TriMas Corp (TRS) 2006 Q2 法說會逐字稿

Good day, ladies and gentlemen, thank you for standing by. Welcome to the TriMas Second Quarter Earnings Conference Call. [OPERATOR INSTRUCTIONS] As a reminder, this conference call is being recorded.

I would like to turn the conference over to Mr. Skip Autry, CFO. Please go ahead, sir.

Thank you, and welcome to our second quarter 2006 conference call. Our President and CEO, Grant Beard, and I will review TriMas' second quarter results. To facilitate the review, we have provided a press release and PowerPoint presentation on our company website, TriMasCorp.com.

After our prepared remarks, we will have a Q&A session for the audience. Also present with us today from TriMas is Bob Zalupski, our Vice President of Finance and Treasurer, and David Mosteller, our Director of Finance for Operations.

A replay of this call will be available later today by calling 866-837-8032, with the reservation number 950218.

Please note that certain information on this call may be forward-looking and contains statements based on current plans, expectations, assumptions, and environmental trends which may affect the Company's future operating results and financial position. Such statements involve risks and uncertainties which cannot be predicted or quantified and may cause future activities and operating results to differ materially from those discussed. These risks are more fully described in our filings with the SEC.

At this point, I would like to turn the call over to Grant Beard, our President and CEO. Grant?

Thank you, Skip, and welcome to the TriMas Second Quarter 2006 Earnings Call. Today, we will cover our second quarter financial and operating highlights, we'll review our financial performance and capitalization at quarter-end, and then we will ask our operator to open the forum up for Q&A. For those following along our slide deck, please turn to the slide titled "2006 Second Quarter Financial Highlights.''

TriMas is a manufacturer of highly engineered products. Our defining attributes include leading market shares, strong brand names, and diversity of end markets, customers, and products. Our second quarter earnings performance had three of our five segments improve over prior year, while our industrial specialties and RV and trailer product segments were essentially flat compared to the prior year. TriMas had sales of $279.6 million in the second quarter of '06, representing an increase of approximately $10 million, or 3.7% over the second quarter of '05. Packaging systems was up 8%, as compared to the second quarter of '05, due to strong market demand, overall economic expansion, and our new products. Energy products revenue increased 23.6%, driven by strong market demand from existing customers, expanded product offerings, and increasing international sales.

Industrial specialties increased 2.2% during the quarter. While demand was moderated somewhat, we still experienced year-over-year sales increases of 7.9% in our aerospace fastener business, 6.3% in our industrial cylinder business, and 11.4% in our precision tools business. Sales of our NI Industries defense business decreased $1.7 million compared to a year-ago period, due to timing of shell casing deliveries to the U.S. military.

RV and trailer products revenue was essentially flat as compared to the second quarter of '05, and within our Recreational Accessories Group, revenue was down 1.9%, as compared to prior year, as a result of softer market demand due to increased fuel and interest rate costs. The Company reported second quarter '06 operating profit of $31.5 million, an increase of $2.3 million, or 7.9%, compared to operating profit levels of $29.2 million in the second quarter of '05. Adjusted EBITDA during the quarter was $40 million, representing an increase of $4 million, or 11.1%, as compared to the second quarter of '05. The increase in adjusted EBITDA was due to the following - continued earnings expansion within packaging systems and energy products, and better conversion within recreational accessories, driven by improved material margins, due to sourcing initiatives and lower variable and fixed overhead spending as a result of the cost initiatives we implemented during the second half of 2005.

Our second quarter 2006 income from continuing operations was $6.9 million, or $0.33 per share on a fully-diluted basis, versus income from continuing operations of $4.9 million or $0.24 a share in the Second quarter 2006 income from continuing operations was $6.9 million or $0.33 per share on a fully-diluted basis versus income from continuing operations of $4.9 million or $0.24 per share in the year ago period. This increase was driven by the following - strong increases in net sales in three of the five business segments and higher operating profit margins due to improved material margins in all segments and increased productivity within Recreational Accessories in the quarter compared to the prior year. We expect this earnings momentum to continue as we move through the remainder of 2006.

