TriMas (TRS) - 2025 Q2 - Quarterly Report

Forward-Looking Statements This section outlines the inherent uncertainties and risks associated with the company's forward-looking statements - The report contains forward-looking statements regarding financial condition, results of operations, and business, identifiable by words like "may," "could," "should," "estimate," "project," "forecast," "intend," "expect," "anticipate," "believe," "target," or "plan"[10] - These statements are subject to numerous assumptions, risks, and uncertainties, including general economic and currency conditions, competitive factors, market demand, government actions (tariffs, climate change), acquisition integration, supply chain pressures (inflation, raw material availability), cybersecurity risks, international operations risks (e.g., US-China tensions), tax policy changes, intellectual property, ESG goals, litigation, interest rate volatility, debt liabilities, labor disputes, catastrophic events, and future dividends/share repurchases[11] - Readers are cautioned not to place undue reliance on these statements, and the company does not undertake to update them, except as required by law[12] PART I. FINANCIAL INFORMATION This part presents the company's unaudited consolidated financial statements and management's financial performance analysis Item 1. Consolidated Financial Statements This section presents TriMas Corporation's unaudited consolidated financial statements and notes for Q2 2025 and FY 2024 Consolidated Balance Sheet This statement summarizes the company's financial position, including assets, liabilities, and equity, at period-end | Metric | June 30, 2025 (unaudited, in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :------------------------ | :------------------ | | Assets | | | | Cash and cash equivalents | $30,280 | $23,070 | | Total current assets | $489,130 | $426,640 | | Total assets | $1,445,400 | $1,324,180 | | Liabilities & Shareholders' Equity | | | | Total current liabilities | $188,760 | $159,430 | | Long-term debt, net | $424,540 | $398,120 | | Total liabilities | $730,130 | $656,880 | | Total shareholders' equity | $715,270 | $667,300 | | Total liabilities and shareholders' equity | $1,445,400 | $1,324,180 | - Total assets increased by $121.22 million (9.15%) from December 31, 2024, to June 30, 2025, driven by increases in current assets, property and equipment, and goodwill[17] - Total liabilities increased by $73.25 million (11.15%) over the same period, primarily due to higher long-term debt and current liabilities[17] - Shareholders' equity saw an increase of $47.97 million (7.19%), reaching $715.27 million by June 30, 2025[17] Consolidated Statement of Income This statement details the company's revenues, expenses, and net income for the three and six months ended June 30 | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $274,760 | $240,500 | $516,430 | $467,600 | | Gross profit | $69,720 | $54,010 | $126,750 | $106,720 | | Operating profit | $27,130 | $17,850 | $48,910 | $30,290 | | Income before income tax expense | $22,350 | $12,670 | $39,510 | $19,860 | | Net income | $16,720 | $10,940 | $29,140 | $16,080 | | Basic earnings per share | $0.41 | $0.27 | $0.72 | $0.39 | | Diluted earnings per share | $0.41 | $0.27 | $0.71 | $0.39 | - Net sales increased by 14.2% for the three months ended June 30, 2025, and by 10.4% for the six months ended June 30, 2025, compared to the prior year periods[19] - Net income significantly increased by 52.8% to $16.72 million for the three months and by 81.2% to $29.14 million for the six months ended June 30, 2025, year-over-year[19] Consolidated Statement of Comprehensive Income This statement presents net income and other comprehensive income components for the periods ended June 30 | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $16,720 | $10,940 | $29,140 | $16,080 | | Other comprehensive income (loss): | | | | | | Defined benefit plans | $10 | $30 | $20 | $50 | | Foreign currency translation | $23,080 | $(5,440) | $33,880 | $(8,950) | | Derivative instruments | $(9,610) | $520 | $(12,730) | $1,110 | | Total other comprehensive income (loss) | $13,480 | $(4,890) | $21,170 | $(7,790) | | Total comprehensive income | $30,200 | $6,050 | $50,310 | $8,290 | - Total comprehensive income for the three months ended June 30, 2025, was $30.2 million, a significant increase from $6.05 million in the prior year, primarily driven by a positive foreign currency translation impact[21] - For the six months ended June 30, 2025, total comprehensive income reached $50.31 million, up from $8.29 million in the prior year, largely due to substantial foreign currency translation gains and higher net income[21] Consolidated Statement of Cash Flows This statement outlines cash flows from operating, investing, and financing activities for the periods ended June 30 | Metric | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $39,440 | $14,670 | | Net cash used for investing activities | $(45,960) | $(23,880) | | Net cash provided by financing activities | $13,730 | $9,330 | | Increase for the period | $7,210 | $120 | | Cash and cash equivalents at end of period | $30,280 | $35,010 | - Net cash provided by operating activities increased significantly to $39.44 million for the six months ended June 30, 2025, from $14.67 million in the prior year, primarily due to higher net income and favorable changes in working capital[23] - Investing activities resulted in a higher net cash