Q1 2025 TriMas Corp Earnings Call
Ladies and gentlemen, greetings and welcome to the Tri Mask Corporation fourth quarter 2025 earnings Conference call.
Operator: Ladies and gentlemen, greetings and welcome to the TriMas Corporation first quarter 2025 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 signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded.
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 signal the operator by pressing star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host Sherry Lauderback crime asked Investor Relations. Please go ahead.
Sherry Lauderback: It is now my pleasure to introduce your host, Sherry Lauderback, TriMas Investor Relations. Please go ahead. Thank you, and welcome to TriMas Corporation's first quarter 2025 earnings call. Participating on the call today are Thomas Amato, TriMas' President and CEO, and Teresa Finley, our Chief Financial Officer. We will provide our prepared remarks on our first quarter results and full year outlook, and then we will open the call up for questions. In order to assist with the review of our results, we have included today's press release and presentation on our company website at trimouse.com under the Investor section.
Yeah.
Speaker Change: Thank you and welcome to try not corporations first quarter 2025 earnings call participating on the call today are Thomas Amato try not who's President and CEO and Teresa Fendley, Our Chief Financial Officer, We will provide our prepared remarks on our first quarter results and full year outlook and then we'll open the call.
Speaker Change: All up for question.
Speaker Change: 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 <unk> Dot com under the investors section. In addition, a replay of this call will be available later today by calling 8776606853.
Operator: In addition, a replay of this call will be available later today by calling 877-660-6853 with a meeting ID of 13753075.
Speaker Change: With a meeting I D of 137530 75.
Sherry Lauderback: 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 refer to our most recent Form 10-K and 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 statement. Also, we undertake no obligation to publicly update or revise any forward-looking statements except as required by law. We would also direct your attention to our website where considerably more information may be found.
Speaker Change: 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.
Speaker Change: Please refer to our most recent Form 10-K and 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.
Speaker Change: Also we undertake no obligation to publicly update or revise any forward looking statements, except as required by law.
Speaker Change: We would also direct your attention to our website where considerably more information may be found.
Sherry Lauderback: 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.
Speaker Change: 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: Today, the discussion on the call regarding our financial results will be on an adjusted basis, excluding the impact of special items. With that, I will turn the call over to Tom Amato. Tom? Thank you, Sherry.
Speaker Change: With that I will turn the call over to Tom Amato Tom.
Tom Amato: Thank you Sherry good morning, and welcome to <unk> first quarter earnings call, let's begin on slide three.
Thomas Amato: Good morning and welcome to TriMas' first quarter earnings call. Let's begin on slide three. We are pleased to announce that we are off to a great start to the year and have delivered strong results for the first quarter. reflecting on our two largest segments, packaging and aerospace, which together represent nearly 90% of TriMas' revenue. we have experienced organic growth of 3.3% and 27.8% respectively. Our aerospace business achieved another record sales quarter and continued momentum in driving conversion to just over 22% EBITDA, with LTM EBITDA now at 20%. This is commendable performance by the aerospace team and represents our steadfast commitment to continuous improvement underpinned by a robust aerospace and defense market.
Tom Amato: We are pleased to announce that we were off to a great start to the year and have delivered strong results for the first quarter.
Tom Amato: Reflecting on our two largest segments packaging and aerospace, which together represent nearly 90% of <unk> revenues, we have experienced organic growth of three 3% and 27, 8% respectively.
Tom Amato: Our aerospace business achieved another record sales quarter and continued momentum in driving conversion to just over 22% EBITDA with LTM EBITDA now at 20%.
Tom Amato: This is commendable performance by the aerospace team and represents our steadfast commitment to continuous improvement underpinned by our robust aerospace and defense market.
Thomas Amato: Within our packaging group, sales grew at an anticipated level when adjusted for currency. and our conversion rate was just slightly below the prior year quarter as we chose to secure certain materials ahead of changing tariff rates. Taking this proactive step resulted in incremental costs in the quarter, which otherwise would have resulted in an increased overall conversion rate as compared to the prior period. Importantly, as we begin Q2, while we navigate the global packaging market, we are continuing to see good demand for our dispensing product line. We will continue to closely monitor this trend given emerging tariff-related dynamics.
Tom Amato: Within our packaging group sales grew at an anticipated level when adjusted for currency and our conversion rate was just slightly below the prior year quarter as we chose to secure certain materials ahead of changing tariff rates.
Tom Amato: Taking this proactive staff resulted in incremental cost in the quarter, which otherwise would have resulted in an increased overall conversion rate as compared to the prior period.
Tom Amato: Importantly, as we begin to as we begin Q2, while we navigate the global packaging market.
Tom Amato: We are continuing to see good demand for our dispensing product lines. We will continue to closely monitor this trend given emerging tariff related dynamics.
Thomas Amato: when considering the performance of our two largest segments. It is important to recognize TriMas' positive shift to a higher quality of segment-level earnings mix, which we believe underscores the value potential of TriMas. with respect to our specialty product segment after we normalize for the sale of aero engines. This segment now represents approximately 10% of TriMas' annual sales. In the first quarter of 2025, and similar to what we experienced at the end of 2024, we continue to believe that Norris Cylinder is at the bottom of a de-stocking demand trough. Encouragingly, we are now beginning to see the rate of cylinder order intake steadily increase for the first time in many months.
