Q2 2025 TriMas Corp Earnings Call
Greetings and welcome to the TriMas Corporation second 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.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Sheri, ladderback vice president and best of relations. Thank you. You may begin.
Thank you and welcome to trimas Corporation, second quarter, 2025 earnings, call participating on the call today are Thomas Schneider. Trimeth is new, president, CEO and Teresa Finley, our Chief Financial Officer.
We will provide our prepared remarks on our second quarter results, in fully your outlook. And then we will open the call up for your 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 try calm under the investor section.
In addition, a replay of this call will be available later today by calling 877-660-6853 with a meeting ID of 13754837.
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 and any forward-looking statements.
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 were 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.
With that, I am pleased to introduce Thomas Schneider, our new chief executive officer who joined try just over a month ago, Tom brings with him, nearly 35 years of experience in the packaging industry, including a distinguished track record of leadership at Silgan. Most recently he served as president of Silgan containers where he led a business generate nearly 3 billion in annual sales.
Under his leadership. The company achieved significant growth in sales earnings and cash flow.
With thrilled to welcome, Tom to the trimeth team and just a short time, he's already been actively engaging across the organization and laying the groundwork. For the next chapter of growth. I'm confident you'll appreciate his insights.
At this point, I'll turn the call over to Tom Tom.
Thank you, Sherry, good morning, everyone. And thank you for joining us today.
As I join you for my first earnings call as CEO, I want to begin by expressing how truly excited and honored I am to lead this company.
Try Mass has a strong Foundation, a proud history, and a commitment to continuous Improvement. And I'm energized by the opportunity to help shape its next chapter.
So, stepping into this role over a month ago, I've made it a priority to listen, learn, and engage deeply with all employees at all levels across the organization.
Over the past 30-plus days, I've had the opportunity to immerse myself in the business, and I'd like to take a few moments to share some of my early impressions and the key areas I've been focused on. Let's begin on slide 4.
First, let me walk you through what I've been focused on since stepping into this role, I've made it a priority to get out into the field and see our operations up close.
Over the past month. I visited 10 of our manufacturing sites across the United States and Europe including several packaging and Aerospace facilities here in the US.
As well as packaging sites in the UK, the Netherlands, and Italy. These plants gave me invaluable insight into our day-to-day operations, the strength of our local teams, and the pride that our employees take in delivering high-quality products.
I was impressed by the flexibility and diverse capabilities of our facilities, as well as the Deep technical expertise embedded in our processes and with our people
I've also spent significant time with our business leadership teams engaging in strategic discussions around what's driving our success today and what we need to do to build upon that success to accelerate our plans to stay ahead of potential Market changes.
These conversations have been candid insightful and energizing and they've helped me quickly get up to speed on the unique strengths and opportunities across each of our businesses.
Policies or growth through internal or external Investments.
From these early engagements a few key observations stand out first, we have an incredibly talented dedicated and focused teams across the organization.
Whether on the shop floor and Engineering or within our commercial and support functions, I've seen a strong sense of ownership engagement in Pride in the work being done.
Second, our products and processes are often Innovative and proprietary, and driven by strong, engineering capabilities, and a culture of continuous Improvement.
Third, our manufacturing facilities have tremendous flexibility with capabilities. Well, positioned for future growth.
And finally, we benefit from long-standing, strategic relationships with Market leading customers who value our ability to deliver quality and reliability.
We listen to our customers and develop key account plans to drive high performance results.
Looking ahead. My focus will be on building upon these strengths while driving further alignment and execution across the Enterprise.
Although early in my tenure, I do see a few opportunities for improvement, specifically, I plan to prioritize.
Driving greater standardization across our Global footprint and our processes systems and operating practices.
This will allow us to scale more efficiently reduce complexity and ensure. We're leveraging the best practices across those locations.
It's about creating a more agile and integrated integrated Enterprise that can respond even faster and operate smarter.
Next, I believe there's an opportunity to focus on the seamless integration of some, of our recent acquisitions.
These businesses bring valuable capabilities and customer relationships and we're committed to committed to unlocking their full potential.
By aligning them with our systems and priorities. I believe we can accelerate synergies expand our Market, reach and drive additional profitable growth.
And finally, we continue to invest in automation and tools to enhance productivity, provide critical business data, and increase responsiveness.
These investments will help us reduce costs improve consistency and free up our teams to focus on higher value activities.
In short, I see tremendous opportunity ahead for growth and margin expansion.
I am committed to working with the teams to identify opportunities and Implement actions to drive improved performance.
Shifting gears. I'd like to turn your attention to slide 5 and take a moment to highlight our strong second quarter performance.