outflow of $45.96 million, mainly due to the acquisition of GMT Aerospace for $37.16 million and increased capital expenditures, partially offset by proceeds from the sale of the Arrow Engine business[23] - Financing activities provided $13.73 million in cash, up from $9.33 million, driven by net proceeds from revolving credit facilities, despite payments for common stock repurchases and dividends[23] Consolidated Statement of Shareholders' Equity This statement details changes in shareholders' equity, including net income and share transactions | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :-------------------------------- | :------------------ | :------------ | | Total Shareholders' Equity | $667,300 | $715,270 | | Net income (six months) | $21,670 (Retained Earnings) | $29,140 (Retained Earnings) | | Other comprehensive income (loss) | $(18,550) (AOCI) | $2,620 (AOCI) | | Purchase of common stock (six months) | N/A | $(2,260) | | Dividends declared (six months) | N/A | $(3,280) | - Total shareholders' equity increased from $667.3 million at December 31, 2024, to $715.27 million at June 30, 2025, primarily due to net income and a positive shift in accumulated other comprehensive income (loss)[25] - The company declared $3.28 million in dividends and purchased $2.26 million of common stock during the six months ended June 30, 2025[25] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements 1. Basis of Presentation This note describes TriMas Corporation's business and the accounting principles used in preparing the unaudited financial statements - TriMas Corporation designs, engineers, and manufactures innovative products for consumer products, aerospace & defense, and industrial markets[27] - The financial statements are unaudited and include all necessary adjustments for fair presentation, with management making estimates and assumptions that may differ from actual results due to economic uncertainties like inflation and supply chain disruptions[28] 2. New Accounting Pronouncements This note outlines recently issued accounting standards and their potential impact on the company's financial reporting - ASU 2024-03, effective for fiscal years beginning after December 15, 2026, requires disaggregation disclosures for income statement expenses; the Company is assessing its impact[30] - ASU 2023-09, effective for fiscal years beginning after December 15, 2024, mandates enhanced jurisdictional income tax disclosures and specific categories for effective tax rate reconciliation; the Company will implement these in its 2025 Annual Report on Form 10-K[31] 3. Revenue This note disaggregates the company's net sales by customer market and details deferred revenue and contract assets | Customer Markets | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consumer Products | $117,650 | $106,980 | $220,500 | $210,560 | | Aerospace & Defense | $103,010 | $77,720 | $192,220 | $145,060 | | Industrial | $54,100 | $55,800 | $103,710 | $111,980 | | Total net sales | $274,760 | $240,500 | $516,430 | $467,600 | - Aerospace & Defense market sales showed significant growth, increasing by 32.5% for the three months and 32.5% for the six months ended June 30, 2025, year-over-year[33] - The Company's deferred revenue and related contract assets totaled $13.9 million and $8.8 million, respectively, as of June 30, 2025, compared to immaterial amounts at December 31, 2024[33] 4. Realignment Actions This note details costs incurred for corporate reorganization, including severance and consulting fees, and their impact on expenses - TriMas recorded $0.7 million and $4.5 million in realignment costs for the three and six months ended June 30, 2025, respectively, primarily for corporate office reorganization, including severance and consulting fees[34] - These costs included $1.5 million of non-cash compensation expense during the six months ended June 30, 2025, and were reported within selling, general and administrative expenses[34] 5. Acquisitions and Sale of Business This note describes the acquisition of GMT Aerospace and the divestiture of the Arrow Engine business, including their financial impacts - On February 17, 2025, TriMas acquired GMT Gummi-Metall-Technik GmbH's aerospace business for $37.2 million, adding $15.4 million in goodwill and $4.6 million in intangible assets[35] - On January 31, 2025, the Company sold its Arrow Engine business (Specialty Products segment) for $20.5 million in net cash proceeds, resulting in a pre-tax gain of $5.3 million[36] 6. Goodwill and Other Intangible Assets This note provides a breakdown of goodwill and other intangible assets, including changes from acquisitions and amortization expense | Segment | Balance, December 31, 2024 (in thousands) | Goodwill from acquisitions (in thousands) | Foreign currency translation and other (in thousands) | Balance, June 30, 2025 (in thousands) | | :---------------- | :------------------------- | :----------------------- | :------------------------------------- | :--------------------- | | Packaging | $280,500 | — | $14,300 | $294,800 | | Aerospace | $69,300 | $15,370 | $2,460 | $87,130 | | Specialty Products | $6,560 | — | — | $6,560 | | Total | $356,360 | $15,370 | $16,760 | $388,490 | - Total goodwill increased by $32.13 million to $388.49 million as of June 30, 2025, primarily due to $15.37 million from acquisitions (GMT Aerospace) and $16.76 million from foreign currency translation and other adjustments[38] | Intangible Category | June 30, 2025 