B - Earnings call transcript Q4 2018

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Operator

Good morning. My name is Marcela, and I will be your conference operator today. At this time, I would like to welcome everyone to the Barnes Group, Inc. Fourth Quarter and Full-Year 2018 Earnings Conference Call. 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]. Thank you. may you begin Pitts, conference. your Bill

Bill Pitts

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

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

are During to our call, the earnings we posted will be release referring supplement on slides also website. our which

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

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

call we provide Then, of that, will financial also of turn Patrick we over to targets XXXX a and After and in the fourth which provide our questions. for now quarter He opening Patrick? Chris remarks. for me update will XXXX. an our outlook. open-up results full-year call on issued review XXXX the our Let September will

Patrick Dempsey

financial many Barnes very good in strategic the with setting we progress all-time highs. and process and results respect performance, profits a the team Thanks, Bill, to financial several with delivered The impressive morning, ended a record everyone. revenues, records operating year orders, along and With initiatives. making Group backlog outstanding successful near XXXX achieved and

In $X.XX, grew increased earlier, addition, margins XX operating revenues adjusted organic a up per Full-year XX% earnings up X% X%. to a from and we points with XX% year operating grew year margins. to adjusted basis share sales Adjusted grew ago.

Organically, to deployment and we programs forming titanium well In to same MAX. Boeing Additionally, as perform invested and capital which we of our company we capabilities we Aerospace, the in advancements. in technology manufacturing the as better the global our expanded expenditures of power $XX stepped super up At million growth new to have position targeted Aerospace growing our capital such Singapore forward. XXX we much the market. programs capabilities MRO in strategic plastic support support time, invested to

drive allow future a are to With customized investing maintain initiatives long-term for supplier gas strategy and our likewise acquired element of portfolio respect markets growth. actively portfolio we to customized markets market designer, towards and technology organic Nitrogen businesses new Gas Industrial scale and application and investments Raymond reshape innovation Spring IGS include to and product vibration, brand and In Aerospace, in and Components XXXX recently our we our General very and success. Industrial, portfolio of Transportation, move, technologies we Industrial, springs engineering customized us complementary integrated commitment provides customer leading the our two end acquired and Gas of where for from July, Nitrogen with manufacturer, was which to Gas control, expertise that our the business $XXX and engineering aligned and it's Medical. critical application, to transformation, Raymond base. to in Gas related process. over IGS, million is other Products solutions IGS. strong at pressure broaden a While Products. Springs, we In Acquisitions our a and demonstrated targeted remain our complementary Engineered motion position business and our diversified growth

Motion this and a SBU, providing combined the focus now Force given the market the other struts With Solutions in & range of gas doing these and this end changes in Force Motion industrial to metal of & strategic Control customers development renaming a and In markets. business new we of unit the gas so, Innovative are wide springs, solutions precision will custom leader hydraulic businesses, establish Control. suspensions, forming as broader

Our second our the the forming during year SBU. Gimatic acquisition basis was of automation

of space. Our processing to goal SBU, post time Solutions six billion the in our Molding is the which a same to here create we combination is in revenues replicate plastic over acquisitions playbook employed half the today

on Gimatic portfolio As Call in our is our our and of manufacturing capabilities. core differentiated that well with strategic pursuing with technologies industrial property strong on capitalize we intellectual fit noted a solutions strategy November, our aligned Investor and based

components. As automation and a advanced mission market in leading tooling player tooling solutions, Gimatic other grippers, and of sensors, end-of-arm designs the develops robotic critical fragmented robotic systems,

and our organically While of the Industrial we to continue segment, been opportunities. aftermarket in transformation invest for the for acquisitions have key aircraft next-generation well Aerospace

