Welcome to the MB Aerospace Acquisition Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Bill Pitts, Vice President of Investor Relations, you may begin your conference. Thank you, Rob. Good morning, and thank you for joining us for our MB Aerospace Acquisition conference call. With me are Barnes President and Chief Executive Officer, Thomas Hook, Senior Vice President, Finance, and Chief Financial Officer, Julie Streich, and Barnes Aerospace President, Ian Reason. During our call, we will be referring to the MB Aerospace Acquisition slides, which are posted on the investor relations section of our corporate website at onebarnes.com. That's O-N-E-B-A-R-N-E-S dot com. Be advised that certain statements we make on today's call, both during the opening remarks and during the question and answer session, may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Please consider the risks and uncertainties that are mentioned in today's call and are described in our periodic filings with the SEC. These filings are available through our investor relations section of our corporate website at onebarnes.com. Tom will kick off our call this morning to discuss the strategic rationale of the acquisition, then Ian will speak to the business acquired, and Julie will follow with some highlights of the transaction. After this morning's prepared remarks, we'll open up the call for questions. Tom? Thank you, Bill. Good morning, everyone. As you saw in yesterday's press release, Barnes has entered into a definitive agreement to acquire privately held MB Aerospace. MB Aerospace is a leading provider of precision aero-engine component manufacturing and repair services to major aerospace and defense engine OEMs, Tier 1 suppliers, and MRO providers. I'm very excited about this transformational acquisition, as MB Aerospace represents a strong strategic fit for Barnes as we continue to build and scale our aerospace business. The acquisition significantly expands our ability to support aerospace and defense customers. During my 10 months as Barnes CEO, I have shared our top line, bottom line, pipeline growth strategy with you. Our internal focus has squarely been on driving core business execution. Previously, I have discussed pausing M&A activities in our industrial segment as we work to integrate, consolidate, and rationalize that part of our portfolio. We are making encouraging progress on those efforts. Also, over the past year, I've spoken about our solid aerospace franchise. This business is already tightly integrated with a cohesive management team, a common ERP system, and end markets that are recovering well. It is truly an investable business for Barnes, and we have found an ideal acquisition to complement our existing operations. MB Aerospace's strong operational performance, skilled workforce, and global footprint allow Barnes Aerospace to scale within our core capabilities. In addition, we'll add complementary programs and capabilities delivered across the aero-engine value chain, deepen our customer relationships, and expand our defense industry offerings. Examining the strategic rationale for this acquisition, it is clear that the combination of Barnes Aerospace with MB Aerospace is an excellent transformational opportunity with several very positive dynamics. Our product and service offerings are well aligned, our capabilities are highly complementary, and we anticipate attractive growth prospects for the combined operations. We plan to fully integrate the business upon close. Based upon our detailed acquisition analysis, we have currently identified run rate cost synergies of approximately $18 million. We have acquisition funding in place, and the debt leverage we are taking on is manageable. Julie will speak about some of the transaction details shortly. Perhaps the most important aspect of this acquisition is that we expect attractive financial returns for our shareholders, given the quality of fit, a solid integration plan, profitable growth, and a fair purchase price. I'll now pass the call over to Ian for a discussion of MB Aerospace. Good morning, everyone, and thank you, Tom. I likewise would like to share my excitement about this acquisition, which is truly transformational for Barnes Aerospace. The combination of MB Aerospace and Barnes Aerospace provides a significant scale in our existing core aero-engine portfolio of full lifecycle capabilities. It brings further diversification across the customer base, engine platforms, and geographies. Both companies are trusted partners to the large aero-engine OEMs. MB Aerospace's engineering capabilities and know-how, coupled with Barnes's engineering expertise and technical knowledge, will provide our customers with enhanced process capabilities, a broader range of products and solutions, superior customer service, and a stronger global presence. We see customers benefiting from the combination of the two companies. MB Aerospace has a global footprint that likewise complements Barnes. Their facilities manufacture high-value fabricated assemblies and complex machine components, conduct component repair, and possess vertically integrated special processes, supplying over 100 aero-engine platforms to leading aerospace and defense industry customers, including Pratt & Whitney, Rolls-Royce, and GE. There are two U.S. manufacturing and service facilities, one in Connecticut and one in Michigan. With these facilities comes additional customer diversity, including higher Pratt & Whitney content relative to our existing business. There are three United Kingdom manufacturing facilities, one of which also houses MB Aerospace's corporate headquarters, and another which will add airfoil capabilities that Barnes does not currently have. MB Aerospace expands our low-cost footprint via three manufacturing locations in Poland and two repair service locations in Taiwan. Low-cost manufacturing and repair capabilities are an important element of our portfolio to ensure we can provide customers with cost-competitive solutions and earn new business. The addition of both the U.K. and Poland introduces European manufacturing capability and provides an opportunity