B - Earnings call transcript Q4 2017

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Operator

Good morning. My name is Carol and I will be your operator today. At this time, I'd like to welcome everyone to the Barnes Group Inc. Fourth Quarter and Full-Year 2017 Earnings Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator Instructions]. I At Investor turn would the time, Relations. call Director, to Pitts, like this Bill over to

Bill Pitts

Thank Dempsey; call. Financial With for are Barnes and thank fourth you, Chief and Officer, and Vice me morning CEO, President President for Finance Patrick quarter earnings Stephens. us Senior our you XXXX full-year Group's Carol. Good and Chris joining and of

on release, not have of a Investor you our can of received it bginc.com. press you If our corporate find copy the at section Relations earnings website

we Reform earnings information our is call, posted Chris shortly. which slides which our on will supplement also Tax quarter this related During will be cover to referring the are in for release the to our impact Included website. U.S. slides, of

non-GAAP in today have These investors. financial which helpful provide believe the with measures measures accordance discussion SEC we includes related measures, additional is information Our GAAP to to been reconciled certain regulations.

section today's These website from Relations the in subject and Exchange are mentioned reconciliation website Securities Securities make and Please on projected. Reform those X-K available consider question-and-answer both periodic filings will of SEC. materially be and Act actual the at to our we that bginc.com. submitted filings statements table Form as may are through You the the in These differ are our in statements opening Certain defined statements risks and during the on XXXX. forward-looking to the to and cause uncertainties session, of are a as our today's may Private release Commission. in forward-looking our corporate Investor results during with find the and press risks the uncertainties remarks, part of call, Litigation described that call

we today's from our open will usual fashion now that, our XXXX Chris. results quarter call a outlook of and fourth remarks the questions. call review from and for followed our After Patrick, in Patrick? by open will up full-year with We

Patrick Dempsey

good on XXXX growth. to within as strong Bill, everyone. Thanks, aerospace year good and well-positioned revenue end earnings generally morning, over industrial and impressive increased during markets. favorable with delivered a both $X the are billion order intake, and very businesses our adjusted Barnes Group Backlog

our We XX% substantial a highly in position innovation journey a talent global Barnes solid and of return to of nearly also the made management. technologies, products progress as shareholders, leading additional on with XXXX. Russell surpassing S&P of Group the indices advancing broader Enterprise total our well strategy transformational growth further and provider to our provided as strategy execution and effectiveness as Barnes our industrial engineered of for The System global the and this investments the XXX of

organic was points. X% Adjusted of declined as EPS XXX which within income a our $X.XX, on operating and basis a of I'll declined industrial U.S. of last fourth in impact the discussion will quarter we to and the of shortly. celebrated touch quarter, has and of operating so, ongoing the strength fourth will Spring sales the the primarily results. quarter. notable call. Adjusted net increased XX%, Both approximately the milestones before few this full-year during new number addition, X% year, adjusted over challenges note improvement with companies, which the few Please year's doing Similar address focus In discuss to other In aerospace many from later let's quarter results a Chris reform given our a fourth contributed had my income fourth adjusted impact XX% results. a an adjusted and last operating But tax Associated up morning accomplishment upon earnings. on of meaningful year's fourth sales a margin quarter. result highlights

solid For increased backlog sales up end XX%. is that a current given Organic as orders you XXXX share will favorable very margins increased sales the earnings were XX%. were organic reverse up XX% our markets, total per while XX%, and abate. XXX points, but result expectation hear operational full-year, increased decline declined to operating XX%. Adjusted basis as our nearly Adjusted challenges

our growth XX%. of beginning Industrial with with For on Sales XX% organic the quarter. segments, growth and fourth focusing was strong

have both been As Molding has end served Gas Products markets all Nitrogen year, case and our very by been the strong. Solutions businesses

