Earnings call transcript Q1 2023

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Operator

Greetings and welcome to the TriMas First Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sherry Lauderback. Thank you.

begin. may You

Sherry Lauderback

Financial welcome call. and Amato, Corporation's quarter our first President Thank on to the earnings Chief Mell, Scott Participating CEO; Thomas call XXXX and you, and TriMas Officer. today TriMas' are

PowerPoint We press the on then XXXX on and under our our presentation our the your to we our release questions. will included open to outlook, results, up review website assist prepared with provide company will on at results Investors remarks the we and call and today's In have our order of trimascorp.com section.

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

like later and we XX-K to subject forward-looking are could factors that actually remind today, Form inherently everyone be XX-Q our today of those uncertainties. cause our in a statements will Before would results from our Form later of list number that Please as that differ anticipated started, to that a get filed refer today filed statements. risks to to may I comments contain forward-looking any

no considerably undertake be forward-looking direct by attention or also revise website We to except may as we Also, required publicly statements, law. our to your more would obligation information where update any found.

would basis, call on press on items. excluding be financial we measures discussion today financial to release addition, used adjusted reconciliations The like the GAAP our of our to the non-GAAP and the In the results special or refer an the appendix in you between presentation for regarding on impact will call.

and TriMas' over call And CEO. turn to with the I'll Tom? Amato, President Tom that,

Thomas Amato

quarter welcome earnings and Thank you, morning, Sherry. to call. our Good first

Engineered analyzed Products on is and we of to than am report Group U.S.-based aerospace, that is the and highly and Manufacturing. call, manufacturer as earnings complex business, RSA expected on industrial million our which Aerospace Martinic call, pleased today's Weldmac, TriMas components a I add fabricated and have applications. is revenues. begin discussed report I we in complementary acquisition of metal into for our to As Engineering This prior defense, Weldmac to more assemblies we'll $XX closed

So businesses. publicly to Weldmac family like I welcome team to of TriMas' today, would the

well the Group. are Aarts Packaging TriMas We in of our process along into integrating also Packaging

As we a Packaging, markets. Aarts earlier food, and is for which beauty, of the premier reminder, packaging in manufacturer year, acquired the end medical a products

trade In which XXXX] TriMas fact, ever, our Pack we Packaging leveraging [Luxe Packaging luxury, the brand are is featuring first [ph] and month. Aarts show at next and brands a for beauty, time

report annual to be that report will we our our pleased am posting I third to soon Additionally, website. TriMas sustainability

excited in We the progress our to with of coming continuing sustainability our year. continued look the making investors is are TriMas and the forward over area overall to momentum share

to to booking our today's consumer markets. certain products refresh pivot expected, end levels. as to call like earnings compared end variability within specifically markets I levels demand to prior and we These of continue industrial exhibit now on prior discussed would call, to what TriMas year Packaging’s our

some with needs an into as activity With even view of quoting customers. potential while recognize the global we CPG next. And that indicator forecasted a bookings increased even in to leading we are later and this particularly not activity, our of said, level experiencing or we larger year in demand sales, quoting packaging is expected

point monitor we levels. return activity market more shoots normalized As for a stated previously, closely to that looking to will green continue to demand

on so as levels steps proactively infrastructure leverage are we recover. may this during demand gains capitalize operating implementing future we Additionally, costs streamline certain to period,

XXXX. will year more move We of the cover specific these through as into we actions and

with areas that to the high certain stainless strained base, of of as aerospace a steel is demand market strong effect particularly TriMas to With recover. Aerospace, rate continues respect wire. grade said, With the aerospace our in remains sub-supply secondary demand

longer supply sub-suppliers balance our continue constraints. and Given these as to customers times we for we with materials, chain collaboratively engineered working are lead

sales do of the conversion quantities year. We our manufacturing Again, the will have a at an our material to in operations the that and rates grades quarter appropriate this estimate be on been our aligned and demand area higher that would had few with will continue higher with levels. improved through million we focus

to in our we against progress Finally, to the shares view net quarterly and which as reducing tax-efficient before make to going XXXX continue shareholders. a of quarter XXX,XXX shares, our We first outstanding, shares our alone. by approximately acquired overall way through X.X% results, return reducing capital long-term about we outstanding

these quarter, execute the have to against funding In and actions dividend shares, retiring addition strategy. streamlining a and our remains balance strong, sheet ample liquidity long-term near-term in paying to we our an acquisition and

