TriMas Corporation (NASDAQ: TRS), a diversified industrial manufacturer, has reported a 3.1% increase in consolidated sales for the fourth quarter of 2023, despite market uncertainty and a decline in demand, particularly in its Packaging (NYSE:PKG) segment.
The company has initiated strategic actions, including facility consolidations and a sale process for its Aero Engine business, to navigate the challenging environment. In the earnings call, TriMas highlighted positive trends in its Packaging and Aerospace segments and provided an optimistic outlook for 2024, forecasting overall sales growth between 5% and 8% and adjusted earnings per share in the range of $1.95 to $2.15.
Key Takeaways
- TriMas Corporation reported a 3.1% increase in consolidated sales in Q4, with Aerospace and Packaging segments showing growth.
- The company plans to report its Norris Cylinder business as part of the Packaging segment and has completed the centralization of its global IT function.
- Adjusted operating profit and EPS for Q4 were higher than the previous year, excluding property sale gains.
- TriMas anticipates growth in adjusted EBITDA in 2024, driven by sales in Packaging and improved conversion rates in Aerospace.
- The company is focusing on share repurchases and maintains a strong balance sheet.
- TriMas Packaging saw a $2.5 million gain in Q4 2022 and will allocate IT costs to its businesses in Q1 2024.
- New product innovations in Packaging include a fully recyclable dispensing solution.
- TriMas Aerospace's net sales increased by over $13 million, with acquisitions contributing $9.6 million.
- The Specialty Products segment faced weaker demand, but the company is optimistic about future growth.
- The company is working to get on the approved vendor list for significant customers in the Life Sciences sector to expand future collaborations.
Company Outlook
- TriMas forecasts a 5% to 8% increase in overall sales for 2024.
- Adjusted earnings per share for 2024 are projected to be between $1.95 and $2.15.
- The company expects improved performance in Packaging and Aerospace, while Specialty Products demand may remain soft in the first half of 2024.
- Focus will be on growing the Packaging and Aerospace segments and investing in innovation and M&A in Life Sciences, Beauty, and Food & Beverage markets.
Bearish Highlights
- Market uncertainty and a decline in demand impacted the company in 2023, especially in the Packaging segment.
- Specialty Products segment experienced weaker demand.
Bullish Highlights
- Positive financial results in the Food & Beverage end market with operating profit up over 7% and adjusted EBITDA improving by 370 basis points year-over-year.
- The Aerospace segment showed a significant increase in net sales, bolstered by acquisitions.
Misses
- Investors expressed concerns about the decision to combine Specialty Products/cylinders with Packaging, fearing it could dilute growth and margins.
Q&A Highlights
- Management addressed concerns about combining the Specialty Products business with Packaging, stating the Norris Cylinder business will remain due to its strong performance and cash generation.
- Projected Packaging sales growth of 5% to 9% is expected to be primarily volume-driven, with a gradual recovery anticipated throughout the year.
- The challenging pricing environment in Packaging indicates that the majority of organic growth will be volume-driven.
TriMas Corporation's strategic actions, including facility consolidations and the sale of its Aero Engine business, reflect a commitment to navigating current market challenges and focusing on core growth areas. The company's positive financial results, particularly in the Aerospace and Packaging segments, and its optimistic outlook for 2024 demonstrate resilience and adaptability in a variable economic landscape. TriMas continues to prioritize innovation, strategic investments, and shareholder returns as it moves into the next fiscal year.
InvestingPro Insights
TriMas Corporation (NASDAQ: TRS) has shown resilience in a challenging market, with strategic initiatives aimed at driving growth. The company's recent financial performance and forward-looking statements are further illuminated by key metrics and insights from InvestingPro.
InvestingPro Data:
- Market Cap (Adjusted): $972.41M USD
- P/E Ratio (Adjusted) last twelve months as of Q3 2023: 20.5
- Revenue Growth (Quarterly) for Q3 2023: 7.69 %
The adjusted P/E ratio suggests that the company is trading at a reasonable valuation relative to its earnings, which may be attractive to value-oriented investors. The quarterly revenue growth is a positive sign, indicating that the company's strategic actions may be starting to pay off, aligning with the optimistic outlook for 2024 shared in the earnings call.
InvestingPro Tips:
1. Management has been aggressively buying back shares, signaling confidence in the company's future and potentially creating value for remaining shareholders.
