Good day, everyone, and welcome to today's TriMas First Quarter 2017 Earnings Conference Call. Just as a reminder, today's call is being recorded. At this time, I would like to turn the conference over to your host for today, Ms. Sherry Lauderback. Please go ahead, ma'am.

Thank you and welcome to the TriMas Corporation first quarter 2017 earnings call. Participating on the call today are Tom Amato, TirMas' President and CEO and Bob Zalupski our Chief Financial Officer. Tom and Bob will review TriMas' first quarter 2017 results as well as provide details on our 2017 outlook. After our prepared remarks 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 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 3901001. 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 for a list of factors that could cause the 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 statements except as required by law. We would also direct your attention to our website where considerably more information may be found. I would like to also refer you to the appendix in our press release issued this morning or included as a part of this presentation which is available on our website 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 excluding special items basis. At this point, I'd like to turn the call over to Tom Amato, TriMas' President and CEO. Tom?

Good morning and thank you, Sherry. As we look back at our first quarter we're pleased with our start to the year. We are seeing positive trends of performance, which are a direct result of operating under our new TriMas business model. As a reminder from our last earnings call our redefined business model provides our leadership team with a common rail of performance expectations for TriMas in our family of businesses. In many ways it serves as the platform for our relentless focus on achieving our goals through a continuous improvement in an engaging environment. We have taken many important realignment actions in the past several months to drive long term performance. Some actions taken in the previous quarter includes the rationalization of two facilities in our Energy segment. First, we exited our Wolverhampton UK facility in connection with deemphasizing certain products in this region. The region which has been under prolonged reduced demand levels. Additionally in the Energy segment, we decided to change direction on ramping up a new location in Reynosa, Mexico, instead seeking to gain operating leverage at our main production facility in Houston, Texas. Given lower volume levels due to end market dynamics and improved manufacturing efficiencies in Houston, we now have adequate capacity for current and planned demand levels and no longer have a need to add to our manufacturing footprint. Within our packaging segment, we also consolidated the Greater Noida, India production into our body India facility, there by leveraging an existing operation. Since joining TriMas nine months ago, we rationalized eight locations, while we are approaching an optimized footprint for anticipated demand levels, we will continue to assess product and facility performance under our new TriMas business model to ensure we are achieving or have a clear pathway to achieve success in…

Thank you, Tom and good morning. As Sherry noted earlier all of my comments today it will be on an excluding special items basis. I will begin my comments with the review of our Packaging segments performance on Slide 9. First quarter net sales were $81 million an increase of approximately 1% compared to the prior year period. Excluding the $1.8 million impact of unfavorable currency exchange sales would have increased more than 3% year-over-year. We experienced higher sale levels in each of our principal end markets of Industrial, Health Beauty & Home Care, and Food & Beverage. We also had record quarterly sales in both Europe and Asia due to continued growth with several of our significant multinational customers. These sales increases more than offset the impact of softer sales demand that we began to see late in the quarter as a few of our customers in the Health Beauty & Home Care market revised product programs and related promotions in response to shifting consumer preferences. Packaging continued to generate strong margins reporting Q1operating profit of $18.5 million and operating margin of nearly 23%. We continue to invest in new products and sales growth initiatives as development of customer focused product applications and increased business with global customers is critical to sustainable long term growth in this segment. In addition to the consolidation of our two India facilities noted earlier by Tom, we also completed the ramp up of our new facility in San Miguel, Mexico, which provides incremental capacity to supply our North American costumers, which significantly shorter lead times and replaces an older facility with capacity limitations just outside of Mexico City. Overall Packaging remains on track with its full year operating plan, although we expect the impact of the softer sales demand experience toward the end…

