Q3 2024 TriMas Corp Earnings Call
Greetings and welcome to the <unk> third quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host Sherry Lauderback, Vice President of Investor Relations.
You may begin.
Sherry Lauderback: Thank you and welcome to try not to corporations third quarter 2024 earnings call participating on the call today are Thomas Amato, Trimas, President and CEO and Scott now our Chief Financial Officer, We will provide our prepared remarks on our third quarter results and outlook and then we'll open up the call for questions.
Sherry Lauderback: In order to assist with the review of our results. We have included in today's press release and presentation on our company website at try not to dot com under the investors section. In addition, a replay of this call will be available later today by calling 870 76606853 with the meeting.
Sherry Lauderback: 13749560, before we get started I would like to remind everyone that our comments today may contain forward looking statements that are inherently subject to a number of risks and uncertainties. Please.
Please refer to our Form 10-K, and our Form 10-Q to be filed later today for a list of factors that could cause our results to differ from those anticipated in any forward looking statements.
Sherry Lauderback: Also we undertake no obligation to publicly update or revise any forward looking statements, except as required by law.
Sherry Lauderback: We would also direct your attention to our website where considerably more information may be found.
In addition, we would like to refer you to the appendix in our press release or presentation for the reconciliations between GAAP and non-GAAP financial measures used during this call today the discussion on the call regarding our financial results will be on an adjusted basis, excluding the impact of special items.
Sherry Lauderback: With that I will turn the call over to Tom Amato, <unk>, President and CEO Tom <unk>.
Tom Amato: Thank you Sherry good morning, and welcome to <unk> Corporation's quarterly earnings call, let's turn to slide three.
To begin I am pleased to report that over the past quarter. We continued to experience positive trends in market momentum across many of our key end markets, particularly as compared to the same period last year.
Sherry Lauderback: Our investments in operational efficiency customer engagement and innovation have laid a strong foundation, enabling us to capitalize on growth opportunities going forward.
And our two largest segment segments <unk> packaging and <unk> aerospace.
Sherry Lauderback: Which together comprise over 85% of our year to date sales, we delivered core sales growth of 12, 3% and four 8%, respectively as compared to the prior year quarter.
Sherry Lauderback: Within <unk> packaging, our largest group our core sales gain marks the third consecutive quarter of solid sales growth as we believe we are clearly exited the demand trough experienced in 2023.
Sherry Lauderback: In fact organic sales growth in our beauty personal care and home care product lines were up over 20% as compared to the prior year quarter.
Sherry Lauderback: While we continue to make operating leverage gains on a sequential basis with <unk> packaging packaging is adjusted EBITDA rate just over 21% and higher than the Q2 2024 rate by 100 basis points. We also continue to manage through specific areas of capacity constraints.
Sherry Lauderback: Given the high demand related to certain product lines.
With that said, we have been taking proactive steps throughout the year, including adding incremental production capacity, which will pave the way for improved conversion rates as we enter 2025, and importantly, better position trimas packaging to reach its full potential as we move forward.
Sherry Lauderback: Within <unk> aerospace our momentum in sales growth over the past five quarters has been hindered only by the availability of skilled labor raw materials and certain equipment capacity as we continue to enjoy the strong demand recovery within the aerospace end market.
Sherry Lauderback: I would also like to note that in the quarter one of our largest locations experienced a 10 week work stoppage as we navigated through the process of achieving a new three year collective bargaining agreement, which was ratified by the workforce on October 11th.
We have estimated that absent. This work stoppage, we would have delivered another $7 million to $8 million of sales in the third quarter, along with a favorable conversion impact on EPS, which we estimate to be approximately <unk> <unk> per share.
Sherry Lauderback: Despite this impact in the quarter, we continued to enjoy positive momentum in bookings and favorable performance trends as we brought our production operations and to better synchronization with aerospace and defense end market demand.
Finally within our specialty product set of businesses, which are experiencing significantly lower demand in 2024 as compared to last year. We have improved conversion rates over Q2 2024 as a result of the restructuring actions, we took last quarter.
The third quarter does represent the last difficult comparison quarter versus the prior year as it has now been one full year since entering the cyclical demand trough for the two businesses reported in this segment.