to develop European-based repair capability, a current gap in our portfolio. MB Aerospace's revenue mix brings additional diversification to Barnes. Most notably, the increased exposure to defense programs will accelerate our strategic aim to grow defense content, and the addition of business aviation and helicopter content will further diversify our portfolio as we currently have limited work scope in these segments. Like Barnes, MB Aerospace provides advanced component manufacturing and repair capabilities, critical to both hot and cold engine sections. The addition of compressor and turbine airfoil manufacturing adds to Barnes' capabilities. Other engine content in both OEM manufacturing and repair services complement Barnes and provide opportunities for best practice and engineering knowledge to be shared to drive increased value across the combined entity. At this point, I'll pass the call over to Julie for a brief description of the transaction details. Good morning, everyone, and thank you, Ian. Let me take a moment to provide some details about the MB Aerospace transaction. We agreed to acquire MB Aerospace via a privately negotiated transaction for a purchase price of $740 million, subject to customary closing adjustments. MB Aerospace is expected to generate calendar year 2023 revenues of $330 million and $65 million of EBITDA for an approximate 20% EBITDA margin. In our pre-acquisition analysis, we identified run rate cost synergies of approximately $18 million. With respect to adjusted EPS, we expect the acquisition to be accretive for the full year 2024. The acquisition multiple is approximately 11.4 times 2023 estimated EBITDA before synergies and 8.9 times considering full run rate synergies. The transaction will be financed with cash on hand and additional acquisition funding. Upon closing, Barnes estimates net leverage to be between 3.7 times and 3.9 times consolidated EBITDA. We project net leverage of less than 3 times within 12 months after closing and less than 2.5 times within 24 months after closing. The deal is expected to be completed by the end of this year. Post-close, we will immediately begin the integration of MB Aerospace into Barnes Aerospace. The combined business will create a well-rounded, highly skilled, and trusted partner to the aerospace and defense industry, with scalable global operations and excellent technical, manufacturing, and repair capabilities. Company-wide, Barnes becomes a more balanced business, with pro forma revenues split approximately half aerospace and half industrial. We look forward to welcoming. Excuse me. We look forward to welcoming MB Aerospace into the Barnes family, combining forces to build an even stronger platform to serve our customers and drive shareholder value. Operator, we will now open the call for questions. At this time, I would like to remind everyone, in order to ask a question, press star, then 1 on your telephone keypad. Your first question comes from the line of Matt Summerville from D.A. Davidson. Your line is open. Thanks. Good morning. Just a couple of questions. Maybe can you talk a little bit about that $18 million, what the major sources or major buckets are of cost synergies that underpin that $18 million, how long you think it will take to generate full run rate synergy target, that 18? Thank you. Hi, Matt, it's Ian. I'll take that question. I mean, first, I just want to say it's important to note that, you know, integration and synergies are absolutely front of mind as we undertake this integration of MB into Barnes. I mean, there's gonna be clear synergies resulting from the increased scale and the combination of, you know, two closely aligned core business capabilities, which just is gonna result in some redundancy in the overhead structure that we're gonna optimize to take out costs and reduce the operating and SG&A expenses. Further, you know, the combination of two highly skilled teams, which are gonna work cooperatively together to fully integrate across all the functional areas, are gonna increase both productivity and innovation. You know, effective and targeted best practice sharing is gonna be a key productivity and efficiency driver that we're gonna fully exploit. You know, there's also gonna be opportunities to either consolidate facilities, you know, or utilize excess capacity to enable planned growth without the addition of further CapEx, and these will be determined post-close in terms of the detail. Looking to the future, there's gonna be additional opportunities for further cost and revenue opportunities, but we're gonna need to understand the full scope of the combined business before we can fully evaluate the size and timing of these opportunities. Relating to timing, you know, we expect to see the full run rate savings starting to materialize in 2026. Got it. Just as a follow-up, if I recollect correctly, Barnes historically has been focused on the hot side of the engine. Obviously, you're adding some cold side capability, but is there any overlap between what MB does on the hot side and what Barnes does? I was hoping maybe you could comment a little bit upon or talk about the difference in profitability between their OEM versus aftermarket business and how that compares and contrasts to Barnes. Thank you. Yeah, in terms of the overlap, the great news here is that the overlap from a program perspective is minimal. What we're getting is highly complementary. If we look, going forward, we're heavy on LEAP, they're heavy on Geared Turbofan. If we look to the legacy platforms, you know, we're heavy on CFM56, they're heavy on V2500, you know, as examples. Really, the overlap is limited, and it really does give us broader platform exposure throughout the life cycle. Really no significant concerns on overlap. In terms of the profitability profiles, very similar to what we see in Barnes. You know, clearly, OEM margins, you know, are lower, aftermarket margins are higher, which is typical across the industry, you know, and a very similar profile to what we have in Barnes. Nothing, nothing unusual and really a good, a good fit as we bring the two together. Clearly, what we want