Tom Amato: When considering the performance of our two largest segments.
Tom Amato: It is important to recognize try masses positive shift to a higher quality of segment level earnings mix, which we believe underscores the value potential of Tri mass.
Tom Amato: With respect to our specialty products segment. After we normalized for the sale of Aero engine. This segment now represents approximately 10% of <unk> annual sales in the first quarter of 2025 and similar to what we experienced at the end of 2024.
Tom Amato: We continue to believe that Norris cylinder is at the bottom of the Destocking demand Trust.
Tom Amato: Encouragingly, we are now beginning to see the rate of cylinder order intake steadily increase for the first time in many months. We believe this is providing the long awaited green shoots, which we expect to build upon throughout the year.
Thomas Amato: We believe this is providing the long-awaited green shoots, which we expect to build upon throughout the year as we have already taken significant cost restructuring actions to facilitate improved performance at a lower annualized sales price.
Tom Amato: As we have already taken significant cost restructuring actions to facilitate improved performance at a lower annualized sales pace.
Thomas Amato: I'll provide a more detailed overview of our segment results later on in the call. Again, despite navigating recent challenges in some of our end markets due to geopolitical actions, we are very pleased to report a strong start to 2025.
Tom Amato: I'll provide more detail a more detailed overview of our segment results later on in the call.
Tom Amato: Again, despite navigating recent challenges in some of our end markets due to geopolitical actions. We are very pleased to report a strong start to 2025 at.
Teresa Finley: At this point, I will turn the call over to Teresa Finley, TriMas' Interim Chief Financial Officer and Board Member, to discuss TriMas' consolidated results. Teresa? Thank you, Tom.
Speaker Change: At this point I will turn the call over to Teresa Finley try Amasses interim Chief Financial Officer, and Board member to discuss <unk> consolidated results Teresa.
Teresa Finley: Thank you Tom.
Teresa Finley: First, I'd like to give a shout out to the TriMas team who have supported me during this transition, and especially those of you in the Detroit offices here have spent some extra hours helping me deepen my knowledge of our businesses. We indeed have a talented team here at TriMas. It's a pleasure to participate in my first earnings call with such encouraging results.
Teresa Finley: Firstly I'd like to give a shout out to the trying to S team, who have supported me during this transition and especially those of you in the Detroit offices here of spend some extra hours have been knee deep in my knowledge of our businesses. We indeed have a talented team here at <unk>, It's a pleasure to participate in my first earnings call with such encouraging result.
Teresa Finley: On that note, let's turn on to slide four. We have delivered solid results this quarter, with consolidated net sales increasing 6.4% year-over-year to $241.7 million. Excluding the impact of currency acquisitions and dispositions, organic revenue growth was more than 8%. Acquisition-related sales growth in the quarter was $3.3 million, related to the February 2025 acquisition of GMT Aerospace, nearly making up for the loss of $3.6 million in sales related to the divestiture of Aeroengine, completed in January.
Teresa Finley: On that note, let's turn on to slide four.
Teresa Finley: We have delivered solid results this quarter with consolidated net sales, increasing six 4% year over year to $241 $7 million, excluding the impact of currency and the acquisitions and dispositions organic revenue growth was more than 8%.
Teresa Finley: Acquisition related sales growth in the quarter was $3 3 million related to the February 2025 acquisition of GMT aerospace nearly making up for the loss of $3 6 million in sales related to the divestiture of Arrow engine completed in January.
Teresa Finley: Sales growth was also partially upset by $3.8 million related to current Consolidated operating profit increased by more than 50% compared to Q1 2024, or $8.2 million, reflecting the strong revenue growth and expanded operating margin of 290 basis points driven primarily by our aerospace business. This resulted in a meaningful increase in adjusted EBITDA, which was up 13.5% to $39.7 million and a margin improvement of 100 basis points to 16.4%. Our adjusted earnings per share rose to $0.46, representing a 24.3% growth year-over-year.
Teresa Finley: Growth was also partially offset by $3 8 million related to currency.
Teresa Finley: Consolidated consolidated operating profit increased by more than 50% compared to Q1, 'twenty 'twenty, four or $8 $2 million, reflecting the strong revenue growth and expanded operating margin of 290 basis points, driven primarily by our aerospace business.
Teresa Finley: This resulted in a meaningful increase in adjusted EBITDA, which was up 13, 5% to $39 7 million and a margin improvement of 100 basis points to 16, 4%.
Teresa Finley: Our adjusted earnings per share rose to 46 cents, representing a 24, 3% growth year over year.
Teresa Finley: Turning to the balance sheet, and our capital position, which is on slide five.
Teresa Finley: Turning to the balance sheet and our capital position, which is on slide 5. We continue to manage a strong and flexible balance sheet, supported by low-interest long-term debt, with no maturities due until 2029. During the quarter, we successfully refinanced our senior secured revolving credit facility, extending its maturity to 2030. Net debt increased from the prior quarter due to our strategic acquisition of GMT Aerospace, increasing our net leverage to 2.7 times.
Teresa Finley: We continue to manage a strong and flexible balance sheet supported by low interest long term debt with no maturities due until 2029.
Teresa Finley: During the quarter, we successfully refinanced our senior secured revolving credit facility extending its maturity to 2030 net.
