TriMas Corporation Aktie

Greetings, and welcome to the TriMas First Quarter 2026 Earnings Call. [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. Thank you. You may begin.

Thank you, and welcome to TriMas Corporation's First Quarter 2026 Earnings Call.

Joining me today are Thomas Snyder, President and CEO; and Paul Swart, our Chief Financial Officer.

We'll begin with prepared remarks discussing our first quarter results, followed by our outlook for 2026, after which we'll open the call for your questions. To help you follow along with today's discussion, both the press release and our presentation are available on our website at trimas.com under the Investors section. A replay of this call will also be available later today by dialing (877) 660-6853 and using meeting ID 13759871.

Before we begin, I'd like to remind everyone that today's comments may include forward-looking statements, which are inherently subject to various risks and uncertainties. Please refer to our most recent Forms 10-K and 10-Q for a discussion of the factors that could cause our results to differ from those anticipated in any forward-looking statements. We undertake no obligation to publicly update or revise such statements, except as required by law. We also encourage you to visit our website for more information.

In addition, please refer to the appendix of our press release or presentation for reconciliations of GAAP to non-GAAP financial measures. Throughout today's call, our discussion of financial results will be on an adjusted basis, excluding the impact of special items. And unless otherwise noted, the financial results discussed will reflect continuing operations.

At this point, I'll turn the call over to Tom. Tom?

Thank you, Sherry. Good morning, everyone, and thank you for joining us today.

Before diving into the results, I want to briefly provide some perspective on the quarter. The first quarter of 2026 reflected steady execution and progress as we advanced several important priorities for the company. During the quarter, our team delivered on several key commitments, most notably the successful divestiture of TriMas Aerospace, which closed on March 16. The transaction was completed on schedule, generated more than $1.2 billion of net after-tax proceeds and meaningfully strengthened our balance sheet. We're pleased with the execution and the increased flexibility this provides as we move forward. We acted promptly and deliberately with the proceeds, repaying borrowings associated with fourth quarter share repurchase activity, completing additional share repurchases and investing the remaining balance in interest-bearing accounts as we assess the best long-term use of that capital.

During the first quarter, we repurchased nearly 1.5 million shares, bringing total repurchases since announcing the Aerospace divestiture to approximately 4.5 million shares. As of the quarter end, we had approximately 36.3 million shares outstanding. These actions reflect our disciplined approach to capital allocation, including returning capital to shareholders while maintaining the flexibility to invest for long-term value creation.

Our priorities remain unchanged: investing in organic growth, strengthening our core capabilities and pursuing targeted high-quality acquisitions that enhance, elevate or expand our platforms within packaging and life sciences. We believe these are attractive, growing and resilient end markets where we see compelling long-term opportunities and where our capabilities position us well to compete and win. While much of the focus this year has been on the Aerospace divestiture and our longer-term strategic positioning, we also continue to make meaningful progress on operational improvements across the business.

We intensified our focus on standardization, operational excellence and continuous improvement. And as discussed on our February call, we took actions that position us to deliver approximately $10 million of cost savings in 2026 and $15 million annually. Based on that momentum, in March, we announced plans to consolidate our Atkins, Arkansas packaging facility into other locations by mid-year '26. This was a difficult but necessary decision that aligns with our long-term strategy to optimize our manufacturing footprint, improve efficiency and remain competitive.

We expect this action to generate approximately $500,000 of additional savings in 2026 and roughly $1 million on an annualized basis. Alongside this progress on execution and strategy, we're operating in a dynamic external environment. Our teams are closely monitoring geopolitical developments, including conditions in the Middle East and proactively managing potential impacts across our operations and supply chains.

While we have not experienced any significant direct impacts to date, we are working collaboratively with our vendors and customers to manage cost pressures and ensure continuity of supply. Despite these external considerations, our focus remains firmly on what we can control. As we move through the remainder of 2026, we believe we are well positioned to accelerate performance, invest in organic growth and targeted acquisitions and continue building a stronger, more customer-focused company.

Before moving on, I want to acknowledge the high level of engagement and commitment demonstrated by our teams across the company. Successfully closing a major divestiture, managing the transition, returning capital to shareholders and advancing operational improvements while continuing to serve customers at a high level requires focus, coordination and discipline. This performance reflects the strength of our leadership team and the collaboration and accountability embedded across TriMas.

Turning now to our first quarter results on Slide 4. The quarter generally reflects the expected performance across the organization and meaningful year-over-year improvement in both growth and profitability. As a reminder, the results of operations for TriMas Aerospace, which were previously reported within the Aerospace segment, along with onetime transaction-related costs have been classified as discontinued operations for all periods presented.

For the quarter, net sales increased more than 10% year-over-year to $168 million. Growth was driven primarily by 7.3% organic gains, complemented by a 4% currency tailwind and partially offset by a modest impact from the Arrow Engine divestiture. Importantly, results reflect steady demand across many of our end markets, with Q1 net sales growth exceeding our expected range.

From a profitability standpoint, we delivered solid margin expansion. Operating profit increased, with margins improving by 120 basis points year-over-year and exceeding our original Q1 assumptions. This outperformance reflects operating leverage on higher volumes, combined with the early benefits of our cost streamlining initiatives, most notably meaningful reductions in corporate cash costs.

Income and earnings per share increased meaningfully year-over-year. Income from continuing operations increased 51% to $9 million compared to $5.9 million in the prior year period. Adjusted earnings per share rose 60% to $0.24 compared to $0.15 in the prior year. This improvement was supported by stronger operating performance, approximately $0.04 of interest income from invested proceeds and disciplined cost management. These benefits more than offset higher interest expense and a higher effective tax rate year-over-year.

Overall, we are encouraged by how the year has begun. With a stronger balance sheet and a more focused portfolio and continued progress across our operations, we believe TriMas is well positioned to accelerate performance in 2026 and beyond. The momentum we're seeing reinforces our confidence as we move through the remainder of the year and continue advancing our strategic priorities following the Aerospace divestiture.

And with that, I'll now turn the call over to Paul to walk through the financial results in more detail. Paul?

Thank you, Tom, and good morning, everyone.

Let me start by walking you through our current balance sheet and capitalization on Slide 5. We successfully closed the Aerospace divestiture in March and received approximately $1.4 billion of gross cash proceeds, meaningfully transforming our balance sheet and providing financial flexibility. We have redeployed over $150 million of the proceeds to fund share buybacks executed between November 2025 and the end of Q1, and expect to fund the estimated $200 million in income taxes owed related to the transaction gain beginning in the second quarter. We ended the first quarter with a net cash position of $913 million.

The majority of our cash balance is invested in interest-bearing accounts, currently earning about 3.5%, a solid income source as we take a disciplined and deliberate approach to further capital redeployment. This income stream began to benefit our results in late March, and Tom will discuss the expected earnings benefit of that interest income as part of the outlook discussion.

From a debt perspective, our $400 million of [ 4.125% ] senior notes due in 2029 continues to provide a stable low-cost financing. First quarter free cash flow was a use of $16 million, which is not unusual, given the seasonal dynamics of our business as we build toward higher sales volumes in the second and third quarters. We expect improved free cash flow generation as we move throughout the year.

In summary, we have significant capacity to execute our priorities, and we'll continue to deploy capital responsibly on a measured basis to create long-term value.

Turning now to business performance. Let's move to Slide 6 and review the Packaging segment. First quarter net sales increased 9.1% year-over-year to $139.2 million, with the growth split between organic improvement and the impact of favorable foreign currency translation. Demand was solid across much of the portfolio, led by strength in applications for the beauty and personal care and life science end markets, partially offset by some softness in industrial closure applications.

In particular, life science sales benefited from nearly $5 million of tooling revenue that was not inherent in our Q1 forecast. Operating profit was $17.7 million, largely in line with prior period. From a margin perspective, first quarter margins improved sequentially versus the fourth quarter of 2025 as expected, driven by higher sales volumes and the early benefits of our operational improvement and cost-out actions.

On a year-over-year basis, margins were lower, reflecting a less favorable product sales mix, particularly as a result of the higher tooling sales, which moderated the impact of the higher volumes and cost actions during the quarter.

Turning to our forward outlook. We continue to expect full-year 2026 sales growth of 3% to 6%, with full-year operating margins expanding into the 14% to 15% range. We anticipate sequential margin expansion as we move through second quarter and then third quarter 2026, driven by cost streamlining initiatives, operational and commercial excellence programs, benefits from prior acquisition integration and footprint optimization.

Finally, as Tom noted, we are operating in a dynamic external environment. We are actively monitoring global conditions and working proactively with our customers, suppliers and operating teams to mitigate potential impacts from geopolitical developments.

Turning to Slide 7. I'll review our Specialty Products segment. Performance in the first quarter reflected continued recovery and strengthening fundamentals. Net sales increased 17% to $29.1 million compared to $24.9 million a year ago. Year-over-year sales growth of 24% at Norris Cylinder more than offset the $1.4 million reduction in sales associated with the Arrow Engine divestiture, which closed in January of 2025. This performance was supported by stronger intake, market share gains and improving demand trends.

Operating profit improved from $100,000 in Q1 of 2025 to $2.9 million, with operating profit margin increasing to 9.8%, expanding by 940 basis points year-over-year, driven by higher sales volumes at Norris Cylinder and improved fixed cost absorption. Looking ahead, we continue to expect full-year 2026 sales growth of 3% to 6% for Specialty Products, with operating profit margins in a range of 8% to 10%.

The ongoing recovery at Norris Cylinder is supported by stronger intake, benefits from the Made in the U.S.A. designation and the impact of our prior cost restructuring actions, all of which are contributing to improved operating performance and margin expansion.

In sum, Norris Cylinder developed a strong start to the year, demonstrating its earnings potential and contributing positively to the company's improving financial profile. Overall, we are pleased with our start to the year. It's worth noting that Q1 was the lowest sales quarter in 2025 for both Packaging and Specialty Products segments, and the expectation has been and remains that the year-over-year growth rates will moderate as we move through 2026 to within the full-year sales growth guidance.

And with that, I'll now turn the call back to Tom to provide details on our outlook and our future. Tom?

Great. Thanks, Paul.

