TriMas Corporation (TRS) Earnings Call Transcript & Summary

Good morning, and welcome to TriMas' Annual Shareholders Meeting. I'm Thomas Amato, President, CEO and Board member of TriMas Corporation. Given the pandemic and our commitment to social distancing, we are again holding this year's shareholders' meeting virtually. I would like to now introduce attendees from our Board of Directors. Joining us on the call are Samuel Valenti III, our Board Chairman; Holly Boehne; Teresa Finley; Jeffrey Greene; Herbert Parker; Nick Stanage; and Dan Tredwell. In addition to our Board, the following members of the senior management team joining the meeting are Scott Mell, Chief Financial Officer; Jodi Robin, General Counsel; Sherry Lauderback, Vice President, Investor Relations; Fabio Salik, President, TriMas Packaging; John Schaefer, President, TriMas Aerospace; and Al Malizia, Vice President of Operations, Specialty Products. And also participating from our independent audit firm, Deloitte, is Denny Moyer, Audit Partner. I would now like to call TriMas' 2021 Annual Shareholders Meeting to order. I will serve as the Chair, and Jodi Robin will serve as secretary of the meeting. I will now turn the meeting over to Jodi to address the formal matters of this meeting. Jodi?

Thank you, Tom. This morning's virtual annual meeting via live audio webcast allows shareholders to attend via the web portal and the toll-free number provided. We have adopted safeguards to provide all shareholders the same rights and opportunities to participate in this meeting as they would at an in-person meeting and have established a process detailed in our proxy statement for submitting shareholder questions. We will address any properly submitted questions from validated shareholders at the end of the meeting. We are conducting this meeting in accordance with our bylaws and the meeting rules. The meeting rules are available on the meeting website. Shareholders attending the virtual meeting can vote their shares online from now to the closing of the poll by logging into the meeting website as a shareholder and clicking the Vote Here button on their screen. If you have previously voted by proxy and do not wish to change your vote, your vote will be cast as you previously instructed and no further action is required. We will begin the formal business of the meeting. After the formal meeting is adjourned, Tom will provide summary comments on our business. Please note that this meeting is being recorded. However, no one attending via the webcast or telephone is permitted to use any audio recording device. The Board fixed March 12, 2021, as the record date for determining shareholders entitled to vote. On March 31, 2021, the Notice of Annual Meeting, together with a proxy statement and annual report on Form 10-K for the year ending December 31, 2020, was first available -- was first made available to shareholders. I, Jodi Robin, have been appointed to act as an inspector of election at this meeting. The report states that as of the record date, holders of 43,217,466 shares of common stock are entitled to vote at this meeting and each share has 1 vote. The holders of not less than 41,516,425 shares are present in person or by proxy. And with approximately 96% of the voting power of the outstanding shares present at this meeting, there is a quorum. As indicated in the meeting introduction, the polls are open for voting. We will close the polls after the proposals have been presented. There are 3 items of business to be voted on at this meeting. The first item of business, proposal 1, is to reelect Samuel Valenti III, Nick L. Stanage and Daniel P. Tredwell to serve as members of the Board until the Annual Meeting of Shareholders in 2024. The second item of business, proposal 2, is to ratify the appointment of Deloitte as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021. And the third and last item of business, proposal 3, is to approve, on a nonbinding advisory basis, the compensation paid to the company's named executive officers.

In the company's proxy statement, the Board recommended a vote for each of the 3 Board nominees and for proposals 2 and 3. At this time, I will pause for a moment to allow for the completion of online voting. [Voting]

Now that everyone has had the opportunity to vote, I now declare the polls for the 2021 TriMas Annual Shareholders Meeting closed. As we have received all votes cast, the polls are officially closed. Jodi, do we have preliminary voting results?

We do. The preliminary vote report reflects the reelection of the Board nominees, the ratification of the appointment of Deloitte as the company's independent registered accounting firm for 2021 and the approval by advisory vote of the compensation of the named executive officers. We will report the final vote results in a timely filed Form 8-K.