Spring both factors in organic very industrial, markets an brands was called growth, general due to solid Adjusted growth, record. our business of double-digit basis exceptional quarter: organic quarter, construction two Associated Synventive, Many organic fourth was Thermoplay, out record while from a heavy-duty over year. likewise to led cap-off quarter the margin margin Manner and SPUs our and demonstrated sales and had continuing the challenges achieved at contribution growth. in way. acquisition. XXX increased the Engineered last year a last points FOBOHA Solutions mid-teens, truck, the X% this the In as sales Priamus, operating fact while up quarter, components low close in down solid another all from year's last to Molding XX% portfolio grew sales sales primarily

runner the automotive be of and leveling in signs exit American demand. therefore anticipate strong a watching continuing As Europe ago, They shadows we launches North program exit year medical With stronger the and than after in for market a to good care a Molds, continuing a backlog Asia. hot given we growth XXXX XXXX, end XXXX. with and did were will we XXXX we personal markets, order both strength support

Lastly, of is growth a likewise business Solutions our supportive year. controls promising Molding in

backdrop production the in improvement exceptional FOBOHA's as FOBOHA's customers mold acquired Touching technology the our organic value and the we and recently, briefly unique business. margins process. progress the we orders opportunity we growth that FOBOHA. demonstrating So part strong contribution this XXXX Solutions have sales total Molding as when in was mid-single-digits. that cube low we the to saw XXXX More for unexpected forecast not brings with The was to great on made been of experienced

its a of operation. completed fronts are number to As our I the Swiss worked of quarter, being mentioned improve profitability, restructuring last detailed including on recently plans

are Molding performance Solutions FOBOHA contribute to in XXXX. We projecting nicely to

XXXX We Gas market half into to the and Moving Products, at organic die sales Gas year, posting XX%, sales At the growth at the quarter of remain and general Components, strength sales Nitrogen growth coming die reflective sustained continued This a sales first the been organic record increased high though we least transportation XXXX. be a fourth last X%. low-single-digits. a whereas stable the is fourth with market markets to and increased XXXX, Industrial with as up high entire and the of volume, Similar Products level. sales anticipate has XX%. markets automotive quarter, total Engineered orders to through sales from non-auto tool tool strong in for sales worldwide difficult with Nitrogen quarter organic up is anticipate comparison, total with and XX%, strong

that last we longer heavy the quarter in We call global on progress. solid to positive Associated automotive for to had fourth though were it for automotive needed that team has modestly flat end made Within than mentioned to production still our slightly taken we expect Spring, lifting American Forecasts XXXX, are the we path and that to on down. stabilization, happen be yet revenues had our to the expected. some North we

our move factors, the the consideration be first level, for In our Engineered we our and organic in Components be for is As line levels. improvement for total full-year the XXXX Industrial expectation to XXXX year. is low-single-digits. expect outlook challenges XXXX we behind the XXXX, into with growth the the in sales these low-to-mid-single-digits, growth of deliver anticipate the sales of to of for segment half us to in bulk remainder the in At with

return Forecasted margin mid-teens. the is operating projected to to

full-year Moving fourth results to Fourth outstanding by sales achieved the to ago. as team. year X% the and up compared excellent quarter for were performance an Aerospace, we a quarter

growth prior New and orders year. by XX% increased programs by strength operating meaningful MRO adjusted up aftermarket Quarterly sales over parts volume XX% were drove improved continued OEM, XX engine the we while deliveries X% We're in commercial bullish for spare the basis and trends and versus aftermarket Overall last margin growing sales experiencing about aerospace XX% productive spare and year. points over services anticipate years aircraft remain another favorable, parts several year. we MRO from forecasted next expansion both end markets.