Sherry Lauderback: Let's now shift to an update on our treasury and portfolio actions, where we also continue to gain momentum.
Sherry Lauderback: Yeah.
With respect to share buybacks, we acquired approximately 99000 shares in the quarter, bringing our total buyback for the year to more than three quarter of a million shares.
Sherry Lauderback: As I have stated before with respect to our capital allocation philosophy, given our strong balance sheet and cash flow profile, we remain committed to returning capital to our shareholders through both dividends and share buybacks.
Sherry Lauderback: Inclusive of dividends on a year to date basis, we have already returned just over 2%.
Sherry Lauderback: Regarding our strategy to focus our portfolio of businesses, we have been making progress on the previously announced divestiture of Arrow engine.
Sherry Lauderback: Our decision to divest arrow engine.
Sherry Lauderback: Allows tri math to invest our resources into product areas and end markets, where we believe we have higher growth potential given our scale and in turn better serve our customers drive innovation and enhance value for our shareholders.
Sherry Lauderback: We remain optimistic to be in a position to update investors further on the status of Aero engine in the first quarter of 2025.
Sherry Lauderback: And the acquisition front, we also remain committed to building out our aerospace platform through strict strategic bolt on acquisitions, which we believe will add to the long term value of our aerospace business.
Sherry Lauderback: As such <unk>.
Sherry Lauderback: We entered into a purchase agreement to acquire GMT Aerospace a Germany based manufacturer of tie rods used in a range of structural aerospace applications.
Annualized sales are approximately $20 million euro with Airbus, representing nearly 50% of its revenue.
Sherry Lauderback: Importantly, this acquisition would represent adding to try mass aerospace our first manufacturing location in Europe, a critical strategic step to leverage and grow our full product range of fasteners and other engineered products within the aerospace market within the Euro aerospace market.
Sherry Lauderback: While the purchase agreement contains some important conditions to close which I will not cover on this call. We would anticipate completing this transaction within the first quarter of 2025.
Sherry Lauderback: In addition, we continue to make progress on identifying and assessing strategic M&A opportunities for bolt on acquisitions for our packaging group.
Sherry Lauderback: These are just a few actions highlighting our commitment to focus <unk> portfolio through corporate development initiatives.
Sherry Lauderback: Turning to slide four.
Sherry Lauderback: We wanted to highlight more specific data on our sequential performance improvement when comparing Q3 2024 to Q2 2020 for normalized for some of the events I mentioned earlier.
Sherry Lauderback: I won't go through the specifics these specific points again as I have already touched upon them on this call. However, we provided the summary analysis to illustrate the positive momentum in our performance, which we believe is valuable for our investors to see as part of today's presentation.
Sherry Lauderback: So, let's turn to slide five and I will briefly go through our consolidated results for the quarter.
Sherry Lauderback: For the third quarter, we are reporting sales of $229 million down two 5% as compared to the prior year quarter as the combined growth in our packaging and aerospace groups of nine 2% was more than offset by lower demand than in the same quarter last year and specialty products.
Sherry Lauderback: Segment EBITDA for our portfolio of businesses was $44 2 million or 19, 2% of sales representing a slight decrease in our two largest segments from the prior year quarter, but a more significant decline related to the lower conversion and the sales decrease within specialty products we can.
Sherry Lauderback: To believe we have upside potential in our segment EBITDA given actions, we have taken and with demand rate improvements, particularly as we enter 2025.
Sherry Lauderback: Yeah.
Sherry Lauderback: Consolidated operating profit for the quarter was $22 7 million lower than the prior year quarter also due to the demand challenges within specialty products.
Sherry Lauderback: Adjusted EPS was <unk> 43.
Which was slightly lower than we anticipated given the work stoppage within one of our aerospace locations and to a lesser extent other factors as noted.
Before turning the call over to Scott I wanted to take a minute to highlight the quality of our adjusted EBITDA mix, which is shown in the bottom section of this slide.
Sherry Lauderback: As you can see when we review the adjusted LTM EBITDA mix of our portfolio for this quarter.
Sherry Lauderback: As compared to the prior year quarter.
