Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in Item 1A "Risk Factors." Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with Item 8, "Financial Statements and Supplementary Data."
Introduction
TriMas designs, develops and manufactures a diverse set of products primarily for the consumer products and industrial markets through its TriMas Packaging and Specialty Products groups. Our wide range of innovative products are designed and engineered to solve application-specific challenges that our customers face. We believe our businesses share important and distinguishing characteristic s, including: innovative product technologies and features; a high-degree of customer approved processes and qualifications; established distribution networks; modest capital investment requirements; strong cash flow conversion and long-term growth opportunities. While the majority of our revenue is in the United States, we manufacture and supply products globally to a wide range of companies. We are principally engaged in two reportable segments: Packaging and Specialty Products.
On November 4, 2025, we entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Takeoff Buyer, Inc. (the “Purchaser”), an affiliate of Tinicum L.P. and funds managed by Blackstone, Inc., to sell TriMas Aerospace. The purchase price for the sale of TriMas Aerospace consists of approximately $1.45 billion in cash, subject to customary adjustments. The sale of TriMas Aerospace is expected to close in the first quarter of 2026, subject to the satisfaction or waiver of customary and other closing conditions. The financial results of our Aerospace business were previously reported within our Aerospace reportable segment, and are presented as assets held for sale in our consolidated balance sheet and as discontinued operations in our consolidated statement of income for all periods presented in the financial statements.
Key Factors Affecting Our Reported Results
Demand for the products our businesses produce and results of operations depend upon general economic conditions. We serve customers in industries that are highly competitive and that may be significantly impacted by changes in economic or geopolitical conditions.
Our results of operations have been materially impacted over the past few years by macro-economic factors, most recently by cost inflation (raw materials, wage rates and freight) and a lack of material, and in certain regions, skilled labor availability. Additionally, during 2025, the U.S. government altered its approach to international trade policy and announced baseline tariffs on products from all countries and additional individualized reciprocal tariffs on the countries with which the United States has the largest trade deficits, including China. This change in international trade policy has also created uncertainty with respect to future tariffs, including any retaliatory tariffs imposed by other countries, or other potential governmental actions. These factors have affected each of our businesses and how we operate, albeit in different ways and magnitudes. The current tariffs, predominately those imposed on China-based imports, have increased the costs of certain products sourced from non-U.S. countries.
Sales of certain of our products for industrial applications, for example steel cylinders for packaged gas applications, have experienced volatility in demand related to customers securing high order rates in prior periods, only to enter a period of destocking in more recent periods. This significant level of volatility in demand levels, input and transportation costs, and material and labor availability, have pressured our ability to operate efficiently in recent periods. While some areas of demand volatility and softness remain, such as in our our Norris Cylinder business within our Specialty Products segment, we have experienced more steady and consistent demand in our Packaging segment.
Overall, 2025 net sales increased $14.9 million, or 2.4%, compared to 2024. We experienced organic growth of 4.1% within our Packaging segment compared to 2024. The increase was partially offset by lower sales of 7.0% in our Specialty Products segment as compared to the prior year, as higher sales of steel cylinders more than offset the lost sales due to the divestiture of our Arrow Engine business in January 2025. Our overall sales increase included $2.2 million of currency exchange, as our reported results in U.S. dollars were favorably impacted as a result of a weakening U.S. dollar relative to foreign currencies.
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The most significant drivers affecting our financial results in 2025 compared with 2024, other than as directly impacted by sales changes, were the impact of the divestiture of our Arrow Engine business, our recognition of a net benefit to recognize our asbestos insurance recovery asset and update our liability to our recent actuarial valuation, realignment costs related to actions to reorganize our corporate office, charges associated with environmental remediation liabilities, the refinancing of our existing Credit Agreement ("Credit Agreement"), the year-over-year impact of accelerated depreciation charges in 2024 related to shortening the useful lives of certain machinery and equipment in our Specialty Products segment, and a decrease in our effective tax rate.
On January 31, 2025, we completed the sale of our Arrow Engine business within the Specialty Products segment for net cash proceeds of $21.0 million. As a result, we recorded a pre-tax gain of $5.4 million for the year ended December 31, 2025.
In third quarter 2025, we commissioned our actuary to update our asbestos study, and upon completion we recorded a pre-tax charge of $8.0 million. In the fourth quarter 2025, we reassessed the facts and circumstances surrounding the CIP agreement with the consortium of insurance companies and deemed the realization of the claim for loss recovery probable. We estimated the loss recovery of indemnity and defense costs under the CIP agreement, and recognized an insurance recovery asset of $35.8 million, which was commensurate with the assumptions used to calculate the asbestos liability. See Note 16, " Commitments and Contingencies ," to our consolidated financial statements attached herein with this Form 10-K.
During 2025, we recorded $5.2 million of realignment costs related to actions to reorganize our corporate office, primarily for severance and consulting costs, including $1.5 million of non-cash compensation expense.
During 2025 we recorded pre-tax charges of $6.5 million for environmental remediation for waste sites in which we had been named a potential responsible party. In 2024, we recorded pre-tax charges of $3.2 million for similar environmental matters.
In March 2025, we amended our Credit Agreement to extend the maturity date through March 31, 2030. We incurred fees and expenses of $1.3 million related to the amendment, all of which was capitalized as debt issuance costs.
In 2024, following a strategic demand and profitability study of our cylinders products within our Specialty Products segment, we ceased use of our second hot forge, which primarily produced lower profitability products, resulting in pre-tax non-cash charges related to accelerated depreciation expense of $8.2 million due to the shortening of the assets expected useful lives.
Our effective tax rate for 2025 and 2024 was (198.1)%, and 53.3%, respectively. The decrease in effective tax rate for 2025 as compared to 2024 is primarily as a result of us recognizing a $53.9 million tax benefit in 2025 related to the tax-basis versus book-basis difference in our Aerospace business. Otherwise, the remaining difference is due to a change in the mix of domestic and foreign pre-tax results.
Additional Key Risks that May Affect Our Reported Results
We have executed meaningful realignment actions over the past few years to address variable and structural costs where demand has fallen. We will continue to assess and take further actions if required. However, as a result of the current period of macroeconomic inflation and uncertainty, including uncertainty regarding the scope and duration of current and future tariffs and trade actions, and the potential impact of such factors to our future results of operations, as well as if there is an impact to TriMas' overall performance and market capitalization, we may record additional cash and non-cash charges related to further realignment actions, asset impairments, including impairments to our goodwill, intangible assets, fixed assets, inventory or customer receivable account balances.
Despite the potential for declines in future demand levels and results of operations, at present, we believe our capital structure is in a strong position. We have sufficient cash and available liquidity under our revolving credit facility to meet our debt service obligations, capital expenditure requirements and other short-term and long-term obligations for the foreseeable future.
Critical factors affecting our ability to succeed include: our ability to generate organic growth through product development, cross-selling and extending product-line offerings, and our ability to quickly and cost-effectively introduce and successfully launch new products; our ability to acquire and integrate companies or products that supplement existing product lines, add adjacent distribution channels and new customers, or expand our geographic coverage; our ability to manage our cost structure more efficiently via supply chain management, internal sourcing and/or purchasing of materials, selective outsourcing and/or purchasing of support functions, working capital management, and greater leverage of our administrative functions; and our ability to absorb, or recover via commercial actions, inflationary or other cost increases, including tariffs and duties.