Let's compared now the turn our XXX X, Slide results I’ll were for million the as to where summarize for Sales XXX.X to for financial quarter the quarter. prior quarter. year million

discussed acquisition segment's only previously by which unfavorable offset our when of effects were Scott results. and specific result the more a will sales. As reviews in currency, partially demand, of each as cover detail reduced he

which the XX.X as of the for XX.X to at compared compared the million of to for the EBITDA prior a quarter of quarter XX.X was rate sales profit million. as Operating of prior XX.X% year sales. million or was was year quarter quarter, XX.X%

in Aerospace. in converting expect longer-term we to return do this ease EBITDA year, through constraints consolidated levels half TriMas in is as second below TriMas well target particularly packaging and our the [percent] demand supply and level, the While significantly improve [ph] anticipate

Earnings quarter per share was which was $X.XX, better for than expectations the slightly our quarter. for the

will sheet over the balance Scott? results. to turn the segment I'll and at take now And point, Scott, who call this through us the

Scott Mell

good and morning. Tom, Thanks,

Slide Aarts a to sheet. dividend a quarter balance strong after repurchases finished Xx. will XXX X, sheet. million completing I funding with ratio cover our We of net turn another and and debt with Packaging now the briefly paying Let's Net balance acquisition, was leverage share the

by the fund year to the credit acquisition the Weldmac, April While we of flows expect we generated to balance million of did cash activities. this on draw line our end outstanding with from approximately operating XX of revolving repay

pay actions Furthermore, present appropriate, buy have where ample to back to complete invest themselves. opportunities take continue businesses, strategic in to dividends as shares, streamlining future we and acquisitions continue liquidity our

turn let's will TriMas my begin segment Slide Now, starting and our to of with Packaging. review results, I X,

or million, while translation of First were XXX when approximately of quarter a compared of by XX% sales year impact contributed sales reduced million X.X decrease Acquisitions quarter, X.X net to foreign period. unfavorable during the the ago sales million X.X%. currency the

products organic the personal in industrial food, sales, notably the applications most when and expected, XX% attributable to care, by beverage, excluding previous decline primarily with and consumable to is demand, the decreased quarter As submarkets. This compared year lower period. currency, during for

uncertainty During future work is our orders consumer believe inventory positions environment. result which we through quarter, the and sentiment, customers of the many managed the of current inflationary continued continuing closely given a to high around elevated

environment previous we year. we return current that half believe during of the temporary, demand demand is earnings calls, to As to expect see a the second the continue on mentioned and to normalized levels

closely assumptions. as However, indicated, will Tom necessary, we monitoring recovery a certain streamlining as our environment. the And market actions against commercial are we hedge as take

EBITDA margin of XX.X to of decreased was the Operating the account adjusted was XX.X% XX.X X.X Operating of million sales, on primarily while million sales. lower XX.X% impact by or profit of sales. net quarter million, in

within in of do consider expect second not as Packaging operating more to normalized we EBITDA revert. levels half margin and Finally, again, to full-year as return Packaging, XXXX TriMas of profit the we for demand to the begins TriMas

We on reductions. infrastructure ongoing execute a rates the cost benefit conversion historical from and we capacity, open impact of

do more normalized return be to clear, to I do not. believe I and levels said expect we we to have Just profit operating of may

to same Slide will period increased to Turning million provide a now I sales TriMas an XX.X% X.X when or Net the year quarter ago. the Aerospace update on X, our segment. compared for by

order As many products we strong our as continue of general market of recover intake volumes continue aerospace to expectations. see to ahead aerospace for

net constraints to quarter to the was related as all compared continuing primarily impact X.X% are production Aerospace. to of raw million the the for persisting chain year-over-year certain in or This for profit unique X.X which of decline and of to X.X% not labor is both inflationary materials, or of skilled inefficiencies million prior pressure, year. those X.X contributing supply availability, Operating sales TriMas