Sherry Lauderback: The absolute gains in both our packaging and aerospace businesses are shown in these two pie charts. We believe this is important to highlight is these two platforms on a comparable basis.
Sherry Lauderback: <unk> some of the highest value businesses within our portfolio.
Sherry Lauderback: So as we move forward and into 2025. It is our objective to continue to build upon this momentum within our <unk> packaging and <unk> aerospace groups and.
Sherry Lauderback: And invest further in turning around the performance of our specialty products businesses.
Speaker Change: At this point I will turn the call over to Scott, who will take us through our balance sheet capital structure structure in segment results Scott.
Scott: Thanks, Tom.
Scott: Let's turn to slide six and I will begin with an update on our key credit statistics.
Scott: As we have noted on prior calls our balance sheet remains strong with our low interest bearing senior notes not maturing until 2029.
Scott: We generated $15 4 million of free cash flow this quarter, a 35% improvement when compared to Q2 of this year, but lower than the same period last year on account of the lower base of absolute EBITDA.
Speaker Change: We finished the quarter with a net leverage ratio of two seven times slightly higher than the second quarter of 2024.
Speaker Change: Moving now to slide seven I will begin my review of our segment results starting with <unk> packaging.
Speaker Change: Net sales in the quarter with $130 million as compared to $117 million for the prior year quarter, an increase of approximately 12%.
Scott: This year over year improvement was primarily driven by robust organic growth within our key end markets with both the beauty and personal care and industrial end markets, increasing more than 20%.
Scott: In addition, we experienced positive year over year growth for the first time in 2024 within our food and beverage end market, which grew two 8% year over year during the quarter.
Scott: We remain very pleased to see the ongoing demand recoveries within these important end markets.
Scott: Operating profit for the quarter was $19 million or 14, 6% of sales a 60 basis point sequential improvement when compared to Q2 of 2024.
Scott: But down 210 basis points versus the prior year period.
Scott: This year over year decline again is primarily related to specific operating costs associated with increased demand for certain dispensing products, which we believe negatively impacted operating margins by 100 basis points in the quarter.
Scott: And cost of $1 2 million or 90 basis points, which were allocated from corporate in 2024, but we're not in the segment level cost structure in 2023.
Scott: Normalizing for the impact of these items pro forma Q3 adjusted operating profit.
Scott: Would have been flat when compared to the prior year period at approximately 16, 7%.
Scott: Adjusted EBITDA was $27 6 million or 21, 2% of net sales with nominal sequential improvement of $1 million and 100 basis points of margin improvement.
Scott: We remain very pleased with the sales momentum within <unk> packaging with year to date organic sales up more than 10% and expect our conversion rates to improve as we move into 2025 as we worked through operational pinch points created by significantly higher customer orders and related capacity.
Scott: Great.
Scott: While we are maintaining our full year guidance for 2024 of 9% to 10% sales growth and adjusted EBITDA margin of 21% to 23%.
Scott: We do believe there are additional margin enhancement opportunities as we get into 2025.
Scott: While we expect GDP plus type sales growth in 2025, we also believe the business is now well positioned to further improve conversion rates as we continue to bring capacity into better alignment with demand for some of our key dispensing products and we benefit from incremental variable contract Contra.
Scott: <unk> margin from higher sales.
Scott: Turning to slide eight I will now provide an update on our <unk> aerospace segment.
Scott: Net sales in the quarter was $71 million as compared to $68 million for the prior year quarter on an organic increase of approximately 5%.
Scott: As Tom mentioned earlier sales during the curve during the quarter were negatively impacted by a work stoppage at one of our largest aerospace facilities.
Scott: We believe this event reduced sales in the quarter by $7 million to $8 million and when adjusting for this item sales otherwise would have increased by more than 15% year over year as we continue to work through a historical backlog in general Aerospace volumes continue their post COVID-19 recovery.
Scott: I would also like to note that while we did experience some shifting of orders by certain customers related to the widely reported work stoppage at Boeing It did not meaningfully impact our results in the quarter.
Scott: Operating profit for the quarter was $8 7 million or 12, 3% of net sales a slight nominal improvement when compared to the previous year period, even when considering the impact of the work stoppage.
