Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the TriMas Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Sherry Lauderback, Investor Relations and Communications. Thank you, Sherry.

You may begin.

Sherry Lauderback

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

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

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

and forward-looking undertake started, our or get Please Form found. cause our results We that statements in considerably we to differ our are from by to required direct factors refer comments will forward-looking publicly would to information may XX-Q may later update today more be I of anticipated where those to law. also Before risks remind we your list that everyone statements. a that any for uncertainties. would revise except as obligation like attention that to a inherently to could website Also, forward-looking contain statements, any subject filed today of be our no number

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

President call the and over will CEO. I Amato, that, With TriMas' to turn Tom? Tom

Thomas Amato

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

to for thank want environment. a reflect the market navigate as their continue very on we TriMas team As I to and dynamic global efforts this year changing increased we first quarter, our

customer demand. adding supply lines, all product robust we are and alleviating production capacity, bottlenecks, skilled to enhancing up labor support certain ramping In volumes,

same manufacturing businesses the irrespective while are is demand procurement gaining Specialty team strong each time, rebalancing our In working end prepare At lines, like quarter, improved our strong markets of our certain results. markets soft, Overall, product I or for as on securing we and to footprint market delivering local against momentum relation disruptions diligently TriMas satisfy conversion in being other savings to strategies. focused personally longer-term to or for remaining offset Products market this to would team recover. thank

demand challenged Specialty customer result in higher investment premise the is that are Products Market prepared were improvement witnessing businesses did as occur on the making of would decisions demand market while also satisfy our converting and well. performance to rebound. was Our when all we today, demand, we

summary, Specialty markets, we prior has investors to end decided today. and advantage benefited So Products in take of invest in our disruption in which

also to and are new current ultra-high future Specialty momentum as applications remote capture units. leveraging gas We purity growth through position innovations for our packaged our cylinders generation to Products power Group EPA-certified such

balance. like team to of starting Specialty materials, would production our well labor that our significant progress and alloy Aerospace into make is performance and I also bringing highlight their strong to year. to some the in I again, are So this we skilled TriMas our capacity raw Products standards while would within potential, like supply performance thank internal for below super better

planning achieving requirements, levels. anticipate strides with our production we financial make from customer improved achieve and results current much improved we As to synchronization

have ahead I as year that quarter margin our otherwise charge to results. that second quarter than prior our in unique better of we would And our operating quarter to fact, first quarter had sequentially QX, percent results settlement In well. had would like note were a the the

group. we are we below while still in overall potential, this are to momentum our So starting achieve

sequential rate Packaging TriMas than forward. TriMas moderated in we hoped for in at Within a achieve we teams seen had our TriMas Packaging, they improved the we more some to point order at are working as while increases Sciences and this have move to diligently market are monthly Life conditions prepare our Finally, backlog, year.

the we submarkets in market be into to move start now than the we second year. gradual more As a and products half, packaging consumer believe assumed certain industrial recovery will we

taking of made and lower this we reposition annual streamline advantage XX assets As our of than we such, savings take once manufacturing which productive rate savings generate and more we actions run million period XXX implemented. anticipate basis the are to points decision other demand procurement footprint, will to or

commercial as expand customers, commercial-ready test to geographic the new particularly our Additionally, And America. dispenser polymer and highlighting momentum, to Sciences, team and advancements Packaging our we Life polymerase characteristics oral component TriMas make applications. XXXX. South patented gaining care, for marketing of leveraging kits ramping -- from to and reaction our by and business expanding markets other with course, in model is we progress up customers our TriMas we into new of benefits anticipate global continue move launching single our CPG supply programs for and these electrosurgery personal are chain We new Within applications. into beauty

in back this anticipate certain originally that and newer at the in of strong and and position modeled remain for quarter have new that areas gradual XXXX, While more adjusted our compared the of share volume, a rate further packaging we Life that few of we for of was think our in planning will science I'll $X.XX that end channels markets a background With in half Packaging to these line with for delivered and the a are be to some of I models. $X.XX excited -- than in life we Again, of in per which continue Sciences in said, applications of customers our improvement performance first growth our we sorry, $X.XX, us teams were a taking qualified, lower assume the moat. earnings discuss while once sequential internal TriMas future. currently today improved about With recovery XXXX slides. TriMas actions represents to quarter the

like to this turn Scott, take consolidated point, Scott? us results. I will through At call over our who to and the segment would

