Good morning, and welcome to the Jefferies 2024 Industrials Conference. My name is Ciara Moses, and it's my great pleasure to introduce Thomas Hook and Julie Streich, the CEO and CFO of the Barnes Group. Thanks, Ciara. I appreciate that very much. It's a pleasure to be here today in the Jefferies conference to talk to you about the Barnes and the Barnes journey, to reach higher levels of performance or higher altitude, as we call it, in the company. I will be making some kind of forward-looking statements, during the course of the presentation, and also we use some non-GAAP measures, as well in our measurement of our financial performance that I'll reference. Just as a ground setting, Barnes has been a company since 1857, when it was founded, in the metals formation, spring forming, metal stamping space. We're. You know, you can see some of the metrics up here around our presence, around employees and global presence. Historically, we have been an industrial-dominated portfolio, but that is shifting over time more towards our investments in the aerospace industry. You can see our 2023 statistics on this slide, and how we align globally across the different zones in the Americas, your EMEA and Asia. We finished a little bit under the $1.5 billion mark in sales in 2023, based on some solid organic and acquisition growth last year. What we are is we are a partner on the aerospace and other industries. We serve to a series of global OEMs in a variety of industries, from aerospace to technology, med tech, biotech, and you can see many of them listed on here. And we've got a long trajectory in a lot of these industries and customer relationships that are at the foundation of Barnes' success, both historically as well as going forward in terms of our partnership with our key customers. It's very important. We are delivering on a strategy at Barnes under operating priorities, three of them in particular, that are really critical to understand, because this is how we invest. Barnes has historically been a holding company portfolio, a composition of multiple companies under a series of businesses that span aerospace, motion control, molding, automation. And we're focused on each one of those businesses and locations, of which there's over a hundred of globally, to drive and execute core business more crisply on an operating level, which we call top-line, bottom-line, pipeline performance. There's been a lot of investments in this area over the past two years, in particular since my arrival as Chief Executive, to work with Julie Streich, the Chief Financial Officer. We've been really focused on whatever business lines we're running under the respective brands. We're focused on good market engagement, good customer relationships, and driving organic growth. And that's been particularly challenging during the COVID and post-COVID period, where we had a lot of disruption, and we're still working on recovering a lot of the lines of businesses through those disruption periods, particularly some pressures around the supply chain that continue to persist in a lot of our businesses. Second big investment area we're focused on is growing our aerospace business. This was approaching now the, you know, and surpassing this year, the majority of our portfolio. Part of that's organic growth, part of that's the acquisition investments that we've made in this area, but we've also been making some investments operationally to integrate the acquisition that we've done and also organically to keep pace with the market growth rates. That transaction was done last year. It was enabled by Barnes recapitalizing to do the acquisition last year, to build on the aerospace trajectory and history that the company has, kind of, been on a trajectory to continue to deploy capital in this area, and that's the second big area of investment we've done. The third area, which you've heard me repeat in my public comments on many occasions, is we are... have a moratorium on industrial M&A, and we're gonna take the deals, you know, that have been done historically in the industrial portfolio around molding and automation. We're gonna integrate, we're gonna consolidate, then we're gonna rationalize them. So we still have a moratorium. We're not gonna do more, any more acquisitions into industrial. We're gonna take the products that we have, and we're gonna push them into three buckets: molding, motion control, as well as automation. And we're gonna take those businesses, and we're gonna integrate the management teams. We're gonna commercially go to market on a comprehensive portfolio basis with each one of them, and we've done some strategic pruning under this initiative. In the last quarter, we sold off two businesses, the Associated Spring and the Hänggi business. Some of you may know that Barnes went public as Associated Spring, you know, decades ago. So it was a bit of a significant change in the portfolio composition of the industrial portfolio, and it's gone hand in hand, that strategic change, with the operating investments we've been making to integrate, consolidate, and rationalize the industrial portfolio. We have been doing that through a transformation office. It's an internal staff that we've executed. It's gone largely right along the schedule