Speaker Change: As Tom mentioned, we believe the work stoppage reduced adjusted EPS by approximately <unk>, <unk> or $2 $5 million of operating profit during the quarter.
Speaker Change: Adjusted EBITDA for the quarter was $13 1 million or 18, 5% of net sales.
Scott: LTM sales for Tri mass aerospace as of the third quarter remained more than 20% higher when compared to the same period in 2023.
Scott: And while we are very pleased with this full demand recovery. We do believe there is incremental margin opportunity within <unk> aerospace as we continue to invest in manufacturing capacity and see further improvements in supply chain and labor force continuity.
Speaker Change: Despite some of the challenges noted in the third quarter and assuming no meaningful impact from the Boeing matter, we are maintaining our full year guidance for 2024 of 18% to 22% sales growth and adjusted EBITDA margin of 18% to 19%.
Scott: We also believe there is more than a 100 basis points of additional upside and conversion improvement to be achieved in 2020 pardon me 2025 from the operational improvement efforts previously mentioned and other actions implemented by our aerospace team along with continued core sales growth.
Speaker Change: End market demand.
Speaker Change: In fact, some of our operations are already booked deep into the second half of 2025.
Speaker Change: Now on slide nine let's review our specialty products segment.
Scott: Net sales were $28 million as compared to 51 million for the prior year quarter and 31 million for Q2 of 2024.
Scott: This will be the last quarter that specialty products will be comping against an abnormally elevated period of customer demand driven by global supply chain continuity concerns in 2023.
Scott: Sales in the quarter continued to be negatively impacted largely by the overstock position of industrial cylinders and to a lesser extent lower sales of compressors, serving the oil and gas industry.
Scott: In addition sales of cylinders into defense related applications have been delayed and are now not expected to run at a normalized rate until the start of 2025.
Speaker Change: While we continue to see some moderate improvement in quoting activity and bookings for steel cylinders. We do not expect these activities to meaningfully impact 2024, and accordingly, we are maintaining our full year guidance for 2024 of a 25% to 30% sales decline in.
Speaker Change: And adjusted EBITDA margin of 10% to 14%.
Speaker Change: Operating profit in the quarter was $2 4 million or eight 5% of net sales a <unk>.
Speaker Change: 660 basis points sequential improvement as we are starting to benefit from the broad cost reduction actions taken during Q2 of this year.
Speaker Change: Adjusted EBITDA for the quarter was $3 4 million or 12, 1% of net sales.
As we look towards 2025 for specialty products, we believe that the cost restructuring actions taken during 2024.
Speaker Change: Along with the strategic initiatives at north cylinder to move to a poll inventory system.
Speaker Change: As the business well positioned to continue to improve conversion rates within a more moderated demand environment and will allow us to react quickly and efficiently if demand recoveries or at a higher rate than anticipated in 2025.
Speaker Change: Accordingly, we are expecting more moderate organic growth for 2025, as we come off the very low sales base in 2024 with EBITDA margins reverting back into the low to mid double digit range.
Sherry Lauderback: At this point I would like to turn the call back over to Tom to provide some closing remarks Tom.
Tom Amato: Thank you Scott, let's turn to slide 10.
Tom Amato: Given our expectations for continuous improvement within our aerospace group now the work stoppages resolved and our backlog remains strong.
Scott: Specialty products as we continue to see gains from our restructuring actions progress.
Scott: And continuous sequential momentum within our packaging group, we are maintaining our adjusted EPS range that we provided in July which was a range of $1 70 to $1 90.
Scott: However.
Scott: I would like to qualify that while we have only seen modest impacts to date from the widely reported Boeing work stoppage. If it is prolonged like most companies within aerospace ecosystem, it will impact demand and the supply chain overall.
Scott: We remain in close dialogue with all of our customers and suppliers related to this matter and we will adjust our production planning if necessary.
Scott: At this point however, we have no practical way to estimate any impact and we continued to deliver to our open orders for all of our aerospace customers.
Scott: Before moving to Q&A I will conclude our prepared remarks by refreshing the near and long term value, creating opportunities set for tri mass.
Speaker Change: First.
