27.5 million, down from $28 million a year earlier, as the impact of higher sales was more than offset by a less favorable product sales mix, production inefficiencies related to the pandemic, and higher non-cash depreciation and amortization.
Said TriMas President and CEO Thomas Amato: “TriMas’ Packaging group, which manufactures dispensers and closures used in applications that help fight the spread of germs, improve personal hygiene and advance home cleaning, as well as food and beverage, pharmaceutical and nutraceutical, and industrial applications, had a record sales quarter. However, we also serve some end markets which are challenged where we have focused on adjusting cost structures to better align with lower demand. I would also note that the anticipated change in sales demand in Aerospace did not occur until June, which helped us achieve a better than expected second quarter result…. As we move forward through the second half of 2020, we expect the impacts of the global pandemic to continue, with robust sales in our Packaging group, offset by lower aircraft production rates and therefore lower demand for products in our Aerospace group, and reduced construction and HVAC maintenance-related demand, which impacts the Specialty Products group. That said, we believe the steps we have taken during the past few years to strengthen our balance sheet and de-emphasize certain end markets better position TriMas to manage through this unforeseen market shock, and have benefited TriMas shareholders during this period.”
TriMas’ Packaging segment, which consists primarily of the Rieke, Taplast, and Rapa brands, saw a 23.9 percent sales increase in the quarter. The Aerospace segment, which includes the Monogram Aerospace Fasteners, Allfast Fastening Systems, Mac Fasteners, RSA Engineered Products and Martinic Engineering, saw a 13.9 percent decrease in sales for the quarter, primarily due the impact of significantly lower air travel and reduced commercial and business jet production related to the global pandemic, partially offset by the sales increase related to the acquisition of RSA in February 2020. The Specialty Products segment, which includes the Norris Cylinder and Arrow Engine brands, saw a sales decline of 24.7 percent, a result of lower steel cylinder demand in the construction and HVAC end markets, and low demand for oil and gas products, all related to the impact of the pandemic.
Due to the COVID-19 pandemic and the resulting economic uncertainty, TriMas withdrew its 2020 full year guidance on April 30. However, company officials say they now expect TriMas’ sales overall for the second half of 2020 to be relatively flat compared to the second half of 2019, with sales activity in the Packaging segment anticipated to remain robust, offset by continued weaker demand for the Aerospace and Specialty Products segments.
To listen to a replay of a conference call discussing these results, visit the investors section of www.trimascorp.com, or call (888) 203-1112, using relay passcode 9768715.