TriMas (US:TRS)2020-05-02 04:01Financial Data and Key Metrics Changes - Overall sales adjusted for currency were up 6%, largely driven by acquisitions in the Packaging and Aerospace segments [25] - Operating profit was $22 million for the quarter, relatively flat as the impact of higher sales was offset by product mix and production scheduling inefficiencies [26] - EPS for the quarter was $0.34 per share and EBITDA was up by $2 million to $35.3 million, representing 19.3% of sales [27] Business Line Data and Key Metrics Changes - Packaging Segment: Net sales were up 13.7% to just over $100 million, driven by acquisition-related sales and organic growth of 5.3%. Operating profit was flat, with margin percentage down due to higher sales of lower margin products [28] - Aerospace Segment: Sales for the quarter were up 7.3% to $48.9 million, driven by acquisition-related sales. Operating profit was slightly down due to production scheduling inefficiencies [34] - Specialty Products Segment: Sales decreased by $5.2 million, or 13.2%, primarily due to lower sales in oil and gas markets. Operating profit was at $3.4 million, down $1.3 million from the prior year [38] Market Data and Key Metrics Changes - Approximately 55% of revenue is in the packaging segment, with significant demand for products used in personal hygiene and cleaning applications [21][22] - The Aerospace segment's sales are primarily directed towards commercial and business jet markets, which are expected to face severe pressure in the coming quarters [36][37] - Specialty Products segment is experiencing a downturn, particularly in oil and gas, but the Norris Cylinder business is seeing demand for oxygen-related applications [39][41] Company Strategy and Development Direction - The company has shifted its business portfolio to reduce exposure to oil and gas from approximately 25% to less than 3% of total revenue [20] - TriMas plans to continue adding capacity globally in response to increased demand for personal hygiene and cleaning products [31] - The company is positioned to take advantage of M&A opportunities that may arise during the crisis [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong balance sheet and liquidity to withstand the crisis and position for future recovery [17][42] - The company has withdrawn its current guidance due to uncertainty in the commercial and business jet markets, planning to reassess at the end of the next quarter [55] - Management remains optimistic about long-term growth and positioning, emphasizing the importance of strategic actions to mitigate lower volumes [56] Other Important Information - The company completed the acquisition of Rapak, which is expected to contribute to the Packaging segment [32] - TriMas generated free cash flow of $1.8 million in Q1 2020, consistent with planned expectations [51] - The company ended the quarter with cash and availability under credit facilities of $337 million, with a leverage ratio of 2.2 times [52] Q&A Session Summary Question: Visibility on revenue forecasting - Management indicated uncertainty primarily for mid to late Q2 and beyond, with specific attention to the Norris Cylinder business as a leading indicator [64] Question: Order trends through Q1 and April - Strong demand was noted in the Packaging segment, particularly for beauty and personal care products, while Aerospace has not yet seen a significant drop in sales [65][67] Question: Differences between industrial packaging and general industrial - Industrial packaging relates to bulk petrochemical sales, which have seen a modest uptick, while general industrial is more unpredictable due to various end markets [70][72] Question: Increase in receivables and decrease in payables - The increase in receivables was attributed to strong sales in March, while the decrease in payables was due to timely payments to key suppliers [73][74] Question: Impacts from supplier shutdowns - Management reported no widespread impacts to the supplier network, with initial disruptions primarily in China [76] Question: CapEx target for 2020 - The original CapEx target was around 4.5%, now expected to be closer to 3% to 3.5% due to lower volume expectations [104] Question: Packaging sales related to health and beauty products - Nearly 50% of sales are from beauty, personal care, and home care products, with expectations for long-term demand increases in these areas [105][109]