B - Earnings call transcript Q2 2024

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Operator

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. [Operator Instructions] I will now like to introduce Bill Pitts, Vice President of Investor Relations. Bill, you may begin your conference.

William Pitts

you call. us thank quarter our and earnings XXXX morning, for for joining second Good are President Chief me Senior Streich. With Barnes Vice Hook; Officer, President, and Thomas Finance and Financial Julie and Officer, Chief Executive

can of corporate section You Investor O-N-E-B-A-R-N-E-S.com. onebarnes.com. our all on website earnings-related the access Relations That's at materials

be During will the release referring our call, presentation. earnings to we .

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

will on You and our as part Exchange submitted find Form to and the release press website Commission. a reconciliation Securities the table of in X-K the

may cause risks Private are in forward-looking statements on onebarnes.com. projected. Act filings differ Be call the actual uncertainties are described and the the materially our that that These both be advised to Relations section Securities today's of as Investor XXXX. and to on during subject session, those in which SEC, uncertainties mentioned remarks forward-looking in and with defined Litigation certain from that statements results we Reform the call may the available make periodic and risks today's opening are consider on Please question-and-answer statements are the

XXXX to now quarter second financial And over will Then will I for turn opening will review the of questions. we the of our call performance updated Tom remarks. provide our his for outlook. call open after Tom? details a that, up Julie and

Thomas Hook

to some will on Julie and annual strategy and outlook. second addition an then everyone. the I industry updates cover more provide progress our detail, current on and color quarterly quarter also update macro our to morning, Bill, including transformation performance in good provide Today, you, . highlights. I will environment. Thank in execution will

have journey, several As of multiyear executed the we we halfway point transformation Barnes milestones. on approach significant

business shortly operations to articulated and to years forward. appointment our global visiting Barnes more a comprehensive understanding early challenges a address. Executive of strategy after Officer XXXX, concise our thereafter, In as Chief and we X-pillar move X to my strengths the ago, and developed Following clear leverage we

business core to underlying value performance yet industrial. complete. our and aerospace rationalize creation execution; and First, second, work third, improve is consolidate and The integrate, not scale

However, associated aerospace. Aerospace, momentum. quarter hang Industrial and we the worried last have made progress, of we in spring pleased the businesses, and I'm sale history, More we meaningful the note the the in in company's deal of recently, acquisition segment. our second completed significantly a with this of lengthy scaled MB rationalizing largest have positive fall's our With year, step

over Given to years spring can founding transaction enterprise back of we value. are unlock be Barnes, associated considering that all XXX this to alternatives traced the clarifies

million, and of and points. margin adjusted an generated basis $XXX second organic. to EBITDA For XX% grew revenue X% EBITDA of was XX we reported XX% the Adjusted quarter, increase $XX million up

Aerospace As result of of just progress EBITDA. X/X transformation our adjusted the now discussed, a contributes portfolio

take we philosophy business actions line, line the through across guide bottom core top on focus to Our pipeline execution growth continues company. our the

cost largely the Through or of Majority our pressures cash actions BTO implementing we Barnes mix. drive have are the competitiveness, our date mitigation unfavorable to are products efficiencies, served increase flow. offset margins Transformation savings and BTO, focused cost Office, and segment enhance to operational on where to improve industrial inflationary

the complexity across over closed in feet divested resulting rationalized, reducing cost a organization. and XXX,XXX facilities and commercial globe across office or the manufacturing space, square We of have reduction

a While this to continues strong work is identify additional optimization opportunities. start,

now business $XX end million unit streamlined have $XX Barnes, to of are end of million to each we and well As by further also we momentum. rate have annualized shared XXXX build Across and on of of our positioned previously, we run the our target by the XXXX. leadership continue teams savings

have growth operation more good scaled Aerospace to diversification Between full makes unlock complete committed meaningful deal we us Barne's customer, geographic Barnes are player further plan. and a developed the a Aerospace and actions a greater closing, platform our recently in growth industry. remains business strategy announcement market and potential. to and integration confidence We with durable comprehensive in the

