Barnes Reports Second Quarter 2024 Financial Results

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Insights

Barnes Group's Q2 2024 results present a mixed picture. While overall sales increased by 13% to $382 million, with organic growth of 5%, the company faced significant challenges:

Operating margin turned negative at -0.6% due to a $53.7 million goodwill impairment in the Automation business unit.
Adjusted EPS declined by 36% to $0.37, impacted by higher interest expenses and tax rates.
Free cash flow was negative $14.5 million year-to-date, adjusted for divestiture-related tax payments.

The Aerospace segment showed strong growth, with sales up 79%, boosted by the MB Aerospace acquisition. However, the Industrial segment saw a 24% sales decline due to divestitures.

The company's debt position remains a concern, with a Net Debt to EBITDA ratio of 3.48x. Barnes aims to reduce this to 3.0x by year-end, which will be important for financial stability.

The updated 2024 guidance suggests caution, with adjusted EPS forecast at $1.55 to $1.75, reflecting ongoing challenges in the Aerospace OEM supply chain and productivity constraints.

Barnes' Aerospace segment performance reveals both opportunities and challenges in the current market:

The 79% sales increase, largely driven by the MB Aerospace acquisition, demonstrates Barnes' strategic move to expand its aerospace footprint.
Organic growth of 8% in Aerospace, with aftermarket sales up 19%, indicates robust demand in fleet maintenance and repair.
However, Aerospace OEM organic sales grew only 1%, highlighting persistent supply chain and productivity issues in new aircraft production.

The Aerospace OEM backlog of $1.51 billion, up 3% sequentially, suggests steady demand. However, the expected 40% conversion to revenue over the next 12 months may be optimistic given current industry constraints.

The decline in Aerospace adjusted operating margin by 220 basis points to 14.8% is concerning, reflecting integration costs and productivity challenges. This margin pressure may persist as the company works through supply chain issues and synergy realization from the MB Aerospace acquisition.

Barnes' transformation into an aerospace-focused company is progressing, but near-term headwinds in the OEM sector will likely continue to impact overall performance.

Barnes' strategic shift towards becoming an aerospace-focused company is evident in this quarter's results, but the transition presents both opportunities and challenges:

The divestiture of Associated Spring and Hänggi businesses for $175 million demonstrates Barnes' commitment to reducing automotive exposure and focusing on higher-growth sectors.
The MB Aerospace acquisition has significantly boosted Aerospace segment sales, but integration costs and margin pressures are apparent in the short term.
The $53.7 million goodwill impairment in the Automation business unit signals potential miscalculations in previous acquisitions or market changes, necessitating a strategic review of the Industrial segment.

The Barnes Transformation Office (BTO) initiatives are showing some positive impact, particularly in cost management within the Industrial segment. However, the overall transformation is creating near-term volatility in financial results.

The company's focus on debt reduction, aiming for a leverage ratio of 2.5x by 2025, is important for maintaining financial flexibility during this transition period. The success of this strategy will depend on improving free cash flow generation and potentially further portfolio optimization.

While the aerospace focus aligns with long-term industry growth trends, Barnes must navigate the current supply chain and productivity challenges to fully capitalize on its strategic repositioning.

07/26/2024 - 06:30 AM

Significant Progress Made on Transforming to an Aerospace Focused Company

Comparisons are year-over-year unless noted otherwise

Second Quarter 2024:

Sales of $382 million, up 13%; Organic Sales up 5%
Operating Margin of -0.6%; Adjusted Operating Margin of 12.4%, down 40 bps
Adjusted EBITDA Margin of 20.0%, up 20 bps
GAAP EPS of -$0.91; Adjusted EPS of $0.37, down 36%
Records Automation goodwill impairment

2024 Outlook:

Sales Growth of 10% to 12%; Organic Sales Growth of 4% to 6%
Adjusted EBITDA Margin of 20% to 22%
GAAP EPS of -$0.36 to -$0.16; Adjusted EPS of $1.55 to $1.75

BRISTOL, Conn.--(BUSINESS WIRE)-- Barnes Group Inc. (NYSE: B), a global provider of highly engineered products, differentiated industrial technologies, and innovative solutions, today reported financial results for the second quarter 2024.

“For the second quarter, strong Aerospace aftermarket and Molding Solutions revenue growth partially offset lower than expected Aerospace OEM sales, as industry supply chain and productivity constraints continue to temper our Aerospace OEM results," said Thomas J. Hook, President and Chief Executive Officer of Barnes. “These industry factors will impact our overall near-term Aerospace outlook, even as our aftermarket continues to benefit from growing fleet opportunities and synergies from our acquisition of MB Aerospace remain on track. Despite these headwinds, we are making significant progress across the company in transforming Barnes into a higher growth, higher value company, led by a strong Aerospace business and a streamlined Industrial business.”