2. Analysts predict the company will be profitable this year, reinforcing the positive outlook provided by TriMas for 2024.
These InvestingPro Tips suggest that management actions and market expectations align with the company's strategy to focus on growth and profitability. For investors seeking more in-depth analysis, there are additional tips available on InvestingPro. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore the full range of insights to inform your investment decisions.
Full transcript - TriMas Corp (TRS) Q4 2023:
Operator: Greetings, and welcome to the TriMas Fourth Quarter and Full-Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sherry Lauderback, Vice President of Investor Relations and Communications. Thank you. You may begin.
Sherry Lauderback: Thank you, and welcome to TriMas Corporation's fourth quarter and full-year 2023 earnings call. Participating on the call today are Thomas Amato, TriMas' President and CEO; and Scott Mell, our Chief Financial Officer. We will provide our prepared remarks on our fourth quarter and full-year results and our 2024 outlook, and then we will open up the call for your questions. In order to assist with the review of our results, we have included today's press release and presentation on our company website at trimas.com under the Investors section. In addition, a replay of this call will be available later today by calling (877) 660-6853 with a meeting ID of 13744326. Before we get started, I would like to remind everyone that our comments today may contain forward-looking statements that are inherently subject to a number of risks and uncertainties. Please refer to our Form 10-K, which will be filed later today, for a list of factors that could cause our results to differ from those anticipated in any forward-looking statements. Also, we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. We would also direct your attention to our website, where considerably more information may be found. In addition, we would like to refer you to the appendix in our press release or our presentation for the reconciliations between GAAP and non-GAAP financial measures used during our call. Today, the discussion on the call regarding our financial results will be on an adjusted basis, excluding the impact of special items. With that, I will turn the call over to Tom Amato, TriMas' President and CEO. Tom?
Thomas Amato: Thank you, Sherry. Good morning, and welcome to our fourth quarter earnings call. Let's begin on Slide 3. As we reflect on the previous year, it's important to note the end market challenges we faced. At the onset of 2023, there was a significant amount of market uncertainty and dislocation in demand, which was impacting many of our businesses. When we developed our 2023 planning model, we had anticipated that we would start to see a market recovery towards the end of the second quarter in our largest operating group, TriMas Packaging, which unfortunately did not occur. Our packaging group was not the only one affected, as consumer products and industrial packaging customers and even our packaging peers encountered a similar dynamic in 2023. Of course, in the spirit of seizing opportunities amidst challenges, we proactively initiated important savings actions to better position ourselves for the future. For example, we exited two packaging locations in California, one manufacturing and the other, a warehouse. We also consolidated two locations in China, one in Haining and the other in Hangzhou, into a single new facility in Haining. Our new facility in China is better aligned with our strategy to support future growth in the region. It is important to note that executing these actions would have been considerably more costly and risky in a regular demand environment. Structural savings from these initiatives, along with other actions will yield operating leverage gains, as sales return to more normalized levels over the coming few years. I would also like to further note that while last year did not turn out how we expected at the start of 2023, we are now encouraged by trends we began to experience in the fourth quarter, particularly within TriMas Packaging and TriMas Aerospace, our two largest segments. As we begin 2024, we believe that many actions we have taken across our businesses reset our foundation for a return to organic growth within Packaging and continued improvement upon conversion rates within Aerospace. In the fourth quarter, consolidated sales were up 3.1%, with Aerospace up 26.1% and Packaging up 7.5%. With respect to our Packaging Group, organic sales were flat to slightly positive, which is a favorable trend as most of our larger customers' inventory levels have started to come into better balance. With that said, the sales growth within Aerospace and Packaging overcame sales demand within our Specialty Products segment that we can more than anticipated at the end of the fourth quarter, as customers chose to defer capital expenditure purchases and better assess their sales rates into 2024. So while we had several bright spots in the fourth quarter within our Packaging and Aerospace Groups, a sudden demand shift within Specialty