Teresa Finley: Net debt increased from the prior quarter due to our strategic acquisition of G. M. T Y aerospace increasing our net leverage to two seven times.
Teresa Finley: Lastly, first quarter free cash flow improved by $14.8 million compared to Q1 of 2024, thanks to both strong operational performance and disciplined working capital management. Overall, we believe our capital structure is well-positioned to support both near-term operations and future strategic investments.
Teresa Finley: Lastly, first quarter free cash flow improved by $14 8 million compared to Q1 of 2024, thanks to both strong operational performance and disciplined working capital management.
Teresa Finley: Overall, we believe our capital structure is well positioned to support both near term operations and future strategic investments.
Thomas Amato: I will now turn the call back to Tom to provide further details on segment performance and outlook. Thank you, Teresa. Let's turn to slide six, and I'll cover our segment results for the quarter. As noted previously, packaging's organic growth was 3.3% after adjusting for a negative currency effect.
Tom Amato: I'll now turn the call back to Tom to provide further details on segment performance and our outlook.
Tom Amato: Thank you Theresa, let's turn to slide six and I'll cover our segment results for the quarter.
Tom Amato: As noted previously packaging organic growth was three 3% after adjusting for negative a negative currency effect.
Thomas Amato: As we discussed in the prior earnings call, we anticipated a more modulated rate of growth in 2025 as compared to 2024, given the snapback in demand that occurred from the very low rate of demand in 2023. Within our packaging group's main product lines, we further experience solid organic growth within our dispensing products, many of which are used in a variety of consumer goods markets. This is an important continuing trend, as our packaging group has many innovative dispensing design and functionality solutions for our customers. Additionally, we are beginning to see our life sciences product line sales increase as compared to the prior year period, as the medtech and market generally work through inventory destocking in 2024.
Tom Amato: As we discussed on the prior earnings call, we anticipated a more modulator rate of growth in 2025 as compared to 2024, given the snapback in demand that occurred from the very low rate of demand in 2023.
Tom Amato: Within our packaging group's main product lines, we further experienced solid organic growth within our dispensing products. Many of which are used in a variety of consumer goods markets. This is an important continuing trend as our packaging group has many innovative dispensing design and functionality solutions for our customers. Additionally.
Tom Amato: We are beginning to see our life Sciences product line sales increased as compared to the prior year period as the Med Tech end market generally worked through inventory Destocking in 2024.
Thomas Amato: Our cloture product line was negatively impacted by lower demand in the quarter, which we believe was driven by elevated customer inventory levels entering 2025, most of which was impacted by inflationary supply issues related to the food and beverage and market generally. operating profit conversion rates for the quarter were slightly lower by 20 basis points than the prior year quarter. However, the most significant impact to the quarter resulted from incurring incremental costs related to a proactive decision to secure certain materials ahead of changing tariff rates. This strategically defensive step resulted in approximately 100 basis points of extraordinary freight expense, which, if normalized for this effect, would have resulted in improved margin compared to the prior year quarter.
Tom Amato: Our closure product line was negatively impacted by lower demand in the quarter, which we believe was driven by elevated customer inventory levels entering 2025, most of which was impacted by inflationary supply issues related to the food and beverage end market generally.
Tom Amato: Operating profit conversion rate for the quarter were slightly lower by 20 basis points than the prior year quarter. However, the most significant impact to the quarter resulted from incurring incremental costs related to our proactive decision to secure certain materials ahead of changing tariff rates.
Tom Amato: This strategically defensive staff resulted in approximately 100 basis points of extra ordinary freight expense, which if normalized for this effect would have resulted in improved margin compared to the prior year quarter.
Thomas Amato: As we continue to look forward in 2025, the most significant matter we are navigating, like most packaging companies, relates to a potentially changing economic environment related to tariffs. In the near term, we are working with suppliers and customers to best reduce exposure from this geopolitical effect. In the longer term, and if necessary, we are well positioned to relocate production throughout various parts of the world given our global footprint. As mentioned on a previous earnings call, we have launched a new and larger facility in Vietnam, relocating from a smaller facility within the country. We expect this upgraded facility will serve as an important manufacturing hub to service Asia and other parts of the world.
Tom Amato: As we continue to look forward into 2025, the most significant matter. We are navigating like most packaging companies relates to a potentially changing economic environment related to tariffs and the near term we are working with suppliers and customers for best reduce exposure from this geopolitical effect and the longer term.
Tom Amato: And if necessary, we are well positioned to relocate production throughout various parts of the world given our global footprint.
Tom Amato: As mentioned on previous earnings call, we have launched a new and larger facility in Vietnam relocating from a smaller facility within the country.
Tom Amato: We expect this upgraded facility will serve as an important manufacturing hub to service Asia and other parts of the world.
Thomas Amato: With respect to imported goods from China, I would note that given our strategy over the past three years to regionalize production, we now only import about 5% of our total packaging sales from China. If the tariff rates implemented against China by the United States remain at the rate in effect currently, we believe we can dampen the near-term direct impact with actions already underway and, if necessary, accelerate our rate of relocating and insourcing other packaging products over the longer term.
Tom Amato: With respect to imported goods from China, I would note that given our strategy over the past three years to regionalized production, we now only import about 5% of our total packaging sales from China.