Scott Mell

Tom. Thanks,

turn were quarter. prior Slide for X now summarize million, quarter financial as as compared the growth year $XXX.X the quarter where the I'll $XXX.X Sales for for our Let's dispenser results and to to lower organic in products in the Specialty by industrial groups were personal closure TriMas sales used more care, and offset applications. food Products TriMas demand TriMas and acquisition-related Aerospace market Packaging million for and than

conservative CPG packaging relates concerns. primarily the patterns softness believe continuing at customers, overstock lingering inflationary purchasing and to more continue to positions market certain We large

quarter. the $XX.X Operating million for was of and profit the quarter to as the quarter $XX.X million XX.X% this for this year, for compared quarter as prior compared for or of first of year sales million million year $XX.X the year XX.X% to quarter. or for quarter million the $XX.X of EBITDA sales and was $XX.X XX.X% sales the of first prior for

for in half at to Tom quarter rate and remarks, planning with the second than our line sequentially albeit more in performance over the performance his As was gradual the expected. the mentioned improve to of continue expect year, opening models a our originally we

when for first share increase per adjusted compared of $X.XX, XX% to this was Finally, quarter quarter the which the a earnings year. were

$XX and Now sheet million, acquisition the million net balance remains debt, share Weldmac, April the discussed, dividend outstanding Net of Slide and after grew ratio revolving credit of $XX acquisition credit we to briefly million previously to paying leverage funding statistics. the line repurchases and which of X.Xx.As of a approximately let's our turn the on a was X, Weldmac, with will completing review of I of at $XXX end our fund quarter.

our and to year liquidity we generated buy activities. take actions Free million shares, have continue strategic expect from remaining for as complete appropriate, themselves. cash We to acquisitions balance the where in in opportunities quarter dividends, with by with future ample flows cash flow expectations, present outstanding back to of pay operating the streamlining end the of businesses, continue was to repay line the the bolt-on $XX invest

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

First quarter million quarter, this year. the sales slightly of $X.X foreign and first while was million quarter the million of net quarter $XXX to sales up compared compared the were impact as Acquisitions immaterial. contributed prior currency of year $XXX during for the to when

compared As the submarkets. for notably expected, organic the previous the primarily when period. quarter, food to certain year most in sales industrial attributable This and decline is were with XX% down lower applications personal care, demand, during lower consumer to goods

year, the environment million continue when any against hedge further streamlining of profit to to commercial the as market softness. Operating compared by but actions this margin million was as closely quarter or XX.X% of while basis additional to on year. the demand first net on million this necessary, monitor quarter first increased and Operating primarily quarter will of account the lower a year-over-year adjusted XXX We a potential $X.X point a $XX.X in more sales, basis, was net of XX.X% to impact year-over-year and sales. when basis $XX.X EBITDA improvement of XX than the was lower compared point a improvement sales, of take

expectations. X.X% the prior to quarter or Aerospace X.X% when compared to quarter the as the than ago many ahead strong Turning to million intake for sales of Slide our net products, for period. of during or sales million $X.X the recover we for $X in provide increased of Acquisitions when contributed sales increased compared year segment. as see aerospace XX% an quarter XX% previous will period or year on while Net aerospace to our to million as market continue same by continue volumes update sales compared $XX.X now profit Operating the million TriMas year. $X.X X. by I $X.X more general or million was organic a to order the of

earlier, been on As quarter charge operating settlement basis. the a would for to quarter, have year-over-year absent Tom a margin mentioned the unique onetime higher

for to by sequential quarterly operating XX.X% of points importantly, higher are than was million $X.X we improved margin starting or net quarter as basis see EBITDA sales. XXX more sales. conversion improved Adjusted rates on the More

continuing spare Net Now the remote compared million double-digit the Specialty $XX X a America to than second million, percentage parts, the related a million margin and on robust EBITDA improvement Slide Operating more year remains net growth Products consecutive quarters $XX actions. to floor our factory $XX.X ago. region Demand level previous increased for packaged Products for of increase generation or year quarter cylinders segment. X, demand units high each Products, of was profit our as to for North let's for period XX.X% result of when now of is XX.X% backlog impact compared This segment. Specialty a sales. $XX.X in steel Adjusted record-setting review of by quarter of and with for businesses. Specialty the the for quarter was million previous as sales $X.X XX% for and levels the the in sales gas net in same period. moderately or applications both power robust This million

