Barrick Mining Corporation

Thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the Barnes Second Quarter 2024 Earnings Conference Call and 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 that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I will now like to introduce Bill Pitts, Vice President of Investor Relations. Bill, you may begin your conference.

Good morning, and thank you for joining us for our second quarter 2024 earnings call. With me are Barnes President and Chief Executive Officer Thomas Hook and Senior Vice President Finance and Chief Financial Officer Julie Stryke. You can access all earnings related materials on the investor relations section of our corporate website at onebarnes.com. That's O-N-E-B-A-R-N-E-S.com. During our call, we will be referring to the earnings release presentation. 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 the 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 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, which are available on the investor relations section on onebarns.com. I will now turn the call over to Tom for his opening remarks. And after that, Julie will provide a review of our second quarter financial performance and details of our updated 2024 outlook. Then we will open up the call for questions. Tom. Thank you, Bill.

And good morning, everyone. Today, I will provide an update on our transformation progress and strategy execution in addition to second quarter highlights. I will also provide some color on the current macro and industry environments. Julie will then cover quarterly performance in more detail, including updates to our annual outlook. As we approach the halfway point of Barnes' multi-year transformation journey, we have executed on several significant milestones. Following my appointment as Chief Executive Officer two years ago, and after visiting our global operation shortly thereafter, We developed a more comprehensive understanding of our strengths to leverage and the business challenges to address. In early 2023, we articulated a clear and concise three-pillar strategy to move Barnes forward. First, core business execution. Second, scale aerospace. And third, integrate, consolidate, and rationalize industrial. The work to improve our underlying performance and value creation is not yet complete. However, we have made noteworthy progress and am pleased with the positive momentum. With last fall's acquisition of MB Aerospace, the largest deal in the company's lengthy history, we have significantly scaled aerospace. More recently, in the second quarter of this year, we completed the sale of our associated spring and hangy businesses. a meaningful step in rationalizing our industrial segment. Given that Associated Spring can be traced back over 165 years to the founding of Barnes, this transaction clarifies we are considering all alternatives to unlock enterprise value. For the second quarter, we generated a revenue of $382 million, an increase of 13% reported and 5% organic. Adjusted EBITDA grew 14% to $76 million and adjusted EBITDA margin was up 20 basis points. As a result of the portfolio transformation progress just discussed, Aerospace now contributes two thirds of our adjusted EBITDA. Our focus on core business execution through our top line, bottom line, pipeline growth philosophy continues to guide the actions we take across the company. Through the Barnes Transformation Office, or BTO, we are implementing cost mitigation actions to improve our competitiveness, drive operational efficiencies, enhance margins, and increase cash flow. The majority of our BTO products are focused on the industrial segment, where savings to date have largely served to offset inflationary cost pressures and unfavorable mix. We have rationalized closed or divested facilities across the globe resulting in a reduction over 500,000 square feet of commercial office and manufacturing space, reducing cost and complexity across the organization. While this is a strong start, work continues to identify additional optimization opportunities. As we have shared previously, we continue to target run rate annualized savings of $38 million by the end of 2024 and $42 million by the end of 2025. Across Barnes, we have also streamlined each of our business unit leadership teams and are now well positioned to further build on our momentum. We have complete confidence in our strategy and are committed to further actions to unlock Barnes' full growth potential. Aerospace remains a good growth market with durable demand. Barnes Aerospace's recently scaled business operation and greater customer, geographic, and platform diversification makes us a more meaningful player in the industry. Between the deal announcement and closing, we developed a comprehensive integration plan. This enabled us to quickly optimize the leadership team, pulling from both legacy Barnes Aerospace and MB Aerospace, and begin capturing synergies from day one. We identified $18 million of cost synergies to attack, and our integration progress is firmly on track with $15 million of annual run rate savings now identified and actioned. We expect to realize the full extent of those cost synergies by the end of 2025 as planned. More recently, we have seen cross-selling green shoots that should benefit the business in the future. Overall, there are several positive trends for aerospace, and we continue to forecast good performance. However, we do anticipate OEM to ramp more slowly than our prior expectations, and this will impact our outlook for the year. Julie will touch on that momentarily. In the aftermarket, we expect excellent growth to continue as the dynamic of lower OEM aircraft production output will lead to a favorable step up for the aftermarket as existing fleets stay in service longer to compensate. Across the OEM landscape, both Boeing and Airbus has spoken to production ramp delays due to existing supply chain bottlenecks and labor productivity. Likewise, we have experienced supply chain and labor efficiency challenges. We continue to actively address what is within our control, but believe market supply chain challenges are likely to persist. While we are well positioned to support the re-ramp, we have dialed back our OEM outlook for 2024. It is prudent to take a more conservative view over the near and medium term for new aircraft production as the environment is dynamic and exhibits less specificity. We see the industry OEM challenges as a timing issue, with stronger, longer-term demand still intact. We are using this transition phase to make capital investments in our Singapore OEM capabilities for new equipment in anticipation of leap engine growth when production ramps. For the aftermarket, very strong growth persists as air travel demand and aircraft utilization remain high. Pressures on the OEM side of the market will continue to support extended flying of legacy aircraft platforms, especially for important narrowbody engines like the CFM56 and V2500. Given engine component repair capacity constraints within the industry, we have significantly expanded capacity in both Singapore and East Granby, Connecticut, supporting our enduring growth expectations for the aftermarket. In addition, we are investing in European aftermarket capacity at our facility in Poland. During the quarter, at the MRO America show in Chicago, Barnes Aerospace and RTX's Pratt & Whitney Canada announced a long-term extension of a repair services agreement for the maintenance, repair, and overhaul of highly complex parts used in aero engine cases, rotating components, shrouds, and seals. Despite a more challenging OEM environment, the commercial aftermarket remains robust. This MRO agreement comes on top of multiple new long-term agreements reached with our large customers this year, including General Electric and Rolls-Royce, in addition to Pratt & Whitney. In total, the full term value of these agreements is approximately $2 billion. We have positioned Barnes as an integral global partner to customers in the aerospace supply chain with expanded geographic reach and capabilities. The strategic balance of our OEM and aftermarket capabilities is unique in the market and will serve us well as the industry works to normalize supply chain and production flow. Moving to industrial, second quarter performance was solid, albeit asymmetrical. We saw improvements in certain areas and lingering softness in others. Our molding solutions business generated solid year-over-year organic sales growth as new commercial leadership and product offerings gained traction. Importantly, we returned to sales growth in China for our automotive hot runner systems. Synvented posted its best quarterly orders and sales levers in China since the end of 2021, a positive sign. In molds, our lead times are holding at 40 weeks, a significant improvement from several quarters ago. as we drive operating rigor throughout our business. At Forreston Motion Control, the remaining business within motion control solutions after the divestiture of Associated Spring and Henge, we generated low single-digit growth in organic orders year over year, while organic sales were relatively flat. Sequentially, orders and sales improved, supported by Europe and China. Lastly, automation organic orders grew year over year, while organic sales declined. To close my remarks this morning, much has changed at Barnes in the last two years, and we remain steadfast in executing our three-pillar strategy to drive improved growth, profitability, and returns. Additional actions to lower cost and boost cash generation are in active deployment. We continue to elevate opportunities to optimize your business to unlock the full value of the company. With that, I will pass the call to Julie to cover our financial performance and outlook.