to do is drive aftermarket business to make sure we can attract as much higher margin business as possible. More importantly, we also want to continue to grow our OEM business and margins and take the opportunities of scale and broader customer relationships and supply chain opportunities to continue to grow OEM margins, which will always be lower than aftermarket. Understood. Thank you, Ian. Thank you, Matt. Your next question comes from a line of Myles Walton from Wolfe Research. Your line is open. Thanks. I was hoping, Julie, maybe you can comment on the cost of debt that you anticipate getting. Also, is it going to be wrapped into the 2024 note refinancing? Then one other modeling while you're there, amortization run rate within your adjusted EPS, if you just have a ballpark? Yeah, thanks for the questions, Myles. In terms of the total cost of debt, we will continue to refine that as we're working to finalize our financing. There's not a specific number that I can share with you at this point in time. It will be, you know, a competitive rate for what's happening in the market at this point. In terms of the 2024 roll-up, that is all part of the anticipated financing, and we are anticipating no problems. This will be a very smooth financing process. If you could repeat the third question around EPS? Just the amortization that you're assuming, within your EPS, that is accretion. I know you're excluding the short-term amortization, but just the run rate of amortization. What I'd prefer to do is wait until we have the deal closed to provide any specifics from a modeling perspective at that point. Okay. Tom, maybe just one for you. In terms of exercising the M&A muscle at Barnes, it hasn't been done in the aerospace group in a while, at least from my recollection. What kind of areas are you most focused in on this integration, which doesn't seem like a bolt on? It does seem like a full-on integration, which obviously carries risks and the opportunities for those cost synergies, but if you can just elaborate there. Certainly, Myles, well, first of all, I'd say Myles, we're more prepared than you would think, although Barnes Aerospace, for a few several decades, has not done an acquisition. We have, as part of our core strategy, of integrate, consolidate, rationalize, already stood up a transformation office within Barnes, both covering industrial and aerospace. The aerospace team, under Jim Fitzpatrick's leadership, has already been established, and that team has already been built out and has been operating under that strategy of our core Barnes Aerospace business to look for value engineering, process reengineering, as well as facility product line moves to drive cost rationalization. Some of that is actually included in our phase 3 communications that we did a little over a month ago when we communicated, the actions that we're taking as part of that program. We feel that we are already really well prepared to start the integration and cost synergy execution, for the MB Aerospace deal, because we have those resources in place, and we've already exercised that muscle. I'll acknowledge, Myles, it is at a much larger scale. We, we will have to do some significant integration planning over the course of the next several months while we're walking towards closure. Fortunately, because, we've done a very nice job doing the, analysis, pre-signing of the deal, we have a very clear line of sight where those opportunities are at both an overhead and a facility level. I think, you know, from a resources standpoint, we know also we have resources deployed also in the industrial side business that are active, that have been finishing the phase one and phase two product, you know, process that we will be able to deploy also to assist with the Barnes Aerospace integration with MB Aerospace. From a standpoint of posturing, I feel really good, and I think we have the resident expertise already on board to have that be very constructive fun as we dive into that immediately after closing the deal. All right. Thank you. Welcome. Thank you, Myles. Your next question comes from a line of Pete Osterland from Truist Securities. Your line is open. Hey, good morning, everyone. For Michael Ciarmoli this morning. Thanks for taking our questions. First, just wanted to ask along the same lines regarding the integration. Do you expect that the resources that you'll have to deploy in order to integrate a large acquisition will make any of the plans that you've had for the phase three restructuring more challenging or extend the timeframe for what you're trying to achieve there? Thanks, Pete, for the question. It would not change our phase three plans. I think that it is going to open up additional opportunities that we'd be able to capitalize upon. Think of the basket getting larger. We may change the prioritization of individual items, but it would be, fairly, you know, granular decisions, not macro decisions. I feel our phase three stands alone. With the process of looking at targeted aerospace acquisitions, when we constructed our phase three programs, we already had in mind of how to construct these so that the acquisitions would be complementary to the synergies, and it wouldn't force rescoping of phase three. Okay, great. Thanks. Just as a follow-up, just trying to get a sense of the growth trajectory for MB Aerospace. Has the company already returned to pre-pandemic revenue and margin levels? If not, how far away are they from that? This is Ian. Thanks for the question, Pete. They're pretty much back to pre-pandemic, you know, their high military content has really helped them through the pandemic, you know, has helped them get back quicker in their platform mix. Yes, they're back to 2019 levels. You know, say, they're, you know, they're about 35%-36% military content has been a big part of helping them bounce back quickly and sustain through the pandemic. Yes, they're there back to where they were. Okay. Just to follow up on that, what are the main drivers of the growth you're expecting there? Does the company have meaningful content on newer generation engine platforms, or what else are you expecting