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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 1-4801

Barnes-Logo.jpg
BARNES GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0247840
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
  
123 Main Street 
Bristol
Connecticut06010
(Address of Principal Executive Offices) (Zip Code)
(860) 583-7070
Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share B New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  x   No  ¨ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.   
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
                   
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).YesNo
The registrant had outstanding 50,702,072 shares of common stock as of April 24, 2024.
1


Barnes Group Inc.
Index to Form 10-Q
For the Quarterly Period Ended March 31, 2024
 
 Page
Part I.FINANCIAL INFORMATION
  
Item 1.
 
 
 
 
  
Item 2.
  
Item 3.
  
Item 4.
  
Part II.OTHER INFORMATION
Item 1.
Item 1A.
Item 2.Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Item 3.
Item 4.
Item 5.
  
Item 6.
  
 


This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. See “FORWARD-LOOKING STATEMENTS” under Part I - Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BARNES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
20242023
Net sales$430,638 $335,357 
 
Cost of sales300,096 226,242 
Selling and administrative expenses90,860 85,831 
 390,956 312,073 
Operating income39,682 23,284 
 
Interest expense24,831 5,308 
Other expense (income), net1,696 1,340 
Income before income taxes13,155 16,636 
Income taxes11,208 3,477 
Net income$1,947 $13,159 
 
Per common share:
Basic$0.04 $0.26 
Diluted0.04 0.26 
Weighted average common shares outstanding:
Basic51,224,884 50,989,169 
Diluted51,293,673 51,264,435 

See accompanying notes.

3


BARNES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
20242023
Net income$1,947 $13,159 
Other comprehensive (loss) income, net of tax
Unrealized gain (loss) on hedging activities, net of tax (1)
9,347 (886)
Foreign currency translation adjustments, net of tax (2)
(38,683)18,473 
Defined benefit pension and other postretirement benefits, net of tax (3)
1,266 11,622 
Total other comprehensive (loss) income, net of tax(28,070)29,209 
Total comprehensive (loss) income$(26,123)$42,368 

(1) Net of tax of $3,030 and $(276) for the three months ended March 31, 2024 and 2023, respectively.

(2) Net of tax of $0 for three months ended March 31, 2024 and 2023.

(3) Net of tax of $475 and $3,639 for the three months ended March 31, 2024 and 2023, respectively.

See accompanying notes.






























4


BARNES GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
(Unaudited)
March 31, 2024December 31, 2023
Assets
Current assets  
Cash and cash equivalents$81,638 $89,827 
Accounts receivable, less allowances (2024 - $6,994; 2023 - $7,258)
308,732 353,923 
Inventories336,153 365,221 
Prepaid expenses and other current assets103,699 97,749 
Assets held for sale84,778  
Total current assets915,000 906,720 
 
Deferred income taxes 10,295 
Property, plant and equipment817,384 1,031,495 
Less accumulated depreciation(468,875)(628,798)
348,509 402,697 
Goodwill1,102,353 1,183,624 
Other intangible assets, net684,392 706,471 
Other assets109,174 98,207 
Assets held for sale114,339  
Total assets$3,273,767 $3,308,014 
 
Liabilities and Stockholders' Equity
Current liabilities
Notes and overdrafts payable$10,025 $16 
Accounts payable145,694 164,264 
Accrued liabilities186,707 221,462 
Long-term debt - current10,922 10,868 
Liabilities held for sale25,860  
Total current liabilities379,208 396,610 
 
Long-term debt1,293,109 1,279,962 
Accrued retirement benefits41,477 45,992 
Deferred income taxes121,722 120,608 
Long-term tax liability21,714 21,714 
Other liabilities77,143 80,865 
Liabilities held for sale8,045  
 
Commitments and contingencies (Note 16)
Stockholders' equity
Common stock - par value $0.01 per share
Authorized: 150,000,000 shares
Issued: at par value (2024 - 64,615,788 shares; 2023 - 64,600,635 shares)
646 646 
Additional paid-in capital541,391 537,948 
Treasury stock, at cost (2024 - 13,916,108 shares; 2023 - 13,914,076 shares)
(532,486)(532,415)
Retained earnings1,544,997 1,551,213 
Accumulated other non-owner changes to equity(223,199)(195,129)
Total stockholders' equity1,331,349 1,362,263 
Total liabilities and stockholders' equity$3,273,767 $3,308,014 