I'd like to spend a few minutes discussing what lies ahead for TriMas, starting with our 2026 outlook on Slide 8. First, we're reaffirming the full-year 2026 sales and margin outlook that we previously provided on February 26. For the year, we continue to expect top line growth of 3% to 6% based on a '25 revenue base of $645.7 million. We also continue to anticipate more than 300 basis points of operating profit margin improvement relative to the 5.3% margin we delivered in 2025. This represents a meaningful step change in performance, driven by improved operating results across both segments and the impact of the cost reduction initiatives we have underway, which we expect to build progressively through the year.

In addition, we are providing full-year 2026 adjusted diluted earnings per share guidance in the range of $1.50 to $1.70, representing a 191% increase at the midpoint compared to $0.55 in 2025. This reflects a significant year-over-year increase in earnings power driven by improved operating performance, the impact of our cost reduction actions and interest income generated from the investment of divestiture proceeds. This outlook assumes approximately $9 million of interest income for remaining quarter and no significant changes in interest rates or redeployment of cash proceeds for the balance of the year.

Key assumptions underlying in this guidance also include interest expense of $20 million to $22 million, a reduction in corporate cash expense of approximately $10 million year-over-year as cost-out initiatives take hold and an effective tax rate in the range of 27% to 29%. We also expect improvement in sales, earnings and adjusted earnings per share in each quarter of 2026 compared to the prior year as well as sequential increases in earnings in Q2 and then Q3 2026, reflecting continued operational momentum and the progressive realization of cost-out and efficiency benefits.

Now turning to Slide 9, which outlines the levers we see for long-term value creation. The story here is fairly straightforward. We have a clear strategy and a defined playbook, and we're executing against it. On the operational side, we are embedding Lean Six Sigma disciplines across our manufacturing footprint, standardizing systems and processes and continuing to optimize our manufacturing network. More than $10 million of savings expected in 2026, reaching more than $15 million annually are not aspirational targets. These actions have already been taken and are progressing as planned.

Innovation is another critical pillar for our long-term growth strategy. We are accelerating customer-driven product development, expanding our portfolio of sustainable product solutions and strengthening our engineering capabilities to move faster and more effectively. Our focus is on driving growth in higher-value, higher-margin applications, particularly within life sciences and select areas of our Packaging business, where we have strong customer relationships and differentiated capabilities.

From a capital allocation perspective, TriMas is in a position of strength. Following the Aerospace divestiture, we ended the quarter with more than $900 million of net cash, providing substantial flexibility to invest in organic growth and pursue targeted high-quality acquisitions. We've repurchased approximately 4.5 million shares since the Aerospace sale announcement, reflecting our balanced approach to capital deployment.

Enhancing and elevating our product offerings remain central to our strategy as we look ahead. Packaging and life sciences represent high-quality platforms with attractive growth profiles and strong differentiation, positioning us to drive higher value growth and enhanced margins over time. We will continue to actively manage and refine the portfolio to advance performance, elevate our strategic portfolio and create sustained long-term value.

In summary, we delivered a strong start for the year with more than 10% sales growth, 60% adjusted earnings per share growth and 120 basis point operating margin expansion while advancing multiple levers that support sustained momentum. With a stronger operating foundation and meaningful capital to deploy, we believe TriMas is well positioned to accelerate performance in 2026 and beyond, deepen customer partnerships and invest in the opportunities that create the greatest long-term value.

Thank you. And with that, I'll turn the call back to you, Sherry.

Thanks, Tom. At this point, we would like to open the call to questions from our analysts.

[Operator Instructions] Our first question comes from Hamed Khorsand with BWS Financial. Hamed, looks like we lost you. If you could join back the queue, that would be great.

We'll move over to Katie Fleischer with KeyBanc Capital Markets.

Can you talk about price -- can you talk about some price cost expectations within Packaging and remind us what the typical lag versus commodity prices is before it flows through to the P&L?

Yes. Sure. As typical in this industry, there's usually a bit of a lag on resin cost pass-through. Our team has been all over this. We have, obviously, a majority of our business under contract with language that recovers our costs. We do have a variety of different term, timing periods to recover that. But the way that we've looked at this, we don't anticipate a lot of impact. There could be some headwind in the quarter with some delay, let's say, moving from Q2 to Q3. But overall, not all that significant. And from a full-year perspective, I feel pretty good about the price over cost recovery.

I don't know, Paul, if you have anything to add to that.

Yes. Katie, I would say the more prevalent contract term is quarterly as opposed to monthly or other escalators. So, I do think while we're not providing specific quarterly guidance, if you will, I do think that there is the potential because of some of the things that started to happen in March that we may not get full recovery on some of it until later in the year. So, we're kind of planning internally.

We talked about margin accretion kind of from first quarter to second quarter and then from second quarter to third quarter. Part of that is premised on our cost-out actions where we're going to get more savings in second quarter and then third quarter compared to first. Part of that is also the thinking at the moment relative to recovery timing of commodity costs that it's likely that maybe we're a little bit short here as we move into second quarter and then begin to overcome that in third quarter.

Got it. Okay. That's helpful. And then turning to Packaging margins. How should we think about the cadence of improvement within that segment through the year, just given the cost savings from the facility consolidation, but then layered into some of those mix impacts that we saw this quarter?

I would say it's very consistent with what my prior comments were, right? I think we expected Q1 to be the lowest from a margin perspective, expect it to increase sequentially as we move through the year. Obviously, there's a little bit of uncertainty in terms of the sales volumes. Sometimes Q2 is the highest sales quarter, sometimes Q3 is. But I would expect that the other actions that we're taking are sufficient to where you're going to see escalation as you move through the next 2 quarters, then Q4 naturally falls back a little bit, but that we'd be in line with our full-year guidance.

Okay. And then just to squeeze one more in here on the mix impacts. I think I heard you say that was from tooling revenue within life sciences. Can you just give a little more detail on that and if we should see that in coming quarters?

Sure. So, we had a tooling sale for a program that we're working on where we're going to ultimately putting product into production later in the year or early next year, but we sold -- we created and sold the tooling at a very low margin to the ultimate customer. So, that really didn't provide a lot at the bottom line and wasn't inherent in what our Q1 guidance was. It was expected a little bit later in the year.

So, that pressured our margins here in Q1 just because of that significant one-time sale, if you will. There is not another significant tooling sale that we currently have forecasted that's inherent in our guidance. So, we would not expect that margin pressure to occur for the remainder of the year. Obviously, we'll update you if something changes, but that's where we stand right now.

It's actually a good thing. I mean, too. I always look at these things as a leading indicator of significant improvements in sales down the road. So, more to come on that as the clock moves forward.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to management for closing comments.

Once again, thank you for joining us today and for your continued interest in TriMas. We appreciate your ongoing support, and we look forward to updating you on our progress next quarter.

Thank you.

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

Ladies and gentlemen, good morning, and welcome to the TriMas Corporation Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, TriMas Corporation's VP, Investor Relations, Sherry Lauderback. Please go ahead.

Thank you, and welcome to TriMas Corporation's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Thomas Snyder, TriMas' President and CEO; and Paul Swart, our Chief Financial Officer. We'll begin with prepared remarks covering our fourth quarter and full year results, followed by our expectations for 2026 and the future of TriMas, after which we will open the call for questions from our analysts.

To help you follow along with today's discussion, both the press release and our presentation are available on our website at trimas.com under the Investors section. A replay of this call will also be available later today by dialing (877) 660-6853 and using the meeting ID of 1375-8505.

Before we begin, I'd like to remind everyone that today's comments may include forward-looking statements, which are inherently subject to various risks and uncertainties. Please refer to our most recent Form 10-K and 10-Q filings for a discussion of the factors that could cause our results to differ from those anticipated in any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. We also encourage you to visit our website where more information is available.

In addition, please refer to the appendix of our press release or presentation for reconciliations of GAAP to non-GAAP financial measures. Throughout today's call, our discussion of financial results will be on an adjusted basis, excluding the impact of special items. At this point, I'll turn the call over to Tom. Tom?

Thank you, Sherry. Good morning, everyone, and thank you for joining us today. Before we discuss our quarterly and year-end results, I want to take a moment to reflect on 2025, a truly transitional year for TriMas. This is not the same company you saw a year ago. Over the past 8 months since I've joined TriMas, we have sharpened our strategic focus, strengthened our leadership team and begun rebuilding the foundation necessary to deliver stronger and more consistent performance going forward.

I'd also like to formally introduce our new CFO, Paul Swart, who joined us in mid-December. Paul brings more than 25 years of financial and operational leadership experience, including 2 decades here at TriMas across corporate and operational finance, accounting and business planning. His deep familiarity with our business and his recent experiences leading transformation efforts make him a tremendous addition to our leadership team and an exceptional partner as we enter this next phase. We are excited to have him back. Welcome back, Paul.

Over the past few months, we've refreshed our management approach, clarified roles and accountability and elevated decision-making speed and execution. This has enabled us to focus our energy on the areas that matter most, serving our customers, improving operations and developing our people and driving performance. We've made meaningful progress in elevating operational excellence and strengthening our commercial execution.

In the latter part of 2025, we completed approximately 100 customer interviews across 10 countries as part of our voice of the customer initiative, giving us clear insights into customer expectations and where we must raise the bar to win with our customers. These insights are driving changes in how we organize and engage with customers so that we are more aligned with their needs and more connected in our day-to-day interactions.

We also launched a structured global operational excellence program, a company-wide operating system rooted in Lean Six Sigma principles. This program is designed to drive continuous improvement, enhance efficiency and increase standardization across our footprint with a focus on safety, quality, delivery and cost. We are encouraged by the initial launch within our packaging business at 2 larger locations and look forward to rolling out the program to more sites in 2026.

These operational and cultural changes are creating more unified practices across the organization, strengthening the foundation of data-driven management and elevating accountability among our teams. Building upon this increased accountability and better visibility into our KPIs, we also restructured our 2026 incentive program to reinforce a disciplined pay-for-performance culture that rewards results and aligns the entire organization on its true north.

As I've traveled to our locations over the past several months, I've seen firsthand the impact of these efforts as we are a company with strong capabilities powered by talented people who are deeply committed to delivering value for our customers and shareholders. At the same time, those visits have highlighted clear opportunities for continuous improvement, areas where we can evolve, innovate and further strengthen our foundation for the future. Taken together, these actions underscore a simple point, TriMas today is becoming more focused, more agile and better positioned to deliver.

With that foundation in place, let's turn to Slide 4 to review several key actions underway that will further transform TriMas and drive the next phase of improvement across the organization. First, we continue to make solid progress toward completing the divestiture of TriMas Aerospace, which we announced in early December. The transaction remains on track to close in mid- to late March. As previously communicated, the purchase price is approximately $1.45 billion in cash, which we expect will generate approximately $1.2 billion in net after-tax proceeds.

