TriMas Corporation TRS has announced that it is optimizing the production footprint of its Packaging segment. This move is expected to aid growth for the segment when end-market demand resumes normalized levels. TRS expects to experience the benefits of these strategic actions in 2024.
In sync with this strategy, the company announced the closure of a 160,000-sq-ft leased manufacturing facility in Rohnert Park, CA. TriMas will redeploy all production assets to other existing U.S. production facilities.
The transition is expected to be completed by the end of 2023.
Additionally, it will insource a third-party warehouse and distribution center in New Jersey to drive logistic savings.
As part of its restructuring efforts, TriMas Packaging will consolidate two China production plants into one new facility. This will deliver enhanced efficiencies to better serve the Asia markets. TriMas Packaging will localize production where necessary to better serve its customers. Therefore, certain production will be transferred to various parts of North America.
The company will close its sites in Hangzhou and Haining, and move the production to a new, larger facility in the Haining region.
TriMas’ packaging segment witnessed a decline in demand as several of its larger-consumer-goods customers became cautious regarding their spending and rebalanced their inventories. This is mainly due to the persisting inflationary pressures. Customer spending has been weak in Europe as well.
In the first quarter of 2023, the packaging segment's net sales were $116 million compared with the year-ago quarter’s $139 million. Adjusted operating profit declined 36% year over year to $15.2 million in the reported quarter.
TriMas expects demand to eventually pick up as these headwinds abate. These proactive steps will cut down costs for the Packaging segment while positioning it to meet demand.
Price Performance
Shares of TriMas have gained 3.2% in the past year compared with the industry’s growth of 41.5%.
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Zacks Rank & Stocks to Consider
TriMas currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. WOR, The Manitowoc Company, Inc. MTW and W.W. Grainger, Inc. GWW. WOR and MTW flaunt a Zacks Rank #1 (Strong Buy) at present, and GWW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.94 per share. The consensus estimate for 2023 earnings has moved north by 10.5% in the past 60 days. Its shares gained 54.3% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share. The consensus estimate for 2023 earnings has moved 63.5% north in the past 60 days. MTW’s shares gained 77.7% in the last year.
The Zacks Consensus Estimate for Grainger’s 2023 earnings per share is pegged at $35.83, up 7.6% in the past 60 days. It has a trailing four-quarter average earnings surprise of 9.1%. GWW gained 71.2% in the last year.
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