parts For about CFM high-single-digits, CFX up can XXXX, we sales aerospace spare outlook our better MRO be up to families activity see parts and up OEM total of spare order for high-single-digits, engines. if is to mid-single-digits, for continue be clearly but with and low-single to mid-single-digits, up

high-teens. is Our outlook operating margin the for

September our for for approximately aircraft. the AXXXneo and I'd unchanged the programs. the Investor between on moving Boeing sales XXX,XXX approximately XXX,XXX the the the OEM These estimates for our AXXX XXX like Airbus to aircraft of by XXX,XXX, XXXX XXX,XXX, major XXX,XXX, from Leap powered approximately are Before to estimates for for per Day: for Boeing Airbus XXX existing share

to aircraft. Lastly, per XX,XXX introduce the want Boeing of our content approximately sales XXX estimated MAX we for

XXXX, few and Enterprise System levels a are for worthy strong a respect additional many over as business and certainly With talent Within many demonstrate opportunities. a know, as before strategic good XXX innovation enablers of order our results we're XXXX, were BES, and ongoing Barnes advocates. during you From departments, had and be future functional and this remarks, now accomplished fronts. with believe our backlog. our and significant our improved as I my at record very we have will are milestones trained of the BES employees recognition. sites closing As program Yet XXXX heading volume there high content prepared into we well-positioned a management, to which business negotiations we progress momentum standpoint, on made of maturity other

group talent, new In and cross-functional our into develop, City, the Group's accelerate enhanced our Internal Inaugural yielding have XXXth now to Group's performance Global Innovation Barnes celebrating with renamed York history growth. Barnes Investor New made and Day in organic converting drive XXXX, Regarding also management, level. we And we was include to necessary and progress top talent innovations processes customer-facing Engineering evolved attract, it Forum. on and helping recognized customer and skills present to held the value our is transformation. representation Anniversary with to retain and systems next rich substantial This Council the innovation, ideas

XXXX laser-focused our a temporary and executing had operational some our our long-term team summary, good progress with in financial challenges, I'm strategy. very with as We performance. year pleased even on So remains

our about from forward very our to the remain customers. position Looking upcoming delivering are feel We benefit strengthen value further strong to well-positioned we and businesses making to the economy our solid and competitive look our shareholders. to positive returns and XXXX, to to investments necessary a exceptional year deliver committed to

now Let the to Chris. turn me over call

Chris Stephens

everyone. Thank morning Patrick, you, and good

on results full-year with quarter X fourth our of results, of then supplement. highlights and Slide with for begin briefly XXXX. speak also outlook initial our our to me Let I'll end our

the growth acquisitions $XXX driven XX% period approximately year fourth organic prior XX%, X%, X%. FX were from benefited For of up quarter, million, by while sales the sales by sales provided

tax loss U.S. For $X.XX million reported basis, the in the last fourth within from X% segment. net an of law reform charge we income a share. related and of actions per share of our share after excludes restructuring the On quarter up a changes $X.XX Adjusted tax adjusted $XX.X quarter, share, to net was $X.XX impact year. per $X.XX net per Industrial $X.XX income or per

which acquisitions FX Organic full-year, the impact was share $XX.X or tax favorable provided while prior $X.XX $X.X income from X%. a from keep reform per adjusted XX% Please year. via benefit On tax $X.XX several year. in of compared benefit. up second basis, were sales share including the EPS net an of billion, XX%, and that last X%, ago. sales the in to Net up approximately consolidation million legal XX% we $X.XX Swiss entities was recorded income share, a quarter per $X.XX of the $X.XX up year of contributed XXXX, mind discrete were per strong For provided

sales announced million Organic by adjustments growth fourth sales Associated at accounting offset benefit incentive certain absence costs continuing -- and SPUs, million, programs were XX% quarter only starting so of X%. period X%, units, the select taken increased as $XXX there XX% year year. across while million, and partially incurred Fourth of within bullish from Now Industrial $XX.X sales Spring up with sales on for prior onto with added million FX previously were beginning consolidations. last $X.X compensation from Industrial, of $X.X short-term the in charges down to increased the performance increased the plant prior business profit In restructuring quarter, the higher XX% all related year acquisition were quarter in operating three purchase revenue by with period. segment profit

