Barnes Group Inc. (NYSE:B) Q4 2021 Earnings Conference Call February 18, 2022 8:30 AM ET Company Participants Bill Pitts - Vice President, Investor Relations Patrick Dempsey - President and CEO Julie Streich - Senior Vice President, Finance and CFO Conference Call Participants Louis Raffetto - UBS Matt Summerville - D.A. Davidson Pete Skibitski - Alembic Global Pete Osterland - Truist Securities Operator Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like t ...

Barnes Group Inc. (NYSE:B) Q3 2021 Earnings Conference Call October 29, 2021 8:30 AM ET Company Participants Bill Pitts – Director-Investor Relations Patrick Dempsey – President and Chief Executive Officer Julie Streich – Senior Vice President and Chief Financial Officer Conference Call Participants Matt Summerville – D. A. Davidson Christopher Glynn – Oppenheimer Louis Raffetto – UBS Pete Osterland – Truist Securities Operator Good day. And thank you for standing by. Welcome to the Barnes Group Incorporate ...

Financial Data and Key Metrics Changes - In Q2 2021, total sales were $321 million, up 36% from the prior year, with organic sales increasing by 31% and a positive foreign exchange impact of 5% [18] - Adjusted operating income was $39.2 million, up 41%, with an adjusted operating margin of 12.2%, an increase of 40 basis points from the previous year [19] - Net income was $24.5 million or $0.48 per diluted share, compared to $600,000 or $0.01 per diluted share a year ago, with adjusted EPS of $0.45, up 67% from $0.27 [21] Business Line Data and Key Metrics Changes - Industrial segment sales were $235 million, up 42% year-over-year, with organic sales increasing by 35% [22] - Aerospace sales were $86 million, up 23% from a year ago, driven by a 37% increase in OEM business [24] - The Molding Solutions business saw organic sales growth of 22% year-over-year, while the Force & Motion Control segment experienced over 50% organic orders growth [12][8] Market Data and Key Metrics Changes - Manufacturing PMIs in the U.S. and Eurozone remain strong, with China in expansion territory, although not as robust [8] - Global production is expected to increase by 10% in 2021 and an additional 11% in 2022, despite ongoing semiconductor issues [8] - The aerospace aftermarket is anticipated to improve sequentially as air traffic recovers, particularly in the U.S. and China [66] Company Strategy and Development Direction - The company is focused on growth initiatives, including investments in technology and new product development, such as the launch of vacuum gripper technology and pipette tips for the medical market [10][11] - The outlook for organic sales growth has been revised to mid-teens for Industrial and approximately 20% for Automation, reflecting strong demand and recovery [14][13] - The company aims to continue funding strategic initiatives and pursue accretive acquisitions to enhance long-term performance [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of end markets, with a strong backlog of $984 million, reflecting a 12% increase from the previous quarter [7] - Supply chain challenges and inflation risks are being actively managed, with pricing actions implemented as necessary [16] - The outlook for Aerospace remains unchanged, with total sales expected to increase by low single digits, while OEM sales are forecasted to rise by mid-single digits [16] Other Important Information - The company repurchased 100,000 shares at an average price of $52.29 during the quarter, with approximately 3.6 million shares remaining available for repurchase [26] - The debt-to-EBITDA ratio improved to 2.9 times, down from 3.1 times at the end of the previous quarter [26] - Cash conversion is now anticipated to be greater than 110%, an increase from the prior expectation of 100% [28] Q&A Session Summary Question: Can you discuss the aerospace aftermarket MRO? - Management indicated that the slight sequential decline in MRO sales was due to timing, with orders up 4% in the quarter, and expects continued growth in the aftermarket [30][32] Question: How do you contextualize the inflation numbers provided? - Management noted that full-year inflation expectations have been adjusted slightly down from $6 million to align with current experiences, indicating optimism for the second half of the year [34] Question: What is the outlook for cash flow conversion? - Management acknowledged the potential for a working capital build in the second half, hence the comfort with a 110% or greater cash conversion expectation [36][37] Question: Can you provide insights on Aerospace margins? - Aerospace margins were slightly down, but management remains optimistic about the mix improving as aftermarket recovery continues [40][41] Question: What is the outlook for Industrial margins? - Management expects Industrial margins to improve sequentially, driven by volume and operational initiatives, with a target of mid-teens margins in the future [46][61]

