Greetings, and welcome to the TriMas Fourth Quarter and Full-Year 2023 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. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sherry Lauderback, Vice President of Investor Relations and Communications. Thank you. You may begin.

Thank you, and welcome to TriMas Corporation's fourth quarter and full-year 2023 earnings call. Participating on the call today are Thomas Amato, TriMas' President and CEO; and Scott Mell, our Chief Financial Officer. We will provide our prepared remarks on our fourth quarter and full-year results and our 2024 outlook, and then we will open up the call 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 trimas.com under the Investors 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 Form 10-K, which will 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 you to the appendix in our press release or our presentation for the reconciliations between GAAP and non-GAAP financial measures used during our 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 will turn the call over to Tom Amato, TriMas' President and CEO. Tom?

Thank you, Sherry. Good morning, and welcome to our fourth quarter earnings call. Let's begin on Slide 3. As we reflect on the previous year, it's important to note the end market challenges we faced. At the onset of 2023, there was a significant amount of market uncertainty and dislocation in demand, which was impacting many of our businesses. When we developed our 2023 planning model, we had anticipated that we would start to see a market recovery towards the end of the second quarter in our largest operating group, TriMas Packaging, which unfortunately did not occur. Our packaging group was not the only one affected, as consumer products and industrial packaging customers and even our packaging peers encountered a similar dynamic in 2023. Of course, in the spirit of seizing opportunities amidst challenges, we proactively initiated important savings actions to better position ourselves for the future. For example, we exited two packaging locations in California, one manufacturing and the other, a warehouse. We also consolidated two locations in China, one in Haining and the other in Hangzhou, into a single new facility in Haining. Our new facility in China is better aligned with our strategy to support future growth in the region. It is important to note that executing these actions would have been considerably more costly and risky in a regular demand environment. Structural savings from these initiatives, along with other actions will yield operating leverage gains, as sales return to more normalized levels over the coming few years. I would also like to further note that while last year did not turn out how we expected at the start of 2023, we are now encouraged by trends we began to experience in the fourth quarter, particularly within TriMas Packaging and TriMas Aerospace, our two largest segments. As…

Thanks, Tom. Let's turn to Slide 7, and I will begin my review of our segment results, starting with TriMas Packaging. For the fourth quarter, net sales were $113.6 million as compared to $105.6 million for the prior year quarter, an increase of 7.5%. Acquisitions contributed $5.8 million of sales, while the favorable impact of foreign currency translation contributed another $1.9 million of sales during the quarter. Organic sales were up slightly, which as Tom noted is encouraging, and we are continuing to see improvements in both sequential and year-over-year bookings within TriMas Packaging. The slight year-over-year sales improvement was led by increased demand for our products serving the Beauty & Personal Care and Life Sciences end markets, offset primarily by continuing demand weakness for our closure products within the Food & Beverage end market. Operating profit for the quarter was $16.2 million, an increase of more than 7% on a year-over-year basis, primarily on account of higher sales and the benefits of our previous cost savings actions. Adjusted EBITDA was $25.4 million or 22.4% of net sales, a 370 basis point improvement year-over-year. I'd like to make two additional comments on TriMas Packaging's fourth quarter and full-year results. First, in Q4 of 2022, TriMas Packaging's operating profit benefited from a $2.5 million gain for the reduction of an acquisition-related liability. Adjusting for this item, in Q4 of 2022, operating profit increased by $3.6 million or 24.5% during the quarter. Second, we have created a centralized IT functional approach and will in turn be allocating certain costs to our businesses starting in Q1 of 2024. Had we allocated these IT support costs in 2023, TriMas Packaging's SG&A costs would have been further burdened by approximately 1% of sales. Turning now to Slide 8. I'd like to highlight a few of…

Thank you, Scott. Let's now turn to Slide 11. We -- I would like to now discuss our outlook for 2024. As we consider the trends that emerged at the end of last year, we are forecasting overall sales growth between 5% and 8%, and adjusted earnings per share in the range of $1.95 to $2.15. Our adjusted earnings per share outlook at the midpoint would represent an increase of about 7% as compared to the prior year and when adding back non-cash stock compensation expense to both periods. On a comparable basis, 2023 adjusted EPS would have been reported as a $1.92 per share. More information on this change is shown in our 8-K, which will be filed this morning. Consistent with our adjusted EPS outlook, we also anticipate adjusted EBITDA to be up approximately 7% or approximately in the $165 million to $170 million range as compared to our year ending 2023 adjusted EBITDA. We are seeing some early indications that demand for our packaging products for the consumer and industrial end markets is beginning to gradually recover, which we are forecasting to continue through the year. We also expect demand to continue to remain strong within TriMas Aerospace and anticipate we will improve conversion rates as we continue balancing production flow with demand. Finally, we expect our Specialty Products businesses to start this year in a demand environment consistent with that of the fourth quarter, however, with increases in demand as we enter the second half. While we expect improved performance in Q1 for our Packaging and Aerospace groups, in light of the slower start to 2024 with our Specialty Products group, we anticipate Q1 EPS to be in line with last year. Let's turn to Slide 12. I will conclude our prepared remarks by providing just…

Thanks, Tom. At this point, we would like to open the call up to your questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Hamed Khorsand with BWS Financial. Please proceed with your question.