Thank you, Bob. Turning to Slide 15. As I previously mentioned, we are reaffirming our full year guidance. Our leadership team has goals that are aligned with the drivers that directly impact TriMas' earnings and cash flow and therefore believe we are in turn appropriately aligned with driving shareholder value. Turning to Slide 16. Our near term focus is to continue to take actions to improve the performance of our Energy and Aerospace segments, while ensuring we have strategies in place for long term value creation for each of our businesses. We will continue to operate under a model geared to generate exceptional cash flow and drive towards returns above our cost of capital. In connection with communicating our performance plan to shareholders I often get the question on TriMas' priorities with respect to our intended use of cash flow of cash. The highest priority is to invest in innovation and capabilities within our businesses. For example, we will invest a large majority of our current year capital expenditures into our Packaging segment as we support projects to drive both products and process innovation and we will invest to ensure for our product pipeline for future long term growth. Next, as we generate cash above reinvestment in our businesses, we will then seek to reduce net debt to do leverage TriMas with the guiding target of less than two times. Ultimately, we will seek to pursue bolt-on acquisitions to augment our highest value proposition segment, as well as assess available options to return capital to our shareholders. As you probably can tell I remain excited about TriMas' future and believe there are many opportunities for sales and earnings expansion. I'm pleased with our start of the year and look forward to continuing our momentum well into the future. Thank you. And we will now turn the call back over to the operator for questions. Operator?

Thank you. [Operator Instructions] We'll go first to Matt Koranda of ROTH Capital.

Hi. Good morning, guys. Thanks for taking the questions. Just want to start off with a quick housekeeping item look like segment guidance was not included in the presentation this time. Should we not expect that going forward or since you're reiterating overall guidance you're just not updating segment guidance?

It was mainly because we are reiterating the full year guidance than none of those assumptions are changed at this time.

Got it. Okay. All right. Moving on to Aerospace. So on the last call, and I think in your prepared remarks you alluded to some improvement in distributor inventory stocking levels. So I think on the last quarter though you guys said you were kind of reserving judgment in that channel just given the seasonal element to Q4. So now that we've got Q1 under our belt and more about a month into Q2 here. Can you just give us an update on where thing stands in that channel in Aerospace?

Well. We're continuing to see some pick up in the order intake into the distributor channel for our businesses our largest distributor customers are indeed ordering, our backlog remains healthy. I think we got the question last call related to our anticipated forecast for sales for Aerospace business and there were some questions on that, and I think we're off to a start that's commensurate with the healthy backlog we went into the New Year with and that we're continuing to enjoy today, that's pretty much across the board. So we're seeing a pickup, it's not where it was perhaps a few years ago, but it's certainly better than what we saw through much of 2016.

All right. Got it. And then in the same segment, could you talk about just the margin improvement came as we head through the year any update you are thinking on sort of how that improves obviously the last quarter's segment level guidance would imply a pretty significant uptick in operating margins in that segment as we go through the year, but like to get your latest thoughts on that?

Well, we would like it to be higher, we're working on that we have a number of actions and plans in place. I will say that, as I said before it's going to take time. There are improvements steps that we're putting in place and in other actions we need to work through or same [ph] way through the system. Our hope is that we will continue the momentum and continue to progress. We talk about internally making improvements every shift, every day, every week and that's the matter we have across all of our business in Aerospace is no exception.

Okay. One on the Energy segment if I could hear, so in Lamons you guys announced the exit of Wolverhampton facility and then Reynosa you guys were able to quantify the charges nicely in that release back in early April. But is there any way you can help us kind of quantify the fixed cost that you're on doing with those actions and is it safe to assume also that none of the benefits from those actions really showed up in your Q1 results yet?

Well, I guess it depends on the period you're looking at Matt. So when you look at our year-over-year Q1 2017 to 2016. The Mexico, Reynosa facility was just ramping up and that was not in our recurring operating results, and since we made the decision to exit it in Q1 of 2017, that amount was not in there either. In terms of fixed costs for Wolverhampton the impact in Q1 a year ago, it was an operating loss of about of the $0.5 million. So if you look at the margin improvement quarter-over-quarter a portion of that pick up $0.5 million is relative to the exit of that UK facility.

