Please standby. Good day. And welcome to the TriMas Corporation’s Fourth Quarter and Fully Year 2012 Earnings Conference Call. Today’s conference is being recorded. At this time, it is my pleasure to turn the conference over to your host today, Ms. Sherry Lauderback. Please go ahead, ma’am.

Thank you. And welcome to the TriMas Corporation fourth quarter and full year 2012 earnings call. Participating on the call today are Dave Wathen, TriMas’s President and CEO; and Mark Zeffiro, our Chief Financial Officer. Dave and Mark will review TriMas’s fourth quarter and full year 2012 results, as well as provide our 2013 outlook. After our prepared remarks, we will then open the call up to your questions. In order to assist with your review of our results we have included a press release and PowerPoint presentation on our company website www.trimascorp.com under the Investors section. In addition, a replay of this call will be available later today by calling 888-203-1112, with a replay code of 2416665. Before we get started, I would like to remind everyone that our comments today may 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 for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements. Also we undertake no obligation to publicly update or revise any forward-looking statement except as required by law. We would also direct your attention to our website, where considerably more information maybe found. At this point, I would like to turn the call over to Dave Wathen, TriMas President and CEO. Dave?

Thanks, Sherry, and good morning to everyone on the call. A special thanks to the TriMas people on the call. 2012 was a year of accomplishment and milestone to TriMas. It’s always a team effort with all of us working together to achieve our objectives. Our company is significantly stronger and more capable now than it was in the past. Our agenda today is that I’ll provide an overview of 2012 in the current environment, then Mark will discuss financial metrics and some details by segment, and I’ll finish by discussing our 2013 outlook. Then we’re glad to take your questions. You’d likely seen our press release this morning, discussing our fourth quarter and full year results. Let me start with some highlights on slide four. TriMas achieved many positive results in 2012. Revenue increased 17% compared to 2011, for a three-year revenue CAGR of approximately 18%. EPS excluding special items was up 16% on a 9% increase in shares, for a three-year EPS CAGR of more than 60%. Interest costs were reset down to competitive levels. We established five new factories which are already delivering growth and productivity benefits, and our seven bolt-on acquisitions are all performing well. We spent more cash both in CapEx and working capital on revenue growth and acquisitions then we had originally planned, but we believe these investment decisions will definitely payoff. Our few businesses experienced some growing pains, with incremental revenue requiring extra costs, which should produce and to serve our customers, but we all learned and improved from these experiences. My own goal is to get better at the timely decisions between revenue growth and capacity additions. TriMas is in businesses where capacity adds should always come after the revenue growth is confirmed, the science isn’t shrinking the time and cost spreads.…

Thank you, Dave and good morning. Let’s start with a brief summary of our fourth quarter results on slide nine. Our fourth quarter sales were $301 million, a 16% increase compared to the fourth quarter of 2011 with growth in five of our six segments. This was our 11th consecutive quarter of seven digit year-over-year sales increases. Our organic growth efforts focused on new products, growing end markets and market share gains represent more than 40% of our growth. In addition, our recent bolt-on acquisitions are performing. Across the company, we are successfully executing on our growth strategy. We are making disciplined decisions today to invest in opportunities for future long-term growth and productivity. Fourth quarter 2012, income from continuing operations attributable to TriMas would have been $13 million excluding special items related to our debt extinguishment cost, restructuring cost associated with Cequent manufacturing footprint optimization and tax restructuring. This represents an increase of almost 49% compared to Q4 2011. Fourth quarter margins were tempered by recent acquisitions, investments and growth and temporary costs and inefficiencies driven by our long-term productivity efforts. We have plans in place to enhance these margin levels and continue to be committed to productivity and lien initiatives. For the quarter, we achieved the diluted EPS of $0.33 excluding special items, an increase of 32% compared to Q4 2011, by observing the effects of 13% more shares as a result of our May equity offering. We remain focused on cash flow and our results reflect our increases in CapEx and decisions to carry more working capital as a result of acquisitions, actions to support our customers, new product inventory levels and geographic expansion. Moving onto slide 10, 2012 full year results. Overall, we are pleased with our 2012 performance with 17% sales growth and 27% income…