Our overall business does not experience significant seasonal fluctuation, other than our fourth quarter, which has tended to be the lowest net sales quarter of the year due to holiday shutdowns at certain customers or other customers deferring capital spending to the following year. A growing amount of our sales is derived from international sources, which exposes us to certain risks, including currency risks.
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We are sensitive to price movements and availability of our raw materials supply. Our largest raw material purchases are for polypropylene, polyethylene, steel, aluminum, and other oil and metal-based purchased components, the costs for each of which are subject to volatility. There has also been volatility in certain of our input costs as a direct and indirect result of foreign trade policy, where tariffs on certain of our commodity-based products sourced from Asia have been instituted.
In addition, in 2025, the U.S. government announced baseline tariffs on products from all countries and additional individualized reciprocal tariffs on the countries with which the United States has the largest trade deficits, including China. We will continue to take actions to mitigate such increases, including implementing commercial pricing adjustments, holding extra inventories, resourcing to alternate suppliers and insourcing of previously sourced products. Although we believe we are generally able to mitigate the impact of higher commodity costs over time, we may experience additional material costs and disruptions in supply in the future and may not be able to pass along higher costs to our customers in the form of price increases or otherwise mitigate the impacts to our operating results.
Although we have escalator/de-escalator clauses in commercial contracts with certain of our customers to address fluctuations in input costs, or can modify prices based on market conditions to recover higher costs, our price increases generally lag the underlying input cost increase, and we cannot be assured of full cost recovery in the open market. If input costs increase at rapid rates, our ability to recover cost increases on a timely basis is made more difficult by the lag nature of these contracts.
Oil-based commodity costs are a significant driver of raw materials and purchased components used within our Packaging segment. As such, an increase in crude oil often is a precursor to rising polymeric raw material costs, for which we may experience a contractual commercial recovery lag.
Each year our businesses target continuous improvement initiatives in an effort to reduce, or otherwise offset, the impact of increased input and conversion costs through increased throughput and yield rates, with a goal of at least covering inflationary and market cost increases. In addition, we continuously review our operating cost structures to ensure alignment with current market demand.
We continue to evaluate alternatives to redeploy the cash generated by our businesses, one of which includes returning capital to our shareholders. In November 2025, our Board of Directors authorized us to increase the purchase of our common stock up to $150 million in the aggregate, adding to the $65.4 million remaining under the previous authorization. During 2025, 2024 and 2023, we purchased 3,124,866, 771,067 and 680,594 shares of outstanding common stock for $103.3 million, $19.3 million and $18.8 million, respectively. As of December 31, 2025, we had $48.9 million remaining under the repurchase authorization. See Note 24, " Subsequent Events ," included in Item 8, " Financial Statements and Supplementary Data ," within this Form 10-K for an update on our authorization.
In addition, in 2025, we declared quarterly dividends of $0.04 per share of common stock, aggregating to dividends declared and paid on common shares during 2025 of $6.6 million. We will continue to evaluate opportunities to return capital to shareholders through the purchase of our common stock, as well as dividends, depending on market conditions and other factors.
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Segment Information and Supplemental Analysis
The following table summarizes financial information for our reportable segments (dollars in thousands):
Year ended December 31,
As a Percentage of Net Sales
As a Percentage of Net Sales
As a Percentage of Net Sales
Net Sales
Packaging
Specialty Products
Total
Gross Profit
Packaging
Specialty Products
Total
Selling, General and Administrative
Packaging
Specialty Products
Corporate expenses
Total
Operating Profit (Loss)
Packaging
Specialty Products
Corporate
Total
Capital Expenditures
Packaging
Specialty Products
Corporate
Total
Depreciation
Packaging
Specialty Products
Corporate
Total
Amortization
Packaging
Specialty Products
Corporate
Total
The following table summarizes detail on the year-over-year sales growth percentages for our reportable segments for the year ended December 31, 2025 as compared to the year ended December 31, 2024:
Year to Date 2025 vs. Year to Date 2024
Organic
Acquisitions
Divestitures
Foreign Exchange
Total
Consolidated TriMas Corporation
Packaging
Specialty Products
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The following "Results of Operations Year Ended December 31, 2025 Compared with Year Ended December 31, 2024" section presents an analysis of our consolidated operating results displayed in the Consolidated Statement of Income.
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
The principal factors impacting us during the year ended December 31, 2025, compared with the year ended December 31, 2024 were:
• Increases in demand for products within our Packaging and Specialty Products segments;
• The divestiture of our Arrow Engine business;
• The recognition of a net benefit to recognize our asbestos insurance recovery asset and update our liability;
• Increased costs, primarily related to consulting costs and costs associated with actions to reorganize the corporate office;
• Environmental remediation expenses related to waste sites in which we had been named a potential responsible party;
• The impact of our debt refinancing activities;
• The year-over-year impact of accelerated depreciation charges in 2024 related to shortening the useful lives of certain machinery and equipment in our Specialty Products segment; and
• The decrease in our effective tax rate in 2025 as compared with 2024.
Overall, net sales increased $14.9 million, or 2.4%, to $645.7 million in 2025, as compared to $630.8 million in 2024. Organic sales, excluding the impact of currency exchange and acquisitions, increased $30.5 million, or 4.8%, driven by organic sales increases of 4.1% and 8.0% within our Packaging and Specialty Products segments, respectively, due to end market demand improvements and growth initiatives. These increases were partially offset by the impact of the divestiture of our Arrow Engine business in our Specialty Products segment. In addition, net sales increased by $2.2 million due to currency exchange, as our reported results in U.S. dollars were favorably impacted as a result of the weakening of the U.S. dollar relative to foreign currencies.
Gross profit margin (gross profit as a percentage of sales) approximated 21.4% and 20.5% in 2025 and 2024, respectively. Gross profit margin increased primarily due to higher sales levels in our Packaging segment, and the year-over-year impact of $8.2 million of accelerated depreciation charges for certain machinery and equipment within our Specialty Products segment. These improvements were partially offset by a $1.5 million write-off of certain inventory to the lower of cost or net realizable value and an increase of certain input costs in our Packaging segment and by the loss of sales related to the divestiture of our Arrow Engine business.
Operating profit margin (operating profit as a percentage of sales) approximated 6.4% and 2.4% in 2025 and 2024, respectively. Operating profit increased $26.1 million, to $41.3 million in 2025, as compared to $15.2 million in 2024, due to a $20 million decrease in net Corporate expenses, higher sales levels in our Packaging segment, and the year-over-year impact of $8.2 million of accelerated depreciation charges for certain machinery and equipment within our Specialty Products segment. These improvements were partially offset by a $1.5 million write-off of certain inventory to the lower of cost or net realizable value, an increase of certain input costs, and the impact of $1.2 million of net gains on sale of non-core properties in 2024 that did not repeat in our Packaging segment. Operating profit also decreased due to the loss of sales related to the divestiture of our Arrow Engine business in our Specialty Products segment and as a result of higher employee-related costs.
Interest expense decreased $1.5 million, to $18.0 million in 2025, as compared to $19.6 million in 2024, primarily due to a decrease in our interest rates on our revolving credit facility.
Other income increased $0.8 million to $1.0 million in 2025, from $0.2 million in 2024, as the impact of foreign currency translation was partially offset by increased pension expense.