to This We both begin our progress day integration leadership attack, Aerospace track the is firmly identified enabled cost Aerospace us on from $XX from savings with actioned. and Barnes MB $XX and now identified to million pulling X. rate run of synergies quickly team, optimize capturing legacy of and synergies million annual and

expect extent More planned. business cost seen the end the that cross-selling benefit in should the of realize of We those the shoots recently, we have as by future. synergies to full XXXX green

positive Overall, several are forecast for and performance. Aerospace, there to good we trends continue

production the production OEM compensate. we output the do as for our outlook have the In longer landscape, spoken anticipate delays year. due lower slowly chain ramp OEM expect to we growth lead more ramp and aircraft to a bottlenecks to will impact However, the prior favorable will our for Across as in Boeing expectations, dynamic fleets productivity. aftermarket, this OEM both than existing step-up touch continue on excellent momentarily. will that service to and to labor of the stay existing Julie to Airbus supply aftermarket and

Likewise, experienced challenges. efficiency labor have chain we supply and

chain within is what believe address are challenges our persist. but actively supply market control, to to likely continue We

the still conservative as anticipation our We exhibits support OEM equipment to phase positioned longer-term XXXX. capital make prudent While ramps. industry stronger, we dynamic we our are to issue. new With timing intact, the Singapore are near investments growth outlook for well using we challenge It more is back and when the demand a for medium capabilities engine in production dialed is term over OEM less reramp, transition the of for new this take a and have view to as production LEAP specificity. OEM see environment in aircraft

of as continue VXXXX. will extended demand for especially to like engines air platforms, travel the Pressures persists and growth the aircraft OEM market high. strong support legacy remain very aircraft flying the aftermarket, and the narrow-body CFMXX utilization For side important of on

industry, repair Connecticut, component we aftermarket. constraints the our capacity Singapore expanded in both within engine East significantly the supporting for capacity Given expectations enduring Granby growth and have

In Poland. facility are European investing we our addition, at in capacity in aftermarket

cases, a America highly for new quarter, General in a Electric Show Chicago, at & of the components, and reached addition our to the a long-term of used overhaul and Rolls-Royce environment, announced of year, maintenance, with robust. remains complex During Aerospace in extension commercial Barnes Emerald This long-term agreement shrouds comes repair customers Canada in challenging RTX repair & Pratt services parts Aeroengine this and agreement Pratt including and seals, despite rotating Whitney the top multiple agreements the more OEM on Whitney. aftermarket MRO large

term value $X is full the approximately total, of agreements billion. these In

of We capabilities. positioned an geographic balance The works integral as strategic chain will chain aftermarket expanded unique us Barnes supply OEM to global with and capabilities aerospace supply reach flow. normalize and serve have partner markets industry is in and the as and customers to in our well the these production

to Moving Industrial.

areas asymmetrical. lending Second and We quarter performance solid, softness was others. saw and improvements in albeit certain

business and product sales Solutions solid leadership growth gain new commercial Our offerings traction. organic Molding as year-over-year generated

are positive its quarterly lead as from weeks, in growth posted in the operating drive business. China holding In Importantly, to since times sales at levers improvement Synventive a and returned XXXX, sign. rigor orders runner sales for molds, we throughout end China significant automotive best quarters several our we XX a systems. hot our of our ago

Sequentially, single-digit At low Spring Forest & in and growth Motion and generated year-over-year, organic and solution orders Motion supported orders Control, China. business of divestiture improved, Control Hänggi, within sales while by we relatively Associated the sales flat. remaining after were the Europe organic

additional organic the orders last remain changed much close To steadfast and X declined. boost cash Barnes executing X-pillar actions to cost generation growth, and lower in profitability to automation remarks grew sales this drive years, organic and active Lastly, morning, at are in our year-over-year, while improved deployment. strategy has an my we returns,

to continue value to business the to our opportunities company. of We elevate the unlock optimize full

With call will Julie I to our and performance outlook. the to pass cover that, financial

Julie Streich

morning, Thank and you, good Tom, everyone.