Products worked against our overall expectations. Despite these inherent dynamics in our diversified portfolio model, we did gain segment EBITDA momentum and expect further upside in 2024, given the actions we have already implemented. Finally, we continue to proactively repurchase shares as a core component of our capital allocation strategy, especially given our balance sheet strength and the confidence we have in the outlook for our businesses and long-term strategy. In 2023, we completed two acquisitions, repurchased more than 680,000 shares, paid quarterly dividends and still finished the year with nothing drawn on our revolver, despite operating in a challenging economic environment. Let's turn to Slide 4. I would like to highlight a few important changes as we move forward into 2024. First, we have formally initiated a sale process for our Aero Engine business. Following the divestiture of our layman's business just before the pandemic, Aero Engine is now our only remaining business focused in the oil and gas end market. We expect Aero Engine's 2024 sales to be just over $30 million, with forecasted adjusted EBITDA of approximately 16%. Aero Engine is a great business led by a very experienced management team, yet we believe the business will be better served by executing its long-term growth plans within a business more aligned and similar end markets, manufacturing processes and product lines. Next, we plan to report our Norris Cylinder business as part of our Packaging segment, bringing more focus to TriMas' portfolio. We envision making this change beginning in the third quarter. We have discussed for some time that Norris Cylinder products are used in packaged gas, general industrial applications and are now preparing to make this change more formally. Upon completing this change, our packaging group will represent nearly 70% of our total sales, and TriMas will be one step closer to our strategic objective of building out our packaging platform to more than $1 billion in revenue. Also, we will be adding back noncash stock compensation expense to our adjusted net income and adjusted earnings per share definitions. We believe this change, beginning in Q1 will provide investors with a better sense of TriMas' cash earnings power. Finally, we have completed the centralization of our global IT function into a shared service model and will in turn, be allocating certain IT costs to our businesses going forward. While this is not sort of normally something we would highlight on an earnings call, we are excited to further advance in our digital transformation journey, better supporting our operating methodology of making tech-based data-driven decisions. This may result in some quarter-to-quarter comparison nuances, which Scott will discuss as we move through the year. I would also note that while this shift in our IT approach will improve our ability to assimilate acquisitions, it will not prohibit our ability to make further portfolio optimization changes. Let's now turn to Slide 5, and I will go through our quarter and year-end results. For the quarter, we are reporting sales of $209.6 million, up 3.1% as compared to the prior year quarter, with the drivers, as noted previously. Before covering conversion rates, I do want to highlight, as we discussed at length in the third and fourth quarters of 2022, we did benefit in 2022 from special cash earnings generating property sale projects, which did not repeat in 2023. We have further normalized for this nuance to better compare 2023 to the prior year. Therefore, adjusted operating profit of $18.8 million was slightly higher than the same quarter last year, when normalizing for the property sale gain of $17.6 million that occurred in the fourth quarter of 2022. When normalizing for the same property sale gain, our fourth quarter 2023 adjusted EPS of $0.37 was 15.6% higher than the prior year quarter of $0.32. I would like to also point out that the adjusted EPS for the year was $1.74, a slight increase over 2022, when normalizing for the same property sales gains. Please note these EPS figures do not include the add-back of noncash stock compensation expense. So again, while 2023 was a challenging year, we experienced positive order intake within TriMas Packaging and earnings momentum within TriMas Aerospace, our two largest segments, as we exited the year. And turning to Slide 6. we are reporting LTM adjusted EBITDA of $156.4 million or 17.5% of sales which was consistent with 2022 levels when adjusting for the property sales gains as noted. As I will cover in a few slides, we expect growth in absolute adjusted EBITDA in 2024, as we leverage sales growth within TriMas Packaging and further improved conversion rates within TriMas Aerospace. While leverage increased slightly driven by the change in adjusted EBITDA, our leverage remains low at 2.3x. And based on our modeling, we would naturally deleverage through the year. Overall, our balance sheet remains strong and is based on a foundation of low interest rate senior notes that do not mature until 2029. At this point, I will turn the call over to Scott, who will take us through TriMas' segment results. Scott?