The effective income tax rate for 2025 was (198.1)%, compared to 53.3% for 2024. We recorded an income tax benefit of $48.1 million in 2025, as compared to an income tax benefit of $2.2 million in 2024. During 2025, we reported domestic and foreign pre-tax income (loss) of $(7.6) million and $31.9 million, respectively, as compared to domestic and foreign pre-tax income (loss) of $(31.2) million and $27.0 million, respectively, in 2024. Our 2025 tax benefit is higher as a result of recognizing a $53.9 million tax benefit related to the tax-basis versus book-basis difference in our Aerospace business. Otherwise, the remaining difference is due to a change in the mix of domestic and foreign pre-tax results.
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Income (loss) from continuing operations increased $74.3 million to income of $72.3 million in 2025, compared to a loss of $2.0 million in 2024. This increase was primarily a result of an increase in operating profit of $26.1 million, an increase in income tax benefit of $45.8 million, a $1.5 million decrease in interest expense, and a $0.8 million increase in other income.
See below for a discussion of operating results by segment.
Packaging. Net sales increased $23.2 million, or 4.5% (of which 4.1% was organic and 0.4% was foreign currency exchange), to $535.5 million in 2025, as compared to $512.3 million in 2024. Sales of dispensing products used primarily for beauty, personal care and home care applications increased by $25.4 million. Sales of products used in life sciences markets increased by $7.7 million, sales of products used for industrial applications increased by $3.0 million, and sales of other consumer goods products increased by $7.2 million. These increases were partially offset by the decrease in sales of products used in food and beverage applications of $22.2 million. Net sales increased by $2.2 million due to currency exchange, as our reported results in U.S. dollars were favorably impacted as a result of the weakening U.S. dollar relative to foreign currencies, as compared to 2024.
Packaging's gross profit increased $3.8 million to $127.4 million, or 23.8% of sales, in 2025, as compared to $123.7 million, or 24.1% of sales, in 2024, due to higher sales levels as well as the favorable impact of prior year operational improvement actions. Although gross profit increased, gross profit margin decreased primarily due to increased input costs including higher tariffs and a $1.5 million write-off of certain inventory to the lower of cost or net realizable value.
Packaging's selling, general and administrative expenses increased $2.4 million to $58.8 million, or 11.0% of sales, in 2025, as compared to $56.4 million, or 11.0% of sales, in 2024, primarily due to higher employee-related costs.
Packaging's operating profit of $68.1 million, or 12.7% of sales, in 2025 remained relatively flat compared to $68.1 million, or 13.3% of sales, in 2024, as higher sales volume and the favorable impact of cost reduction efforts were offset by increased input costs, the write-off of certain inventory to the lower of cost or net realizable value, higher selling, general and administrative expenses, and the impact of $1.2 million of net gains on sale of non-core properties in 2024 that did not repeat.
Specialty Products. Net sales decreased $8.3 million, or 7.0% (of which 8.0% was organic and (15.0)% was due to the divestiture of Arrow Engine), to $110.2 million in 2025, as compared to $118.5 million in 2024. Sales of steel cylinders increased $9.5 million, or 9.5%, to $108.8 million, as compared to $99.3 million, due predominantly to improved demand for industrial applications as customers continued to work through high prior period inventory balances. Arrow Engine contributed $1.4 million of sales in 2025, as compared to $19.2 million in 2024. See Note 4, " Acquisitions and Sale of Business," to our consolidated financial statements attached within this Form 10-K.
Gross profit within Specialty Products increased $4.8 million to $10.7 million, or 9.7% of sales, in 2025, as compared to $5.9 million, or 5.0% of sales, in 2024, primarily due to the year-over-year impact from $8.2 million of accelerated depreciation charges in 2024 for certain machinery and equipment in our cylinder business that did not repeat in 2025. In addition, gross profit increased due to increased sales of steel cylinders and as a result of structural cost reductions made within our cylinder business. These increases were partially offset by the $4.4 million of 2024 gross profit generated by the Arrow Engine business, which was sold in January 2025.
Selling, general and administrative expenses within Specialty Products decreased $1.5 million to $6.3 million, or 5.7% of sales, in 2025, as compared to $7.8 million, or 6.6% of net sales, in 2024, primarily due to $0.9 million of lower expenses resulting from the January 2025 sale of the Arrow Engine business. The remainder of the decrease was primarily due to reduced spending levels related to structural cost reduction efforts within our cylinder business.
Operating profit (loss) within Specialty Products increased $6.2 million to an operating profit of $4.2 million, or 3.8% of sales, in 2025, as compared to an operating loss of $2.0 million, or 1.7% of sales, in 2024, primarily due to the year-over-year impact from $8.2 million of accelerated depreciation charges in 2024 for certain machinery and equipment in our cylinder business that did not repeat in 2025. In addition, operating profit increased due to increased sales of steel cylinders and as a result of structural cost reductions made within our cylinder business. These increases were partially offset by the $3.4 million of 2024 operating profit generated by the Arrow Engine business, which was sold in January 2025.
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Corporate. Corporate expenses, net included in operating profit consist of the following (dollars in millions):
Year ended December 31,
Corporate operating expenses
Non-cash stock compensation
Legacy-related expenses (benefit)
Gain on disposition of assets
Corporate expenses
Corporate expenses decreased $20.0 million to $31.0 million in 2025, from $51.0 million in 2024 due to:
• Corporate operating expenses increased $10.9 million to $46.9 million in 2025 from $36.0 million in 2024, as we incurred $3.7 million of corporate operating expenses (exclusive of non-cash stock compensation) associated with actions to reorganize the corporate office, $4.4 million in higher information technology costs including costs associated with the upgrade of certain key information technology applications, and higher employee-related costs.
• Non-cash stock compensation increased $4.3 million to $9.9 million in 2025 from $5.6 million in 2024, primarily due to $1.5 million related to actions to reorganize the corporate office, additional expense associated with inducement awards granted in 2025, and a change in the expected attainment of existing awards in 2024.
• Our legacy-related expenses (benefit) increased $29.8 million to a net benefit of $20.4 million in 2025 from expense of $9.4 million in 2024. This change was primarily due to a $33.3 million change in asbestos-related benefit (costs), net as we recognized a $27.8 million net benefit related to updating our asbestos studies in 2025, which consisted of a $35.8 million pre-tax benefit to recognize an insurance recovery asset, offset by a $8.0 million pre-tax charge to update our asbestos liability. This compares to a $5.5 million pre-tax charge in 2024 to update our asbestos liability. Also within our legacy expenses, our pre-tax charges for environmental matters increased $3.3 million as we recorded a pre-tax charge of $6.5 million in 2025 for environmental remediation for waste sites in which we had been named a potential responsible party, as compared to pre-tax charges of $3.2 million in 2024 for similar environmental matters.
• We recognized a $5.4 million pre-tax gain on the 2025 sale of our former Arrow Engine business.
Discontinued Operations. The results of discontinued operations consist of our Aerospace segment for which we entered into a definitive agreement to sell on November 4, 2025. Income from discontinued operations, net of income tax expense, was $47.8 million for the year ended December 31, 2025, as compared to $26.2 million for the year ended December 31, 2024. See Note 5, " Discontinued Operations ," to our consolidated financial statements within this Form 10-K.
Aerospace net sales increased $102.2 million, or 34.7% (of which 26.6% was organic and 8.1% related to acquisitions), to $396.4 million in 2025, as compared to $294.2 million in 2024. Acquisition-related sales growth from our February 2025 acquisition of GMT Aerospace was $23.9 million. Sales of our fasteners products increased by $64.4 million due to increases in aircraft build rates, improved production yield and commercial actions. Sales of our engineered components products increased by $14.0 million due to improved production throughput. Net sales decreased by $0.1 million due to currency exchange.