Total debt and securitization at June 30, 2006 was $773.5 million, or a decrease of approximately $10 million compared to June 30, 2005. TriMas finished the quarter with $169.5 million of net operating working capital, or 15.0% of sales, as compared to $155.4 million of working capital, or 14.0% of sales, in the second period of 2005.

TriMas closed on its Amended and Restated Credit Agreement on August 2, 2006. Under the Amended and Restated Credit Agreement, the Company's Bank LTM EBITDA at June 30, 2006 was $147.9 million, which supported our lending ratios as follows - our leverage ratio was 5.23 versus a leverage ratio covenant of 5.75, and our interest coverage ratio was 1.89 versus a covenant of 1.50. TriMas had $1.4 million of cash at quarter end and approximately $77 million of available liquidity

On August 3, 2006, TriMas filed a registration statement on Form S-1 for a proposed initial public offering of shares of our common stock.

In the quarter, we sold our asphalt-coated paper business, which resulted in a $1.7 million loss net of related tax benefits of $1.4 million. These amounts have been reflected in discontinued operations.

Within our industrial fastener business, which is also reported as a discontinued operation, we recorded a $2.0 million loss, net of related tax benefits of $1.3 million. The loss reported was impacted by the closure of our Lakewood, Ohio steel processing plant, which resulted in approximately $1.0 million of one-time closure costs in the quarter, but we expect this action to positively impact cash flow going forward. We continue to use our free cash flow to reduce debt which was reduced approximately $10 million within the quarter as compared to the second quarter of '05. TriMas’ business future continues to be defined by strong organic growth, increased earnings and free cash flow.

Now, turning to each of our reporting groups, within our Packaging Systems group, Net sales for the quarter were $53.9 million, an increase of 8.0% compared to the second quarter of '05, with the increase primarily driven by stronger demand for our industrial closure products, specialty tapes, laminates and insulation products, and increased sales of our new specialty dispensing products.

The group's adjusted EBITDA in the second quarter increased to $13.3 million from $10.7 million in the second quarter of '05, an increase of 24.3% attributed to increased sales levels and moderating raw material costs. Our operating profit for second quarter improved 8.6% to $10.1 million, or 18.8% of sales, from $9.3 million in the second quarter-- as compared to the second quarter of '05. It should be noted that Rieke had an intercompany loan-related foreign exchange loss in the second quarter of '05 of approximately $1.5 million, which negatively impacted adjusted EBITDA but not operating profit. The loss on the sale of Compac’s asphalt-coated paper business of $1.7 million, net related tax benefit of $1.4 million, was reported, as we stated, in discontinued operations. The facility has been closed and equipment sold. Our Packaging Systems group expects positive earnings momentum to continue throughout 2006 with strong demand for both our industrial and consumer-based products.

Within our Energy Products group, we had in the second quarter sales of $38.7 million, an increase of $7.4 million, or 23.6%, as compared to the year-ago period. The group's adjusted EBITDA in the quarter was $6.2 million as compared to $4.1 million in the second quarter of '05, or an increase of 51.2%. Our operating profit improved $2.0 million to $5.5 million from $3.5 million in second quarter of '05. The Energy Products segment expects continued earnings momentum throughout 2006 driven by strong market demand due to favorable conditions for the oil and gas producers, our extended product line offerings and an expanded sales focus on international markets, and increased market share gains due to our superior delivery performance.