Second Quarter 2024 Highlights

Sales of $382 million were up 13% versus the same quarter a year ago, with organicgrowth⁽¹⁾ of 5%. The net beneficial impact of acquisition and divestiture related sales was approximately 8%. Foreign exchange did not have a meaningful impact on sales.

In the quarter, the sales and cash flow expectations for the Automation business unit within the Industrial segment were reduced, which among other factors, resulted in a non-cash impairment charge of $53.7 million contributing to an operating loss of $2.1 million, and operating margin of -0.6%.

Adjusted operating income of $47.6 million was up 9% and adjusted operating margin of 12.4% was down 40 bps. Adjusted operating income excludes the goodwill impairment charge, a $10.2 million pre-tax gain on the sale of the Associated Spring and Hänggi businesses, restructuring and transformation related charges of $5.4 million, MB Aerospace short-term purchase accounting adjustments of $0.7 million, and shareholder advisory costs of $0.1 million. Adjusted EBITDA⁽²⁾ was $76.5 million, up 14% from a year ago and adjusted EBITDA margin was 20.0%, up 20 bps.

In early April, Barnes closed the divestiture of the Associated Spring and Hänggi businesses, materially reducing its exposure to automotive component manufacturing. The headline price of the transaction was $175 million, and net cash proceeds of approximately $150 million were used to reduce debt.

Interest expense was $20.8 million, up from $6.5 million a year ago, due to higher average borrowings from the purchase of MB Aerospace and a higher average interest rate given the recapitalization of the Company’s debt structure.

The effective tax rate for the quarter was -112% compared with 23% last year primarily driven by the non-deductible goodwill impairment charge and taxes tied to the sale of Associated Spring and Hanggi. On an adjusted basis, the second quarter’s effective tax rate was 31%.

Net loss was $46.8 million, or -$0.91 per share, compared to net income of $17.4 million, or $0.34 per share in the prior year. On an adjusted basis, net income per share of $0.37 was down 36% from $0.58. Adjusted net income per share excludes a $1.05 non-cash goodwill impairment charge, $0.14 of charges inclusive of tax related to the Associated Spring and Hänggi divestiture, $0.08 of restructuring and transformation related charges, and $0.01 of MB Aerospace short-term purchase accounting adjustments.

Year-to-date cash provided by operating activities was $3.1 million versus $42.5 million in the first half of 2023. The decrease from the prior year was primarily due to an increase in working capital and divestiture related income tax payments. Capital expenditures of $29.9 million year-to-date increased $8.2 million over the prior year, driven by investments related to the Company’s restructuring program and investments for growth. Year-to-date free cash flow, adjusted for the tax payments related to the divestiture, was negative $14.5 million.

Segment Performance

Aerospace

Second quarter sales in the Aerospace segment were $218 million, up 79%. Organic sales increased 8%, and sales related to the acquisition of MB Aerospace added 71%. Aerospace original equipment manufacturing (“OEM”) sales increased 75%, while aftermarket sales increased 84%. On an organic basis, OEM sales increased 1%, and aftermarket sales increased 19%. Segment operating profit was $29.3 million, up 77%. Adjusted operating profit of $32.3 million was up 56%, while adjusted operating margin declined 220 bps to 14.8%. Adjusted operating profit excludes restructuring and transformation-related charges of $2.2 million, and MB Aerospace short-term purchase accounting adjustments of $0.7 million. Adjusted operating profit benefited from the contribution of higher organic sales volumes, inclusive of pricing, and the contribution of MB Aerospace sales, partially offset by the amortization of long term acquired intangibles for the MB Aerospace acquisition and lower productivity. Aerospace adjusted EBITDA was $50.4 million, up 64%, and adjusted EBITDA margin was 23.1% versus 25.2% a year ago.

Aerospace OEM backlog ended the second quarter at $1.51 billion, up 3% sequentially from March 2024. The Company expects to convert approximately 40% of this backlog to revenue over the next 12 months.

Industrial

Second quarter sales in the Industrial segment were $164 million, down 24% due to the sale of the Associated Spring and Hänggi businesses. On an organic basis, sales were up 3% from a year ago. Operating loss was $31.5 million versus operating income of $9.4 million in the prior year. Adjusted operating profit was $15.3 million, down 33%, and adjusted operating margin was 9.3%, down 120 bps. Adjusted operating profit reflects the impact of the divested businesses partially offset by positive pricing and Barnes Transformation Office (BTO) cost initiatives. Adjusted operating profit excludes a $53.7 million non-cash goodwill impairment charge, a $10.2 million pre-tax gain on the sale of the divested businesses and restructuring and transformation related charges of $3.2 million. Adjusted EBITDA was $25.1 million, down 28% from a year ago, and adjusted EBITDA margin was 15.3%, down 70 bps.

