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OFFON

BARNES GROUP INC.

(B)
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BARNES GROUP INC Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

10/29/2021 | 03:45pm EST

OVERVIEW


Please refer to the Overview in the Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report on
Form 10-K for the year ended December 31, 2020. The Annual Report on Form 10-K,
along with the Company's other filings, can be found on the Securities and
Exchange Commission's website, www.sec.gov, as well as on the Company's website:
www.bginc.com.

Third Quarter Highlights

The Company reported net sales of $325.1 million in the third quarter of 2021,
an increase of $56.0 million or 20.8%, from the third quarter of 2020. Organic
sales increased by $54.3 million, or 20.2%, including increases of $32.9
million, or 16.7%, and $21.4 million, or 29.6%, at Industrial and Aerospace,
respectively. Sequentially, sales increased approximately 1% in the third
quarter of 2021 as compared with the second quarter of 2021, with an increase in
Aerospace sales being partially offset by a slight decrease in Industrial sales.
The year-over-year increase at Aerospace was driven by a volume increase within
both the Aerospace Original Equipment Manufacturing ("OEM") and Aerospace
Aftermarket businesses, reflecting improving Aerospace end markets. From an
Industrial standpoint, end-markets improved on a year-over-year basis, however
declined slightly on a sequential basis as pressures resulting from
semiconductor shortages and global supply chain sourcing constraints impacted
near-term automotive and broader industrial production. The weakening of the
U.S. dollar against foreign currencies increased net sales within the Industrial
segment by approximately $1.7 million. Operating margins increased from 11.6% in
the 2020 period to 13.4% in the current period, largely a result of the profit
impact of increased sales volumes, partially offset by an increase in employee
related costs, including incentive compensation.

Impact of COVID-19


The COVID-19 pandemic resulted in a disruption in business activities worldwide
and caused weakened economic conditions throughout the 2020 period, both in the
United States and abroad. COVID-19 had a significant impact on order rates
within Industrial and, on a more targeted basis, Aerospace end-markets.
Industrial sales volumes gradually strengthened throughout the first six months
of 2021, although recent signs of softness in orders during the third quarter of
2021 have been driven by broader supply chain constraints. Similar pressures
also resulted in freight and raw material cost increases. The Aerospace
Aftermarket business remains impacted by lower passenger traffic and the removal
of aircraft from service. Although sales volumes have increased within the
Aerospace OEM business, management anticipates continued sales pressure as the
production of certain wide body aircraft has been lowered. COVID-19 may continue
to have further negative impacts on the Company's operations, customers and
supply chain despite preventative measures taken.

The Company currently maintains sufficient liquidity and continues to closely
monitor its cash generation, usage and preservation including the management of
working capital to generate cash. The Company took several actions in 2020 to
better align costs with the current business environment, including
restructuring and workforce reductions (the "Actions"). Resulting pre-tax
charges of $18.2 million were recorded through operating profit in 2020
(primarily during the second quarter of 2020). See Note 17.

RESULTS OF OPERATIONS


Net Sales
                                     Three Months Ended                                  Nine Months Ended
                                        September 30,                                      September 30,
     (in millions)       2021         2020              Change              2021         2020               Change
     Industrial        $ 231.5$ 196.9$ 34.6        17.6  %    $ 686.2$ 561.0$ 125.2        22.3  %
     Aerospace            93.5         72.1        21.4        29.6  %      261.6        274.2        (12.6)       (4.6) %

     Total             $ 325.1$ 269.1$ 56.0        20.8  %    $ 947.8$ 835.3$ 112.6        13.5  %



The Company reported net sales of $325.1 million in the third quarter of 2021,
an increase of $56.0 million or 20.8%, from the third quarter of 2020. Organic
sales increased by $54.3 million, or 20.2%, including increases of $32.9 million
at Industrial and $21.4 million at Aerospace. Industrial sales declined slightly
on a sequential basis whereas Aerospace sales improved 8% in the third quarter
of 2021, as compared with the second quarter of 2021. The year-over-year
increase at Aerospace was driven by improved sales within both the OEM business
and Aftermarket businesses, resulting primarily from continuing global
                                       24
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improvement in aerospace markets. OEM and Aftermarket sales improved
sequentially by 5% and 16%, respectively, in the third quarter of 2021, as
compared with the second quarter of 2021. From an Industrial standpoint,
end-markets improved year-over-year and declined slightly on a sequential basis
as continuing pressures resulting from semiconductor shortages and global supply
chain sourcing constraints impacted near-term automotive and broader industrial
production. Medical end markets in which the Company participates remain solid
and order activity remains favorable. General industrial markets demonstrated
significant strength in the year-over-year period, although sequential sales and
orders rates have tapered. The Automation business experienced organic sales
growth during the current period as a result of further penetration into end
markets. The weakening of the U.S. dollar against foreign currencies increased
net sales within the Industrial segment by approximately $1.7 million.

The Company reported net sales of $947.8 million in the first nine months of
2021, an increase of $112.6 million, or 13.5%, from the first nine months of
2020. Organic sales increased by $93.5 million driven by an increase of $106.1
million at Industrial, partially offset by a decrease of $12.6 million at
Aerospace. The Company completed the sale of its Seeger business on February 1,
2020, reducing sales by $5.3 million during the first nine months of 2021
relative to the prior year period. The weakening of the U.S. dollar against
foreign currencies increased net sales within the Industrial segment by
approximately $24.4 million. The decrease at Aerospace was driven by organic
sales declines within the Aftermarket businesses, due primarily to the effect of
COVID-19 on airline travel, whereas improvements within Industrial were driven
by recovering end-markets within each of the businesses.

Expenses and Operating Income
                                               Three Months Ended                                                   Nine Months Ended
                                                  September 30,                                                       September 30,
(in millions)                2021             2020                    Change                     2021             2020                    Change
Cost of sales             $ 205.1$ 176.9$ 28.2              15.9  %       $ 602.9$ 532.2$ 70.7              13.3  %
% sales                      63.1  %          65.8  %                                            63.6  %          63.7  %
Gross profit (1)          $ 120.0$  92.2$ 27.8              30.2  %       $ 344.9$ 303.1$ 41.9              13.8  %
% sales                      36.9  %          34.2  %                                            36.4  %          36.3  %
Selling and
administrative expenses   $  76.3$  60.9$ 15.4              25.2  %       $ 230.3$ 212.4$ 17.9               8.4  %
% sales                      23.5  %          22.6  %                                            24.3  %          25.4  %
Operating income          $  43.7$  31.2$ 12.5              39.9  %       $ 114.6$  90.7$ 24.0              26.4  %
% sales                      13.4  %          11.6  %                                            12.1  %          10.9  %



(1) Sales less cost of sales.