Q2 2021 Performance Highlights - Orders increased by over 400% year-over-year[5] - Organic sales increased by 31% year-over-year[5] - Adjusted operating margins increased by 40 basis points year-over-year[5] - Adjusted EPS increased by 67% year-over-year[5] - The book-to-bill ratio was 1.3x[5] - Total backlog reached $984 million, the highest level since Q4 2019, up 12% from Q1 2021[5] Segment Performance - **Industrial:** Organic orders increased by 37%, organic sales increased by 35%, and adjusted operating margin was 11.7%, up 230 basis points[5] - **Aerospace:** Organic orders increased by over 300%, organic sales increased by 23%, and adjusted operating margin was 13.5%, down 400 basis points[6] 2021 Outlook - The company anticipates low single-digit growth for the Aerospace segment[9] - The company anticipates low-teens growth for Barnes Group Total, with a foreign exchange impact of approximately +2% and an M&A impact of approximately -1%[9] - The company anticipates high-teens growth for Molding Solutions, driven by the medical market and recovery in auto, packaging, and personal care[10]

Part I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the three and six months ended June 30, 2021, and 2020, highlighting a significant increase in Q2 2021 net income to **$24.5 million** and total assets at **$2.63 billion** Consolidated Statements of Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $321,158 | $235,537 | $622,787 | $566,207 | | **Operating income** | $38,543 | $10,115 | $70,923 | $59,429 | | **Net income** | $24,491 | $567 | $43,873 | $30,300 | | **Diluted EPS** | $0.48 | $0.01 | $0.86 | $0.59 | Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $664,669 | $642,345 | | **Total assets** | $2,626,871 | $2,676,226 | | **Total current liabilities** | $307,433 | $295,379 | | **Long-term debt** | $654,483 | $699,868 | | **Total stockholders' equity** | $1,390,393 | $1,382,677 | Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $85,721 | $123,194 | | **Net cash (used) provided by investing activities** | $(14,507) | $17,309 | | **Net cash used by financing activities** | $(58,567) | $(151,610) | - The company divested its Seeger business effective February 1, 2020, yielding net cash proceeds of **$36.1 million**, which were used to reduce debt, resulting in tax charges of **$4.2 million** and divestiture charges of **$2.4 million** in Q1 2020[30](index=30&type=chunk)[31](index=31&type=chunk) - In June 2021, the company elected an Italian tax basis realignment for intangible property, resulting in a one-time tax benefit of **$2.7 million**, and recording a deferred tax asset of **$83.9 million** and a corresponding deferred tax liability of **$72.2 million**[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q2 2021 net sales rose **36.4%** to **$321.2 million** with operating margin at **12.0%**, reflecting market recovery and strong liquidity [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Q2 2021 sales increased **36.4%** to **$321.2 million**, with operating income surging **281.0%** to **$38.5 million** due to higher sales and reduced charges Net Sales by Segment (in millions) | Segment | Q2 2021 | Q2 2020 | % Change | H1 2021 | H1 2020 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Industrial | $234.7 | $165.0 | 42.2% | $454.7 | $364.1 | 24.9% | | Aerospace | $86.5 | $70.5 | 22.7% | $168.1 | $202.1 | (16.8)% | | **Total** | **$321.2** | **$235.5** | **36.4%** | **$622.8** | **$566.2** | **10.0%** | Operating Profit (Loss) and Margin by Segment | Segment | Q2 2021 Profit | Q2 2021 Margin | Q2 2020 Profit | Q2 2020 Margin | | :--- | :--- | :--- | :--- | :--- | | Industrial | $27.3M | 11.6% | $(0.3)M | (0.2)% | | Aerospace | $11.3M | 13.0% | $10.4M | 14.8% | - The Industrial segment's Q2 organic sales increased by **$57.5 million (34.8%)**, driven by improved volumes across all businesses, with foreign currency fluctuations contributing an additional **$12.4 million** to sales[135](index=135&type=chunk) - The Aerospace segment's Q2 sales increase was driven by a **37%** rise in the OEM business, partially offset by a **2%** decline in the Aftermarket business due to the COVID-19 pandemic's impact on air travel[139](index=139&type=chunk) - The significant increase in operating income was primarily driven by the absence of **$17.7 million** in pre-tax restructuring charges recorded in Q2 2020, combined with higher sales volumes[124](index=124&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$85.7 