Thanks, Mark. First, let me share a summary of our current playbook for 2013 on slide 20. There are several ongoing strategic drivers that are common across many of our businesses, globalization and emphasis on the environment and the growing middle class. We are making sure we capitalize on every opportunity. Let me share some examples. Globalization is a positive driver in each of our segments. In Packaging, global customers are shrinking the number of suppliers and need a global partner around the world who has local capabilities. They are also communizing dispensing designs globally, with biggest positive for us so far in Asia. In Energy, we have multiple global contracts and continue to build out our branch network to support our customers in close proximity to their plants and refineries. In Aerospace and Defense, aircraft usage decline with globalization, a trend that promotes aircraft build rates and usually develop products with both current and new manufacturers. At Norris Cylinder, our ability to meet global specifications helps the export side of the business. And in Cequent globalization of our customer’s means our customers build the same pick up trucks in Thailand, South Africa, Mexico and Brazil, and need our products globally. Another strategic driver is environmental concerns, which also affects each of our segments. In Packaging, environmental concerns are driving product designs to allow for recycling and less wastes. Our customers are looking for partners to aid them in developing innovative dispensers and green solutions. For example, when they get a request to replace steel springs and plastic dispensers to assist with recycling. In Energy, plentiful natural gas needs customer plants are converting from oil to gas as feedstock and concerns about leakage or environmental hazards help increase sales of higher spec seals, gaskets and fasteners. In Aerospace and Defense,…

Thank you. (Operator Instructions) Our first question will come from Joe Bess with Roth Capital Partners.

Good morning.

Good morning, Joe.

Good morning, Joe.

In your opening remarks you mentioned the process to penetrate markets like Brazil take a bit of time. Can you walk me through some of what the key main steps are over the next couple of years to really get to a point of having meaningful customer relationships there?

Yeah. Two things, one, there are some new customers, particularly the drilling companies who are putting in a lot of infrastructure and use our kinds of products. We have to get ourselves qualified and accepted by them. That is going on. Certainly, the acquisition we made in January was about -- partly about acquiring a set of approvals that because the specs are just different enough, we decided we better off acquiring the approvals. So there is a set of getting the approvals from new customers that we haven’t been dealing with. The other customers, I’ll say current customers, that we deal with globally is a more normal process for us. It just -- it’s a matter of having a site close geographically and convincing that site that we are the supply of choice. We are use to that. It takes a little while. The advantage in Brazil in particular is the ramp up of the industry is so fast that we do give a leg up and so we are seeing pretty decent growth rates. It was an important ingredient to get that acquisition done in January though to get some approvals into our camp, and it makes it easier now for us to start bringing in the rest of our product line for those customers. Other than that it’s a global, it’s a global sealing market, customers in Brazil are similar to customers everyplace else and so you’ll see pretty decent and in the Cequent that was also of really about approvals in country, so that we have products that meet the local specs and importantly meet the approval agencies requirements. So we are seeing that ramp pretty nice to.

Okay. Thank you for that insight. And then thinking about the leverage ratio, Mark, are we still sort of targeting 1.6 times leverage ratio or how should we start to think about that now, the debt levels where they are and a currency issues that you really have to increase EBITDA going forward?

That’s a -- thanks for the question, Joe. The goal of the company is still to continue our relative leverage ratio [sub two] is exactly where we are headed, the 1.5 to 1.75 level is kind of what feels where we should be as a company long-term. There is obviously the opportunistic view towards acquisitions we’ve had. So I think we’ll continue to prioritize cash use with high shareholder, stakeholder, value accretion to these acquisitions at least for the immediate term.

Okay. And then thinking about inventory levels, it is little higher this quarter on a percentage sales basis. Should we think about that as being just some of their redundancies with some of the facilities, Dave, you are consolidating or is this sort of a level?

No. You’re right on. That’s the big driver.

Okay. So we should see that kind of come down the board?

Yeah. That’s part of the check list as you move in facilities around the Q. To take care of your customers, you make sure you’ve got a -- I don’t like the word bank of inventory but it’s descriptive.