Cost of sales in the third quarter of 2021 increased 15.9% from the 2020 period
and gross profit margin increased from 34.2% in the 2020 period to 36.9% in the
2021 period. Gross profit margins increased at both Aerospace and Industrial.
Within Industrial, gross profit and gross profit margin increased primarily as a
result of the profit contribution of higher sales volumes within each of the
businesses, partially offset by increased global sourcing costs, including
increased freight and raw material. Within Aerospace, higher volumes within both
the Aftermarket and OEM businesses contributed to an increase in both gross
profit and gross profit margin during the third quarter of 2021. Selling and
administrative expenses in the third quarter of 2021 increased 25.2% from the
2020 period. Sales increased by 20.8% between the comparable 2020 and 2021
periods. As a percentage of sales, selling and administrative costs increased
from 22.6% in the third quarter of 2020 to 23.5% in the 2021 period. The
increase in selling and administrative costs as a percentage of sales was
primarily driven by an increase in employee related costs, including incentive
compensation within both segments, and investments in growth and innovation.
Operating income in the third quarter of 2021 increased by 39.9% to $43.7
million compared with the third quarter of 2020 and operating income margin
increased from 11.6% to 13.4%, driven by the items above.

Cost of sales in the first nine months of 2021 increased 13.3% from the 2020
period and gross profit margin increased slightly from 36.3% in the 2020 period
to 36.4% in the 2021 period. Gross profit margins declined at Aerospace and
increased slightly at Industrial. Within Aerospace, lower volumes within the
Aftermarket business on a year to date basis contributed to a decrease in gross
profit during the first nine months of 2021. Gross profit margin also decreased
during the first nine months of 2021 at Aerospace, given the mix of products
between the OEM and Aftermarket businesses. Within Industrial, gross profit
increased primarily as a result of the profit contribution of increased sales
volumes. Gross profit margins at Industrial between the 2021 and 2020 periods
increased slightly as the profit contribution of increased sales volumes was
partially offset by an increase in global sourcing costs. Within Aerospace, a
reduction in gross profit in the first nine months of 2021 was driven by
significantly
                                       25
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lower volumes within the Aftermarket businesses as compared with the 2020
period. Selling and administrative expenses in the first nine months of 2021
increased 8.4% from the 2020 period. Sales, however, increased by 13.5% between
the comparable 2021 and 2020 periods. As a percentage of sales, selling and
administrative costs decreased from 25.4% in the first nine months of 2020
to 24.3% in the 2021 period. The decrease in selling and administrative costs as
a percentage of sales was driven by the absence of $18.0 million of pre-tax
charges related to restructuring and workforce actions and $2.4 million of
divestiture charges related to the completion of the Seeger sale during the 2020
period. Partially offsetting this decrease were investments in growth and
innovation, and an increase in employee related costs, including incentive
compensation within both segments. Operating income in the first nine months of
2021 increased 26.4% to $114.6 million from the first nine months of 2020 and
operating income margin increased from 10.9% in the 2020 period to 12.1% in the
2021 period, primarily driven by the items noted above.

Interest expense
Interest expense increased by $0.3 million in the third quarter of 2021 and by
$0.5 million in the first nine months of 2021 as compared with the prior year
periods, primarily as a result of higher interest rates, partially offset by
decreased average borrowings during the period.

Other expense (income), net
Other expense (income), net in the third quarter of 2021 was $1.2 million
compared to $0.0 million in the third quarter of 2020. Other expense (income),
net in the first nine months of 2021 was $4.0 million compared to $2.7 million
in the first nine months of 2020. This increase in expense was primarily caused
by an increase in other components of net periodic benefit costs, from $0.8
million in the nine months ended September 30, 2020 to $1.7 million in the nine
months ended September 30, 2021.

Income Taxes
During the second quarter of 2021, the Italian tax authorities released Tax
Guidance related to the application of tax basis realignment rules for
intangible property ("Realignment") which provides Italian taxpayers with the
opportunity to step up the basis of goodwill and intangibles to their fair
market value and amortize the step up over 18 years for tax purposes in exchange
for paying a 3% tax on the step up, payable over a three year period. The
Company opted to elect the Realignment in June 2021 and accordingly recorded a
tax payable of $3.0 million and a long-term tax payable of $6.0 million. The
Company subsequently made its first required installment payment of $3.0 million
during the third quarter of 2021, reducing the long-term tax payable
accordingly. The Company also recorded a deferred tax asset of $83.9 million
related to the Realignment. Accounting guidance requires that when a deferred
tax asset is realigned for tax purposes, a corresponding revaluation reserve
also be recorded. Under Italian tax rules, any dividends paid out of this
revaluation reserve are subject to tax at a 24% rate. Accordingly, the Company
recorded a deferred tax liability of $72.2 million related to the potential 24%
tax due on any dividends, paid out of the revaluation reserve. The deferred tax
asset and liability balances have been presented on a net basis on the
Consolidated Balance Sheets. The Company also recorded a one time $2.7 million
benefit to the provision in the first nine months of 2021 related to this
election and related accounting.

The Company's effective tax rate for the first nine months of 2021 was 27.0%
compared with 40.0% in the first nine months of 2020 and 37.6% for the full year
2020. The decrease in the first nine months of 2021 effective tax rate from the
full year 2020 rate is primarily due to the absence of tax expense related to
the completed sale of the Seeger business in 2020, the benefit related to the
tax basis of goodwill and intangibles (discussed above), a net benefit related
to the resolution of a foreign tax matter and a favorable mix in earnings based
on tax jurisdictions. The tax rate benefits were partially offset by tax expense
related to the revaluation of UK deferred taxes resulting from a legislative
increase in the corporate tax rate.

The Aerospace and Industrial segments have a number of multi-year tax holidays
in Singapore and China. The tax holiday in China expired at the end of 2020. The
Company has re-applied for approval of a potential three-year holiday in China
which could reduce the tax rate effective January 1, 2021 (retroactively). The
Company anticipates a decision on its application for the holiday in the fourth
quarter of 2021. These holidays are subject to the Company meeting certain
commitments in the respective jurisdictions. Aerospace was granted an income tax
holiday for operations recently established in Malaysia. This holiday commenced
effective November 2020 and remains effective for a period of ten years.