XX% year XX.X% basis was ago, operating noted, million So Patrick and from down excluding this as down was operating $XX.X profit XXX adjusted margin adjusted a points.

down sales For while $XXX million year. added were Full-year X%. XX% acquisitions was X% XXX from were of a profit X%; an the versus X% year. operating operating Organic contributed adjusted On up last XX.X% from operating which basis points. prior with sales a up basis, year, was year FX decreased $XXX.X adjusted margins of the million, million $XXX.X down to favorable profit XX%; ago

offset impact by $XXX Moving the quarter, $XX.X deflation. on sales same for the year, higher sales Aerospace, productivity the million price X% from million, up operating fourth from period were profit and X% fourth scheduled quarter volumes reflecting partially up profit last benefits, was

million year, quarter in XX.X% operating margin profit fourth XX of up XX% while Excluding up the adjusted year operating $X.X a which ago, was was basis termination points. from last contract of was award a

year were was margin total while For up year from record a XX%. profit XX%, a up from And Aerospace third to at and operating backlog an on XXXX ago of points up XX% $XXX XX% quarter year was million, compared year, ago. million, sequentially ended operating basis XXXX. the operating X% increased up the sales XX% and profit million, $XXX versus a Aerospace up basis, XXX adjusted $XX.X last to

backlog ship backlog For next million OEM and was months. we XX% the to only, of that expect XX approximately over $XXX

$X.X The the arbitration required Tax rate interest expense to million million $XX.X XX.X% termination increased December the to award repatriation income for was Other to interest a in higher year. result a compared The decreased largely due predominately other the XXXX. absence $X.X interest to due related items of primarily Jobs of deemed effective as increase XX.X% to income year last per to million note, million versus full-year $X.X company's ago. is average tax last of year. enacted rate Cuts effective Some and mandatory contract Act the XXXX the

rate however U.S. and guidance of rate enacted a supplement, on note guidance made of now tax our the deferred as XX.X% as some as positions. would need the tax additional to transition new U.S. issued, U.S. fourth Treasury's tax may result excluded adjustments impacts recorded is regarding a over reform. to In asset effective XX.X we With the which but in if a of U.S. the been shares. of X continue XX% million we a our Our tax be XXXX reform impact and and quarter, benefit. issue On highlight you to respect have key XXXX XX% on tax Slide of we XXXX. from rate Please were eight in fourth cumulative estimate be quarter tax XXXX, tax our EPS tax count, XXXX from between certain million outstanding the sections foreign average of of $XX.X one-time related reform improvement effective such reflecting inclusive as U.S. tax share XX% payable and two provisional U.S. charge reform charge impact the corporate to taxes shares an of point earnings our applying years, $X.XX legislation for provides

During average quarter, were cost we in active of shares share. the per XXX,XXX fourth $XX.XX an an at repurchasing buyer

million expenditures million X.X those million of approximately as repurchase was cash and senior XXXX With of cost at the versus were was million Full-year repurchased million Included free at EBITDA compared in $XX we remained ratio XXXX. XXXX. Full-year flow And allowed, at our activities to are $XXX credit from XXX,XXX which year. $XXX $XX in flow plan available this XXXX quarter million Under by debt full-year, year. we the million $XX year's provided at be $XXX up was discretionary times $XXX capital on average pension million our board X.X $XX million borrowings year-end less debt of operating results authorizations. was additional last shares define covenants, end. $XXX in cash million end. $XX.XX, quarter and of capital last existing debt while under expenditures facility would million for $XXX to available respect existing in operating shares sheet, an our balance $XX For remain cash which to million contributions