As a result of the pending sale, TriMas Aerospace is now reported as discontinued operations beginning with these quarterly results. You'll also notice that we provided additional disclosure to help you interpret the results. We've included both total company performance and the breakout between continuing and discontinued operations where practicable. And to ensure comparability, we have recast certain historical periods to reflect the planned sale of TriMas Aerospace. That recast information will be available in the Form 8-K we are filing today.

Following the close, TriMas will operate with 2 reporting segments: our Packaging segment and our Specialty Products segment. The divestiture positions TriMas as a more focused company and the significant proceeds provide us with meaningful flexibility as we execute our capital deployment priorities, including share repurchases, investing in organic growth initiatives, pursuing targeted acquisitions and maintaining our balance sheet.

Let me now cover how we are approaching capital deployment as we move into the next chapter. Our priorities remain consistent, reinvesting in the business, pursuing selective acquisitions, particularly in the Packaging and Life Science space and returning capital to shareholders as appropriate. To support a more disciplined and strategic approach to M&A, we have established a strategic investment committee that brings sharper focus and rigor to evaluating opportunities aligned with our long-term vision.

Since announcing the divestiture, we have repurchased more than 3 million shares for approximately $100 million. And as announced earlier today, we increased our remaining share repurchase authorization back to $150 million. The Board will continue to assess potential increases to the company's existing share repurchase authorization as we move forward. As we deploy capital, we expect to repurchase additional shares while also planning to pay down the revolver borrowings associated with the prior buybacks.

In parallel with these strategic actions and a smaller, more focused organization, we have also reshaped our structure to operate more efficiently and better serve our customers. At the end of January, we implemented a company-wide realignment to streamline operations, including integrating certain corporate and business functions to simplify the structure, eliminate duplication and improve execution. Savings from the initiatives we have completed are expected to ramp up throughout the year, generating over $10 million of cost reductions in 2026 and more than $15 million on an annualized basis.

In addition, within TriMas Packaging, we are restructuring the commercial and operational model to break down silos, accelerate decision-making and to strengthen customer engagement and responsiveness. This transformation is supported by several initiatives, including brand unification, expanded operational excellence programs, upgraded systems and continued optimization of our manufacturing footprint. Collectively, these actions are strengthening TriMas' operation model, enhancing customer satisfaction and positioning the company for sustainable long-term value creation.

As we advance this work, I'm also drawing on several decades of personal experience operating in highly competitive environments where 2 principles ultimately determined who won, relentless cost discipline and unwavering focus on the customer. Those disciplines are more important today than ever as we compete to win in the marketplace. As I look at the transformation underway, I feel strongly that this is where I can help us create real value by instilling a sharper cost mindset across the organization and elevating our focus on serving customers better than our competitors.

Shifting gears, let's turn to our full year and fourth quarter performance. Despite all the transition and change throughout 2025, we delivered full year and fourth quarter results in line with our expectations. Total company adjusted earnings per share for the year was $2.09, towards the upper end of our provided guidance range of $2.02 to $2.12, which had already been raised earlier in the year. I'm very proud of how our teams executed during this period of significant transformation. And with that, I'll now turn the call over to Paul, who can walk us through the financial results in more detail. Paul?

Thank you, Tom, and good morning, everyone. I'm so excited to be back at TriMas and help lead the company and our great group of employees in the next chapter of our history. Let's continue where Tom left off with a review of the financials on Slide 5, which shows our fourth quarter and full year results. This slide shows our total company results before consideration of the reclassification of Aerospace to discontinued operations to evaluate results consistent with how we provided our most recent outlook.

Starting with the fourth quarter, TriMas total company net sales were $256 million, 12.5% higher than the prior year. Organic increases in each of our segments totaled just over 9% and were augmented by the contribution from TriMas Aerospace's 2025 acquisition in Germany and modest favorable currency exchange. These items were partially offset by the impact of the Arrow Engine divestiture, which was a part of TriMas for all of 2024, but only 1 month in 2025.

From a profitability standpoint, fourth quarter segment operating profit increased more than 21% to $33 million, with margins expanding by 90 basis points, driven by the higher sales levels and continued operational execution. Q4 adjusted EPS declined by $0.03 year-over-year as the higher business operating performance was more than offset by the timing and higher levels of both incentive compensation and foreign currency exchange in '25 versus '24.

Looking at the full year, total company net sales were just over $1 billion, up 12.7% year-over-year, driven by organic sales increases in each segment, most notably in Aerospace. Sales from our February Aerospace acquisition in Germany contributed $23 million, more than offsetting the impact of $18 million from the divestiture of Arrow Engine. Adjusted segment operating profit grew by more than 30% to $149 million, a 200 basis point increase year-over-year, driven by higher sales levels and continued operational improvements throughout the year.

In addition, as Tom mentioned, adjusted EPS increased by $0.44 year-over-year or 27% to $2.09 toward the upper end of our guidance range of $2.02 to $2.12. Overall, we're pleased with the growth and margin expansion achieved during 2025, which meaningfully outpaced our original expectations with the Aerospace-specific growth significantly enhancing its financial profile and allowing for the monetization of the value our team has created when the deal closes in the coming weeks.

Turning to Slide 6, I'll cover our cash flow and our balance sheet. We delivered strong cash performance during 2025, generating fourth quarter and full year 2025 free cash flow of $43 million and $87 million, respectively, with both figures more than double the prior year period. This improvement reflects stronger operating performance and disciplined working capital management throughout the year.

This strong cash flow allowed us to fund the $38 million purchase price for the acquisition within Aerospace and repurchased over $100 million of stock during 2025, among other items, while only increasing our net debt by $64 million to $439 million. Following the Aerospace divestiture announcement, we repurchased more than 3 million shares for just over $100 million, reducing our year-end outstanding share count to 37.6 million.

We approach these repurchases thoughtfully, taking on a measured amount of net leverage a few months in advance of having certainty while capitalizing on what we viewed as an attractive opportunity to buy shares at levels that did not reflect the company's underlying value. The newly announced share repurchase authorization today, back to $150 million, provides us with incremental flexibility going forward, particularly post deal close.

At year-end, our total debt was comprised of $400 million of [ 4.5% ] bonds due in 2029 as well as approximately $70 million of revolving borrowings. While our net leverage remained flat with the prior year-end at 2.6x, it increased from 2.2x in the third quarter due to financing most of the share repurchases on the revolver.

Finally, we expect to receive approximately $1.2 billion in net after-tax proceeds from the sale of TriMas Aerospace, which upon receipt, we would plan to pay down any amounts outstanding on the revolver. We plan to invest the remaining approximately $1.1 billion in high-quality interest-bearing accounts while awaiting redeployment. Assuming the deal closes in late March, we estimate this balance could generate up to $30 million in cash interest over the last 3 quarters of the year, subject to the timing and amount of cash redeployed and actual interest rate earned.

Shifting gears now to business performance. Let's turn to Slide 7 to discuss Packaging. As expected, the fourth quarter was a mixed quarter, directionally consistent with what we've been managing all year. Sales were up 5% year-over-year, with organic sales up 2.4%, driven by strength in products serving the industrial and life sciences markets, partially offset by softer demand in food and beverage applications, particularly flexibles and closures.

Operating profit of $15 million was down about 5% year-over-year, with margins at 11.6%, below prior year as well as the margins achieved in the first 9 months of '25, reflecting a less favorable mix as well as the typical Q4 seasonal pattern. For the full year, Packaging delivered 4% organic growth and held margins nearly flat with full year operating profit of $71 million and a 13.3% margin, which we view as a solid outcome given the persistent macro headwinds, tariffs and demand uncertainty across several end markets.

Looking ahead, we expect 2026 to show continued momentum with 3% to 6% sales growth and margin improvement to 14% to 15% as cost-out actions already implemented ramp up and flow through. We expect sales and profit growth in Q1 will land at the lower end of these full year ranges and we'll continue sharpening operational and commercial execution, focusing on ways to improve profitability, efficiency and customer satisfaction.

Overall, the business exited the year with a solid foundation and clear drivers of profit improvement as we move into 2026. Turning now to Slide 8. I'll review our Specialty Products segment. It was a solid year for Norris Cylinder, the remaining business in this segment, although its results are less visible due to the sale of Arrow Engine, which closed in January 2025. In Q4, Norris delivered nearly 14% year-over-year sales growth, although total segment sales were down 1.4% as the Arrow Engine divestiture more than offset that growth. Profitability, however, meaningfully improved.

While there is still further improvement expected, operating profit and margin doubled year-over-year, with margins expanding to 6.5%, driven by Norris Cylinder's prior cost restructuring actions. For the full year, Norris Cylinder delivered 9.5% sales growth and nearly doubled operating profit, contributing to $5.4 million in operating profit and a 4.9% margin.

While this improved performance helped, it's only partially offset -- it only partially offset the lost profit from Arrow as it was part of Specialty Products for all of 2024, but only 1 month in 2025. Looking ahead, we expect continued improvement with 3% to 6% sales growth in 2026 and operating profit margins in the 8% to 10% range.

Q1 is expected to track toward the upper end of the sales range with margins growing from 2025 levels into the 8% to 10% range, supported by stronger intake, our made in the U.S.A. positioning and further leveraging the prior cost restructuring actions. Overall, despite the headwind from the Arrow Engine divestiture, Specialty Products enters 2026 with stronger profitability fundamentals and clear opportunities for further improvement.

Now moving to our final segment, Aerospace, which is now reported as discontinued operations and assets held for sale on Slide 9. This was an exceptional year for the business, delivering record results and a key reason why we were able to secure a strong valuation in the pending sale. Fourth quarter sales increased 29% year-over-year, driven by improved output, commercial actions and nearly 10% growth from acquisitions.

Operating profit grew more than 50% with margins expanding 240 basis points, supported by strong sales leverage and continued operational excellence. For the full year, sales grew nearly 35% with more than a 600 basis point improvement in operating margin, reflecting consistent execution across the organization. The team has done an excellent job in 2025 of creating value for TriMas and its shareholders. A big thanks to the team for their contributions in 2025.

Given that the transaction is expected to close yet in first quarter and that Aerospace's financial results are included in discontinued operations, we are not providing forward expectations for this segment. To wrap up the financial review, despite a dynamic year of transition and macroeconomic challenges, our results met our expectations overall, providing a solid foundation from which to elevate the position and position the new, more focused TriMas going forward.