We delivered solid results across the board with year-over-year sales growth and all 3 of our groups, packaging Aerospace and North cylinder.
We also achieved notable margin improvement, led by our Aerospace group. This margin expansion contributed meaningfully to our growth in operating income and earnings per share, both of which came in ahead of expectations.
So thank you to the try team for making my first earnings call and easier 1.
The strong results this quarter are a direct reflection of your hard work and focus.
With that, I'll turn it over to Theresa to walk through our financial and segment results for the quarter. Teresa.
Thank you, Tom, let's turn to slide 6. Highlighting our second quarter, 2025 financial performance. We delivered another strong quarter with Consolidated. Net sales of 275 million up more than 14% year-over-year.
In the impact of currency and acquisitions and dispositions, organic growth was more than 13% for the quarter.
Quarter 2 acquisition related. Sales were 6.7 million related to the acquisition of GMT Aerospace now known as Trimac Aerospace Germany or tag.
More than making up for the loss of 5.4 million, in sales related to the deveste of Aero engine in the specialty product segment.
Consolidated operating profit increased by more than 50% compared to Q2 2024 or 11 million reflecting the strong Revenue growth and expanded operating margin of 300 basis points with improvements in all segments, led by Aerospace.
This correlated to a meaningful increase in consolidated adjusted EBITDA, which was up 31% to nearly $48 million, and a margin improvement of 220 basis points to 17.4%.
Our registered earnings per share increased to 61 cents, representing 42% growth year-over-year.
New quality and providing innovative solutions for our customers.
Turning to the balance sheet and our Capital position on slide 7. We continue to manage a strong and flexible benefit balance sheet supported by low interest rates and a long-term debt with no maturities due until 2029.
Net debt declined sequentially from Q1 2025 as we continue to pay down the increase resulting from the GMT Aerospace acquisition.
As a result of the higher earnings and efforts to pay down debt our net leverage as of June 30th, 2025 decreased to 2.4 times as compared to 2.6 times. At the end of 2024,
Q2 free cash flow improved to 16.9 million bringing our year-to-date. Free cash flow to 17.5 million as compared to a use of cash of 2.8 million during the same period of 2024.
This Improvement reflects our enhanced operating performance in disciplined working Capital Management.
Overall, we believe our capital structure is well positioned to support both near-term operations and future strategic Investments.
I will now shift gears to provide additional color on our Q2 segment performance, starting with packaging on slide 8.
In our packaging segment. We achieved organic sales growth after adjusting for currency effects of nearly 8% reflecting continued demand strength for dispensers for the beauty and personal care Market.
This growth was partially upset by slower growth in our closures and flexible product lines due to some weakness in the food and beverage markets.
Second quarter operating profit margin improved 30 basis points to 14.3%, while adjusted IBA margin improved 70 basis points to 20.9%, driven by sales leverage, operational efficiencies, and continued cost management.
Our teams also successfully navigated direct tariff impacts through proactive commercial actions, including strategic pricing adjustments and supplier negotiations.
Looking ahead. We remain confident in the trajectory of our packaging business for the full year. 2025 we continue to expect TDP plus sales growth supported by recent customer wins and steady demand across most end markets.
we also anticipate modest margin expansion compared to 2024 as we continue to drive operational, discipline and leverage efficiencies
During the second half of 2025, the most significant external Factor. We are monitoring like many in the packaging. Industry is the evolving Global te tariff environment.
In the near term, we are actively working with both suppliers and customers to mitigate exposure and manage cost impacts through strategic sourcing and commercial actions.
Overall, we are encouraged by the progress made in the packaging segment this quarter and remain optimistic about its long-term growth potential.
Turning to slide 9, I'll review our Aerospace segment.
during Q2, our Aerospace group had a record sales quarter of about 100 million in Revenue with a growth rate of 32%, Plus,
This was driven by continued increasing demand in the Aerospace and defense Market improved throughput against a strong order book, successful contract management and acquisition related sales of 6.7 million related to the acquisition of tag.
Our operating profit, nearly doubled, year-over-year with margin expansion of 650 basis points.
And our LPM adjusted IBA margin now exceeds. 21% surpassing pre-pandemic levels.
This outstanding performance was largely driven by the Aerospace teams execution, including accelerated, facts, tree floor and operational excellence improvements procurement initiatives and our ability to capitalize on Market opportunities by delivering innovative solutions to our customers.