Within our Industrial Specialty group of companies, we had net sales for the quarter of $47.1 million, or an increase of 2.2% as compared to the same period a year ago. This was driven by economic expansion, new product introductions and market share gains. Monogram continues to experience strong demand for its aerospace fasteners with sales increase of approximately 7.9% in the second quarter versus the second quarter of last year. This company continues to maintain a very strong order backlog. Our Norris Cylinder business had its sales increase 6.3% over the second quarter of '05 with a continued strong order backlog and an increase in our international sales of ISO cylinders. Our Precision Tool company sales increased 11.4% within the quarter, due to strong demand for our cutting tools within our industrial markets and our growth initiatives into medical equipment market. Our NI Industries had its sales decrease $1.7 million compared to the year-ago period due to timing of shell casing deliveries to the U.S. military. The group's adjusted EBITDA was approximately flat in the quarter at $11.1 million compared to the $11.4 million level of year ago. Operating profit for the quarter was $9.9 million as compared to $10.2 million in the second quarter of '05. The Industrial Specialties group of companies expect positive earnings momentum throughout the remainder of 2006.

Within our RV & Trailer Products group, our second quarter sales, operating profit and adjusted EBITDA were essentially flat as compared to the same period a year ago. Our import competition continues to cause reduced pricing in all markets served for standard products. Sourcing initiatives from our Company are beginning to deliver results and are being viewed as a real strategic advantage by our customers. Demand from our OE customers in Australia remains stable, although there is a shift to lighter duty tow bars which do have a lower content per vehicle. Our focus in this will be to accelerate our sourcing initiatives and to continue to provide our customers with engineered product solutions, order fill and superior delivery performance. Our outlook for the RV & Trailer Products group is conservative due to its exposure to consumer spending for products such as RVs, boats, horse trailers and other lifestyle products, given the uncertainty around interest rates and fuel prices. The group's new Thailand facility is proceeding as planned. Start-up quality from the facility has been excellent. We are currently awaiting formal supply approvals from both Nissan and Toyota to supply product into these dealership channels in Southeast Asia, the Middle East and Australia.

Within our Recreational Accessories group, our second quarter sales decreased $1.7 million to $88.4 million, or 1.9%, from the $90.1 million level of a year ago. The group's operating profit in the second quarter, however, increased, on lower sales, as our cost reduction and sourcing strategies take hold. Sales in our Consumer business was up modestly at 4% while Towing sales were off approximately 6%. We believe interest rates and fuel prices are impacting our sales performance. The group's adjusted EBITDA in the quarter increased $2.7 million to $9.0 million from $6.3 million in Q2 2005. Our quarterly operating profit increased $2.8 million to $6.5 million from the $3.7 million level in second quarter of '05. This was primarily due, again, to improved material margins and reductions in variable and fixed costs due to the cost reduction initiatives that we implemented in the second half of 2005. The competitive pricing pressures that impacted margins within our Consumer or retail business in 2005 continue to be addressed via sourcing initiatives and selected pricing actions. Our initiatives are on plan, and continued margin expansion is expected in this business as we move across 2006. The rest of year forecast remains conservative, again, given the pressures on demand caused by rising gasoline prices and fluctuating interest rate costs. Our Towing business is regaining market share in the customized towing and weight distribution products while overall demand within this market segment is softening. However, we believe this channel will not grow substantially as the retail channel continues to grow and take share within the standard products and accessory type product offering.

Now, Skip will profile our financial performance and the Company's capitalization at quarter end.

Turning to page 13, please note that the results from our industrial fastener and Compac asphalt businesses have been classified as discontinued operations and therefore have been excluded from this data. Starting with sales, Packaging Systems sales increased 8% as our closure business was up over 9% on stronger demand for industrial closures and the continued penetration of recently introduced consumer-based products. Energy Products sales increased almost 24%, as our engine and gasket companies continue to benefit from strong markets, along with expanding product lines, customers and geographies. Industrial Specialty sales increased a little over 2%; however, our aerospace fastener business was 8%, industrial cylinder business was up over 6%, our tooling company was up about 11%, and our specialty hydraulic fittings business was up 4%. Our defense business was up about 20% due to the time of shell casing delivery, as Grant previously mentioned. RV & Trailer Product sales, again, essentially mirrored prior-year levels. And, Recreational Accessory sales were up about 2% [inaudible] from our OE and big box channel.