Balance Sheet and Liquidity

As of June 30, 2024, the Company had $66 million in cash and $419 million available borrowing capacity under its revolving credit facility. The “Net Debt to EBITDA” ratio, as defined in our credit agreements, was 3.48 times, down from 3.62 times at March 31, 2024. Barnes remains focused on achieving a leverage ratio of 3.0x or lower by the end of 2024 and reaffirms its long-term leverage goal of 2.5x by 2025.

Updated 2024 Full Year Outlook

The Company is updating its full year 2024 guidance to the following:

		2024 Guidance
Organic sales growth		4% to 6%
Adjusted operating margin		12% to 14%
Adjusted EBITDA margin		20% to 22%
Adjusted earnings per share		$1.55 to $1.75
Capital expenditures		$55 million to $65 million
Free cash flow		$45 million to $55 million
Adjusted effective tax rate		33% to 34%

The Company’s 2024 Adjusted EPS guidance excludes a $1.05 non-cash goodwill impairment charge, $0.40 related to restructuring and transformation activities, $0.35 of divestiture impacts related to the sale of the Associated Spring and Hänggi businesses, $0.06 of MB Aerospace short-term purchase accounting adjustments, $0.02 of acquisition-related impacts, and $0.03 of shareholder advisory costs.

Conference Call Information

Barnes will conduct a conference call with investors to discuss the second quarter 2024 results at 8:30 a.m. ET today, July 26, 2024. The public may access the conference through a live audio webcast available on the Investor Relations section of Barnes’ website at www.onebarnes.com.

The conference is also available by direct dial at (888) 510-2379 in the U.S. or (646) 960-0691 outside of the U.S.; Conference ID 1137078. Supplemental materials will be posted to the Investor Relations section of the Company's website prior to the conference call.

In addition, the call will be recorded and available for playback from 12:00 p.m. (ET) on Friday, July 26, 2024, until 11:59 p.m. (ET) on Friday, August 2, 2024, by dialing (609) 800-9909; Conference ID 1137078.

Notes:

⁽¹⁾ Organic sales growth represents the total reported sales increase within the Company’s ongoing business less the impact of foreign currency translation and acquisitions and divestitures completed in the preceding twelve months.

⁽²⁾ While Barnes reports financial results in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides additional information with respect to a non-GAAP measure, “Adjusted Earnings Before Interest, Income Tax, Depreciation and Amortization” (Adjusted EBITDA). With the acquisition of MB Aerospace, the largest transaction in Barnes’ history, the Company incurred related expenses, including acquired intangible assets and additional interest expense from the debt-funded acquisition. Accordingly, the Company uses Adjusted EBITDA, among other measures, to monitor our business performance. While EBITDA is not a U.S. GAAP measure, nor is it a substitute for a U.S. GAAP measure, we believe it provides helpful information to investors in understanding the ongoing operating performance of the Company. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with U.S. GAAP. Tables reconciling non-GAAP to GAAP financial measures, including forward looking outlook information, are presented at the end of this press release.

About Barnes

Barnes Group Inc. (NYSE: B) leverages world-class manufacturing capabilities and market-leading engineering to develop advanced processes, automation solutions, and applied technologies for industries ranging from aerospace and medical & personal care to mobility and packaging. With a celebrated legacy of pioneering excellence, Barnes delivers exceptional value to customers through advanced manufacturing capabilities and cutting-edge industrial technologies. Barnes Aerospace specializes in the production and servicing of intricate fabricated and precision-machined components for both commercial and military turbine engines, nacelles, and airframes. Barnes Industrial excels in advancing the processing, control, and sustainability of engineered plastics and delivering innovative, custom-tailored solutions for industrial automation and metal forming applications. Established in 1857 and headquartered in Bristol, Connecticut, USA, the Company has manufacturing and support operations around the globe. For more information, visit please visit www.onebarnes.com.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future operating and financial performance and financial condition, and often contain words such as "anticipate," "believe," "expect," "plan," "estimate," "project," "continue," "will," "should," "may," and similar terms. These forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements. These risks and uncertainties include, among others: the Company’s ability to manage economic, business and geopolitical conditions, including rising interest rates, global price inflation and shortages impacting the availability of materials; the duration and severity of unforeseen events such as an epidemic or a pandemic, including their impacts across our business on demand, supply chains, operations and liquidity; failure to successfully negotiate collective bargaining agreements or potential strikes, work stoppages or other similar events; changes in market demand for our products and services; rapid technological and market change; the ability to protect and avoid infringing upon intellectual property rights; challenges associated with the introduction or development of new products or transfer of work; higher risks in global operations and markets; the impact of intense competition; the physical and operational risks from natural disasters, severe weather events, and climate change which may limit accessibility to sufficient water resources, outbreaks of contagious diseases and other adverse public health developments; acts of war, terrorism and other international conflicts; the failure to achieve anticipated cost savings and benefits associated with workforce reductions and restructuring actions; currency fluctuations and foreign currency exposure; impacts from goodwill impairment and related charges; our dependence upon revenues and earnings from a small number of significant customers; a major loss of customers; inability to realize expected sales or profits from existing backlog due to a range of factors, including changes in customer sourcing decisions, material changes, production schedules and volumes of specific programs; the impact of government budget and funding decisions; our ability to successfully integrate and achieve anticipated synergies associated with recently announced and future acquisitions, including the acquisition of MB Aerospace; government-imposed sanctions, tariffs, trade agreements and trade policies; changes or uncertainties in laws, regulations, rates, policies or interpretations that impact the Company’s business operations or tax status, including those that address climate change, environmental, health and safety matters, and the materials processed by our products or their end markets; fluctuations in the pricing or availability of raw materials, freight, transportation, energy, utilities and other items required by our operations; labor shortages or other business interruptions at transportation centers, shipping ports, our suppliers’ facilities or our facilities; disruptions in information technology systems, including as a result of cybersecurity attacks or data security breaches; the ability to hire and retain senior management and qualified personnel; the continuing impact of prior acquisitions and divestitures, and any ongoing and future strategic actions, and our ability to achieve the financial and operational targets set in connection with any such actions; the ability to achieve social and environmental performance goals; the outcome of pending and future litigation and governmental proceedings; the impact of actual, potential or alleged defects or failures of our products or third-party products within which our products are integrated, including product liabilities, product recall costs and uninsured claims; future repurchases of common stock; future levels of indebtedness; the impact of shareholder activism; and other risks and uncertainties described in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by the Company, including, among others, those in the Management's Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors sections of the Company's filings. The Company assumes no obligation to update its forward-looking statements.