XX% X%. top our expected outlook initial Turning half X%. on second a X% expect growth forecasted XX.X%. weighted envision to is revenue recognition interest EPS first the from is a diluted XXXX. of a of on for $X.XX. We of the standard X% strong we and few expected earnings million to our in X% of $X.XX, Slide year growth between the $XX.X to with With up few share half. benefit sales XXXXs quarter margin XX.X% our XXXX have items the $XX impact. respect be to of XXXX other X not to of a of XXXX supplement, first million. we strong organic X% split is of X%, it in new the of $X.XX to EPS revenues to to the a cents expense to second below we do be XXXX see to per to of the to to expect And XX% sales total to outlook, of be revenue Operating roughly XXXX anticipated with half first range material to is be FX quarter adjusted range to Also

conversion is over three years. XXX%. a our XX.X is be expected is shares CapEx diluted roughly and be forecasted million, to XX% expenditures past greater million cash average million $XX are between million Average which higher shares. Our $XX the than than expectation to And XX to capital

growth performance. financial improved XXXX. us entering good XXXX and with difficult a comparisons set into anticipate solid has up well We summary, revenue in even So, performance

sheet Our reliable organic now promotes the in well-positioned and objective open which call allows delivering strategic shareholder increased Operator, value. our growth investment generation us balance and we'll acquisitions long-term questions. further cash of for

Operator

Instructions]. Thank you. [Operator

Our ahead. comes from Pete first Please go Skibitski today from question Hamilton. Drexel

Pete Skibitski

Yes.

about disappointed there? topic. on should maybe kind starting So are me than just the the from upward LEAP-XB ask you are of surprised, how or be as viewing good lower you let was XA but thinking disappointed content point the content, it's kind $XX,XXX a on we thoughts that, this pretty you your of that and engineering guidance the kind you're of you Just are about that

Patrick Dempsey

content extremely Pete -- strategy enter and continue wasn't a the with XXX the service a it's content indicated multiple to position the because going to Boeing from the a our we're you the from one-on-one And time. very on program, components. that work the into was we program. the whilst perspective as Yes, for to AXXXneo. pleased volume across it's two around these There the be a, because we've read OEs be being so deliberate high sources always the aircrafts of The creating as one-to-one content MAX same particularly reason going roughly know,

content as there we that the only but And also so, terms MAX. itself are ongoing also pleased engine, allow opportunities not will it for have in pertains the believe the to airframe play very we XXX with, additional with the of that, that we're but negotiations that in

Pete Skibitski

interesting. that's Okay,

on work a anything mainly for ask little you that you can Singapore me more is XXXneo give follow-up, Actually, else Singapore? as well; us I think GE or your as is expanding the Singapore expansion. detail in Let a

Patrick Dempsey

considerable as you across seen aerospace, both OE aftermarket. of side well So the as strength, the all on on know, as we've

to LEAP our which our within is that -- made expansion to program. in the locations, the of house OE only also current continued announcement but respect U.S. the our recently So is Singapore the location support with side we not

been there expect the We well. CRP within the to RSPs, are as that a programs to aftermarket worldwide and services. demand as also our as basis the the MRO to and And programs, look opportunities continue we'll driven continue to by footprint the support pertains other aftermarket expand it as well aftermarket on at primarily that global

Pete Skibitski

it. Got

Okay.

facility you of one by sight Spring my improvement question have you is pretty -- that in line closed? is Just now the I And good of then the there do last quarter? guess, did third Associated the

Patrick Dempsey

we're more half, And with we terms view have expect the -- have the that that through We that referenced programs authorizations working mentioned basically in as us. necessary year progress the work today moving a been of the in other I The consolidating throughout of working is we'll with importantly, operational closing in that you had been facilities. it QX. made to great to now our and we've the months I extremely behind we move for and existing to them facility new indicated, these close early the but still customers it And, approvals XXXX. first

Operator

comes & Our Sidoti Edward Marshall next ahead. Please question from from Company. go

Edward Marshall

you follow-up wanted just OEM on that curious -- on next-generation the content, Pete's to content aircraft first I on CFM-XX, the question XXX the the So have what's I'm on that what OEM?