million** in H1 2021 operating cash flow, a **$1 billion** credit facility, and compliance with all debt covenants Cash Flow Summary (in millions) | Activity | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Operating | $85.7 | $123.2 | | Investing | $(14.5) | $17.3 | | Financing | $(58.6) | $(151.6) | - In February 2021, the company entered into a sixth amended and restated senior unsecured revolving credit agreement, maintaining **$1 billion** in availability, increasing the accordion feature to **$250 million**, and extending the maturity to February 2026[150](index=150&type=chunk) Debt Covenant Compliance as of June 30, 2021 | Covenant | Actual Ratio | Required Ratio | | :--- | :--- | :--- | | Ratio of Consolidated Senior Debt to Consolidated EBITDA | 2.86x | Maximum 3.75x | | Ratio of Consolidated Total Debt to Consolidated EBITDA | 2.86x | Maximum 3.75x | | Ratio of Consolidated EBITDA to Consolidated Cash Interest Expense | 14.21x | Minimum 4.25x | - Share repurchase activity, suspended in 2020 due to COVID-19, resumed in Q2 2021, with the company repurchasing **0.1 million shares** for **$5.2 million**[153](index=153&type=chunk) [Critical Accounting Policies](index=35&type=section&id=Critical%20Accounting%20Policies) This section details critical accounting policies, noting that the Q2 2021 annual impairment test identified no impairment for goodwill or indefinite-lived intangible assets - Management completed its annual impairment assessment for goodwill and indefinite-lived intangible assets during the second quarter of 2021, identifying no impairments at any reporting units[167](index=167&type=chunk)[168](index=168&type=chunk) - The estimated fair value of the Automation reporting unit (Gimatic acquisition) exceeded its carrying value, while the fair values of all other reporting units significantly exceeded their carrying values[168](index=168&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposure during the first six months of 2021, referring to its Annual Report for detailed discussion - There have been no material changes to the Company's market risk during the six-months ended June 30, 2021[174](index=174&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - The President and Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[175](index=175&type=chunk) - There were no changes in internal control over financial reporting during Q2 2021 that materially affected, or are reasonably likely to materially affect, internal controls[176](index=176&type=chunk) Part II. OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but anticipates no material adverse effect on its financial position, cash flows, or results of operations - The company expects that the outcome of pending litigation, individually or in the aggregate, will not have a material adverse effect on its financial position, cash flows, or results of operations[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2021, the company repurchased **102,332 shares** at an average price of **$52.30**, with **3,604,000 shares** remaining available under the program Issuer Purchases of Equity Securities (Q2 2021) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased Under Program | Max Shares Remaining Under Program | | :--- | :--- | :--- | :--- | :--- | | April 2021 | 730 | $51.12 | 0 | 3,704,000 | | May 2021 | 100,472 | $52.29 | 100,000 | 3,604,000 | | June 2021 | 1,130 | $53.28 | 0 | 3,604,000 | | **Total** | **102,332** | **$52.30** | **100,000** | **3,604,000** | - On April 25, 2019, the Board of Directors increased the share repurchase authorization by **3.5 million shares**, bringing the total authorized under the program to **5.0 million shares**[181](index=181&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the CFO offer letter and certifications required by the Sarbanes-Oxley Act - Exhibits filed with this report include the CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[183](index=183&type=chunk)

Barnes Group Inc. (NYSE:B) Q1 2021 Earnings Conference Call April 30, 2021 8:30 AM ET Company Participants Bill Pitts - Director, Investor Relations Patrick Dempsey - President & Chief Executive Officer Marian Acker - Vice President, Controller & Interim Chief Financial Officer Conference Call Participants Christopher Glynn - Oppenheimer Pete Skibitski - Alembic Global Matt Summerville - D.A. Davidson Lou Raffetto - UBS Operator Good day and thank you for standing by. Welcome to the Barnes Group First Quar ...