Good day. And welcome to the TriMas First Quarter 2019 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Ms. Sherry Lauderback. Please go ahead..

Thank you. And welcome to the TriMas Corporation’s first quarter 2019 earnings call. Participating on the call today are Tom Amato, TriMas’ President and CEO; and Bob Zalupski, our Chief Financial Officer. After our prepared remarks on our first quarter results, we will open up the call to your questions.

In order to assist with a review of our results, we have included the press release and PowerPoint presentation on our company website, www.trimascorp.com, under the Investors section. In addition, a replay of this call will be available later today by calling 888-203-1112, with a replay code of 4982233.

Before we get started, I would like to remind everyone that our comments today, which are intended to supplement your understanding of TriMas, may contain forward-looking statements that are inherently subject to a number of risks and uncertainties.

Please refer to our Form 10-K for a list of factors that could cause our results to differ from those anticipated in any forward-looking statements. Also, we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.

We would also direct your attention to our website, where considerably more information may be found.

I would also like to refer you to the appendix in our press release issued this morning or included as part of this presentation, which is available on our website, for the reconciliations between GAAP and non-GAAP financial measures used during this conference call.

Today, the discussion on the call regarding our financial results will be on an adjusted basis, excluding the impact of special items. At this point, I would like to turn the call over to Tom Amato, TriMas’ President and CEO.

Tom?.

Good morning, and thank you, Sherry. If we turn to slide three, I would like to start by taking a few minutes to remind our investors how we began the process to unleash value through reshaping the TriMas portfolio businesses.

Overall TriMas had last 12 months sales of $881 million, an EBITDA margin of about 19% and a market capitalization of about $1.5 billion. We operate our businesses in three reporting segments Packaging, Aerospace and Specialty Products.

A summary profile of each of these segments is shown on the right side of slide three, which we will go into more detail later on the call.

It’s worth noting that while we leverage the TriMas business model to drive performance and continuous improvement in each of our facilities and operations, the reorganized approach shown you has provided a platform for TriMas leadership to prioritize investment and resources in a fact based data driven way.

TriMas and our shareholders have benefited from this approach in the form of meaningful financial improvement at the consolidated performance level and subsequent enterprise value appreciation.

In considering our prioritizing of investments and resources, for example, today we announced the acquisition of Taplast, a well-recognized company and brand in the dispenser, closure and container packaging end market. I will cover more specifics on Taplast in a few slides.

We have stated on past earnings calls that we will focus on bolt-on acquisitions to support growth in our best performing businesses and the acquisition of Taplast represents the second acquisition already this year in our Packaging segment to bolster our Rieke business.

The addition of Taplast and the previously announced Plastic Srl transaction will allow us to continue to unleash value in our high performing Rieke business. In our TriMas Aerospace Group we had a solid quarter. We have recently focused the product lines and brands in this segment an engineered and standard faster applications.

Over the past two years, our new TriMas Aerospace leadership team has refocused our commercial efforts to better capitalize on available market opportunities and has implemented significant operational changes to increase capacity and improved production efficiencies.

Even though we are beginning to see performance trending in the right direction, we remain focused on manufacturing process and productivity improvement initiatives to further advance the operational and financial performance of this business.

And last, but certainly not least, in our Specialty Products segment, we have been focused on realignment, financial improvement and capacity initiatives related to equipment upgrades and process improvements.

Each business within Specialty Products has contributed nicely to TriMas’ overall performance and we will continue to utilize the TriMas business model to drive growth and financial and operational improvements in Specialty Products.

With that said, the journey which we began a few years ago is well underway and I remain excited about continuing to unleash shareholder value for our investors through our more proactive and engaged model. If we turn to slide four, our strategy to manage our multi-industry businesses and grow shareholder value is straightforward.

As noted, first, we rely on the TriMas business model to seek to achieve optimal performance in each of our businesses and throughout every one of our locations. In turn, our businesses are committed to executing against very discrete strategies, which include product and process innovation to generate long-term growth.