Patrick Dempsey

the in On as to MAX. the the next-generation XXX predecessor

Edward Marshall

That's correct.

Patrick Dempsey

as very as in the opposed narrow-body. aircraft -- little, so been piece the very, far always has that to focus Very, wide-body our on historically

on content has as the narrow-body the been in the to opposed side. aftermarket historically OE Our

Edward Marshall

Okay.

not number you a that to have it's don’t So XX,XXX? comparable

Patrick Dempsey

No.

Edward Marshall

Industrial side, there about to quarter through margins just before. Got back mid-teens said -- your then compression the of to were that I year, Switzerland, on outlook bring walk what those the you I about, things it. have maybe benefit this XXXX? what talk was in margin understand saw know benefits could you kind you you the would that can few And a the talked those items you you Industrial might been, into for you restructuring there of

Patrick Dempsey

Sure.

facility approximately just the Switzerland contributing course the Spring. into those one Both little a So of locations. Associated announced over it a was our last about other of consolidations cited of we consolidated benefit the just And earlier in we the mentioned year, savings. mentioned which XXXX in I facility which into million two FOBOHA $X which one of savings in was talked you which within being we was

of so and mid-teens Industrial, we the XXXX. see in that repeating XXXX, coming particular, will expect heavier course of on that emphasis incurred to improvements in Engineered Associated be of in back see out do to costs in a the driver and movement Spring, in we businesses. then the the not productivity entire Components, And our of also continued that the particular, across XXXX portfolio we big On

Edward Marshall

restructuring the Great. When Associated completed? Spring was

Patrick Dempsey

now, going that half right highlighting It's the -- first complete we're XXXX. be it expect we totally to of within

Chris Stephens

Yes.

So when the mentioned, part we the the two be Solutions announced year. And of here completed the consolidations, Patrick our has Molding in FOBOHA within been as year-end. completed beginning one at operation within Associated Spring one will the

Edward Marshall

So half to guide second I it guess split. your half that parses back first versus

see So thinking I big you're probably of the assume that about it? margins in going that be the to second and you'll Industrial way first is the half; are second pickup half the half XXXX then to comparable a

Chris Stephens

It's low why first being we're look with is the XX:XX full-year outlook EPS a That's for at to kind exactly. the kind way split looking guidance quarter than good of year. the it at watermark more our of, the the for

Edward Marshall

curious final result terms you might the have? question, ask seeing GE or actually in-sourcing, changes, maybe issues that the as that got you outsourcing Got some of further to And be it. or of the payment just discussions, any impact

Chris Stephens

payment terms, but that maybe There of business with payment I with for, them would a it's overall payment that terms. in discussion offer comes longer negotiation and will customer, clearly GE that general. of occasions are the our with terms And an on provide those negotiate comment Yes. constant just terms; we specifically in

the volume we're GE, we to that's thinking make to able and contribute about have with continue we we in better about this win new as programs longer-term. thinking one to long economically Group So run for Barnes help as and work price on way

Operator

from ahead. Chan Our next from question Josh go Please comes Baird.

Josh Chan

morning. Hi, good

baseline of you is kind XXXX? next of for the to the of how some year guess Spring $XX cost goes million that of over away much just and in numbers much this do close XXXX I Industrial so how or you business, ballpark the course So Associated the think issue

Patrick Dempsey

million, the just we majority it's to say going the would and I of north it expect into $XX go So XXXX. of away slightly

all as we to to as locations moved Associated well as to to we've as work continued expectations is some Spring be. to work transferred and not the business designated different may that as aspects to up forward and and been So what move has that work work bring we speed, portfolio meeting of our that the evaluate

a year, of significant improvement the first today sequentially work months. portion behind with a but through six as we additional go As we expect we predominant us costs through view that, the through

Josh Chan

Okay.