During a into an existing parts program. part our the agreement represents of sharing dual our second This spare profitable and to business. within an addition revenue entered quarter, growing aftermarket attractive highly we use covering

generating perspective, the From million XXXX on innovation by very we to management. look of healthy and realizing System we and processes commercial, continuously business sheet with sufficient emphasis our property. Barnes to drive operational, to Enterprise the of business in Enterprise on By and share excel XXXX. our in regarding shareholders to value the six reinforced bring returned System, Barnes years our continue last significant at remains excellence the central ongoing excellence, enterprise strategic was value talent capacity items considered, examples Lastly, to our innovation increased flexibility Barnes an the standardizing fifth with a operational our financial spotlight Several intellectual saw maturity of capital delivering, of Slide wide part the repurchases. the the selling, respect the and and enablers power we across Throughout advanced year, as deployment these Also Enterprise of With all to over balance this are dividend, we capital through marketplace. enterprise. the with to X an cash deployment, $XXX efforts supplement. on leveraging the placed System year depicted

leveraging using being in program we Aerospace, connected to factory techniques key our automation, leverage our technology used manufacturing software projects one of employed and implemented and utilization asset digitalization and similar fabrication smart at position machine increase by advanced at our machining and developed competitive customers. productivity. enhanced With with products additive in instance new are Industrial, manufacturing, optimization For smart enthusiasm

Our the talent our management skills Barnes unveiled create and and In XXXX, our and members. workforce. program apprenticeship the to of campaign our Manufacture team continues develop we promote expand of programs future next-generation Your skilled global to existing Dreams a

the positioning performance I'm pleased for future the XXXX. results company in on made progress our and together, Taken the with achieved

projects automotive of are implemented, high additional several ongoing flat. within auto manufacturers the parts light automotive remain if on impacting concern of business many of Motion markets. transportation our Global by and moment markets we're end and auto and due yet of production half changes to declined with slight in while Force softness persisting level rates underway see uncertainty the Now XXXX top further will Molding incremental At related pressure our the integration improved and present, we model a would automotive current Components, efforts Molding trade Engineered American in Solutions markets discuss North Components given as negotiations and to automotive healthy. is end in runners has introductions, well. personal we non-automotive model through light and due end business, see to our At a vehicle are industrial businesses. markets XXXX; that and resulting Industrial, is to is seeing expectation vehicle delay Engineered years. production over the the and & tariff With environment. Solutions expect the the such At three within first respect take new year. tensions second relatively half ongoing & automotive optimistic die I successful markets. current tool medical In would essentially remain Control our downward of tariffs to bias we be and progressing automotive general the which like however, are production next care XXXX impacting disputes, tariffs X% A such weakness plateaued automation for impacting

relationships deleveraging expansion global include Solutions tooling which initiatives development our through growth our new and multiple out customer of technologies, end-of-arm laid businesses. have We in geographies, Molding of

the to be So our the teens as segment revenues that approximately auto margin anticipate range. adjusted over growing operating Raymond, up anticipated sales primarily and low-single-digits growth Control to organic SBU, and IGS be expect in both Engineered our be we though in the in we weakness, and are With and sales from production look mid-single-digits In organic. down Components sales mid-single-digits the with we Force Industrial to at to flat Motion organic end low-single-digits. total mid of & see acquisition we out lower XXXX, sales total sales

flat. sales down with low-single-digits in For approximately Molding Solutions, total we sales the organic foresee

sales be in the $XX automation million million from of to to their anticipate range we up levels. XXXX Lastly, $XX double-digits

sales an OEM and strong financial quarter fourth continue to the to team up performance year. year exceptional had Aerospace, prior the X% over our deliver both businesses Moving aftermarket

from nearly the programs strong ramp Airbus engines over last AXXX Boeing the OEM XXX the quarter the benefiting in business driven OEM of engine were LEAP orders MAX. year. Our for by is up and XX% new primarily

$XXX leading orders OEM full-year, the backlog of to grew XX% million. record a For

and XX% XXXX. expect delivered the remain growth platforms fundamentals Aerospace with up Our parts and anticipated the strong narrow-body continue market aftermarket quarter solid charge. MRO year very The in is spare OEM leading again to supportive up business sales a we with cycle XX%. growth in

demand and older aircraft. our high the growth contribute These new aftermarket in others to year. strong factors side, the passenger of see On that that further continuing persists aftermarket belief with and among will utilization upcoming