I would add one thing there. There is obviously pushes and pulls with everything in business. We have the gain of certain regional and global customer opportunities. We have added inventory in those spaces. But we also knew we have if you will transitions to new facilities like that have temporary effects associated with inventory. So there is growing consideration in terms of customer needs. And then there is obviously the temporary consideration associated with continued investment in our footprint optimization.

Okay. And then last question, I’ll get back in the queue. Thinking about the Martinic acquisition, is there opportunities for us to penetrate existing programs that you guys already have or is this really a function of getting new customers and new programs like with customers in Europe and stuff?

It’s important that Martinic’s main customers are not the first tier aircraft manufacturers.

Okay.

It’s the -- call it OEM suppliers who make big subassemblies for the aircraft manufacturers. Martinic machines titanium ports. We’ve got that what we are used to but they use more in the customer channel of this big suppliers. And so it gives us that opportunity to go into those people that we haven’t served this much. Conversely though it allows us to take their products to the customers we know best. This is one of those put unique two way synergy wins...

Okay.

And we are happy to make a connection with them.

Thank you for that.

Thank you. We’ll take our next question from Robert Kosowsky with Sidoti.

Good morning guys and Sherry. How are you doing?

Doing pretty well.

Doing pretty good. Mark, I was wondering if you look year-over-year the -- full year the operating margin was down 130 basis points, 140 basis points. And I was wondering if you could bucket that into acquisition accounting impacts, product mix, inefficiencies from all these new plants going on, other growth initiatives. Just kind of give us a little bit of more clarity into what the margin degradation was?

Yeah. If you think about if there is nearly $3 million in purchase accounting effect within the year, you’ve got just sub $3 million and which will be duplicative cost, not considered net special items, namely you feel duplicative cost and frank consolidations. And also Robert, I told you product mix is a big number for us as well. And that was more in the neighborhood of about $8 million in terms of relative margin pressure that we felt as a company.

Okay. That’s very helpful. And then what did you see in the fourth quarter on the industrial closures business and how is that trending in the first quarter, kind of, was there a dive in demand in December like we’ve seen without industrials?

Yeah. It’s a -- if you had Lynn Brooks on the phone and the folks of that business can tell you that they almost attributed it to the new cycle about fiscal cliff and all that. And it turned back on after we got through that whole mess. And it turned back on as it went back to the way it was earlier in the year. But December was pretty -- was pretty discouraging. Europe is still just up and down. And if you step back far enough and smother over a few months, it’s fairly level and the lower levels we’ve been running at. But yeah, we definitely saw industrial closures. We probably saw some of it in the other industrial business like Norris, some of it, the effect from the stuff going on in Washington, D.C. People…

Okay.

… back order -- back orders was best you can tell.

Okay. So, given that we should see a decent snapback in the profitability on the Packaging side in the first quarter. So given that December might have been a pretty poor month?

There will be some improvement because we’ve got a heavy load in Packaging of new product launches and we get going big time in Asia on capacity adds. But yeah the margin -- I will give you a quarter answer but we are on the margin of movement track actually in each of our businesses because we are on the margin improvement track for sure.

Thank you very much.

Thanks Rob.

Thank you. We’ll go next to Scott Graham with Jefferies.

Good morning, Scott.

Good morning. Sorry, I had to unmute myself here. So I kind of have the same questions, the prior question but may be with a little bit more specific on each segment. Could you tell us how the purchase accounting numbers as far as that between the segments, Packaging and Energy, in particular, I guess, the larger ones.

Just for everybody, that will obviously be in the K. The purchase accounting effect obviously affected the Packaging business most notably and the Energy business also. And I’ll tell you that they were terribly dissimilar between the two.

Okay.

3 million buck -- I mean it’s 3 million buck, Scott. I mean, it’s between probably it’s just 1.5 for our trends in Packaging and the rest of it obviously is largely in Energy. There is obviously couple of other admits in that but the biggest effect was Packaging.

Okay. And then I, kind of, saw, you were kind enough to give us the $8 million hit on mix. Two questions on that, where did you see that the most in the segments and was any part of that $8 million from pricing?