Now that we reviewed the total company results, we thought it very important to level set you on remaining TriMas post the Aerospace sale on Slide 10, which shows the continuing business segments and consolidated metrics in 2025 as well as providing initial thoughts on 2026 and beyond.

Net sales were $645 million in 2025 with operating profit of $34 million, adjusted EBITDA of $79 million and EPS of $0.55. As Tom has mentioned previously, remaining TriMas is an entity with several levers in our control to streamline, integrate and optimize costs as well as to simplify and strengthen commercial strategies. We have already implemented actions during the back half of 2025 and thus far in 2026, which we expect to significantly improve our financial results this year and which can be leveraged over future periods. And there is more that we will be evaluating as new IT systems and processes allow for further enhancements.

In addition, the corporate office oversight functions and costs necessary for a $1-plus billion company are much different than for a focused business with 2 segments, and changes have already been made to centralize and integrate functions and positions with the business to simplify and reduce costs. And there are other opportunities over time, such as once the Aerospace transition support is completed that will further enable cost efficiencies.

In 2025, TriMas operated at a 12% adjusted EBITDA margin, which we believe is 600 to 800 basis points lower than where this current set of businesses can and should operate on a long-term basis, even before reinvesting any aerospace proceeds to further strengthen the portfolio.

As Tom will note in a moment, 2026 is expected to be a strong first step in a multiyear program to continuously improve toward those goals, and we plan to update you on our progress along the way. With that, I'll now turn the call back to Tom to provide further details on our outlook and our future. Tom?

Thanks, Paul. I would like to take a few minutes to talk about what the future looks like for TriMas as a more focused company, beginning with our 2026 outlook on page -- Slide #12. With the TriMas Aerospace sale expected to close in mid- to late March, my comments today focus on our continuing operation and the key assumptions behind our expectations for 2026.

For the full year, we expect sales growth of 3% to 6% from our 2025 baseline of approximately $646 million. We also expect more than 300 basis points of adjusted operating margin improvement, driven by continued operational execution in both Packaging and Specialty Products, along with the full year benefit of the cost out and organizational realignment initiatives already underway, which include an expected reduction in corporate cash expenses of at least $10 million in 2026 versus 2025.

Given the scale of the cost-out actions and the timing to reach their full run rate, we do not -- we do expect the first quarter of 2026 to be our lowest quarter for margins and earnings per share. While we anticipate 3% to 6% sales growth in Q1, we expect adjusted operating margin to improve by just over 100 basis points versus Q1 2025, although sequentially, it would represent more than a 400 basis point improvement versus Q4 of 2025. We've also provided a few additional Q1 assumptions given the significant changes taking place across the company.

Across the first quarter and the balance of the year, we expect year-over-year improvements in sales, earnings and earnings per share in each quarter as savings build and operational performance continues to strengthen. And importantly, today's expectations do not include any redeployment of the TriMas Aerospace sale proceeds.

Finally, given the pending sale of TriMas Aerospace, we plan to provide full year earnings per share guidance on our Q1 2026 earnings call in April once the transaction has closed. Before we move into Q&A, I want to step back and describe why we're so excited about the future of TriMas and the company we are becoming on Slide 13.

With the Aerospace divestiture nearing completion, TriMas is emerging as a more focused and more agile organization built around businesses that have strong market positions and substantial opportunities for value creation. And importantly, we now have a foundation that we can continue to build upon in ways that further transform the company.

Who we are -- who we currently are is clear. We are a global provider of high-value dispensing, closure and life science solutions supported by deep technical expertise, long-standing customer partnerships and a flexible global manufacturing footprint. Our end market exposure is well diversified, and our teams embrace a culture of innovation and operational excellence that drives innovative, sustainable and high-quality solutions.

And just as important is what will set us apart, a customer-first approach with a unified sales team and integrated solutions. We've reshaped the organization to be simpler, faster and more responsive. Our innovation pipeline is increasingly aligned with customer needs, and we are leveraging technology and operational excellence to enhance quality, reduce cost and increase speed to market.

Our strategy is centered on accelerating growth in higher-value, higher-margin applications, particularly in Life Sciences and areas of our packaging business where our capabilities and customer access give us meaningful opportunities to expand.

And finally, as you know, we will also have financial flexibility to continue investing in our future. The aerospace sale proceeds will enable us to fund growth, pursue strategic acquisitions, maintain our solid balance sheet and return capital to shareholders. Taken together, the new TriMas is a focused portfolio with different capabilities, a stronger foundation and significant opportunities ahead.

Turning to Slide 14. As we look forward, TriMas has multiple levers to drive growth across sales, earnings and long-term value creation. With a stronger operating base and meaningful capital to deploy, we are well positioned to accelerate our strategy, deepen customer partnerships and invest in the highest value opportunities across our markets. Our teams are energized, and I couldn't be more excited about the future of TriMas. Thank you. And with that, I'll turn it back to Sherry.

Thanks, Tom. At this point, we would like to open the call to questions from our analysts.

[Operator Instructions] We take the first question from the line of Ken Newman from KeyBanc Capital Markets.

Paul, it's great to hear from you again. Congrats on coming back. So maybe to my first one, I know there's a lot of moving pieces, so first, thanks for all the increased transparency around all that. I think it helps to get an apples-to-apples look. I'm curious if, first, could you just help us how to think about the cadence of margin improvement as we move beyond the first quarter? Are there things that are easier to kind of get done in the second and third quarters? Is there any seasonality we should kind of think about? Or is this really more of a linear progression up as we move through the year?

Sure. So I'll take that, Ken. So yes, as we think forward, there is an increased ramping savings related to our $10 million of cost savings actions as well as other initiatives that will be happening throughout the year. And as a reminder, Q2 and Q3 tend to be our highest sales quarters of the year, so we would expect an increase from Q1 to Q2 and then increased margin from Q2 to Q3.

Q2 or Q3 could be the sales -- highest sales quarter as they've changed over the years, but they're the highest 2. And then Q4 typically has a step down from a sales perspective. We would also likely expect that margin declines Q4 versus Q3, but it would be still significantly higher than Q1.

Okay. That's very helpful. I appreciate that. And then within Packaging, obviously, you're forecasting or guiding to margin improvement there. I know there was a mix headwind this quarter that was a little higher than I was expecting on my apples-to-apples model. Is there a way to bridge how you think about the margin improvement within Packaging that's being driven by either cost-out efficiencies versus better mix or market demand?

Yes. I'll try and then, Paul, you can fill in where I've missed. Just strategically, in packaging, so we do have -- we have a lot of improvement going on there. And so some of it is the -- as we talked about consolidating organizational efforts, and so we had a kind of a fragmented approach around certain functional areas in the company. That's being consolidated, some of that was part of our January initiative. And then -- and we have operational improvements as well that are coming in through the year that are going to continue to deliver.

Now the Q4 was -- had some headwinds and had some mix differences that kind of contributed to Q4, not all bad from my perspective, and so on the sales side in Q4, we had a lot more tooling sales in the quarter than -- let's say, than was normal. But that -- and that usually converts a little bit less than the products themselves. But the good news is that, that's laying the groundwork for key initiatives and projects that we're working on that are coming to market in 2026, and so I'm excited about that stuff. So not all bad from my perspective.

Yes. And from a balancing perspective, I think it's probably pretty well weighted between the 2 of them in terms of how much read-through is from cost savings actions versus how much is just going back to a normal product sales versus tooling sales as we move into first quarter, so I mean, I think it's pretty balanced between the 2. It's not that we're expecting a tremendous difference other than the tooling sales that we have visibility to in Q4, not repeating at the same level.

Got it. Okay. Maybe I could just squeeze one more in. It was good to see another increase in the share repurchase authorization today. Tom, you also talked about this new investment community to analyze potential deals.

First, I guess, how aggressive can you get on the repurchase authorization in the coming quarters? And second, as it relates to potential acquisitions, is there a way to help us think about what the pipeline looks like today and how quickly you think you could go after a deal within some of those higher mix, call it, life science type of targets?

Yes. I mean we're spending a lot of time learning, studying, looking at opportunities, understanding opportunities that are actionable. But we need to get through where we are right now. We need to get the transaction behind us. We need to get it closed. And then we'll be more specific about what the outlook is in our Q1 call.

We'll also have probably a little bit more clarity around capital redeployment. So it's hard to really give you any more specifics at this point. But we are looking at markets that are -- we do like our Life Science business. We do like the opportunities that we see in that space to continue to grow and bolt-on growth in that area as well as other opportunities that are higher value-added areas of our business. So I wish I could give you more, but that's pretty much where we are at the moment.

Well, the share buyback, too, I mean, I think that's what I was saying, we'll give more clarity around that as we get through the -- between now and the first quarter. So we are reauthorizing, as you saw, another $150 million in total, and we continue to look at and evaluate what we should do beyond that. It's all part of our overall strategy, and we'll, again, provide more clarity on that down the road.

The next question comes from the line of Hamed Khorsand from BWS Financial.

So first off, anything that could derail the closing of the deal to Q2? What is it -- is there a specific event that you're looking for, for it to go through the closing process?

So there are regulatory processes, which obviously we don't control that are still underway based on everything we're aware of at this point. They're going through their normal course. And that's why we're projecting that if they are through when we expect them to be through based on typical days, that's why we're comfortable talking about the back half of March as the expected close date. So nothing we're aware of that would change that outcome today.

Okay. And then in the Packaging segment, is there any particular end market or geography that you're expecting to outperform this year compared to what your guidance is?

Well, we're optimistic about several markets. We do have an expansive footprint. We're in different markets and different geographies that position us well for these opportunities as they come. We like -- we do have some growth in the life sciences area that we think is going to contribute well going down the road. We see growth in our industrials business as a result of regulations that are changing, and we have a leadership position in some of those markets.

The beauty and personal care for us is a good market as well. It's got good growth across the globe and the markets that we compete in are performing well, so we continue to be optimistic in that area.

We do expect food and beverage too, to have some recovery this year versus last year. Last year, as we've talked about, wasn't a very good year. So we're looking at, say, low -- at least low to mid-digit recoveries in that market.

And we do have some leading expertise in technologies, especially in Europe around beverage products that are going to be mandated to change technology over the course of the next 18 months. And so we're -- we feel that we have a really good position there, too. So broadly, those are the big markets for us and kind of what we see coming down the road.