lead, develop, prior parts new for top on mid-single-digits Chris, the and company up Senior of this per new of XX%. low-single-digits implement item, of strategies that continued Officer. my our anticipated of call and created solid Hurley, growth. Pat and innovation unchanged from OEM our brings position, Group, in our approximately So on margins increase Pat to the and programs point OEM of I'd up turn will diversified before strong the major Aerospace In with are industrial to to He performance. we Vice MRO and Barnes over last spare to high-single-digits, Technology leadership existing growth A in conclude to sales and our to Overall, like up estimates of remarks, XXXX President mid-single-digits. be welcome Barnes Chief that innovation. operating accelerate the technologies XXXX, growth to adoption XXXX expect revenues of One drive sales I is view. aircraft Aerospace product technologies, new development and proven creative experience wealth development, newly a final

to would again So outstanding Barnes team like the once to year. entire an for conclude, thank I

future are our continue and what longer-term company. for to excited holds world-class build We a XXXX as about we prospects the

to and determination over this Chris, long-term point, our customers never Barnes Group a for growth on let discussion profitable Our has At for the value stronger. for me to the turn been financial create details. call superior

Chris Stephens

Patrick, and morning you, everyone. Thank good

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

was X% up X% For $X.XX sales impact were $X.XX a diluted or from net per loss share $XXX growth the positive FX share $XX.X quarter, X% fourth Net compared sales acquisitions. income per a year to and with diluted was a of negative million, million X%. Organic ago.

our $X.XX U.S. Reform. XX%. Industrial adjusted segment acquisition to the XXXX Tax purchase per excludes and quarter cost and Gimatic basis, $X.XX adjustments up fourth benefit related of adjusted in and share short-term EPS $X.XX, IGS accounting EPS On was

related the related adjusted U.S. to tax charge For within XXXX, restructuring fourth share $X.XX of EPS excludes actions law our quarter changes Industrial a and charge per to $X.XX segment.

Industrial adjustments ago. segment diluted purchase Organic XX%. U.S. and diluted from year, in favorable per accounting year or an per up of basis, $X.XX, and sales Tax On each FX XXXX of the to adjusted short-term Gimatic excludes adjustments $X.X Group up a share for Adjusted per Reform. was billion, was share IGS sales were Net of X% and income $XXX.X acquisitions X%. up costs EPS a related favorable while transaction provided our $X.XX XXXX. $X.XX EPS Barnes For and compared million $XX.XX to share X%, generated $X.XX tax

charge changes, For from $X.XX law XXXX, to short-term $X.XX and tax adjustments, FOBOHA related adjusted EPS accounting excludes a $X.XX restructuring purchase benefit of actions.

sales our to performance end segment decreased while $XXX lower contributed quarter by combined decrease, incentive last million, offset costs beginning the organic profit due the noted. lower fourth million, acquisition-related Patrick revenues. X%, automotive Unfavorable X% the with while sales softness markets impact Organic X% were year. decreased FX on the sales and partially decline. up Industrial, Gimatic and that was acquisition Moving X% drove IGS $XX.X of our in slightly sales of Operating volume down the primarily in from to compensation

actions year, costs adjustments current up XX.X% and XX% up operating in and adjusted adjusted quarter, operating was restructuring last XXX points. million $XX.X and accounting purchase margins Excluding short-term basis were the of profit transaction

Industrial down up was the sales $XXX.X and was contributed FX and while million, up And X% acquisitions XX basis operating up points. on full-year, added X%. basis, was $XXX Organic up favorable adjusted million, XX.X%, profit X% For were XXXX. margin operating sales from $XXX.X X% X%. million, profit X%, Operating were

continue given $XX.X Moving the higher of was spare incentive of $XXX by up in higher the sales with strength OEM schedule price volumes basis quarter Operating XX% impact to increased to points million, by year-ago. was performance from programs and very engine XX.X% sales XX% parts sustained on million, given up ramp sales X%, of results X% compensation. XX%, aftermarket and offset Aerospace, excellent increased MRO sales deflation and up extending partially Operating sales. Aerospace profit the margin strong a XX both team from new run fourth be a

backlog X% was operating million, a quarter. the the $XXX compared $XXX up up and to and X% million, up XX% end from ago million, up basis sequentially XX.X%. total from margins ended profit $XXX.X full-year, was points year For to at XXX Operating were XXXX. XX% sales third Aerospace year a the record of up