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Income and Income per Share
                                              Three Months Ended                                                Nine Months Ended
                                                 September 30,                                                    September 30,
(in millions, except per
share)                      2021             2020                    Change                   2021            2020                    Change
Net income                $ 27.9$  15.4$ 12.5             81.4  %       $ 71.7$ 45.7$ 26.1             57.1  %
Net income per common
share:
Basic                     $ 0.55$  0.30$ 0.25             83.3  %       $ 1.41$ 0.90$ 0.51             56.7  %
Diluted                     0.55             0.30            0.25             83.3  %         1.40            0.89            0.51             57.3  %
Weighted average common
shares outstanding:
Basic                       50.9             50.8             0.1              0.1  %         50.9            50.9               -              0.1  %
Diluted                     51.1             50.9             0.1              0.2  %         51.1            51.1               -             (0.1) %


Basic and diluted net income per common share increased for the three and nine
month periods ended September 30, 2021 as compared to 2020. The increases were
due to the increases in net income for the periods. Basic and diluted weighted
average common shares outstanding were largely consistent for the periods and
were only slightly impacted by the repurchase of 396,000 and 100,000 shares
during 2020 and 2021, respectively, as part of the Company's publicly announced
Repurchase Program (as defined herein) as well as the issuance of additional
shares for employee stock plans.

Financial Performance by Business Segment

Industrial
                                  Three Months Ended                                    Nine Months Ended
                                     September 30,                                        September 30,
(in millions)         2021          2020              Change               2021          2020               Change
Sales              $ 231.5$ 196.9$ 34.6        17.6  %    $ 686.2$ 561.0$ 125.2        22.3  %
Operating profit      30.1          24.4          5.6        23.0  %       78.6          42.1          36.6        86.9  %
Operating margin      13.0  %       12.4  %                                11.5  %        7.5  %



Sales at Industrial were $231.5 million in the third quarter of 2021, a $34.6
million, or 17.6% increase from the third quarter of 2020. Organic sales
increased by $32.9 million, or 16.7%, during the 2021 period, driven by improved
volumes across each of the businesses. On a sequential basis, Industrial
declined slightly in the third quarter of 2021, as compared with the second
quarter of 2021, as pressures resulting from semiconductor shortages and global
supply chain sourcing constraints impacted near-term automotive and broader
industrial production. The Automation business saw strong year-over-year organic
sales growth, although sequential sales and order rates both declined relative
to the second quarter of 2021. Orders within the personal care and packaging
markets demonstrated softness on both a year-over-year and sequential basis.
Volumes within our medical markets remained solid, consistent with this market
trend throughout the pandemic. Foreign currency increased sales on a
year-over-year basis by approximately $1.7 million as the U.S. dollar weakened
against foreign currencies. During the first nine months of 2021, this segment
reported sales of $686.2 million, a 22.3% increase from the first nine months of
2020. Organic sales increased by $106.1 million, or 18.9%, during
the 2021 period, primarily a result of recovering end-markets, the lessened
impacts of COVID-19 and related sales improvements within each of the
businesses. The Company completed the sale of its Seeger business in February
2020, reducing sales by $5.3 million during the first nine months of 2021
relative to the prior year period. Foreign currency increased sales by
approximately $24.4 million as the U.S. dollar weakened against foreign
currencies.

Operating profit at Industrial in the third quarter of 2021 increased 23.0% from
the third quarter of 2020 to $30.1 million. Operating profit benefited from the
impact of increased organic sales volumes, partially offset by an increase in
employee related costs, including incentive compensation, and investments in
growth and innovation. Global sourcing also impacted the current period as
supply chain constraints drove freight and raw material cost increases across
the broader industry. Operating margin increased from 12.4% in the 2020 period
to 13.0% in the 2021 period, driven primarily by increased organic sales
volumes. Operating profit in the first nine months of 2021 was $78.6 million, an
increase of $36.6 million from the first nine months of 2020, driven by the
profit impact of increased organic sales and the absence of $15.8 million of
restructuring charges and $2.4 million of divestiture charges related to the
completion of the Seeger sale during the 2020 period. Partially offsetting these
benefits were the increase in employee related costs, global sourcing and
investments in growth and innovation. Research and development costs increased
in the first nine months of 2021 period as the Company continues to invest in
innovation.
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Operating margin increased from 7.5% in the 2020 period to 11.5% in the 2021 period, primarily a result of the increased organic sales and the absence of the prior period restructuring costs.


Outlook: In Industrial, management remains focused on generating organic sales
growth through the introduction of new products and services and by leveraging
the benefits of its diversified products and global industrial end-markets. This
being the case, our end markets continue to recover from the impacts of COVID-19
and increasing supply chain constraints. Markets within our key regions of North
America, Europe and China, although having demonstrated recovery throughout the
first half of the year, softened during the third quarter as supply chain
disruptions impacted demand and shipments across most Industrial businesses and
regions. General industrial end markets have shown significant year-over-year
improvement, although order rates were sequentially flat as compared with the
second quarter of 2021. For overall industrial end-markets, the manufacturing
Purchasing Managers' Index ("PMI") are above 50 in most regions. PMI within the
United States, Europe and China, however, have shown slight deterioration since
the second quarter of 2021. Global forecasted production for light vehicles has
continued to decline due to semiconductor shortages that have impacted, and may
continue to impact, near-term automotive builds, tempering overall strength
within the transportation markets during the first nine months of 2021.
Management also continues to track closely the impact of pricing changes and
lead times on raw materials and freight, given the increasing pressure of supply
chain constraints, primarily during the back end of the current quarter. Within
our Molding Solutions business, global medical markets remain healthy and are
expected to remain favorable given the recent demands of COVID-19, an aging
population and expanded medical applications. The automotive hot runner and tool
and die markets remain strong following the release of projects with automotive
original equipment manufacturers related to model launches, including new
electric vehicles. Orders within the packaging market have declined on both a
year-over-year and sequential basis. Proposed environmental regulations
affecting product and packaging composition and disposability may impact future
sales within these end markets. Automation end-markets continue to trend
positively from a year-over-year standpoint. Although order activity declined
sequentially during the third quarter of 2021, we continue to focus on further
expansion into adjacent end-markets. Overall industrial end-markets may be
impacted by uncertainty related to current and potential future tariffs. As
noted above, our sales were positively impacted by $1.7 million from
fluctuations in foreign currencies. To the extent that the U.S. dollar
fluctuates relative to other foreign currencies, our sales may be impacted
relative to the prior year periods. The relative impact on operating profit is
not expected to be as significant as the impact on sales as most of our
businesses have expenses primarily denominated in local currencies, where their
revenues reside, however operating margins may be impacted. Management is
focused on sales growth through innovation, acquisition and expanding geographic
reach. Strategic investments in new technologies, manufacturing processes and
product development are expected to provide benefits over the long term and
management continues to evaluate such opportunities.