Gross profit within Aerospace increased $45.3 million to $115.2 million, or 29.1% of sales, in 2025, as compared to $69.9 million, or 23.8% of sales, in 2024. Gross profit increased primarily due to higher sales levels and resulting improved fixed cost absorption, a more favorable product sales mix and favorable commercial actions. Additionally, 2024 was impacted by increased costs and manufacturing inefficiencies resulting from a prolonged labor union strike that did not repeat. These increases in gross profit were partially offset by a $1.9 million purchase accounting charge related to the step-up of GMT Aerospace's inventory to fair value.
Selling, general and administrative expenses within Aerospace increased $10.2 million to $48.0 million, or 12.1% of sales, in 2025, as compared to $37.9 million, or 12.9% of sales, in 2024, primarily due to higher employee-related costs and higher ongoing selling, general and administrative costs associated with our acquisition of GMT Aerospace. Costs directly attributable to Aerospace and allocated to discontinued operations increased $3.0 million to $4.7 million in 2025, as compared to $1.7 million in 2024, primarily due to $3.1 million third-party transaction costs incurred in 2025 associated with the sale of Aerospace. These increases were partially offset by the impact of $1.8 million of costs related to the labor union strike in 2024 that did not repeat.
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Operating profit within Aerospace increased $35.0 million to $67.0 million, or 16.9% of sales, in 2025, as compared to $32.0 million, or 10.9% of sales, in 2024, primarily due to the impact of higher sales levels, improved fixed cost absorption, a more favorable product sales mix, the impact of the labor union strike in 2024 that did not repeat, and commercial actions. These increases were partially offset by higher selling, general and administrative expenses and the recognition of the purchase accounting charge related to the step-up of GMT Aerospace's inventory to fair value.
The following "Results of Operations Year Ended December 31, 2024 Compared with Year Ended December 31, 2023" section presents an analysis of our consolidated operating results displayed in the Consolidated Statement of Income for those areas that have changed as a result of accounting for our Aerospace segment as a discontinued operation. A discussion regarding our results of operations for our Packaging and Specialty Products segments for the year ended December 31, 2024 compared to the year ended December 31, 2023, which did not change, can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission on February 27, 2025.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
The principal factors impacting us during the year ended December 31, 2024 compared with the year ended December 31, 2023 were:
• Increases in demand for products within our Packaging segment;
• Significant demand decrease in our Specialty Products segment;
• The impact of our recent acquisition of Aarts in February 2023;
• Expedited freight costs within our Packaging segment related to the abrupt increase in demand for certain products;
• Accelerated depreciation charges related to shortening the useful lives of certain machinery and equipment in our Specialty Products segment;
• Expenses associated with our asbestos exposure to update the liability to recent actuarial studies;
• Environmental remediation expenses related to waste sites in which we had been named a potential responsible party;
• The impact of realignment expenses taken in 2023 in response to changes in end market demand; and
• A decrease in our effective tax rate in 2024 compared with 2023.
Overall, net sales decreased $21.4 million, or 3.3%, to $630.8 million in 2024, as compared to $652.2 million in 2023. Acquisition-related sales growth was $2.8 million, from our February 2023 acquisition of Aarts. Organic sales, excluding the impact of currency exchange and aquisition, decreased $22.1 million, or 3.4%, driven by an organic sales decrease of 37.2% within our Specialty segment, due to lower market demand, partially offset by an organic sales increase of 10.3% within our Packaging segment due to end market demand improvements and growth initiatives. The increase in net sales was also offset by $2.0 million due to currency exchange, as our reported results in U.S. dollars were unfavorably impacted as a result of the strengthening U.S. dollar relative to foreign currencies.
Gross profit margin (gross profit as a percentage of sales) approximated 20.5% and 23.5% in 2024 and 2023, respectively. Gross profit margin decreased due to reduced sales, significantly less favorable absorption of fixed costs, and $8.2 million of accelerated depreciation charges for certain machinery and equipment within our Specialty Products segment as well as increased input costs, the impact of a $2.6 million commercial settlement in 2023 that did not repeat in 2024, and higher production costs, which started to abate in fourth quarter 2024, related to demand reversion above peak capacity for certain product lines in our Packaging segment. The decrease in gross profit was partially offset by higher sales levels and related improved fixed cost absorption, the impact of a charge related to purchase accounting in 2023 that did not repeat in 2024, and the favorable impact of lower year-over-year realignment costs all within our Packaging segment.
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Operating profit margin (operating profit as a percentage of sales) approximated 2.4% and 7.8% in 2024 and 2023, respectively. Operating profit decreased $35.5 million, to $15.2 million in 2024, as compared to an operating profit of $50.7 million in 2023, primarily due to decreased sales, significantly less favorable absorption of fixed costs and accelerated depreciation charges for certain machinery and equipment within our Specialty Products segment, a $5.5 million pre-tax charge related to updating our asbestos studies, and $3.2 million of pre-tax charges related to our environmental remediation obligations. Additionally, operating profit decreased due to increased input costs and higher production costs, which started to abate in fourth quarter 2024, related to high demand for certain dispensing products within our Packaging segment. These decreases were partially offset by higher sales levels and related improved fixed cost absorption, the impact of a charge related to purchase accounting in 2023 that did not repeat, lower realignment costs, and the impact of $1.0 million of higher net gains on sales of non-core properties all within the Packaging segment.
Interest expense increased $3.6 million, to $19.6 million in 2024, as compared to $15.9 million in 2023, due to a higher effective interest rate and an increase in our weighted average borrowings as a result of increased borrowings from our revolving credit facility.
Other income, net decreased $0.9 million to $0.2 million in 2024, from $1.1 million in 2023, primarily due to increased foreign translation losses, which was partially offset by a non-cash settlement charge for our Canadian defined benefit obligations during 2023.
Income tax (benefit) expense decreased $8.5 million, to $2.2 million of income tax benefit for 2024, as compared to $6.3 million of income tax expense in 2023. The effective income tax rate for 2024 was 53.3%, compared to 17.6% for 2023. During 2024, we reported domestic and foreign pre-tax (loss) income of $(31.2) million and $27.0 million, respectively, as compared to domestic and foreign pre-tax income of $3.9 million and $32.0 million, respectively, in 2023. The rate for 2024 is higher primarily as a result of the overall pre-tax loss in 2024 and a change in the mix of domestic and foreign pre-tax results.
Income from continuing operations decreased $31.5 million to $2.0 million of net loss in 2024, from $29.5 million of net income in 2023. The decrease was primarily the result of a decrease in operating profit of $35.5 million, a $3.6 million increase in interest expense, as well as a $0.9 million decrease in other income, partially offset by a decrease in income tax expense of $8.5 million.
Corporate Expenses. Corporate expenses included in operating profit consist of the following (dollars in millions):
Year ended December 31,
Corporate operating expenses
Non-cash stock compensation
Legacy expenses
Corporate expenses
Corporate expenses included in operating profit increased $5.1 million to $51.0 million in 2024, from $45.9 million in 2023, primarily due to a $5.5 million pre-tax charge related to updating our asbestos studies in 2024, $3.2 million of pre-tax charges related to our environment remediation obligations and $1.3 million of higher professional costs associated with business acquisition, diligence and transaction related activity. These increases were partially offset by a $3.3 million decrease in non-cash stock compensation due to expected attainment of existing awards and a $1.3 million decrease in technology costs, as $5.3 million of higher costs associated with upgrades of certain of our information technology applications were more than offset by $6.6 million of technology costs allocated to our segments that was not allocated in 2023.