Tom Amato: If the tariff rates implemented against China by the United States remain at the rate and if that currently we believe we can dampen the near term the near term direct impact with actions already underway and if necessary accelerate our rate of relocating an in sourcing other packaging products over the longer term.
Thomas Amato: So overall, we remain encouraged by the progress made within our packaging group this quarter, as well as the longer-term outlook. The same time, we are also working diligently to mitigate pending challenges created by geopolitical decisions.
Tom Amato: So overall, we remain encouraged by the progress made within our packaging group this quarter as well as the longer term outlook at the same time. We are also working diligently to mitigate pending challenges created by geopolitical decisions.
Thomas Amato: If we turn to slide 7, I'll review our aerospace. As noted, our aerospace group had a record sales quarter of nearly $90 million of revenue. This was driven by continued increasing demand in the aerospace and defense market, improved throughput against a strong order book, commercial actions, and acquisition-related sales. Also, our operating profit conversion rate was up significantly by 650 basis points as compared to the prior year quarter and with EBITDA margin rates now at pre-pandemic level. This result was largely driven by our aerospace team's efforts over several quarters, ranging from extensive factory floor and operational excellence improvements to fact-based, data-driven purchasing and commercial action.
Tom Amato: If we turn to slide seven I'll review, our aerospace segment.
Tom Amato: As noted our aerospace group had a record sales quarter of nearly $90 million of revenue. This was driven by continued increasing demand in the aerospace and defense market improved through throughput against a strong order book commercial actions and acquisition related sales.
Tom Amato: Also our operating profit conversion rate was up significantly by 650 basis points as compared to the prior year quarter and with EBITDA margin rates now at pre pandemic levels.
Tom Amato: This result was largely driven by our aerospace team's efforts over several quarters ranging from extensive factory floor and operational excellence improvements to fact based data driven purchasing and commercial actions.
Thomas Amato: While we are pleased with the performance to start the year, we also remain excited about the long-term growth outlook given our backlog and continued commercial gains, some of which will benefit our growth trajectory in 2026 and beyond. We also successfully closed on the purchase of GMT Aerospace, which we have renamed TAG for TriMas Aerospace Germany and are currently working on the integration of that acquisition. For the month and a half of ownership, TAG contributed about $3 million in sales to the Aerospace Group.
Tom Amato: While we are pleased with the performance to start the year. We also remain excited about the long term growth outlook, given our backlog and content and continued commercial gains some of which will benefit our growth trajectory in 2026 and beyond.
Tom Amato: We also successfully closed on the purchase of GMT Aerospace, which we have renamed tag for Tri Mass Aerospace, Germany and are currently working on the integration of that acquisition for.
Tom Amato: For the month and a half of ownership tag contributed about $3 million in sales to the aerospace group.
Thomas Amato: on behalf of the entire TriMas management. We welcome the team at TAG to the TriMas Aerospace family of business.
Tom Amato: On behalf of the entire <unk> management team, we welcomed the team attached to the <unk> aerospace family of businesses.
Tom Amato: If we now turn to slide eight I'll cover specialty products.
Thomas Amato: If we now turn to slide eight, I'll cover specialty products. Specialty product sales were lower as compared to the prior quarter by $7.9 million, of which approximately $3.6 million related to sales lost due to the divestiture of Arrow Engine. The balance, just over $4 million, related to lower demand for cylinders in Q1 2025 as compared to Q1 2024.
Tom Amato: Specialty products sales were lower as compared to the prior year quarter by $7 9 million of which approximately $3 6 million related to sales lost due to the divestiture of Arrow engine the balance just over $4 million related to lower demand for cylinders in Q1, 2025 and <unk>.
Tom Amato: Compared to Q1 2024.
Thomas Amato: While those are the results, it's not the full story this quarter for Norris-Hillen. First, we are starting to see positive change in the rate of order intake, which we are monitoring closely and certainly hope it continues. Additionally, we have already restructured our cost base and anticipate that we can achieve a more normalized conversion rate on a lower sales base. Finally, in Q1 2025, we sold through inventory at a higher cost base as compared to Q1 2024 levels, a quarter when manufacturing costs were not fully adjusted and aligned with lower demand. That is not the case today, as our production costs are in much better balance with current market demand.
Tom Amato: While those are the results it's not the full story this quarter for Norris cylinder.
First we are starting to see positive change in the rate of order intake, which we are monitoring closely and certainly hope. It continues. Additionally, we have already restructured our cost base and anticipate that we can achieve a more normalized conversion rate on a lower sales base.
Tom Amato: Finally in Q1 2025, we sold through inventory at a higher cost base as compared to Q1 2024 levels a quarter when manufacturing costs were not fully adjusted and aligned with lower demand that is not the case today as our production costs are in much better balance with.
Tom Amato: Current market demand and.
Thomas Amato: In light of this dynamic, and as anticipated for the first half of 2025, we are in a period where we still need to work through absorbed manufacturing overhead from the prior year period. Knowing that, and given the factory floor actions we have already implemented, we are confident that operating profit conversion will begin to normalize as we move into the second half and would anticipate seeing an operating profit back in the low double-digit range by the end of the year.