Okay. And is any of that outlook that you just described because of the benefits of the cost cutting and the integration of the brands?

No. No. I mean what you're talking about is product specific. So it's really not as a result of the cost cutting or realignment, although I do think that inherent in that guidance is what Tom talked about related to our sales structure and our commercial strategy.

So I thought you there's more coming in your question, that's why I paused there. So the way that we're going to market, I think we're going to be more successful in being able to achieve growth in these particular areas. And my expectation is that we should be able to beat the market. I mean that's when I talked about earlier winning in the marketplace and beating the competition.

The intent here is that we're going to be a low-cost, nimble organization that has quicker response times and with innovative products that meet the needs in the market. And we have a sales approach now that used to be a bit cumbersome. And so it was a duplication of sales across different product lines.

What we heard through our voice of the customer survey is that we want a team, a person, a lead to talk to us about opportunities in our particular markets before we were tripping over ourselves. And so I think that's just another example of how we can bring efficiency to the commercial process.

And if we can execute against everything that I've just said, we're going to be able to be more efficient, and we should be able to beat the market numbers from what I just talked about, so that's one of the areas that has me really excited.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for their closing comments.

Once again, we'd like to thank you for joining us today and for your continued interest in TriMas. We appreciate your ongoing support, and we look forward to updating you on our progress next quarter. Thank you.

Thank you.

Thank you. Ladies and gentlemen, the conference of TriMas Corporation has now concluded. Thank you for your participation. You may now disconnect your lines.

Greetings, and welcome to the TriMas Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sherry Lauderback, Vice President, Investor Relations and Communications. Thank you. You may begin.

Thank you, and welcome to TriMas Corporation's Third Quarter 2025 Earnings Call. Participating on the call today are Thomas Snyder, TriMas' President and CEO; and Teresa Finley, our Chief Financial Officer. We will provide our prepared remarks on our third quarter results and full year outlook, and then we will open up the call for 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 a (877) 660-6853, meeting ID of 13756458. 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 most recent Form 10-K and 10-Q to 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 presentation for the reconciliations between GAAP and non-GAAP financial measures used today during the call. The discussion today on the call regarding our financial results will be on an adjusted basis, excluding the impact of special items.

At this point, I'll turn the call over to Tom. Tom?

Thank you, Sherry. Good morning, everyone, and thank you for joining us today. As I conclude my fourth month as CEO, I remain energized by the opportunity to lead this great organization. Over these 4 months, I've had the privilege of engaging with our teams around the world, visiting 16 facilities, listening to our employees and gaining a deeper understanding of operations and the opportunities that lie ahead. What I've seen is a company with solid capabilities powered by talented people and deeply committed to delivering value for our customers and our shareholders.

At the same time, we have identified opportunities for continuous improvement, areas where I believe we can evolve, innovate and enhance our foundation for the future. Let's turn to Slide 3. This quarter, we've continued to take meaningful steps to strengthen our company and position TriMas for long-term success. I'd like to take a moment to highlight a few initiatives on this call. First, we're launching a comprehensive global operational excellence program to drive continuous improvement, enhance efficiency and share best practices across our footprint. This will be our company-wide operating system rooted in Lean Six Sigma principles and designed to improve safety, quality, delivery and cost while increasing speed and standardization.

In the next 2 weeks, we'll begin implementation within our packaging business at 2 larger locations in Indiana and Mexico as initial model lines for this rollout. We expect to use these pilots to prove benefits, refine the playbook and then scale across the network, supported by visible daily management and leadership accountability. Over the next month, we are beginning a comprehensive strategic planning process. While strategic assessments are a regular part of our annual cycle, this year's approach goes much deeper. We will rigorously assess where we win, where untapped potential exists and where to focus going forward. Using internal and external data structured strategy tools and fresh voice of the customer input, we will develop a Hoshin Kanri road map often called True North Alignment that cascades from the enterprise value to each division and site.

This work will set clear direction on our most important objectives, define actionable initiatives and assign ownership and time lines for accountability. Our goal is simple: align the entire One TriMas team on the few priorities that matter most and ensure consistent execution across the company. In our Packaging group, we've also launched the One TriMas branding initiative, a strategic effort to unify and elevate our brand identity and organizational culture across all regions and business units. Our goal is to consolidate the 6-plus legacy brands into one consistent brand across TriMas Packaging, creating a more cohesive and compelling experience for our customers and our employees, enhancing cross-selling opportunities and simplifying and fine-tuning our message. As part of this effort, we are conducting internal and customer-facing interviews to gain deep insights as to how our brand is perceived, where we can improve and how we can more effectively communicate the value we deliver.

Additionally, we have successfully rolled out our new ERP system to a second location, significantly streamlining our operations and enhancing data visibility. We will continue to invest in automation and tools to enhance productivity, provide critical business data and increase responsiveness. These investments will help us reduce costs, improve consistency and free up our teams to focus on higher-value activities. And finally, as part of our global manufacturing optimization strategy, we are starting to actively evaluate our capacity and footprint to better support growth, enhance operational efficiency and respond to evolving market dynamics.

In light of evolving trade policies, including tariffs and the increasing customer demand for manufacturing flexibility, cost effectiveness and localized production, it is more important than ever that we have the right capabilities in the right locations. This effort involves a thorough assessment of our global operations to ensure we can deliver high-quality products efficiently while remaining agile and responsive to customer needs. We are analyzing production volumes, logistic flows, cost structures and regional demand patterns to determine where we can scale, consolidate or invest to optimize performance.

Together, these initiatives reflect our commitment to build a more agile, efficient and growth-focused enterprise. By strengthening our operational foundation, aligning strategic priorities and investing in our people and infrastructure, we are positioning TriMas to deliver sustainable value for our customers, employees and shareholders. I'm confident the actions we are taking will serve as a strong catalyst for long-term success. Before I shift gears to talk about our third quarter financial performance, I wanted to touch base on the Board-level strategic portfolio review we announced earlier this year. We are well into that process of evaluating our options and actively working on bringing this review to conclusion. However, as we have said in the past, we're not able to specifically announce any updates at this time, but we'll let you know as soon as we can. The team remains committed to making decisions that serve the best interest of our company and our shareholders.

Turning to Slide 4. I'm pleased to report a strong third quarter performance with year-over-year sales growth across all 3 segments. TriMas delivered over 16% organic sales growth, along with improved cash flow and earnings per share, driven by solid execution and disciplined operational management. TriMas Aerospace led the way, posting record quarterly sales with over 37% organic growth, expanded margins and a strong backlog that supports continued momentum. TriMas Packaging remains on track for GDP plus growth, supported by ongoing improvement initiatives that position the business for enhanced performance as we look into 2026. These results are a testament to the dedication and focus of our global teams. I want to sincerely thank all our employees for their hard work and continued commitment to delivering value.

With that, I'll turn it over to Teresa to walk through the financials and segment results for the quarter. Teresa?

Thank you, Tom. Let's turn to Slide 5, highlighting our third quarter 2025 financial performance. We delivered another strong quarter with consolidated net sales reaching $269 million, up more than 17% year-over-year. Organic growth exceeded 16% for the quarter, excluding the effects of currency fluctuations and acquisitions and dispositions. Sales from our February acquisition of GMT Aerospace in Germany contributed $6.2 million, more than offsetting the $5.2 million reduction from the divestiture of Arrow Engine in our Specialty Products segment.

Favorable currency exchange contributed an additional $2.1 million to net sales, further increasing our overall growth for the quarter. Consolidated operating profit increased by 34% year-over-year to $30.3 million, reflecting strong revenue growth and a 140 basis point expansion in our operating margin, led primarily by improvements in aerospace. This performance translated to a meaningful increase in consolidated adjusted EBITDA, which grew more than 25% to $48 million with margin improvement of 110 basis points to 17.8%. Our adjusted earnings per share increased to $0.61, representing a 42% increase compared to third quarter 2024.

Turning our year-to-date performance on Slide 6. I won't spend too much time here as the trends closely align with our strong third quarter results. Year-to-date, sales are up 12.7%, driven almost entirely by organic growth of 12.6%. We've expanded our operating profit margin by 240 basis points to 11% and delivered diluted EPS of $1.68, a 38% increase year-over-year. These results reflect the sustained momentum across our businesses and the disciplined execution of our initiatives.

Turning to the balance sheet and capital position on Slide 7. We continue to maintain a solid and flexible balance sheet, supported by low interest rates and long-term debt with no maturities until 2029. Net debt declined from both prior periods as we continue to pay down the increase associated with the GMT Aerospace acquisition. As a result of higher earnings and ongoing debt reduction, our net leverage improved to 2.2x as of September 30, 2025, down from 2.6x at the end of 2024. Free cash flow for the third quarter improved to $26.4 million, bringing year-to-date free cash flow to $43.9 million, more than triple the $12.6 million generated during the same period last year. This improvement reflects our enhanced operating performance and working capital management.

Overall, we believe our capital structure is well positioned to support both near-term operations and future strategic investments. Let's shift gears and take a closer look at our Q3 segment performance, beginning with packaging on Slide 8. In the Packaging segment, organic sales grew 2.6% after adjusting for currency, reflecting continued strength in demand for dispensers in the beauty and personal care market. This was partially offset by softer demand for closures and flexibles, primarily used in food and beverage applications. Operating profit for the quarter was $18.2 million, a 4.3% decline primarily due to a tough year-over-year comparison as third quarter 2024 included a $1.1 million in gains from the sale of noncore properties. As a result, operating margin contracted by 120 basis points to 13.4%, while adjusted EBITDA margin came in at 20.1%. Once again, our teams continued to navigate direct tariff impacts effectively through proactive commercial strategies, including pricing adjustments and supplier negotiations.

Looking ahead to full year 2025, we continue to expect GDP plus sales growth and relatively stable margins compared to 2024 as we continue to drive commercial discipline and continuous improvement initiatives that Tom mentioned earlier. With 1 quarter remaining, we're closely monitoring the evolving global tariff environment, which does remain one of the most significant external factors affecting the packaging industry. Longer term, we remain focused on positioning our package business for sustainable, profitable growth.

Turning to Slide 9. I'll review our Aerospace segment. Our Aerospace Group delivered another record-setting quarter, once again surpassing $100 million in revenue with a year-over-year sales increase of more than 45%. This outstanding performance was driven by continued strength in the aerospace and defense market, improved throughput against a robust order book, disciplined contract execution and $6.2 million in acquisition-related sales from GMT, now operating as TriMas Aerospace Germany or as we call TAG.