See accompanying notes.
5


BARNES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
20242023
Operating activities:  
Net income $1,947 $13,159 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization31,009 24,048 
Loss (gain) on disposition of property, plant and equipment67 (55)
Stock compensation expense3,422 2,627 
Changes in assets and liabilities, net of the effects of acquisition:
Accounts receivable(896)(2,209)
Inventories(6,500)(7,062)
Prepaid expenses and other current assets(11,416)(3,412)
Accounts payable(1,494)6,450 
Accrued liabilities(22,984)(636)
Deferred income taxes9,792 1,356 
Long-term retirement benefits(4,395)(3,883)
 Other(867)1,832 
Net cash (used) provided by operating activities(2,315)32,215 
Investing activities:
Proceeds from disposition of property, plant and equipment20 190 
Capital expenditures(12,838)(10,946)
Business acquisitions, net of cash acquired159  
Other (525)
Net cash used by investing activities(12,659)(11,281)
Financing activities:
Net change in other borrowings10,049 (109)
Payments on long-term debt(70,587)(44,343)
Proceeds from the issuance of long-term debt90,000 31,208 
Proceeds from the issuance of common stock67 94 
Dividends paid(8,111)(8,096)
Withholding taxes paid on stock issuances(71)(252)
Cash settlement of foreign currency hedges related to intercompany financing(11,213)1,353 
Other(1,556)(2,492)
Net cash provided (used) by financing activities8,578 (22,637)
Effect of exchange rate changes on cash flows(1,546)1,438 
(Decrease) increase in cash, cash equivalents and restricted cash(7,942)(265)
Cash, cash equivalents and restricted cash at beginning of period92,039 81,128 
Cash, cash equivalents and restricted cash at end of period84,097 80,863 
Less: Restricted cash, included in Prepaid expenses and other current assets (2,179)
Less: Cash, included in Assets held for sale(2,459) 
Cash and cash equivalents at end of period$81,638 $78,684 


See accompanying notes.



6


BARNES GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts included in the notes are stated in thousands except per share data)
(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying Condensed Consolidated Balance Sheet and the related Condensed Consolidated Statements of Income, Comprehensive (Loss) Income and Cash Flows have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The Condensed Consolidated Financial Statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The balance sheet as of December 31, 2023 has been derived from the 2023 financial statements of Barnes Group Inc. (the "Company"). For additional information, please refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair statement of the results, have been included. Operating results for the three month period ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

2. Recent Accounting Standards

The Financial Accounting Standards Board ("FASB") establishes changes to accounting principles under U.S. generally accepted accounting principles ("US GAAP") through the use of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification. The Company evaluates the applicability and potential impacts of recent ASUs on its Condensed Consolidated Financial Statements and related disclosures.

Recently Issued Accounting Standards

In November 2023, the FASB amended its guidance related to segment reporting requirements. The amended guidance serves to improve segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amended guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The guidance requires application on a retrospective basis to all periods presented. The Company is currently evaluating the impact that the guidance may have on the disclosures within its Consolidated Financial Statements.

In December 2023, the FASB amended its guidance related to income tax disclosure requirements. The amended guidance requires establishes new income tax disclosure requirements including providing greater disaggregation in the rate reconciliation and information on taxes paid. The amended guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that the guidance may have on the disclosures within its Consolidated Financial Statements.

3. Divestiture

On January 11, 2024, the Company entered into a Share Purchase and Asset Agreement ("SPA") with One Equity Partners ("OEP") to sell its Associated Spring™ and Hänggi™ businesses (the "Businesses") for $175,000, subject to certain adjustments (the "Sale"). The Businesses operate within the Motion Control Solutions business. The Company classified the assets and liabilities of the Businesses, which operate within the Industrial segment, as "held for sale" on the Consolidated Balance Sheet as of March 31, 2024. Pursuant to the required accounting guidance, the Company allocated $58,900 of goodwill from the Motion Control Solutions reporting unit to the Businesses based on the estimated relative fair values of the Businesses to be disposed of and the portion of the reporting unit that will be retained.