The Company is focused on the proactive management of costs to mitigate any
residual impacts of COVID-19 and increasing risks of supply chain constraints on
operating profit. Management also remains focused on strategic investments and
new product and process introductions, as well as driving productivity by
leveraging the Barnes Enterprise System ("BES"). Cost saving initiatives taken
earlier, including discretionary spending initiatives, continue to provide
benefit. The Company continues to manage its cost structure to align with the
intake of orders and sales given remaining uncertainty within certain
end-markets as we close out 2021. Management will continue to explore
opportunities for additional cost savings, while working closely with vendors
and customers as it relates to the timing of deliveries and pricing initiatives.
It is anticipated that operating profit will continue to be impacted by changes
in sales volume, mix and pricing, inflation, freight costs and the levels of
investments made within each of the Industrial businesses. Operating profit may
also be impacted by enactment of or changes in tariffs, trade agreements and
trade policies that may affect the cost, lead times and/or availability of
goods, including but not limited to, steel and aluminum. Costs associated with
new product and process introductions, restructuring and other cost initiatives,
strategic investments and the integration of acquisitions may negatively impact
operating profit.

Aerospace
                                    Three Months Ended                                   Nine Months Ended
                                       September 30,                                       September 30,
   (in millions)        2021         2020              Change               2021          2020               Change
   Sales              $ 93.5$ 72.1$ 21.4        29.6  %    $

261.6 $ 274.2$ (12.6) (4.6) %

Operating profit 13.6 6.8 6.8 100.5 % 36.0 48.6 (12.6) (25.9) %

   Operating margin     14.6  %       9.4  %                                13.8  %       17.7  %



The Aerospace segment reported sales of $93.5 million in the third quarter of
2021, a 29.6% increase from the third quarter of 2020. Sales increased 23%
within the OEM business and 46% within the Aftermarket business relative to the
2020 period. On a sequential basis, Aerospace sales improved 8% in the third
quarter of 2021 relative to the second quarter of 2021, with OEM and Aftermarket
sales improving by 5% and 16%, respectively, relative to the prior period. The
year-over-year increase in
                                       28
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OEM sales was driven by growing narrow body airframe production including the
return to flight of the Boeing 737 MAX. Sales within OEM, although having
increased since the comparable 2020 period as well as sequentially since the
second quarter of 2021, continued to experience the impact of earlier reductions
in engine and airframe build schedules, in addition to higher levels of
inventory within the supply chain. The order schedules of our OEM customers have
continued to stabilize throughout 2021, although OEM orders declined
sequentially in the current period as customers continue to normalize their
aircraft production schedules. Sales within the Aftermarket Maintenance Repair
and Overhaul ("MRO") and spare parts businesses improved during the third
quarter of 2021 on a year-over-year basis. Airline traffic and aircraft
utilization have improved significantly relative to the third quarter of 2020.
The MRO business continued to demonstrate signs of a gradual recovery as the
distribution of vaccines increased, certain domestic health and travel
restrictions were lifted and passenger traffic improved. Sales within the
segment are largely denominated in U.S. dollars and therefore were not
significantly impacted by changes in foreign currency. During the first nine
months of 2021, the Aerospace segment reported sales of $261.6 million,
a 4.6% decrease from the first nine months of 2020, driven by declines within
the Aftermarket businesses, partially offset by an increase within OEM. The
sales decline during the first nine months of 2021 resulted from lower sales
volumes, primarily during the first quarter of 2021, due to the impact of
COVID-19. Aerospace segment sales during the first quarter of 2021 were down 38%
relative to the comparable 2020 quarter, thereby weighing on the first nine
months of 2021.

Operating profit at Aerospace in the third quarter of 2021 more than doubled
since the third quarter of 2020 to $13.6 million. The increase in operating
profit resulted from the profit contribution of higher volumes within the OEM
and Aftermarket businesses, as discussed above, and favorable productivity.
These benefits were partially offset by an increase in employee related costs,
including incentive compensation. Operating margin increased from 9.4% in the
the 2020 period to 14.6% in the 2021 period, driven primarily by the profit
contribution of increased sales. Operating margin decreased from 17.7% in the
first nine months of 2020 to 13.8% in the first nine months of 2021, a result of
mix across the businesses and, more specifically, the comparably lower
Aftermarket sales during the first nine months of 2021. Operating profit in
the first nine months of 2021 decreased 25.9% from the first nine months of
2020 to $36.0 million, driven by lower Aftermarket performance within the
current nine-month period, partially offset by the absence of $2.2 million of
restructuring charges during the 2020 period.

Outlook: Sales in the Aerospace OEM business are based on the general state of
the aerospace market driven by the worldwide economy and are supported by its
order backlog through participation in certain strategic commercial and
defense-related engine and airframe programs. OEM sales and orders grew modestly
in the first nine months of 2021 relative to the similar 2020 period and
management anticipates gradual order improvement over the remainder of 2021 as
customer schedules continue to normalize, albeit at lower levels. The Company
expects, however, that the OEM business will continue to see lingering softness
in demand for its manufactured components relative to pre-pandemic levels as
aircraft production rates at Boeing and Airbus have been reduced. Narrow body
airframe production is beginning to ramp, whereas wide body airframe production
remains under pressure given continued international travel restrictions. The
duration and depth of the aerospace market disruptions remain uncertain at this
time, however a recovery to pre-pandemic levels is expected to take several
years. Aerospace management continues to work with customers to evaluate engine
and airframe build schedules, giving management the ability to react timely to
such changes. Management is also working closely with suppliers to align raw
material schedules with production requirements. Management remains focused on
executing long-term agreements while expanding our share of production on key
programs. Backlog at OEM was $665.1 million at September 30, 2021, an increase
of 16.3% since December 31, 2020, at which time backlog was $572.0 million. OEM
orders increased backlog through the first six months of 2021, however levels
declined in the current quarter, largely as Aerospace customers continued to
adjust orders based on their changing aircraft production schedules.
Approximately 40% of OEM backlog is expected to be recognized over the next 12
months. If COVID-19 continues to have a material impact on the aviation
industry, including our more significant OEM customers, it will continue to
materially affect our Aerospace business and results of operations. The
Aerospace OEM business may also be impacted by changes in the content levels on
certain platforms, changes in customer sourcing decisions, adjustments to
customer inventory levels, commodity and labor availability and pricing, vendor
sourcing capacity and the use of alternate materials. Additional impacts may
include the redesign of parts, quantity of parts per engine, cost schedules
agreed to under contract with the engine and airframe manufacturers, as well as
the pursuit and duration of new programs.