Okay. Got it. And then just in terms of further opportunity in that segment I mean there's a number of distribution sales offices worldwide there. Are we done with kind of footprint consolidation in Energy for the time being how are we kind of assessing the positioning in that segment going forward?

As I mentioned in my comments, we continue to look at all of our locations around the world not just in the Energy segment, we want to make sure that we have top performing locations and strategic need for all of our sites. I mean that in my background in history and coming to TriMas, I see there as a potential value driver to gain operating leverage for the company. I made the point in my remarks that we're pretty far along the path that being said. We always will take a look at our sites various end market changes and dynamics. So I guess what long way to say we continue to study it, but most of the big movements we've taken already.

Got it. I'll turn back in queue guys. Thank you.

Thank you.

Up next from JPMorgan, we'll go to Steve Tusa. Please go ahead.

Hi, guys. Good morning.

Good morning, Steve.

Can you just talked about what you're seeing on the kind of turnaround side in the refineries and any uptick there?

Well, interestingly we had planned for basically a quarter-over-quarter softer forecast in turnarounds and we saw a little bit better than what we had anticipated. Now, I'm talking about what we planned for versus perhaps what occurred in 2016. So we were pleasantly surprised with our order intake in our Lamons' business and it can through as you could see in the performance improvement in the company as well. So I wouldn't say that it's back, but we're seeing signs of that we're better than we anticipated that's a good thing.

And I would add to that just by we had orders from a couple of customers during this spring turnaround season that were new to us, so in essence customers who return to us. So that was viewed as a very positive side as well.

On the Aerospace side, the destocking impact that you guys have been talking about maybe I have missed this before, but you might have mentioned it. But any update there, some color on those issues?

Yeah. I just addressed it with Matt's last question. But basically the

I'm sorry, I might have missed that.

No worries, I'll restate again is important it's a positive impact for our business. We're seeing some good order intake from our largest distributor customers, helping I think helping to add to our backlog going into this quarter and the rest of the year. It's not perhaps where it was a couple years ago, but we're seeing the right signs in the right direction and that's like I said a positive.

Okay. And then just lastly, are some of the parts analysis at least shows significant upside I mean are you guys evaluating anything strategically if that disconnect continues to persist in. Are there any major dis-synergies between these various businesses, is there any leakage potentially out there whether it's around tax rate like that that they would have to consider?

Yeah, I mean I think typically in some of the parts analysis the piece that's most difficult for folks to estimate is the tax leakage associated with that any sort of transactional activity, and generally speaking it's pretty significant for our portfolio companies given our current tax basis. So that's a portion of the analysis that is hard to quantify on the outside, but certainly it's what we look at internally and you know again we firmly believe that we continue down the path of enhancing profitability particularly in Aerospace and Energy that any delta that exists between some of the parts of the current valuation will be relatively minor.

Got it, yeah and I mean certainly the cash remains the cash outlook this year is strong, so that's something that's probably not reflected either, so okay, cool, thanks a lot guys.

Thank you.

[Operator Instructions] We'll go to Steve Barger of KeyBanc Capital Markets.

Hi good morning guys.

Good morning Steve.

Good morning Steve.

Morning, so first question is on Packaging, you've had special charges in Packaging every quarter now for the last nine quarters and the sizes stepped up quite a bit in these past three quarters, could you just remind us what are you taking these charges for here and how much longer do you expect to have special items in Packaging?

Charges over the last three quarters have been predominantly related to the ramp up of our new San Miguel, Mexico facility. So in connection with that ramp up then we also have to exit our existing Mexico City facility, and while a number of the workers transferred over to the new operation there was cost related to severance and shutdown of that operation. And that as Tom mentioned that during his remarks, we did consolidate a plant we had outside of Delhi in Greater Noida, India into a larger more modernized production facility in body India. So those are really where the two charges in the quarter occurred and our expectation is as we move forward that they'll be relatively de minimus in terms of any future actions.