We covered a few examples on prior earnings calls, one of which was an e-commerce product innovation to solve a customer challenge and another of which was a factory floor innovation project to improve delivery times.

We operate all of our businesses with a culture of relentless commitment to cash flow conversion, whilst continuing to reinvest in our businesses to improve performance and drive future growth.

Finally, a key component of our strategy is our disciplined approach to capital allocation, which in addition to reinvestment in our businesses and strategic M&A. We have in the past year retired about 1% of our outstanding shares and have recently increased our authorization to repurchase shares up to $75 million.

So, with this update, let’s turn attention to the first quarter’s performance on slide five. We are off to a solid start for the year which was particularly positive given the first quarter of 2018 was strong both in sales and earnings.

Net sales were still up 1.9% to $221.3 million, with organic sales net of currency and acquisitions up 1.6% as compared to Q1, 2018. Operating profit was up 1.2% to $28.4 million as compared to first quarter of 2018.

Diluted earnings per share was up 12.2% to $0.46 per share driven by better operating performance and a lower effective tax rate in the quarter due to the timing of deductions for certain specific items related to stock compensation and state tax planning initiatives.

At the end of 2018, it was our objective to keep up the momentum into the new year and we are pleased to have started the year with this solid performance across all of our businesses. Turning to slide six, as a reminder, our first quarter is typically the lowest free cash flow quarter for the year.

We generated $2.6 million of free cash flow in the first quarter of 2019, which was on plan, even though what was less than the $14.4 million generated in the same period a year ago.

On a comparative basis, the main differences in year-over-year free cash flow generation were higher capital expenditures of $4 million, higher investment in operating net working capital of about $3 million and a tax refund of $5 million that we enjoyed in the first quarter of 2018, but did not repeat.

Overall, we continue to expect our free cash flow conversion for the year to be greater than 100% of net income as in our guidance. Our quarter ending leverage ratio was 1.4 times, down from the prior year’s first quarter leverage ratio of 1.8 times, despite share buybacks and the acquisition of Plastic Srl in the year.

This ratio does not include the acquisition of Taplast, which on a pro forma basis would still be well below our target of less than 2 times at approximately 1.6 times. Turning to slide seven, we announced today the acquisition of Taplast.

Taplast is a designer and manufacturer of dispensers, closures and injection blow molding containers for consumer markets with approximately $33 million in annual revenue. Taplast is a great fit and complement to our Rieke business in our Packaging Group. Taplast ads to the breadth of our product offering and expands our geographic presence.

We are particularly excited to bringing together the advanced technical and design global teams from Taplast and Rieke to enhance our overall focus on innovation and continue to solve customer challenges. Taplast sold its product lines predominantly throughout Europe and in the Americas with manufacturing facilities in Italy and Slovakia.

We identified Taplast through the corporate development work we reignited last year to begin to build out our Packaging Group and we worked closely with Taplast’s owners and advisors through a private negotiated sale process.

Again, we are very excited to have closed in this transaction, and we welcome Taplast and its employee into our Packaging Group and the TriMas family of businesses. With that, I will turn the call over to Bob who will take us through the segment results.

Bob?.

Thank you, Tom. I will begin my comments on slide nine, beginning with the Packaging segment. Overall first quarter performance was on plan with reported net sales of $88.8 million, up slightly compared to Q1 of year ago.

Organically, we achieved solid sales growth in our health, beauty and home care products, up approximately 12% versus Q1 2018, which also reflected strong performance versus Q1 2017, primarily due to the higher demand in North America and continued sales growth in Asia.

These increases, however, were offset by lower sales of our food and beverage and industrial products due to softer end market demand in North America and in part due to a period of unusually cold weather in the U.S. which affected certain of our customers’ production facilities.