Category: Earnings

BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Dollars in thousands, except per share data)
(Unaudited)

	Three months ended June 30,								Six months ended June 30,
	2024			2023			% Change		2024			2023			% Change

Net sales	$	382,232		$	338,984		12.8		$	812,870		$	674,341		20.5

Cost of sales		258,188			224,625		14.9			558,284			450,868		23.8
Selling and administrative expenses		82,667			88,350		(6.4	)		170,394			174,180		(2.2	)
Goodwill impairment charge		53,694			-		100.0			53,694			-		100.0
Gain on the sale of businesses		(10,204	)		-		NM			(7,071	)		-		NM

		384,345			312,975		22.8			775,301			625,048		24.0

Operating (loss) income		(2,113	)		26,009		(108.1	)		37,569			49,293		(23.8	)

Operating margin		-0.6	%		7.7	%				4.6	%		7.3	%

Interest expense		20,812			6,512		219.6			45,643			11,819		286.2
Other expense (income), net		(845	)		(2,894	)	(70.8	)		850			(1,553	)	NM

(Loss) income before income taxes		(22,080	)		22,391		(198.6	)		(8,924	)		39,027		(122.9	)

Income taxes		24,741			5,039		391.0			35,949			8,516		322.1

Net (loss) income	$	(46,821	)	$	17,352		(369.8	)	$	(44,873	)	$	30,511		(247.1	)

Common dividends	$	8,118		$	8,099		0.2		$	16,229		$	16,195		0.2

Per common share:

Net (loss) income:
Basic	$	(0.91	)	$	0.34		(367.6	)	$	(0.88	)	$	0.60		(246.7	)
Diluted		(0.91	)		0.34		(367.6	)		(0.88	)		0.60		(246.7	)
Dividends		0.16			0.16		-			0.32			0.32		-

Weighted average common shares outstanding:
Basic		51,302,547			51,051,780		0.5			51,263,503			51,020,648		0.5
Diluted		51,302,547			51,225,545		0.2			51,263,503			51,245,163		0.0

NM - Not meaningful

BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
(Unaudited)

	Three months ended June 30,									Six months ended June 30,
	2024			2023			% Change			2024			2023			% Change
Net sales

Aerospace	$	217,958		$	122,015		78.6			$	439,328		$	239,272		83.6

Industrial		164,274			216,971		(24.3	)			373,542			435,079		(14.1	)

Intersegment sales		-			(2	)					-			(10	)

Total net sales	$	382,232		$	338,984		12.8			$	812,870		$	674,341		20.5

Operating (loss) profit

Aerospace	$	29,344		$	16,580		77.0			$	60,430		$	35,331		71.0

Industrial		(31,457	)		9,429		(433.6	)			(22,861	)		13,962		(263.7	)

Total operating (loss) profit	$	(2,113	)	$	26,009		(108.1	)		$	37,569		$	49,293		(23.8	)

Operating margin							Change									Change

Aerospace		13.5	%		13.6	%	(10	)	bps.		13.8	%		14.8	%	(100	)	bps.

Industrial		-19.1	%		4.3	%	(2,340	)	bps.		-6.1	%		3.2	%	(930	)	bps.