Discontinued Operations. The results of discontinued operations consists of our Aerospace segment for which we entered into a definitive agreement to sell on November 4, 2025. Income from discontinued operations, net of income tax expense, was $26.2 million for the year ended December 31, 2024, as compared to $10.8 million for the year ended December 31, 2023. See Note 5, " Discontinued Operations ," to our consolidated financial statements attached herein.
Aerospace net sales increased $52.8 million, or 21.9% (of which 16.6% was organic and 5.3% related to acquisitions), to $294.2 million in 2024, as compared to $241.4 million in 2023. Acquisition-related sales growth from our April 2023 acquisition of Weldmac was $12.9 million. Sales of our fasteners products increased by $22.3 million due to increases in aircraft build rates, improved production yield and commercial recoveries, partially offset by a decrease in sales due to the labor union strike at our Aerospace facility in Commerce, California. Sales of our engineered components products increased by $17.6 million due to improved throughput, commercial recoveries and new business wins.
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Gross profit within Aerospace increased $21.9 million to $69.9 million, or 23.8% of sales, in 2024, as compared to $48.0 million, or 19.9% of sales, in 2023. Gross profit increased primarily due to higher sales levels and resulting improved fixed cost absorption, reduced material availability constraints, a more favorable product sales mix, favorable commercial recoveries, and a $2.4 million purchase accounting charge related to the step-up of inventory to fair value in 2023 that did not repeat. These increases were partially offset by increased costs and manufacturing inefficiencies resulting from the labor union strike.
Selling, general and administrative expenses within Aerospace increased $5.8 million to $37.9 million, or 12.9% of sales, in 2024, as compared to $32.1 million, or 13.3% of sales, in 2023, primarily due to higher employee-related costs, higher information technology costs, $1.8 million of increased costs related to the labor union strike, and higher ongoing selling, general and administrative costs associated with our acquisition of Weldmac. These increases were partially offset by lower legal costs and lower intangible asset amortization expense due to certain assets becoming fully amortized. Additionally, costs directly attributable to Aerospace and allocated to discontinued operations increased $1.0 million to $1.7 million in 2024, as compared to $0.7 million in 2023 primarily due to additional non-cash stock compensation expense in 2024.
Operating profit within Aerospace increased $17.2 million to $32.0 million, or 10.9% of sales, in 2024, as compared to $14.8 million, or 6.1% of sales, in 2023, primarily due to the impact of higher sales levels, improved fixed cost absorption, reduced material availability production constraints, a more favorable product sales mix, commercial recoveries, a purchase accounting adjustment related to Weldmac's inventory step-up to fair value in 2023 that did not repeat, and a $1.1 million indefinite-lived intangible asset impairment charge in 2023 that did not repeat. These increases were partially offset by higher selling, general and administrative expenses and increased costs and manufacturing inefficiencies related to the strike.
Liquidity and Capital Resources
Cash Flows
Cash flows provided by operating activities in 2025 were $117.5 million, as compared to $63.8 million in 2024. Significant changes in cash flows provided by operating activities and the reasons for such changes are as follows:
• In 2025, the Company generated $118.3 million in cash flows, based on the reported net income of $120.1 million, which includes $72.3 million income from continuing operations and $47.8 million income from discontinued operations, and after considering the effects of non-cash items related to depreciation, amortization of intangible assets and debt issuance costs, (gain) loss on dispositions of assets, changes in deferred income taxes, stock-based compensation, provision for losses on accounts receivable, change in asbestos and environmental liability estimates and other operating activities. In 2024, the Company generated $107.3 million in cash flows based on the reported net income of $24.3 million, which includes a $2.0 million loss from continuing operations and $26.2 million income from discontinued operations, and after considering the effects of similar non-cash items and impairment of indefinite-lived intangible assets.
• Decreases in accounts receivable resulted in a source of cash of $1.8 million in 2025, while an increase in accounts receivable resulted in a use of cash of $20.5 million in 2024. Changes in our accounts receivable in 2025 and 2024 are due primarily to the timing of sales and related collection of cash during the periods. Days sales outstanding of receivables decreased by five days in 2025 and increased by two days in 2024.
• We increased our investment in inventory by $4.3 million and $21.2 million in 2025 and 2024, respectively. Our days sales in inventory increased by two days in 2025, primarily as a result of investing in certain inventories as a result of increased customer demand. Our days sales in inventory decreased by four days in 2024, primarily as a result of moderating inventory levels with higher sales levels within our Packaging and Aerospace segments.
• Decreases in prepaid expenses and other assets resulted in a source of cash of $4.1 million in 2025, while increases in prepaid expenses and other assets resulted in a use of cash of $2.3 million in 2024. The changes in 2025 and 2024 are primarily as a result of the timing of payments made for income taxes and certain operating expenses.
• Decreases in accounts payable and accrued liabilities resulted in a use of cash of $2.4 million in 2025, as compared to a source of cash of $0.6 million in 2024. Our days accounts payable on hand decreased by three days through 2025 and decreased by six days through 2024. Our days accounts payable on hand fluctuate primarily as a result of the timing of payments made to suppliers and the mix of vendors and related terms.
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Net cash used for investing activities was $64.1 million and $47.0 million in 2025 and 2024, respectively. During 2025, we invested $48.4 million in capital expenditures as we continued our investment in growth, capacity and productivity-related capital projects. During 2025, we paid $37.7 million, net of cash acquired, to acquire the aerospace business of GMT Gummi-Metall-Technik GmbH. We also received proceeds of $22.0 million from the sale of our Arrow Engine business and disposition of property and equipment. During 2024, we invested $51.0 million in capital expenditures and received proceeds of $4.0 million from the disposition of property and equipment.
Net cash used for financing activities was $46.5 million and $28.6 million in 2025 and 2024, respectively. During 2025, we received net proceeds of $66.5 million from borrowings on our revolving credit facilities, paid $1.3 million for debt financing fees, purchased $103.3 million of outstanding common stock, used a net cash amount of $2.0 million related to our stock compensation arrangements, paid dividends of $6.6 million, and received $0.3 million related to other financing activities. Our reported net proceeds from borrowings on our revolving credit facilities considers the impact of foreign currency translation. During 2024, we received net proceeds of $1.4 million from borrowings on our revolving credit facilities, purchased $19.3 million of outstanding common stock, used a net cash amount of $1.8 million related to our stock compensation arrangements, paid dividends of $6.6 million, and paid $2.3 million related to other financing activities, which included $2.25 million of cash paid as final contingent consideration for our acquisition of the Weldmac Manufacturing Company.
Our Debt and Other Commitments
The $400.0 million aggregate principal amount of our senior notes due 2029 ("Senior Notes") accrues interest at a rate of 4.125% per annum, payable semi-annually in arrears on April 15 and October 15. The payment of principal and interest is jointly and severally guaranteed, on a senior unsecured basis by certain named subsidiaries of the Company. The Senior Notes are pari passu in right of payment with all existing and future senior indebtedness and subordinated to all existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. In 2025, our consolidated subsidiaries that do not guarantee the Senior Notes represented 30% of the total of guarantor and non-guarantor net sales, treating each as a consolidated group and excluding intercompany transactions between guarantor and non-guarantor subsidiaries. In addition, our non-guarantor subsidiaries represented 25% and 13% of the total guarantor and non-guarantor assets and liabilities, respectively, as of December 31, 2025, treating the guarantor and non-guarantor subsidiaries each as a consolidated group.