As I think, just to clarify is the forward look for charges if there's still consolidation to do in terms of terms of plants or is that after these passed to you pretty much there?

So in with respect to our Packaging business that's correct, we're - we don't anticipate anything above de minimus type of items. We do have a plant in - the plant we just exited in Mexico and Reynosa that could spill over into this quarter depending on what we do with it in relation to sublease or not.

Understood. And then next question here the deemphasize is the less profitable regions in Energy, you've mentioned Wolverhampton, are you completely exiting those markets and how much lower are they in terms of profitability, so think about mix?

Well, we're not completely exiting the European market. As I noted we continue to service our ceiling products customers in the UK and in more general across Europe through our facility branch location in Belgium. I think the portion of the market that we've backed away from, as I mentioned was the specialty bolt subsea applications that really that was the business that Wolverhampton was strong and that's a market that essentially has gone away here over the last 24 of the 36 months.

Thanks.

From Barrington Research, we'll hear from Rudy Hokanson. Please go ahead.

Thank you. Two questions, one in the engineered components area you make the comment that there was some softness due to the number of wellhead completions and you know in that end market and just thinking the rig count over the last year is up something like 37% year-over-year and it's been going up since the middle of last year. And eventually even those rigs turn wells out. And I was just wondering what your outlook is in the second and third quarter should there be a jump in those wellhead completions for you or is there some other issue going on or some kind of market competition?

Hey Rudy, good morning, great question. And I think what's a little challenging is on a year-over-year, quarter-over-quarter basis, it is a different story than what we're seeing at the business in a more precisely. We are seeing a customer - our customers have a different bounce in their step, we're getting a lot more code activity there is clearly more confidence in this space than there has been in a while. We need that confidence in quotes to turn into orders. We are seeing a little bit of uptick above our plan right now, but we're talking uptick and small dollars generally. But you're right the wellheads are up, they're up nicely year-over-year. And I know crude was down a little bit today pulled back, but with crude moves up a little bit or with perhaps a different focus on a U.S. energy plan that should bode well for our Arrow business in particular.

Okay, thank you. And then the other question, a comment was made in your discussion on packaging that at the end of the first quarter things slowed a bit because customers started making adjustments to revising, I think it's sort of like they're revising their plans or changing maybe when certain products that they wanted to bring out or models or something could you elaborate on that and how that may impact the second quarter?

Sure it's not in the sense new products, they're bringing out, it existing products that we haven't, again in the HPHC consumer focused market there consumer preferences are fickle they change and of course our customers have to respond to what their end markets are doing. It's really not anything new, it's something that we see routinely in this portion of the business, it was just maybe a little greater than we expected at least going into the quarter and certainly we're doing everything we can to offset those impacts with sales to other customers or their end market vertical. So more to come, but we do see softness continuing with certain of those customers through second quarter.

Okay, thank you. Those are my two questions.

Thank you.

[Operator Instructions] We'll go to Karen Lau, Deutsche Bank.

Thank you, good morning everyone.

Good morning Karen.

We start with Arrow. So every call you've been talking about improving coding activities for a couple of quarters now, is there I mean does it feel like the orders are going to come more eminently is there like further change in term from your customers, and I'm just curious like what kind of indicators should we look forward to as you know to suggest that some of these orders might finally come?