Total operating margin		-0.6	%		7.7	%	(830	)	bps.		4.6	%		7.3	%	(270	)	bps.

BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)


	June 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	65,909	$	89,827
Accounts receivable		345,482		353,923
Inventories		350,292		365,221
Prepaid expenses and other current assets		104,689		97,749

Total current assets		866,372		906,720


Deferred income taxes		-		10,295
Property, plant and equipment, net		351,879		402,697
Goodwill		1,046,822		1,183,624
Other intangible assets, net		662,666		706,471
Other assets		109,348		98,207

Total assets	$	3,037,087	$	3,308,014

Liabilities and Stockholders' Equity
Current liabilities
Notes and overdrafts payable	$	6,547	$	16
Accounts payable		152,271		164,264
Accrued liabilities		217,793		221,462
Long-term debt - current		10,518		10,868

Total current liabilities		387,129		396,610

Long-term debt		1,149,386		1,279,962
Accrued retirement benefits		36,825		45,992
Deferred income taxes		115,950		120,608
Long-term tax liability		-		21,714
Other liabilities		71,299		80,865

Total stockholders' equity		1,276,498		1,362,263

Total liabilities and stockholders' equity	$	3,037,087	$	3,308,014


BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)


	Six months ended June 30,
		2024			2023
Operating activities:
Net (loss) income	$	(44,873	)	$	30,511
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		59,563			46,913
Gain on disposition of property, plant and equipment		(50	)		(180	)
Stock compensation expense		6,464			4,832
Non-cash goodwill impairment charge		53,694			-
Gain on sale of businesses		(5,545	)		-
Changes in assets and liabilities, net of the effects of divestiture:
Accounts receivable		(12,173	)		(18,102	)
Inventories		(23,011	)		(9,743	)
Prepaid expenses and other current assets		(12,532	)		(5,183	)
Accounts payable		2,862			(2,300	)
Accrued liabilities		(645	)		16,745
Deferred income taxes		3,454			779
Long-term retirement benefits		(10,336	)		(10,636	)
Long-term tax liability		(17,372	)		(13,029	)
Other		3,550			1,860

Net cash provided by operating activities		3,050			42,467

Investing activities:
Proceeds from disposition of property, plant and equipment		344			149
Proceeds from the sale of businesses		146,041			-
Capital expenditures		(29,854	)		(21,617	)
Business acquisitions, net of cash acquired		159			-
Other		-			(722	)
Net cash provided (used) by investing activities		116,690			(22,190	)

Financing activities:
Net change in other borrowings		6,568			7,775
Payments on long-term debt		(233,207	)		(112,927	)
Proceeds from the issuance of long-term debt		110,000			101,208
Proceeds from the issuance of common stock		122			189
Dividends paid		(16,229	)		(16,195	)
Withholding taxes paid on stock issuances		(141	)		(376	)
Cash settlement of foreign currency hedges related to intercompany financing		(9,967	)		(1,176	)
Other		(232	)		(2,588	)

Net cash used by financing activities		(143,086	)		(24,090	)

Effect of exchange rate changes on cash flows		(2,784	)		(466	)

Decrease in cash, cash equivalents and restricted cash		(26,130	)		(4,279	)

Cash, cash equivalents and restricted cash at beginning of the period		92,039			81,128

Cash, cash equivalents and restricted cash at end of period		65,909			76,849

Less: Restricted cash, included in Prepaid expenses and other current assets		-			(2,176	)

Cash and cash equivalents at end of period	$	65,909		$	74,673

BARNES GROUP INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(Dollars in thousands)
(Unaudited)

	Six months ended June 30,
	2024			2023
Free cash flow:

Net cash provided by operating activities	$	3,050		$	42,467
Capital expenditures		(29,854	)		(21,617	)

Free cash flow⁽¹⁾	$	(26,804	)	$	20,850

Free cash flow (as adjusted):
Free cash flow (from above)	$	(26,804	)	$	20,850
Income tax payments related to the sale of the businesses		12,280			-
Free cash flow (as adjusted) ⁽¹⁾	$	(14,524	)	$	20,850


Notes:
(1) The Company defines free cash flow as net cash provided by operating activities less capital expenditures. In 2024, net cash provided by operating activities was negatively impacted by $12.3 million of estimated income tax payments related to the pre-tax gain related to the sale of the Associated Spring™ and Hänggi™ businesses (the "Businesses"). The proceeds from the sale are reflected in investing activities. The Company believes that the free cash flow metric is useful to investors and management as a measure of cash generated by business operations that can be used to invest in future growth, pay dividends, repurchase stock and reduce debt. This metric can also be used to evaluate the Company's ability to generate cash flow from business operations and the impact that this cash flow has on the Company's liquidity.

BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
ADJUSTED OPERATING PROFIT AND ADJUSTED DILUTED EARNINGS PER SHARE
(Dollars in thousands, except per share data)
(Unaudited)

	Three months ended June 30,												Six months ended June 30,
	2024			2023					% Change				2024			2023			% Change
SEGMENT RESULTS

Operating Profit - Aerospace Segment (GAAP)	$	29,344		$	16,580					77.0			$	60,430		$	35,331		71.0

Restructuring/reduction in force and transformation related charges		2,247			545									2,638			2,314
Shareholder advisory costs		50			-									1,078			-
Acquisition related costs		-			3,559									-			3,559
MB Short-term purchase accounting adjustments		685			-									2,826			-

Operating Profit - Aerospace Segment as adjusted (Non-GAAP) ⁽¹⁾	$	32,326		$	20,684					56.3			$	66,972		$	41,204		62.5

Operating Margin - Aerospace Segment (GAAP)		13.5	%		13.6	%				(10	)	bps.		13.8	%		14.8	%	(100	)	bps.
Operating Margin - Aerospace Segment as adjusted (Non-GAAP) ⁽¹⁾		14.8	%		17.0	%				(220	)	bps.		15.2	%		17.2	%	(200	)	bps.

Operating (Loss) Profit - Industrial Segment (GAAP)	$	(31,457	)	$	9,429					(433.6	)		$	(22,861	)	$	13,962		(263.7	)

Restructuring/reduction in force and transformation related charges		3,167			13,351									6,888			25,461
Shareholder advisory costs		50			-									1,022			-
Gain on the sale of businesses		(10,204	)		-									(7,071	)		-
Goodwill impairment charge		53,694			-									53,694			-

Operating Profit - Industrial Segment as adjusted (Non-GAAP) ⁽¹⁾	$	15,250		$	22,780					(33.1	)		$	31,672		$	39,423		(19.7	)

Operating Margin - Industrial Segment (GAAP)		-19.1	%		4.3	%				(2,340	)	bps.		-6.1	%		3.2	%	(930	)	bps.
Operating Margin - Industrial Segment as adjusted (Non-GAAP) ⁽¹⁾		9.3	%		10.5	%				(120	)	bps.		8.5	%		9.1	%	(60	)	bps.


CONSOLIDATED RESULTS
Operating (Loss) Income (GAAP)	$	(2,113	)	$	26,009					(108.1	)		$	37,569		$	49,293		(23.8	)

Restructuring/reduction in force and transformation related charges		5,414			13,896									9,526			27,775
Shareholder advisory costs		100			-									2,100			-
Gain on the sale of businesses		(10,204	)		-									(7,071	)		-
Acquisition related costs		-			3,559									-			3,559
MB Short-term purchase accounting adjustments		685			-									2,826			-
Goodwill impairment charge		53,694			-									53,694			-

Operating Income as adjusted (Non-GAAP) ⁽¹⁾	$	47,576		$	43,464					9.5			$	98,644		$	80,627		22.3

Operating Margin (GAAP)		-0.6	%		7.7	%				(830	)	bps.		4.6	%		7.3	%	(270	)	bps.
Operating Margin as adjusted (Non-GAAP) ⁽¹⁾		12.4	%		12.8	%				(40	)	bps.		12.1	%		12.0	%	10		bps.

Diluted Net (Loss) Income per Share (GAAP)	$	(0.91	)	$	0.34					(367.6	)		$	(0.88	)	$	0.60		(246.7	)

Restructuring/reduction in force and transformation related charges		0.08			0.19									0.14			0.39
Shareholder advisory costs		-			-									0.03			-
Loss related to sale of businesses, net of tax		0.14			-									0.35			-
MB Short-term purchase accounting adjustments		0.01			-									0.04			-
Acquisition related costs		-			0.05									0.02			0.05
Goodwill impairment charge		1.05			-									1.05			-

Diluted Net Income per Share as adjusted (Non-GAAP) ⁽¹⁾	$	0.37		$	0.58					(36.2	)		$	0.75		$	1.04		(27.9	)


	Full-Year 2023			Full-Year 2024 Outlook
Operating Margin (GAAP)		6.1	%		7.1	%	to			9.1	%

Restructuring/reduction in force and transformation related charges		3.2	%				1.6	%
Divestiture transaction costs/loss related to sale of businesses, net of tax		0.1	%				-0.4	%
MB Short-term purchase accounting adjustments		1.3	%				0.3	%
Shareholder advisory costs		-					0.1	%
Acquisition related costs		0.8	%				-
Goodwill impairment charge		-					3.3	%

Operating Margin as adjusted (Non-GAAP) ⁽¹⁾		11.5	%		12.0	%	to			14.0	%

Diluted Net Income (Loss) per Share (GAAP)	$	0.31		$	(0.36	)	to		$	(0.16	)