Gross Carrying Amount (in thousands) | June 30, 2025 Accumulated Amortization (in thousands) | December 31, 2024 Gross Carrying Amount (in thousands) | December 31, 2024 Accumulated Amortization (in thousands) | | :-------------------------------- | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Total customer relationships | $277,330 | $(190,960) | $268,070 | $(182,050) | | Total technology and other | $99,530 | $(85,580) | $100,090 | $(85,670) | | Trademark/Trade names (indefinite) | $62,730 | — | $60,640 | — | | Total other intangible assets | $439,590 | $(276,540) | $428,800 | $(267,720) | | Amortization Expense | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Technology and other (cost of sales) | $790 | $870 | $1,590 | $1,660 | | Customer relationships (SG&A) | $3,560 | $3,350 | $6,950 | $6,770 | | Total amortization expense | $4,350 | $4,220 | $8,540 | $8,430 | 7. Inventories This note details the composition of inventories, including finished goods, work in process, and raw materials, as of period-end | Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------- | :------------ | :---------------- | | Finished goods | $83,420 | $86,430 | | Work in process | $65,210 | $62,380 | | Raw materials | $68,270 | $60,380 | | Total inventories | $216,900 | $209,190 | - Total inventories increased by $7.71 million to $216.9 million as of June 30, 2025, compared to December 31, 2024, driven by increases in work in process and raw materials, partially offset by a decrease in finished goods[41] 8. Property and Equipment, Net This note presents the company's property and equipment, net of accumulated depreciation, and related depreciation expense | Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------ | :------------ | :---------------- | | Land and land improvements | $30,470 | $30,810 | | Buildings | $92,530 | $93,780 | | Machinery and equipment | $559,950 | $524,390 | | Less: Accumulated depreciation | $345,690 | $330,330 | | Property and equipment, net | $337,260 | $318,650 | - Net property and equipment increased by $18.61 million to $337.26 million as of June 30, 2025, primarily due to an increase in machinery and equipment, partially offset by higher accumulated depreciation[42] | Depreciation Expense | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total depreciation expense | $10,010 | $10,020 | $19,650 | $20,000 | 9. Long-term Debt This note details the company's long-term debt, including senior notes and credit facilities, and compliance with financial covenants | Debt Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | 4.125% Senior Notes due April 2029 | $400,000 | $400,000 | | Credit Agreement | $28,590 | $1,500 | | Debt issuance costs | $(4,050) | $(3,380) | | Long-term debt, net | $424,540 | $398,120 | - Net long-term debt increased by $26.42 million to $424.54 million as of June 30, 2025, primarily due to increased borrowings under the Credit Agreement[43] - In March 2025, the Company amended its Credit Agreement, extending the maturity date of its $250.0 million senior secured revolving credit facility to March 31, 2030, from March 29, 2026[47][48] - As of June 30, 2025, the Company had $28.6 million outstanding under its revolving credit facility and $215.1 million potentially available, after accounting for letters of credit[50] - The Company was in compliance with all financial covenants under the Credit Agreement as of June 30, 2025, with a total net leverage ratio of 2.55x (covenant 4.00x) and an interest expense coverage ratio of 9.70x (covenant 3.00x)[52][185][187][188] 10. Derivative Instruments This note describes the company's use of derivative instruments to hedge foreign currency and interest rate risks, and their fair values - The Company uses cross-currency swap contracts to hedge its net investment in Euro-denominated assets against U.S. dollar-Euro exchange rate volatility, synthetically converting U.S. dollar debt to Euro-denominated debt[55] - As of June 30, 2025, the fair value of cross-currency swaps designated as net investment hedges was a liability of $19.71 million, compared to $2.92 million at December 31, 2024[60] - The Company also uses foreign currency exchange forward contracts with notional amounts of $128.2 million to economically hedge foreign currency rate changes impacting receivables, payables, and intercompany transactions, primarily between the U.S. dollar and Euro, Canadian dollar, Chinese yuan, and Mexican peso[61] | Derivative Type | June 30, 2025 Fair Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :---------------------- | :----------------------- | :----------------------- | | Cross-currency swaps | $(19,710) | $(2,920) | | Foreign exchange contracts | $(2,790) | $360 | 11. Leases This note provides information on the company's operating and finance leases, including assets, liabilities, and associated costs | Lease Type | June 30, 2025 Assets (in thousands) | December 31, 2024 Assets (in thousands) | June 30, 2025 Liabilities (in thousands) | December 31, 2024 Liabilities (in thousands) | | :---------------- | :------------------- | :----------------------- | :------------------------ | :------------------------ | | Operating leases | $45,760 | $40,480 | $48,660 (PV) | $42,590 (Total) | | Finance leases | $2,280 | $2,110 | $1,610 (PV) | $1,620 (Total) | | Total lease assets | $48,040 | $42,590 | $50,270 (Total) | $44,720 (Total) | | Lease Cost Component | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $2,920 | $2,560 | $5,500 | $4,840 | | Finance lease depreciation | $70 | $50 | $130 | $110 | | Finance lease interest | $10 | $20 | $20 | $30 | | Short-term, variable, other lease costs | $1,050 | $1,060 | $2,140 | $2,150 | | Total lease cost | $4,050 | $3,690 | $7,790 | $7,130 | - The weighted-average remaining lease term for operating leases is 5.9 years with a discount rate of 4.6%, while for finance leases it is 2.1 years with a discount rate of 2.6% as of June 30, 2025[70] 12. Other Long-term liabilities This note details the components of other long-term liabilities, including asbestos-related obligations and other non-current liabilities | Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :------------ | :---------------- | | Non-current asbestos-related liabilities | $26,040 | $27,200 | | Other long-term liabilities | $29,390 | $15,340 | | Total other long-term liabilities | $55,430 | $42,540 | - Total other long-term liabilities increased by $12.89 million to $55.43 million as of June 30, 2025, primarily due to a significant increase in 'Other long-term liabilities,' partially offset by a decrease in non-current asbestos-related liabilities[71] 13. Commitments and Contingencies This note outlines the company's legal proceedings, including asbestos claims and environmental remediation obligations, and related financial impacts Asbestos Claims Activity: | Metric | Six Months Ended June 30, 2025 | Fiscal Year Ended December 31, 2024 | | :-------------------------------- | :----------------------------- | :------------------------------------ | | Claims pending at beginning of period | 4,968 | 4,863 | | Claims filed during period | 155 | 269 | | Claims dismissed during period | 115 | 131 | | Claims settled during period | 24 | 33 | | Claims pending at end of period | 4,984 | 4,968 | | Average settlement amount per claim | $9,979 | $20,083 | | Total defense costs during period (in thousands) | $795 | $1,750 | - As of June 30, 2025, TriMas had 4,984 pending asbestos-related cases, with a total liability of $28.5 million, down from $29.7 million at December 31, 2024[74][78] - The Company reached the threshold for excess carrier insurance coverage in Q2 2025 and is transitioning administration of defense costs and indemnity payments to insurers, though no insurance recovery asset has been recognized yet[79] - The total environmental remediation obligation remained at $3.3 million as of June 30, 2025 and December 31, 2024[82] 14. Segment Information This note provides financial data by operating segment, including net sales and adjusted operating profit, for performance evaluation - TriMas operates in three segments: Packaging, Aerospace, and Specialty Products, with performance assessed using segment adjusted operating profit (excluding Special Items like realignment costs and purchase accounting charges)[83] Net Sales by Segment (Three Months Ended June 30): | Segment | 2025 Net Sales (in thousands) | 2024 Net Sales (in thousands) | YoY Change (%) | | :---------------- | :------------- | :------------- | :------------- | | Packaging | $143,010 | $131,930 | 8.4% | | Aerospace | $103,010 | $77,720 | 32.5% | | Specialty Products | $28,740 | $30,850 | -6.8% | | Total | $274,760 | $240,500 | 14.2% | Segment Adjusted Operating Profit (Three Months Ended June 30): | Segment | 2025 Adjusted Operating Profit (in thousands) | 2024 Adjusted Operating Profit (in thousands) | YoY Change (%) | | :---------------- | :----------------------------- | :----------------------------- | :------------- | | Packaging | $20,430 | $18,460 | 10.7% | | Aerospace | $20,650 | $10,460 | 97.4% | | Specialty Products | $1,260 | $580 | 117.2% | | Total | $42,340 | $29,500 | 43.5% | Net Sales by Segment (Six Months Ended June 30): | Segment | 2025 Net Sales (in thousands) | 2024 Net Sales (in thousands) | YoY Change (%) | | :---------------- | :------------- | :------------- | :------------- | | Packaging | $270,580 | $258,950 | 4.5% | | Aerospace | $192,220 | $145,060 | 32.5% | | Specialty Products | $53,630 | $63,590 | -15.7% | | Total | $516,430 | $467,600 | 10.4% | Segment Adjusted Operating Profit (Six Months Ended June 30): | Segment | 2025 Adjusted Operating Profit (in thousands) | 2024 Adjusted Operating Profit (in thousands) | YoY Change (%) | | :---------------- | :----------------------------- | :----------------------------- | :------------- | | Packaging | $38,250 | $36,480 | 4.9% | | Aerospace | $35,880 | $17,590 | 103.9% | | Specialty Products | $1,350 | $3,190 | -57.7% | | Total | $75,480 | $57,260 | 31.8% | 15. Equity Awards This note details the company's stock option and restricted stock unit awards, including grants, unrecognized compensation costs, and related expenses - The Company granted 900,000 stock option awards during the six months ended June 30, 2025, with a weighted-average option price of $41.11[94] - Unrecognized compensation cost for stock options was $6.7 million as of June 30, 2025, expected to be recognized over 1.6 years[94] - The Company awarded 590,246 Restricted Stock Units (RSUs) during the six months ended June 30, 2025, including service-based and performance-based awards[96][97][99] - Unrecognized compensation cost for unvested RSUs was $13.1 million as of June 30, 2025, expected to be recognized over 2.4 years[99] | Stock-based Compensation Expense | Three months ended June 30, 2025 (in millions) | Three months ended June 30, 2024 (in millions) | Six months ended June 30, 2025 (in millions) | Six months ended June 30, 