Barrick Mining Corporation

Good morning. My name is Devin, and I will be your conference operator today. At this time, I would like to welcome everyone to Barnes' fourth quarter and full year 2022 earnings conference call-in webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, press star and then the number one on your telephone keypad. If you would like to withdraw your question at any time, press the pound key. Thank you for your patience. I now turn the call over to Vice President of Investor Relations, Mr. Bill Pitts. You may begin the conference, sir.

Thank you, Devin. Good morning, and thank you for joining us for our fourth quarter and full year 2022 earnings call. With me are Barnes President and Chief Executive Officer Thomas Hook and Senior Vice President Finance and Chief Financial Officer Julie Streich. If you have not received a copy of our earnings press release, you can find it on the investor relations section of our corporate website at onebarnes.com. That's O-N-E-B-A-R-N-E-S dot com. During our call, we will be referring to the earnings release supplement slides, which are also posted to our website. Our discussion today includes certain non-GAAP financial measures which provide additional information we believe is helpful to investors. These measures have been reconciled to the related GAAP measures in accordance with SEC regulations. You will find a reconciliation table on our website as part of our press release and in the form 8K submitted to the Securities and Exchange Commission. Be advised that certain statements we make on today's call, both during the opening remarks and during the question and answer session, may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Please consider the risks and uncertainties that are mentioned in today's call and are described in our periodic filings with the SEC. These filings are available through the investor relations section of our corporate website at onebarns.com. Let me now turn the call over to Tom for his opening remarks. Then Julie will provide a review of our financial performance and details of our initial outlook for 2023. After that, we'll open up the call for questions. Tom?

Thank you, Bill, and good morning, everyone. It's been an enjoyable six months since moving into the CEO role at Barnes. I'm pleased with the depth and pace of our drive towards unlocking enterprise value through a focus on core business execution. Beneficial early signs of these efforts are already appearing in many areas across the company. For example, at Industrial, investments in commercial professionals have reinvigorated our sales funnels this has precipitated early success in orders in certain targeted end markets we are combining two of our strategic business units into one and we are making solid progress on our integrate consolidate and rationalize restructuring efforts at aerospace the aftermarket remains robust and oem orders were very good We will touch on the details of these points momentarily. For the fourth quarter, organic revenues increased 5%, though adjusted operating margin decreased slightly. Given ongoing labor productivity challenges, COVID-related absenteeism in our China operations, and gross inflation concerns, it reflects some progress, but not sufficient progress. Organic orders were good, up 10%, and booked a bill with a solid 1.1 times. Cash performance was pressured, and Julie will touch on that in additional detail shortly. However, we believe the cash challenge in 2022 is passing, and we expect more typical performance in 2023. Before jumping into the financial results, let's talk about what's happening within our businesses, beginning with industrial. Industrial has a strong portfolio of brands, some of which have significant strength within their end markets. Others are being refocused to unlock more value than has been delivered to date. Our integrate, consolidate, rationalize initiative will power some of that performance improvement. As an example, to begin in 2023, we have combined our engineered components and force motion control businesses into a single new strategic business unit called Motion Control Solutions, or MCS. MCS will bring the combined brands together and be better positioned to leverage the entire portfolio of products, services, and solutions we offer to our global customers. This integration will allow MCS to better manage and mitigate global macroeconomic challenges and rationalize costs. A portion of those savings will be reinvested into enhancing our MCS sales force to drive top line growth. Our restructuring efforts are well underway with ongoing execution of phases one and two announced in July and October respectively. During the fourth quarter as part of our phase two actions, we consolidated one of our molding solution sensor facilities into other operations and more significantly, transition to our innovation hub activities. Of course, we remain focused on innovation and believe we are best served driving R&D from within the business in closer proximity to customer revenue generation. In addition, eliminating the central structure of the innovation hub is a demonstrable step in our efforts to rationalize overhead. At this time, planning for additional actions is underway. With all this activity occurring simultaneously across industrial, what early sign of traction can be seen in the organic orders of our molding solutions, SBU. You may recall in July, we spoke to the establishment of key regional markets in the Americas, Europe, China, and Asia. This was a deviation away from our brand-based commercial strategy with the intent to better leverage our full product portfolio with customers. This allows us to better tailor our extensive technology solutions for each customer application and generate growth for molding solutions. That change has resulted in a better fill of the commercial pipeline. In the fourth quarter, we saw 17% organic orders growth for molding solutions with mold systems demonstrating considerable strength. That performance could have been even stronger had we not seen our hot runner product line pressured by significant COVID disruption in China at the end of the year. Molding Solutions' book-to-bill was a solid 1.16 times, which is a good result for the largest growth engine within our industrial portfolio. Our aerospace business continues to perform well despite challenges, especially as it relates to labor. We have successfully acquired the critical talent that was a constraint earlier in 2022. However, integrating the newly acquired talent into our production operations has negatively affected productivity and operating margin, primarily within the OEM business. Fortunately, this dynamic is changing for the better through enhanced training and development efforts. We do not anticipate future quarters to be as impacted by these effects. OEM's book to bill in the fourth quarter was 1.33 times. Looking forward, 2023 provides significant opportunities for renewing and extending existing key contracts with GE on LEAP and other programs. We are highly confident these will present upside prospects for our financial performance and provide a baseline of future work, enabling cost optimization and production efficiencies in our Windsor, Connecticut and Singapore locations. In the aftermarket, overall activity remains robust, capping a significant year of recovery. As additional flight activity builds with China reopening, we expect this business to continue to grow through 2023. To conclude my prepared remarks, our unrelenting emphasis on core business execution will improve our competitiveness, provide revenue growth, drive operational efficiencies, and generate solid cash flow. Our top line, bottom line, pipeline philosophy will direct the actions we take across the company. While much work remains to improve our underlying performance, multiple actions are underway with the appropriate sense of urgency from the Barnes team. Our collective efforts will unlock the enterprise value potential we see in Barnes to the benefit of all stakeholders. Let me now pass the call over to Julie for a discussion on our fourth quarter and full year performance, as well as an end market color.