The year-over-year comparison also benefited from the absence of a work stoppage that impacted Q3 2024 results. Operating profit more than doubled compared to the prior year with margins expanding by 860 basis points. Our trailing 12-month adjusted EBITDA margin now stands at 23% reflecting the aerospace team's strong execution across the board from accelerated factory floor and operational excellence initiatives to strategic procurement actions and delivering innovative solutions that meets evolving customer needs. Given our strong year-to-date performance, we remain confident in achieving full year 2025 organic sales growth of 20% plus, along with margin improvement of over 500 basis points versus 2024.

We're highly encouraged by the long-term growth outlook, supported by a healthy backlog and our continued focus on customer-driven innovation. To sustain this momentum, we are prioritizing targeted capital investments to expand capacity and drive further operational improvements across TriMas Aerospace.

If we turn to Slide 10, I will now cover our Specialty Products segment. Norris Cylinder delivered improved performance in the third quarter with sales up 31% year-over-year as they continue to recapture market share. This growth more than offset the $5.2 million reduction in sales resulting from the divestiture of Arrow Engine. As a result, the segment posted overall sales growth of 7.2% compared to Q3 2024. Operating profit for this segment was relatively flat year-over-year as the higher profit contribution related to Norris Cylinder was offset by the loss of profit related to the divestiture. However, it's worth noting that Norris Cylinder grew operating profit year-over-year nearly 40%, while expanding margins another 50 basis points.

For full year 2025, we expect Norris Cylinder to deliver mid- to high single-digit sales growth with operating margins trending slightly higher year-over-year. We remain focused on driving operational efficiency and leveraging demand tailwinds to support continued profitable growth within the segment.

I will now turn the call back to Tom to provide further details on our outlook.

Thank you, Teresa. Let's now look -- turn to Slide 11. As highlighted in our press release this morning, we are raising our full year 2025 outlook following 3 strong quarters. We're increasing both our sales and earnings per share guidance supported by continued strength in our Aerospace business. We now expect full year sales growth of approximately 10% compared to 2024 and adjusted earnings per share in the range of $2.02 to $2.12 as compared to the previous guidance of $1.95 to $2.10 per share. At this new midpoint, this represents a 25% increase over last year's earnings per share of $1.65, an encouraging step forward in our growth trajectory. While we expect much of this positive momentum to continue, it's important to note that Q4 typically reflects seasonal softness driven by fewer production days and customer holiday shutdowns.

Additionally, the evolving tariff environment continues to introduce uncertainty in customer ordering patterns and consumer demand, which we are actively monitoring. That said, we remain focused on mitigating these impacts through proactive planning and ongoing performance improvement initiatives.

Before turning to Q&A, I want to reiterate how pleased I am to be part of TriMas and how excited I am about our future. While each of our businesses, TriMas Packaging, TriMas Aerospace and Specialty Products is at a different stage in its cycle, all are well positioned to deliver long-term growth and value. I'm excited about what we can accomplish together, and I look forward to working with our teams, customers and investors to build an even stronger TriMas. Thank you. And with that, I'll turn the call back to Sherry.

Thanks, Tom. At this point, we would like to open the call to questions from our analysts.

[Operator Instructions] Our first question comes from Ken Newman with KeyBanc Capital Markets.

Teresa, I just wanted to clarify -- sorry, this is Katie on for Ken. I should have said that. Teresa, I wanted to clarify one of the comments you said when you were talking about expectations for packaging margins. Did I hear you say that there's -- you expect those to be relatively stable in full year '25 versus 2024?

Yes, that's correct, Katie. We expect about flat margins year-over-year.

Got you. Okay. And then can you help us think about how much cost out benefited margins within Packaging this quarter? And then how much dry powder you think is left for improvement within that segment?

Well, I'll start, but I'll turn it to Tom. I think we see some definite upside on the activities that we're putting in place across the Packaging business. The continuous improvement initiatives that Tom referenced should certainly help us manage our costs going forward no matter what environment is presented to us in 2026. So we certainly see opportunities ahead.

Yes. We're early in that process. We're identifying opportunities. I anticipate a lot of activity, especially as we look towards next year and the opportunity to -- everything I said earlier really about optimizing our footprint, figuring out where we should be making what and then putting the tools of lean in place and driving standardization across these facilities. As we've talked before, these were really separate companies run independently in a lot of regards, not running to any best practices or any particular standards. And so there's definitely a lot of opportunity to improve that. But again, we're early in that. We're kicking it off right now, and I look forward to continuing to report on that as we go forward.

Katie, I would add that in the quarter, as previous quarter and likely in Q4, we continue to manage our tariff pressures across the Packaging business. We're doing pretty well and managing that through pricing actions and procurement actions, but there is a bit of a headwind, obviously, on our business and FX that we need to continue to try and overcome, maybe somewhere around 30 to 40 basis points in a given quarter. But we're doing well managing that, but that is a headwind we don't think is going to -- it doesn't look like it's going to disappear anytime soon.

Got it. And then if I could just squeeze one more in here. I think Howmet had mentioned that they put it up 30% EBITDA margins in their fastener business recently. Any thoughts on how high the TriMas business could get and if that's a reasonable long-term goal?

We get that question a lot, Katie. We've had such great performance out of the Aerospace. But I would just say we like where our margins are today. We're looking at certainly balancing growth and balancing continuous increase in margin. We think there's always opportunities. We're constantly looking at robotics and other things to take out costs and to create more throughput. So I don't want to say we're done, but I would say we like where we are today.

I would just say, too, let me add to that and say that in the visits that I've been to in these facilities, there's a lot of activity about increasing throughput, value stream mapping their operations, identifying areas where they can reduce waste. They're energized about that. We're pretty excited to see kind of the work that they're doing in that area. And so I think between the throughput improvements that they're making in the plants and then the additional -- and we've talked about this before, the capacity that we had largely through adding human resources, skilled trades into these operations. That is one of the bottlenecks to continuing to improve throughput, and we do that in a very measured approach. And so we did that this year. We have opportunities to continue to do that next year. So we'll see both, I think, throughput increase as well as productivity, overall volume and productivity, both in those aerospace facilities. Hopefully, that gives you a little bit of additional color.

Our next question comes from Hamed Khorsand with BWS Financial.

I just want to start off with on the packaging side. You've talked about different strategic events there and trying to manage the business. Why is it every quarter, there's a lot of moving parts associated with it. And do you feel like you're ahead of the curve or right at where the market is?

Can you explain a little bit when you say a lot of moving parts, what you're looking at, what you're thinking about?

Sure. Like last quarter and 2 quarters prior, you were talking about the beauty market moving higher. This quarter, you're talking about how you're trying to manage the business with growth strengths. So I'm just trying to understand like do you actually have -- you're on the pulse of this business or you just plan...

Yes. Let me -- I can give you a little bit of insight from my perspective here. We continue to see strong growth in the dispensing side of the business. Especially in certain markets, we see a lot of growth in Latin America. We continue to see that. And I think we've been consistent, I think. I mean I haven't been here that long, but I think that's what we've been saying. The -- on the closure side of the business, it's been -- I think we've been consistent there as well. It's been softer than we'd like to see. And both in the U.S. and in Europe for different reasons, perhaps. We've seen some softness. We're more beverage oriented in Europe, and we're more food-oriented, let's say, on the here.

So we've seen some, like I said, softness in that closures market. I think it's consistent with what we've been addressing all year. And the Industrial business, that continues to be a very stable business. This year, in fact, slightly growing for a very mature business. And so that's the -- if you want to talk about the moving parts, I mean, those are the parts that are moving.

Hi, Hamed, I would just add that we've been consistent all year that we're going to turn out GDP plus growth, and we are on track to do that this year. So in terms of consistency there, I don't know if that helps with your question. That's helpful.

And as you look out into 2026, is there anything that bothers you as far as clarity goes in the packaging business.

Well, overall, the situation we're talking about, the tariff situation, the lack of global, let's say, demand and economy, all those kind of macro factors that are going to impact any business, those always worry me a bit. But I tend to be a lot more optimistic than pessimistic when I think about next year because, again, I just think there's a lot of things that this business should have been doing that they weren't doing over the past. And I've addressed those in the plan that we laid out here a few minutes ago as far as looking into the future. So I know consolidating our businesses into like one brand, bringing broader awareness to our customers. I mean a lot of customers don't even know TriMas, let's say, when I say not necessarily our customers, but broadly into the packaging space.

When you talk about TriMas, they might know some of the brands. They're closer to some of those individual historic brands, but they don't know the breadth or the depth of kind of what we can provide. And we've seen some firsthand situations here recently where there's been some real surprise, like, "Oh, you do that, that's great." So I think we're going to. That's a really important thing. And then getting our plants operationally aligned and driving best practices, that's something that should have been done from the time these plants were acquired. And so we're going to see improvements on the operating side. We're going to see improvements on the commercial side. And I'm very comfortable with an optimistic view as we look forward.

Great. And just lastly, on the aerospace side, how does your order book look for '26. And Do you have the capacity to grow compared to 2025 levels on a unit volume basis?

Yes. Our order book is order booked for the most part, right, for 2026. It's a very, very strong backlog. And then we did add some -- spend some capacity -- some CapEx this year to meet the demands of some of our contracts moving forward. And as I mentioned earlier, we're constrained primarily around our skilled resources that we have in our facilities. They're very high skilled tradesmen that are operating in these facilities. We grow capacity roughly 10% a year, somewhere in that area based on the amount of people that we feel is responsible to add and train and bring up to speed in this highly quality-oriented business.

We have reached the end of our question-and-answer session. I would like to now turn the floor back over to management for closing comments.

Once again, thank you for joining us today and for your continued interest in TriMas. We appreciate your ongoing support, and we look forward to updating you on our progress next quarter. Thank you.

Thank you, everyone.

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

Greetings, and welcome to the TriMas Corporation Second Quarter 2025 Earnings Conference Call.

[Operator Instructions]

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Sherry Lauderback, Vice President, Investor Relations. Thank you. You may begin.

Thank you, and welcome to TriMas Corporation's Second Quarter 2025 Earnings Call. Participating on the call today are Thomas Snyder, TriMas' new President and CEO; and Teresa Finley, our Chief Financial Officer.

We will provide our prepared remarks on our second quarter results and full year outlook and then we will open the call up 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 13754-837.