Please Slide a to turn otherwise year-over-year, X. comparisons As are reminder, noted. unless

sales million, reported second up organic. the and up $XXX For were quarter, XX% X%

income was margin margin adjusted was exchange was and quarter. points. Adjusted XX% EBITDA was meaningful million, the X%, points. Foreign XX up XX.X% basis up was Adjusted operating XX%, adjusted EBITDA operating XX and million, $XX not down of $XX in up basis

million company's share Adjusted ago. net ago to Interest year $X.XX acquisition million due higher $X versus and tax compared a to was was adjusted interest borrowings year given basis, rate the expense of rates. On per average was XX%. second quarter income $XX a higher MB Aerospace $X.XX an the

performance, to on Turning X. Slide Aerospace with our segment beginning

increased organic organic. X% million, sales XX% up sales reported XX%. For increased quarter, organic the second OEM $XXX aftermarket and sales and up X% were

Adjusted labor from contribution MB was was OEM due challenges in the Tom $XX operating contribution profit of lower-than-expected million of inclusive supply the select higher a As Aerospace. volumes issues. chain benefiting and XX%, external and of growth mentioned, of sales pricing to organic combination efficiency of up

benefits partially XX.X% operating points XX% EBITDA XX.X% productivity EBITDA Adjusted organic was acquisition basis for OEM ago. of margin year million, Adjusted and and Aerospace $XX lower certain was sales These margin MB the MB benefiting from a XXX the offset Aerospace. long-term acquired amortization were higher up noncash by of to versus contribution facilities. intangibles at the declined Adjusted XX.X%.

MB MRO mix margin sales As in and Aerospace a our reflects following of between reminder, EBITDA Aerospace. OEM, the year-over-year change new acquisition RSP the

quarter, March $X.X points. backlog In to the approximately basis was impact increased this up mix X.Xx X% Notably, billion, XXXX. OEM second and XXX was OEM book-to-bill from

months. XX% We expect revenue approximately XX the convert to over next to

determine increased mentioned, we estimates. positioned and Tom to to on well As activity. aftermarket the That our are production impact we backlog capture aircraft levels are potential lower monitoring OEM said, revenue

impact benefit of to well-balanced and positioned in ongoing we MRO the portfolio performance on from allowed mitigate remain OEM margin well Our to OEM volume quarter, the aftermarket us growth. much

control. remain in on we a half, with softness things the our reduction the actions continued proactively OEM expectation second heightened cost and Nonetheless, additional focused managing within taken for have

of Spring Moving net automotive results debt. transaction we divestiture was Slide price to our used the and The Associated million early the to materially to on reducing Industrial exposure April, $XXX million closed and were proceeds businesses, headline of manufacturing. of cash Hänggi the reduce XX. $XXX on approximately component In

ago. Second while sale Molding $XXX Associated from and X%. for a Spring of basis the Control XX% automation on was X% due quarter up Motion year sales were increased Hänggi. and reported this, Force sales flat Solutions was organic to approximately X%, down & sales were a down Adjusting million,

by was down basis the offset divested points. transformation was $XX XX%, Adjusted initiatives. margin million, X.X%, operating XX down million, Barnes' adjusted reflecting businesses, profit basis EBITDA was XXX was operating Adjusted points. Adjusted partially and EBITDA positive pricing $XX margin and XX% down down cost XX.X%, office

trimmed Of points. have charge note, divestiture adjusted this from forecast from second factors, automation the was in our a sales among our $XX EBITDA adjusted the growth million been cash in prior business, was comparison, expected. of orders XXX the grew approximately Excluding while and which, quarter, than impairment flow year in for excluded XX% earnings. slower This was and Accordingly, margin basis the has quarter. adjusted charge we resulted noncash growth up EBITDA other

to the Spring $X.X year support adjusting largely flow company's ago. to The balance $X.X and XXXX million operating of in XX. on negative payments. and for flow program increase tax million. up was first versus namely the were capital, million and provided $XX.X an income After cash Turning payments Capital million Associated $XX.X free decrease restructuring Slide divestiture-related half sale cash expenditures cash the $XX.X was to by was a income Hänggi, investments. activities the related and sheet tax growth of of versus of due in the working inventory Year-to-date million

further end the ratio deleveraging Our from X.XXx X.XXx net end, of at debt-to-EBITDA exhibiting at was March. quarter