COVID-19 continues to impact our Aerospace Aftermarket businesses. Reduced
aircraft utilization, increased levels of aircraft removed from service and
reduced airline profitability are expected to continue to negatively impact our
business in the mid-term. The Aftermarket business has, however, showed signs of
a gradual recovery during the first nine months of 2021 as domestic and
international passenger traffic improved, the distribution of vaccines increased
and certain domestic health and travel restrictions were lifted. Travel
restrictions, especially on an international basis, continue to impact wide body
aircraft utilization and corresponding Aftermarket orders, although
freight-related air traffic remains strong. Sales in the Aerospace Aftermarket
business may continue to be impacted by inventory management and changes in
customer sourcing, deferred or limited maintenance activity during engine shop
visits and the use of surplus (used) material during the engine repair and
overhaul process. Management believes that its Aerospace Aftermarket business
continues to be competitively positioned based on well-established long-term
customer relationships, including maintenance and repair contracts in the MRO
business and long-term Revenue Sharing Programs ("RSPs") and Component Repair
Programs ("CRPs"). The MRO business may also be
                                       29
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impacted by airlines that closely manage their aftermarket costs as engine
performance and quality improves. Fluctuations in fuel costs and their impact on
airline profitability and behaviors within the aerospace industry could also
impact levels and frequency of aircraft maintenance and overhaul activities, and
airlines' decisions on maintaining, deferring or canceling new aircraft
purchases, in part based on the economics associated with new fuel efficient
technologies.

Given the pressures on sales growth resulting from COVID-19, the Company remains
focused on the proactive management of costs and improved productivity as it
takes action to mitigate continued pressure on operating profit. Certain cost
savings actions taken in the prior year remain in effect and have been critical
in partially offsetting the lower profit contribution of lower Aftermarket
sales. Aerospace will continue to explore opportunities for additional
productivity throughout 2021 and into 2022, including working closely with
vendors and customers as it relates to the timing of deliveries and pricing
initiatives. Management also remains focused on strategic investments and new
product and process introductions. Driving productivity through the application
of the Barnes Enterprise System continues as a key initiative. Operating profit
is expected to be affected by the impact of the changes in sales volume noted
above, mix and pricing, particularly as they relate to the higher profit
Aftermarket RSP spare parts business, and investments made in each of its
businesses. Operating profits may also be impacted by potential changes in
tariffs, trade agreements and trade policies that may affect the cost and/or
availability of goods and labor. Costs associated with new product and process
introductions, the physical transfer of work to other global regions, additional
productivity initiatives and restructuring activities may also negatively impact
operating profit.

LIQUIDITY AND CAPITAL RESOURCES


Management assesses the Company's liquidity in terms of its overall ability to
generate cash to fund its operating and investing activities. Of particular
importance in the management of liquidity are cash flows generated from
operating activities, capital expenditure levels, dividends, capital stock
transactions, effective utilization of surplus cash positions overseas and
adequate lines of credit. The Company currently maintains sufficient liquidity
and will continue to evaluate ways to enhance its liquidity position as it
navigates through the disrupted business environment that has resulted from
COVID-19.

The Company believes that its ability to generate cash from operations in excess
of its internal operating needs is one of its financial strengths. Management
continues to focus on cash flow and working capital management, and anticipates
that operating activities in 2021 will generate sufficient cash to fund
operations. See additional discussion regarding currently available debt
facilities below.

To better align costs with the current business environment, the Company has
taken several actions. During 2020, the Company announced the Actions that were
taken across the businesses and functions in response to the macroeconomic
disruption in global industrial and aerospace end markets. A resulting pre-tax
charge of $18.2 million was recorded through operating profit during 2020 (Note
17), primarily related to employee severance and other termination benefits. The
Actions were substantially completed in 2020 and, at the time of the Actions
being taken, reduced the Company's global workforce by approximately 8%. The
Company continues to invest within its businesses, with its estimate of 2021
capital spending to be approximately $40 million.

In October 2014, the Company entered into a Note Purchase Agreement ("Note
Purchase Agreement"), among the Company and New York Life Insurance Company, New
York Life Insurance and Annuity Corporation and New York Life Insurance and
Annuity Corporation Institutionally Owned Life Insurance Separate Account, as
purchasers, for the issuance of $100.0 million aggregate principal amount of
3.97% senior notes due October 17, 2024 (the "3.97% Senior Notes"). The 3.97%
Senior Notes are senior unsecured obligations of the Company and pay interest
semi-annually on April 17 and October 17 of each year at an annual rate of
3.97%. The 3.97% Senior Notes will mature on October 17, 2024 unless earlier
prepaid in accordance with their terms. Subject to certain conditions, the
Company may, at its option, prepay all or any part of the 3.97% Senior Notes in
an amount equal to 100% of the principal amount of the 3.97% Senior Notes so
prepaid, plus any accrued and unpaid interest to the date of prepayment, plus
the Make-Whole Amount, as defined in the Note Purchase Agreement, with respect
to such principal amount being prepaid. The Note Purchase Agreement contains
customary affirmative and negative covenants that are similar to the covenants
required under the Amended Credit Agreement, as discussed below. At
September 30, 2021, the Company was in compliance with all covenants under the
Note Purchase Agreement.

On October 8, 2020, the Company entered into the sixth amendment to its fifth
amended and restated revolving credit agreement with Bank of America (the "Sixth
Amendment") and the first amendment to the Note Purchase Agreement with New York
Life (the "First NPA Amendment"). The Sixth Amendment maintained the borrowing
availability of $1,000.0 million along with access to request $200.0 million
through an accordion feature. The Sixth Amendment and the First NPA Amendment
provided for an increase in the Company's maximum ratio of Consolidated Senior
Debt, as defined, to Consolidated EBITDA, as defined, from 3.25 times (or, if a
certain permitted acquisition above $150.0 million is consummated, 3.50 times)
to 3.75 times in each case at the end of the four fiscal quarters, beginning
with December 31, 2020, and regardless
                                       30
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of whether a permitted acquisition, as defined, is consummated, providing
additional financing flexibility and access to liquidity. Additionally, the
Sixth Amendment requires the Company to maintain a maximum ratio of Consolidated
Total Debt, as defined, to Consolidated EBITDA, of not more than 3.75 times in
each case, at the end of the four fiscal quarters, beginning with December 31,
2020 and regardless of whether a permitted acquisition, as defined, is
consummated. Furthermore, the First NPA Amendment provides for (i) adjustments
to the ratio of Consolidated Total Debt, as defined, to Consolidated EBITDA, as
defined, to conform to a more restrictive total leverage ratio that may be
required under the Amended Credit Agreement, (ii) an increase in the amount of
allowable add-back for restructuring charges when calculating Consolidated
EBITDA from $15.0 million to $25.0 million and (iii) a required fee payment
equal to 0.50% per annum times the daily outstanding principal amount of the
note during each of the four fiscal quarters, following the quarter ended
December 31, 2020, if the Company's Senior Leverage Ratio, as defined, exceeds
3.25 times. In October 2020, the Company paid fees and expenses of $1.4 million
in conjunction with executing the Amendments; such fees have been deferred
within Other Assets on the accompanying Consolidated Balance Sheet and are being
amortized on the Consolidated Statements of Income.