The Businesses' assets and liabilities held for sale are comprised of the following as of March 31, 2024:

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Assets
Cash$2,459 
Accounts receivable, less allowance of $82144,537 
Inventories32,818 
Prepaid expenses and other current assets4,964 
  Current assets held for sale84,778 
Property, plant and equipment, net51,428 
Goodwill58,900 
Other assets4,011 
  Non-current assets held for sale 114,339 
Liabilities
Accounts payable$17,605 
Accrued liabilities8,255 
  Current liabilities held for sale 25,860 
Accrued retirement benefits4,570 
Other liabilities3,475 
  Non-current liabilities held for sale8,045 

The Company completed the Sale to OEP on April 4, 2024. Pursuant to the terms of an Amended Share Purchase and Asset Agreement SPA (the "Amended SPA"), total cash consideration is estimated at $172,998, inclusive of $2,459 of cash sold, subject to post-closing adjustments. At the time of closing on April 4, 2024, $151,638 was received. The residual $21,360 of the $172,998 relates to two foreign facilities and is expected to be received upon completion of the transfer of the foreign assets. Expected net cash proceeds of approximately $150,000 will be used to reduce debt. The Company expects to record a pre-tax gain of approximately $6,000 inclusive of transaction costs, of which $4,504 expense was recorded in the first quarter. The expected tax charges related to the Sale are estimated to approximate $16,000, with $5,724 (including a discrete tax charge of $6,794) of these charges being recorded during the first quarter of 2024. The residual is expected to be recorded during 2024, following the completion of the Sale and the transfer of the assets.

4. Revenue

The Company is a global provider of highly engineered products, differentiated industrial technologies, and innovative solutions, serving a wide range of end markets and customers. Its specialized products and services are used in far-reaching applications in aerospace, healthcare, automation, packaging, mobility and manufacturing.

Revenue is recognized by the Company when control of the product or solution is transferred to the customer. Control is generally transferred when products are shipped or delivered to customers, title is transferred, the significant risks and rewards of ownership have transferred, and the Company has rights to payment and the rewards of ownership pass to the customer. Customer acceptance may also be a factor in determining whether control of the product has transferred. Although revenue is generally recognized at a point in time, a certain portion of the Company's businesses with customized products or contracts in which the Company performs work on customer-owned assets requires the use of an over-time recognition model as certain contracts meet one or more of the established criteria pursuant to the accounting guidance. Also, service revenue is recognized as control transfers, which is concurrent with the services being performed.

The following table presents the Company's revenue disaggregated by products and services, and geographic regions, by segment:
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Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2023
AerospaceIndustrialTotal CompanyAerospaceIndustrialTotal Company
Products and Services(A)
Aerospace Original Equipment Manufacturing Products$134,827 $ $134,827 $72,738 $ 72,738 
Aerospace Aftermarket Products and Services86,544  86,544 44,518  44,518 
Motion Control Solutions Products 93,122 93,122  98,474 98,474 
Molding Solutions Products 101,394 101,394  103,527 103,527 
Automation Products 14,751 14,751  16,100 16,100 
$221,371 $209,267 $430,638 $117,256 $218,101 $335,357 
Geographic Regions (B)
Americas$155,031 $90,017 $245,048 $84,572 $95,940 $180,512 
Europe41,956 79,574 121,530 20,667 79,608 100,275 
Asia22,143 37,556 59,699 10,022 40,111 50,133 
Rest of World2,241 2,120 4,361 1,995 2,442 4,437 
$221,371 $209,267 $430,638 $117,256 $218,101 $335,357 
(A) The results of MB Aerospace, from the acquisition on August 31, 2023, have been included within the Company's revenue disaggregated by products and services, and geographic regions within the Aerospace Segment for the three month periods ended March 31, 2024.
(B) Sales by geographic region are based on the location to which the product is shipped and services are delivered.