No, we separate pricing for mix, Scott, in terms of pure analytics. I would tell you we saw very much affect obviously the Energy business with the launch of new branches. We saw affect on Packaging business with some of the new product launches and engineered component as well in terms of some of the new products that were really most notable out of our Arrow Engine business.

Okay. That’s great. Two other questions and this may be is more directed toward you, Dave. I know that sale spending is extremely targeted with you guys and certainly it has worked. You pick a spot, you spend it and sales come through the next quarter or so. It looks to me like the fourth quarter. There was a fair amount of that, heading into 2013. I was just kind of wondering two things on this, number one, where was that sales spending kind of the most and maybe identify a couple of things that you are pursuing if you will. And then secondly, on the productivity side, the product fees, of course the fund sales spending, did that happen this quarter and the decline in the margin was from these other factors. Just curious?

The last question, I would say that we are in balance of the productivity didn’t offset this spending that we took on. The targeted spending, Brazil was certainly, it is a focus and will continue to be, Asia in the broader sense for Packaging and Aerospace and Cequent and it is paying off. I’d say, the science in it is to get the capacity adds at the right time and we are trying more hard to make sure we get that right. China, I could go on and on about, but the dilemma in China of all the stuff with permits and export duties and import duties and all. And the Chinese government recognizing the issues and changing the rules around and us trying to -- in our favor and us trying to find the most opportune way to do it. And we think we’ve sorted that out and you will see some pretty decent positives come out of all that. I wouldn’t list any broader sales efforts than there really have been regional. There is a few specific things in the U.S. in a couple of business. Norris’ had a couple of special things that are quite dependable for us and Arrow has the customer complexion in Arrow because of shale and fracking and all that kind of thing is just moving fast. We had a good story. I’ll tell we’ve got one engine design in Arrow that has proven to be extremely popular. It hasn’t lay past any kind of capacity and we’ve actually -- we’ve had air freight components and all that kind of a thing but it’s good. And we’ve raised prices a couple of times too. And so we are still chasing kind of when you say mix, mix is normally bad. A lot of times it’s a positive but you are chasing it to get yourself lined up with it and we have that kind of a year. That’s the way of the world, moving faster and we keep getting faster to respond.

And, Mark, back to you on for one last one. The mix was $8 million. I forget to ask, does that include acquisition mix or is the other way?

No. That is existing product mix.

Got it. Thank you.

You bet.

(Operator Instructions) We’ll go to Steve Barger with KeyBanc Capital Markets.

Hi. Good morning.

Hey, Steve.

First question for Mark. How much of that 6% to 8% revenue growth was from acquisitions you completed last year, or what are you thinking about in terms of pure organic growth this year?

Pure organic growth, we’ve grown the gap really. The Martinic acquisition, which allows us to add acquisitions topline, GVT is not a material number in terms of total company and you’ll have the first quarter associated with Arminak. So you put all those three together, you are talking about $30 million or 20 million bucks. We are actually targeting more than $15 million. So call about $30 million in total will be acquisition growth, Steve.

Okay. And do you expect positive organic growth in every segment in 2013, based on how you are planning the year right now?

Yeah. Organic would include driven by new product programs and that sort of thing but yeah.

Sure. But right just and you don’t see any areas that we -- sorry, go ahead.

No. I mean, we’ve got markets modeled at the -- I’d call it, we would try to do on the low end and I still think the U.S. is a 2% GDP in 2013 and Europe is flat, et cetera. There are some people who think Europe might be up a percent, but not enough you can feel it. No. I think we’ve got -- we’ve got product programs and customer programs identified and so when we give you a sales guidance we know what it is. We’ve got risk factors applied to it. The trick then is to find some more to add on top.

Right. So just as you think about the various segments, I'm guessing just given on the aerospace build rate, A&D could have double-digit organic growth but is there anything else in there that could approach high singles, or are you thinking more low single-digit for all the segments?