Xx million, of $XXX XXXX. remain XX by cash until leverage end our ratio maturities June including and million We end XXXX as debt revolving on and achieving focused a of no capacity XXXX. the in by $XX major borrowing X.Xx There of are of on Liquidity hand the facility. or of under lower million $XXX was credit

XX% believe developments with of Turning our to updated sales to increasingly guidance. and backdrop, X%. expect customers, an we of organic including XX% challenging sales to it our We outlook. reduce OEM annual and X% to is growth X% recent year versus down from X% prudent to XX%, Slide total full Amid to now XX XX% growth

to grow inclusive XX% with from double of in growth full low contribution MB Aerospace We expect digits. sales sales the organic year a Aerospace approximately

to sales Industrial, divestiture. For given we mid-teens to total expect the continue be down

Excluding grow single sales this the low in impact, to we digits. expect

Adjusted XX% between expectations operating total margin and for between XX% XX% of Industrial bonds and unchanged. X.X% are of to

is basis XX adjusted to timing mix expense versus and year on depreciation to margin of XX%. points million margin unchanged expect XX.X%, sales by a guidance to of we previously XX.X% sales. operating Aerospace, amortization now range of For primarily each and capital up $XXX aftermarket driven now be is approximately XX% end EBITDA expenditures to higher amortization. Full million the expected of $XXX Adjusted related the due in

This XX% XX% to reflects margin and aerospace adjusted Industrial XX% EBITDA to of XX%. of

versus We EPS $X.XX and of midpoint at outlook. expect our the adjusted between down $X.XX $X.XX April

we of XX additional guidance robust. the longer-term earnings Slide presentation, closing, in the Aerospace have outlook performance while for for modeling of our the our included On assumptions purposes. is sector outlook XXXX the year, for half second remains In OEM tempered

the strategic our a of has and industry. Associated by through the MB created divestiture and business on revitalize strategic in focused aerospace continuous business efficiency Barnes of player pivoted improvement the more in enduring Hänggi, to core energized Through emphasis Aerospace are developed transformation Spring We of business. acquisition and discipline a the has execution mindset.

at only impact our already midpoint the X-pillar of of journey our are value. see the and driving We shareholder positive strategy

Operator, questions. we now for call will the open

Operator

Your Instructions] Research. first Gregory comes Dahlberg question from with [Operator Wolfe

Gregory Dahlberg

Maybe on [indiscernible]. one Julie. is for just Greg This Dahlberg

dig I margin. I lower the have think you XQ? I hoping dynamics, your higher prepared the into aftermarket aero a OEM, given in in just little expected bit mentioned was more the better to you margins a mix mentioned just would know I remarks.

into you bit can deeper? So dig just little a

Julie Streich

do robust in had definitely happy to Aftermarket of a that. profile So segment. we the more benefit sales the Yes,

in may the we in remarks, have OEM the fluctuations a challenges productivity as mentioned I side, as did of see I think demand. on result However,

needs. you can overall that the of position. the inefficiencies starting we're so from stopping As And and through impacting impact come there's expect, people OEM customer seeing flow margin from that can keeping that employed lines, meet we on

Gregory Dahlberg

I clean guess Got then on a cash. quick up sense. And it. That makes just

for little this a looks for return there about to to So you to exceed? path just conversion be XXXX? given do below think year I that cash how XXX. a bit guess or XXX% Is

Julie Streich

are offer we're an a seeing not While our working inventory to in the can orders. changing from when coming is would I capital, seeing space that we flow tend the we're supplies that's and coming customers correlated directly cash is disruptions off the guidance, free OEM with the in where between and lag inventory increase namely provide forward-looking this in year cut there in we blip when

So back conversion to no forward. reason be free cash said, sorry, normal not all we there's that conversion, our should going cash

Operator

Your next question comes from Matt Summerville with D.A. Davidson.