On February 10, 2021, the Company and certain of its subsidiaries entered into
the sixth amended and restated senior unsecured revolving credit agreement (the
"Amended Credit Agreement") and retained Bank of America, N.A. as the
Administrative Agent for the lenders. The Amended Credit Agreement maintains the
$1,000.0 million of availability within the facility, while increasing the
available borrowings under the accordion feature from $200.0 million to $250.0
million (aggregate availability of $1,250.0 million) and extends the maturity
date through February 2026. The Amended Credit Agreement also adjusts the
interest rate to either the Eurocurrency rate, as defined in the Amended Credit
Agreement, plus a margin of 1.175% to 1.775% or the base rate, as defined in the
Amended Agreement, plus a margin of 0.175% and 0.775%, depending on the
Company's leverage ratio at the time of the borrowing. Multi-currency
borrowings, pursuant to the Amended Credit Agreement, bear interest at their
respective interbank offered rate (i.e. Euribor) or 0.00% (higher of the two
rates) plus a margin of between 1.175% to 1.775%. As with the earlier facility,
the Company's borrowing capacity is limited by various debt covenants in the
Amended Credit Agreement, as described further below. The Amended Credit
Agreement requires the Company to maintain a Senior Debt Ratio of not more than
3.75 times at the end of each fiscal quarter ending on or before September 30,
2021, after which the ratio will revert to 3.25 times (or, if a permitted
acquisition above $150.0 million is consummated, 3.50 times at the end of each
of the first four fiscal quarters ending after the consummation of any such
acquisition). In addition, the Amended Credit Agreement requires the Company to
maintain a Total Debt Ratio of not more than 3.75 for each fiscal quarter (or,
if a permitted acquisition above $150.0 million is consummated, 4.25 times at
the end of each of the first four fiscal quarters ending after the consummation
of any such acquisition, however, such increase in the ratio will not be
effective during any period prior to October 1, 2021. A ratio of Consolidated
EBITDA to Consolidated Cash Interest Expense, as defined, of not less than 4.25,
is required at the end of each fiscal quarter. The Amended Credit Agreement also
contemplates the potential replacement of LIBOR (as defined below) with a
successor financing rate, pursuant to the intent of the United Kingdom'sFinancial Conduct Authority to phase out use of LIBOR. See additional discussion
immediately below regarding the Company's ongoing evaluation related to this
potential change in financing rates. The Company paid fees and expenses of
$4.2 million in conjunction with executing the Amended Credit Agreement; such
fees will be deferred within Other assets on the Consolidated Balance Sheets and
will be amortized into interest expense on the Consolidated Statements of Income
through its maturity. The Company subsequently amended the Credit Agreement on
October 11, 2021, defining certain applicable multi-currency borrowing rates
that may be used as replacement rates for LIBOR, which is expected to be
discontinued by reference rate reform. See Note 3 of the Consolidated Financial
Statements, as well as discussion below.

The United Kingdom'sFinancial Conduct Authority, which regulates the London
Interbank Offered Rate ("LIBOR"), announced its intent to phase out the use of
LIBOR by December 31, 2021. The U.S.Federal Reserve, in conjunction with the
Alternative Reference Rates Committee, a steering committee comprised of large
U.S. financial institutions, identified the Secured Overnight Financing Rate
("SOFR") as its preferred benchmark alternative to U.S. dollar LIBOR. Published
by the Federal Reserve Bank of New York, SOFR represents a measure of the cost
of borrowing cash overnight, collateralized by U.S.Treasury securities, and is
calculated based on directly observable U.S.Treasury-backed repurchase
transactions. The Company's Amended Credit Agreement and corresponding interest
rate Swap are tied to LIBOR, with each maturing in February 2026, as noted
above. In March 2021, the ICE Benchmark Association announced that it will
extend the publication of overnight, 1, 3, 6 and 12 month LIBOR rates until June
30, 2023, while ceasing publication of all other LIBOR rates including 1 week
and 2 month rates. The Company's Credit Facility was amended in October 2021 to
address the replacement of LIBOR, defining certain applicable multi-currency
borrowing rates that may be used as a replacement. The Company is continuing to
monitor the potential impact of the replacement of LIBOR, but does not
anticipate a material impact on our business, financial condition, results of
operations and cash flows.

At September 30, 2021, the Company was in compliance with all applicable
covenants. The Company anticipates continued compliance under the Agreements in
each of the next four quarters. The Company's most restrictive financial
covenant is the Senior Debt Ratio, which required the Company to maintain a
ratio of Consolidated Senior Debt to Consolidated EBITDA of not more than 3.75
times at September 30, 2021. The actual ratio at September 30, 2021 was 2.59
times, as defined. As noted
                                       31
--------------------------------------------------------------------------------


above, the Amended Credit Agreement requires the Company to maintain a Senior
Debt Ratio of not more than 3.75 times at the end of each fiscal quarter ending
on or before September 30, 2021, after which the ratio will revert to 3.25 times
in subsequent periods.

Management did not repurchase any shares during the third quarter of 2021.
Management will continue to evaluate additional repurchases based on prevailing
market conditions, our liquidity requirements, contractual restrictions and
other factors. See "Part II - Item 2 - Unregistered Sales of Equity Securities
and Use of Proceeds".

Operating cash flow may be supplemented with external borrowings to meet
near-term business expansion needs and the Company's current financial
commitments. The Company has assessed its credit facilities in conjunction with
the Amended Credit Facility and currently expects that its bank syndicate,
comprised of 12 banks, will continue to support its recently executed Amended
Credit Agreement which matures in February 2026. At September 30, 2021, the
Company had $476.6 million unused and available for borrowings under its
$1,000.0 million Amended Credit Facility, subject to covenants in the Company's
revolving debt agreements. At September 30, 2021, additional borrowings of
$282.8 million of Total Debt, as defined, including $282.8 million of Senior
Debt would have been allowed under the financial covenants. The Company intends
to use borrowings under its Amended Credit Agreement to support the Company's
ongoing growth initiatives. The Company continues to analyze potential
acquisition targets and end markets that meet its strategic criteria with an
emphasis on proprietary, highly-engineered industrial technologies. The Company
believes its credit facilities and access to capital markets, coupled with cash
generated from operations, are adequate for its anticipated future requirements.
The Company has not drawn on its debt agreements as a result of COVID-19, as it
believes the availability of those funds are not at risk given the strength of
the underlying bank syndicate. The Company maintains communication with its bank
syndicate as it continues to monitor its cash requirements.

The Company had no borrowings under short-term bank credit lines at September 30, 2021.