Plastic Srl which we acquired in January is off to a solid start contributing $2.8 million in sales during the quarter. Lastly, net sales reported in the quarter were negatively affected by approximately $2 million due to the impact of unfavorable currency exchange.

Segment operating profit for the quarter was also on plan at $18.7 million or 21% of sales, as we continued to reinvest in our products, technologies and global capabilities. Compared to the prior year period, operating profit margin was impacted by a less favorable product sales mix, unfavorable currency exchange and competitive pricing pressures.

As discussed on our last earnings call, we expected the first quarter to be Packaging’s lowest sales and operating profit quarter in 2019, as well as the lowest growth quarter compared with 2018.

Factors contributing to this expectation are an exceptionally strong first quarter a year ago, the impact of tariff and trade related uncertainties entering the year and the timing of certain new customer program launches expected to occur in the latter half of 2019.

We continue to see solid quoting activity and expect to maintain this momentum through our expanded commercial efforts. Our technical teams continue to work -- continue their work to commercialize product applications related to a solid pipeline of innovative product technologies under development.

For the full year, we continue to expect our Rieke business organic sales growth rate to approximate 3% to 5%, with the operating profit margin remaining in the range of 22% to 23%. The acquisitions of Plastic Srl and Taplast add approximately $45 million in annual revenues, which will be prorated for their portion of the year under our ownership.

While we expect these acquisitions will be slightly dilutive to Packaging’s overall operating margin in 2019, we will leverage the TriMas business model to integrate these businesses with Rieke and improve operating profitability over time.

Turning now to slide 10, sales in our Aerospace segment increased 1.4% for the quarter to $38.3 million, as compared to $37.8 million in the year ago period. Operating profit for the quarter increased $1.4 million to $6.2 million and operating profit margin improved 400-basis-point to 16.1% of sales.

Operating profit increased due to improved production efficiency and a more favorable product sales mix it is despite the challenges we continued to address in our standard fastener product line and production facility. We are encouraged by the signs of progress at this facility, both in terms of order scheduling and production throughput.

We are cautiously optimistic this will lead to improved financial performance of this product line later in the second half of 2019 and beyond.

As Tom noted earlier, the Aerospace’s commercial and technical teams have refocused their efforts to better capitalize on available market opportunities, and we continued to see increased order intake levels which has further strengthened the backlog in our highly engineered fastener product lines.

We remain focused on manufacturing process and productivity improvement initiatives at our primary specialty fastener plants to convert this order backlog and continue to advance the operational and financial performance of this business.

With the full year outlook, we continue to expect year-over-year sales growth in the range of 3% to 4% and operating profit margin to range between 16% to 17%.

Turning to slide 11 and our Specialty Products segment, as a reminder, we made a reportable segment change effective January 1st in which we now report the machine components business as part of the Specialty Products segment. Previously machine components was reported as part of the Aerospace segment.

Net sales for the quarter increased $3 million or 3.3% to $94.1 million. Sales of our industrial products increased approximately $2 million due to solid market demand for large high pressure and specialty steel cylinders.

Net sales of our oil and gas related products also increased approximately $1.8 million, primarily due to higher sales of our gasket and fastener product lines used in refinery complexes and petrochemical facilities. This increase was offset in part by lower sales of our machine components products and the effects of unfavorable currency exchange.

Operating profit declined slightly for the quarter to $10.9 million or 11.5%, as compared to $11.2 million or 12.3% in the prior year.

The benefits of increased sales levels and lower selling, general and administrative expenses were more than offset by higher conversion costs associated with the less favorable product sales mix related to industrial cylinders and engine applications for oil and well -- gas wellhead extraction.

For the full year, we continue to expect our Specialty Products segment to achieve sales growth of 4% to 6% and we expect to leverage higher sales levels, as well as our continuous improvement initiatives over the remainder of the year to achieve segment operating margin in the range of 11% to 13%.