Related to adjusted EBITDA, Packaging Systems increased EBITDA from improved material margins and higher sales levels. Energy Products' improvement was primarily sales and material margin related. Industrial Specialties was off slightly as a result of increased compensation and benefits expense in these businesses. RV & Trailer Products' performance was in line with the sales levels. And Recreational Accessories' improved EBITDA is the result of improving material margins resulting from sourcing initiatives and improved fixed and variable cost base as a result of last year's cost reduction initiatives. That leaves us with improved adjusted EBITDA of $4 million on $10 million on incremental sales, or roughly a 40% conversion, and we're very happy with that.

Turning to page 14, we lowered debt over year-ago levels by approximately $10 million. As Grant mentioned, we continue to focus on debt reduction and cash flow. Our availability at the quarter end stood at approximately $77 million under our new Credit Agreement.

For a quick summary of our Credit Agreement, let's turn to page 15. The new deal is essentially the same size as our previous arrangement. We extended our maturities, we improved our borrowing cost, we established a new covenant strip, which provides us with adequate flexibility. And, as a side note, we received rating upgrades from Moody's and S&P.

Now I'd like to turn it back over to Grant for a wrap up prior to our Q&A session.

Again, we are generally pleased that TriMas had a solid performance within the second quarter. We improved earnings, we reduced debt, and we feel very strong that the earnings momentum within our Company has been firmly re-established. The Company and our team are focused on continued focused on continued earnings improvement and debt reduction. Strengthening our balance sheet remains our number-one tactical objective. This will be driven by utilizing our free cash flow for debt repayment and utilizing and net proceeds from selected asset dispositions for the same purpose. Our Company continues to see great opportunities across our entire portfolio. The general economic outlook appears positive for the majority of our companies, but we are closely watching the short term demand in the end markets of our Recreational Accessories and RV & Trailer Product businesses. Again, TriMas’ goal is very simple. We want to drive our credibility via performance, lower our debt and continue to build our Company with discipline.

That concludes our formal remarks, and I would now ask the operator to open the forum for questions and answers. Thank you.

+++ Q&A

Thank you very much, sir. [OPERATOR INSTRUCTIONS]. We have a question coming in from Philip Volpicelli from Goldman Sachs.

Congrats on the quarter, guys. I just wanted to touch on the divesture program. Can you give us the status on Lake Erie and some of the comments on the asphalt-coated paper business. What kind of cash should you get for that, and what kind of cash should you get for the equipment that you sold?

Sure. I'll do them in reverse order. The asphalt product business was a business of about $9.5 million in revenue. It was losing approximately $900,000 to $1 million in cash. We were not in a position where we could get pricing for it, so we decided to liquidate the business. We sold the underlying assets for about $450,000. So, from our perspective, it was a good decision to step out of the business, and it didn't have any strategic bearing to any other activity within the portfolio. With regards to LEP, as you know, we have retained third-party representation to take our fastener business to market. We've actually found that our business is probably more valuable in the parts versus the sum of the total. So, we have decided to break up the offering, and we're selling independently our small fastener business, and that activity's going on. We've had a reasonable amount of interest expressed in that business. Our processing facility, which we just closed, in Cleveland-- we are in the later stages of negotiation to sell those underlying assets. And the large bolt business-- we do have a formal offer that we are negotiating through at present, and we continue to try to move that process forward.

Okay; great. And are there any other, I guess, small businesses that you're considering divesting within any of the portfolios?

What we're doing now is we're really looking more at any excess property the Company might have or sort of non-core product lines. But no other what we call SVU or company is formally for sale. But we are going through sort of a rationalization of stuff. As those things identify themselves, we'll identify them to you.