Specialty will sell into, if necessary. end remain our believe monitor businesses, resilience is markets changes take actions which in for While they to input continuing of Products costs strong, which appropriate and books we order indicative order certain we continue closely and

to point, over to some remarks. back this like would and At closing for outlook, our I Tom? review to XXXX the call turn Tom

Thomas Amato

Scott. you, Thank

Let's to X. now turn Slide

in model markets. to scenarios a given especially uncertainty some the continue potential end few our for of of We XXXX,

significant of our modifying packaging most view few driver important I'd like markets. full year in earnings noted As are a note. outlook. in are is certain end our recovery to There the considerations our we The release,

demand Specifically, than range to to consolidated while XXXX originally forecasted. a that, to will as our EPS of $X.XX. through compared $X.XX customers recovery continued rate modifying X% sequential estimated Therefore, sales new adjusted of more believe be rate to we we work recovery range now growth have moderated and inventories, an we that XX%, are

when that at midpoint, for sequential noting EPS worth are XXXX $X.XX. special basis, the in completed and performance. adjusted is our comparison forecasting Therefore, adjusted would XXXX EPS for discrete we X It projects normalizing revised even our on momentum that base last year, we been a have

strong continued balance production our group, assumes within into continued Our sequential continued progress Specialty against increases within better Products revised also demand moderated and bringing Group Aerospace supply our Packaging. demand outlook TriMas and TriMas within

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

continued let's to their we would XX. I about said, we believe like a I thank a prepared that With period. -- demand few investors just softer temporary but of our prolonged remarks So what providing for again would I conclude the for thank we navigate prospects TriMas. examples to why remain turn to our will long-term as through like support Slide is by excited

long-term attractive geographic Group markets, are demand. there diverse multiple presence believe TriMas within to our improving and characteristics our Sciences and continue Life we First, TriMas end Packaging through

and such to We tethered also and gaining to in we future, medical TriMas as product child-resistant caps, in with mono many are have coming closures new polymer, some the applications. the sustainable and market pipeline solutions traction

have also sustained anticipate and growing spending We markets end Aerospace. the benefit -- the within commercial recovery increased defense in defense confidence in will future and aerospace TriMas increases

take expect We gains are working operating skilled production through remaining better and long-term labor advantage bring we supply leverage to as constraints and our demand. and with customer synchronization of planning into supply

Within Products order remain to backlog. our demand given group, strong TriMas Specialty we expect our robust

We Products market our businesses. to drive new and future assess will within Specialty continue also adjacencies to product growth

shareholders, in and our both long-term generation, commitment businesses relentless while for buybacks. returning our to dividends through capital also our Given cash flow to will growth to share continue we reinvest

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

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

Sherry Lauderback

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

Operator

Instructions] [Operator

Our with Capital Newman KeyBanc Ken first the line of from question comes Markets.

Ken Newman

in start Hey, market where little a you today? have visibility first the talk off. just end the Maybe is customers bit about with that confidence just guys. good in morning, and the your packaging to guide Can you

Thomas Amato

make that a Yes. The working market customers best we've been our describe of that that's our position, we're have the me seen I capacity year but this overstock market, that's explain the inventory have way a question. way with best is, the mean, seeing in happened, positions. had significantly overstock available happening our been reduced look, those where -- the through happening times -- started positions, we've what's down given product burning we we've to What's for customers the is the had lines. not of all, me several many, number as through. progress a to positions today as Ken, for great it gone lead given year in result, in What's we've that

what other weeks. we So certain well X as deliver weeks means down X would normally packaging substantially. compete with our suppliers quote X previously like suppliers as would is, to That's that group products, to

cycle are the capacity, customers a shorter lead scenario. So has times, from means to supply benefiting which shorter market available shifted

that say a is long That's visibility pretty to short. way our

because period. in I we still the call a there So feel where shorter month-over-month our is saw order also uncertainty But on up second book a would comfortable little quarter pick bit cycle we're we basis. what in a

for to So I the way at think that's best answer question point. the us this

programs. We Packaging until but are larger call given of what I newer those hit year, or were that for don't progress there on orders would group, outstanding innovations making several our specific booking next

for So XXXX. we really on can't them count

being So strong TriMas consolidated some basis, in packaging. we we coming we're order Aerospace. That where that. TriMas really Specialty make have for for on our said, current the looking we're cadence, top the And trying And in that's book at order up have orders our to Products. revised outlook predictions with line around a

it's getting the a us, the out for matter So product of door.