We may redeem all or part of the Senior Notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, to the redemption date, if redeemed during the twelve-month period beginning on April 15 of the years indicated below:
Year
Percentage
2026 and thereafter
We are party to a credit agreement ("Credit Agreement"), consisting of a $250.0 million senior secured revolving credit facility, which permits borrowings denominated in specific foreign currencies, subject to a $125.0 million sub limit, maturing on March 31, 2030.
As of December 31, 2025, monthly borrowings under the Credit Agreement are subject to benchmark interest rates determined based on the currency denomination of borrowings, with British pound sterling borrowings subject to the Sterling Overnight Index Average, Euro borrowings subject to the Euro InterBank Offered Rate and U.S. dollar borrowings subject to the Secured Overnight Financing Rate, each plus a spread that ranges from 1.375% to 2.00% based upon the leverage ratio, as defined, as of the most recent determination date.
The Credit Agreement provides for incremental revolving credit commitments in an amount not to exceed the greater of $200.0 million and an amount such that, after giving effect to such incremental commitments and the incurrence of any other indebtedness substantially simultaneously with the making of such commitments, the senior secured net leverage ratio, as defined in the Credit Agreement, is no greater than 3.00 to 1.00. The terms and conditions of any incremental revolving credit facility commitments must be no more favorable than the existing credit facility.
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Amounts drawn under our revolving credit facility fluctuate daily based upon our working capital and other ordinary course needs. Availability under our revolving credit facility depends upon, among other things, compliance with our Credit Agreement's financial covenants. Our Credit Agreement contains various negative and affirmative covenants and other requirements affecting us and our subsidiaries, including the ability to, subject to certain exceptions and limitations, incur debt, liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, assets dispositions, sale-leaseback transactions, hedging agreements, dividends and other restricted payments, transactions with affiliates, restrictive agreements and amendments to charters, bylaws, and other material documents. The terms of our Credit Agreement require us and our subsidiaries to meet certain restrictive financial covenants and ratios computed quarterly, including a maximum total net leverage ratio (total consolidated indebtedness plus outstanding amounts under any accounts receivable securitization facility, less the aggregate amount of certain unrestricted cash and unrestricted permitted investments, as defined, over consolidated EBITDA, as defined) and a minimum interest expense coverage ratio (consolidated EBITDA, as defined, over the sum of consolidated cash interest expense, as defined, and preferred dividends, as defined). Our permitted total net leverage ratio under the Credit Agreement is 4.00 to 1.00 as of December 31, 2025. If we were to complete an acquisition which qualifies for a Covenant Holiday Period, as defined in our Credit Agreement, then our permitted total net leverage ratio cannot exceed 4.50 to 1.00 during that period. Our actual total net leverage ratio was 2.68 to 1.00 at December 31, 2025. Our permitted interest expense coverage ratio under the Credit Agreement is 3.00 to 1.00, and our actual interest expense coverage ratio was 10.35 to 1.00 as of December 31, 2025. In December 2025, we amended the Credit Agreement to clarify the inclusion of Aerospace discontinued operations in the definition of consolidated net income used in ratio calculations. At December 31, 2025, we were in compliance with our financial covenants.
The following is a reconciliation of net income, as reported, which is a GAAP measure of our operating results, to Consolidated Bank EBITDA, as defined in our Credit Agreement, for the year ended December 31, 2025. We present Consolidated Bank EBITDA to show our performance under our financial covenants. Dollars are in thousands in the below tables.
Year ended December 31, 2025
Net income
Bank stipulated adjustments:
Interest expense, net (as defined)
Income tax benefit
Depreciation and amortization
Impairment charges and asset write-offs
Non-cash compensation expense (1)
Other non-cash expenses or losses
Non-recurring expenses or costs (2)
Extraordinary, non-recurring or unusual gains or losses (3)
Effects of purchase accounting adjustments
Business and asset dispositions
Permitted acquisitions
Currency gains and losses
Consolidated Bank EBITDA, as defined
December 31, 2025
Total Indebtedness, as defined (4)
Consolidated Bank EBITDA, as defined
Actual total net leverage ratio
Covenant requirement
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Year ended December 31, 2025
Interest expense, as defined
Bank stipulated adjustments:
Interest income
Non-cash amounts attributable to amortization of financing costs
Total Consolidated Cash Interest Expense, as defined
December 31, 2025
Consolidated Bank EBITDA, as defined
Total Consolidated Cash Interest Expense, as defined
Actual interest expense coverage ratio
Covenant requirement
(1) Non-cash compensation expenses resulting from the grant of equity awards.
(2) Non-recurring costs and expenses relating to diligence and transaction costs, severance, relocation and realignment.
(3) Includes asbestos-related (benefit) costs, net and change in environmental liability estimate.
(4) Includes $12.8 million of derivative liabilities and $1.3 million of finance leases as of December 31, 2025.
The Credit Agreement allows issuance of letters of credit, not to exceed $40.0 million in aggregate, against revolving credit facility commitments. At December 31, 2025, we had $72.8 million outstanding under our revolving credit facility and had $171.2 million potentially available after giving effect to $6.0 million of letters of credit issued and outstanding. At December 31, 2024, we had $1.5 million outstanding under our revolving credit facility and had $292.2 million potentially available after giving effect to $6.3 million of letters of credit issued and outstanding. Our letters of credit are used for a variety of purposes, including support of certain operating lease agreements, vendor payment terms and other subsidiary operating activities, and to meet various states' requirements to self-insure workers' compensation claims, including incurred but not reported claims. Our borrowing capacity was not reduced by leverage restrictions contained in the Credit Agreement as of December 31, 2025. After consideration of leverage restrictions contained in the Credit Agreement, as of December 31, 2024 we had $216.7 million of borrowing capacity available for general corporate purposes.
We rely upon our cash flow from operations and available liquidity under our revolving credit facility to fund our debt service obligations and other contractual commitments, working capital and capital expenditure requirements. At the end of each quarter, we have historically used cash on hand from our domestic and certain foreign subsidiaries to pay down amounts outstanding under our revolving credit facility, as applicable.
Our weighted average borrowings were $434.4 million during 2025, compared to $433.9 million during 2024, primarily due to the aggregate principal balance on our senior notes as well as borrowings on revolving credit facilities.
In May 2021, we, through one of our non-U.S. subsidiaries, entered into a revolving loan facility with a borrowing capacity of $4 million. The facility is guaranteed by TriMas Corporation. There were no borrowings on this loan facility as of December 31, 2025, and 2024.
Cash management related to our revolving credit facility is centralized. We monitor our cash position and available liquidity on a daily basis and forecast our cash needs on a weekly basis within the current quarter and on a monthly basis outside the current quarter over the remainder of the year. Our business and related cash forecasts are updated monthly.
The majority of our cash on hand as of December 31, 2025, is located in jurisdictions outside the United States. We have available funding under our revolving credit facility of $171.2 million at December 31, 2025. Based on forecasted cash sources and requirements inherent in our business plans, we believe that our liquidity and capital resources, including anticipated cash flows from operations, will be sufficient to meet our debt service, capital expenditure and other short-term and long-term obligation needs for the next 12 months and for the foreseeable future, as well as dividends and share repurchases.