Scott Mell: Thanks, Tom. Let's turn to Slide 7, and I will begin my review of our segment results, starting with TriMas Packaging. For the fourth quarter, net sales were $113.6 million as compared to $105.6 million for the prior year quarter, an increase of 7.5%. Acquisitions contributed $5.8 million of sales, while the favorable impact of foreign currency translation contributed another $1.9 million of sales during the quarter. Organic sales were up slightly, which as Tom noted is encouraging, and we are continuing to see improvements in both sequential and year-over-year bookings within TriMas Packaging. The slight year-over-year sales improvement was led by increased demand for our products serving the Beauty & Personal Care and Life Sciences end markets, offset primarily by continuing demand weakness for our closure products within the Food & Beverage end market. Operating profit for the quarter was $16.2 million, an increase of more than 7% on a year-over-year basis, primarily on account of higher sales and the benefits of our previous cost savings actions. Adjusted EBITDA was $25.4 million or 22.4% of net sales, a 370 basis point improvement year-over-year. I'd like to make two additional comments on TriMas Packaging's fourth quarter and full-year results. First, in Q4 of 2022, TriMas Packaging's operating profit benefited from a $2.5 million gain for the reduction of an acquisition-related liability. Adjusting for this item, in Q4 of 2022, operating profit increased by $3.6 million or 24.5% during the quarter. Second, we have created a centralized IT functional approach and will in turn be allocating certain costs to our businesses starting in Q1 of 2024. Had we allocated these IT support costs in 2023, TriMas Packaging's SG&A costs would have been further burdened by approximately 1% of sales. Turning now to Slide 8. I'd like to highlight a few of TriMas Packaging's new product innovations, which will underpin our future organic sales growth. Starting on the top left of the slide and moving clockwise, I will first highlight our fully recyclable single-polymer dispensing solution, which we have branded as Singolo. This dispensing product, which is initially tailored for the Beauty & Personal Care end market has been designed and developed to meet our customers' legislative, regulatory and corporate social responsibility requirements. Moving to our Life Sciences and medical product innovations, I'd like to highlight a few of the capabilities we acquired as part of our recent life science acquisitions. In addition to clean room molding capabilities, we are also able to provide prototyping, production tooling, manufacturing and assembly. Finally, on the bottom of the slide, we highlight two of our innovative closure solutions for the Life Science and Food & Beverage end markets. We offer a broad array of child-resistant and tamper-resistant closures, as well as a full range of tethered caps for a variety of beverage types. These projects represent a small sample of our ongoing new product development pipeline within TriMas Packaging. And although we faced demand challenges in 2023, it's important to note that we continue to invest in application and design development in order to support our long-term growth objectives. Turning to Slide 9. I will now provide an update on our TriMas Aerospace segment. Net sales for the quarter increased by more than $13 million or 26% when compared to the same period a year ago, as we continue to see strong order intake for many of our aerospace products, as general aerospace volumes continue to recover. Acquisitions contributed $9.6 million of sales during the quarter, while organic sales increased by $3.7 million or 7.3% when compared to the previous year period. Operating profit for the quarter was $6.1 million or 9.5% of net sales, which represents a 670 basis point improvement when compared to the previous year period. We remain cautiously optimistic that the macroeconomic challenges that have negatively impacted TriMas Aerospace in recent quarters, including supply chain disruptions and labor inefficiencies continue to progressively improve and we will largely be behind us as we move through 2024 and into 2025. Adjusted EBITDA for the quarter was $10.8 million or 16.9% of net sales. Now on Slide 10, let's review our Specialty Products segment. Net sales were $32 million as compared to $47 million for the prior year quarter, as general industrial cylinder demand weakened well beyond expectations as customers deferred capital expenditure purchases to rebalance inventories toward the end of the year. We anticipate that the demand environment will remain soft within Specialty Products through the first half of 2024, as customers work through their elevated inventory positions. Of course, we continue to closely monitor our order changes, and we'll continue taking appropriate flexing actions as necessary. While demand within Specialty Products weakened more than expected during the fourth quarter, we do remain encouraged with our product innovation within the segment, including cylinder products, which will support the growing electronic related manufacturing sector in North America, as well as natural gas-fueled engines for auxiliary power, which serve the general industrial market. Operating profit in the quarter was $4 million or 12.6% of net sales, while adjusted EBITDA for the quarter was $5.1 million or 15.8% of net sales. At this point, I'd like to turn the call back over to Tom to review our 2024 outlook and for some closing remarks. Tom?