we've intended. We laid out a three-year plan that we communicated to shareholders at the beginning of last year, and we largely halfway through that journey, right on schedule with the deliverables we're expecting. And I will confirm it, it's very tough to do all three of these things at the same time, but it's the right strategy for Barnes to pursue over the last couple of years, and it is the same strategy we are going to deploy over the next several years as we move forward.... Is where are we at, at that transformation? You have to think of it in, two segments. One is industrial and one is in aerospace. Both of them are advancing along different journeys in different ways. We're capital allocating significant amount of resources to aerospace right now. It is now, as of 2024, the majority of our revenues. We serve as a strategic partner to our customers, all the way from new engine builds, all the way through the aftermarket and spare parts sides of the industry. We are an industry leader in doing this with our customers in partnership, and the MB Aerospace acquisition, combined with Barnes Aerospace legacy business, has been a perfect complement to maintaining the balance, both geographically with all aero engine customers across the entire engine life cycle, which has been at the foundation of what we are investing in for aerospace going forward. So we feel really positioned to continue to scale this organically. But job one right now is, on the aerospace side, for us to complete the integration of MB, which is well along its way. It'll complete substantially completed administratively. It still have a few operating steps to complete over the course of the next year. Where are we at in industrial? Industrial is smaller this year. We dispositioned Associated Spring and Hänggi, so it's a smaller business now focused on molding, motion control, and automation. We've done a lot within each business to integrate the management teams. We've de-layered the leadership levels within the industrial portfolio. I am now the industrial segment leader, and Julie is the financial leader of the segment in industrial. We've done a lot of integration and a lot of consolidation in this area. We've consolidated 20 facilities and 500,000 sq ft of manufacturing and office space over the past year and a half, so it's quite considerable, and we're only halfway through the journey, so there's more yet to come in terms of driving efficiency and effectiveness and really cost rationalize the business out. We're entering the phase now where we want to get on to predictable, consistent performance of industrial as those leadership teams and strategies have been deployed to help return to levels of revenue growth and profitability that the company enjoyed pre-COVID, before a lot of the COVID disruption occurred. When you put those two pieces together, what does this look like? You know, if you look historically, kind of before I became CEO in the company in Q3 of 2022, we were a majority industrial company by composition, less in aero. As we look in 2024, we're a majority aerospace now, based on divestitures in industrial and the acquisition of MB and organic growth. This is gonna continue to shift as we move forward, and there's two ways to think as you look at the long-term illustrative portfolio. Number one, we're gonna organically capital allocate and grow aerospace, given end market demand and dynamics more. Makes common sense. We're also gonna look for opportunities to targetedly evaluate our strategic alternatives and operating alternatives on the industrial side, and that's gonna continue through growth and capital deployment and evaluation of strategic alternatives, shift the portfolio more to be a balanced aerospace company, really targeted on aero engine partnerships with the major manufacturers across the entire life cycle and globally as we move forward. And that shift is fundamental to the strategy we're deploying and the individual operating plans we're executing. Where we are from a financial performance standpoint, improving, but we got a lot of room continued to go to improve the historical levels. We've done a nice job of executing its core business performance and recovering from some of the pandemic, you know, impacts that have occurred that disrupted supply chains and customer relationships. And as industries are normalizing and our operating performance is normalizing, we're seeing us have better return to growth from a sales perspective, and certainly leveraging a lot of aerospace growth in the process here. Our margins through the transformation, it's been a lot of capital deployed into the integrate, consolidate, rationalize strategy in industrial, and also the ramping of aerospace. That, from a projection standpoint, we feel favorable transition, you know, year and a half we've done of transition, and it's starting, the fruits of those labors are starting to show up here later in the second half of 2024, and prospectively as we move into 2025. A lot of effects in the EPS line that we have. Many of you would know as we levered up last year, we have some limitations on our ability for interest expense deductibility for tax purposes. That is a headwind for us, that we will have, you know. It will affect