TriMas Corporation

At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please dial star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Sherry Lauterbach, Vice President, Investor Relations. Thank you. You may begin.

Thank you, and welcome to Trimask Corporation's fourth quarter and full year 2024 earnings call. Participating on the call today are Thomas Amato, Trimus' president and CEO, and Scott Meller, chief financial officer. We will provide a prepared remarks on our fourth quarter and full year results and 2025 outlook, and then we will open up the call 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 Trimus.com 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 13744326. 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 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. 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. In addition, we would like to refer to you refer you to the appendix in our press release or our 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'll turn the call over to Tom Amato. Tom?

Thank you, Sherry. Good morning, and welcome to TriMASA's quarterly earnings call. Let's turn to slide three. As we reflect on the final quarter of 2024, which was a better comparison quarter to the prior year than the first three quarters, we experienced several positive trends in both financial and non-financial key performance indicators across all of our business lines. Furthermore, we believe these trends provide a solid foundation for 2025 and position us well for the future. In each of our businesses, and in different ways, given the variability we often experience with our diverse set of end markets, we have taken meaningful actions aimed at improving customer engagement and conversion rates, enabling us to capitalize on growth and new opportunities going forward. Within TriMass Packaging, our largest segment representing 55% of total sales, we achieved organic growth of nearly 10% compared to the prior year quarter. This growth was driven by our dispensing product lines, particularly for products used in the beauty and personal care end markets. Due to the snapback in demand compared to 2023 levels, we have had to make investments in assembly lines and injection molding machines throughout the year, and tooling refurbishments more specifically in the fourth quarter, all to accommodate increasing volumes. As a result, in locations where we have had practical capacity constraints in prior quarters, we are now starting to see improvements in overall equipment effectiveness, or OEE, and which, in our experience, is a leading indicator to improved financial performance as we move forward. And in fact, we're off to a nice start in 2025 within our packaging group, as well as in all of our business platforms. Within the Trimass Aerospace Group, which represents 32% of total sales, we have made investments and have taken numerous actions to improve upon OEE on key production lines at several locations. These manufacturing excellence initiatives, coupled with concluded commercial actions, are allowing Trimass to benefit from a recovering aerospace and defense market. We have been seeing this throughout the year. but it is worth highlighting the significant improvement in the segment EBITDA rates compared to the prior year period. Importantly, we are entering 2025 with a strong order book and expect momentum in this segment to continue throughout the year. Regarding our specialty product segment, which represents 13% of total sales, we have successfully closed on the sale of our aero engine business as announced at the end of January. So for simplicity, I will limit my comments today to Norris Cylinder only for this segment. As we anticipated, we believe Norris Cylinder is now at the bottom of the significant destocking demand trough that we experienced throughout 2024. Norris Cylinder sales for the quarter were slightly lower than the prior year quarter, down about 6.5%. Importantly, given the dynamics in the cylinder market, we have taken additional cost restructuring actions to operate with improved performance at lower annualized sales rates as we move into 2025. Scott will discuss this in more detail as we believe Norris Cylinder will now begin to contribute more to TriMass' absolute earnings in 2025. It is important to note that as related to Norris Cylinder in the fourth quarter, the drag on operating income compared to the prior year quarter, was just over $2.2 million. And given our scale, this would translate to approximately $0.04 per share in the fourth quarter, as anticipated recovery in customer capital expenditures, which drive cylinder demand, was deferred to 2025. While this was the largest specific driver impact in the fourth quarter, it also importantly highlights the prospective benefit to Trimast as Norris Cylinder begins its recovery, even on a modest sales base, in 2025. Let's turn to slide four, and I will cover some forward planning items. Before reviewing the items on this slide, it is important to note that TriMass enters 2025 with a strong balance sheet and low leverage. This characteristic enables TriMass to continue to invest in growth and factory floor improvements in our businesses return capital to shareholders through share buybacks and dividends, and augment organic growth through bolt-on size acquisitions. As announced previously and noted on this slide, we completed the acquisition of GMT Aerospace, a Germany-based manufacturer of tie rods used in a wide range of structural aerospace applications. Annualized sales are approximately €22 million, with sales to Airbus representing nearly 50% of its revenues. Importantly, this acquisition adds the first manufacturing location in Europe to our Trimass Aerospace Group, a critical strategic step to leverage and grow our full product range of fasteners and other engineered products within the Euro aerospace market. We are excited to complete this acquisition and welcome the GMT Aerospace team to the Trimass family of businesses. Also, as announced, we have completed the sale of our aero engine business. This action facilitates TriMass's exit of direct sales to the oil and gas end market, which has been a priority for some time. The proceeds from the aero engine sale of about $22 million will be used, along with drawing on our credit line, to pay for GMT Aerospace, which had a purchase price of about $35 million. Importantly, these two corporate development actions provide a portfolio shift in sales and earnings, reducing the impact of the specialty products group on Trimass. And finally, as we continue to take actions to increase the intrinsic value of all of Trimass' businesses, and specifically in this example our Trimass Aerospace business, we are pleased to announce that we have gained meaningful wallet share of future fastener sales to Airbus under a new multi-year contract which will begin to ramp up in 2026. The aerospace team has been working on this project for the better part of a year, and we are excited to expand our trading relationship with Airbus, which we believe will provide an opportunity for growth above normal market demand levels for the coming years. Turning to slide five, I will now briefly highlight key financial data from Q4 compared to the prior year quarter. As noted previously, the fourth quarter was, in many cases, a better comparison quarter to the same period in 2023, certainly as compared to prior quarters in 2024. With that said, consolidated sales were up 8.8% driven by solid organic growth within our packaging and aerospace segments. Segment EBITDA was up $1 million in the quarter at $42.2 million, or 18.5% of sales. However, when accounting for enterprise-wide IT costs that were reallocated to our segments in 2024, segment EBITDA was up by nearly $3 million for the quarter, despite specialty products being lower in EBITDA by $3.3 million. As noted previously, we finished the year with a strong balance sheet, despite cash used to return capital to shareholders through share buybacks and dividends, and with net leverage slightly reduced from the prior quarter. Net income was also up in the quarter and EPS was higher compared to the prior year quarter by 13.2% at 43 cents per share. I would also like to highlight that while our fourth quarter is typically a reduced profit quarter compared to the third quarter, we are reporting today a comparable EPS level in Q4 as compared to Q3, which we believe is an important sequential performance indicator as we move into 2025. Let's turn to slide six. Before turning the call over to Scott, who will take us through specific segment performance and outlook, slide six highlights full year results. As discussed throughout the year, given the significant destocking we experienced within our North Cylinder business, the normalized EBTA gains we have made within our TriMAS packaging and aerospace segments were more than offset by the significant earnings decline within our specialty product segment in 2024 as compared to 2023. With that said, we continue to believe that it's important to highlight the higher quality of earnings in our segment level EBTA mix driven by our largest business platforms, packaging and aerospace. I will now turn the call over to Scott.