Revenue from products and services transferred to customers at a point in time accounted for approximately 75 percent and 80 percent of total revenue for the three month periods ended March 31, 2024 and March 31, 2023, respectively. A majority of revenue within the Industrial segment and Aerospace Original Equipment Manufacturing Products business ("OEM"), along with a portion of revenue within the Aerospace Aftermarket Products and Services business ("Aftermarket"), is recognized at a point in time, primarily when the product or solution is shipped to the customer.

Revenue from products and services transferred to customers over-time accounted for approximately 25 percent of total revenue and 20 percent of total revenue for the three month periods ended March 31, 2024 and March 31, 2023, respectively. The Company recognizes revenue over-time in instances where a contract supports a continual transfer of control to the customer. Substantially all of our revenue in the Aerospace Aftermarket maintenance repair and overhaul business (within Aftermarket Products and Services) and a portion of the revenue for Motion Control Solutions products, Molding Solutions products and Aerospace OEM products is recognized over-time. Within the Molding Solutions and Aerospace Aftermarket businesses, this continual transfer of control to the customer partially results from repair and refurbishment work performed on customer-controlled assets. With other contracts, this continual transfer of control to the customer is supported by clauses in the contract, or governing commercial law of the relevant jurisdiction, where we deliver products that do not have an alternative use and require an enforceable right to payment of costs incurred (plus a reasonable profit) or the Company has a contractual right to complete any work in process and receive full contract price.

The majority of our revenue is from contracts that are for less than one year, however certain Aerospace OEM and Molding Solutions business contracts extend beyond one year. In the Industrial segment, customers are typically OEMs or suppliers to OEMs and, in some businesses, distributors. In the Aerospace segment, customers include commercial airlines, OEMs, defense-related manufacturers, and industry parts and service providers.

A performance obligation represents a promise within a contract to provide a distinct good or service to the customer. Revenue is recognized in an over-time model based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company utilizes the cost-to-cost measure of progress for over-time contracts as we believe this measure best depicts the transfer of control to the customer, which occurs as we incur costs on contracts.

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Adjustments to net sales, cost of sales and the related impact to operating income are recognized as necessary in the period they become known. Revenue recognized from performance obligations satisfied in previous periods was not material in both the three month period ended March 31, 2024 and 2023.

Contract Balances. The timing of revenue recognition, invoicing and cash collections affects accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets.

Unbilled Receivables (Contract Assets) - Pursuant to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable is recorded to reflect revenue that is recognized when 1) the cost-to-cost method is applied and 2) such revenue exceeds the amount invoiced to the customer. Unbilled receivables are included within Prepaid Expenses and Other Current Assets on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.

Customer Advances and Deposits (Contract Liabilities) - The Company may receive a customer advance or deposit, or have an unconditional right to receive a customer advance, prior to revenue being recognized. Certain contracts within the Molding Solutions business, for example, may require such advances. Since the performance obligations related to such advances have not been satisfied, a contract liability is established. An offsetting asset of equal amount is recorded as an account receivable until the advance is collected. Advances and deposits are included within Accrued Liabilities on the Condensed Consolidated Balance Sheets until the respective revenue is recognized. Advance payments are not considered a significant financing component as they are generally received less than one year before the customer solution is completed. These assets and liabilities are reported on the Condensed Consolidated Balance Sheets on an individual contract basis at the end of each reporting period.

Net contract assets (liabilities) consisted of the following:
March 31, 2024December 31, 2023$ Change% Change
Unbilled receivables (contract assets)$68,685 $59,652 $9,033 15 %
Contract liabilities(38,093)(42,428)4,335 (10)%
Net contract assets$30,592 $17,224 $13,368 78 %

Contract liabilities balances at March 31, 2024 and December 31, 2023 include $11,014 and $10,032, respectively, of customer advances for which the Company has not yet collected payment, but has an unconditional right to collect payment. Accounts receivable, as presented on the Condensed Consolidated Balance Sheet, includes corresponding balances at March 31, 2024 and December 31, 2023, respectively.

Changes in the net contract assets during the three month period ended March 31, 2024 included a $9,033 increase in contract assets, driven primarily by contract progress (i.e., unbilled receivable), partially offset by earlier contract progress being invoiced to the customer. Adding to this net contract increase was a $4,335 decrease in contract liabilities, driven primarily by revenue recognized in the current period, partially offset by new customer advances.