Scott: Our two largest operating groups <unk> packaging and <unk> aerospace are at different stages of performance recovery. After a very challenge 2023.
Scott: We anticipate that the positive momentum on these high quality business lines will carry into 2025 and well be at.
Speaker Change: Next we continue to take proactive steps to focus our portfolio of businesses, we have already announced the first divestiture step which is underway.
Scott: We also continue to place a priority on building out our <unk> packaging platform through M&A with a focus on the life Sciences beauty and food and beverage end markets and also our <unk> aerospace platform.
Scott: Product complements and adjacencies to enhance its long term value.
Speaker Change: Finally, while our specialty products businesses have experienced significant challenges. This year, we have already completed many actions that are only beginning to provide a financial benefit, but which we expect to build upon as we move into 2025.
Speaker Change: Moreover, as we expect to experience demand reversion when it occurs we should convert very well and our specialty products businesses.
Speaker Change: I'd like to again, thank our investors for their continued interest and support and we'll now turn the call back to Sherry Sherry.
Sherry Lauderback: Tom at this point, we would like to open up the call to questions from our analysts.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: So participants using speaker equipment, it may be necessary handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: Our first question comes from Ken Newman with Keybanc capital markets. Please proceed with your question.
Ken Newman: Hey, good morning, guys.
Speaker Change: Hi, Ken.
Speaker Change: Neither Tom.
Ken Newman: Maybe for my first question, just starting with aerospace.
Scott: Look I know that it's a challenging environment out there with Boeing but I'm curious if.
Scott: Maybe remind us how much of your workforce is unionized and that in that segment then.
Scott: Whether or not you see any risk of another labor dispute here in the near term.
Scott: Well.
Speaker Change: We only have one facility that is unionized in that was the facility that we completed a new three year deal and so we don't anticipate.
Scott: More workforce issues.
Scott: Within aerospace.
Speaker Change: Got it that's helpful.
Speaker Change: Just sticking with with the Arrow then.
Speaker Change: I was surprised to hear that you haven't really seen an impact from the Boeing strike this quarter it wasn't as incremental as maybe we would've thought.
Speaker Change: Do you have a sense and I know visibility in the channel is always really tough, especially on the fastener side, but just how much inventories maybe out in the channel that these guys are maybe.
Scott: Burning through are not burning through and how does that impacting order rates at <unk>.
Scott: Go forward level.
Speaker Change: Yes that look Thats a good question, that's a difficult one for us to predict but youre exactly right within.
Speaker Change: Our largest product lines.
Speaker Change: It does tend we tend to track with a little bit of a lag factor so.
Speaker Change: We're hopeful that a resolution will occur hopefully today.
Speaker Change: And that production will get turned out again, so it's difficult for us to predict if there is.
Scott: We will be any impact.
Scott: I don't expect it much if any in Q4 could be a little bit of some rebalancing in 2025.
Scott: But remember that for much of this year.
Scott: We've been behind that and shipments. So we have a lot of open orders that we still have to fill so I am not.
Scott: I don't feel like for some of our product lines. Some of our major product lines that there is a heavy amount of overstocking, but we'll update we will update you next quarter.
Speaker Change: Got it maybe if I can just squeeze one more in.
Speaker Change: Looking at the packaging guide that was maintained it implies a pretty big step up in margins from <unk> to <unk> at the midpoint I'm just curious if there's a way to help us understand how much of that is going to be driven by the better absorption on the new capacity additions or if there is a mix benefit there anything that we should kind of be aware of in <unk>.
Scott: How is that maybe trending through October.
Scott: Relative to that to that midpoint of the guide.
Speaker Change: Well first of all we have been we have been seeing some sequential improvement within packaging throughout the year, we expect that to continue.
Speaker Change: Within all of our operations outside of very few select hotspots.
Scott: <unk> packaging is performing pretty well so.
Scott: If assuming orders hold up we do have some short cycle nature to our business in this current environment, but assuming the orders hold up as we expect them to.
Scott: I expect that we'll continue to make progress against some of the hotspots, we have in the quarter and.
Scott: <unk> performed better than Q3.
Speaker Change: So just to clarify it sounds like this is a truly all of that just an absorption.