2024 (in millions) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock Options | $0.1 | $0 | $0.1 | $0 | | Restricted Stock Units | $1.9 | $1.9 | $4.9 | $6.4 | 16. Earnings per Share This note presents the calculation of basic and diluted earnings per share, including weighted average shares and share repurchase activity | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Weighted average common shares—basic | 40,647,361 | 40,699,287 | 40,626,325 | 40,858,668 | | Dilutive effect of restricted stock units | 282,500 | 299,751 | 313,473 | 301,858 | | Weighted average common shares—diluted | 40,929,861 | 40,999,038 | 40,939,798 | 41,160,526 | - The Company repurchased 85,729 shares for $1.8 million in Q2 2025 and 106,220 shares for $2.3 million in H1 2025, with $65.4 million remaining under the $250 million authorization[102] - Quarterly cash dividends of $0.04 per share were declared and paid, totaling $1.7 million for Q2 2025 and $3.3 million for H1 2025, consistent with the prior year[103] 17. Defined Benefit Plans This note outlines the net periodic benefit cost for the company's defined benefit pension plans and expected contributions | Component of Net Periodic Benefit Cost (Income) | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service costs | $140 | $130 | $270 | $260 | | Interest costs | $320 | $330 | $640 | $660 | | Expected return on plan assets | $(260) | $(510) | $(510) | $(1,020) | | Amortization of net loss | $20 | $40 | $50 | $90 | | Net periodic benefit cost (income) | $220 | $(10) | $450 | $(10) | - Net periodic benefit cost for defined benefit pension plans was $0.22 million for the three months and $0.45 million for the six months ended June 30, 2025, compared to a nominal income in the prior year periods[105] - The Company contributed $0.5 million to its defined benefit pension plans during the six months ended June 30, 2025, and expects to contribute $1.2 million for the full year 2025[106] 18. Other Comprehensive Income (Loss) This note details changes in accumulated other comprehensive income, including components like foreign currency translation and derivative instruments Changes in AOCI (Six Months Ended June 30, 2025): | Component | Balance, December 31, 2024 (in thousands) | Net unrealized gains (losses) (in thousands) | Net realized losses reclassified to net income (in thousands) | Balance, June 30, 2025 (in thousands) | | :-------------------- | :------------------------- | :---------------------------- | :--------------------------------------------- | :--------------------- | | Defined Benefit Plans | $(8,010) | — | $(20) | $(7,990) | | Derivative Instruments | $16,300 | $(12,730) | — | $3,570 | | Foreign Currency Translation | $(26,840) | $33,880 | — | $7,040 | | Total | $(18,550) | $21,150 | $(20) | $2,620 | - Accumulated Other Comprehensive Income (AOCI) shifted from a loss of $18.55 million at December 31, 2024, to a gain of $2.62 million at June 30, 2025, primarily due to significant net unrealized gains from foreign currency translation[107] - Net current-period other comprehensive income was $21.17 million for the six months ended June 30, 2025, a substantial improvement from a loss of $7.79 million in the prior year[107][109] 19. Income Taxes This note provides information on the company's effective income tax rate, income tax expense, and the impact of recent tax legislation | Period | Effective Income Tax Rate | Income Tax Expense (in millions) | | :-------------------------------- | :------------------------ | :----------------- | | Three months ended June 30, 2025 | 25.2% | $5.6 | | Three months ended June 30, 2024 | 13.7% | $1.7 | | Six months ended June 30, 2025 | 26.2% | $10.4 | | Six months ended June 30, 2024 | 19.0% | $3.8 | - The effective income tax rate increased for both the three and six months ended June 30, 2025, compared to the prior year, primarily due to the recognition of a $1.4 million tax benefit from foreign tax loss carryforwards in Q2 2024, increased losses in certain foreign subsidiaries without tax benefit, and a $1.4 million tax expense from the Arrow Engine business sale in H1 2025[110][111] - The recently signed One Big Beautiful Bill Act (OBBBA), effective Q3 2025, is not anticipated to materially impact the effective tax rate but is expected to have a favorable impact on U.S. federal cash taxes for the remainder of 2025[112] 20. Subsequent Events This note discloses significant events occurring after the reporting period, such as dividend declarations - On July 22, 2025, the Board of Directors declared a cash dividend of $0.04 per share of common stock, payable on August 12, 2025, to shareholders of record as of August 5, 2025[113] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on TriMas Corporation's financial condition, operational results, liquidity, and outlook Introduction This introduction outlines TriMas' business model, product offerings, and strategic focus on innovation and growth - TriMas designs, develops, and manufactures diverse products for consumer products, aerospace & defense, and industrial markets through its Packaging, Aerospace, and Specialty Products segments[116] - The company emphasizes innovative product technologies, customer-approved processes, established distribution, modest capital investment, strong cash flow conversion, and long-term growth opportunities[116] Key Factors Affecting Our Reported Results This section discusses macroeconomic factors, strategic actions, and financial drivers influencing