Matt Summerville

questions. A couple of

back been internal getting to I had Aerospace the prior you're OEM challenges things, Just what of own quarter. this your productivity you describing having to, side think,

to issues itself? change sort how And are issues So things internal the titanium more much OEM on outlook procuring that. trying market material, the having of and I'm you Barnes of forgings is procuring versus the things market, and like like understand

that, of on And If follow-up. that helpful. a expand would have you I then all could be

Thomas Hook

Matt. Sure, Yes.

distinction I draw important. side Let productivity think that on me first OEM very the on is

getting investing get What customers. facilities the I to all issue. at to those job now done levels had our rehired, be facilities teams is right been rate able to our fix all the output have want that of call up in and labor great to have of we maintain our support After would retrained productivity few what output bringing a productivity support have issues to issues. people customers. to these efficiency OEM a We've We we

input down, rates down, the an Those up. problem. rates it held come take long-term short-term have rates have the And come is but

not made will for We fitting But that and of our for waiting after workforce productivity out capacity really capacity, plants. in we've maintain repositioning see We that decision have that or a ramp conscious plenty a we're engaged, to the our temporary those labor output. don't return of capability force. our this the come

buffer got the inputs forgings rate plenty and but mix rate, It's is a be we've That's from important capability now, would because later because the titanium. within as shift that casting, more of of input other on stock really Boeing. the for that is there because limiting if components raw rate-limiting the you adjust. That towards at can you not between look see our titanium step Airbus and which really particularly shift, is more time and right lower of shift takes some consciously coming, What's market Boeing. forgings well our shifting castings that higher We're happening not with to end are and input plan. the Airbus, materials, reducing

ability that end frame it they time that, we comes on issue we're to offset with customers have the to efficiency market. 'XX labor the be positioned Aftermarket our where 'XX the know to to to reramp want rates when the and buffer come as that -- that's for So we handle they We back up over the to to the the way. next because

the And So shifting, that right time that a it's course period because with not rates now on we we absorb. us. or output the or the is chain is constraint going of over making stuff the And of forward. supply for sure rate-limiting And going our whatever for that quarter the -- mix we're for to X to or this maintain whatever the customers. makes take pace a can plan

market. having raw to is correct casting, we in go to to rates we patient it castings end the we're a have wait forgings output for the be and short-term to where command to tempering But to will forgings do demand, for take materials because and end pain and up the higher

Matt Summerville

portfolio the you on just putting to adviser that, then evaluate you've And some of Tom, indeed how strategic hired about thinking that Got is terms strategic that in the on a Barnes company. please? where -- and options reports the understand here. of a more, from touch I business financial at little additional for in the out Can as it. follow-up, to And evolve I may shaping a of context want

Thomas Hook

Matt. Absolutely,

last we factors, journey, strategy X-pillar As prepared now remarks. we the we you We're growth about we've X.X years. after through halfway launched and that spoke what the know, We've great year, vector that out a rolling call that in for my been -- operational accomplished to deal.

obviously, the also The MB the these strategic underlying being off deeply business. we enabled the of of already business. the over in Spring which We've some of We've portfolio, divested seen company. at you've of Associated past We things Aerospace implemented. year, acquisition and the of Hänggi optionalities looked recapitalization the have, divested

quite actively like prospectively portfolio value, We at considering how the drives looking Nothing should looking best operational you everything. done already as operationally that communicate, really at but can just to at only And the it be so transform this through we're we update a what there'll we've communicate strategic strategic look bit you. are but have. to enterprise we're this time, nothing at and this know, you very optionalities and and more journey, company. We're to the halfway to expect time

Operator

of question from Struhsaker next Truist line the comes Your with Sam Securities.

Samuel Struhsaker

On for [indiscernible].

begin, to the you color to we're is more give of guess, was little year, bit sector? confidence maybe the for maintain giving just can industrial the that I on seeing I given provisions the some guide a downward hoping guys So kind you across what of just

Thomas Hook

the in and has some the taken management investments each call, of automation second Industrial now been last call, of set entire integrate, to motion Solutions that as and at are Yes. while We -- Molding they're know, and specific got we indirect and major industrial They would place. have implementing. they're reconfigured, look a into first that making quarter of year, now. year, force you business teams control simplified Sam, we at within strategies what themes the streamlined quarter this the And their, only year consolidate what and fundamentally, the delayered transforming a I businesses end business in last the, the we've we in and have the under started rationalize. really that and been portfolio of

teams So those place. in are

got lot We We've in some And share, behind businesses. Solutions. across hot better of launched conditions to visibility runner working expectations we've they're have we've particularly expecting lost of business, able in those by the have the meet of we've continue lot effectively we a BTO realities and we're some conditions, teams, laid And the momentum those going going up what a of where be picking really side products the great to are short-cycle digested the sales some despite not the side deployed now of new businesses confidence have and our that while initiatives. that business. we've we're new Molding market strategies markets. market market the to confidence like to It's is the out. those We which be funnels momentum, to tough