On April 28, 2017, the Company entered into an interest rate swap agreement (the
"2017 Swap") with one bank which converts the interest on the first $100.0
million of the Company's one-month LIBOR-based borrowings from a variable rate
plus the borrowing spread to a fixed rate of 1.92% plus the borrowing spread.
The 2017 Swap expires on January 31, 2022. On March 24, 2021, the Company
entered into a new interest rate swap agreement (the "2021 Swap") with this same
bank that will commence on January 31, 2022 and will convert the interest on the
first $100.0 million of the Company's one-month LIBOR-based borrowings from a
variable rate plus the borrowing spread to a fixed rate of 1.17% plus the
borrowing spread. The 2021 Swap will expire on January 30, 2026. These interest
rate swap agreements (the "Swaps") remained in place at September 30, 2021 and
are accounted for as cash flow hedges. At September 30, 2021, the Company's
total borrowings were comprised of 33% fixed rate debt and 67% variable rate
debt. At December 31, 2020, the Company's total borrowings were comprised of 30%
fixed rate debt and 70% variable rate debt.

The Company completed the sale of the Seeger business to KNG effective February
1, 2020. Gross proceeds received were 39.0 million Euros ($42.9 million) after
consideration of post-closing adjustments, which were made during the fourth
quarter of 2020, pursuant to the terms of the SPA. The Company yielded net cash
proceeds of $36.1 million after consideration of cash sold and transaction
costs. Resulting tax charges of $4.2 million were recognized in the first
quarter of 2020 following the completion of the sale. The Company utilized the
proceeds from the sale to reduce debt under the Amended Credit Facility.

At September 30, 2021, the Company held $93.5 million in cash and cash equivalents, the majority of which was held by foreign subsidiaries. These amounts have no material regulatory or contractual restrictions and are expected to primarily fund international investments.

The Company currently does not plan to make any additional discretionary contributions to its U.S. Qualified pension plans in 2021, however approximately $4.7 million is expected to be made into its U.S. Non-qualified and international pension plans throughout 2021.










                                       32
--------------------------------------------------------------------------------

Cash Flow
                                                       Nine Months Ended
                                                         September 30,
                (in millions)                   2021         2020        Change
                Operating activities          $ 127.8$ 163.8$ (36.0)
                Investing activities            (23.4)         7.3        (30.7)
                Financing activities            (88.6)      (181.1)        92.5
                Exchange rate effect             (2.9)         0.7         (3.6)
                Increase (decrease) in cash   $  12.9$  (9.3)$  22.2



Operating activities provided $127.8 million in the first nine months of 2021
compared to $163.8 million in the first nine months of 2020. Operating cash
flows in the 2021 period were positively impacted by improved operating results
reflecting a recovery within our end-markets which was offset by a reduction in
cash provided by working capital. The 2021 period included a use of cash for
working capital of $3.4 million compared to $67.1 million of cash provided by
working capital in the 2020 period which was driven by a reduction in accounts
receivable due to the decline in sales in the period.

Investing activities used $23.4 million in the first nine months of 2021 and
generated $7.3 million in the first nine months of 2020. Net cash proceeds of
$36.9 million from the sale of the Seeger business were included in investing
activities for the 2020 period. See Note 2 of the Consolidated Financial
Statements. Investing activities in the 2021 period included capital
expenditures of $26.7 million compared to $30.2 million in the 2020 period. The
Company expects capital spending in 2021 to approximate $40 million.

Financing activities in the first nine months of 2021 included a net decrease in
borrowings of $48.3 million compared to $137.5 million in the comparable 2020
period. During the first nine months of 2021 and 2020, the Company repurchased
0.1 million shares and 0.4 million shares, respectively, of the Company's stock
at a cost of $5.2 million and $15.6 million, respectively. Total cash used to
pay dividends was $24.3 million in both the 2021 and 2020 periods. Other
financing cash flows during the first nine months of 2021 and 2020 include $1.1
million and $1.9 million, respectively, of net cash payments resulting from the
settlement of foreign currency hedges related to intercompany financing. Other
financing cash flows during the first nine months of 2021 also include
$4.2 million of payments made in conjunction with executing the Amended Credit
Agreement and $4.2 million of payments related to the residual interest in a
subsidiary.

The Company maintains borrowing facilities with banks to supplement internal
cash generation. At September 30, 2021, $523.4 million was borrowed at an
average interest rate of 1.47% under the Company's $1,000.0 million Amended
Credit Facility which matures in February 2026. As of September 30, 2021, the
Company had no borrowings under short-term bank credit lines. At September 30,
2021, the Company's total borrowings were comprised of 33% fixed rate debt and
67% variable rate debt. The interest payments on $100.0 million of the variable
rate interest debt have been converted into payment of fixed interest plus the
borrowing spread under the terms of the respective interest rate swaps that were
executed in April 2017 and March 2021.

Debt Covenants


As noted above, borrowing capacity is limited by various debt covenants in the
Company's debt agreements. Following is a reconciliation of Consolidated EBITDA,
a key metric in the debt covenants, to the Company's net income (in millions):
                                       33
--------------------------------------------------------------------------------

                                                                      Four Fiscal Quarters Ended
                                                                          September 30, 2021
Net income                                                            $                   89.5
Add back:
Interest expense                                                                          16.5
Income taxes                                                                              34.2
Depreciation and amortization                                                             90.8
Adjustment for non-cash stock based compensation                                          11.4

Workforce reduction and restructuring charges                                              1.6

Other adjustments                                                                          0.2

Consolidated EBITDA, as defined within the Amended Credit Agreement $

              244.1

Consolidated Senior Debt, as defined, as of September 30, 2021 $

              632.5
Ratio of Consolidated Senior Debt to Consolidated EBITDA                                  2.59
Maximum                                                                                   3.75

Consolidated Total Debt, as defined, as of September 30, 2021 $

              632.5
Ratio of Consolidated Total Debt to Consolidated EBITDA                                   2.59
Maximum                                                                                   3.75

Consolidated Cash Interest Expense, as defined, as of September 30, 2021

                                                                  $                   16.5

Ratio of Consolidated EBITDA to Consolidated Cash Interest Expense

             14.83
Minimum                                                                                   4.25



The Amended Credit Agreement allows for certain adjustments within the
calculation of the financial covenants. Other adjustments consist primarily of
due diligence and transaction expenses as permitted under the Amended Credit
Agreement. The Company's financial covenants are measured as of the end of each
fiscal quarter. At September 30, 2021, additional borrowings of $282.8 million
of Senior Debt would have been allowed under the covenants. Additional
borrowings for Total Debt would also have been limited to $282.8 million at
September 30, 2021. Senior Debt includes primarily the borrowings under the
Amended Credit Agreement, the 3.97% Senior Notes and the borrowings under the
lines of credit. The Company's unused committed credit facilities at
September 30, 2021 were $476.6 million; however, the borrowing capacity was
limited by the debt covenants to $282.8 million at September 30, 2021.

OTHER MATTERS


The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant accounting policies are
disclosed in Note 1 of the Consolidated Financial Statements in the Company's
Annual Report on Form 10-K for the year ended December 31, 2020. The most
significant areas involving management judgments and estimates are described in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's Annual Report on Form 10-K for the year ended
December 31, 2020. Actual results could differ from those estimates. There have
been no material changes to such judgments and estimates.

