Good day and welcome to the TriMas Third Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Sherry Lauderback. Ma'am, please go ahead.

Thank you and welcome to the TriMas Corporation's third quarter 2018 earnings call. Participating on the call today are Tom Amato, TriMas' President and CEO and Bob Zalupski, our Chief Financial Officer. After our prepared remarks on our third quarter results and updated 2018 outlook, 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 6060513. 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 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 statements, except as required by law. We would also direct your attention to our website where considerably more information may be found. I would also like to refer you to the appendix in our press release issued this morning or included as 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 adjusted basis, excluding for the impact of special items. At this point, I would like to turn the call over to Tom Amato, TriMas' President and CEO. Tom?

Good morning and thank you Sherry. Let me start by taking a few minutes to remind our investors how we have reshaped TriMas over the past couple of years. Turning to Slide 3. On my first earnings call a few years ago. The teams at TriMas were focused on a high sense of urgency, on needed operational improvements and realignment steps. Our actions which have been enumerated on prior calls had significantly strengthened TriMas. We can currently accelerated enhancing our businesses through growth initiatives and reigniting our M&A focus as well as overall enterprise wide planned and capital allocation, planning and capital allocation priorities. With that background, I will remind those in the call that TriMas operates businesses with leading brand names in niche markets, each of which relies on product and process innovation, and a deep commitment to partnering with our customers as key differentiators. We are now solidly operating under the TriMas' business model, which has driven significant improvements and has provided a platform to improve reliability in TriMas' performance which is a positive attribute for our customers, employees and investors. All the metrics in this page have improved since redirecting TriMas. On an LTM basis TriMas revenues are about $860 million, adjusted EBITDA is about 19%. Net leverage is currently 1.5 time down from 2.9 times since Q3 of 2016 and we have the market capitalization around $1.3 billion. Turning to Slide 4, I'm pleased to report our third quarter results. TriMas' built momentum through 2018 and this continued in the third quarter with our teams delivering results ahead of expectations. Third quarter net sales were up 6.9% to $224 million with growth in all three segments. And for the first time all year, currency exchange was slightly unfavorable, so our organic growth was actually 7.2%. We…

Thank you, Tom. Turning to Slide 11, I will begin my comments with a review of our year-to-date financial results, which are very consistent with a quarterly performance as Tom discussed earlier. Net sales increased $43.3 million or 6.9% compared with the prior year period with sales growth occurring across the majority of our end markets. Operating profit increased 8.3% to $90.3 million and operating margin improved by 20 basis points as the impact of higher sales volume, operational improvement in previous realignment more than offset the impact of higher material and freight cost during the first nine months of the year. On a year-to-date basis, diluted EPS was $1.37 an increase of 25.7% as compared to $1.09 in the year ago period, nearly one half of the year-over-year EPS growth was driven by the impact of the higher sales and operational improvement while the remainder related to the lower effective tax rate in 2018 as a result of tax reform and assets in December of 2017. Moving on to Slide 12. As Tom noted earlier, we delivered another quarter of strong cash generation, the cash flow was $27.4 million, which represented a 123% conversion of net income as compared to $22 million in the year ago period, this despite a modest investment in net working capital to support higher sales activity. On a year-to-date basis, we generated free cash flow of $70.70 million as compared to $63.5 million in the year ago period an increase of 11.2%. In the third quarter, we used approximately $3.6 million of our free cash flow to repurchase more than 124,000 TriMas shares, we also capitalize on recent broader market volatility and we are able to repurchase an additional 112,000 shares through October 29 for approximately $3.1 million. Cumulatively since we initiated our buyback…

Thank you Bob. Prior to opening up the call to Q&A, I would like to share with you why I’m so excited about the future prospects for TriMas on Slide 14. First, we are pleased with our year-to-date results and our overall performance improvements. Not only have our internal planning processes improved for the TriMas business model, there is significantly less variation between our GAAP and non-GAAP reported results and we have been able to raise guidance despite increased material and anticipated tariff costs. We have not only been operationally improving TriMas' businesses, but we are starting to see the benefits of our investments in innovation and growth. For example, our weekly business continues to develop a well coordinated engineering approach by leveraging its innovation centers of excellence on three continents and is actively quoting on multiple e-commerce programs as well as other new product developments related to package sustainability, child safety and convenience. Our TriMas Aerospace engineering and commercial teams are working on a number of projects for our OEM customers to develop even lower weight fasteners and automated installation ready fasteners. We expect to work with our customers to qualify new design solutions that will continue to differentiate TriMas Aerospace. In addition to our focus on sales growth, we will always drive continuous improvement in all that we do and we will do this through campaigning a culture of Kaizen. For example, this year we launched TriMas Kaizen challenge, an internal competition highlighting some of the best Kaizen projects from all of our businesses. We received 27 submissions from 19 different locations in seven countries. These entries demonstrates employee engagement, process improvement and capital expenditures savings which all makes TriMas better for the future. Over the past year, we have also been working on reassessing the strategic the…