hedge a pure have mini company. packaging we a So little versus

Ken Newman

Right. to this built-in you kind to the I is lower is up quarter should is end comfortable Or of much truly are guide, trying packaging revenue quarter? third kind that that year-over-year that expect conservatism midpoint? the guess does sales Do -- of we revenue get things we're type in that with of of heavy growth you fourth a there? how the gets

Thomas Amato

bit sales a And was QX would quarter. fourth occur versus to Good this We low. very low were have quarter. seasonal in then didn't a expect up period quarter very last do we of question. Yes. sales pickup selling fourth expect which expecting and last be to quarter, a moderately We're year, Last occurred year.

year. of some were that not the our in just system you they place never were remember orders and the did in took dropped If -- conversations, orders our

be selling will somewhat do normalized not yet not at some a we certainly last So of what saw we but year. there reversion expect rates, period to seasonal

Scott Mell

we Ken, revised X% earnings growth high and end, for to the XX which I'd end, the is low the year, minus you on X%. year-over-year for minus Slide where sales also presentation, the our highlight of point packaging on

Ken Newman

Right. that. I No, get

I year-over-year, back in that digits double think it for the segment. half implies just still up right,

easier of kind the you probably And last about the to makes the on so margin pretty XQ to I we for next commentary leads in Tom, guess profile year That that that cadence me and question margin comps made, the the selling from think a half. implies leads XQ? the kind can because any of the period, of that given back way incremental leverage sizable ramp sense also operating just

Thomas Amato

every I want value proposition Yes. we're mean into for I based in making -- that through back progress revenue comes but to should progress the as of it in up right aerospace now, -- on as that's day, as rates terms the TriMas Look, bring conversion as packaging, will and write nonfinancial the I seeing think aerospace making and in that the we're don't nicely. we're numbers story, come the we synchronization come

I packaging, for if some sales. infrastructure abnormally low. doing positioning current run But costs some place this think we're for out. new at rationalization. We're extent, some We're keeping is footprint rate right? the that taking to So run We're the business as in our not it's rate

a recovery. are the for We positioning business

within So sit convert we today, well. as I'm we'll here I packaging, as that incremental sales confident, get very

Ken Newman

Packaging. one just on more Right. Maybe

consolidations much of the expected of -- sense packaging? timing realizing within to Sorry those if did missed this, And I cost the a how but benefits. are say you these

Any expected. there? are $XX color you million benefits think I mentioned in

Thomas Amato

some that costs to anticipated in largely Yes. make to do I those charges restructuring the have moves. quarter relate don't know, Scott. We

with is that, will rates. us conversion also pretty but the our I So think, swift, help payback on

Ken Newman

then And even a be to logistics as space? in existing that And they that risk Okay. the need retooled you is get perspective capacity consolidating to since what's a in of caught the from do can visibility operational flat-footed now, there involved is an you any move there low risk consolidate is of over? way that or manufacturing right the so facilities, capacity? kind to Or that kind try

Thomas Amato

think don't so. I

recount The I'd I than understand having but at my one you're to career this think, manufacturing saying, moment. can here, in I operations more reposition we're point make even the what like move the that into moving existing operation, exiting -- we is a actually where ways. assets plants within so even we're existing bank U.S., don't a making many to in production I we California which build -- we have

we're tools over, and existing So are that move presses follow. then able just will them the presses put to into

So a in market, if savings out prolonged infrastructure further we'll some there's California. get one the of taking softness costs we're still plant the in because

Ken Newman

Right.

Thomas Amato

so we're terms then a demand just more want a plants little in And on more based estimates bringing what into because X new complex doing little levels. say, -- are facility, our their X -- to China we're involves that but in it's I current in of a

we're demand in pickup there assets some and to of a moving we're So the forecasting really not even world. parts other

at new as launching I like compared a both safer plant. brand So is look launches steps restructuring those of to

Ken Newman

segment. switching just Obviously, here. to Maybe margins the over Right. strong Specialty very

at you mean, think? I cycle, do this term, I sustainable are level? longer the new Just baseline for through this the is business that how mean, margins