Speaker Change: And the capacity additions is that fair.
Speaker Change: Yeah, well look.
Speaker Change: As Scott alluded to and I mentioned as well, we do have a few hotspots, where we have some operations that are not performing to their full potential and every day, we get better and we've reduced some of the inefficiencies that we're seeing and so I wouldn't quite call that absorption I just call that some.
Scott: Eliminating some of the off standard costs that are impacting us and the <unk> is that the.
Scott: The driver behind those off standard costs are exceptionally high demand on a select few product lines, which in 2023 orders were down for those product lines nearly 20%.
Scott: So it's sort of a snapback effect and we've seen this in aerospace and we've seen this in other businesses as well, sometimes when demand snaps back that's great at the top line, but it takes a while to bring things into balance.
Scott: Yes.
Speaker Change: That's helpful I'll get back in queue. Thanks.
Speaker Change: Thank you.
Speaker Change: Our next.
Speaker Change: Comes from Amit <unk> with B Ws financial. Please proceed with your question.
Amit: Hi, good morning, So first off on packaging I guess, you were seeing some orders come in and some inefficiencies.
Speaker Change: Why is it taking so long to.
Speaker Change: Right size, the business and get the bottlenecks out of the way.
Speaker Change: Hi, Good morning, Matt that's a good question in that particular case that we're referencing.
Speaker Change: It's specifically has to do with installed capacity.
Speaker Change: No.
Speaker Change: We sometimes when we have to add capacity can take.
Speaker Change: 40, plus weeks by the time equipment comes in it gets qualified and approved by the customer and brought online. So we actually ordered equipment late last year earlier this year and it's on our factory floors in fourth quarter. So we're in the process of ramping it up so that's the the issue.
Speaker Change: As we've been talking about capacity pinch points, what that really means is we had to add another assembly line.
Speaker Change: Got it and then on packaging itself.
Speaker Change: Could you just described.
Speaker Change: The order book.
Speaker Change: Quoting activity Youre seeing.
Speaker Change: Given the guidance it seems that Q4 could actually be flat to up while seasonally Q4 is supposed to be weak for the segment.
Speaker Change: Yes, let me first let me say that we do have a fair amount of.
Scott: <unk>.
Scott: Product lines that are shorter cycle in nature and customers are taking advantage of that short cycle dynamics, so the visibility too.
Scott: Exact orders are a little bit more difficult than they have historically been but we're starting to see the trends with those orders coming in but I will you said something earlier in your <unk>.
Scott: Question about the.
Scott: Quoting activity the quoting activity that we're seeing in our packaging group.
Scott: Is exceptional right now and I would I would expand that also too.
Scott: Our life Sciences product lines, and we're not we're pretty unique because we have the ability to offer customers in life Sciences.
Scott: The prototype runs and then sort of going up to mid scale before they might go to a larger CMO CMO supplier, but we're seeing a lot of quoting activity.
Scott: Globally.
Scott: Or particularly the beauty area, which is an area, where we have several product lines.
Scott: And in life Sciences at the moment, so we're pretty optimistic.
Scott: About our activity that we're seeing today translating into core growth as we move into 2025 and beyond.
Speaker Change: Okay, and then could you comment about the GMT acquisition, what the price point is on this.
Speaker Change: Yes, I can as I can at this time, because we just signed the agreement and it's subject to a number of conditions before we close but assuming everything is cleared appropriately then we will provide that later on.
Speaker Change: Early into next year, but as I mentioned, its $20 million in euro and revenue. So you can sort of handicap from that point in terms of overall size relative to try mass.
Speaker Change: And given the.
Speaker Change: Susan to divest.
Speaker Change: Your engine business is there any.
Speaker Change: Decision or opinion as to what you wanted to do with the rest of the business or it's just basically whatever interest you receive inbound.
Scott: I'm not quite sure I follow the question.
Speaker Change: You've decided to divest engines is there any interest to divest anything else or are you depending on.
Speaker Change: What any any inbound call you got you.
Speaker Change: No not really.
Speaker Change: Yeah, I think it's good it's a good question, we're always looking at our portfolio of businesses.