As a result of the strong first-half performance, we now expect organic sales growth of 20% plus for the full year 2025, with an improvement in margin of 400-plus basis points compared to 2024.
we also remain excited about the longer term growth Outlook, given our backlog and continued focus on customer Solutions, which we expect will drive growth in 2026 and Beyond
continue to prioritize incremental Capital Investments to support this growth and to accelerate further operational improvements for tryst Aerospace.
Robert, our specialty product segment.
North cylinder delivered, 13% year-over-year, sales growth reflecting solid, underlying demand, and quarterly year-over-year sales growth for the first time since the third quarter of 2023.
However, this was more than offset by the 4 5.4 million reduction in sales resulting from the January 2025, the vesture of Aero engine.
As a result, the specialty product segment experienced overall sales down 6.8% year-over-year.
In profit more than doubled and improved, 250 basis points year-over-year driven by higher sales and absorption of fixed costs and the benefits of previous cost reduction initiatives, at North cylinder offsetting the unfavorable inventory capitalization changes in the quarter.
We expect these unfavorable impacts to subside as we continue to work through absorbing manufacturing overhead from the prior year period.
With that said, we expect mid-single-digit sales growth for Norah Cylinder for the full year 2025, with margins relatively flat to slightly up year-over-year.
As a result of improving order intake, combined with prior costs. Restructuring actions, we expect to accelerate North cylinders recovery performance as we move through the second half of the year.
I will now turn the call back to Tom to provide further details on our Outlook.
Thank you, Teresa.
Let's now turn to slide 11.
As highlighted in our press release this morning, we are raising our 2025 Outlook.
Following a strong first half of the year, we are increasing both our full-year sales and earnings per share guidance, supported by continued strength in our Aerospace business and positive trends within Specialty Products.
We now expect full year, sales growth of 8 to 10% compared to 2024 and full year adjusted earnings per share of a 1.95 to $2.10.
At the midpoint of our new guidance, we are now driving toward a 25% increase in earnings per share compared to $1.65 for the full year 2024.
While we expect much of our positive momentum, to continue the changing tariff, environment continues to present uncertainty in customer, order, patterns, and consumer demand, which we continue to monitor.
With that said, we continue to take proactive steps to mitigate the impact and remain focused on driving ongoing performance improvement.
Before turning to Q&A, I would like to once again State how pleased I am to be at try mass and how excited I am about the company's future potential. While each business is at a different phase in their respective cycle, try Mass packaging, try Mass Aerospace, and North cylinder are all well, positioned to deliver a bright future.
I'm excited about what we can accomplish together and I look forward to working with our teams, our customers, and all of our investors to deliver long-term value.
Thank you. And with that, I will turn the call back to Sherry.
To conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line as in the question queue.
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1 moment, please, while we pull for questions.
Thank you. Our first question comes from a line of Ken Neumann with KeyBanc Capital Markets. Please proceed with your question.
Hi, good morning, guys.
Hi, good morning morning.
Hi, Tom, congrats on the new position. Um, thank you very much. So, yeah, of course, uh, appreciate all the prepared comments on your key Focus areas. Uh, coming into the organization. Now, I know you've only been there for a little over a month now. But, you know, I, I think the biggest question that I get from investors, uh, particularly recently is, what does the portfolio kind of look like over the intermediate to longer term? You know, coming in I I'm sure you saw a lot of great things out of the packaging segment. But I'm curious how you think about the portfolio as it is today and uh if you have any comments or thoughts on what that portfolio could look like um you know, and maybe Aerospace in particular, whether you think that is a a longer term pillar of the growth strategy uh and coming years.
well, you know, I was
thanks for the question. I
Um, I forgot to mention that I was going to ask you guys to be easy on me.
So the portfolio today, what we're focused on is maximizing that portfolio. We're looking at 3 really good businesses and we're, uh, we uh, we're working on operational improvements. We're working on how we can take costs out of those business and how we can, uh, expand our, uh, our, our positions commercially with our customers. And so we have, we have, uh, businesses that have not been. Let's say, fully integrated or or maximized. And so, that's been kind of my focus is. I've gone through these, uh, through these through these different plants. And I've seen a lot of them as it, as I said, over the last couple of weeks, uh, and so I, I see the potential there, uh, you know, we're in the process of figuring out how we're going to maximize, uh, you know, the current, uh, portfolio that we have as you know, we've, uh, We've engaged in that in that process to, uh, to study that and figure out what's, what's best long term. Uh, and we're continuing to work on that. In the meantime, we're going to continue to focus on.
Doing what we do and do it the best we can.
Understood that that's uh, that's helpful.
Um, maybe just switching over to the guidance, uh, first on on Aerospace 3. So, it does seem like, uh, the implied operating margins for Arrow. Maybe step down from the first half or from 2q levels into the back half.