$X.X for the million was net XX.X% of Adjusted sales. or quarter EBITDA

year, As expected we the Weldmac to of the remain expect the which we acquisition, order robust. impact includes of the intake balance consider

improvements expect that also We our capacity improving of chain for the production actions in accelerated and margin rates our and ultimately provide year. will operational the and supply course over performance

X North a segment. quarter now the million to ago. a the remote compared Now high backlog double-digit each same and American of sales on million, quarters XX% with steel businesses. Specialty increase robust review more Slide for by increased our when related spare Specialty eight X, This is remains power XX.X both growth for and the Demand levels Products units for let's parts, in Products Net consecutive segment. cylinders year region to than of period for moderately generation first our

in million net in XX.X% EBITDA profit and XX.X sales increases. was as actions the period. than X.X of for previous Operating net the quarter offset inflationary quarter million sales as or the higher XX.X% to margins or cost Operating pricing sales. compared improved million of X.X year was more Adjusted

take changes order costs markets Cylinder they Norris is books if into, to continuing appropriate in we order end will necessary. which resilience sell indicative Aero monitor we continue of both Engines remained which and While actions strong, input for believe certain and closely and

Specialty Products segment for will full-year, order remain through we we our Finally, intake XXXX. will the with to solid, well convert respect expect and

some the I'd our point, and for consolidated call back to closing XXXX to Tom to turn remarks. Tom? outlook this discuss At like over

Thomas Amato

you, Scott. Thank

X. Let's now Slide to turn

continue potential first uncertainty some in model few especially of to the we quarter the end for various and given markets. our of XXXX, With a concluded, assess scenarios

for a to are of operating second the since packaging. year anticipate, normalized largely was more quarter As of profit first as quarterly the do a second full-year quarter the experienced quarter reaffirming lower of in release, XXXX. last compared our earnings TriMas for in XXXX, our XXXX, outlook noted We as sales quarter we we and

will we we challenged our continue TriMas for through Additionally, expecting from the now as anticipate strong while continued we supply Aerospace Products to work second performance are remain quarter Group. Specialty that TriMas constraints

forecast our to income. continue full-year than to also XXX% cash of net greater free flow be We

prepared few remain support Let's navigate this for their period. turn a that our I long-term our examples prospects by we of to to the will conclude providing Slide XX. I through just like excited TriMas. as again would for why ongoing we about thank said, remarks With investors

attractive product within have TriMas we we segment to the are for some experiencing demand we end and while lines are this our market the and in future. sustainable First, many continue multiple believe product solutions lower certain coming to markets, pipeline in in there long-term characteristics packaging, through

commercial sustained the We end have market. recovery also aerospace growing in within confidence a

leverage gains work labor We commercial continues constraints skilled any take defense through in remain of jet to operating production remain as demand and and expect applications ultimately the long-term strengthen and advantage to strong. supply

Specialty business resources TriMas' demand our positioned to we Within are as expect with portfolio are Cylinder our to assess shareholders. aeroengine value business. will to given backlog remain our and businesses focusing our create we Products the to order And Group, continue our for of overall always robust we highest have TriMas' done, we ensure best strong Norris and long-term

growth, to we While our buybacks. shareholders, return capital through share long-term anticipate we also continuing both continue in our to dividends reinvest and to businesses for

invest addition, way the to to Again, contribute in. is work. where committed believe communities in TriMas to an in particularly and In leadership to continue remains positively a live operating to team our we we exciting TriMas society, company responsible

back And with turn Sherry? to the call Sherry. that, I'll

Sherry Lauderback

Thanks, Tom. the would point, your to like questions. At to up call open this we

Operator

comes [Operator question. Newman you. first with Our Please Capital from Instructions] Thank with proceed Ken of the Markets. line your question KeyBanc

Katie Fleischer

you for I with if the know costs Katie I on segment. streamlining to more initiatives that, that the hedge is uncertainty. you're certain little on a the you any maybe go Fleischer as on take going This could provide market anything that specific some or against that Packaging everyone. detail just would on a you was actions targeting. start detail wondering Ken you're throughout wanted into today. to Hi, more said year I