Speaker Change: We do have some businesses that are quite different from others in terms of the broad set of characteristics. So it's a good question. We're always looking at the businesses, we own and assessing what what businesses have had the longest term strategic potential.
Speaker Change: For us in terms of creating value for our shareholders.
Speaker Change: Alright, thank you.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Our next question comes from Ken Newman with Keybanc capital markets. Please proceed with your question.
Ken Newman: Hey, Thanks for taking the follow up.
Ken Newman: Maybe just to touch on that last question in terms of how you view the portfolio.
Ken Newman: Obviously, you've got a new shareholder here.
Speaker Change: And Im curious if theres been any talk about the board or just how you view his intention.
Speaker Change: Whether he's got a view on the Ford portfolio or that you could talk to.
Speaker Change: Well, yes, we have.
Speaker Change: Certainly.
Speaker Change: Read the public filing.
Speaker Change: <unk>.
Speaker Change: I think as a normal course irrespective of that particular shareholder or other large shareholders that we have as a company and certainly with our board we're always.
Speaker Change: Reviewing each of our portfolio set of our set of portfolio of businesses and assessing which have the best long term value for us and for our shareholders. So.
Speaker Change: I don't think anything has really changed its something that we do as a normal course of the board all the time.
Speaker Change: Got it okay.
Speaker Change: And then maybe one more on free cash and capital deployment, obviously, you're maintaining the view on.
Speaker Change: Maybe going after M&A as well as being a little bit more active on share repurchases here through the year.
Speaker Change: Maybe first on the M&A pipeline, obviously, you've got the GMT acquisition here.
Speaker Change: How do you characterize the pipeline of deals here relative to both the.
Speaker Change: The aerospace and the packaging segments and.
Speaker Change: I guess.
Speaker Change: A follow up to that.
Speaker Change: The GMT deal is that is that one that.
Speaker Change: Should we expect that to be margin accretive or relatively in line with with segment margins when that closes.
Speaker Change: Yes, it's Scott let me let me try.
Speaker Change: Trying to address the GMT.
Speaker Change: Not going to get into specifics there, but obviously, we do expect it to be accretive as it relates to <unk>.
Speaker Change: <unk> adjusted EPS.
Speaker Change: Coming out of the gate with regards to your other question on the pipeline.
Speaker Change: How it relates to cash flow could you just.
Speaker Change: Ask that one more time, so I make sure I'm clear on what you are asking yes.
Speaker Change: I'm just curious if you have just give some color on what the pipeline is looking like between packaging and aerospace deals.
Speaker Change: Because the leverage is up a little bit, but mostly I think just on maybe some more depressed EBITDA in the cycle and where our where our deals kind of trading and from a multiples perspective, and just your opportunity to go after incremental bolt ons from here.
Speaker Change: Yeah, Let me, let me jump in here.
Speaker Change: Dan.
Speaker Change: Certainly we were very active on the packaging front.
Speaker Change: And we're looking at deals that are what I would call nicely in the the bolt on size range. So sofa Russell's are great deals to absorb and integrate.
Speaker Change: Assuming we.
Speaker Change: Make progress with Arrow engine, which we expect that'll help us sort of fund some of the repositioning of our portfolio as we move into next year, focusing further into packaging and deemphasizing specialty products.
Speaker Change: So yes, so I think I don't know if that addressed it but we're seeing high activity is still in our packaging set of businesses and I would say a little bit more selective.
Speaker Change: Set of opportunities within aerospace.
Speaker Change: This act acquisition that we identified.
Speaker Change: And developed and sort of brought into brought under contract is a uniquely great fit with us and it provides provides us the long needed presence in Europe and to increase our concentration with Airbus. So we felt it was a huge add for our business, albeit it's a smaller acquisition.
Speaker Change: Variable pay day does.
Speaker Change: Does that address your question.
Speaker Change: Yes that was very helpful. Thanks.
Speaker Change: Thanks.
Speaker Change: Thank you.
Speaker Change: We have reached the end of our question and answer session I would now like to turn the floor back over to Thomas Amato for closing comments.
Thomas Amato: Thank you and thank you for joining us on our earnings call and we look forward to updating you again next quarter have a great day.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].