Great. Thanks. With regard to the Recreational Products and the RV & Trailer line, you mentioned there's pricing pressure there. Can you give us some color on how much pricing pressure there is? Are you able to--? Are you considering putting through price increases yourself or trying to? What ways are you going to mitigate that?

I think the reaction on the standard products, that stuff that is sort of more available through competitive choice and sort of what I call accessories-- I think we're showing that we can displace what used to be activity here in North America, either in our supply base or within our own factories, and take those products offshore. And, through the combination of simple sourcing alternatives and, in effect, reengineering and, in some cases, decontenting product, not making the quality less but making them just a little less engineered, is a way to drive margins. We're showing that we can do that, and you can see it in our business segment, Recreational Accessories, where you're starting to see the margins go back up. I think that in this segment, or in both these segments, that pressure from offshore competition in non-customized product isn't going to go away. So, I'm not specifically answering your question, but generally that's how we're dealing with it. There's a different answer probably for every product category that we're in.

Last question from me. The NI Industries, the 20% fall off in sales there-- is that something that you'll make up as you go through the remainder of the year, or is it just lumpy because of the way the government is acting?

Sort of both. It's the government-- just the government moving an order around. So, we won't lose the revenue; it just was moved time wise. But, it's obviously a little different than a commercial environment. We're holding to their schedule.

Yes. Phil, on a year-on-year basis, that business' sales will be roughly equal.

Okay. Thanks, guys. Good luck.

Thank you. Our next question is coming in from Michael Schwartz from Aristeia Capital.

First, a couple of questions related to the S-1 and then some follow ups on the new credit facility. On the S-1, are those all primary shares, and what's the timing you guys expect?

Michael, we really cannot talk about the S-1. We're not intending to talk about the S-1. It's there for you to read. But, on advice of our counsel, we're trying to steer away from that subject in today's call.

Okay. That may ding my second follow up questions. I was curious; with the proceeds you may receive from that, would you be looking to reduce debt. And, if so, would that be on the new credit facility or current debt outstanding, including the notes?

Yes, Michael; those would certainly be options. As we get further down the road, we'll ferret those out.

Okay. In the new credit facility, it looks like there's kind of a carve out to repay some of the notes based on a leverage test. Are there any other carve outs that are available to repay notes with net proceeds received?

Mike, that's the only one. We just tried to maintain a little flexibility around what we could eventually do with proceeds if there were any.

And, how is the-- does the bank group want to stay in place, given that this was just refinanced?

I would say that the participation from our bank group was very solid. We were well over subscribed. Generally, I would say the new bank deal went very well.

Okay. All right; great. Thanks a lot.

Thank you. Our next question is coming in from Tom Klamka from Credit Suisse.

This is [Stephen Carpell] for Tom. Given that accessories was so strong in the quarter, can you give us an update on sourcing on how much you're actually doing? I think in the past you'd given a number of kind of $75 million.

We don't like to give real specific data, Steve, as you know. But, we're sourcing north of $100 million, probably, in the two businesses that we're talking about, namely RV&T and Recreational Accessories.

Again, the strategy's pretty simple. Those things that are standard or, obviously, have high labor content and are not customized-- we're moving those types of products offshore. Absolutely pleased with how quickly we've been able to move and at the performance of the supply base that we've developed through our buying offices in southeast Asia. The activity that will remain in the factories in North America will be those low volume, high SKU, customized, highly engineered type products. That's our strategy.

You mentioned in the Towing business you're taking share. So that's all this sourcing then; right?

I believe that on the conclusion of our fairly aggressive fixed cost consolidation we did in Towing-- we shut down a number of plants and restructured a distribution system. It was a fairly internally focused process. It took us a couple years. Now we're just back out [inaudible], Draw-Tite and Reese and these wonderful market-leading brand names that we have. Our service levels are at the top of their game. I believe, even though that the market is soft, we're taking back market share the old fashioned way. It has really nothing to do with the movement of where some of the product is being manufactured. You follow me?