I would now like to shift gears and briefly touch on our strong balance sheet and available liquidity on slide 13. As of March 31st, our net debt and leverage remained below our target levels, even after considering the cash used to fund the acquisition of Plastic Srl in the share repurchases that we completed during the past few quarters.

We ended the quarter with $84 million of cash on book after funding the $22 million purchase price for Plastic Srl and the increased capital deployed towards the ongoing reinvestment in our businesses. We ended the quarter with net debt of $209.5 million, with the resulting leverage ratio of 1.4 times.

Our strong balance sheet, we have approximately $370 million of cash in aggregate availability under our revolving credit facility and solid track record of free cash flow generation positions us well for the remainder of the year and provides both ample capacity and flexibility to fund our balance capital allocation priorities.

At this point, I will now turn the call back to Tom for his wrap up.

Tom?.

Thank you, Bob. If we turn to slide 14, and as noted in our earnings release this morning, we are reaffirming our 2019 guidance, which we first presented in February, with organic sales in the 3% to 5% range, EPS in the $1.82 to $1.92 range and free cash flow greater than 100% of net income.

Q1 is expected to be our lowest organic sales growth quarter for the year and our current bookings support higher year-over-year growth rates as we move through 2019. First quarter EPS was a little higher than planned due to the fact that the discrete tax items occurred in Q1 versus being budgeted ratably throughout the year.

Therefore, our tax rate for the remainder of the year will be trending toward the higher end of our guidance range. In addition, our guidance does not include the results of Taplast, as we continue to work through purchase accounting impacts related to the transaction.

With that said, we do anticipate that Taplast will be accretive to EPS and will add approximately $0.01 per quarter over the remainder of the year. Prior to opening the call up to Q&A, I would like to remind our investors of the prospects we have to continue to drive shareholder value at TriMas in slide 15.

By utilizing the TriMas business model, we will always drive continuous improvement in all that we do and we will do this through a championing a culture of Kaizen and operational excellence.

We have not only been operationally improving TriMas’ businesses, but we are also starting to see the benefits of our investments in innovation and grow through our solid in-bookings and new program wins.

Our capital allocation priorities remain to first reinvest in our businesses with a key focus on the highest return and factory floor improvement projects.

And secondarily ensure we operate with a net debt ratio below our overarching target of 2 times, a level which we are now comfortably below, while seeking to grow our highest potential platform through M&A, as well as continuing to take other treasury actions to benefit shareholders.

While we have been operating solidly against the first two pillars on this page, we have started to take more meaningful steps with respect to capital allocation priorities as evidenced by the two bolt-on acquisitions completed this year, $12 million in share repurchases to-date and an increase to our share repurchase authorization, all while maintaining a strong balance sheet.

With that, I remain excited about the prospects for TriMas and the multiple levers we have available to us to drive shareholder value. Thank you..

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

Thank you. [Operator Instructions] The next question will come from Scott Graham with BMO Capital Markets. Please go ahead..

Hi. This is Katja on for Scott..

Hi, Katja..

Quick question on the Packaging, I think you said there are competitive pricing pressures, can you maybe talk a little bit more on what’s going on there and what your expectations are for pricing for the rest of the year?.

Sure. Look, I think, as in any business, we face competitive market dynamics, not just in Packaging, but the other businesses as well that we have to be responsive to in terms of our pricing strategies and mindful of the impact that that can have on our volume activity.

And so we take actions as needed to ensure we maintain that volume with customers and it’s very specific to both geographies, product lines and customers. So, in the main, we have done a pretty good job of balancing those dynamics in terms of maintaining an overall operating margin in that business of 21%, 22%, 23% historically..

Yeah. And I would also add that, that to help mitigate this pressure in any one of our businesses the continuous improvement program, which is a key tenant of the TriMas business model is imperative for us to operate again successfully, so we could protect from just general market forces.