our financial performance in the EPS line. But from a profitability standpoint, as we look at our Adjusted EBITDA performances and our ability to generate cash and repay debt, is gonna really be our operating priority, as a business as we move forward and finish the transformation over the course of the next year and a half. We really feel that, you know, as we're transforming Barnes, we're a great investment thesis. There is a lot of dynamics in the company, purposeful in terms of aggressive strategic deployment. Many of you would know, as we're trying to shift from the industrial portfolio that's slower growth to aero, it's meant a lot of large transitions occurring, not just in consolidating the industrial business, selling off pieces, recapitalizing the company, and doing the acquisition, followed by acquisition, integration, and synergy planning. We do feel we're moving the portfolio towards aerospace is the right thing to do, although we recognize that there's a lot of transitory effects and transitions that make that difficult, and we continue our commitment on really from an industrial portfolio to continue integrating, consolidating, and rationalizing it. There's some 66 projects underlie this from the company. It's all internally managed, and I would say just in general, all those products are hitting endpoint deliverables on schedule, which is impressive given the breadth and the magnitude of it, but it's fundamental, these two things, both aerospace growth through the consolidation of MB, and then also the industrial products, are really where we need to be. There are absolute dynamics both on the industrial and aerospace end markets that are beyond our control, which make it a little bit more challenging in order to predict the direction of travel, but we feel really well positioned in both segments, and we're doing the right thing strategically and planning-wise to deliver against what we would like to as a company, so this, you know, communication is how we're getting traction in terms of our operating results, and it's fundamental for how we're going to drive our performance going forward. We're not gonna acquire our way through more portfolio additions. We're gonna rationalize our way through good integration of the acquisitions we've done historically in industrial and the MB acquisition that we did last year in aerospace, to just generate solid cash-on-cash returns for the investments that we've made. So I'll thank you for that brief overview, and I'm happy for Julie and I to take questions for any questions anybody has. Hey, this is Adam from J. Goldman. Just curious why, I mean, clearly, there's a lot you're doing well on the industrial front to rationalize these businesses, but why do you guys think you're the best owner for these assets? I don't know if I would define us being the best owner of assets, is that we own the assets, and we are responsible to manage them right now. I think that you have to think of two layers: operational and strategic. We own the assets, and we have to operationally run them, and we have to make them perform. So the operating teams need to be focused every day on how to best drive top line, bottom line, and pipeline. We also have to look at the strategic level, to your question, Adam, is that, what should Barnes look like in the future? As you know, as we've messaged publicly, we engaged some external advisors to help us through understanding optionality. And the first one you know that has just closed last quarter was the sale of Associated Spring and Hänggi. We felt that was number one. We also sold some. We have a considerable real estate portfolio that we've also monetized as part of those deals. So we're well aware of the responsibility to look at the strategic alternatives we have. Nothing to announce at this time, but you have to evaluate them and decide on those things first. It's a journey, so to speak. But regardless of those strategic options, of who would be the best owner and how Barnes should look like portfolio-wise in the future, we have to operate the businesses comprehensively and competently on a daily basis, 'cause the better we operate, the better the strategic alternatives would be. Julie and I have only been working together for two years, so a lot has happened in two years in a hundred and sixty-eight-year-old company. But it's happening. There's no urgency to it, but there's a purposefulness to those strategic determinations. That's very active discussion at the board and management level. Yeah, feel free. Adam wants number two. There's a two-question limit here. No. I was just gonna ask on the industrial business again, the molding business. You guys really saw, like, a turn in the organic growth in the second quarter, and there's clearly, like, a lot of, I guess you could call it, some uncertainty around global CapEx. So it was encouraging to see that business turn. Like, what are you guys seeing on the macro front there? Yeah. I'd like that. I mean, as you would probably remember, Adam, that, you know, I stepped in in, in the second quarter of last year and took over management of the molding business. We delayered the business in terms of its management architecture. It sold as kind of six different product lines, six