Thomas Amato

in we facility that on let this Well, few currently at consolidating in now, Haining. about into locations item it the China, have a or process We're call. of Haining in items right Sure. operations one actioning one in talk least and upon in are We I two could manufacturing and mention those one Hangzhou. me one

an opportunity out infrastructure to that's So, take costs. some

other product for America. the of China in out export India other into We'll and parts the some Europe of which and of relocate of we world, parts North

footprint. that, our to given manufacturing our done of addition in as other demand we at looking lower this So during operations periods, we're these with period, types have

to high and footprint. can you demand when restructure difficult As it's probably imagine, is streamline very your manufacturing

So advantage sort take these times, present these of good that. opportunities present to or of opportunities

North where doing might our more but be go at we're can't not reduce still into manufacturing that little into my we able Europe, third detail cost. operations, some our some report into in of America, bit some front. I our will second to we're expectation because looking only infrastructure specific. So, on But as quarter more in on now go we analytics a be or quarter perhaps

Katie Fleischer

That's what Okay. year. talk are normal the in this then of that a level what's there doesn't demand? going take of All normal to fact your start if about performance you restocking confidence the anticipating to just Packaging more the you gives Can And in risk are you I actually customers And place? the returning helpful. a half in continuing to right. more second segment. return the know

Thomas Amato

of year. question. at year, was a – over of selling the remember in that position heavily we we period expect us on last the engaging particularly for with customers, Look, existed seasonal missed that I what that's our think end end an last question. intelligence year the this year was was the essentially challenging last that It's interacting, that Yes. important Based good have inventory

an We QX, of level we be rate in for in something future. preparing they're point sales. the as at levels, through quoting remarks, translate starts should inventory which mentioned sort normalized those we is expectation to the in orders. and they're a end not some it's selling in that towards – a placing I our when And of it's at seeing our working not prepared is Again, suggest to an or position selling that improved in the quoting forecast to occur season, look that gain But we'll would experience the believe that bookings. activity some that my could we're in that indicator certainly of

this majority point also I'll is been drag quarter of the quarter this the one probably And that out vast drags the has biggest related. to to volume of

we well. So volume very convert returns, as that to would expect

Katie Fleischer

I then off guess, more. And little going Okay. bit just that a

if So, more you were to return normalized levels see to a than expected. you inventory smaller

– that hedge the you of rely the more processes really before going to you on any streamlining discussed this? are against You're at

Thomas Amato

things That's to quarter that if the don't level a return more were rates exactly actions to that we back, to to trying a normalized make hope the comes will back we're point we so, normalized, level enjoyed want if is market and [Technical not taking that's this today still wait Difficulty]. that conversion but – that have the we've

Katie Fleischer

Okay.

then helpful. aero That's Okay. And to here the pivoting business.

So, I a about do And you realization upside you've can opportunities closed you synergy acquisition, of to your for got expanding talk but that just result as once foresee Weldmac on know see deal? that you integrated? the fully margins any you business any

Thomas Amato

into of we larger think commercial bringing there customers to actually, has larger that Weldmac a engineered I so reasonably our at a yes, of today. We with of look opportunities components when we And of don't certainly, the have Well, aerospace. mean, we it's enterprise, business we types are some customers. side Weldmac performing that a significant systems to the go go can can for aerospace suite

It's our business. fastener different than

So, businesses. the our for is strongest Martinic our fit RSA with us and

of segment sort helps us Aerospace supply I it our is addition TriMas the fasteners. aspect aerospace in in to build looking believe, The largest, of through for So, opportunity group, out constraints. that for Aerospace forward working

we or that rates for better aerospace ease not so of quarters only very the unique now. to But sort conversion many in largest I'm not well couple than we look much And aware, those through my you is well constraints, experiencing beyond. a some belief sector will right work to of that's companies and book we we're TriMas start as enjoy which that And but customers, anything today. take sure XXXX, strength commercial at is our as this when Aerospace plaguing might of order see into the are jet

on years need factory few to a improvements made very Specialty the point of So, intense TriMas there. after of hard to factory we're improvements. floor I floor some that Products working would be