So that's good.

consolidations I I -- most away get -- you savings about million of top of so then guess plus So $X million right? the from and XX goes this that, on this the am thinking that,

Patrick Dempsey

Yes, it's correct.

Chris Stephens

Exactly, yes exactly.

Josh Chan

is Okay. to gears for think And timing other there type of some you kind we potentially business, to could that OEM about? ship shift growth, the allow is you of the guess if I that designed or strong might forecast of Aero get very so I offsets if so high-single-digit XX% switching backlog kind a some should double-digit of OEM

Patrick Dempsey

also the that LEAP within we're think number, think I AXXX, and by high-single-digits that guidance primarily we've No, driven the on but the ramp program looking in very contributing MAX. I in in of indicated XXXX also the the you're XXX terms confident it's we're as it some pertains at to Dash heard the to We're also online. now increase as XXXX AXXX slight comes as

the programs movements to overall, some So nonetheless, there other slippage are on we right. seeing are

high-single-digits. so if with we're look at at very in, pull strong should have we they right now looking back year, but everything as we we And the have a full-year,

Josh Chan

last M&A I pipeline what one reform in how last guess the active tax is of the just are year, of for Okay, you has terms great. And looking me since kind late anything basically? changed

Patrick Dempsey

I that something we QX the deal to be continues in mentioned to part before fourth the never very away relative that from margins from to So M&A standpoint our of we're working a was compression diligently. contributor quarter. but walked it

research as be context overall, and opportunities technologies end to exploring and lot Molding of behalf. effort into it So exploring our but space we've the excited also already so M&A, the about that pertains active entered continuing M&A Solutions in we're to and going of other through we're in we're we're that moment the a that other only markets at within not

Josh Chan

Okay. for hear. guys And time. that’s And great to your thanks

Patrick Dempsey

you. Thank

Chris Stephens

Thank you, Josh.

Operator

go comes Our Ciarmoli Michael from next from ahead. Please SunTrust. question

Les Sulewski

Good is actually This morning guys. Les for in Michael.

Patrick Dempsey

Good Les. morning,

Chris Stephens

Good morning, Les.

Les Sulewski

other about just specifically the deal that walked Josh was mentioned a you pressure M&A guess Actually you can to than front, from back Industrial question first the I margin from or any away previous Aero that to other go you pressure Industrial on talk to in deal And related? Associated margin, on what Spring?

Patrick Dempsey

an Industrial that and deal of our was Well, of hard and in at lot looked in we -- spent, the we very opportunity doing terms resources it evaluation. was a

remained very criteria disciplined our However, on to all we M&A.

in just point instance couldn't the so, to to. particular this And get we wanted we

In have or some because demand. With that of compression China as record to where highlight particularly I high levels the throughout as SPUs, products there as that so NGP seeing which seen as production we to some of demand. areas what ramped year the Europe and inefficiencies Asia an other example, we're of margin are terms compression, respect comes of and of shipping or from business that's within has with to materials did increased now expediting other to

is So the to nothing a largest number Associated significant it pertain as but commentary of Spring. areas the already

Les Sulewski

it. color. for that additional Thank Got you

some your Spares? On really the there, is growth specifically in there aftermarket on you're lapping to rates side, risk MRO quarters; and Aero strong the any guidance

Patrick Dempsey

Surprising both lifecycle. being and But engines our half participation to a terms the the well the driven sharing now had programs. it's and XXXX as product back robust for utilization by on saw captured engine air revenue the continued strength at as look very because by XXXX it's older maybe RPKs. repair are narrow-body with those and of primarily that in recently our Both of throughout at of into on an it's just CFX So programs. CFM-XX X.X% in have just programs shops. the high its rates aftermarket, driven one aircraft coming as the We've seen traffic with traffic of terms demand been air right driven was we being as the CFX, as wide-body. other component you our engine What engine well our

we a expect is revenues strength terms we particular is spot So our of its because move bulk of coming maintenance that the of into sweet continue. into come. requiring for years CFM as to which engine in number that the course of XXXX, to And