different general managers, and kind of was really disaggregated. We used Q3 and Q4 of last year to reframe the leadership team. There's only a president and five people run the business now instead of fifteen, so it's dramatically smaller. It's all integrated with full line sell, every product globally now. Marcello Vendemiati is the president of that division, and his team are subject matter experts in molding. We have very streamlined strategies under a series of themes, five themes that we're investing in. Being a molding guy for the past thirty-five years is, you have to just have an aggressive mindset. We have premier world-class technologies in molding. We have exceptionally strong operating footprint, but it's too costly. It has to consolidate, and that's what we've been doing for the last year and a half, and we have more to go in the next year and a half. Our weak point, we're just not carnivorous in terms of our commercial practices. So what's happened is that all that top grading on the commercial team has been done. That is all investment that had been done in 20, you know, 2023 in Q4. Now, what's out there in—you're seeing that business being able to perform and pick up organic growth relative to competition because it's commercial. It has the right technology, it has the manufacturing base to back it up. Now, it's selling it as a comprehensive portfolio, and it's winning. And that's why we're positioned, you know. I'd say, as we kind of lost a lot of market share. Now, we're just gonna go capture it all back. It has to be done by country, by product line. So, as it's on the right configuration for the rebound, and it's got a lot of nice progress since the beginning of the year, but there's a lot more, you know, improvement that we, Julie and I, expect to come. ... There have been a lot of portfolio moves. Is there any reason why within Aero and Industrial, you couldn't return to your 2019 margins? Like, Aero was 22%, and Industrial was 13%. Yeah. Look at the changes- Yeah. When you return to those? Yeah. Maybe what timeframe? I would say the industrial side, we have the ability to return to, you know. You know, obviously, we sold off Associated Spring and Hänggi, which, you know, tended to be a different margin profile and revenue profile. But we have the ability, from a profitability standpoint in industrial, get back to historical margin profile. And despite higher interest rates and higher inflation levels, we should be able to run the businesses and execute, integrate, consolidate, rationalize, which we're halfway through and still got a ways to go. But when you get to the other side of that journey, you're getting the management teams that are in place now performing. You're gonna get-- You're gonna have yourself back to historical levels of profitability as that year and a half to two years of horizon comes, which is great. Different story in aerospace. You can remember when, you know, when we did the acquisition of MB Aerospace, they're a balance between OEM and MRO. We're, at legacy Barnes, a balance between OEM, MRO, and RSPs. So RSPs is very unique. So if you put the RSP aspect of that margin profile to the side, you're gonna look at... You're gonna really, once the integration plan and consolidation plan is done for aerospace, it'll largely be in a margin profile of where we were kind of historically pre-COVID. But there is no parallel in MB to the RSP dynamic. Also, is there a multiple that would entice you to dive in faster and further than others? Twenty. Just joking. I'm just joking. Well, I think, you know, I think it's a question that we constantly ask ourselves: What's the appropriate multiple, and what's the appropriate operating performance? So we look at what operational variables we can improve at whatever the multiple is. And of course, businesses that tend to perform tend to get better multiples. But I think we also have to look; we have to compare and contrast that against, "Well, what if I put that money into aerospace or other higher growth markets?" and compare and contrast the two things. And I would say, coming from a holding company mindset to an operating company mindset, there's this, you know, tension. And having just done this exercise with Associated Spring and then again with Hänggi, it's an ongoing discussion. And as you know, there's been governance changes at Barnes as well, from a board directorship also that have helped facilitate some of these discussions. But it's happening pretty quickly, but again, it's only been two years. There's been a lot going on, you know, in comparison to the prior decade. So, I think we're not urgently pursuing anything, but purposely looking at all alternatives to drive enterprise value. And certainly, our focus operationally is drive cash flow, delever, and stay committed to the dividend as we have been to reward shareholders holding Barnes shares. Somebody's got to have a question for Julie. All righty. Just for Julie, on the cash flow, are there specific tactics you're taking to get the free cash as a% of EBITDA higher? Yes, absolutely. The most significant action we're taking is to reduce our investment in working capital. There has been some bloat that's occurred coming out of COVID, exacerbated by the recent actions