Tom Amato: In light of this dynamic and as anticipated for the first half of 2025, we are in a period, where we still need to work through absorb manufacturing overhead from their prior year period, knowing that and given the factory floor actions. We have already implemented we are confident that operating profit conversion will begin to normal.
Tom Amato: Lives as we move into the second half and would anticipate seeing in operating profit back in the low double digit range by the end of the year importantly, as <unk> begins to progress in its recovery is poised to make meaningful contribution to <unk> overall performance levels.
Thomas Amato: Importantly, as NORS begins to progress in its recovery, it is poised to make meaningful contribution to TriMas' overall performance level.
Tom Amato: Let's now turn to slide nine.
Thomas Amato: Let's now turn to slide nine. As highlighted in our press release this morning, we are reaffirming our outlook for 2025. While our primary near-term challenge relates to the current trade strategy from the U.S. government, which continues to be a fluid situation, we do not yet have enough information to be able to predict the annual impact. We also remain cautiously optimistic that as trade deals are announced with some countries... That result may provide inertia for other countries to begin to settle with the U.S.
Tom Amato: As highlighted in our press release. This morning, we are reaffirming our outlook for 2025, while our primary near term challenge challenge relates to the current trade strategy from the U S government, which continues to be a fluid situation. We do not yet have enough information to be able to predict the annual impact.
Tom Amato: We also remain cautiously optimistic that as trade deals are announced with some countries that result may provide a nursery for other countries to begin to settle with the U S.
Thomas Amato: Before turning to Q&A, I would like to once again state that TriMas is comprised of great businesses with well-recognized brand names in the markets they serve. While each business is at a different phase in their respective cycle, all are well-positioned to deliver an outstanding future.
Tom Amato: Before turning to Q&A I would like to once again state that <unk> is comprised of great businesses with well recognized brand names in the markets. They serve while each business is at a different phase in their respective cycle, all are well positioned to deliver an outstanding future.
Sherry Lauderback: Thank you, and with that, I'll turn the call back to Sherry. Thanks, Tom.
Tom Amato: Thank you and with that I'll turn the call back to Sheri.
Speaker Change: Thanks, Tom at this point, we would like to open up the call to questions from our analysts.
Sherry Lauderback: At this point, we would like to open up the call to questions from our analysts. Thank you.
Tom Amato: Thank you.
Operator: Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Tom Amato: Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question. Please press star and one on your telephone keypad.
Tom Amato: A confirmation tone will indicate your line is in the question queue.
Tom Amato: You May press star two if you'd like to remove your question from the queue.
Tom Amato: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock east.
Speaker Change: Ladies and gentlemen, we will wait for a moment, while the question give us numbers.
Tom Amato: Okay.
Ken Newman: The first question comes from the line of Ken Newman from KeyBank Capital Markets. Please go ahead. Hey, thanks. Morning, guys. Morning, Ken. Morning.
Speaker Change: The first question comes from the line of Ken Newman from Keybanc capital markets. Please go ahead.
Speaker Change: Hey, Thanks morning, guys.
Speaker Change: Good morning, Ken.
Speaker Change: Good morning.
Thomas Amato: Congrats on the solid quarter there. Just for clarity, Tom, I know you maintained your full year sales and earnings guidance, but just to be clear, is there any change to the segment guidance that you provided last quarter as well? At this point, no, Ken, we just are, there's so much uncertainty right now that we're not adjusting that at this point. Okay. That's helpful. So, just trying to keep that, and I understand that this is a fluid environment and there's a lot of change here, but I'm trying to make sure that we're not missing anything. And I know you talked about the 100 basic points of impact from higher freight expense and packaging.
Speaker Change: On the solid quarter there.
Speaker Change: Just for clarity I know you mean, you maintained your full year sales and earnings guidance, but just to be clear is there any change to the segment guidance that you provided last quarter as well.
Speaker Change: At this point no can we just are.
Speaker Change: There's so much uncertainty right now that we're not adjusting that at this point.
Speaker Change: Okay.
Speaker Change: That's helpful.
Speaker Change: So I'm just trying to keep that and I understand that this is a fluid environment and there's a lot of change here, but I'm trying to make sure that we're not missing anything and I know you talked about.
Speaker Change: The 100 basis points of impact from higher freight expense and packaging.
Thomas Amato: Are there, how are you thinking about other investments or potential headwinds relative to packaging or any of the other segments as you try to position yourself to be a little bit more nimble through this environment?
Speaker Change: Are there how are you thinking about other investment or a potential headwind.
Speaker Change: Relative to packaging or any other of the other segments as they try to position yourself to.
Speaker Change: To be a little bit more nimble through this environment.
Speaker Change: Well I think so first of all when I think of our ability to adjust.
Thomas Amato: Um, well, I... So first of all, when I think of our ability to adjust to the issues that may arrive from tariffs. In the near term, outside of the expense that we incurred in Q1, I don't see much more of these abnormal type of expenses. A lot of what we're doing is on the procurement and commercial front to mitigate exposure in the near term. If this becomes a prolonged situation with certain parts of the world, then we'll have to make some decisions on where we manufacture. That would have certainly some cost impact, but I would expect that we're probably a couple, at least two to four months away from making those decisions.
Speaker Change: Adjust to that the issues that may arrive from tariffs.