For of ended quarter, Other XXXX next million by last acquisition over tax this expense ship primarily XX% year. losses million for fourth a million to taxes, to due was $X.X XXXX XX XX.X% rate was effective backlog to which for tax $XXX,XXX ago significant Tax items months. XXXX. expect OEM FX Reform. XX.X% expense $XXX to year $X.X full-year interest driven by the With Other approximately rate specifically, respect year versus was company's $X.X funding. impact versus of driven for we to note million at the primarily increased Gimatic the the U.S. gains versus effective The XXXX the

impact, effective this been the exclude in tax you would XXXX. rate If have XX.X%

third of taxes, our a tax outlook quarter were the a improvement. number to a holiday is are puts and point shares adjusted repurchase our did further there realize and quarter diluted while One rate share effective to than takes, in XXXX average fourth on shares flat So essentially on fourth XX.X of respect tax effective of any Tax lower quarter. $X.XX rate we With basis. year-over-year a did granting which contributed shares the count, million EPS in not outstanding China quarter the the due we

year-end and expenditures which $XXX last million up cash cash million capital ended $XXX to activities $XXX due EBITDA the the to expenditures we to was less times at third allowed. additional last year. to Year-to-date senior to the our XXXX $XX conversion increased was Gimatic free borrowings Under flow flow approximately compared at be XX%. of by from covenants, sheet, million provided ratio X.X full-year, For debt million cash existing operating primarily the our as from cash $XXX up strong quarter million versus were $XXX operating million would define times year, acquisition. X.X respect balance With XXX%. debt capital debt of

of supplement. Turning our Slide to X on outlook initial our XXXX

contribute of X% to be sales XXXX's $X.XX to acquisitions total X% in revenue of EPS adjusted of expected forecasted X%. is is the negatively X% to expect For range expected in impact to be to $X.XX margin by XXXX, of from of anticipated revenues while with to approximately $X.XX. adjusted XX.X%, Operating to is the we to X%. to X% range X% XX% EPS are FX up, growth X%, growth organic

our of first experienced expect A and million. the be quarter XXXX Also of the received to $XX be items. starting quarter is last cents earnings first of below the second quarter the We and XXXX. year's out million XXXX to XX.X%. what have second quarter first tax a EPS be half XX.X% lowest is between few XX a weighted auto-related effective between fourth half, with to Interest the envision anticipated XX the split. outlook given with performance lower be year year rate to we forecasted we expense to the orders other and $XX in few The in half

CapEx million between average to is million expectation $XX and to conversion be be standing and XX than are million; our diluted shares; forecasted shares is million to forecasted is for greater Our expectation $XX XX cash XXX%. as

Relative to towards at XXXX a Day on achieving our financial Turning the view level and are we driving heightened moment of take automotive slowing. growth progress to the benefits incremental inaugural downside XXXX tax and is China's are see the discuss variables stronger improved view, our repurchases. Slide markets global a weighing end these to of of a uncertainty The seen trade business, an year we targets number benefit mold aftermarket, its let's actions, in our and X, XXXX. targets to of global management on of Investor share contribution There weaker. economy our with introduced Aerospace Collectively, our a to September three highlight. we've

recent X% impact our the together, Reform excludes organic margins which in three-year as and XX%, CAGR taken adjusted acquisitions Tax well high-single-digits. X%, of the has XX% of to us benefit our to adjusted generating XXXX operating as view U.S. current of sales CAGR EPS So

Our cash conversion unchanged. targets and ROIC remain

we the our of cash generation in level the to organization, a greater of and returned able summary, increase the pleased capital our across deploy with value strategically significant with shareholders. we'll sheet solid financial XXXX, XXXX in growth Notwithstanding of deployment well-positioned in are we performance So ongoing growth the very were business, cash to year capital with further to let's Operator, returns. a call continue balance seek enhance supportive the ended turn of XXXX, over to investments. opportunities remains we drive continued and questions. the And that enhancing to

Operator

Instructions]. [Operator

Your first from of from Oppenheimer. the comes line Glynn Christopher question

Your line is open.