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We are subject to variable interest rates on our revolving credit facility, which is subject to a benchmark interest rate determined based on the currency denomination of borrowings. At December 31, 2025, the Prime rate approximated 6.8%, the 1-Month SOFR approximated 3.9% and the 1-Month EURIBOR approximated 1.9%. Based on our variable rate-based borrowings outstanding at December 31, 2025, a 1% increase in the per annum interest rate would increase our interest expense by $0.7 million annually.
In addition to our long-term debt, we have other cash commitments related to leases. The majority of our lease transactions are accounted for as operating leases, and we incurred rent expense related thereto of $12.2 million in 2025. We expect leasing will continue to be an available financing option to fund future capital expenditure requirements.
In November 2025, we announced our Board of Directors had authorized us to increase the purchase of our common stock up to $150 million in the aggregate, adding to the $65.4 million remaining under the previous authorization. During 2025, 2024 and 2023, we purchased 3,124,866, 771,067 and 680,594 shares of our outstanding common stock for $103.3 million, $19.3 million and $18.8 million, respectively. Since the initial authorization through December 31, 2025, we have purchased 9,691,430 shares of our outstanding common stock for an aggregate purchase price of $285.7 million. We will continue to evaluate opportunities to return capital to shareholders through the purchase of our common stock, depending on market conditions and other factors.
Under various agreements, we are obligated to make future cash payments in fixed amounts. These include payments under our long-term debt agreements, rent payments required under operating and finance lease agreements, certain benefit obligations and interest obligations on our long-term debt. The following table summarizes our material contractual cash obligations as of December 31, 2025 (dollars in thousands).
Payments Due by Periods
Total
Less than
One Year
1 - 3 Years
3 - 5 Years
More than
5 Years
Contractual and other cash obligations:
Long-term debt
Operating lease obligations
Finance lease obligations
Benefit obligations (a)
Interest obligations (b)
Total contractual and other cash obligations
(a) Benefit obligations for both continuing and discontinued operations.
(b) Our Senior Notes bear interest at 4.125%. The future interest obligations calculation excludes the impact of our cross-currency swap agreements. See Note 13, " Derivative Instruments ," included in Item 8, " Financial Statements and Supplementary Data ," within this Form 10-K for additional information.
The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a reasonable estimate of the timing and amount of cash flows from future tax settlements cannot be determined. For additional information, refer to Note 22, " Income Taxes ," included in Item 8, " Financial Statements and Supplementary Data ," within this Form 10-K.
Market Risk
We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. The functional currencies of our foreign subsidiaries are primarily the local currency in the country of domicile. We manage these operating activities at the local level and revenues and costs are generally denominated in local currencies; however, results of operations and assets and liabilities reported in U.S. dollars will fluctuate with changes in exchange rates between such local currencies and the U.S. dollar.
We use derivative financial instruments to manage currency risks associated with our procurement activities denominated in currencies other than the functional currency of our subsidiaries and the impact of currency rate volatility on our earnings. As of December 31, 2025, we were party to foreign exchange forward and swap contracts to hedge changes in foreign currency exchange rates with notional amounts of $ 139.9 million. We also use cross-currency swap agreements to mitigate currency risks associated with the net investment in certain of our foreign subsidiaries. See Note 13, " Derivative Instruments ," included in Item 8, " Financial Statements and Supplementary Data ," within this Form 10-K for additional information.
We are also subject to interest risk as it relates to our long-term debt. We have historically used interest rate swap agreements to fix the variable portion of our debt to manage this risk.
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Common Stock
TriMas is listed in the NASDAQ Global Select Market SM . Our stock trades under the symbol "TRS."
Credit Rating
We and certain of our outstanding debt obligations are rated by Standard & Poor's and Moody's. On December 18, 2025, Moody's affirmed a Ba3 rating to our Senior Notes, as presented in Note 12, " Long-term Debt " included in Item 8, "Financial Statements and Supplementary Data" within this Form 10-K. Moody's placed the Ba2 Corporate Family Rating under review for possible downgrade on November 6, 2025 and updated its outlook to under review following the announcement of the Aerospace sale. On August 6, 2025, Standard & Poor's affirmed a BB- rating to our Senior Notes. Standard & Poor's also affirmed a BB corporate credit rating and maintained its outlook as stable. If our credit ratings were to decline, our ability to access certain financial markets may become limited, our cost of borrowings may increase, the perception of us in the view of our customers, suppliers and security holders may worsen and as a result, we may be adversely affected.
Outlook
We delivered strong financial results for 2025, as well as continued to streamline our portfolio, driven by increased demand for our products within our Packaging segment and our cylinder business in our Specialty Products segment. During 2025, we successfully divested of our Arrow Engine business. Additionally, we entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Takeoff Buyer, Inc. (the “Purchaser”), an affiliate of Tinicum L.P. and funds managed by Blackstone, Inc., to sell TriMas Aerospace (the "Transaction"). The Transaction allows us to right-size the portfolio and intensify our attention on our Packaging and Specialty Products businesses, both of which are well-positioned for continued growth and operational improvement.
Early in 2026, we executed a comprehensive organizational realignment to streamline operations, strengthen customer responsiveness and drive sustainable cost savings. The realignment integrates select corporate and business functions to simplify the structure, eliminates duplication and improves operational efficiency. These initiatives are expected to generate more than $10 million in savings in 2026 and approximately $15 million on an annualized basis.
As part of this effort, TriMas Packaging is restructuring its commercial and operational model to eliminate silos, accelerate decision-making, and deliver more integrated customer solutions. The changes include unifying sales teams, standardizing operations across facilities and reducing management layers to improve speed, accountability and innovation. Key initiatives include brand unification, expanded operational excellence programs, technology implementations and manufacturing footprint optimization. Collectively, these actions are expected to strengthen TriMas’ operating model, enhance customer satisfaction and support sustainable long-term value creation.
We believe our capital structure remains strong and that we have sufficient headroom under our financial covenants, and ample cash and available liquidity under our revolving credit facility, to meet our debt service, capital expenditure and other short-term and long-term obligations for the next 12 months and for the foreseeable future. We also plan to redeploy the proceeds from the Transaction in ways that enhance long-term value to our shareholders, employees and customers through prioritizing organic growth investments, pursuing strategically aligned acquisition opportunities and repurchasing shares.
Impact of New Accounting Standards
See Note 2, " New Accounting Pronouncements ," included in Item 8, " Financial Statements and Supplementary Data ," within this Form 10-K.
Critical Accounting Policies
The following discussion of accounting policies is intended to supplement the accounting policies presented in Note 3, " Summary of Significant Accounting Policies " included in Item 8, " Financial Statements and Supplementary Data ," within this Form 10-K. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, our evaluation of business and macroeconomic trends, and information from other outside sources, as appropriate.
Impairment of Long-Lived Assets and Definite-Lived Intangible Assets. We review, on at least a quarterly basis, the financial performance of each business unit for indicators of impairment. In reviewing for impairment indicators, we also consider events or changes in circumstances such as business prospects, customer retention, market trends, potential product obsolescence, competitive activities and other economic factors. An impairment loss is recognized when the carrying value of an asset group exceeds the future net undiscounted cash flows expected to be generated by that asset group. The impairment loss recognized is the amount by which the carrying value of the asset group exceeds its fair value.
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Goodwill and Indefinite-Lived Intangibles. We assess goodwill and indefinite-lived intangible assets for impairment at the reporting unit level on an annual basis as of October 1, by reviewing relevant qualitative and quantitative factors. More frequent evaluations may be required if we experience changes in our business climate or as a result of other triggering events that take place. An impairment loss is recognized when the carrying value of the asset exceeds its fair value.