Speaker Change: In the near term outside of the expense that we incurred in Q1 I don't see much more of these abnormal type of expenses a lot of what we're doing is.
Speaker Change: The procurement and commercial front to mitigate our exposure in the near term. If this becomes a prolonged situation with certain parts of the World. Then we'll have to make some decisions on where we manufacture that would have some certainly some cost impact but.
Speaker Change: I would expect that that will probably a couple at least two to four months away from making those decisions.
Speaker Change: Okay, and if you were to make those decisions, what's the timeframe in order to.
Thomas Amato: Okay, and if you were to make those decisions, what's the time frame in order to kind of realize some of this movement in production? Yeah, that's a great question, and it does depend a bit, but for us, if we're moving operations predominantly in a packaging area where we have assembly, it could take a year, a little bit over a year before we can relocate production from one part of the world to another. If it's something that is more focused on molding only, we can move that quicker, but I would say it's typically about a year.
Speaker Change: Realize some of this move into production.
Speaker Change: Yeah. That's that's that's a great question and.
Speaker Change: It does depend a bit but for us with if we're moving operations predominantly in the packaging area, where we have assembly it could take a year a little bit over a year before we can relocate production from one part of the world to another if it's.
Speaker Change: Something that is more focused on molding only we can move that quicker, but I would say.
Speaker Change: It's typically about a year.
Speaker Change: Got it okay.
Ken Newman: Got it, okay.
Ken Newman: If I could just squeeze one more in here and then I'll jump back into the queue. You know, look, the aerospace organic growth this quarter was pretty, was very solid, right? I think almost 28% organic. You know, if you're keeping the aerospace organic growth guide of low double digits for the year, it does imply a pretty sizable step down here from 1Q levels.
Speaker Change: If I can just squeeze one more in here and then I'll jump back into the queue.
Speaker Change: The aerospace organic growth this quarter was pretty it was very solid right I think almost 28% organic.
Speaker Change: And.
Speaker Change: If you're keeping the aerospace organic growth guide of low double digits for the year. It does imply a pretty sizable step down here from <unk> levels.
Thomas Amato: Can you talk us through the order intake there, how to think about the cadence of growth there? And then also, how do I think about, you know, the operating leverage as we move through the year? Is 17% segment operating margins the right run rate to look at this business going forward? Yeah, I understand. I understand the point. No, we are coming off. We're going to start coming off a different quarterly base as we move through the year. I do expect some modest operating leverage gains as we move through the year as well within aerospace, but at this point, Ken, we just want to be conservative overall as there's just so much uncertainty out there, but I understand the point.
Speaker Change: Can you talk us through the order intake there how to think about the cadence of growth. There and then also how do we think about.
Speaker Change: The operating leverage as we move through the year, it's 17% segment operating margins the right run rate to look at this business going forward.
Speaker Change: Yeah, I understand I understand the point, we are coming up we're going to start coming off the different quarterly base as we move through the year.
Speaker Change: Hum.
Speaker Change: I do expect some modest operating leverage gains as we move through the year as well within aerospace, but at this point Ken. We're just we just want to be conservative overall as there is just so much uncertainty out there, but I understand the point.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks.
Ken Newman: Okay, thanks. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Hamed Khorsand: The next question comes from the line of Hamed Khorsand from PWS Financial. Please go ahead. Hey, good morning. I'm just following up here. The conversation on aerospace is You acquired GMT, so you have more exposure to Europe, and then the U.S., it's very well advertised now in the media about your competitor having the fire and kill quarter, so how is that going? play out as far as your capacities go. pricing And you're talking being conservative, but your customers are basically saying that there's just no supply. have reconciled the commentary.
Speaker Change: The next question comes from the line of Humming, it's called Sun from B Ws financial. Please go ahead.
Speaker Change: Hi, good morning.
Speaker Change: Just following up here.
Speaker Change: Keep the conversation on aerospace.
Speaker Change: Yeah, you you acquired.
Speaker Change: <unk> Oh, so you have more exposure to Europe, and then U S.
It's very well advertising and media about your competitor, having the fires in quarter. So how is that going to play out as far as your capacity is concerned pricing and you're you're talking being conservative, but your customers are basically saying that there's no <unk>.
Speaker Change: Apply so can you just reconcile.
Speaker Change: Reconcile the commentary that's out there.
Thomas Amato: Yeah, well, look, I mean, first of all, the dynamics you put forward are spot on, and that does set a basis for a better outlook for us with respect to the aerospace business. We're very excited about the opportunity. We've been delivering on a quarter-over-quarter basis now for the past several quarters, and we expect to continue to drive that. With respect to, you know, adding the acquisition of GMT Aerospace, that improves our positioning with Airbus, and we're pretty excited about that. I think we talked about that a little bit on the last call. And with respect to the unfortunate event at one of our competitors' manufacturing facilities, and clearly we don't like to see that at all anywhere, that does obviously relate to some opportunities for us in the space, particularly, you know, where we have overlap.
Speaker Change: Yeah, well look I mean first of all the dynamics you put forward are spot on and.
Speaker Change: That does set a basis for a better outlook for us with respect to the aerospace business, we're very excited about the opportunity.
Speaker Change: We've been delivering on a quarter over quarter basis.
Speaker Change: Now for the past several quarters.
Speaker Change: And we expect to continue to drive that with respect to <unk>.