You of the do can highest And been is our that well. with highest – bringing to enjoyed segment, to it conversion historically. that levels able we've of Aerospace see path rates be we'll that TriMas expectation in the moving what we've some over as time down

Katie Fleischer

Okay. And that question. next kind of my leads onto

So, just constraints going back on that the supply you discussed.

that guide in second implies improving a – an for your So, performance segment, margin obviously the margin for coming Aero in of half the the operating the year quarters. better

bridge constraints we now? you of constraints that kind kind that mix? you an in Just margin to how right going these you quarter assumption can Are that Is provided? the So, just supply are margin X% help that about there operating anticipating get get chain X% improve. from from to me to of this help – me better that X% guide

Thomas Amato

Yes. That's look of balancing as just factory I mix would million had even our slightly this close mean than factory sales particular exactly in benefit some I component would rates higher or have again our I additional quarter, to production conversion it, in we my but mentioned better our prepared biggest be flow. that on to will through floor – right. at quarter. the probably if that remarks, say X on I the there's

We our have and have it in book, we order better. would converted

is opportunity our book. order in the So,

world. satisfied had better that which to in or day, But we ordered, in supposed are do stage not have to it to to material are things everywhere operations. we ordered order when Our performed actually – come raw we expected the that. quarter. seeing the There plans, certain levels coming in to running And in generally so have I partial disruptive that had we're improve we orders. that well. at pretty would right be very that's I'll around with can as the every for speaking, say, are in, certainly production come mean materials we I never

Katie Fleischer

do those to of what imagine – for that? And you that mean constraints you more see are like do those the will some start you year of crystal guidance kind – has no come but a Okay. I the or towards end ball, one of off assuming

Thomas Amato

personally accelerate third the this Yes, I'm see close occur very in personally can some starting take try at of to to to period time. of I staying point. advantage on actions the this we more to it it engaging quarter that so of

Katie Fleischer

thanks. all jump else on guess, helpful. way I That queue. the alright I’ll Okay, in there’s very anyone back queue. the

Operator

Thank next you. proceed Our Ken a with Newman your question is [Operator from KeyBanc follow-up question. Capital Markets. Instructions] with Please

Katie Fleischer

last here. Thanks. I one question just have

So right M&A you that you little expansion that, talk looks for the Sciences more environment talked quarter, TriMas and bit Can business. Life last is what now? still like really how priority? the about deal main prioritizing we about were within a the And

Thomas Amato

just Yes. Thanks, that. for to Katie, expand I beauty. would also that

the beauty and very and potential on we see beauty limited a personal and we about are we the we what calls space as are where in – call beauty nice in talked there. care, we well, with and currently look pleased what I this what excited We have the made prior forward. pretty beauty see for up we we've think we Packaging, holding nice applications acquisition And potential aspect, Aarts

balance those opportunities, And into teams hope That for fit one that of My in working the said, more is hard our not within at model, life sheet but also sellers. the being company, percolating. that can end within have year. very business markets and TriMas court somewhat of and So, only we the beauty prospects size for least by would one bring we equally. to identify the some – are are well end we we're deals sciences our of prioritize our that

businesses, As that's have sell has those – TriMas you family-owned they sale of And or know, something they in with we're decisions types they to. their been been dealing negotiated who and on who auction often, can of where processes. – some or entrepreneurs favorably viewed they business make bring

a science is that's high up of So question, where packaging, priority our packaging, priority today. wrap focus a a just in your in Life high beauty to and is is lot

Katie Fleischer

Great. and questions Okay. conference for our the next you month. Thanks see at guys

Thomas Amato

Thank you, Katie.

Operator

for at are There I'd back like questions over no Amato Mr. Thank turn further this time. call you. closing any to the remarks. to

Thomas Amato

questions, quarter. look on to joining Okay. us more There and our Thank like you again no we earnings for being next I'd updating thank call, you to forward you. again

Operator

Thank you. This concludes teleconference. today's

and may your day. You Thank this wonderful time. lines participation, disconnect at have you a your for

TriMas (TRS) 27 Apr 232023 Q1 Earnings call transcript