Thomas Amato: Thank you, Scott. Let's now turn to Slide 11. We -- I would like to now discuss our outlook for 2024. As we consider the trends that emerged at the end of last year, we are forecasting overall sales growth between 5% and 8%, and adjusted earnings per share in the range of $1.95 to $2.15. Our adjusted earnings per share outlook at the midpoint would represent an increase of about 7% as compared to the prior year and when adding back non-cash stock compensation expense to both periods. On a comparable basis, 2023 adjusted EPS would have been reported as a $1.92 per share. More information on this change is shown in our 8-K, which will be filed this morning. Consistent with our adjusted EPS outlook, we also anticipate adjusted EBITDA to be up approximately 7% or approximately in the $165 million to $170 million range as compared to our year ending 2023 adjusted EBITDA. We are seeing some early indications that demand for our packaging products for the consumer and industrial end markets is beginning to gradually recover, which we are forecasting to continue through the year. We also expect demand to continue to remain strong within TriMas Aerospace and anticipate we will improve conversion rates as we continue balancing production flow with demand. Finally, we expect our Specialty Products businesses to start this year in a demand environment consistent with that of the fourth quarter, however, with increases in demand as we enter the second half. While we expect improved performance in Q1 for our Packaging and Aerospace groups, in light of the slower start to 2024 with our Specialty Products group, we anticipate Q1 EPS to be in line with last year. Let's turn to Slide 12. I will conclude our prepared remarks by providing just a few examples of why we remain excited about the near and long-term shareholder value creation prospects for TriMas. First, after a demand challenge year, we are beginning to see order intake increases within our largest segment, TriMas Packaging. While we are cautiously optimistic about 2024 revenue growth, we are positioned to make further operating leverage gains in 2024, should we experience higher-than-planned growth, and also would expect enhancing conversion rates into 2025. Finally, we continue to invest in innovation in 2023 despite the challenges in the year, to allow for a sustained long-term growth trajectory. We are also confident in our actions we have taken within our TriMas Aerospace group to improve supply and skilled labor constraints. We have top-graded our leadership talent within the group, and we expect to take advantage of further operating leverage gains as we continue to bring our production planning into better synchronization with customer demand. We are taking proactive steps to focus our portfolio. In addition to announcing the planned divestiture of Aero Engine -- our Aero Engine business and the exit of our presence in the oil and gas end markets, we also will soon be moving our presentation to TriMas into two highly attractive segments, Packaging and Aerospace. We also continue to place a priority on building out our TriMas Packaging platform through M&A, with the focus on the Life Sciences, Beauty and Food & Beverage end markets. Also, given our relentless commitment to cash flow generation, we will continue to reinvest in our businesses for long-term growth, while also returning capital to our shareholders, both through share buybacks and dividends. In addition, our leadership team remains committed to operating TriMas in a responsible and sustainable way to contribute to society, particularly in the communities where we live and work. I would again like to thank our investors for their support. We continue to believe TriMas is an exciting company to invest in. And with that, I'll turn the call back to Sherry.
Sherry Lauderback: Thanks, Tom. At this point, we would like to open the call up to your questions.
Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Hamed Khorsand with BWS Financial. Please proceed with your question.
Hamed Khorsand: Hi, good morning. So first question I had was related to Packaging, the signs that you're seeing of the gradual recovery, are they -- how material is that? Is there any way you could provide us a little bit more detail of what you're seeing? Are you seeing it back to normal? Is there '22 kind of levels or just better than '23?
Thomas Amato: Yes. Thank you, Hamed. That's a great question. And we're running a number of analytics right now looking for various positive trends. I would say one of the things that we're studying frequently is rolling averages of our order intake. So we'll call that order intake momentum. And we've seen multiple months of increases in momentum in order intake across many of our product lines. And some of the product lines that have gained momentum just had really, really off years last year, which is a -- as we triangulate the technical data that we're seeing on order intake with what customers are saying, we're coming to the conclusion that outside of a few customers, most of the inventory matters, at least for our customers are behind us. And that's a very positive sign. Now we're not back to what I would call pre mid-2022 levels yet, but these are signs that we're starting to see that we did not see for the most part of 2023. I talked at the beginning of the year that I was looking for some green shoots to occur midyear last year, and did not happen. Now we're starting to see that. And look, we hope they're sustainable. They seem pretty robust. Our technical -- we're pretty excited about. We're talking to customers, but it's not going to be a snapback like we saw with Aerospace.
Hamed Khorsand: Got it. And my other question was related to Life Sciences. Are you getting more customers? Are the current customers ramping up orders? How is that progressing for you?