Christopher Glynn

So to stated you your as at on year, comments curious don't but for next one I if margin for Industrial know look we Aerospace outlook XXXX.

positives and and curve status maybe price you think volume learning I contending there your slight OEM deflation Aerospace? have you're from but run shift mix a rates with margin towards pretty at quo then

Patrick Dempsey

indicated we approximately for that XX%, margins operating our be in XX%. Well terms would was Yes. XXXX guidance of

Christopher Glynn

Okay. And in Industrial Thank little than bit couple end come market a there for for started of expected? from of productivity some halting emergence out production the the like performance you know of and moves a the that has the was was the XXXX, of footprint I XXXX? turmoil that. it more what's the bit a footprint status margins then but moves how looks of for

Patrick Dempsey

consolidation some into hoped net-net, respect targets I the at XXXX for. of a our little did behind to that our this to team make been or business the job, now the set in and associated the move as footprint in shy, nice of ingested completed pretty that we it's locations XXXX of a the Overall one that other has So them. and Spring with early had say you decision But against we much But locations. facilities reference, point. effectively we've very is a a would us productivity completely up other into made coming achieved terms

Christopher Glynn

Okay. FOBOHA? And then

Patrick Dempsey

was been of Barnes as a there over improvement to we've integration including set with of facility of be well a the identified we one the And in in also what the continues purging consolidation margin to know, on terms last onset that goals a of as years market story had very into been at you from the couple FOBOHA out its had pricing. felt which, there to we improvement into roadmap below backlogs margin the XXXX. and continuing target great system

Operator

Walton Your line from comes next question from the UBS. Myles of

line is open. Your

Myles Walton

like you're the into of at just recovery but you First, or at outlook looking building the quarter softness be half building the improved fourth you for auto you're second of in market can first the on how looking how course comment year, the Patrick, continuing. you through sounded the saw an kind quarter may you're it

the you just into So XXXX the expectation how building for outlook? improvement much are

Patrick Dempsey

of in moreover half, So, guidance split in automotive a mentioned, end in we driver of challenge in looking But we're Around Engineered reflected half. was what production Components was is XX% the of the markets. the saw our as auto were at think settle trade Chris changes outlook dust we the was XX% not albeit And impact it terms programs that by our to The so full-year the that in on for the primary quarter current of our fourth much is back tariffs I is terms speak factor terms the pipeline so are much a second number in and/or first in give what the everybody the that businesses. our tensions more been issue certainty. in of on was module but waiting the launched. the with And in businesses that there to launches. OEM negotiations impacted holding of a manufacturers a product not saw by the and that to have

to fact about. trade those that would view So half which stronger assuming half programs be with subsequently, the that released optimistic negotiations are looking a we're at successful first and a second softer a we're

Myles Walton

Okay.

plans particularly originally some second kind in organically in for relaxes system we and changeovers tension half? Solutions what the of model around Molding changes model that that's were the the this So of to go plateaued back

Patrick Dempsey

That's correct.

where Molding the healthy within in the side remains we strong to continued and business Solutions, backlog other mold XXXX it, have orders to side the see On be outlook. support of of strength the

Myles Walton

the one XX% kind of of XXXX? and -- make you And I is feel getting it other in Where comfortable would that to like Industrial to the rise of to XXXX mean Do to XXXX going most XX% seems then to have itself margins that you heavy be just lifting levels? between one from to XX%.