We determine our reporting units at the individual operating segment level, or one level below, when there is discrete financial information available that is regularly reviewed by segment management for evaluating operating results. For purposes of our 2025 goodwill impairment test as of October 1, 2025, which preceded the announced sale of our Aerospace business, we had five reporting units, all of which had goodwill, within our three reportable segments.
We first perform a qualitative assessment for our annual goodwill impairment test and for our indefinite-lived intangible asset impairment test, which involves significant use of management's judgment and assumptions to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount. In conducting the qualitative assessment, we consider macroeconomic conditions, industry and market considerations, overall financial performance, entity and reporting unit specific events, capital markets pricing, recent fair value estimates and carrying amounts, as well as legal, regulatory, and contractual factors. These factors are all considered in reaching a conclusion about whether it is more likely than not that the fair values of the intangible assets are less than the carrying values. If we conclude that further testing is required, we would perform a quantitative valuation to estimate the fair value of our intangible assets.
For purposes of the 2025 annual impairment tests, we performed qualitative assessments for all reporting units except the reporting units specified below for which we elected to perform a quantitative assessment. Based on results of the qualitative assessments, we determined there were no indications that the fair value of a reporting unit or indefinite-lived intangible asset was less than its carrying value; therefore, we determined that quantitative goodwill impairment tests were not required for all reporting units included in the qualitative assessment.
We performed a quantitative assessment for the Life Sciences reporting unit within the Packaging segment and the Norris Cylinder reporting unit within the Specialty segment. In conducting the quantitative analysis, we determined the estimated fair value utilizing both income and market-based approaches. The income approach relies on the present value of estimated future cash flows of the business, discounted using a rate appropriately reflecting the risks inherent in the cash flows. The market approach relies on market data of other public companies that we deem comparable in operations to our reporting units. Based on results of the 2025 quantitative assessment, we determined there were no indications that the fair value of the Life Sciences and Norris Cylinder reporting units were less than their carrying values. Upon completion of the goodwill impairment test, we determined that the fair values of the Life Sciences and Norris Cylinder reporting units exceeded their carrying values by approximately 9%, and 64%, respectively, and thus there was no goodwill impairment.
The techniques used in our quantitative impairment test incorporated a number of assumptions that we believe to be reasonable and to reflect the current market conditions. Assumptions in estimating future cash flows and earnings were based on Level 3 inputs under the fair value hierarchy and were primarily related to customer demand and revenue growth, and associated profitability and cash flows. To provide a level of sensitivity analysis, for the Life Sciences reporting unit a 1% increase in the weighted average cost of capital would have resulted in a goodwill impairment charge of approximately $0.9 million, while a 0.5% decrease in the terminal growth rate would have resulted in no impairment to goodwill. For the Norris Cylinder reporting unit a 1% increase in the weighted average cost of capital or a 0.5% decrease in the terminal growth rate would have resulted in no impairment to goodwill.
Changes in future results, assumptions, and estimates from those used in the quantitative impairment test may lead to an outcome where impairment charges would be required in future periods. Specifically, actual results may vary from management's forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions. Further, continued adverse or worsening market conditions could result in the recognition of additional impairment if we determine that the fair value of our Life Sciences reporting unit has fallen below its carrying value. Certain circumstances that could reasonably be expected to negatively affect the underlying key assumptions and impact the estimated fair value of our Life Sciences reporting unit may include such items as: (i) a decrease in expected future cash flows, (ii) inability to achieve the sales targeted as part of our strategic growth initiatives, and (iii) inability to efficiently leverage the projected sales growth at expected margin rates.
Additionally, we performed a quantitative assessment for the indefinite-lived intangible assets within the packaging-related Life Sciences reporting unit after electing the option to bypass the qualitative assessment. The relief-from-royalty method involves the estimation of appropriate market royalty rates for our indefinite-lived intangible assets and the application of these royalty rates to forecasted net sales attributable to the intangible assets. The resulting cash flows are then discounted to present value, using a rate appropriately reflecting the risks inherent in the cash flows, which is compared to the carrying value of the assets. Upon completion of the quantitative impairment test, we determined there were no indications that the fair value of the Life Sciences indefinite-lived intangible asset was less than its carrying value.
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Future declines in sales and/or operating profit, declines in our stock price, or other changes in our business or the markets for our products could result in further impairments of our goodwill and indefinite-lived intangible assets.
Pension Benefits. We engage independent actuaries to compute the amounts of liabilities and expenses under defined benefit pension plans, subject to the assumptions that we determine are appropriate based on historical trends, current market rates and future projections as of the measurement date. Annually, we review the actual experience compared to the most significant assumptions used and makes adjustments to the assumptions, if warranted. Discount rates are based upon an expected benefit payments duration analysis and the equivalent average yield rate for high-quality fixed-income investments. Pension benefits are funded through deposits with trustees and the expected long-term rate of return on plan assets is based upon actual historical returns modified for known changes in the market and any expected change in investment policy. Certain accounting guidance, including the guidance applicable to pensions, does not require immediate recognition of the effects of a deviation between actual and assumed experience or the revision of an estimate. This approach allows the favorable and unfavorable effects that fall within an acceptable range to be netted.
Income Taxes. We compute income taxes using the asset and liability method, whereby deferred income taxes using current enacted tax rates are provided for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities and for operating loss and tax credit carryforwards. We determine valuation allowances based on an assessment of positive and negative evidence on a jurisdiction-by-jurisdiction basis and record a valuation allowance to reduce deferred tax assets to the amount more likely than not to be realized. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense.
Asbestos-related Matters. We utilize known facts and historical trends for Company-specific and general market asbestos-related activity, as well as an actuarial valuation in determining estimated required reserves and related insurance recoveries, which we believe are probable and reasonably estimable. We accrue loss reserves and record the related insurance recovery asset for asbestos-related matters based upon an estimate of the ultimate liability and recovery for claims incurred, whether reported or not, including an estimate of future settlement costs and costs to defend. Asbestos-related accruals and insurance recovery assets are assessed at each balance sheet date to determine if the liability and asset remains reasonably stated. Accruals for asbestos-related matters are included in "Accrued liabilities" and "Other long-term liabilities" and asbestos-related insurance recoveries are included in "Prepaid expenses and other current assets" and "Other assets" in the consolidated balance sheet.
Other Loss Reserves. We have other loss exposures related to insurance, litigation and environmental claims. Establishing loss reserves for these matters requires the use of estimates and judgment in regard to risk exposure and ultimate liability. We are generally party to high deductible insurance programs for losses and liabilities related principally to workers' compensation, health and welfare claims and comprehensive general, product and vehicle liability. Generally, we are responsible for up to $0.8 million per occurrence under our retention program for workers' compensation, up to $1.5 million per occurrence under our retention programs for comprehensive general, product and vehicle liability, and have a $0.4 million per occurrence stop-loss limit with respect to our self-insured group medical plan. We accrue loss reserves up to our retention amounts based upon our estimates of the ultimate liability for claims incurred, including an estimate of related litigation defense costs, and an estimate of claims incurred but not reported using actuarial assumptions about future events. We accrue for such items when such amounts are reasonably estimable and probable. We utilize known facts and historical trends, as well as actuarial valuations in determining estimated required reserves. Changes in assumptions for factors such as medical costs and actual experience could cause these estimates to change significantly.
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