Barnes Group Inc. (NYSE:B) Q2 2018 Earnings Conference Call - Final Transcript
Jul 27, 2018 • 08:30 am ET
Good morning. My name is Sharon and I will be your conference operator today. At this time, I would like to welcome everyone to the Barnes Group Inc. Second Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)
William Pitts, Director of IR, you may begin your conference.
Thank you, Sharon. Good morning and welcome to our second quarter 2018 earnings call. With me are Barnes Group's President and CEO, Patrick Dempsey and SVP of Finance and CFO, Chris Stephens. If you have not received a copy of our earnings press release, you can find it on the Investor Relations section of our corporate website at bginc.com. During our call, we will be referring to the earnings release supplement slides, which are also on our website.
Our discussion today includes certain non-GAAP financial measures, which provide additional information we believe is helpful to investors. These measures have been reconciled to the related GAAP measures in accordance with SEC regulations. You will find a reconciliation table on our website as part of our press release and in the Form 8-K submitted to the SEC.
(Forward-Looking Cautionary Statements)
Let's now open today's call as we customarily do with remarks from Patrick, followed by a review of our second quarter results and our updated 2018 outlook from Chris. After that, we will open up the call for questions. Patrick?
Thank, Bill and good morning everyone. In the second quarter, Barnes Group delivered very strong operating performance as adjusted earnings per share grew 11% to $0.90, the best quarterly results in recent history. We achieved this high level of performance through sustained strength in our Aerospace segment and continuing improvement in our Industrial segment. In addition, total Company adjusted operating margin expanded 120 basis points from the prior-year period and we ended the quarter with another record total backlog, which now stands at $1.2 billion.
During the quarter, and shortly thereafter, several positive capital deployment events also occurred. While some of these are modest, they contributed to our overall growth strategy and our objective to be a good steward of shareholder capital. I'll discuss those in a moment.
First, let's start with a review of the quarter's performance, beginning with our Aerospace business. Second quarter performance was excellent. Sales were up 12% compared to a year ago, with original equipment manufacturing, OEM, up 7% and aftermarket up 21%. In our OEM business, we continued to see a meaningful transition to newer programs like CFM's LEAP engines. With the commercial aerospace industry continuing to forecast increased aircraft production levels, our OEM orders remained robust, more than doubling last year's second quarter intake and in excess of 60% growth sequentially. As you would expect, given the significant order strength, OEM backlog grew to another record level, supportive of longer-term production increases.
In our aftermarket business, sales growth was robust as both MRO and spare parts sales were