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 most recent Form 10-K and 10-Q to 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 presentation for the reconciliations between GAAP and non-GAAP financial measures used during this 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 am pleased to introduce Thomas Snyder, our new Chief Executive Officer, who joined TriMas just over a month ago. Tom brings with him nearly 35 years of experience in the packaging industry, including a distinguished track record of leadership at Silgan. Most recently, he served as President of Silgan Containers where he led a business generate nearly $3 billion in annual sales. Under his leadership, the company achieved significant growth in sales, earnings and cash flow. We're thrilled to welcome Tom to the TriMas team. And just about time, he's already been actively engaging across the organization and laying the ground work for the next chapter of growth. I'm confident you'll appreciate his insights.

At this point, I'll turn the call over to Tom. Tom?

Thank you, Sherry. Good morning, everyone, and thank you for joining us today. As I join you from my first earnings call as CEO, I want to begin by expressing how truly excited and honored I am to lead this company. TriMas has a strong foundation, a proud history and a commitment to continuous improvement and I'm energized by the opportunity to help shape its next chapter. Since stepping into this role over a month ago, I've made it a priority to listen, learn and engage deeply with all employees at all levels across the organization.

Over the past 30-plus days, I've had the opportunity to immerse myself in the business, and I'd like to take a few moments to share some of my early impressions and the key areas I've been focused on.

Let's begin on Slide 4. First, let me walk you through what I've been focused on since stepping into this role. I've made it a priority to get out into the field and see our operations up close. Over the past month, I visited 10 of our manufacturing sites across the United States and Europe, including several Packaging and Aerospace Facilities here in the U.S. as well as Packaging sites in the U.K., the Netherlands and Italy. These plants gave me an invaluable insight into our day-to-day operations, the strength of our local teams and the pride that our employees take in delivering high-quality products.

I was impressed by the flexibility and diverse capabilities of our facilities as well as the deep technical expertise embedded in our processes and with our people. I've also spent significant time with our business leadership teams, engaging in strategic discussions around what's driving our success today and what we need to do to build upon that success to accelerate our plans to stay ahead of potential market changes. These conversations have been candid, insightful and energizing and they've helped me quickly get up to speed on the unique strengths and opportunities across each of our businesses.

In parallel, I've reviewed our current business plans and financial outlook. Working closely with our senior leaders. We've begun the early discussions of identifying both near-term actions and longer-term initiatives that can enhance our performance, whether through operational improvements, cost efficiencies or growth through internal or external investments. From these early engagements, a few key observations stand out. First, we have an incredibly talented, dedicated and focused teams across the organization, whether on the shop floor and engineering or within our commercial and support functions, I've seen a strong sense of ownership, engagement and pride in the work being done.

Second, our products and processes are often innovative and proprietary driven by strong engineering capabilities and a culture of continuous improvement. Third, our manufacturing facilities have tremendous flexibility with capabilities well positioned for future growth. And finally, we benefit from long-standing strategic relationships with market-leading customers who value our ability to deliver quality and reliability. We listen to our customers and develop key account plans to drive high performance results.

Looking ahead, my focus will be on building upon these strengths while driving further alignment and execution across the enterprise. Although early in my tenure, I do see a few opportunities for improvement. Specifically, I plan to prioritize driving greater standardization across our global footprint and our processes, systems and operating practices. This will allow us to scale more efficiently, reduce complexity and ensure we're leveraging the best practices across those locations. It's about creating a more agile and integrated enterprise that can respond even faster and operate smarter.

Next, I believe there's an opportunity to focus on the seamless integration of some of our recent acquisitions. These businesses bring valuable capabilities and customer relationships and we're committed to unlocking their full potential. By aligning them with our systems and priorities, I believe we can accelerate synergies, expand our market reach and drive additional profitable growth. And finally, we continue to invest in automation and tools to enhance productivity, provide critical business data and increased responsiveness. These investments will help us reduce costs, improve consistency and free up our teams to focus on higher-value activities.

In short, I see tremendous opportunity ahead for growth and margin expansion. I am committed to working with the teams to identify opportunities and implement actions to drive improved performance.

Shifting gears, I'd like to turn your attention to Slide 5 and take a moment to highlight our strong second quarter performance. We delivered solid results across the board with year-over-year sales growth in all 3 of our groups, Packaging, Aerospace and Norris Cylinder. We also achieved notable margin improvement led by our Aerospace group. This margin expansion contributed meaningfully to our growth in operating income and earnings per share, both of which came in ahead of expectations.

So thank you to the TriMas team for making my first earnings call an easier one. The strong results this quarter are a direct reflection of your hard work and focus.

With that, I'll turn it over to Theresa to walk through our financial and segment results for the quarter. Teresa?

Thank you, Tom. Let's turn to Slide 6, highlighting our second quarter 2025 financial performance. We delivered another strong quarter with consolidated net sales of $275 million, up more than 14% year-over-year. Excluding the impact of currency and acquisitions and dispositions, organic growth was more than 13% for the quarter. Quarter 2 acquisition-related sales were $6.7 million related to the acquisition of GMP Aerospace, now known as TriMas Aerospace Germany or TAG. More than making up for the loss of $5.4 million in sales related to the divestiture of Arrow Engine in the Specialty Products segment. .

Consolidated operating profit increased by more than 50% compared to Q2 2024 or $11 million, reflecting the strong revenue growth and expanded operating margin of 300 basis points, with improvements in all segments, led by Aerospace. This correlated to a meaningful increase in consolidated adjusted EBITDA, which was up 31% to nearly $48 million and a margin improvement of 220 basis points to 17.4%. Our adjusted earnings per share increased to $0.61, representing 42% growth year-over-year. All of our businesses contributed to these results with a strong focus across the organization on operational efficiency initiatives, revenue quality and providing innovative solutions for our customers.

Turning to the balance sheet and our capital position on Slide 7. We continue to manage a strong and flexible balance sheet, supported by low interest rates and a long-term debt with no maturities due until 2029. Net debt declined sequentially from Q1 2025 as we continued to pay down the increase resulting from the GMT Aerospace acquisition. As a result of the higher earnings and efforts to pay down debt, our net leverage as of June 30, 2025, decreased to 2.4x as compared to 2.6x at the end of 2024. We Q2 free cash flow improved to $16.9 million, bringing our year-to-date free cash flow to $17.5 million as compared to a use of cash of $2.8 million during the same period of 2024.

This improvement reflects our enhanced operating performance and disciplined working capital management. Overall, we believe our capital structure is well positioned to support both near-term operations and future strategic investments.

I will now shift gears to provide additional color on our Q2 segment performance starting with Packaging on Slide 8. In our Packaging segment, we achieved organic sales growth after adjusting for currency effects of nearly 8%, reflecting continued demand strength for dispensers for the beauty and personal care market. This growth was partially offset by slower growth in our closures and flexibles product lines due to some weakness in the food and beverage markets.

Second quarter operating profit margin improved 30 basis points to 14.3%, while adjusted EBITDA margin improved 70 basis points to 20.9%, driven by sales leverage, operational efficiencies and continued cost management. Our teams also successfully navigated direct tariff impacts through proactive commercial actions including strategic pricing adjustments and supplier negotiations. Looking ahead, we remain confident in the trajectory of our packaging business. For the full year 2025, we continue to expect GDP plus sales growth, supported by recent customer wins and steady demand across most end markets. We also anticipate modest margin expansion compared to 2024 as we continue to drive operational discipline and leverage efficiencies.

During the second half of 2025, the most significant external factor we are monitoring like many in the packaging industry is the evolving global tariff environment. In the near term, we are actively working with both suppliers and customers to mitigate exposure and manage cost impacts through sourcing and commercial actions. Overall, we are encouraged by the progress made in the Packaging segment this quarter and remain optimistic about its long-term growth potential.

Turning to Slide 9. I'll review our Aerospace segment. During Q2, our Aerospace Group had a record sales quarter of about $100 million in revenue with a growth rate of 32% plus. This was driven by continued increasing demand in the Aerospace and Defense market, improved throughput against a strong order book, successful contract management and acquisition-related sales of $6.7 million related to the acquisition of [indiscernible]. Our operating profit nearly doubled year-over-year with margin expansion of 650 basis points and our LTM adjusted EBITDA margin now exceeds 21%, surpassing pre-pandemic levels. This outstanding performance was largely driven by the Aerospace's team's execution including accelerated free floor and operational excellence improvements, procurement initiatives and our ability to capitalize on market opportunities by delivering innovative solutions to our customers.

As a result of the strong first half performance, we now expect organic sales growth of 20% plus for the full year 2025, with an improvement in margin of 400-plus basis points compared to 2024. We also remain excited about the longer-term growth outlook given our backlog and continued focus on customer solutions, which we expect will drive growth in 2026 and beyond. We continue to prioritize incremental capital investments to support this growth and to accelerate further operational improvements for TriMas Aerospace.

If we turn to Slide 10, I will now cover our Specialty Products segment. Norris Cylinder delivered 13% year-over-year sales growth reflecting solid underlying demand and quarterly year-over-year sales growth for the first time since the third quarter of 2023. However, this was more than offset by the $5.4 million reduction in sales resulting from the January 2025, divestiture of Arrow Engine. As a result, the Specialty Products segment experienced overall sales down 6.8% year-over-year.

Despite the impact of the divestiture, operating profit more than doubled and improved 250 basis points year-over-year. driven by higher sales and absorption of fixed costs and the benefits of previous cost reduction initiatives at Norris Cylinder, offsetting the unfavorable inventory capitalization changes in the quarter. We expect these unfavorable impacts to subside as we continue to work through absorb manufacturing overhead from the prior year period.

With that said, we expect mid-single-digit sales growth for Norris Cylinder for the full year 2025, with margins relatively flat to slightly up year-over-year. As a result of improving order intake combined with prior cost restructuring actions, we expect to accelerate Norris Cylinders' recovery performance as we move through the second half of the year.

I will now turn the call back to Tom to provide further details on our outlook.

Thank you, Teresa. Let's now turn to Slide 11. As highlighted in our press release this morning, we are raising our 2025 outlook. Following a strong first half of the year, we are increasing both our full year sales and earnings per share guidance, supported by continued strength in our Aerospace business and positive trends within Specialty Products. We now expect full year sales growth of 8% to 10% compared to 2024 and full year adjusted earnings per share of $1.95 to $2.10. At the midpoint of our new guidance, we are now driving toward a 25% increase in earnings per share compared to $1.65 for full year 2024.