to be just the main drivers of growth, kind of looking forward over the next few years? Yeah, the thing we're most excited about with, what comes with MB, you know, is their Geared Turbofan content, you know, which is obviously, you know, key for narrow body, which when combined with our LEAP, gives us great narrow body, exposure, you know, covering our bets there, which is awesome. The F135 content they have, gets us on, you know, the right military platform to be on, you know, to complement, work we have. It really scales, our exposure to both the key military and, commercial programs going forward, plus the addition of, you know, filling in gaps in our legacy, market, to complement the aftermarket. We see growth, both in aftermarket, and new production, both commercial and military. That's gonna really power our growth, you know, particularly when both defense and commercial are on upcycles at the same time at the moment. All right, great. Thanks for taking the questions. Thank you, Pete. Your next question comes from a line of Christopher Glynn from Oppenheimer. Your line is open. Thanks. Good morning, and congratulations on the transaction. Thank you, Chris. I was curious about the process, how it came about, the, you know, history of engagement with the company. Yeah, just kind of curious how the deal came to fruition. I mean, obviously, as an aerospace company interested in acquisitions, there's been constant engagement going on for many years across the asset, and certainly, you know, pre-pandemic, there was a lot of discussions between the two companies on possibilities when they did come to market. Certainly at Farnborough Airshow, you know, I met with the company and the owner, and we talked about what a great strategic fit it was, you know, and our level of interest. You know, I've been with Barnes just over a year, and since joining, I've been engaging with MB and others to talk about great strategic fits for us in line with our growth strategy. We've been engaging for a while, and when they came to market, we got involved in the process. It was a normal process from therein, you know, a competitive, auction-type process. Okay, you mentioned the. Yeah To develop a European repair services network. I'm curious, you know, if you could go a little deeper into that, what you think the opportunity is there, you know, when you can start to initiate that build-out strategy, and if you think it'll be a pretty straightforward lever to execute? Yeah, no, certainly. As we, you know, as we think about some of the components we repair, particularly large engine cases, you know, the desire of customers to move those large components around the world, particularly with a view to, you know, carbon footprint, ESG considerations, means you've got to have capabilities closer to the point of need. You know, that's something our customers have been telling us, that it's something we're gonna need if we want to continue to work on those larger components regionally. You know, we have Asia, and we have the Americas covered, so there, it's a gap there. Now, that is something we were looking to add. Now, with Poland, particularly, you know, we have both the footprint, you know, and the technical capability to add that. Really it's about adding a, you know, a Part 145 repair capability. Having facilities and people makes that a much easier lift than trying to do a greenfield. We see it as something we can do relatively quickly, because it's really about transferring capability we have in other regions, and transferring that capability into a new region with an existing workforce and footprint. We think it's an easy lift and something our customers are asking for. Great. Thank you. Hey, Chris, just one clarification. This was a competitive bid process. It was not an auction, just for clarity. I'm sorry. Got it. Your next question comes from the line of Garo Norian from Palisade Capital Management. Your line is open. Hey, guys. I may have touched on this a little bit with that last question, but I'm curious to get a sense of just how well the businesses know each other. It looks like your Connecticut facilities are only 5 minutes apart, and, you know, in Michigan, you're maybe 1 hour, 1 and a half hours. I'm imagining that there might be a fair amount of knowledge of the other side coming into this. I mean, aerospace is a small business anyway. We all know each other. Certainly, yes, the businesses know each other well. you know, our customers know us both well in the same spaces and in the same regard. Yes, we know each other reasonably well. Obviously, there's, you know, there's a lot to learn as we integrate, you know, and acquire the business, yes, we know each other well. What areas in particular do you see the benefits of scale coming through, once the companies are brought together? It's really about, you know, operating expenses, G&A, you know, reduced overhead that we will have by bringing really businesses that are doing the same thing together. There'll be functional synergies. You know, we're not growing, we're not adding customers. We're just increasing, you know, the scope of what we do with customers, for example. We're not bringing in new processes and capabilities, you know, functionally, we'll be able to get a lot of synergies, and the overall overhead of how we operate and run the business will be reduced. The details of that, you know, we're gonna work through, you know, over the integration period and after we've acquired and assessed, you know, the full capabilities of both businesses together. There's gonna be clear synergies from operating and G&A expenses that we'll be able to take out. Thank you. Thank you, Garo. We have now reached the end of our question-and-answer period. Mr. Bill Pitts, I'll turn the call back over to you for some final closing remarks. Thank you, Rob. We'd like to thank all of you for joining us this morning. We look forward to speaking with you next in July for our Q2 2023 earnings call. Rob, we will now conclude today's call. Thank you, everyone. This concludes today's conference call. Thank you for your participation. You may now disconnect.