Yes; I understood.

Steve, as part of the TriMas management system, we track delivery performance of all our businesses. The relationship between improving delivery performance in the Towing business and share gain, we think, go hand in hand.

Okay. Then, secondly, on some of the corporate costs. You mentioned comp was up in a couple of segments impacting earnings. If we look at corporate, that was up-- when you guys break out in the press release, that was up pretty significantly too. Can you talk about some of these non-- these comp expenses and non-recurring expenses there?

Yes, Steve. We implemented-- Let me just kind of take them in pieces. We won't get real specific, but you'll get a flavor for what we're talking about. We had-- This year, we're expensing stock options, so that's some of the year-over-year increase. Call it $0.5 million or so. In the quarter, we also accrued for a potential tax issue that we have related to one of our businesses that operated in the state of Michigan. We also in the quarter-- we're doing better. And we are increasing our bonus pool for not just the executives up here but across the Company. And, we've also experienced higher benefit costs, which is very common for companies that operate in the States. Healthcare is going up, and that's part of our increase. But I would say last year was kind of a low quarter at 5, and I would say this year at 8 is kind of a high quarter. If I were looking at what that number ought to look like kind of on a go-forward basis, I'd say probably in the middle of that.

Okay. Thanks, guys.

Thank you. Our next question is coming in from [Joseph Vamistu] from Jefferies.

Great quarter. Just a couple of quick ones. What level of CapEx do you expect to be spending over the next year?

Joe, we've been talking about a number around 30 for a while, and I don't think we'll come off of that. It could be 5 either side of that.

And what is the LTM revenue and EBITDA for the fastener business that's being held for sale?

LTM revenue is around $100 million or maybe a little less than that. And EBITDA-- it's kind of a moving target. EBITDA loss in the quarter was probably a couple of million dollars. But that varies. We're certainly not forecasting to continue to lose money in that business as we go forward.

Is it money losing on a last twelve months' basis?

Yes. Oh, yes.

And, ball park, what kind of valuation do you see on that - very ball park?

We've been talking about this business as-- We have a lease obligation in this business. So, we have to buy assets to be able to sell the business. We've always expected that on a kind of all-in basis, this would be kind of a push from a cash flow perspective. We'd garner enough money to pay out the leases and deliver the assets, and that's kind of been our assumption all along. So, it's not going to be a deleveraging transaction; it's just going to be-- As you've already seen, it's an improvement to the operating performance of the Company.

And I guess this is a question that are on a lot of people's minds and I'm sure that you've thought about it a lot too. If I'm just thinking out loud about buying a trailer hitch, I have to be sort of pretty far back in doing that in my life plan, given the high cost of fuel. So, in this environment, what have you seen in past downturns in terms of impact on your trailer business and your transportation business? And how do you think you can mitigate what is clearly a tough market condition in that business segment?

Very interesting competing demand forces. Clearly, most of what you're towing is financed. And we believe that interest rates are much more impactful on demand than gas, actually. Now, obviously, you fill your big SUV up, and it costs $100. That's got some impact on people's buying patterns. That said, the sort of aging baby boomer continue to get themselves into this space with this kind of spend. Long term, we're not so concerned about our exposure here. In fact, we think it's a pretty good place to be. We are dominant market share participants, so we get to feel when the market slows down. If I look out over the broader market right now, there's a reasonable amount of inventory sitting at the dealer bodies. That has started to mitigate a little bit as we've come through June and July. It was probably more unhealthy 30 days ago than it is today. So, a good long Indian summer would probably bode a little bit well. But we don't see this end market in a free fall. We think it will fight hard to sort of stay even with last year. We want to be pretty conservative about that.

Do you expect 2006 on a apples-to-apples basis to be generally even with 2005?

From an end market revenue perspective? My guess is when we're all done unit volumes will probably be down a little bit. That doesn't mean that there won't be more units produced. The guys building RVs are building a lot of them. But I do think that units sold will probably ultimately be down a little bit year over year.