the company's reported performance - Macroeconomic factors like cost inflation (raw materials, wages, freight), material shortages, and skilled labor availability have significantly impacted operations[118] - Changes in U.S. international trade policy, including tariffs on China-based imports, have increased costs and created uncertainty[118] - Overall net sales increased by 14.2% in Q2 2025 (YoY), driven by organic growth in Aerospace (23.8%) and Packaging (7.9%), and 8.7% acquisition-related growth in Aerospace, partially offset by a 6.8% decline in Specialty Products due to the Arrow Engine divestiture[119] - Significant drivers affecting Q2 2025 results included higher consulting costs, corporate reorganization expenses, and an increased effective tax rate[120] - The divestiture of Arrow Engine (Specialty Products) for $20.5 million generated a $5.3 million pre-tax gain, while the acquisition of GMT Aerospace (Aerospace) for $37.2 million contributed $6.7 million in Q2 2025 sales[121] - The effective income tax rate rose to 25.2% in Q2 2025 from 13.7% in Q2 2024, mainly due to a prior-year tax benefit from foreign loss carryforwards and increased losses in certain foreign subsidiaries[123] - The company continues to evaluate alternatives for cash redeployment, including share repurchases ($65.4 million remaining authorization as of June 30, 2025) and dividends ($0.04 per share declared in Q2 2025)[132][133] Additional Key Risks that May Affect Our Reported Results This section highlights ongoing macroeconomic risks, trade policy uncertainties, and critical success factors for the company's performance - Ongoing macroeconomic inflation, trade policy uncertainties, and potential impacts on overall performance may lead to further realignment actions or asset impairment charges (goodwill, intangibles, fixed assets, inventory, receivables)[124] - Critical success factors include generating organic growth through product development and cross-selling, acquiring and integrating complementary businesses, managing cost structure efficiently (supply chain, working capital), and recovering inflationary cost increases[126] - The business experiences minimal seasonal fluctuation, except for Q4, which typically has the lowest net sales due to holiday shutdowns and deferred capital spending[127] - The company is sensitive to raw material price movements (polypropylene, polyethylene, steel, aluminum, superalloys) and supply availability, with efforts to mitigate increases through pricing adjustments, extra inventories, and alternative sourcing[128] Segment Information and Supplemental Analysis This section provides a detailed breakdown of net sales growth by segment, including organic, acquisition, and divestiture impacts Net Sales Growth (Q2 2025 vs. Q2 2024): | Segment | Organic | Acquisitions | Divestitures | Foreign Exchange | Total | | :---------------- | :------ | :----------- | :----------- | :--------------- | :---- | | Consolidated | 13.4% | 2.8% | (2.2)% | 0.2% | 14.2% | | Packaging | 7.9% | —% | —% | 0.5% | 8.4% | | Aerospace | 23.8% | 8.7% | —% | —% | 32.5% | | Specialty Products | 10.8% | —% | (17.6)% | —% | (6.8)% | Net Sales Growth (YTD Q2 2025 vs. YTD Q2 2024): | Segment | Organic | Acquisitions | Divestitures | Foreign Exchange | Total | | :---------------- | :------ | :----------- | :----------- | :--------------- | :---- | | Consolidated | 10.9% | 2.1% | (1.9)% | (0.7)% | 10.4% | | Packaging | 5.7% | —% | —% | (1.2)% | 4.5% | | Aerospace | 25.7% | 6.9% | —% | (0.1)% | 32.5% | | Specialty Products | (1.5)% | —% | (14.2)% | —% | (15.7)% | Results of Operations (Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024) This section analyzes the company's financial performance for the three months ended June 30, 2025, highlighting key revenue, profit, and segment-specific changes - Net sales increased by $34.3 million (14.2%) to $274.8 million, driven by organic growth in Aerospace (23.8%) and Packaging (7.9%), and $6.7 million from the GMT Aerospace acquisition, partially offset by a 6.8% decline in Specialty Products due to the Arrow Engine divestiture[137] - Gross profit margin improved to 25.4% from 22.5%, primarily due to higher sales, improved fixed cost absorption, a favorable product mix, and operational improvements in Aerospace and Packaging, despite increased input costs and a $0.5 million purchase accounting charge[138] - Operating profit increased by $9.3 million to $27.1 million, with operating profit margin rising to 9.9% from 7.4%, driven by sales growth and operational efficiencies, but partially offset by higher employee-related costs, consulting fees, and corporate reorganization expenses[139] - Interest expense decreased by $0.7 million to $4.6 million due to lower weighted average borrowings and a reduced effective interest rate[140] - Net income increased by $5.8 million to $16.7 million, reflecting higher operating profit and lower interest expense, partially offset by a $3.9 million increase in income tax expense[144] - Packaging segment sales increased 8.4% to $143.0 million, driven by dispensing products, partially offset by reduced demand in food and beverage[145] Operating profit rose 11.1% to $20.0 million[148] - Aerospace segment sales surged 32.5% to $103.0 million, with organic growth from fasteners and engineered components, plus $6.7 million from GMT Aerospace acquisition[149] Operating profit more than doubled to $20.1 million[152] - Specialty Products sales decreased 