Speaker Change: Adding the acquisition at GMT aerospace that that improves our our positioning with Airbus and we're pretty excited about that I think we talked about that a little bit on the last call and with respect to <unk>.
Speaker Change: The unfortunate event at one of our competitors manufacturing facilities and clearly we don't like to see that at all.
Speaker Change: Anywhere that does obviously relate to some opportunities for us in the space, particularly where we have overlap we don't have a fantastic amount of overlap with what their particular plant manufactured but there are certain product areas, where we do.
Thomas Amato: We don't have a fantastic amount of overlap with what that particular plant manufactured, but there's certain product areas where we do, and if we can help out our customers in any way, shape, or form for continuity of supply, trust me, we are all over that.
Speaker Change: And.
Speaker Change: If we can help out our customers in any way shape or form for.
Speaker Change: For continuity of supply.
Speaker Change: Trust me, we are all over that.
Speaker Change: Okay. So but can you just reconcile like why are you being conservative those given the dynamics that we're seeing and then adding to that.
Thomas Amato: Okay, so can you just reconcile, like, why are you being conservative, though, given the dynamics that we're seeing, and then adding to that, you know, in Europe, you're seeing increased spending in defense, right? Yeah, look, as I mentioned to Ken, we understand the point. We just put our guidance out a few months ago, and we're in a period where it's a little bit uncertain. So we'd like to get through the second quarter and take a look at our segment of forecasting. And if we feel comfortable, we'll make some adjustments there. But overall, right now, we feel we're off to a great start.
Speaker Change: In Europe, you're seeing increased spending in defense right now.
Speaker Change: Yeah.
Speaker Change: I as I mentioned to can we understand the point.
Speaker Change: We just put our guidance out a few months ago and we're in a period, where it's a little bit uncertain side, we'd like to get through the second quarter and take a look at our segment forecasting and if we feel comfortable make some adjustments there, but but overall right now we're we feel we're off to a great start.
Speaker Change: If it wasn't for if it wasn't for a the uncertainty on tariffs, we probably be guiding on an overall annual basis to the higher end of our range or or be at.
Hamed Khorsand: If it wasn't for the uncertainty in tariffs, we'd probably be guiding on an overall annual basis to the higher end of our range or be at. Got it. Okay.
Speaker Change: Yeah.
Speaker Change: Got it Okay, and then on the packaging side.
Thomas Amato: And then on the packaging side, are you done with the CapEx investments you made last year? And how's that going to look as far as you know, the end market sales go and the order intake you're seeing now? Well, I, I, I'm not sure. We're ever done with CapEx investments because we continue to invest in capacity and adding to our factory floor to drive organic growth. I do think that the CapEx rate for packaging will be more moderate than it was in prior years, and we're pretty keen on trying to sell products where we do have available capacity.
Speaker Change: Are you done with the Capex investments you made last year and how is that going to look as far as you know the end market sales go in the order intake you're seeing now.
Speaker Change: Well.
Speaker Change: I'm not sure.
Speaker Change: Wherever done with Capex investments, because we continue to invest.
Speaker Change: And capacity and adding to our factory floor for to drive organic growth.
Speaker Change: I do think that the capex rate for packaging will be more.
Speaker Change: Moderate moderate than it was in prior years and we're pretty keen on.
Speaker Change: Trying to sell our products, where we do have available capacity that being said there still is a demand for certain product lines, where it behooves us to invest in capacity.
Thomas Amato: That being said, there still is a demand for certain product lines where it behooves us to invest in capacity and make capital investments. But I think the rate of spending will be lower in 2025 and beyond than it was over the past two or three years.
Speaker Change: And make capital investments, but I think the rate of spending will be lower in 2025 and beyond than it was over the past two years or three years.
Okay, and then lastly could you just talk about what what drove these gains 40 in beauty and personal care was it new product introductions wasn't taking share any anything any color would be great.
Thomas Amato: Okay, and then lastly, could you just talk about what drove these gains for you in beauty and personal care? Was it new product introductions? Was it taking share? Any color would be great. So it's a little bit of both. We are, in certain parts of the world, we believe we are capturing some share, particularly in Latin America. And then we do have a product line, which is a, it's not a large dose pump. It's a larger dose pump. It's 4 cc. And that market, which the application is predominantly lotion. That end market is very strong right now and remember in 2023 it was extremely weak and we're seeing a lot of continued demand there.
Speaker Change: So it's a little bit of both.
Speaker Change: We are in certain parts of the world. We believe we are capturing some share, particularly in Latin America.
Speaker Change: And then we do have a product line, which is a.
Speaker Change: It's not a large dose pump, it's a larger dose pump for.
Speaker Change: OCC and that that market.
Speaker Change: Which of the.
Speaker Change: <unk> is is predominantly lotions.
Speaker Change: That end market is very strong right now and remember 2023, it was extremely weak and we're seeing a lot of continued demand. There. We believe are our dispensing pump is.
Thomas Amato: We believe our dispensing pump has some advantages over competitors and we're selling that pump to some pretty fantastic CPG customers and it's growing nicely around the world.
Speaker Change: Has some advantages over our competitors and we're selling that pump to some pretty fantastic CPG customers and it's growing nicely around the world.
Speaker Change: Great. Thank you.
