TRS - Earnings call transcript Q3 2018

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Operator

Good day and welcome to the TriMas Third Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Sherry Lauderback. Ma'am, please go ahead.

Sherry Lauderback

to Corporation's welcome earnings quarter and call. you the third TriMas XXXX Thank call Amato, are CEO on today Participating the Tom Zalupski, Chief and our TriMas' Financial Officer. Bob and President results remarks our will prepared the for up questions. call XXXX our After open third quarter outlook, and on we your updated In the PowerPoint results, our presentation have order Company the Investors the included website, our assist of with under section. on press to www.trimascorp.com, review we release and

today call In XXX-XXX-XXXX by addition, later of be of calling this a will a code replay with available replay XXXXXXX.

this non-GAAP also may our would TriMas' CEO. regarding to website financial this our for an basis, impact over adjusted the uncertainties. statements, would like factors information President I Before this publicly of measures call which any started, in between items. no of forward-looking the list conference supplement XX-K the Form appendix to to on get results on available Amato, financial as may and point, our of presentation, are could or we direct Please where that a be used of law. our to for Tom? is Tom your and or update like comments understanding those which I contain refer be refer to to revise during as results obligation more like part that intended excluding to the differ our we will subject attention anticipated found. the included I Today, press remind and that statements the from on At our forward-looking call. number website We inherently are turn you would statements. our except undertake to everyone to considerably forward-looking to required discussion for call also Also morning by to TriMas special issued today, a would in your such release cause of GAAP any this risks reconciliations

Thomas Amato

Good morning and thank you Sherry.

minutes few remind the we past reshaped Let have me of years. TriMas investors how to our taking start a over by couple

X. high operational call a teams a urgency, first Slide few on sense on at to years and The of were TriMas On realignment steps. focused needed Turning ago. improvements earnings my

operates Our names capital prior background, our remind with that strengthened actions priorities. focus enumerated which and We been through initiatives enhancing key TriMas enterprise had and currently in on With leading allocation, reigniting significantly with commitment our deep the capital of and have differentiators. accelerated relies as which as customers TriMas. overall that will and planning niche brand I markets, allocation process partnering calls call planned businesses well growth and M&A each wide our as can to product those in businesses a innovation, on

TriMas' under this for We in All to $XXX about X.X are platform TriMas' which model, a attribute and redirecting business customers, provided investors. have improvements positive TriMas. has LTM from we performance the operating the improve is the in capitalization is is since now an have a billion. basis are adjusted times revenues driven XX%. million, XXXX has market which and page currently metrics of leverage significant solidly employees our and Net $X.X improved X.X since QX On down around EBITDA TriMas about time reliability

built I'm continued teams of quarter delivering this XXXX results. to TriMas' through in pleased with our X, momentum Turning report expectations. results the our quarter third and to ahead Slide third

actually slightly organic $XXX growth were X.X% sales X.X%. all growth unfavorable, our currency up segments. year, in all time to net was Third million for the quarter was And three with first exchange so

with markets and our pleased demand new are of are gaining we robust ability seeing process our the direction continue and with many and our We product capture innovation. end be we to to the

Third of higher operating per share impact impact performance an sales The profit $X.XX was rate. per driven lower than quarter margin of million by approximately higher XX.X% the which positive improvement tax of level, improvement increased $X.XX $XX.X operational material profit prior costs, quarter share XX.X%. to the posted year. the $X.XX X.X% compared the year sales, actions or to higher Earnings offset to of higher $X we effective and prior impact and million operating in prior up and realignment

cash on flow to X, Slide Moving evidence. conversion our focus is

cash XX.X% $XX up was XX.X% free was year-to-date million. flow nearly and quarter, the up For

option. and Our free TriMas cash flow capital fuel allocation drives that our continues conversion the to be

pleased I segment quarter are Slide to transition packaging with X segments. on point, to So At our our would performance beginning third like this progress. we our with

North X.X% approximately were activity sales in health, and America half end or industrial million year in of all organically the relate largely home quarter sales growth remains both care Consistent increases and quoting X% with Asia to see and markets. markets beauty $XX robust. to solid continue up and of the Third with first our end the we to

are costs sales. profit higher when quarter was XX.X% and we planned mix. than solid were million at less $XX.X all operating Third considering steel favorable as resin, had particularly These results or planned of and freight

that from of revenue demand with X% Slide for aerospace up about sales than our up the TriMas Continuing our year about would the to ever. third exit higher margin I profit As prior for million a results impact was increasing and organic quarter less are range. performance, more offset to profitable as X% products. decision quarter XX% the operating to from sales highest segment. $XX.X our Net were X on note this our like of be full-year we our growth X% guidance XX% in with year-to-date remaining with packaging to aerospace