Thomas Amato: Yes. Thank you very much for that question. That's a great question, and one I hope that we can continue to talk about as we move forward. The answer to that is both yes. We are growing with our existing customer base. We're adding customers. And then we're in the process, I certainly don't want to disclose anything that would jeopardize our ability to qualify a brand new customer, but we're doing work with some significant customers in the space that we hope we can get on their approved vendor list or AVL, to do more with them in the future. One of the biggest drivers to our ability to grow in Life Sciences is our clean room capability, what we call Class 7 clean rooms and there's different levels of that. But these are extremely clean production environments with continuous airflow, air circulation reflow and filtering and often, as we seek to grow with our current customers, expanding customers and new customers, they're looking at our clean room capability. So one of the things we tried to do last year and we'll continue to do as we move forward is speak with you and our investors on how much square footage we have in clean room capacity, because that's the driver to growing in particularly the medical area, but the life sciences area.
Hamed Khorsand: Great. Thank you.
Thomas Amato: Thank you.
Operator: Our next question comes from Tim Burns with Cranial Capital. Please proceed with your question.
Tim Burns: Good morning. Tom, I'm kind of scratching my head with regard to the combination of Specialty Products/cylinders with Packaging. What was the rationale for that action?
Thomas Amato: Well, we haven't taken the action yet. It's something we have been talking about for the better part of the year. When you look at our Packaging business, we do have a component of our business that has had a legacy presence in what I would call general industrial. And we sort of see that as in some peer groups as well, in packaging peer groups. But when we look at the end markets we go into, it's a packaged gas end market. So packaging in the broadest sense is core to TriMas, and our view was that it would be better for our investors to appreciate that packaged gas business if it was reported with our industrial business in our Packaging segment.
Tim Burns: From my dumb view, it's going to dilute the growth and margins in your premier business. And I guess I would ask you, why not sell specialty products?
Thomas Amato: Well, we did announce that we're selling a portion of Specialty Products. And I appreciate the feedback that you're providing on our Norris Cylinder business. But yes, if you look at our Norris Cylinder business and maybe I'll talk about some things we've talked about on prior calls, our tax basis is extremely low in it. So monetizing that would come at a cash drag, number one. Number two, it's a high-performing business, okay? It had a tough quarter last year, but we've seen that historically over a long period of time, then there are some highs and lows that come with that business. Historically, it's fairly reliable. Its EBITDA margins are on a normalized basis at a very respectable level, and it's a great cash generator. So I do think that it will be, in the long run, a contributor to our Packaging segment.
Tim Burns: Okay. Well, I disagree. I think it's a mistake. I feel like it's -- I feel like there's some kind of structural move going on to protect the company. And if it's such a great business, then let it be reported on its own. It's just going to cloud up a great business that you've got. And so I'm voting against it, Tom, but I'm just one man.
Thomas Amato: Well, Tim, I appreciate your feedback. Thank you very much.
Tim Burns: Okay. Thank you. Have a good day.
Thomas Amato: You too.
Operator: [Operator Instructions] Our next question comes from Peter Ra with New York Life. Please proceed with your question.
Peter Ra: Hi, thank you for the questions. Just on the outlook, when you -- especially for Packaging, you're showing sort of sales growth of 5% to 9%. How much of that is volume? And then just cadence by quarter will be helpful.
Scott Mell: Yes. I mean relative to the organic growth versus acquisition-related growth, it's around 1.5% is what we're forecasting for the acquisition-related growth. Relative -- we're not going to provide sales guidance by quarter, but I think it's fair to extrapolate that we believe it's a gradual recovery. And hence, you should see more momentum as we get towards the later part of the year. So I think that's probably pretty good guidance relative to how you want to think about Packaging sales sequentially over the course of the year.
Peter Ra: Okay. And just a follow-up, just in terms of the -- just organic growth. Most of that is volume? Or is there price baked in?
Scott Mell: Well, we're not going to get into price versus volume discussion. But I will say, given the demand environment within Packaging and more broadly, the excess capacity in most of the end markets, it's a very challenging pricing environment. So I think you can assume that the vast majority of our organic growth is volume-driven.
Peter Ra: Okay. Thank you.
Operator: It appears there are no further questions at this time. I would now like to turn the floor back over to management for closing comments.
Thomas Amato: Thank you, and thank you for joining us on our earnings call, and we look forward to updating you again next quarter.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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