6.8% to $28.7 million, as a 13.1% increase in steel cylinder sales was offset by the $5.4 million impact of the Arrow Engine divestiture[153] Operating profit increased to $1.3 million from $0.6 million[156] - Corporate expenses increased by $3.1 million to $14.3 million, mainly due to higher employee-related costs, $2.2 million in consulting and reorganization costs, and $0.7 million for IT upgrades, partially offset by lower professional fees and a non-recurring environmental settlement[156] Results of Operations (Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024) This section analyzes the company's financial performance for the six months ended June 30, 2025, detailing revenue, profit, and segment-specific changes - Net sales increased by $48.8 million (10.4%) to $516.4 million, driven by organic growth in Aerospace (25.7%) and Packaging (5.7%), and $10.0 million from the GMT Aerospace acquisition, partially offset by a 15.7% decline in Specialty Products due to lower demand and the Arrow Engine divestiture[157] - Gross profit margin improved to 24.5% from 22.8%, primarily due to higher sales, improved fixed cost absorption, a favorable product mix, and operational improvements in Aerospace and Packaging, despite increased input costs and a $0.7 million purchase accounting charge[158] - Operating profit increased by $18.6 million to $48.9 million, with operating profit margin rising to 9.5% from 6.5%, benefiting from sales growth, operational efficiencies, and a $5.3 million gain on the Arrow Engine sale, but partially offset by increased consulting costs, corporate reorganization expenses, and higher employee-related costs[159] - Interest expense decreased by $1.1 million to $9.1 million due to lower weighted average borrowings and a reduced effective interest rate[160] - Net income increased by $13.1 million to $29.1 million, reflecting higher operating profit and lower interest expense, partially offset by a $6.6 million increase in income tax expense[163] - Packaging segment sales increased 4.5% to $270.6 million, driven by dispensing products, partially offset by reduced demand in food and beverage[164] Operating profit rose 6.0% to $37.2 million[167] - Aerospace segment sales surged 32.5% to $192.2 million, with organic growth from fasteners and engineered components, plus $10.0 million from GMT Aerospace acquisition[168] Operating profit more than doubled to $35.2 million[171] - Specialty Products sales decreased 15.7% to $53.6 million, primarily due to lower steel cylinder demand and the $10.4 million impact of the Arrow Engine divestiture[172] Operating profit declined to $0.1 million from $3.2 million[175] - Corporate expenses decreased by $2.0 million to $23.6 million, primarily due to a $5.3 million pre-tax gain on the Arrow Engine sale, lower professional costs, and reduced non-cash stock compensation, partially offset by increased consulting and reorganization costs[176] Liquidity and Capital Resources This section assesses the company's cash flow generation from operating, investing, and financing activities, and its overall liquidity position - Cash flows from operating activities increased significantly to $39.4 million for the six months ended June 30, 2025, from $14.7 million in the prior year, driven by higher net income and favorable working capital changes[177][179] - Net cash used for investing activities increased to $46.0 million, primarily due to the $37.2 million acquisition of GMT Aerospace and $30.0 million in capital expenditures, partially offset by $21.2 million from the Arrow Engine sale[177] - Net cash provided by financing activities was $13.7 million, up from $9.3 million, mainly from net borrowings on revolving credit facilities, despite share repurchases and dividend payments[178] Our Debt and Other Commitments This section details the company's long-term debt, credit facilities, financial covenant compliance, and available liquidity - The Company's long-term debt includes $400.0 million in 4.125% Senior Notes due April 2029 and borrowings under a Credit Agreement, which was amended in March 2025 to extend its maturity to March 31, 2030[180][183] - As of June 30, 2025, the Company had $28.6 million outstanding on its revolving credit facility and $215.1 million available liquidity, after accounting for $6.3 million in letters of credit[188] - The Company was in compliance with its financial covenants, with a total net leverage ratio of 2.55x (covenant 4.00x) and an interest expense coverage ratio of 9.70x (covenant 3.00x) as of June 30, 2025[185][187][188] - The weighted average borrowings for the first six months of 2025 were approximately $436.3 million, down from $452.9 million in the prior year[190] - A 1% increase in the variable interest rate would increase annual interest expense by $0.3 million based on borrowings at June 30, 2025[193] Market Risk This section describes the company's exposure to foreign currency exchange rate and interest rate risks, and its hedging strategies - TriMas is exposed to market risk from foreign currency exchange rate fluctuations, managing it through derivative financial instruments like foreign exchange forward and swap contracts ($128.2 million notional amount as of June 30, 2025) and cross-currency swap agreements[197][198] - The Company is also subject to interest rate risk on its long-term debt and has historically used interest rate swap agreements to manage this risk[199] Outlook This section provides management's