Restructuring/reduction in force and transformation related charges		0.66					0.40
Divestiture transaction costs/loss related to sale of businesses, net of tax		0.02					0.35
MB Short-term purchase accounting adjustments		0.29					0.06
Shareholder advisory costs		-					0.03
Acquisition related costs		0.37					0.02
Goodwill impairment charge		-					1.05

Diluted Net Income per Share as adjusted (Non-GAAP) ⁽¹⁾	$	1.65		$	1.55		to		$	1.75

Notes:

(1) The Company has excluded the following from its "as adjusted" financial measurements for 2024: 1) charges related to restructuring/reduction in force actions at certain businesses and transformation costs (consulting/professional fees related to business and portfolio transformation initiatives), 2) a pre-tax gain related to the divestiture of the Businesses, including $7.1M reflected within operating profit ($10.2 million in the second quarter), $1.5M reflected within other expense, net ($0.2 million in the second quarter) and a $23.7M charge reflected within income taxes ($16.9 million in the second quarter), 3) shareholder advisory costs, 4) short-term purchase accounting adjustments related to its MB Aerospace acquisition, 5) acquisition costs related to the acquisition of MB Aerospace, including $1.6M reflected within interest expense ($0.0 million in the second quarter), and 6) goodwill impairment charge recorded in the second quarter of 2024 related to the Automation reporting unit. The Company has excluded the following from its "as adjusted" financial measurements for 2023: 1) charges related to restructuring/reduction in force actions at certain businesses and business transformation costs (consulting fees related to transformation initiatives), including $27.8M reflected within operating profit ($13.9M in the second quarter) and ($1.1M) reflected within other expense (income), net, for both the year-to-date and quarter-to-date periods and 2) acquisition transaction costs related to the planned acquisition of MB Aerospace. The tax effects of the restructuring related actions, acquisition related actions, and shareholder advisory costs were calculated based on the respective tax jurisdictions and ranged from approximately 15% to approximately 30%. The goodwill impairment charge did not have a tax effect as it is not deductible for book purposes. Management believes that these adjustments provide the Company and its investors with an indication of our baseline performance excluding items that are not considered to be reflective of our ongoing results. Management does not intend results excluding the adjustments to represent results as defined by GAAP, and the reader should not consider it as an alternative measurement calculated in accordance with GAAP, or as an indicator of the Company's performance. Accordingly, the measurements have limitations depending on their use.

BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
EBITDA, EBITDA MARGIN, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
(Dollars in thousands)
(Unaudited)

	Three months ended June 30,
	2024												2023
	Aerospace			Industrial			Other ⁽¹⁾			Total			Aerospace			Industrial			Other ⁽¹⁾			Total
Net Sales	$	217,958			164,274			-		$	382,232		$	122,015			216,971			(2	)	$	338,984

Net (Loss) Income										$	(46,821	)										$	17,352

Interest expense											20,812												6,512
Other expense (income), net											(845	)											(2,894	)
Income taxes											24,741												5,039

Operating Profit (Loss) (GAAP)	$	29,344		$	(31,457	)	$	-		$	(2,113	)	$	16,580		$	9,429		$	-		$	26,009

Operating Margin (GAAP)		13.5	%		-19.1	%					-0.6	%		13.6	%		4.3	%					7.7	%

Other expense (income), net		-			-			845			845			-			-			2,894			2,894
Depreciation ⁽²⁾		7,463			3,990			-			11,453			4,867			6,393			-			11,260
Amortization ⁽³⁾		11,214			5,887			-			17,101			5,191			6,413			-			11,604

EBITDA (Non-GAAP)⁽⁴⁾	$	48,021		$	(21,580	)	$	845		$	27,286		$	26,638		$	22,235		$	2,894		$	51,767

EBITDA Margin (Non-GAAP)⁽⁴⁾		22.0	%		-13.1	%					7.1	%		21.8	%		10.2	%					15.3	%

Restructuring/reduction in force and transformation related charges		2,247			3,167			-			5,414			545			12,555			-			13,100
Shareholder advisory costs		50			50			-			100			-			-			-			-
Acquisition transaction costs		-			-			-			-			3,559			-			-			3,559
MB Short-term purchase accounting adjustments		42			-			-			42			-			-			-			-
Pension related loss		-			-			156			156			-			-			(1,144	)		(1,144	)
Gain on the sale of businesses		-			(10,204	)		-			(10,204	)		-			-			-			-
Goodwill impairment charge		-			53,694			-			53,694			-			-			-			-

Adjusted EBITDA (Non-GAAP)⁽⁴⁾	$	50,360		$	25,127		$	1,001		$	76,488		$	30,742		$	34,790		$	1,750		$	67,282

Adjusted EBITDA Margin (Non-GAAP)⁽⁴⁾		23.1	%		15.3	%					20.0	%		25.2	%		16.0	%					19.8	%