Samuel Struhsaker

now to to Boeing the side. turning more then you any for platforms? detail specifically give you Could And and OEM producing guys what the of Aero Great. rates kind are Airbus into to

Thomas Hook

to question [ what Sam, that is there's what a and actually the I when of and dynamics call get kind the, after a call, could would rate excellent stated the would rate I that's I ], to in Farnborough side. up uncertainty is I myself from 'XX. XX Boeing wish XX an coming of they of to one be understand the back and deal great on going what to 'XX in And

be output can't I those right now. think So rates, achieved we

labor to with have and customers. consciously pain maintain choices and albeit to can some inefficiency synchrony we're make working capital making our painful So OEM we sure

to decision end reramp relationship over going are going it And over our in the an in at second the think mitigation is off already a going customer market It's think our to do. we as it's that our of we for. year. that. and year short-term pay thing of inefficiency reflected to the kind investment and capability the right and capability. We that the the up to occurs. to level looking it's It's over of this the get clear labor and in We to some really end half of Aftermarket when the somewhat of investment day, already here a know we're to maintain order seen rates side, guidance. to get we've is take overcapacity It really That's

can that term facilities know over move also We side, them in on short some labor heavy the can of we support and the those demand we that employees take for side. on the OE given to Aftermarket

offsets there's by decision of re to a do, due of be the shifting we to as that's It's market conscious forgers normalizes. it's mix. kind So absolutely and casters, raw going paced kind materials can investment painful but end industry inputs the

And that to shift, feel we to we have within investment balance. that make stay

customers, and almost we're So I now feel right by communication daily order that weekly synchronization literally in with that order. our with this them on

I of in get rate. think we for the not, it's going ahead. one we not going chain to supply ourselves that position. we're and this so we're rate-limiting be a industry a invested the in too are up sure entire make have to time the that too much tough maintain period to worked across back We've and currently to And will hard step step

think we we're help going And it's sure going us laggard helps a be side, make in this the that Aftermarket to OE And while not because be we're and side. we it's place recovery when in the a there, right painful now, in us to could it too. leader to the

Operator

question next of Glynn Your Christopher the from comes Oppenheimer. with line

Christopher Glynn

the orders able get on gating factories putting are what forgings backdrop are specific the orders on kind to limiting that issue for that or if your that now just right wanted rate in suggests of some industry, the source you, casters you're forges from a being and when want broad customers Tom, you in and you're [ and that you with you not put a there do start Aero rather is casters ] the the limiter the reflection casting that the to from clarification you and OEM of I or than --

Thomas Hook

Yes.

explain it to X we around heart try signal Chris. advance We It's it me that. demand XX have our an months plan here market production are. way, what this the to in really our comes excellent question. patterns end an of the that Let matter It's of is

products short will them that demand, And completed shift having end customer and term what forgings have have capacity in castings the made. yet, they'll and flex have their they ability capital We demand of working send assemblies having have for. the components up in that over chain demand in don't that raw don't produced changes from to supply for and and the to because if the materials, we we the we've their

and symmetry equilibrium, a imbalance there. there's have we So

of mix We and the meet have is. whatever process capacity to plenty plenty special of machining capacity

also the have well. that employees do We as to

-- very of chain So multiple output month quarter. aero would half is right equilibrium. change by standpoint. from a why rate within to the the that we're respond supply is very the is a And our But second engine of controlled can what mix a like quickly the OEMs They for quarters. can't that now out

opposite makes of side in we, the market. shifting to forgings us We and over products have castings that work and have and the process intermediate plenty of and for that frankly, just too it of, many

to how That amount of we'll supply and is that shift rapidly fortgings and into pick adequate chain castings the those direction, and cured is for an materials higher I'll doesn't are a capital working There's rapidly. as those with short is which materials shipping levels, them the customers. inputs able have investment, up products. being changing, but it's be service our But term, in painful we win the put and it mean very to