There is a different, there has been a different tone quarter-over-quarter. In that - that is clear and we're seeing revenue above our plan, which came through in terms of our performance this quarter, but again our basis relatively has been beaten down it's relatively low. So while we're pleased we have a long way to go. I don't think I get could say it in any other way, we're seeing that what we feel is our customers confidence is up, it does there is a little bit of a lag time when wellheads get put in, we need to see that stability for a while. We actually look at that and anticipate that if crew ticks back up and stays up and the wellheads keep the amount of wellheads keep going up, that ultimately given the fact that we have a pretty good competitive environment in the space for our Arrow business that we should benefit from that it will just take a little bit of time, it's a little bit of lag factor for us. I think the challenge is you know a lot of the price support if you will for crude is come from production cuts that have occurred in OPEC countries and overseas, and I think to the extent any of that created incremental demand, I think what we're seeing in the marketplace is that the ramp up of shale production or other producers here in the U.S. readily fill that and so you have this governor on crude pricing that as it picks up to kind of mid-50's it seemingly then all of a sudden there's concerns about oversupply and it's drops back down into the 50, 51. So I think in order for us to really see improved sustain demand in Arrow engine business, it's going to have to get above 55 or higher and stay there and that's the big unknown at least at this point in time.

Okay. Thank you. That's very helpful. And then maybe on Energy so should we start to see that top line more reflective of underlying demand given that you have finished exiting some of the key branches, some of the overseas markets or should we still expect a little bit noise as you move production back from Mexico to the U.S.?

No. It is more the former not the latter and I would say that with that our hope and expectation as we become better and improve our performance that also translates into our ability to compete better in the space. So hopefully we get some lift above what the market demand is. But that's certainly something we talk about with our management team often and we all truly believe that with better performance will come additional customer appreciation for that is a competitive advantage. So your statement is correct that given where we are today. There is the current turnover rate is commensurate with demand.

Okay. And maybe one last one, Tom mentioned that you're moving closer to optimal footprints, but constantly evaluating for more opportunities. I guess where are you seeing the most opportunity in terms of more footprint capacity realignment in terms of segments?

Well. First of all, what I said in my text is we're essentially there, and I think that that's an important statement, because you get the most benefit if you can address manufacturing locations in, as I look across TriMas, we're largely there. The question that we have to ask ourselves all the time is maybe smaller satellite operations are they performing, are they pulling their weight, are they are they delivering cash flow to the business that is appropriate for that location is and that's something that we just have to study. Look as we have started to get better and have started to dive deeper into all of our businesses these are just sort of what I call the second derivative stop, but there's nothing that is highly eminent. And I think the bigger that like it or the bigger muscles once are done.

Okay. So going forward it there could be some smart trimming, but we shouldn't expect anything size on that?

That's as I said you today that's correct.

Okay. Got it. Thank you.

Thank you.

We will move to Wells Fargo, Andrew Casey. Please go ahead.

Thanks. Good morning, everybody.

Good morning Andy

Hi, Andy.

A lot have been asked and answered. I just had a detailed question on Engineered Components. Could you elaborate a little bit more on what you're seeing in the industrial end markets, we're seeing a little bit of movement up in and kind of shorter cycle type products, and I'm just wondering if there's you mentioned soft. I'm just wondering if you're seeing any movement for your products.

Well. The type for our Engineered Components business is generally speaking, we are seeing slightly better activity in the market than we anticipated on a marginal basis. So that so we have forecasted in our planning a certain environment that we're pleased that - it's a little bit better than that. So I think what we're seeing generally in the states where these businesses largely supply is a confidence level that's up and everybody's reading the same things that we're reading and that's that is helping us in these businesses, now we need that not for quarter, but we do that for many, many years. So that's something that we're continuing to take advantage of and it is our customers place orders we want to get them products as quicker than our competitors and just reestablish and strengthen our brand in the market.

Okay. Thank you very much.

Thank you.

And it appears are no further questions at this time. I would like to turn the conference back over to our presenters for any additional or closing remarks.

Look, I'd like to thank everybody again for their time this morning. Like I said, we're very pleased with this quarter. We're going to do what we can to keep the momentum up for TriMas and we look forward to talking to all of you again, next quarter. Thank you very much. Thank you.

And ladies and gentlemen, again that does conclude today's conference. We thank you all for joining.