1 is that is that kind of the right way to think about it? And if so, um, just any help on what's kind of driving the moderation and the operating leverage, there is that just some pullback on on volumes is there a mixed impact their
Yeah, thanks Ken. Um, yes, you you've got it right. There is some pullback in Q3 Q4 most of that is due to our seasonal uh, Trends uh, both for Aerospace and packaging. I would say that both businesses also had some unique uh, 1 time, customer benefits and and growth in Q4 that we don't plan on repeating. So it is, it is a bit more moderated in the back end. But we're confident um, on uh, our expectations on the Range and and what we've got going on on both those businesses.
Yeah.
That's that's helpful. Maybe maybe just 1 last 1 and I'll jump back into the queue. Um, you talked about ramping up on the capital, uh, investment for the Airbus contract starting in 26, is there any way to help? I know you're not ready to to guide the 26 yet, but is there any way to help us size the revenue opportunity? Uh, you know, from for arrow in particular, just from that contract or, you know, putting some some uh, some some barriers around uh sizing what Topline could look like, just from the contract as it ramps up.
Yeah, I think I think we'll defer that for 2020 uh, 6 guidelines, but as we've we've previously um, discussed with the aerobus, you know, we we look at ramping up uh in 2026 to phase in phase out program. Uh, then we'll have a larger step increase in 2027. So it's a it's going to be a, a several year, uh, process. Um, we're really excited about that. Commercial deal and margins will be strong, uh, but we'll probably be able to guide you a little bit better as we get into 2026 planning.
I said, thanks.
Our next question comes from the line of Humid Coran with BWS Financial. Please proceed with your question.
Hey, good morning. Um I was just going to start off with the
Um, with the aerospace, um, if I could.
The growth that you're seeing, how much of that was coming from the loss of capacity at your competitor? How much of that is coming from you picking up market share? And how are you adjusting the business for capacity so you can still continue to grow?
On the capacity, um, you know, we have plenty of machine capacity. Um,
that's really, you know, our challenge is more on the people's side ensuring that we can bring on the right skills. Uh, resources at the right pace to drive the overall production, efficiencies, um, you know, we could do third shifts. We're kind of some of that is would be extra cost. But frankly, we're we're challenged and we'll continue to be challenged to figure out how we can bring in, even more opportunity because the demand, uh, the demand is strong and the demand is looking good for the next couple years.
Great. And then on the packaging side, um, are you done with, you know, with bottleneck issues and trying to, you know, maximize the efficiencies in the segment?
No, we we've got, I'll defer to Tom because he's been a lot of time in packaging, but uh, we we see a lot of opportunity uh, to continue to work on our packaging segment. Uh, we've got certainly a a number of, uh, initiatives and things in place. We've got some new accounts coming on, but there's work to do, uh, to get us to that margin expansion. And then we were hoping for, uh, this year and and we look forward to uh more more activities that will help us with that.
Yeah, I would just add, you know, going around and looking at those facilities, uh, and I mentioned it earlier in my remarks that uh, these these businesses are at different phases, you know? Let's say in their integration and their approach to continuous Improvement. Aerospace pretty Advanced on that that side and on the packaging side, you know, we have some great platforms that we can, uh, continue to build on. I see great capabilities, great Machinery, uh great, uh, resources.
uh, but they're, they're like a bit on the integration side and they're like, in on the standardization side and so I see that a not from a disappointed perspective, but I see that as opportunity for us to
Uh, to maximize these businesses and um and so I've I've got a lot of experience in that particular area and so uh, it didn't scare me at all. In fact, I was energized as I walked away from those and said we have some we have some great opportunities to build up for the future.
And how much I would just add that on the the top uh the revenue side of that equation. There are certainly some opportunities to rationalize, our products going forward and ensure that we are positioning ourselves uh in the marketplace with the highest margin and and best return type products. So you'll hear more about that as we move forward.
Okay. And then just the last, uh, question: What is going to be the, you know, the new accounts receivable run rate? Should we expect it to go down? Or is it because the sales are now going to be at a higher rate, you know, your receivables are going to stay at this kind of, uh, number?
Um, yeah, I think it's a little on the high side.
Uh, some improvements over time. Uh, we've had a few, um, you know, every quarter, there seems to be a few special customer, uh, type of Arrangements, but underlying that we're making good progress, uh, on on, on those areas.
Thank you.
Our next question is a follow-up from Ken Neumann with KeyBank, please receive with your questions.