The Company recognized approximately 55% of the revenue related to the contract liabilities balance as of December 31, 2023 during the three month period ended March 31, 2024, and approximately 40% of the revenue related to the contract liabilities balance as of December 31, 2022 during the three month period ended March 31, 2023, primarily representing revenue from the sale of molds and hot runners within the Molding Solutions business.

Remaining Performance Obligations. The Company has elected to disclose remaining performance obligations only for contracts with an original duration of greater than one year. Such remaining performance obligations represent the transaction price of firm orders for which work has not yet been performed and, for Aerospace, excludes projections of components and assemblies that Aerospace OEM customers anticipate purchasing in the future under existing programs, which represent orders that are beyond lead time and do not represent performance obligations pursuant to accounting guidance. As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $573,830. The Company expects to recognize revenue on approximately 65% of the remaining performance obligations over the next 12 months, with the remainder to be recognized within 24 months.

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5. Stockholders' Equity

A schedule of consolidated changes in equity for the three months ended March 31, 2024 is as follows (number of shares in thousands):
Common
Stock
(Number of
Shares)
Common
Stock
(Amount)
Additional
Paid-In
Capital
Treasury
Stock
(Number of
Shares)
Treasury
Stock (Amount)
Retained
Earnings
Accumulated
Other
Non-Owner
Changes to
Equity
Total
Stockholders’
Equity
December 31, 202364,600 $646 $537,948 13,914 $(532,415)$1,551,213 $(195,129)$1,362,263 
Comprehensive loss— — — — — 1,947 (28,070)(26,123)
Dividends declared ($0.16 per share)

— — — — — (8,111)— (8,111)
Employee stock plans16 — 3,443 2 (71)(52)— 3,320 
March 31, 202464,616 $646 $541,391 13,916 $(532,486)$1,544,997 $(223,199)$1,331,349 

A schedule of consolidated changes in equity for the three months ended March 31, 2023 is as follows (number of shares in thousands):
Common
Stock
(Number of
Shares)
Common
Stock
(Amount)
Additional
Paid-In
Capital
Treasury
Stock
(Number of
Shares)
Treasury
Stock (Amount)
Retained
Earnings
Accumulated
Other
Non-Owner
Changes to
Equity
Total
Stockholders’
Equity
December 31, 202264,481 $645 $529,791 13,891 $(531,507)$1,567,898 $(220,500)$1,346,327 
Comprehensive income— — — — — 13,159 29,209 42,368 
Dividends declared ($0.16 per share)
— — — — — (8,096)— (8,096)
Residual interest in subsidiary    — — (2,381)— — — — (2,381)
Employee stock plans23  2,665 6 (252)(83)— 2,330 
March 31, 202364,504 $645 $530,075 13,897 $(531,759)$1,572,878 $(191,291)$1,380,548 

6. Net Income Per Common Share

For the purpose of computing diluted net income per common share, the weighted-average number of common shares outstanding is increased for the potential dilutive effects of stock-based incentive plans. For the purpose of computing diluted net income per common share for the three month periods ended March 31, 2024 and 2023, the weighted-average number of common shares outstanding was increased by 68,789 and 275,266, respectively.

The calculation of weighted-average diluted shares outstanding excludes all shares that would have been anti-dilutive. During the three month periods ended March 31, 2024 and 2023, the Company excluded 1,962,390 and 805,977 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive.

The Company granted 144,100 stock options, 196,660 restricted stock unit awards and 145,100 performance share awards ("PSAs") in February 2024 as part of its annual long-term incentive equity grant awards. All of the stock options and the restricted stock unit awards vest upon meeting certain service conditions. The restricted stock unit awards are included in basic weighted-average common shares outstanding as they contain nonforfeitable rights to dividend payments. The PSAs are part of the long-term Performance Share Award Program and are based on performance goals that are driven by a combination of independently measured metrics (depending on the grant year). The metrics for awards granted in 2024 include the Company’s total shareholder return ("TSR"), return on invested capital ("ROIC") and operating income before depreciation and amortization growth ("EBITDA growth") with metrics weighted 50%, 25% and 25%, respectively. The TSR and EBITDA growth metrics are designed to assess the long-term Company performance relative to the performance of companies included in the Russell 2000 Index over a three-year performance period. ROIC is designed to assess the Company's performance compared to pre-established Company targets over a three-year performance period. The participants can earn from zero to 200% of the target award and the award includes a forfeitable right to dividend equivalents, which are not included in the aggregate target award numbers. The fair value of the TSR is determined using a Monte Carlo valuation method as the award contains a market condition.