But this is something that that we -- as we review performance in all of our businesses, we have a very robust process of looking at very specific continuous improvement programs in some cases by location and that allows us to remain competitive vis-à-vis our competitors..

Okay. And I know that first quarter organic sales are going to be the slowest of the year and that orders are trending well.

But could you maybe talk a little bit about how orders are trending relative to your 3% to 5% organic sales growth?.

Well, we are seeing in-bookings across all of our businesses that suggest at least as we sit here today that we are comfortable with our outlook. So that’s one thing that as we look at our in-bookings, in our quoting activity, which for us are pretty key indicators that have us remaining optimistic about our outlook..

We had some very strong organic growth in our home, beauty and healthcare products segment 12% compared to the prior year Q1, and as we enter Q2 and Q3, which typically are our higher volume quarters based on the seasonality of activity, we anticipate our ability to maintain the guidance range of 3% to 5% organic growth..

Okay. I just have one more.

Do you foresee any impact from Boeing’s MAX issues?.

So we do supply fasteners to the 737 MAX, and as you are aware, they are still in production, albeit at a slightly reduced level. We are still supplying and customer is still taking through distribution and directly to our Min/Max level programs, which I think most suppliers are doing.

Overall for a plane of this size in construction, we would be in roughly about $20,000 ship set range. So given the amount of less production that’s occurring versus the overall plan it’s -- we don’t see it as much of an impact for us at the current forward projection..

Okay. Thank you very much..

Thank you.

Thank you for your question. The next question will come from Matt Koranda with ROTH Capital Partners. Please go ahead with your question..

Hey. This is Mike [ph] on for Matt. Good morning..

Good morning, Mike..

Good morning, Mike..

So my first question on Packaging and apologies if you have already said this, but is there a particular region where food and beverage, and industrial products were a little weaker in the quarter?.

Well, we sell most of our food and beverage into the U.S., North America and industrial we don’t know if we mentioned or not, but was a little weaker more in North America than rest of world. So it’s predominantly for both cases a U.S./North America impact..

Okay. Great.

And then regarding Taplast, what are the operating margins for Taplast and what kind of synergies can we extract either on the commercial side or the cost side of things?.

So the margins for the business are below where Rieke operates today and given some of the margins of Rieke, that’s typically the case as we look for transaction opportunities, acquisition opportunities in the market. We see a number of opportunities for synergies both in terms of cost structure.

For example, this is a smaller business that ran standalone. So when we plug it into the larger Rieke organization, the larger Rieke global organization right away there will be benefits to that as we eliminate some of those standalone costs.

In addition to that, there’s a number of product line opportunities that, for example, customers of Taplast were seeking for Taplast to supply them in other parts of the world. That would have been very difficult for Taplast of its size to supply those product lines or technologies in those parts of the world.

But for us, we have locations everywhere where our customers would like them to be with their specific products, so we can quickly adapt and support that growth. So synergies both in the areas of cost structure and procurement as well, but also in the future revenue side..

Okay. Great. That’s helpful.

And then last one on Specialty Products, are there any brands that are seeing more of an impact from cost inflation and is this starting to cost inflation, and is this starting to abate in any specific brands as well?.

I don’t think we are seeing any across the board cost inflation that are drivers that we can’t offset through our normal continuous improvement activity.

I do think if we didn’t have -- and I said this before, if we didn’t have tariffs or at one point towards the end of last year intellectual material, we might be talking about freight more, because freight definitely is up over the past year, year and a half.

But these are things that we have to see to mitigate through continuous improvement in pricing where we can get that..

Yeah. I think we saw a lot of those impacts in terms of both input costs and freight costs a year ago. They seemed to be moderating as we enter into 2019. So it doesn’t mean they are declining, but the rate of increase has lessened then.

We would expect that absent any significant change to the macroeconomic trends to sort of continue through the remainder of the year..

Okay. Great. Thanks a lot. I will get back in the queue..

Thank you..

Thank you..