in aerospace in the second quarter that we spoke of on our earnings call. So first and foremost is control our own destiny around working capital discipline and drive that to historic levels of a ratio between working capital and sales. In addition, as we emerge from the heaviest investments in our transformation program, we'll start to see more cash flow through to the bottom line because we have been strategically making choices to invest in the transformation, both in CapEx and just cash for funding severance and the other types of things that come along with a transformative effort. A third factor, which many companies I believe have been dealing with, is transition tax payments. It was something that came in in the first Trump administration. Next year is the last year of that. That will consume $22 million of cash that instantly will start to come through to the bottom line. So there are things external that will drop off, and there are, more importantly, deliberate choices and actions that we are taking to drive improved cash flow and restore it, and get above and beyond, right? This is a strong cash-generating business. Just on the strategic review, like, obviously, you've nothing to announce today, but what have you learned so far in terms of, like, how the market sort of perceives your mix of businesses and just, like, any sort of commentary you can give there? Sure. I think we have a lot more optionality. I think, you know, as a kind of a head and heart aspect to this, you know, you have to think through the analytics, but then, you know, there's been some emotional departures of the dispositions that are tough for any organization, as would any facility shutdowns be, 'cause there's a lot of legacy and heritage in the company, and the culture has been built around that. We have a lot of opportunities that we could pursue operationally and strategically. I think where we're at right now is that we're probably at full max rate operationally of how much you can improve. Sixty-six projects and all these is really max rate.... Is you have to situationally look at when strategically and how you should look at your portfolio, because it is based on market conditions and organic performance. We have a lot more optionality than I thought we would heading into this job a couple years ago. And I think that just makes the analysis harder. I think we did the right dispositions first to move out of Hänggi and Associated Spring, which are really good businesses, but they're wire forming and metal stamping specifically for automotive direct vehicle content of ICE vehicles that are very old model vehicles. So it's the right disposition for us to do first, but certainly not the only portfolio rationalization we have the ability to think through. I think the magic always is, as a public company, is that when do you make those decisions and when do you communicate them? That's really the magic. And as you can imagine, with core business investments, scaling aerospace and recapitalizing to do that, and doing some dispositions and a lot of consolidation projects, it's just a lot going on in the last couple years. So there's a certain rate at which it's all going to happen at, but it's pretty quick. And just how should we think about the opportunity on the aerospace side, on your ability to focus there? Yeah. So the job one is absolutely complete the integration, which is substantially done, but we have operational steps in plant, alignment and consolidations that are still yet to be done over the next year, and we are moving some product lines between our operating facilities. We do not need to do acquisitions in aerospace to be successful. We can organically finish the synergy plan, which is $18 million of cost out, which we're well on the journey to delivering against, by the end of next year, and execute a fully integrated business. As you know, the aero business, we've had a legacy, and MB came together as a fifty/fifty blend of the leadership. So largely, we operate as a single aerospace entity. We approach our customers as one entity, and we have to predictably and consistently execute that business model. That's job one. We don't need to overreach for the next acquisition in aero. We need to stay focused on just generating cash in aerospace, managing working capital and getting it down to the appropriate level, and then using it to repay debt to drive equity value. Very simple growth management exercise. Then when we get to that point, we can start entertaining what's the next tuck-in strategically to add, but I can tell you it's going to be aero-engine focused, primarily around those core capabilities across the entire engine life cycle, across all engine platforms with all OEMs. It's going to be very balanced, and I don't think we want to be over-levered to OE or aftermarket. We want to maintain a balance across it. So I don't think we need to do inorganic things right now. I just think we just need to consistently and predictably operate every business we have, and in industrial, look for some portfolio opportunities, maybe to reorient the portfolio. So I don't want to say we're going to become boring, but it would be a lot easier to understand if we would just be more predictable and consistent performers.