Second Quarter 2020 Earnings Release Supplement July 28, 2020 The data in this package should be read in conjunction with Barnes Group Inc.’s earnings release and periodic filings with the SEC.
Safe Harbor Statement/Non-GAAP Measures THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. 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 include, among others: difficulty maintaining relationships with employees, including unionized employees, customers, distributors, suppliers, business partners or governmental entities; failure to successfully negotiate collective bargaining agreements or potential strikes, work stoppages or other similar events; difficulties leveraging market opportunities; 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; introduction or development of new products or transfer of work; higher risks in global operations and markets; the impact of intense competition; acts of terrorism, cybersecurity attacks or intrusions that could adversely impact our businesses; the impacts of the COVID-19 pandemic on our business, including on demand, supply chains, operations and our ability to maintain sufficient liquidity throughout the unknown duration and severity of the crisis; the failure to achieve anticipated cost savings associated with the workforce reductions and restructuring actions previously announ ced by the Company (the “Plan”); the ability to successfully execute the Plan; higher than anticipated costs in implementing the Plan; the preliminary nature of our cost and savings estimates related to the Plan, including the timing of such charges and savings, which are subject to change as the Company makes decisions and refines estimates over time; timing delays in implementing the Plan; our ability to realize all of the cost savings and benefits anticipated in connection with the Plan; management and employee distraction resulting from the Plan; uncertainties relating to conditions in financial markets; currency fluctuations and foreign currency exposure; future financial performance of the industries or customers that we serve; 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; government tariffs, trade agreements and trade policies; the impact of new or revised tax laws and regulations; the adoption of laws, directives or regulations that impact the materials processed by our products or their end markets; changes in raw material or product prices and availability; restructuring costs or savings; the continuing impact of prior acquisitions and divestitures; integration of acquired businesses; and any other future strategic actions, including acquisitions, divestitures, restructurings, or strategic business realignments, and our ability to achieve the financial and operational targets set in connection with any such actions; the outcome of pending and future legal, governmental, or regulatory proceedings and contingencies; product liabilities and uninsured claims; future repurchases of common stock; future levels of indebtedness; and numerous other matters of a global, regional or national scale, including those of a political, economic, business, competitive, environmental, regulatory and public health nature (including the COVID-19 pandemic); 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. NON-GAAP MEASURES References to adjusted financial results for 2019 & 2020 are non-GAAP measures. You will find a reconciliation table on our website as part of our second quarter 2020 press release and in the Forms 8-K submitted to the SEC. This supplement should be read in conjunction with this reconciliation table. Q2’20 Earnings 1 Release Supplement
Q2’20 Sales Growth & Highlights Sales Organic (1) F/X M&A Growth Industrial (29%) (22%) (1%) (6%) Aerospace (49%) (49%) Total BGI (37%) (32%) (1%) (4%) • Sales of $236 million, down 37% from a year ago; Organic Sales decrease of 32% • Adjusted Operating Income of $27.8 million, down 52% from last year’s $58.3 million • Adjusted Operating Margin of 11.8%, down 390 bps from last year’s 15.7% • Adjusted EPS of $0.27 per diluted share, down 64% from $0.75 from a year ago • Total Company Backlog of $791 million, down 15% from Q1’20 • Aerospace Total Backlog of $566 million, down 21% from Q1’20 Q2’20 Earnings (1) Organic sales decline represents the total reported sales decrease within the Company’s ongoing businesses less the impact of foreign currency 2 translation and acquisition and divestitures completed in the preceding twelve months. Release Supplement
2019 & 2020 Results ($M, except per share) 2019 Variance Full Year 2020 Over 2019 2020 Full Year Outlook Results YTD Results YTD Results Remains Suspended For Q3'20 versus Q3'19: Net Sales $1,491 $566 - 24% - Organic Sales - 20% Down Approximately 30% - Operating Margin % 15.9% 10.5% - 390 bps Adjusted Operating Margin (1) 16.4% 14.0% - 110 bps ~ 10% EPS (diluted): $3.07 $0.59 - 57% - Adjusted EPS (diluted): (1) $3.21 $0.98 - 33% $0.22 to $0.32 Cash Conversion (2) 119% Key Performance Variables for 2020: – Deepening Aerospace Aftermarket Declines + Quicker Pace of Economic Recovery – Further Delays of Customer Program Launches + Additional Cost Containment & Productivity Initiatives – Slower Ramping of Auto Production + Ongoing Strength in Medical Mold Systems Q2’20 Earnings (1) References to Adjusted Operating Margin and Adjusted EPS are non-GAAP measures. A reconciliation table is available on our website as part of our Q2 2020 press releases and in the Form 8-K submitted to the SEC. 3 Release Supplement (2) Cash Conversion is equal to Net Cash Provided by Operating Activities less Capital Expenditures divided by Net Income (as adjusted).
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