You are right about A&D because of the d part has got them small enough now. We don’t have to keep making or trying to explain that. Packaging has got some strong sales programs. The Asian part of Packaging we keep talking about, that is really helping and there is some kind of neat, new products that are adding in Packaging. Energy, it will be pretty decent but it’s being driven by more branches.

Right. So the margin profile may not be there but the topline is --

But the topline will come true, yeah.

Okay. What do you expect the impact of working cap is going to be this year?

It will be as of growing and unlike, we are expecting it obviously to be used. We’ll close the year and of the higher teens than what we have historically been, in the 12% to 13% but the reality is we are looking at about 15% working capital as a percent of sales. So it will be a slight use.

Right. Okay. Say that again, sorry?

In dollars but on a percentage basis, we should see a slight improvement.

Right. In decent dollars though, yeah.

Temporary.

And CapEx looks like, it’s a mid $50 million range. Can you break that up between maintenance and growth, and talk about how you are framing up your return profile expectations on the growth part?

Yeah. Let me give the bifurcation of the three elements here. Our maintenance CapEx hasn’t really moved drastically all that much and it’s been about in the mid teens in terms of our million of dollars a year. The rest of it is, obviously very much focused on growth and productivity for us as a company. So there is really three pieces, right, Steve and that is productivity and that investment has been kind of a two-year or less kind of pay back investment. I think our growth capital has obviously had some shorter, some longer but on average it’s been about a two-year savings.

If you were siting in an operating room, you’d recognize that we have -- we are pursuing more CapEx driven productivity, which is a way to go after margins. TriMas had been pretty stark on that kind of stuff and I could take you around and show you a banks of machine tools and that sort of thing that are really paying off and four of them sitting in Monogram. The obvious next step is eight more. So we’ve got some -- within the CapEx spending, we’ve got some of those kind of things going on and it’s another one of those hidden benefits in TriMas for me is that when it’s been starved so long, the upside for turn on some of that a little bit on some of that kind of productivity CapEx is great. We are not replacing machines that are 5 or 10-years old. We are replacing machines that are couple of decades old that have come a long, long way and not just cost of running the machine. It’s about throughput and quality levels and all that. We’ve got a whole push going on throughout and first passing yields and all that in some of the basics and I like it. We have used a lot of good.

Well, I guess I will take it one step further then since you have these good things going on. If there's $40 million plus or minus of growth CapEx -- growth and productivity, will you tell us the split between how much of that is on the productivity side, the machine investments that you are making and how much of it’s on growth?

I don’t want to give that precise on it because there is a little spillover between them too.

Okay. I understand.

Sometimes you get a growth investment that’s also productivity, so it's kind of hard to separate those two.

Okay. And Dave, you talked about waiting for confirmed revenue growth before you add capacity. Which segments are up again constraints right now and really need the expansion, and where are you maybe over capacitize or you just don’t need the investment right now?

Well, we’ve -- certainly in Packaging, we’re up against in our capacity and we are having to run higher cost ways of making products and so we can gets some things online. So, Packaging definitely needs capacity adds. We are -- we have a capacity ramp going on in Monogram as you can imagine that will be on for a while unless something changes dramatically in those markets, we will be on our capacity to ramp for a while in that business. There is -- we have a fastener capacity issue within Energy, as in the big fastener that we will make a South Texas Bolt in all that. And we need more of that capacity because we are having to outsource things and pay way more than we could manufacture four. I would kind of put those at the top of a list. There is a few tights spots and certain kinds of cylinder sizes in Huntsville and things like that, but we know how to address them. The new plants in Reynosa for Cequent North America are -- we do add some capacity because we can see the product mix. But they're totally driven by productivity, so we generally have enough capacity in the rest of businesses.

All right. Okay.

I have a few division presidents reminding me that I had this saying about me running a press on third shift Sunday night and I get called on that once in while.

And last question, I will get back in line. You talked about being up against capacity in Packaging also in Energy. Are those the first initiatives that you are pursuing with the $40 million in growth and productivity CapEx, and do you expect that those capacity constraints can be broken to some degree in the first half of the year -- of your year?

Generally, yeah.

So we should start to see the margin.