Patrick Dempsey

Yes, supplement so for in to you of that we is drivers our relative identification the saw what and earnings and XXXX in the wonderful targets, the strength the upside to story was being saw which the downside with are us Aerospace what will its a key and that the assumptions outlook primarily margin really XXXX the the for markets. the around end our right outlook that the is us come think headwind the area side The the for was of targets part required outlook a and into provided down on XXXX on to from little I automotive continue has Industrial onset.

area headwinds As for a experienced, big management look of and at to the is current of we and focus XXXX us costs. the look been we productivity

expect headwinds in might we of terms a teams and manage to structure driving overall though improvement maintaining even so view to working some in aggressively are with margins. And the cost top-line, the

Myles Walton

Okay. rate using for be for tax XXXX on well? last at this Chris And as good to rate the XXXX one,

Chris Stephens

would a to earnings. ballpark mix based little global for bit use it's a on I rate Yes, pretty But decent in that XXXX. maybe it's of pressure the say of

Operator

& Sidoti Company. Your the comes Marshall Edward next question of from from line

open. is line Your

Edward Marshall

touch margin of say of I'm XX Molding points And up to -- that assuming mix absorption, curious you be growth. And you're much of to consolidated the thoughts Thanks. through outlook just kind mix Solutions want that higher aero, what for might have basis today? flat to how So to XXXX. a that from looking is at walk can can maybe driving I that improvement here higher much highlight some wanted kind getting to we I the side X% mix I'm portion as so X% your on of we of

Patrick Dempsey

businesses side higher being So in of with lower, first margin within at associated the Clearly, lower over tariffs. molding two we're flat just the auto start made the as a the the half strengthening we're mix factor course With being business. the a & the Die business of that. with of as I the things at to looking of our that year well is the alignment year as around in commentary, Tool looking

area and top-line. top-line a mix driver productivity other The flow costs of from is outside challenge the emphasis is given the on the primary through that the on is any

Edward Marshall

Okay.

So sounds the businesses; it noticeable of outlook across productivity the points organic really with in enhancements majority which It that mix. that like on like the basis increase sounds is to a related flattish XX some is fair? is

Patrick Dempsey

fair. That's

Chris Stephens

going there's year. would strength aerospace and aftermarket strength I and counting Ed, margin the add are for to the throughout reason no clearly the the profile, of that that the continued and to of not believe strength continue our business full-year on and we're that CSM CSX actually

So being RSPs terms of MRO low-single-digits, top-line in we've the got mid-single-digits.

nothing looking causes that is green. Aerospace pause. So us There's

side, note the Industrial just mentioned we the before. is of On what of settlement

Enterprise We actions just margin enhancements. are every and productivity the year cost working as in Systems we Barnes do to our drive leveraging

dependent this volume valued organization. it's on is much we're indicating, actions basically throughout so to productivity as although is XX% year XX.X%, that the on drive not it the So we

Edward Marshall

I what you I That's Great. thought say. hope would

know we've for to XXXX, the $XX Thanks. can in On we want the fourth too Gimatic, the forecast is it what I don't about $XX forward -- Gimatic? if to today. get performance million see all and quarter was the million some that that ultimately talked much I

Patrick Dempsey

Gimatic to million business, the under to in ownership our million the the of we approximately months $X $XX is the relative Yes, business the million did $XX year. last of couple

the we're integration that And the place in with sales of again team. pleased of put added in see we what Molding to advantage of efforts entire working that the that overlap and very force benefit be as to continue business with of the lot an the especially continued business two the growth working customers as that We about a terms Solutions teams driving plans Barnes we've with relative excited is and together.

Edward Marshall

embedded what's that an margin and you in from highlight standpoint for contribution the your Could outlook? business EPS maybe maybe for XXXX accretion

Chris Stephens

let me that. Yes, so take

from EBITDA communicated what is the with contribution an margin what the view, acquisition a is in November point very XX-plus-percent Gimatic consistent into going we we're operationally, business. of So XXXX And see of timeframe. we

do guidance contribution Gimatic's So to it's the EPS has it that assessment XXXX for really $X.XX would non-operational. contribution, to outlook. bit is a taxes lift. the performance going to -- below of that interest that end that primarily things $X.XX to other reflected our be of line expense, little operating below to range lower are on the But categorize our with I items their that in And performance are nice

Edward Marshall

Got the from me, question XX, to if longer Aerospace I out I I coming. want maybe a it. look put with look terms to GEXX the take of could. at we in tried to wanted as final the And GEXX

you've that did got the in up that GEXX the was as might any high program where and is but that content there about we reference from XXX,XXX X.X could to as Now that use start GEXX? relate