forward-looking perspective on business performance, growth drivers, and strategies to mitigate market uncertainties - The Company delivered strong financial results in H1 2025, driven by increased demand and growth initiatives in Aerospace and Packaging, along with manufacturing enhancements and commercial actions[201] - Management is optimistic about long-term growth in Packaging and Aerospace, and expects an accelerated recovery in the Specialty Products segment's cylinder business[201] - Despite global market uncertainties (inflation, supply chain, labor, tariffs), TriMas remains committed to mitigating impacts through commercial, procurement, production, and streamlining actions to maintain a strong balance sheet and generate cash[202] - The capital structure is strong, with sufficient liquidity to meet obligations, fund dividends, share repurchases, and bolt-on acquisitions[203] - The One Big Beautiful Bill Act (OBBBA), effective Q3 2025, is expected to have a favorable impact on U.S. federal cash taxes for the remainder of 2025, with no material impact on the effective tax rate[205] Impact of New Accounting Standards This section refers to detailed disclosures on recently issued accounting standards and their potential financial reporting impact - Refer to Note 2, 'New Accounting Pronouncements,' for details on recently issued accounting standards and their potential impact[206] Critical Accounting Policies This section confirms no material changes to the company's critical accounting policies during the current reporting period - No material changes occurred to the Company's critical accounting policies during the quarter ended June 30, 2025, as previously disclosed in the 2024 Annual Report on Form 10-K[208] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section reiterates the company's exposure to market risks and refers to detailed management strategies in other financial sections - The Company is exposed to market risk from fluctuations in foreign currency exchange rates and interest rates on its long-term debt[209] - Further details on primary market risks, objectives, and management strategies are provided in Item 2, 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' and Notes 9 and 10 to the Consolidated Financial Statements[209] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal controls - As of June 30, 2025, management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures are effective in providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[211] - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[212] PART II. OTHER INFORMATION This part provides additional information beyond the financial statements, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section refers to detailed information on the company's legal proceedings, including asbestos claims, in the financial statement notes - Information regarding legal proceedings is detailed in Note 13, 'Commitments and Contingencies,' within Part I, Item 1, 'Notes to Unaudited Consolidated Financial Statements'[214] Item 1A. Risk Factors This section confirms no material changes to the risk factors previously disclosed in the company's annual and quarterly reports - There are no material changes to the risk factors as disclosed in the 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the period ended March 31, 2025[215] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases under its publicly announced share repurchase program during the quarter | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) | | :-------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------ | | April 1, 2025 to April 30, 2025 | 85,729 | $20.94 | 85,729 | $65.4 | | May 1, 2025 to May 31, 2025 | — | — | — | $65.4 | | June 1, 2025 to June 30, 2025 | — | — | — | $65.4 | | Total | 85,729 | $20.94 | 85,729 | $65.4 | - During the three months ended June 30, 2025, the Company repurchased 85,729 shares of its common stock for $1.8 million under its $250 million authorization, with $65.4 million remaining[219] Item 3. Defaults Upon Senior Securities This item is marked as not applicable, indicating no defaults on senior securities during the reporting period - This item is not applicable[216] Item 4. Mine Safety Disclosures This item is marked as not applicable, indicating no mine safety disclosures are required for the company - This item is not applicable[217] Item 5. Other Information This section discloses a modification to a Rule 10b5-1 trading plan by a former executive, allowing for common stock sales - On May 21, 2025, Thomas A. Amato, former President and CEO, modified his Rule 10b5-1 trading plan to allow the sale of up to 222,891 shares of common stock, with first trades not occurring before August 19, 2025, and the plan terminating by December 31, 2025[218] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, equity agreements, and certifications - The exhibits include corporate governance documents (Certificate of Incorporation, By-laws), various equity award agreements (Restricted Stock Units, Non-Qualified Stock Option), offer and severance agreements for executives, indemnification agreements, Sarbanes-Oxley Act certifications (Sections 302 and 906), and Inline XBRL financial data[220] Signatures This section contains the required signatures, certifying the filing of the report on behalf of TriMas Corporation - The report is duly signed on behalf of TriMas Corporation by Teresa M. Finley, Chief Financial Officer, on July 29, 2025[223]