Critical Accounting Policies


Goodwill and Indefinite-Lived Intangible Assets: Goodwill and indefinite-lived
intangible assets are subject to impairment testing annually or earlier if an
event or change in circumstances indicates that the fair value of a reporting
unit has been reduced below its carrying value. Management completes their
annual impairment assessments during the second quarter of each year as of April
1. The Company utilizes the option to first assess qualitative factors to
determine whether it is necessary to perform the Step 1 quantitative goodwill
impairment test in accordance with the applicable accounting standards. Under
the qualitative assessment, management considers relevant events and
circumstances including but not limited to macroeconomic conditions, industry
and market considerations, overall unit performance and events directly
affecting a unit. If the Company determines that the Step 1 quantitative
impairment test is required, management estimates the fair value of the
reporting unit primarily using the income approach, which reflects management's
cash flow projections, and also evaluates the fair value using the market
approach. Inherent in management's development of cash flow projections are
assumptions and estimates,
                                       34
--------------------------------------------------------------------------------


including those related to future earnings and growth and the weighted average
cost of capital. The Company compares the fair value of the reporting unit with
the carrying value of the reporting unit. If the fair values were to fall below
the carrying values, the Company would recognize a non-cash impairment charge to
income from operations for the amount by which the carrying amount of any
reporting unit exceeds the reporting unit's fair value, assuming the loss
recognized does not exceed the total amount of goodwill for the reporting unit.
Based on our second quarter assessment, the estimated fair value of the
Automation reporting unit, which represents the 2018 acquisition of Gimatic,
exceeded its carrying value while the estimated fair value of each of the
remaining reporting units significantly exceeded their carrying values. There
was no goodwill impairment at any reporting units. Many of the factors used in
assessing fair value are outside the control of management, and these
assumptions and estimates can change in future periods as a result of both
Company-specific and overall economic conditions, including the impacts of the
COVID-19 pandemic. Management's quantitative assessment includes a review of the
potential impacts of current and projected market conditions from a market
participant's perspective on reporting units' projected cash flows, growth rates
and cost of capital to assess the likelihood of whether the fair value would be
less than the carrying value. The Company also completed its annual impairment
testing of its trade names, indefinite-lived intangible assets, in the second
quarter of 2021 and determined that there were no impairments.

EBITDA


Earnings before interest expense, income taxes, and depreciation and
amortization ("EBITDA") for the first nine months of 2021 was $178.7 million
compared to $154.0 million in the first nine months of 2020. EBITDA is a
measurement not in accordance with generally accepted accounting principles
("GAAP"). The Company defines EBITDA as net income plus interest expense, income
taxes, and depreciation and amortization which the Company incurs in the normal
course of business. The Company does not intend EBITDA to represent cash flows
from operations as defined by GAAP, and the reader should not consider it as an
alternative to net income, net cash provided by operating activities or any
other items calculated in accordance with GAAP, or as an indicator of the
Company's operating performance. The Company's definition of EBITDA may not be
comparable with EBITDA as defined by other companies. The Company believes
EBITDA is commonly used by financial analysts and others in the industries in
which the Company operates and, thus, provides useful information to investors.
Accordingly, the calculation has limitations depending on its use.

Following is a reconciliation of EBITDA to the Company's net income (in
millions):
                                     Nine Months Ended
                                       September 30,
                                     2021          2020
Net income                       $     71.7$  45.7
Add back:
Interest expense                       12.4         11.9
Income taxes                           26.5         30.4
Depreciation and amortization          68.0         66.0
EBITDA                           $    178.7$ 154.0



FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q are forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements often address our expected future operating and
financial performance and financial condition, and often contain words such as
"anticipate," "believe," "expect," "plan," "estimate," "project," "continue,"
"will," "should," "may," and similar terms. These forward-looking statements do
not constitute guarantees of future performance and are subject to a variety of
risks and uncertainties that may cause actual results to differ materially from
those expressed in the forward-looking statements. These include, among others:
difficulty maintaining relationships with employees, customers, distributors,
suppliers, business partners or governmental entities; failure to successfully
negotiate collective bargaining agreements or potential strikes, work stoppages
or other similar events; difficulties leveraging market opportunities; changes
in market demand for our products and services; rapid technological and market
change; the ability to protect and avoid infringing upon intellectual property
rights; introduction or development of new products or transfer of work; higher
risks in global operations and markets; the impact of intense competition; acts
of terrorism, cybersecurity attacks or intrusions that could adversely impact
our businesses; the continuing impact of the COVID-19 pandemic on our business,
including on demand, supply chains, operations and our ability to maintain
sufficient liquidity; the failure to achieve anticipated cost savings and
benefits associated with workforce reductions and restructuring actions;
uncertainties relating to conditions in financial markets; currency fluctuations
and foreign currency exposure; future financial performance of the industries or
customers that we serve; our dependence upon revenues and earnings from a small
number of significant customers; a major loss of customers; inability to realize
expected sales or profits from existing backlog due to a range of factors,
including
                                       35

--------------------------------------------------------------------------------



changes in customer sourcing decisions, material changes, production schedules
and volumes of specific programs; the impact of government budget and funding
decisions; government tariffs, trade agreements and trade policies; the impact
of new or revised tax laws and regulations; the adoption of laws, directives or
regulations that impact the materials processed by our products or their end
markets; fluctuations in the pricing, quality or availability of raw materials,
supplies, freight, transportation, utilities and other items required by
operations; labor shortages or other business interruptions at transportation
centers, shipping ports, our suppliers' facilities or our facilities;
disruptions in information technology systems, including as a result of
cybersecurity or data security breaches; the continuing impact of prior
acquisitions and divestitures; and any other future strategic actions, including
acquisitions, divestitures, restructurings, or strategic business realignments,
and our ability to achieve the financial and operational targets set in
connection with any such actions; the ability to achieve social and
environmental performance goals; the outcome of pending and future legal,
governmental, or regulatory proceedings and contingencies; the impact of actual,
potential or alleged defects or failures of our products or third-party products
within which our products are integrated, including product liabilities, product
recall costs and uninsured claims; future repurchases of common stock; future
levels of indebtedness; and numerous other matters of a global, regional or
national scale, including those of a political, social, economic, business,
competitive, environmental, regulatory and public health nature; and other risks
and uncertainties described in documents filed with or furnished to the
Securities and Exchange Commission ("SEC") by the Company, including, among
others, those in the Management's Discussion and Analysis of Financial Condition
and Results of Operations and Risk Factors sections of the Company's filings.
The Company assumes no obligation to update its forward-looking statements.

© Edgar Online, source Glimpses

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