Patrick Dempsey

its that approximate was as Barnes programs GEXX, Well, highlighted million aircraft. with the you of OEM in day sales one it successful most dollar the in per

the because took risk that was out belonged table. who in for about parceled originally that programs took doing we of the think the that GE and primary in source terms to being we're the partners of that on reason so and subsequently Base and is differently were in revenue outlook the GEXX, off sharing the portion not the a volume to GEXX we As different to that same the ballpark GEXX

terms excited opportunity continuing it’s in GEXX we're GEXX, we're as base that content a the about. the But still work vein relative the just same not to wise. So

Edward Marshall

of to to kind discussion -- do that might opportunity problems changing of to or the your anything they've you be some near-term from with giving of due kind there that that the just Is that relationship had it. Got OEM any infer

Patrick Dempsey

None whatsoever. no There there correlation is whatsoever.

I both relationship on stronger the we ever Our strategy about partner to work. excited on past moving we as the that relationship. a be as more and GEXX of to in and than programs continue the And couldn't terms is performance forward strategic believe continue the build other and LEAP

Chris Stephens

relationships to kind provides not with risk Patrick the on these to of program add partners relationships with our the that partners And -- a well. necessarily directly an sharing win it GE is revenue actually outlook sharing as revenue GE opportunity would us work I pursuing, risk engine relates partners is the different that as with but GEXX although

and looking out there to opportunities. team the at conscious Aerospace So of we're very what's looking

Edward Marshall

Great, guys, appreciate your Thanks that's you. Thank good I today. comments all insight.

Chris Stephens

Ed. Thanks,

Patrick Dempsey

Ed. Thanks,

Operator

question next Your Michael Ciarmoli SunTrust. comes line of from the from

Your line is open.

Michael Ciarmoli

the good looking guys and this Chris that's especially of outside Is you at get I order of or a then mean looks I'm I a it give you guys would weakening. on flow There's a down a was outlook traffic of when second the today for to everything backlog aftermarket for dime elections. calling does. you XX% unknowns turn second Industrial view tariffs even trying or sense. the an mean more I'm from appear I looking lot I have more -- are mean half to optimistic tends Airlines at to just do of already, in that on weighted mean I XXXX, I'm Patrick, profit decelerates? but seeing Brexit, line know Industrial what of happens strength Aero, the good strength so sequentially. going fundamentals are sight we're warnings face slowdown. half the you just the global if into between more a just in in optically I'm here

to just half? of trying what visibility I'm kind you second have out that So into figure

Patrick Dempsey

into it In Yes, there within business cycle how you a with clearly we businesses. have how some side. and good our which question, and production Aerospace. I'd year this side the we portfolio cycle The both of within good longer Aerospace it visibility so And of look and break with equation long businesses is think address for the the -- within Michael. next cycle new the equation, short at respect are OEM what some some if I the our down obviously Industrial and is to side

turning. is cycle On shorter the aftermarket subject to to your a is business point, it and

two aircraft. And of know, a there OEM what little the the which the narrow-body driver you of we're our of on visibility the look at primary That is the less is operating on that the CFMXX strength aftermarket. as we the program, programs said, than So workhorse is the is that side. is

between shop relative to mid flight also visits, hours and that outlook be mid-single-digit so, growth the And a at XXXX. continued engine and now robust against look to of trajectory

the to subject again Aerospace all remain Sojourners to positive side. the So continues event, fundamentals for

nowhere and primarily experiencing and at cycle of that backlog headwinds. it's Industrial terms times months. nature side, the launches. line looking as cycle Industrial but in of we're the On a business product more cycle to is some visibility nine lead long six of cycle There's to side Molds And that what is of The what a business opposite it pertains long around short to the the mixture cycle of businesses as in now given the near that long which of Aerospace business. because is we're the the the of product side short is with because

automotive immediately the well quarter & Die and auto molding taken as our the pressure businesses. start So Tool in into fourth year, has our as almost some of into it's as the reflecting businesses

point, your recovering receiving at half who driven have to second the we're primarily hesitancy tariffs. are the in so And uncertainty looking to outlook relative pause from our we those customers and feedback by around expressed in

that the will that And and receiving are is the changes the allow of pipeline. we're of in once model general so some feedback launches release clears, the product that that