Yeah. And it’s about margin. Again, it’s -- we’re the kind of company that we can find a way to build it. A way we build our higher costs where we outsource a component and sort of things. So not like it’s we’re going after the revenue, it’s going after margin.

Right. Okay. Thanks so much. I’ll get back in line.

(Operator Instructions) We’ll take a follow up from Robert Kosowsky.

Yeah. Just a couple of follow ups. First off on Cequent North America, do you -- are you baking much growth in that segment given the rebound that we are seeing in housing?

There is, yeah, housing, the rebound of housing is driving, we see it in construction, we see it, we might even see a secondary effect because of people’s house values feeling little better and them spending more money on the recreational side of that business. But directly in the construction part of the business, yeah, we are seeing it. How you’re going to be, we don’t tend to think, we don’t tend to talk housing as a driver for TriMas, but at least in that segment it will be good for us for awhile, yeah.

Okay. That’s going to be good amount of…

As you run into a math problem because of the size of construction within Cequent, within TriMas, so it’s not a huge change. But, yeah, it’s definitely a positive and it tends to be the heavy duty products which are higher margin for us.

Okay. Now these are some of the products that you are moving from Goshen to Mexico and kind of how are you dealing with that, I guess, risk if demand come back?

Well, some of it we build inventory for, we have been, Goshen is the only facility we have -- we have a lot of issues with potential conjunctions and things like that which have now settle out with us going to the employees and agreeing on severance and that sort of things. I would say, we, I strongly believe in treating people well, you can’t fix every problem for them but in a time like this we treat people well, we are doing that and they build it for what we rewarded. So now we have a situation where people know what their exact package is and all that kind of thing, and so we are doing okay building. There is always a chance of issues with it. But I think we’ve get it covered with some dual capacity, with some inventory build. We’ve done this kind of thing before and we certainly know how and so we got good people working on it.

Okay. That’s helpful. And then if you are talking about…

We are not skimping. We’ll show you a show place plant in those some day.

Okay. Cool. And then you talk a lot about the short-term and you are feeling on margins right now? And I was wondering longer term what the margin potential is as you see down the road?

Are you talking in general or in a specific segment rather?

Just company-wide, you mentioned a lot of short-term in this year and I’m just wondering what you see five years down the road is kind of some margin potential targets?

Well, let’s talk immediate term because obviously there is, we’ve recognized the pressure that we saw in 2012. We did everything possible to offset those pressures in 2012. We never stand still. We’re expecting to see margin expansion in 2013 as a company. We haven’t given guidance on what the expansion will look like but it like to be all the way back but we’re going to recover good of it in 2013. The reality is that there are investments that you hear us talking about in terms of Packaging as well as our trends in Cequent are clearly going to add margin opportunities for us as the company. You can do your own mathematics associated with that with respect to the move to the Goshen facility and get a sense as to what that means to your own model. But we will continue to expand margins because quite frankly as we’re growing earnings faster than topline, we’re going -- you're going to naturally see that happen. So in terms of target tier, we internally continue to think of it in terms of 15% operating target that has a threshold for us as a company and that’s what we’re running to. Now, I’m not going to give and say it’s five and three years but I’ll tell you that’s where we’re heading.

Okay. That’s helpful. And then also any thoughts about return of cash to shareholders?

It’s interesting that for the first time we with this most recent finance that’s not a restricted payment as under the credit agreement. It’s not something that immediately is ahead of us simply because we have a very robust acquisition pipeline. So I think that the return on capital is there for us to continue down the path.

All right. Thank you very much and good luck.

You bet.

Thank you. (Operator Instructions) It appears we have no further questions.

Okay. Well, we sure appreciate everyone’s attention and interest and suggestions. We’ve come a long way. We’ve got long ways to go yet. And we understand our priorities. We know how to continuously improve. We know when we need to turn the dials heavier in one direction than another. We know how to do that. So in spite of kind of ugly economies and markets and natural events, I think we’ve got great spots identified and focused on them. And we look forward to continuing the increase the value of this place. So thank you for your support. Be in touch.

Thank you. Ladies and gentlemen, that does conclude today’s presentation. You may now disconnect.