We it the capital the OEM be working being now, taking 'XX purge able frame to in that to equilibrium out visible our back offset to in because renormalize pain and be again. to right take feel is chain us able We're that supply we're very time to rewarded we'll side and we have to customers. Aftermarket, from which the the and get

cycle the the way, it's guidance, in it working our our to a win in changing across OEM. But us mean rate-limiting step investment that it's is painful. term, we're philosophy, that never that positions in short the every change And and which in with aero single and does capital, entire engine

Christopher Glynn

the then kiss bit And took kind margin where Aero noting mix second the explanation just versus sort mix seeing that Does were the and more in of a side the the you of shift. up that not over second the guidance productivity reflect second kind Okay. quarter? mix weight on the of quarter? the half the OEM the in has of it inefficiencies an period timing issues adjustment But

Thomas Hook

Yes, a fair that's Chris. Chris, question.

I think lost quickly, you efficiency that the we've labor customer argument. can a shifts to from imagine when us OE output the to mitigate opportunity really

that the that half the exiting inefficiency the second low of some can of kind knowing is second haven't do second training. in the amounts we that can invested of high choices that in we to skilled shift Now into quarter of to rationalize make the We of kind labor make some smaller. occurring, year is the workforce

the shuffle workforce, can high side. skills over the into of Aftermarket some the We

We facilities in the combined Connecticut of shuffle and Ohio that area, we can that also Singapore both MRO talent. area so OE in some have capabilities, close and have in the

workforce in of in. it there leverage want retain we seen, Aftermarket kind of workforce. that demand half an But by So but level of the be side, decision at mitigator, -- know I demand We can side. Aftermarket more can we the that we're have the mitigate the will we conscious year, end day, And we've to of mitigation. and expecting -- the second them this fully the on made since but it don't high some insatiable to of the and without extremely losing call shifting in have incomplete

to was At being this all the end and training a talent. had day, we the because labor attract us productivity issue last of vexing we able loop year, that of really know

will So the want like XXXX. push approach, labor and the the labor just back in albeit efficiency. through to we go see. we level as it effect pains we're would But that's upside this productivity be And through why we OE to improving -- that taking don't lose get like gradually we don't of temper that on in talent have Aftermarket to

Christopher Glynn

otherwise the and Yes, and makes be perfect of investment sense. throughput, should demand to And aftermarket I everything. understand capacity retention locations that the pretty kind with straightforward strategic and overall talked Aftermarket the clean in about and capture That you could. X you expansions. all your

Thomas Hook

of out and to highlights facilities. as Chris, the you aftermarket the on we've Polish question been -- team. let We're going our supporting making give that's for fair, capability me bring investments. that thank those because We've a been you

East maintain investments of we you have the partners investments in our made to ahead. we've a ahead and very of We very, push discussions the know lot and Farnborough productive our in had facility a We also We're our making at with our see and Aftermarket lot already going facility that market. facility in Aftermarket. aftermarket Singapore already Granby strong -- been Ohio in well of very Westchester, I capacity and

ourselves don't but to the through quite a second we ahead we the that for But the of come get far. see we way year, want so healthy our from well all our aftermarket that fast with work ramp a it we be exceptionally contingent all it's after in RSPs. to and customers, of half ability the the purely going, make limit we be been a ramp time to to our but can of going market will to to has on see don't going how MRO would capacity years ability do market which turnaround lot extend And keep capability

Operator

session. closing That our Chief for comments. Thomas the question-and-answer Hook, will now concludes back over turn Executive conference to Officer, I

Thomas Hook

our for today. joining you Thank call

increasingly on transformation market. navigate on to customer to disciplined are maximize operations an We we execute Barnes' we dynamic and continue our value, as synchronization and focused

While in is we Barnes. our your making against for our in work interest continued strides deliver every Thank there you profitable growth ambitions, to are executing more quarter strategy.

Operator

Thank today's your conference participation, concludes for This you disconnect. and now call. may you

Barnes (B) 26 Jul 242024 Q2 Earnings call transcript