Thank you for the question. The next question will come from Steve Barger with KeyBanc Capital Markets. Please go ahead..

Hi. Good morning, everybody..

Hi, Steve..

Hi, Steve..

On your comment on industrial packaging organic growth being weak in North America, what drove that and has that persisted in April?.

Well, we did see to start the year a little bit of a slowdown across the Board in North American industrial. And then when we had that cold snap of weather that certainly didn’t help. So that was a bit of the more of the major driver to it.

As we look at our forecast for industrial, we are seeing a little bit of softness, but it is mainly related to what our end customers are seeing, as they look at it -- their overall end markets versus any other type of share matter or something like that..

Right. And if you can try and step back from the weather, which end markets are you seeing that in, as I am just curious, is it machinery or is it a distribution issue or....

So when we look at our industrial segment for Packaging, we are talking about drum and taut closures and dispensers. So typically that would go to the petrochemical markets, for example, and that’s the ordering cadence for that sector is a little bit off and we have seen this from some of the larger customers in the spaces talk about that as well..

Got it. Thank you.

Where is Taplast on capacity utilization and will it require any step up in CapEx or has that business been invested in appropriately over the years?.

Very good question. We likely will invest in capital, but more to adapt some of the production techniques to some methods and opportunities for improvement that we are more familiar with, for example, in automation and assembly production lines.

As far as capacity goes, there is available capacity on some of the equipment, not all of the equipment, and also in terms of floor space. So we have an opportunity in Slovakia to grow, we are looking at that facility as an opportunity, as well as in their Povolaro facility..

And sorry, if I missed this, but did you say what multiple of EBITDA are you paying?.

I did not. We do disclose the price in the Q and it was sort of high-single digits before synergies..

Okay.

As you have transactions back to be being more active on M&A, are you looking across all segments or do you really want to stay focused on Packaging because of the return profile there or just holistically, how are you thinking about M&A?.

Great question. And something that we have talked about in previous occasions and it’s more appropriate to revisit now, perhaps, having closed our second deal in Packaging.

Much of the work as you can imagine to bring deals to closure take a lot of time and the work on Taplast and the work on Plastic Srl and others that we are looking at and preparing for the pipeline started over a year ago as we worked and honed the strategy for our Packaging business and we declared at that time that we want to invest M&A dollars in our best performing businesses.

So we have identified Packaging as an area where we want to build out that platform. With the better performance and turn around operationally of our Aerospace business, where we can find select opportunities that would be bolt-ons or nice additions to complement that business, we would definitely consider as well. But I want to emphasize bolt-ons.

We are not looking for anything transformational in, certainly, in TriMas Aerospace. And then with respect to Specialty Products, as I talked about to open up the call, we have strategically either relative to financial performance or just generally what we do with the strategic direction of some of those businesses.

We really want to work on operating those businesses better, ensuring they have long-term sustainable high performance, and in some cases we are not there yet. So our emphasis for M&A is going to simply be the priority of our Packaging Group, building that out and then in a very focused way in TriMas Aerospace..

Got it.

And can you -- just last question -- any -- what’s your internal measure of hurdle rate as you think about M&A or how are you kind of gauging what you will consider a successful business?.

Well, we look at -- well, we look at success -- we will say a successful transaction, I mean, versus successful business, because that’s a broad -- could be a broad characteristic depending on what they bring to us.

But in terms of our metric -- our internal metric, we are looking at achieving our cost of capital of above 8% by the third year of ownership and if that translates to a RONA -- getting to a RONA above 8% by third year of ownership.

And as we look at deals that’s the minimum metric that they have to achieve either through purchase price on the deal or through synergies that we could gain after..

Understood. Thank you..

Yeah. Thank you..

Thank you for your question. [Operator Instructions] The next question will be from Andy Casey with Wells Fargo. Please go ahead..

Good morning. This is actually Patrick Wu standing in for Andy Casey. Thanks for taking our questions..