Thank you, sir. [Operator Instructions] Thank you. Our first question comes from Steve Roger with KeyBanc Capital Markets.

Hi. Good morning guys. This is Ken Newman on for Steve. Thanks for taking my question.

Good morning.

Good morning.

Good morning. The first question I have here today is just on your Chinese exposure in general, we have been hearing a lot of commentary throughout earnings season about concerns about weakening Chinese microenvironment. Any commentary or color you would have in that market and what you are seeing and hearing from customers in that region?

Well, we do have some sales into the indigenous market, but for the past few years we have been growing in that market. So, it’s been a nice contributor to TriMas.

Understood. So, just to clarify there has been I think any kind of weakening in equal levels within the health market in that region?

Net-net anything meaningful at all. Keep in mind it's a relatively minor portion of our sales overall in HPC and in packaging.

Go it. And then for my follow-up question, I just wanted to touch on the free cash flow, it's been pretty strong over the last three quarters and the guidance is a very positive. It looks like you did talk about opportunities for M&A. Just curious if you could talk about what you are seeing in the pipeline in terms of further opportunities, where you are really focused on and what kind of multiples you are seeing for deals that are crossing your desk?

Yes, good question. We continue to see a pretty reasonable pipeline of opportunities. It is a very competitive M&A market. We are predominantly focused in broadening and enhancing our packaging segment, but we are studying deals in other segments as well. But when we look at the types of areas we want to expand or get into or grow into, we are seeing enough opportunities out there that that have us excited.

Thank you. [Operator Instructions] Thank you. Our first question comes from [indiscernible] from BMO Capital Markets.

Sorry, I was on mute. Can you talk a little bit about more - about pricing in each segment where has there been any price increases and a little bit about outlook?

Yes, I think in terms of pricing kind of a consolidated factor, we have been able to recover a good portion of our higher material costs, certainly not all, but enough to be able to deliver the performance that we have year-to-date through nine months. If you go by segment, packaging is very competitive, but in the case of a good portion of our packaging business, we are able to pass through increased or decreased resin cost as the case may be based on auto escalators based on resin price indices and that typically happens kind of on a 90 to 100 point a day lag basis. With regards to seal and packaging that is really just based on sort of what the market will bear and generally speaking, that business has been very effective at recovering price as evidenced by very stable long-term margins in the 22% to 24% range. Within Aerospace again, pricing there, a good portion of that work is contractually driven through LTAs, but at the same time we need to be very market competitive there in the distribution end of that market. Generally speaking in Aerospace, we haven't seen nearly quite the price inflation or cost inflation as we have in the other two segments. And within Specialty Products, it's been largely driven with steel costs for our industrial steel cylinder business. We saw quite significant increases in steel. If you went back to the first half of the year compared to the first half of the prior year, they have stabilized a bit here as we have moved through third quarter and a while elevated have seemingly sees to increase. And we have done a pretty good job of getting some pricing adjustments as fuel has moved and again, though it's a very competitive marketplace, so we have to be mindful of what our competition is doing as well.

Now, when it comes to tariff, can you maybe quantify how much of your cost are exposed directly and indirectly?

Well tariffs from our - direct costs for us unmitigated basis is about in the fourth quarter is roughly $2 million and if we look at it on a run rate basis, tariffs are increasing as I think we move into 2019. The annual exposure or cost exposure there could be upwards of $10 million.

Okay. Thank you very much.

Thank you. [Operator Instructions] Sir, I'm currently showing no further questions in the queue. I would now like to turn it back for closing remarks.

Alright, thank you very much. I would like to thank those on the call for listening and as a manager team, we are very pleased to have delivered such a strong quarter to our shareholders. And we look forward to our next update call. Thank you very much.

Thank you.

Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.