Les Sulewski

one is believe I me more a great, up a the I a of little you. that rate thank that normalized CapEx, on bumps bit in from of XXXX, last looking forward? or event is the running That's number one-off is kind guess this

Chris Stephens

across to industrial I would would and internal $XX we Chris. off to opportunities this $XX near-term Yes, the continue $XX the say come and full-year CapEx aerospace, growth in we're to the say, at so million I million, million see and million. do $XX requirement both going fuel year coming is

for as we our internally going to We, present those grow investments we're feed themselves make opportunities continue not are say, to will start business We to capital, businesses profitable to appropriate we as growth. globally. in going our

Operator

Our Glynn next Please from comes from Christopher question Oppenheimer. ahead. go

Patrick Dempsey

morning, Chris. Good

Christopher Glynn

guys. Thanks. Good morning

Chris Stephens

morning, Good Chris.

Christopher Glynn

last mix think I the within pop in sequential you OEM. margins, a had aerospace talked adverse So about you quarter nice

could just aftermarket that of caused that if growth or really the of flush inter-OEM renormalized dynamic that wondering if the the sequential mix Just it improvement? you kind was through

Patrick Dempsey

parts aftermarket, I out saw programs we was are would of coming spare of refurbishment component which repair primary parts our the both say performance strong existing is The ramping driver there in the doing particular progress to in customers' the side make with Chris, nice programs the OEM that extremely a into and continued shops on outstanding an meeting very requirements. just teams for job in the overhaul. that

move we business. into both we our and XXXX, into the OE, aftermarket of continued side of as so aerospace see segments And both strength

Christopher Glynn

Okay.

OEM don't or within you being year anticipate So noisy next this particularly mix year?

Patrick Dempsey

in the we attention within progressing. a we particular is sometimes I business and have out on depending program always to, not have any draw aerospace issues what that movement mix is would and a quarter how No of

very So again a aspects equated bit there on chain is movement predictable what design mix sense any then planning it's one of in overall the into that can whenever the in of to and if be there track the type more in year. ship, movement to confident little the were depending but we any program's on but supply issues we're going program is or

Christopher Glynn

points XX% questions Associated at on a interesting if three Okay. of you look Spring high above came you organic. back, with level And off margins few but on XXXX point touched

Spring Just wondering question Associated whole portfolio a Associated as fits Barnes towards some about or the here. revisiting view Spring within the whether attrition within the

Patrick Dempsey

improve and expectations on set of So and to and particular is performance what looking expect proceeded our as we each and exit out or our as we as looking expectations into any one believe Spring, of certain vision see Associated continue opportunity of of that deliberate we've terms given XXXX. at the if thing of over we're I don’t one as migrate strategy very saying for high best we lines to whether business case the as it’s that particular interest Associated been -- of those we've case Industrial businesses say business, In work we the also in to different end it is is we to a all always for this within them. as to hurdle it's that for programs not product our them new we in reference We're to constantly in result rates that make meets a set long-term. the that bar Spring

from lines to portfolio do in differentiate to so. -- how continually have a and a we’re we’ll raise business I standpoint through the themselves and it up businesses to as space differentiated process businesses, strategic product to then standpoint overall we're market evaluating that within And of a the the same on Spring ongoing Associated I migrating more that continue from a so and the portfolio, to think or basis to work entire highly strategic they if group

Operator

the I'll call closing Bill We have turn no back Pitts question to further for Mr. queue. remarks. in

Bill Pitts

Carol. like conclude morning us thank XXXX next you, with call. for we all and Carol, to joining this today's you with you first of call. earnings will our would speaking Thank We forward now quarter in April to look

Operator

today's Thank may you you. now This indeed disconnect. and conference does conclude

Barnes (B) 16 Feb 182017 Q4 Earnings call transcript