Fair enough. Thanks, guys.

Thank you. Our next question is coming in from [Numa Abibe] from JP Morgan.

A couple of quick ones, if I may. Firstly, as you look at your five different segments, where do you see as an opportunity to expand your margins within the different segments?

Well, I think you're seeing a good example of our ability to improve margins in our Recreational Accessories business right now. So, where did that come from? It came from more sourcing and providing particularly what the customer wanted as opposed to what we were building. So I would say that you can-- you would expect to see that in RV & Trailer as well as we begin to implement that strategy. As you know from studying our data, we have a fair amount of operational leverage, and we have a fair amount of open capacity. So, as our packaging business continues to grow, as our energy business continues to grow, and as the significant businesses within ISG continue to grow, you'll continue to see improving conversion in the businesses. We've also talked about from time to time whether or not we should be manufacturing in the States versus Mexico. We have state of the art Mexican facilities that we have planned to do more in Mexico. So that will be also a margin-improving move for the Company. Also, we're in the process of watching a facility in Thailand, which will cost us far less to produce in Thailand versus Australia. We've also, as you know, launched a facility in China for our packaging business and also launching a facility in China for our gasket business. So, those are some root causes or drivers for profit improvement and margin improvement in the Company.

Yes. Thank you. As you look out perhaps 12 or 24 months-- your margins are up nicely year over year. Without going into specific numbers, where do you see the overall corporate margin heading down the road?

We really-- We'd prefer not to talk about that on this call.

Okay; that's fair enough. My last question is-- can you remind us the seasonality in the business quarter to quarter?

Yes. You'll see seasonality primarily in our Recreational Accessories business. Did you want anything in particular?

Well, which quarters are the most favorable?

The quarters through the middle of the year, through the summer months, are the stronger quarter; and the quarters that are closer to cold weather are the weaker quarters.

Great. Thank you very much.

Thank you. Our next question is coming in from Sandy Burns from Sigma Capital.

I just wondered, on a big picture basis, if you could elaborate a little bit more on your positive economic outlook, away from energy and the consumer-related businesses where the trends are most apparent. Given all the events going on in the world and economy, I'm just curious what you're hearing from customers and seeing out there - if you're seeing any slowdown from what you've experienced in the first half of the year on the industrial side of the businesses.

That's a great question. I think most of us sort of feel we're at halftime or somewhere along the journey. Our intake and order activities across most of our portfolio, frankly, have maintained. And we've got good exposure in aerospace, and we're picking up market share that might hide a little bit of underlying demand. So we're going to grow a little bit faster than demand because of some of our product offerings. I think energy speaks for itself. Packaging - again, it's new product development growth that's going to drive our view and the acceptance of those products. It will allow-- we're going to enjoy or grow at the general economic economies. I think we will outstrip that because of our initiatives. I don't know if I'm getting to your point. But, I think our drivers, in our view, are more along the acceptance in our initiatives of taking our products offshore to follow our big customers into new markets for TriMas and the extension of our existing product lines in our channels. We're seeing just a lot of support there. That's a little different than trying to answer a macro economic question, but that's the basis of our [inaudible].

Are you starting to get any feedback from customers that they're having much greater concerns about the economy? I know backlog isn't really big in your business. But, in terms of their outlooks, they're coming back to you with changes in their forecasts and outlooks?

To date, no. The only place that we're seeing those types of activities is on our Recreational product lines that we've already talked about. But on the industrial side, not yet.

Okay. Great. Thank you.

Thank you. I'm not showing any further questions in the queue.

Okay. If that-- are the final questions, we thank you for your interest and your participation this morning and your support. That will conclude our call. Thank you all.

Thank you. Ladies and gentlemen, thank you all for your participation in today's conference. This concludes the conference. You may now disconnect your line. Have a wonderful day.