Thomas Amato: Great, thank you. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: The next question comes from the line of Ken Newman from Keybanc capital markets. Please go ahead.
Ken Newman: The next question comes from the line of Ken Newman from KeyBank Capital Markets. Please go ahead. Hey, thanks for the follow-up here. Just one quick one is... Tom, can you just talk a little bit about the sense that you're getting from where inventories are at your customers' distributor channels? We're getting a lot of questions, not just across all of our names that we cover, whether or not customers are showing any kind of pre-buying activity to get ahead of tariffs, and I'm curious if you're seeing anything that would suggest that type of behavior. And what, are you just talking generally across all product lines?
Hey, Thanks for the follow up here.
Speaker Change: Just one quick one is.
Tom Amato: Tom can you just talk a little bit about.
Tom Amato: You know the sense that you're getting from where inventories are at your customers distributor channels.
Tom Amato: We're getting a lot of questions not just across all of our names that we cover whether or not customers are showing any kind of pre buying activity to get ahead of tariffs and I'm curious if you're seeing anything that would suggest that type of behavior.
Tom Amato: And what are you just talking generally across all product lines.
Thomas Amato: Correct, yeah. And any color across the product lines would be great. Yeah, I think, you know, there may have been, there may have, we're starting to see a little bit of that, I think, with respect to North Cylinder, believe it or not, North would be a positive recipient to Terrace, given that the competitors are predominantly overseas or offshore. Within aerospace, I would say not really that the strong demand that we have for our products there is a function mostly of the strength in the aerospace and defense market right now. And within packaging, you know, I guess there might be pockets or two with some customers in some parts of the world that, you know, would take advantage of some buying opportunities.
Tom Amato: Correct, Yeah, and any color across the product lines would be great.
Tom Amato: I think.
Tom Amato: There may have been there, we're starting to see a little bit of that I think with respect to Norris cylinder believe it or not north would be a positive recipient to tariffs given that the competitors are.
Tom Amato: Predominantly overseas offshore.
Tom Amato: Within aerospace I would say not really that the the strong demand that we have for our products. There is a function mostly of the strength in the aerospace and defense market right now.
Tom Amato: And within packaging.
Tom Amato: Yes, there might be pockets or two with some customers in some parts of the world that.
Tom Amato: We would take advantage of.
Tom Amato: Some buying opportunities but.
Thomas Amato: But, you know, we're, there's some parts of, some product lines that we have that were down compared to the prior year quarter. So they came into the year, particularly in closures, for example, they came into the year where they were overstocked. So I wouldn't say there's anything too abnormal that we experienced in the first quarter on that front.
Tom Amato: There are some parts of some product lines that we have that were down compared to the prior year quarter. So they came into the year, particularly enclosures. For example, they came into the year, where they were overstocked. So I wouldn't say, there's anything to abnormal that we experienced in the first quarter on that front.
Tom Amato: Okay.
Ken Newman: Okay, that's that's helpful.
Tom Amato: That's that's helpful. And then maybe one last one for me.
Thomas Amato: And then maybe one last one for me, you know, as it relates to the the full year sales guide. And again, I understand everything is kind of fluid here, but from a pricing perspective, it doesn't sound like you pushed a lot of price to offset any kind of tariff impacts here in the first quarter, but how are you thinking about organic pricing relative to volumes within that 4 to 6% range? Yeah, good. That's that's a good a good question. And certainly, if tariffs hold much longer in Q2, we might see some impact to that in our year end guide on the sales front.
Tom Amato: As it relates to the full year sales guide.
Tom Amato: And again I understand everything is kind of fluid here, but from a pricing perspective. It doesn't sound like you pushed a lot of price to offset.
Tom Amato: Any kind of tariff impacts here in the first quarter, but how are you thinking about organic pricing relative to volumes are.
Tom Amato: Within that 4% to 6% range.
Tom Amato: Yeah good.
Tom Amato: A good a good question.
Tom Amato: And certainly if tariffs hold.
Tom Amato: A much longer in Q2, we might see some impact to that in our year end guidance of sales front.
Ken Newman: We'll know more at the end of Q2, that's all I can say. Understood. Thanks.
Tom Amato: We'll know more at the end of Q2, that's all I can say.
Tom Amato: Understood. Thanks.
Ken Newman: Okay, thank you very much.
Tom Amato: Okay. Thank you very much any more questions.
Speaker Change: Ladies and gentlemen, there are no further questions I would now hand, the conference over to the management for their closing comments.
Thomas Amato: Ladies and gentlemen, as there are no further questions, I will now hand the conference over to the management for their closing comments. Okay, thank you very much for joining us on our earnings call. We look forward to updating you again next quarter.
Speaker Change: Okay. Thank you very much for joining us on our earnings call and we look forward to updating you again next quarter have a great day.
Sherry Lauderback: Have a great day. Thank you.
Speaker Change: Thank you Lee.
Operator: Ladies and gentlemen, the conference of TriMas Corporation has now concluded. Thank you for your participation. You may now disconnect your lines.
Speaker Change: Ladies and gentlemen, the confidence of climate Corporation has now concluded. Thank you for your participation you may now disconnect your lines.
Speaker Change: Okay.
Speaker Change: [music].
Yeah.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: And.
Operator: [music]
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.