Hi, Patrick..

Hi, Patrick..

Hello.

Just on your Packaging segment, I was wondering if you can bucket sort of the delta between this year’s EBIT margin versus last year, I think, it’s around 120 bps difference, you call that FX, obviously, competitive pricing as well as mix, can you bucket that firstly? And then also just sort of associated with your question on pricing earlier, what regions are you seeing the pressure more from, is it fair to say from your commentary that is more from domestic, industrial, and food and bev?.

I wouldn’t characterize it as being focused in a particular segment or a particular geography. I mean, generally speaking, yet, if -- there’s instances of competitive pricing and challenges really across all our markets and I don’t view that as being any different than any other business or end market that you happen to be participating in.

So, in that sense, I think, our team is very good at balancing the equation of pricing and retaining business, as well as improving on a value added proposition that might allow us to obtain the business or retain the business without price reduction.

So, I don’t view this as being any different than what we have experienced across Packaging or many years.

In terms of the margin differential, it’s largely product mix and as we talked about our topline, much higher sales growth in HBPHC, with operating margins are slightly lower than the overall Rieke Packaging average and lesser sales volume in both food and beverage and industrial in the first quarter.

We expect as we look out over the remainder of the year as those levels of activity in those two end markets rebound consistent with our plan that the margin average will get back into the guidance range of 22% to 23%..

Got it. Thanks for that. And just a little bit more on Taplast, and I guess, even Srl for that matter just trying to reconcile your commentary on deal being a $0.01 accretive sort of on a quarter-over -- on a quarterly basis moving forward, but the margins for that business is below your current Packaging segment margin.

Just wondering how should we think about where the accretion is from and also as you put these businesses through your business model -- your TriMas business model, what kind of levels can it ultimately get up to, a little bit more color on that would be great?.

Sure. So let me take the question in the order -- questions in the order you presented. So if we talk first about accretion. We have to separate ROS, return on sales from absolute euros or dollars coming into -- incrementally coming into the business.

So we are adding a nice amount of EBITDA from this company -- this small company, it’s roughly, we will call it, in the plus or minus $4.5 million to $5 million range of EBITDA is anticipated to come in.

That ultimately by the time non-cash cost hit that through depreciation and one of the things that we can’t answer right now is intangible amortization, is going to result in taxes, is going to result in residual dollars that add to our EPS.

So we have estimated through our experience in anticipating what purchase accounting is likely to look at -- look like here that the net result will be an incremental $0.01 per share for each of the subsequent quarters going forward and until we drive further synergies, which gets me to the second part of your question.

Yeah, I mean, we expect that the performance of this business under our ownership, not only as part of the larger company, a larger global company, I mean, this is a small company in many ways providing customer support globally, which is extremely expensive, when we plug this into our organization we can get the global support that the Taplast would expect to provide its customers through our existing cost structure without adding anything.

So there is immediate savings that we can get at in short order. Then longer term as we look at using the best of the best manufacturing techniques not only within Rieke, not only within Taplast, but also with Plastic Srl, we would expect that that we will learn from all of our best benchmarking practices to improve the businesses.

And then in addition to that, there’s procurement savings and procurement opportunities. I mean we buy a lot of polypropylene, Taplast buys the fraction of that, so we will plug them into our purchasing and hopefully that will provide a benefit as well.

So it is going to provide absolute EPS income to us and we would expect that the margin profile over time under our ownership, under the GBM will be driven up as well..

Okay. Thank you..

Thank you..

Thank you for your question. [Operator Instructions] Speakers I am showing nothing further at this time, I will turn the conference back over to you for closing remarks..

Okay. I’d like to thank everyone for listening to our quarter update and we look forward to our next quarterly update for 2Q. Thank you very much..

Thank you..

Thank you, ladies and gentlemen. This concludes today’s event. You may now disconnect your lines. Have a great day..