and stretch delivery reenergized from XXXX and intake Our order reorganized, drive the to solid compared commercial orders teams into continue refocused, technical levels XXXX. will now these and to as

customers. we the I distribution area quarter, seeing our As defense in also through have mentioned last and pickup been some military largely

focus the unmanned we expanding as well And platforms on market. against customer to and rotary progress extend product make to offerings aerial the to products new overall. wing of fixed continue use as continue qualifications and on We existing

the up finalizing to profit to than inefficiencies $X.X plants. U.S. increased X.X% sales was This and operating nearly Third XX%. a one margin is offset related to more to negotiating higher which collective revised million and costs and our levels, of quarter and agreement temporary due performance improvement percent bargaining of

operations Although to now which negotiations past in were we distracting the achieved labor a over progress longer XXXX. than anticipated, in agreement and more have our extends year. place We

to commodity environment. commercial like we to have However, operates a particularly continue in our do challenging more which in line, product faster

year balance XXXX. this through We and into working expect over continue to the improving the product line of

for profit full-year quarter segment, X%, as We temporary largely expect Aerospace the driven inefficiencies XX% shipments to we closer to achieve to over our new related the growth to XX% range expect by operating finalizing to of XX%, the our growth collective guidance bargaining about compared to further be margin XXXX. Regarding showing of QX sales with fourth original agreement.

segment and than specialty sales million two oil equally Turning of X, end million. markets. $X to and $XX up XX.X% general end markets Sale achieved more a net our a and or Slide industrial products gas. We in were both products increase specialty operate in

nicely which from have and incremental costs. Operating this actions allowed despite XX.X% increase operating higher demand. as to or $X approximately benefited material in we gain products We convert profit us specialty capture prior million realignment leverage to

for remains capitalize these respect products, share completed actions seeking profit now majority financial XXXX business on specialty margin are focus to while opportunities. XX% the we in we again about expecting segment, guidance from and of in With to sales full-year improving the improvement range. updating the maintaining always in And our XX% Our efficiencies to to realignment additional call up over remain this full-year to and while have I With raises of continuous turn Bob? XX% that, while results discuss growth outlook. to operating will be Bob X% the focus.

Robert Zalupski

Thank you, Tom.

profit sales higher in X.X% realignment by across impact tax offset review a sales result or year-to-date and XX, than prior On effective the the of our financial $XX.X period I XXXX year-over-year points the remainder freight higher to reform will diluted volume, December Net material XX basis, growth our year-to-date operational and $X.XX the earlier. higher $XX.X impact with ago XXXX. was my of improvement compared increased majority million half with as markets. by months consistent comments the nine the of lower sales margin of related improvement EPS of of in as X.X% a to previous performance Slide to million in tax while with Turning operating and begin Operating Tom a rate cost basis very was an discussed are assets year more driven which as a year. impact quarterly results, the of increased and to during with the of the increase occurring of year improved growth operational in $X.XX sales end period, the as EPS first compared nearly one the XX.X% of the

on XX. Moving Slide to

EBITDA purchased $XX XXXX, we our quarter in On approximately stock year-to-date slight reduced flow period $X.X earlier, the XXX,XXX to leverage delivered to conversion the are additional the or despite year compared represented $X.X Cumulatively and year million $XX support end. net $X.X used XX.X%. initiated $XX.X million million was to buyback free the a million which a income ago than $XX third this able a shares million XXXX. since million. improved sales by versus and a $XX.X $XX.XX our have increase basis, approximately modest on Tom shares, of basis, XXX% XXX,XXX than volatility against In period have through at net million XX, in ago since to XX we we a cash higher in million, As to generated September year-to-date working cash times more more adjusted capital in $XX.X repurchase second investment our and million. we we an million X% the than we year free the more to cash $XXX.X quarter net repurchase our TriMas quarter X.X $XX.X of buyback LTM to program also market another comparable or of authorization compared of we noted a broader of October ratio strong million recent an generation, ago On open as of for approximately cash capitalize worth debt flow as flow approximately of shares we of reduced activity. we million period, XXX,XXX quarter,

approximately of operating QX we available cash half September $XXX consistent largely basis. and in demonstrate continued XXXX, a of summary, our established for trends the performance reported In the in with year-over-year on million. and As were improvement liquidity XX, results

guidance. to full-year Turning Slide our to XX an XXXX and update

guidance XXXX expected stronger the full-year of driven from in metric sales X% for than year, specialty higher sales months our growth growth Given organic we to by nine and segments. the principally volume sales increasing products are X% in first packaging the our