Michael Ciarmoli

Okay.

accelerate about have target, mean, X% the and to to in that growth X% got I the at Okay. did take correct mid XXXX, you or to you you I started did to level GEXX, to forecast are Arrow going I if an make going rate then what it's here, -- to but I increases I X% to higher I make organic X% that headwind the XXXX at ways or X% math And XXXX, numbers obviously forecast probably at OEM a just CAGR on X% on to know X% out. sure period the you're organic XXX, going to right XX what do get that needs said at to materialize. zone? that But have on the you plus to to the up what shift on year that the revenue mean way the We're the I've that I in acceleration want looking given the am to would going the the the see growth at that just to organic be XX% you're there have not midpoint, guess you're or XXXX is sure but even

Patrick Dempsey

in to forth, GEXX pertaining this rates of a juncture represents to a by at earlier to low indicated of been are it also down think support those come offset levels comments two the have it's because in some reflected not at downside what lower our on with LEAP of is the Base of contribution -- indicating. upside that we now volumes headwinds relative program. Well, margins very that levels GEXX the decline productivity also be But factors. but -- management revenues the so the the from from as seem current in Subsequently will stabilizing. key we what your that you to GEXX the those us necessarily focus on The increase combination say see top-line the we've we're some referenced or can the growth and costs, Chris to

a job our power to could top-line successfully. aircraft to of done older through Aerospace So challenge it over very wonderful transition newer the aircraft what been from team a have actually a to

Michael Ciarmoli

jump right back in All Perfect. Got guys. will queue it. I the here.

Patrick Dempsey

you. Thank

Operator

line from from comes question next Josh Baird. the Chan of Your

Your open. line is

Josh Chan

Good morning.

QX in ask So guidance like as in than a you of envisioned. quarter about QX at I your softer guess and I to had what wanted were margins looking little transpired, the the it margins because just seems

a on into what of might just headwinds some the give and if can dissipate XXXX? you So maybe color little wonder, whether that'll talk about that drove bit of

Patrick Dempsey

the Well, margins the our business had was on result flow a as particular than primary driver corresponding coming fourth a we to pressure. little end the and well. there really was relative saw markets we that of in of that automotive top-line shorter through volume Industrial impact as pressure us where productivity on the up was and And that subsequently area quarter the anticipated

Josh Chan

that first that guess within I then being it? XXXX likely markets into right the think continues, about half of And to the is phenomenon probably Okay. that softer auto entering way

Patrick Dempsey

the Yes. tariff I the execute actions planned in out our say view as the as resolution proposed pressure that half that have second for year as in first of around as well been we to be our with the will would full-year under improving I half of to the run rates on a margins laid the highlighted dispute. compared uplift

Josh Chan

some how you're guess and the previous Okay. sort half first for following the weak And year, is forecast to of I would that the a kind makes question be then expecting That how of then for relative kind up sense. of on ballpark guess in cadence half? Molding XXXX. helpful. strong about is flat I of the the recovery Thanks. second Just the

Patrick Dempsey

side step-up different outlook the their first insignificant the as So and a mentioned. and so Die really second half received driven the both Die over auto that relative programs fact I a it businesses customers we the for well that and primarily as decline & again the side looked all case that half auto two molding QX at Tool is full-year collectively by driven the those molding on where is and to interactions those the & in release did businesses. of have It's with biggest saw was see in Tool by impact not of the of we that primarily terms the

So the again the is buoyed those first by into strength Industrial the move our half, are of business. as we molds part in two offsetting which the

Josh Chan

QX Chris, the a that's or EPS, about any question lastly And to All note in the tax QX? for there to similar comment rate full-year rate your QX assumed dynamic relative is Okay. in modeling to is right. tax the then, the just on

Chris Stephens

rate. one, change similar no that no, on No,

Operator

I There over back the [Operator Instructions]. are further presenters. turn time. the questions this at call to no

Bill Pitts

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

Operator

concludes This today's call. conference

You may now disconnect.

Barnes (B) 22 Feb 192018 Q4 Earnings call transcript