Hi, good morning. So first question I had was related to Packaging, the signs that you're seeing of the gradual recovery, are they -- how material is that? Is there any way you could provide us a little bit more detail of what you're seeing? Are you seeing it back to normal? Is there '22 kind of levels or just better than '23?

Yes. Thank you, Hamed. That's a great question. And we're running a number of analytics right now looking for various positive trends. I would say one of the things that we're studying frequently is rolling averages of our order intake. So we'll call that order intake momentum. And we've seen multiple months of increases in momentum in order intake across many of our product lines. And some of the product lines that have gained momentum just had really, really off years last year, which is a -- as we triangulate the technical data that we're seeing on order intake with what customers are saying, we're coming to the conclusion that outside of a few customers, most of the inventory matters, at least for our customers are behind us. And that's a very positive sign. Now we're not back to what I would call pre mid-2022 levels yet, but these are signs that we're starting to see that we did not see for the most part of 2023. I talked at the beginning of the year that I was looking for some green shoots to occur midyear last year, and did not happen. Now we're starting to see that. And look, we hope they're sustainable. They seem pretty robust. Our technical -- we're pretty excited about. We're talking to customers, but it's not going to be a snapback like we saw with Aerospace.

Got it. And my other question was related to Life Sciences. Are you getting more customers? Are the current customers ramping up orders? How is that progressing for you?

Yes. Thank you very much for that question. That's a great question, and one I hope that we can continue to talk about as we move forward. The answer to that is both yes. We are growing with our existing customer base. We're adding customers. And then we're in the process, I certainly don't want to disclose anything that would jeopardize our ability to qualify a brand new customer, but we're doing work with some significant customers in the space that we hope we can get on their approved vendor list or AVL, to do more with them in the future. One of the biggest drivers to our ability to grow in Life Sciences is our clean room capability, what we call Class 7 clean rooms and there's different levels of that. But these are extremely clean production environments with continuous airflow, air circulation reflow and filtering and often, as we seek to grow with our current customers, expanding customers and new customers, they're looking at our clean room capability. So one of the things we tried to do last year and we'll continue to do as we move forward is speak with you and our investors on how much square footage we have in clean room capacity, because that's the driver to growing in particularly the medical area, but the life sciences area.

Great. Thank you.

Thank you.

Our next question comes from Tim Burns with Cranial Capital. Please proceed with your question.

Good morning. Tom, I'm kind of scratching my head with regard to the combination of Specialty Products/cylinders with Packaging. What was the rationale for that action?

Well, we haven't taken the action yet. It's something we have been talking about for the better part of the year. When you look at our Packaging business, we do have a component of our business that has had a legacy presence in what I would call general industrial. And we sort of see that as in some peer groups as well, in packaging peer groups. But when we look at the end markets we go into, it's a packaged gas end market. So packaging in the broadest sense is core to TriMas, and our view was that it would be better for our investors to appreciate that packaged gas business if it was reported with our industrial business in our Packaging segment.

From my dumb view, it's going to dilute the growth and margins in your premier business. And I guess I would ask you, why not sell specialty products?

Well, we did announce that we're selling a portion of Specialty Products. And I appreciate the feedback that you're providing on our Norris Cylinder business. But yes, if you look at our Norris Cylinder business and maybe I'll talk about some things we've talked about on prior calls, our tax basis is extremely low in it. So monetizing that would come at a cash drag, number one. Number two, it's a high-performing business, okay? It had a tough quarter last year, but we've seen that historically over a long period of time, then there are some highs and lows that come with that business. Historically, it's fairly reliable. Its EBITDA margins are on a normalized basis at a very respectable level, and it's a great cash generator. So I do think that it will be, in the long run, a contributor to our Packaging segment.

Okay. Well, I disagree. I think it's a mistake. I feel like it's -- I feel like there's some kind of structural move going on to protect the company. And if it's such a great business, then let it be reported on its own. It's just going to cloud up a great business that you've got. And so I'm voting against it, Tom, but I'm just one man.

Well, Tim, I appreciate your feedback. Thank you very much.

Okay. Thank you. Have a good day.

You too.

[Operator Instructions] Our next question comes from Peter Ra with New York Life. Please proceed with your question.

Hi, thank you for the questions. Just on the outlook, when you -- especially for Packaging, you're showing sort of sales growth of 5% to 9%. How much of that is volume? And then just cadence by quarter will be helpful.

Yes. I mean relative to the organic growth versus acquisition-related growth, it's around 1.5% is what we're forecasting for the acquisition-related growth. Relative -- we're not going to provide sales guidance by quarter, but I think it's fair to extrapolate that we believe it's a gradual recovery. And hence, you should see more momentum as we get towards the later part of the year. So I think that's probably pretty good guidance relative to how you want to think about Packaging sales sequentially over the course of the year.

Okay. And just a follow-up, just in terms of the -- just organic growth. Most of that is volume? Or is there price baked in?

Well, we're not going to get into price versus volume discussion. But I will say, given the demand environment within Packaging and more broadly, the excess capacity in most of the end markets, it's a very challenging pricing environment. So I think you can assume that the vast majority of our organic growth is volume-driven.

Okay. Thank you.

It appears there are no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Thank you, and thank you for joining us on our earnings call, and we look forward to updating you again next quarter.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.