	Six months ended June 30,
	2024												2023
	Aerospace			Industrial			Other ⁽¹⁾			Total			Aerospace			Industrial			Other ⁽¹⁾			Total
Net Sales	$	439,328			373,542			-		$	812,870		$	239,272			435,079			(10	)	$	674,341

Net (Loss) Income										$	(44,873	)										$	30,511

Interest expense											45,643												11,819
Other expense (income), net											850												(1,553	)
Income taxes											35,949												8,516

Operating Profit (Loss) (GAAP)	$	60,430		$	(22,861	)	$	-		$	37,569		$	35,331		$	13,962		$	-		$	49,293

Operating Margin (GAAP)		13.8	%		-6.1	%					4.6	%		14.8	%		3.2	%					7.3	%

Other expense (income), net		-			-			(850	)		(850	)		-			-			1,553			1,553
Depreciation ⁽²⁾		15,319			9,581			-			24,900			9,820			13,869			-			23,689
Amortization ⁽³⁾		22,850			11,813			-			34,663			10,297			12,927			-			23,224

EBITDA (Non-GAAP)⁽⁴⁾	$	98,599		$	(1,467	)	$	(850	)	$	96,282		$	55,448		$	40,758		$	1,553		$	97,759

EBITDA Margin (Non-GAAP)⁽⁴⁾		22.4	%		-0.4	%					11.8	%		23.2	%		9.4	%					14.5	%

Restructuring/reduction in force and transformation related charges		2,638			6,164			-			8,802			2,314			23,072			-			25,386
Shareholder advisory costs		1,078			1,022			-			2,100			-			-			-			-
Acquisition transaction costs		-			-			-			-			3,559			-			-			3,559
MB Short-term purchase accounting adjustments		1,540			-			-			1,540			-			-			-			-
Gain on the sale of businesses		-			(7,071	)		-			(7,071	)		-			-			-			-
Pension related loss (gain)		-			-			1,526			1,526			-			-			(1,144	)		(1,144	)
Goodwill impairment charge		-			53,694			-			53,694			-			-			-			-

Adjusted EBITDA (Non-GAAP)⁽⁴⁾	$	103,855		$	52,342		$	676		$	156,873		$	61,321		$	63,830		$	409		$	125,560

Adjusted EBITDA Margin (Non-GAAP)⁽⁴⁾		23.6	%		14.0	%					19.3	%		25.6	%		14.7	%					18.6	%

Notes:

(1) "Other" includes intersegment sales and items that are included within Other expense (income), net that are not allocated to the Company's reportable business segments.
(2) Depreciation expense in 2024 includes $0.7 million of accelerated depreciation charges related to restructuring actions ($0.0 million related to the second quarter). Depreciation in 2023 includes $2.4 million ($0.8 million related to the second quarter) of similar accelerated depreciation charges.
(3) Amortization expense in 2024 includes $1.3 million ($0.6 million related to the second quarter) of short-term purchase accounting adjustments related to backlog amortization, attributed to the acquisition of MB Aerospace.
(4) The Company defines EBITDA as net income plus interest expense, income taxes, and depreciation and amortization which the Company incurs in the normal course of business; in addition to these adjustments, the Company also excludes the impact of its "as adjusted items" above ("Adjusted EBITDA"). The Company does not intend EBITDA nor Adjusted EBITDA to represent cash flows from operations as defined by GAAP, and the reader should not consider it as an alternative to net income, net cash provided by operating activities or any other items calculated in accordance with GAAP, or as an indicator of the Company's operating performance. Accordingly, the measurements have limitations depending on their use.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240726914672/en/

Investors:

Barnes Group Inc.

William Pitts

Vice President, Investor Relations

ir@onebarnes.com

860.583.7070

Source: Barnes Group Inc.

FAQ

What were Barnes Group's (NYSE: B) Q2 2024 sales?

Barnes Group reported Q2 2024 sales of $382 million, up 13% year-over-year with organic growth of 5%.

Did Barnes Group (NYSE: B) report a profit or loss in Q2 2024?

Barnes Group reported a net loss of $46.8 million, or -$0.91 per share, in Q2 2024, compared to a net income of $17.4 million in the prior year.

What was Barnes Group's (NYSE: B) adjusted EPS for Q2 2024?

Barnes Group's adjusted EPS for Q2 2024 was $0.37, down 36% from $0.58 in the same quarter last year.

How did Barnes Group's (NYSE: B) Aerospace segment perform in Q2 2024?

Barnes Group's Aerospace segment sales were up 79% in Q2 2024, with organic sales increasing 8% and aftermarket sales increasing 84%.

What is Barnes Group's (NYSE: B) updated guidance for 2024?

Barnes Group updated its 2024 guidance, projecting organic sales growth of 4% to 6% and adjusted EPS of $1.55 to $1.75.

Barnes Reports Second Quarter 2024 Financial Results

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