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7. Inventories

The components of inventories consisted of:
March 31, 2024December 31, 2023
Finished goods$90,695 

$104,801 
Work-in-process114,841 105,737 
Raw material and supplies130,617 154,683 
$336,153 $365,221 

8. Goodwill and Other Intangible Assets

Goodwill:
The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company as of and for the period ended March 31, 2024:
AerospaceIndustrialTotal Company
December 31, 2023 (A)
$352,352 $831,272 $1,183,624 
Reclassified to assets held for sale (see Note 3) (58,900)(58,900)
Foreign currency translation(784)(21,587)(22,371)
March 31, 2024$351,568 $750,785 $1,102,353 
(A) Industrial amounts are net of accumulated goodwill impairment losses of $68,194.


The Company completed the Sale of the Businesses in April 2024. See Note 3. Pursuant to the required accounting guidance, the Company allocated $58,900 of goodwill within the Motion Control Solutions reporting unit to the Businesses based on the estimated relative fair values of the businesses.

Other Intangible Assets:

Other intangible assets consisted of:
March 31, 2024December 31, 2023
Range of
Life -Years
Gross AmountAccumulated AmortizationGross AmountAccumulated Amortization
Amortized intangible assets:  
Revenue Sharing Programs (RSPs)
Up to 30
$299,500 $(179,695)$299,500 $(176,143)
Component Repair Programs (CRPs)
Up to 30
111,839 (51,430)111,839 (49,577)
Customer relationships
10-16
579,050 (181,220)586,189 (180,679)
Patents and technology
4-18
174,280 (97,764)178,433 (100,662)
Trademarks/trade names
10-30
7,153 (6,399)10,949 (10,910)
Other
Up to 10
26,334 (15,783)26,334 (14,857)
1,198,156 (532,291)1,213,244 (532,828)
Unamortized intangible assets:
Trade names55,670 — 55,670 — 
Foreign currency translation(37,143)— (29,615)— 
Other intangible assets$1,216,683 $(532,291)$1,239,299 $(532,828)

Gross amounts of $7,139, $4,153 and $3,821 that were included within customer relationships, patents and technology, and trademarks, respectively, at December 31, 2023, were related to the Businesses, and are therefore classified within Assets Held for Sale as of March 31, 2024. The gross amounts were fully amortized at March 31, 2024.

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Amortization of intangible assets for the three months period ended March 31, 2024 and March 31, 2023 was $17,562 and $11,620, respectively. Estimated amortization of intangible assets for future periods is as follows: 2024 (remainder) - $53,000; 2025 - $71,000; 2026 - $68,000; 2027 - $66,000; 2028 - $63,000 and 2029 - $62,000.

9. Debt

Long-term debt and notes and overdrafts payable at March 31, 2024 and December 31, 2023 consisted of:
 March 31, 2024December 31, 2023
 Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Revolving Credit Facility$655,902 $670,196 $642,988 $646,843 
Term Loan Facility646,750 647,966 648,375 651,215 
Unamortized deferred financing costs and original issue discount - Term Loan Facility(12,062)— (12,532)— 
Borrowings under lines of credit and overdrafts10,025 10,025 16 16 
Finance leases13,441 13,335 11,999 11,732 
1,314,056 1,341,522 1,290,846 1,309,806 
Less current maturities(20,947)(10,884)
Long-term debt$1,293,109 $1,279,962 