Hi, thanks for the follow-up. Um,
37 time, maybe is give you the opportunity to see if you want to quantify at all. What the opportunity is from self-help initiatives in packaging today. Um, and just also help us frame up the magnitude of those expected benefits is, is this something where you think even at margins and packaging can get back to that, call it low, 20% range, uh you know in 26 or is that too?
Too much of a hurdle.
Yeah, I I'll answer personal. It's Tom jump in on what he's
Yeah, I think we will, uh, we'll be able to guide more specifically, I think in 2026, at least on, uh, on the range for that year.
yeah, I mean
I would just say I don't know what the potential is. Yes. You know. Uh our business is uh,
Uh is is different. Let's say the mix of it is different than it was historically. Um and um uh but we we do think that uh,
You know, our ibida rate against our peer group is strong and so uh we're not ashamed of anything on that front but there's always opportunity for improvement and uh we'll work on uh right sizing uh you know our cost structure, our sgna, our capacity footprint utilization Etc.
And, uh, we'll improve it. I just don't know what that upper limit is. So, sorry to be so vague.
Yeah, no no. It's it makes sense.
um,
Tom, I do want to go back to the standardization comments you made before though. Um, you know, typically, when I think about trimeth is Ricky's business, in particular, uh, you know, I think about their ability to do a lot of Highly customized customized designs and that kind of being a, a primary pillar of the outside margin performance versus the peers.
Um, can you talk a little bit about where the opportunities are to standardize processes there and you know how that does it necessarily? Uh impacts the the competitive nature of of that business?
Well, first, I want to say that, you know, um, you know, the historical Reiki business does a great job, they've got the, you know, some more of a mature business. We understand that,
Um but but we have a lot of Acquisitions as you know that we've bolted onto this business over the past few years. And uh, and what we need to do is we need to look at Best Practices across all of those uh, operating platforms. And we need to figure out uh, you know, how we adopt and standardized across that. There's just they do a great job collectively, you know uh you know with respect to the importance of meeting customer, expectations and quality and Service uh but we all have our own way of doing things and
Uh, that I've seen and that's less efficient than it could, otherwise be. And so, you know, my experience in the past, you look at Best Practices you figure out. Uh, you you, uh, you don't have any Pride when you, uh, when you acquire businesses and you look at the 1 you're acquiring, you look at the 1 you have. And you say, okay what's best
Uh, and then you standardize on that 1. And so I just that process hasn't happened, uh, yet that I can see maybe to some extent. But, uh, there's, there's still room, a lot of room to go there. And so, that's good though. That's, uh, you know, we can look at those best practices and we can, uh, we can figure out how to, uh, how to standardize it and then and, uh, you got to be standardized really before you can start building, uh, uh, really good improvements on top of that. So, that's in a nutshell. That's, that's where we're at. Hey, Ken. I would, I would just also add that, you know, we, we have made a number of it in
PRP platforms that will enable us uh from an IT systems perspective to uh certainly to standardize and to gain some of the the synergies out of those businesses. We look forward to as we deploy these systems. We look forward to capitalizing on those as we move forward.
That is a big piece of it.
Really looking forward again.
Into our bill.
Yep, that makes sense. Uh, maybe last one from me. Um, if there’s a reason you mentioned, you know, the expectation for margins to continue to improve, even into 2026, especially with the volume outlook here in the near term. Um, how is there a way to think about what you think is?
A normalized incremental margin.
Through an upcycled for Aerospace today.
Uh, you know, we we we like where we are.
These margins uh, certainly that we've achieved now. Uh, certainly, there's there's likely a little bit more upside but frankly, our focus is, is really to drive Revenue through this model. Now, um, you know, focus on growth over maximizing margin. Uh, and you know, I I think that that's uh, that that will give us the the, the better returns over time. Uh, so we like we were at is there some upside? Yeah, we'll probably guide a little bit more of the range. Um, based on what we see in 2026.
Mid 20s on ebit.
Um, but when you say like, where we're at, is that
Kind of more in line with what you've seen in the first half on the incremental margins through an upcycle. Again, this is more of like a
Uh an upcycled average then you know, looking for a specific chord or anything like that.
Yeah, I think that's fair. Uh, can um.
I mean there could be a little bit upside on the incremental uh compared to the first half because we've been obviously performing month after month has gotten better, but I think that's fair assumption.
Got it. Hey Chris.
We have no further questions at this time. I'd like to turn the floor back over to management for closing comments.
Once again, thank you for joining us today and for your continued interest in TriMas. We appreciate your time and engagement, and we look forward to sharing our progress and updates with you on the next earnings call. Thank you.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.