Thomas Amato

overall here. characteristic of depends is cylinders on sell. what we Well, it mix and market a big sort think demand I There

talking the past quarters been purity cylinders. ultrahigh So for on few I've

localizing typically a For types and cylinders of pricing go movement good better can a of specifically those product the into with -- of better would U.S., higher into command types and, goes therefore, margins. a application, it us, into that's line, we those applications microchips specialized

what recognize we getting -- that. and we're thing historical both protect also ranges for to look, here, that's looking margin high us some do into can doing and a behind us we're and making it good So we're has sure we

improving though our cost structure. of the A lot been driver has

you're it's lot I we've those the here, Like and a on taking did invest in to over. are back actions of tough that taken off. business, -- the that difficult. paid a it the and best sometimes risk, and mean, we it's we did market -- times said, come So I did are would and a When time it

cognizant certainly a just there's fair So risk we're point. but don't to it's I that of what here, conclude saying. you're want

Ken Newman

ramping with just monthly Arrow over XXX. Okay. production switching quick. Maybe to really Boeing's are

impact production. for Just faster the how about that and think curious you visibility

Thomas Amato

on Yes. you question Look, if XXX? a ask

Ken Newman

I the but think XXX, any --.

Thomas Amato

okay. XXX,

book we're So everyone mean, there. meet look, unique could of -- is it's The and the but The only just took space, gathering possibly talk to. all of ago, industry with very types And order to few not aerospace you to we're I weeks for some alone, that faster upbeat. supply that production issues it air that annual very hard want -- that a terms not show in of us in part something space. we're The in is place has helps. having, the of

So is us supply, for getting the customers, labor, our turn big cetera. production-base, labor, et alignment to again, aerospace the with getting in the skilled sub-supply as base with -- suppliers the wheel key theme in starts our

why that's excited pretty that forward we'll and we as into convert certainly well. go So I'm XXXX,

plus, a -- comes as maybe there's no think that. I XXXX asked that so longer got as you very term, that's nice well. I activity the also but to to And numbers a related back in XXX a on little that's about the XXX, presence online, question we've longer term, thought our

Ken Newman

last Maybe Yes. one the for me.

excluding some conversion. even through restructuring costs, but around XX% I so greater Just an XXX%. on adjusted completely think, we're not the I half, the than cash on that's know maybe free basis, apples-to-apples, guide, flow even, first

attention given paying much half, back to any starts how thing? in all onetime need in with cash Or How big that the just kind we that that anything free issues packaging? of through flow of to of is to here terms is So seasonality? be there the

Scott Mell

we the then really we year working our that's fourth we mean as third get quarter. into as and I of with cycle of generation the it -- Yes. typically first into in cash and half quarter capital the traditional unwind invest to the

just there's of the capital. the first in our Ken, than unique the unwinding obviously, expectations other there, versus earnings nothing on traditional year So of Plus, the incremental really half. working second half

Operator

Our of next the BWS with Financial. from question comes Khorsand Hamed line

Hamed Khorsand

Good morning.

So Do than you in if capacity have side. question Packaging you a might where come on you thinking orders was I quicker you're on the the have back be consolidation the think situation first don't side?

Thomas Amato

actually shifts it a We would have of a it's to wake-up we've basis studying. not question. many been within mean all something No. pinch can several have certainly that intently, running of So explored running our within great plants not have given add We're a packaging yet take or we -- plants cases, But we're That's I points. was a aerospace, where we even we especially not X-shift what right? seen And place in on call for basis. our us. X-shift

scale can incredible on or get productive we operating assets up our So some and operating -- leverage. margin

Hamed Khorsand

they're as And the products the with channel? attract again? stuck Or through are as inventory making for adjusting they're out waiting new to this far far just purely as concerned, it it to clear as the Okay. they are customer customers just is then and

Thomas Amato

-- with when our we goes versus question. customers, I what customers that product doing, is the about another. our we're Look, that lot And exciting there's the purchase, the there's packaging point of space core the always point especially at Well, one them, innovation of segment is of think generally, doing and attracts with item support for consumer the understand that I you science and us think within what's at what that are select into about a consumer effort intently. what to sale, of

significant have was frankly, of X cc because example, dispensers like forward simple been there. into on and disposed there's of simple it burned do to You're consumer's yes, pumps less a to year have cc wouldn't probably dispenser, for a a that, coming will get be It a simple or right, X fancy They're liquid cost simple extent though, to get pump, lower a here for a that overstocked here job -- inventory consumption of going today the getting of amount hands. a always -- out high would of this fine container while, would like that through. are that

Operator

There Tom are to at no I'd this floor for questions closing the like comments. over to time. back turn further

Thomas Amato

again next you And us we for Thank Okay. quarter. joining look updating forward again to our on call. earnings you

Operator

This concludes teleconference. today's

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

TriMas (TRS) 27 Jul 232023 Q2 Earnings call transcript