TriMas Corporation

Good day, and welcome to the Trimass Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. This time, I would like to turn the conference over to Sherry Lauterbach. Please go ahead, ma'am.

Thank you, and welcome to Trimass Corporation's Second Quarter 2021 Earnings Call. Participating on the call today are Tom Amato, Trimass' President and CEO, and Scott Mell, our Chief Financial Officer. We will provide our prepared remarks on our results and our 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 the press release and PowerPoint presentation on our TriMath website under the investor section. In addition, a replay of this call will be available later today by calling 888-203-1112 with a replay code of 730-2308. Before we get started, I would like to remind everyone that our comments today, which are intended to supplement your understanding of TriMAS, may contain forward-looking statements that are inherently subject to a number of risks and uncertainties. Please refer to our Form 10-K and our Second Quarter 10-Q that will be filed today for a list of factors that could cause our results to differ from those anticipated in any forward-looking statements. Also, we undertake no obligation to publicly update or revise any forward-looking statements except those required by law. 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 issued this morning or included as part of this presentation for the reconciliations between GAAP and non-GAAP financial measures used during this conference 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'll turn the call over to Tom Amato, TriMass' president and CEO. Tom?

Good morning, and welcome to TriMass' second quarter earnings call. We are pleased to report that TriMass' positive momentum has continued through the second quarter. While there were indeed challenges that affected our ability to accurately forecast demand at the start of the year, we are reporting solid second quarter results today. Let's turn to slide three. As a reminder, In the second quarter of 2021, we are comparing results to a pandemic-related demand surge in TriMass' packaging group, which began in the second quarter of 2020. However, we are also comparing against the effects of an abrupt demand slowdown in our aerospace and specialty products businesses, which also began in the second quarter of last year. With that said, our consolidated sales were at the top end of our expectations, driving better than anticipated earnings. Our TriMass packaging segment continues to outperform expectations as the pullback from the record 2020 pandemic-related sales rate was less than expected. We remain optimistic that the results in our TriMass packaging group are aligned with our thesis of a positive secular demand change given that many of our products are used in applications for cleaning or that help fight the spread of germs. We are also pleased to announce some significant investments for our future, which include commercializing innovative dispensing products, which foster our commitment to sustainability, and adding capacity in North America. I will cover this more in the next slide. In addition, within our specialty products group, specifically our Norris Cylinder business, we successfully achieved our Made in the USA designation. We have often discussed the unique position of Norris Cylinder as the only high pressure Ford steel cylinder manufacturer in the United States. And we think it is only fitting that we lean into this enviable position. We believe our most discerning customers, which already rely on Norris Cylinder for high quality products, will now add the made in USA criteria to their decision making process. As we close out the first half of 2021, we're also very pleased to sustain our positive momentum in LTM adjusted EBITDA, which we attribute to our focus on operational excellence and operating under the TriMAS business model. Finally, we repurchased approximately 358,000 TriMAS shares during the quarter, thereby reducing our net shares outstanding from our December 2020 level by approximately 0.5%. We are pleased to be in a position where we can provide this added benefit to our shareholders and will continue to assess repurchasing shares as a means to return value or take advantage of any market dislocations generally. Let's turn to slide four. Last week, we announced that we further advanced our commitment to sustainability in the commercialization of the patented Mono 2E pump, a unique dispenser that is fully recyclable. This was the first pump on the market made from a single polymer grade resin which makes the pump more easily recyclable at end of use. For example, by eliminating the metal spring and making several parts out of one polymer, this pump can more easily feed the post-consumer resin stream, which reduces process steps, investment, and the overall carbon footprint. Our single polymer pump is commercially available and ready for advanced design applications for customers serving the beauty, personal care, and other end markets. It is already being used by one of our major consumer packaging customers for a newly launched personal care product. We're also working on developing additional dispensing products made from a single polymer without compromising quality, aesthetics, or performance. We look forward to launching our newest pump that is currently in advanced stages of testing under the Singolo brand name. As I mentioned on the last slide, we are continuing to invest in capacity for TriMass packaging and have recently broke ground on a new 230,000 square foot facility in New Albany, Ohio. This new facility will enable TriMass packaging to localize the production of a variety of products, including foaming and traditional dispensers, currently produced overseas for a large customer while providing incremental capacity for new business growth. With a focus on advanced manufacturing technology, this facility is expected to ensure continued excellent lead times, high quality performance, and collaborative product development with our customers. Production is expected to start in the second quarter of 2022. If we turn to slide five, I will now review TriMet's second quarter results. Consolidated sales were 219 million. up 9.7% as compared to the prior year quarter, driven by acquisitions, organic sales increases, and favorable currency exchange. Organic sales were up 2.4%, driven largely by TriMAS's specialty products and aerospace groups. Again, it is important to remember that the prior year comparison quarter had an unusually high pandemic-related demand surge within TriMAS packaging, while we also started to see an abrupt slowdown in demand in aerospace and specialty product segments. Adjusted operating profit was $30 million, or 13.7% for the quarter, up $2.5 million as compared to the prior year quarter. And adjusted net income was $22.7 million, up $4 million as compared to the prior year quarter, primarily driven by higher-than-expected sales and related conversion, and further boosted by a lower tax rate. Adjusted diluted EPS was 62 cents per share for the quarter. This exceeded the top end of our outlook of 50 to 57 cents and compares to 52 cents for the prior year quarter. Finally, adjusted EBITDA was 45.3 million or 20.7% of sales, up 2 million from the prior year quarter. Let's turn to slide six. On a year-to-date basis through the first half, Consolidated sales were $425.7 million, up 11.3% as compared to the prior year, driven again by acquisitions, organic sales increases, and currency. Organic sales were up 2.2%, driven largely by TriMas' packaging and specialty products groups, more than offsetting lower demand in TriMas' aerospace group, which started to occur in the second quarter of 2020. Adjusted year-to-date operating profit was 56.6 million, or 13.3% of sales, up 7.1 million as compared to the prior year. And adjusted net income was 40.1 million, up 6.3 million. Adjusted diluted EPS was $1.11 per share, up 18% as compared to 94 cents per share for the prior year first half. Finally, Adjusted EBITDA was $85.9 million, or 20.2% of sales, up $7.3 million. I will now turn the call over to Scott, who will take us through our balance sheet and segment results. Scott?