Thank you, Jodi. There being no further business to come before the meeting, the TriMas 2021 Annual Shareholders' Meeting is adjourned. At this point, I would like to provide a few comments on TriMas. TriMas is a diversified manufacturer of proprietary engineered products, and we go to market through our leading brand names in the end markets we serve. With annual sales of approximately $800 million, we've been growing our adjusted EBITDA to $162 million as of March 31, 2021, or 20.4% of sales. Our balance sheet is strong, our leverage ratio is under 2x and we continue to have exceptional cash flow. TriMas delivered another year of solid financial performance in 2020 and continued progress toward achieving our overarching strategy. Against the backdrop of unprecedented challenges related to the global pandemic, we continue to execute well on the items within our control. We leveraged our TriMas business model to anticipate disruptions to our plan and in turn took swift actions to implement changes to protect our workforce and respond to customer demands. I extend my deepest appreciation to our 3,200 employees around the world for their commitment and dedication during these times. At TriMas, we report our businesses -- our business activities in 3 segments: Packaging, Aerospace and Specialty Products. In our largest segment, Packaging, we provide products such as lotion, soap and sanitizer dispensers, which are used in applications that improve personal hygiene and help fight the spread of germs. In addition, we have a number of other dispenser and closure products for applications in the beauty and personal care, home care, food and beverage, industrial and pharmaceutical and nutraceutical end markets. In our Aerospace segment, we manufacture highly engineered products, including fasteners, air management and connection products and assemblies and machine components for commercial, business jet and military and defense applications. In our Specialty Products segment, we manufacture steel cylinders for the welding, HVAC and breathing air end markets as well as engines and compressors for the oil and gas end market. We believe our diverse set of end markets allows investors to participate in a positive secular trend in demand for our Packaging products and as markets start to recover, increased demand for our industrial products and then, ultimately, demand for our Aerospace products as the aerospace market begins its road to recovery. We believe investors will further benefit from our disciplined capital allocation strategy which is shown on this slide. As we have stated previously, TriMas will ensure that we operate our businesses in a culture of Kaizen built upon a foundation of operational excellence; utilize our TriMas business model to track and measure our near-term performance against our longer-term strategic plans, and proactively adjust as markets change; reinvest our cash, first, to improve and grow our businesses organically and to also ensure net debt remains in check to protect our shareholders; deploy capital to augment organic growth through programmatic M&A; and also return capital to shareholders through treasury actions such as share buybacks. I also wanted to provide a few comments on TriMas' commitment to ESG and sustainability. In December of 2020, we launched our inaugural sustainability report. Although this was our first report, our commitment to sustainable environmental, social and governance practices have been longstanding at TriMas as it exemplifies our core values of integrity and respect for the environment, the health, safety and well-being of our employees in the communities in which we operate. We are pleased to be enhancing our transparency on these important initiatives and look forward to updating our progress as we go forward. In summary, we continue to believe TriMas is an exciting company to invest in. We would like to thank our investors, customers and employees for their continued support as we build upon our strong foundation and continue to execute upon our long-term strategy to drive success. At this time, I would like to review any questions that were submitted by investors prior to the start of the meeting. Sherry, were there any questions?

Yes, Tom, there was a question submitted. The question was submitted by Michael Barnwell from the Carpenter Pension Fund. Mr. Chairman, the Carpenter Pension Funds holds a total of 231,775 shares of the company's stock. As long-term investors, we strongly believe that the company's executive compensation plan should be designed primarily to drive the successful execution of the Board's long-term strategic business plan. Today's public company executive compensation plans are largely formulaic, peer-related plans with simplistic annual say-on-pay voting, reinforcing plan homogeneity. Would you or the Chair of the Compensation Committee speak to whether TriMas might be better served by an executive compensation plan tailored specifically to the company's particular circumstances and its unique long-term strategic business plan? Thank you.

Well, I'd like to first thank the Carpenter Pension Funds for their investment and for this question. It's a very good question and one that we often study carefully with our Compensation Committee. We have robust reviews throughout the year of compensation trends and benchmarking our NEOs and other executives opposite other companies. In relation to the specific question asked, we believe that for our NEOs and senior executives, a substantial portion of their total compensation relates to our long-term equity incentive plan. Some of that -- most of that is actually at risk, further putting an emphasis on how we feel about this point. We believe that our long-term incentive plan ties to the company executing its long-term strategy as much of the compensation does not get valued for multiple years. This is in combination with a short-term plan, which tends to be a little bit more tactical in nature. But as I've mentioned, for our senior executives and NEOs, that's a smaller portion of their compensation. So thank you for that question, and hopefully, my response addressed it.

Thank you, Tom. There are no additional questions.

As there are no additional questions, this will conclude our discussion. Thank you for your continued support and interest in TriMas. Have a good day.