EPS of approximately $X.XX We to are also XX% and in XXXX $X.XX tightening our raises a from raising range share February a of representing guidance range $X.XX. over increase $X.XX our and $X.XX EPS $X.XX a midpoint original to a of $X.XX per the guidance to previously This guidance to an our the of a provided provided XXXX. from full-year to improvement

incur increasing in compared We ago roughly expect in fourth nearly that million year despite quarter and period, $X such costs cost to million year $X the EPS to million the between of in commodities are evenly and split guidance to XXXX tariffs total. for $XX incremental the we the

to continue in As cost influence quarter respect higher and with these Tom particularly fuel we based pressures we earlier, resident commodity continue QX. anticipate during and noted experience to third costs will

on competitive these engage of escalators, on teams higher other cases cost in continue taken operating forces. identifying In with as We we impact matters to to market we the actions some auto pricing depending material ways cases, much have mitigate as commodity have practical. and our end

impact lifts to also tariffs including this greater the tariff again fluid just term, competitive landscape expect We of significant of depending much in-sourcing impact businesses is courses. with managing mitigate opportunities, continuous see and as to price on to contractual where practical, in With expanded Longer on exposure expect through recently redirecting our to taken supply most market the a with course a terms In QX exposure those mitigate improvement. the and action locations products. we near-term, sourcing to to effect. have respect more imported expect bit we

incremental Over commodity anticipate we that XX% cost. recover our QX of will businesses the remainder of tariff year, the the approximately and

will of end higher provided we addition, continue. that In has helped of markets experiencing the to market and year-to-date, strength volume offset in our end increase some we some anticipate are class

sales EPS Nonetheless, lower taken and is able a items As pleased quarter fourth typically activity profit due shutdown. our holidays our of we raise by of year-end are given midpoint into to customer guidance with all quarter year, account, levels and reminder, lower be these our the to $X.XX. to production

are XXX% reaffirming of XXXX guidance flow net free we Lastly, cash income. full-year our at

investment continue levels emphasize conversion of to our increased capital sales of end and cash market higher optimizing networking We earnings relative while to activity. operating

first end I of end expect year of tax the provided for call our X% ramp running will and the three lower near approximately his lower back turn At although final previously the the call remarks of point, the XX% to We quarters range to rates XX% to up. for to and the be year-to-date through level our year at now at a this CapEx sales. Tom Tom?

Thomas Amato

excited to would opening the with XX. prospects future you so up for call TriMas Prior I’m to I like Q&A, Bob. share on why you Slide Thank about the to

are only costs. guidance for with raise results TriMas model, results our and Not planning non-GAAP increased internal GAAP been is and we between anticipated and despite have and able our to improvements. material pleased there less business tariff overall reported we variation our the have processes our year-to-date performance First, improved significantly

not see growth. in only we investments improving operationally and but been benefits our to have of starting TriMas' businesses, We are innovation the

and engineering developments sustainability, continents weekly as new centers our and well on approach programs safety multiple package to a child as coordinated on e-commerce actively three business quoting leveraging innovation well convenience. example, to its For is of product develop other related continues by excellence

customers and Aerospace and engineering fasteners are of commercial develop our TriMas lower working a weight ready OEM number projects on teams to installation for even Our automated fasteners.

will solutions with differentiate TriMas to to that We expect work our Aerospace. to design customers new qualify continue

Kaizen. to will in our we drive improvement all addition and In we that campaigning sales through on of always this a we focus do continuous growth, do will culture

our year employee engagement, an XX better TriMas projects from improvement XX received Kaizen different For which makes TriMas submissions for seven from competition all capital These all Kaizen businesses. launched we demonstrates example, highlighting expenditures countries. the some challenge, of this best the entries internal of in locations process savings future. We and

past the our reassessing performance been of working strategic the of have also we on the characteristics year, businesses. Over each

initiates. better We significant make our continue and which sheet corporate focus cash balance our to us flow strengthening with progress generation along allowed development to has

and working broaden Although in product diligently performing announce we on businesses this more challenging products better deemphasizing there previously, call, is as nothing been to markets. to have on lines M&A demonstrated certain our through opportunities been or that end have

cash strong to Finally, have we TriMas’ creates that multiple value. drive levers flow

example, already maturity our shares, For increase to and have back we financing significantly extended started buy liquidity. deleveraged,

balance Our position enhance further well us to solid TriMas. sheet

enhance transfer our to on to continue both accelerate execute acquisitions to capital all in We and will reinvest return higher return or growth shareholder businesses, value.

and see, can right such path, appreciate for we have are you about the believe excited we prospects delivered As are we to pleased like our a will remain the our our year-to-date TriMas We performance. thank this Operator? and strong Q&A. on and call and listening the now operator employees. our would you shareholders, we point, support over for I for to At to of turn customers the

Operator

you, Thank [Operator Instructions] sir. Thank you.