While we expect much of our positive momentum to continue, the changing tariff environment continues to present uncertainty in customer order patterns and consumer demand, which we continue to monitor. With that said, we continue to take proactive steps to mitigate the impact and remain focused on driving ongoing performance improvement.

Before turning to Q&A, I would like to once again state how pleased I am to be at TriMas and how excited I am about the company's future potential. While each business is at a different phase in the respective cycle, TriMas Packaging, TriMas Aerospace and Norris cylinder are all well positioned to deliver a bright future. I'm excited about what we can accomplish together, and I look forward to working with our teams, our customers and all of our investors to deliver long-term value.

Thank you. And with that, I will turn the call back to Sherry.

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

[Operator Instructions]

Our first question comes from the line of Ken Newman with KeyBanc Capital Markets.

Tom, congrats on the new position. I appreciate all the prepared comments on your key focus areas coming into the organization. And I know you've only been there for a little over a month now, but I think the biggest question that I get from investors particularly recently, is what does the portfolio kind of look like over the intermediate to longer term coming in, I'm sure you saw a lot of great things out of the Packaging segment, but I'm curious how you think about the portfolio as it is today. And if you have any comments or thoughts on what that portfolio could look like and maybe Aerospace, in particular, whether you think that is a longer-term pillar of the growth strategy in coming years?

Thanks for the question. I forgot to mention that I was going to ask you guys to be easy on me. But anyway, yes, so the portfolio today, what we're focused on is maximizing that portfolio. We're looking at 3 really good businesses, and we're working on operational improvements. We're working on how we can take costs out of those businesses and how we can expand our positions commercially with our customers. And so we have businesses that have not been, let's say, fully integrated or maximized. And so that's been kind of my focus as I've gone through these different plants. And I've seen a lot of them, as I said, over the last couple of weeks. And so I see the potential there.

We're in the process of figuring out how we're going to maximize the current portfolio that we have. As you know, we've engaged in that process to study that and figure out what's best long term. And we're continuing to work on that. In the meantime, we're going to continue to focus on doing what we do and do it the best we can.

Understood. That's helpful. Maybe just switching over to the guidance. First on Aerospace. Teresa, it does seem like the implied operating margins for Aero maybe stepped down from the first half or from 2Q levels into the back half. One, is that kind of the right way to think about it? And if so, any help on what's kind of driving the moderation in the operating leverage there? Is that just some pullback on the volumes? Is there a mix impact there?

Yes. Thanks, Ken. Yes, you've got it right. There is some pullback in Q3, Q4. Most of that is due to our seasonal trends, both for Aerospace and Packaging, I would say that both businesses also had some unique onetime customer benefits and growth in Q4 that we don't plan on repeating. So it is a bit more moderated in the back end, but we're confident on our expectations on the range and what we've got going on in both those businesses.

Yes. That's helpful. Maybe just 1 last one, and then I'll jump back into the queue. You talked about ramping up on the capital investment for the Airbus contract starting in '26, is there any way to help -- I know you're not ready to guide to '26 yet, but is there any way to help us size the revenue opportunity for Arrow in particular, just from that contract or putting some barriers around sizing what top line could look like just from the contract as it ramps up?

Yes. I think we'll defer that for 2026 guidance. But as we've previously discussed with the Airbus, we look at ramping up in 2026, the phase-in, phase-out program, then we'll have a larger step increase in 2027. So it's going to be a several year process, we're really excited about that commercial deal and margins will be strong, but we'll probably be able to guide you a little bit better as we get into 2026 planning.

Our next question comes from the line of Hamed Khorsand with BWS Financial.

I was just going to start off with the with the aerospace, if I could. The growth that you're seeing, how much of that was coming from the loss of capacity at your competitor? How much of that is coming from you picking up market share? And how are you adjusting the business for capacities so you can still continue to grow?

Thank you, Hamed, for the question. I would say the competitive issues that took place earlier in the year, really insignificant in terms of our overall growth. We are looking long term at opportunities to position ourselves with customers for our unique product set. I would say more of this is really across the board, market penetration, new customers that we've gained that we're really focused on new products and customer product innovations. We certainly have a strong market that we're playing in.

And along with that is some really healthy margin expansion. But I would credit see that event to be less of our growth story. On the capacity, we have plenty of machine capacity that's really our challenge is more on the people side, ensuring that we can bring on the right skills resources at the right pace to drive the overall production efficiencies. We could do third shifts. We're kind of -- some of that is -- would be extra cost, but frankly, we're challenged and will continue to be challenged to figure out how we can bring in even more opportunity because the demand is strong and the demand is looking good for the next couple of years.

Great. And then on the packaging side, are you done with bottleneck issues and trying to maximize the efficiencies in the segment?

No. We've got -- I'll defer to Tom because he's spent a lot of time in Packaging, but we see a lot of opportunity to continue to work on our Packaging segment. We've got certainly a number of initiatives and things in place. We've got some new accounts coming on, but there's work to do to get us to that margin expansion that we were hoping for this year, and we look forward to more activities that will help us with that.

Yes, I would just add, going around and looking at those facilities, and I mentioned it earlier in my remarks that this company's businesses are at different bases, let's say, in the integration and their approach to continuous improvement. Aerospace is pretty advanced on that side. And on the Packaging side, we have some great platforms that we can continue to build on. I see great capabilities, great machinery, great resources, but they're lagging a bit on the integration side and they're lagging on the standardization side. And so I see that not from a disappointed perspective, but I see that as opportunity for us to maximize these businesses.

And so I've got a lot of experience in that particular area. And so it didn't scare me at all. In fact, I was energized as I walked away from those and said we have some great opportunities to build up for the future.

And Hamed, I would just add that on the top -- the revenue side of that equation. There is certainly some opportunities to rationalize our products going forward to ensure that we are positioning ourselves in the marketplace with the highest margin and best return type products. So you'll hear more about that as we move forward.

Okay. And then just last question. What is going to be the new accounts receivable run rate, should we expect this to go down? Or is it because the sales are now going to be at a higher rate, your receivables are going to stay at this kind of number.

Yes, I think it's a little on the high side today. We should see some improvements over time. We've had a few -- every quarter, there seems to be a few special customer type arrangements. But underlying that, we're making good progress on those areas.

Our next question is a follow-up from Ken Newman with KeyBanc.

Maybe give you the opportunity to see if you want to quantify at all what the opportunity is from self-help initiatives in Packaging today. And just also help us frame up the magnitude of those expected benefits. Is this something where you think EBIT margins and Packaging could get back to that, call it, low 20% range in '26? Or is that too much of a hurdle?

Yes. I'll answer first and let Tom jump in on what he's seeing. We've got room to improve overall margins in the Packaging business. I think some of that's going to -- it's going to tie into what our product set is going forward and the customer segments that we're going after. We're making some shifts in our approach to customers today. So I do think that there's some upset -- upside. I'm not ready to comment on what that range will be. I think it gives us a little more time -- to give Tom a little more time. to do some magic and work with the team, I think we'll be able to guide more specifically, I think, in 2026, at least on the range for that year.

Yes. I mean I would just say I don't know what the potential is yet. Our business is different. Let's say, the mix of it is different than it was historically. And -- but we do think that our EBITDA rate against our peer group is strong. And so we're not ashamed of anything on that front. But there's always opportunity for improvement, and we'll work on rightsizing our cost structure, our SG&A, our capacity footprint utilization, et cetera, and we'll improve it. I just don't know what that upper limit is. So sorry to be so big.

No, it makes sense. Tom, do you want to go back to just the standardization comments you made before though. Typically, when I think about TriMas is Regis business, in particular, I think about their ability to do a lot of highly customized designs and that kind of being a primary pillar of the outsized margin performance versus the peers. Can you just talk a little bit about where the opportunities are to standardize processes there and how that doesn't necessarily impact the competitive nature of that business?

Well, first, I want to say that the historical Rieke business does a great job. They've got -- it's more of a mature business. We understand that. But we have a lot of acquisitions, as you know, that we've bolted on to this business over the past few years. And what we need to do is we need to look at best practices across all of those operating platforms and we need to figure out how we adopt and standardize across that. There's just -- they do a great job collectively with respect to the importance of meeting customer expectations and quality and service, but we all have our own way of doing things. And that I've seen.

And that's less efficient than it could otherwise be. And so my experience in the past, you look at best practices, you figure out -- you don't have any pride when you acquire businesses and you look at the 1 you're acquiring. You look at the 1 you have, and you say, okay, what's best. And then you standardize on that one. And so I just -- that process hasn't happened yet that I can see, maybe to some extent, but there's still room -- a lot of room to go there. And so that's good, though. That's -- we can look at those best practices, and we can figure out how to standardize it. And then -- and you got to be standardized really before you can start building really good improvements on top of that. So that's in a nutshell, that's where we're at.

Ken, I would just also add that we have made a number of IT investments, especially this year. ERP platforms that will enable us from an IT systems perspective to certainly to standardize and to gain some of the synergies out of those businesses. We look forward to -- as we deploy these systems. We look forward to capitalizing on those as we move forward.

That is a big piece of it. And really looking forward to getting that under our belt.

Yes. That makes sense. Maybe last 1 from me. Teresa, you mentioned the expectation for margins to continue to improve even into '26, especially with the volume outlook here in the near term. Is there a way to think about what you think is a normalized incremental margin through an up cycle for aerospace today?

We like where we are. These margins, certainly that we've achieved now. Certainly, there's likely a little bit more upside. But frankly, our focus is really to drive revenue through this model now, focus on growth over maximizing margin. I think that, that's -- that will give us the better returns over time. So we like where we're at. Is there some upside. Yes, we'll probably guide a little bit more of the range based on what we see in 2026.

So just to clarify, I think the implied back half incremental on average, I think, is maybe, call it, mid one-teens on EBIT. But when you say like where we're at, is that kind of more in line with what you've seen in the first half on the incremental margins through an up cycle. Again, this is more of like an up cycle average than looking for a specific quarter or anything like that?

Yes, I think that's fair, Ken. I mean there could be a little bit upside on the incremental compared to the first half because we've been obviously performing month after month has gotten better, but I think that's a fair assumption.

We have no further questions at this time. I'd like to turn the floor back over to management for closing comments.

Once again, thank you for joining us today and for your continued interest in TriMas. We appreciate your time and engagement, and we look forward to sharing our progress and updates with you on the next earnings call. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.