Steve question with Markets. first comes Our KeyBanc from Roger Capital

Kenneth Newman

Hi. guys. taking for Ken is Good Newman morning question. This for Steve. on Thanks my

Thomas Amato

morning. Good

Robert Zalupski

Good morning.

Kenneth Newman

Good morning.

from throughout Any I in you hearing about have you in earnings that on what have a commentary are question commentary Chinese lot concerns region? have exposure and in weakening of just we been that your first Chinese color here hearing customers market general, is The would seeing about today and microenvironment. season or

Thomas Amato

have but years do have past market, into we market. the for in the growing been sales that few some Well, we indigenous

been So, contributor nice a to TriMas. it’s

Kenneth Newman

Understood.

any region? I in health been in weakening within levels the think has of kind there clarify that to equal just market So,

Thomas Amato

it's sales Net-net minor our at Keep HPC overall anything all. in and in meaningful mind a relatively portion packaging. of in

Kenneth Newman

is and then M&A. did for wanted just been flow, And three strong on free It question, last over it. the Go to you cash quarters talk the opportunities the guidance I positive. looks follow-up about it's like my very pretty for a touch

you what Just you opportunities, are curious really deals that and in you pipeline of for talk if what kind terms desk? focused are further where could you in crossing about seeing the are of multiples seeing your are on

Robert Zalupski

question. good Yes,

pretty pipeline competitive market. M&A We continue opportunities. a reasonable a very It see of to is

predominantly broadening out segments into, our studying seeing other look are or we in deals enough want focused segment, opportunities packaging grow that as but we in We of But that enhancing or are and get we when excited. types the into there are expand we well. have us at areas to

Operator

Thank you. Instructions] Thank you. [Operator

Markets. [indiscernible] Our first comes from BMO Capital question from

Unidentified Analyst

in more was has on outlook? a there about Sorry, and - bit price little you segment a talk increases any pricing about about mute. little each where been bit I Can

Thomas Amato

pricing consolidated I of the a certainly been but through to think deliver Yes, kind be all, recover have nine factor, of not our in we to terms portion that to of months. performance year-to-date able good material higher costs, we a have enough able

inflation good If competitive, segment, the time same we and be very XX% that price resin cost may again, the Generally packaging but is case there, in resin XX% packaging case in segments. in on costs at significant decreased quite We competitive of able will XXX have based saw of inflation point auto we Within that LTAs, really based kind driven stable you largely business. that portion to market quite XX work happens or nearly is a long-term our that pricing end we for a are With increased speaking, by of there is with through increases packaging very lag need what that the other effective very evidenced range. escalators haven't business seal industrial of cost at pass typically steel portion we market. as on contractually indices as steel in based business, speaking seen Specialty price been a distribution good just and Products, the be or bear to of price it's go the steel. been as very And on of within basis. the Aerospace Aerospace, the sort driven regards in to but two margins cylinder has our and through day the a market to recovering generally in on to by

the we have to prior have year quarter a you here a increase. some half And job the getting very sees while well. as have third back is half through moved done have what competitive we first they as to again, of and competition adjustments fuel went If has pretty a moved though bit the we have marketplace, to it's pricing of good compared of the stabilized of as a mindful be so first to doing seemingly year, elevated our and

Unidentified Analyst

exposed Now, directly when much cost your how indirectly? tariff, to maybe it and you are quantify comes can of

Robert Zalupski

costs on annual in move Well our about tariffs into is basis, unmitigated increasing from we exposure XXXX. run a and of quarter or the I it for The roughly be exposure million. we - rate direct could fourth look if million as tariffs basis there $XX think upwards at is us are $X cost

Unidentified Analyst

you Thank Okay. very much.

Operator

no would Thank in Sir, it currently I'm [Operator remarks. to now turn Instructions] queue. for the further back closing you. like I questions showing

Thomas Amato

we have team, you much. a thank strong you next for to look to very we pleased update our Alright, call. very as the And to like listening I our delivered a much. such shareholders. manager those forward and quarter on would thank very Thank to are call

Robert Zalupski

you. Thank

Operator

and ladies This you concludes Thank teleconference. today's gentlemen.

disconnect. may now You

TriMas (TRS) 30 Oct 182018 Q3 Earnings call transcript