On February 10, 2021, the Company and certain of its subsidiaries entered into the sixth amended and restated senior unsecured revolving credit agreement (the "Unsecured Credit Agreement") and retained Bank of America, N.A. as the Administrative Agent for the lenders. The $1,000,000 Unsecured Credit Agreement was to mature in February 2026. Borrowings under the Unsecured Credit Agreement bore interest at either the Eurocurrency rate, as defined in the Unsecured Credit Agreement, plus a margin of 1.175% to 1.775% or the base rate, as defined in the Unsecured Credit Agreement, plus a margin of 0.175% to 0.775%, depending on the Company's leverage ratio at the time of the borrowing. Multi-currency borrowings, pursuant to the Unsecured Credit Agreement, bore 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% and 1.775%. The Unsecured Credit Agreement required the Company to maintain a Senior Debt Ratio of not more than 3.25 times. In addition, the Unsecured Credit Agreement required the Company to maintain a Total Debt Ratio of not more than 3.75 times for each fiscal quarter. A ratio of Consolidated EBITDA to Consolidated Cash Interest Expense, as defined, of not less than 4.25 times, was also required at the end of each fiscal quarter. The Company subsequently amended the Unsecured Credit Agreement on October 11, 2021 (the "LIBOR Transition Amendment"), defining certain applicable multi-currency borrowing rates that could be used as replacement rates for LIBOR, which was expected to be discontinued by reference rate reform.

On April 6, 2022, the Company entered into Amendment No. 1 to the Unsecured Credit Agreement (“Amendment No. 1”), which (i) replaced the LIBOR interest rate for U.S. dollar loans to a term Secured Overnight Financing Rate including a Secured Overnight Financing Rate adjustment (or "SOFR", as defined in the Unsecured Credit Agreement), (ii) added a daily SOFR option for U.S. dollar loans and a term SOFR option for U.S. dollar loans, and (iii) added the ability to borrow foreign swing line loans based on the Euro Short Term Rate ("€STR") (as defined) with the same interest spread as the interest spread for SOFR Loans (as defined) and Alternative Currency Loans (defined as loans denominated in Euro, Sterling, Swiss Francs or Yen). In addition, Amendment No. 1 lowered the interest rate spread on (i) SOFR Loans and Alternative Currency Loans to a range from 0.975% to 1.70%, depending on the leverage ratio (the “Leverage Ratio”) of Consolidated Total Debt (as defined) to Consolidated EBITDA (as defined) as of the end of each fiscal quarter, and (ii) loans based on the Base Rate (as defined), to a range from 0.00% to 0.70%, depending on the Company’s Leverage Ratio as of the end of each fiscal quarter. Amendment No. 1 also lowered the facility fee, which was required to be paid by the Company under the Unsecured Credit Agreement and was calculated on the full amount of the revolving facility, to a range from 0.15% to 0.30%, depending on the Company’s Leverage Ratio at the end of each fiscal quarter. In April 2022, the Company paid fees and expenses of $1,037 in conjunction with executing Amendment No. 1. Such fees have been deferred within Other Assets on the Condensed Consolidated Balance Sheets and will be amortized into interest expense on the Condensed Consolidated Statements of Income through its maturity. Cash used to pay these fees was recorded through other financing activities on the Condensed Consolidated Statements of Cash Flows.

The United Kingdom's Financial 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
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Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, identified 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 Unsecured Credit Agreement and corresponding interest rate swap were tied to LIBOR, with each maturing in February 2026. In March 2021, the ICE Benchmark Association announced that it would 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 Unsecured Credit Agreement was further amended in October 2021 and in April 2022 to address the replacement of LIBOR, which, as a result of the Company's contract amendments as discussed above, did not have a material impact on our business, financial condition, results of operations or cash flow.

On June 5, 2023, the Company entered into the Agreement with MB Aerospace Group Holdings Limited, a Cayman Islands limited company. In connection with entry into the Agreement, on June 5, 2023, the Company entered into the Second Amendment (the “Second Amendment”) to Note Purchase Agreement and Amendment No. 2 ("Amendment No. 2") to Unsecured Credit Agreement to facilitate the Transaction, as well as a commitment letter with Bank of America, N.A. and BofA Securities, Inc. (collectively, the “Commitment Parties”), pursuant to which the Commitment Parties agreed to provide, subject to the satisfaction of customary closing conditions contained therein, a $1,000,000 backstop senior secured revolving credit facility and a $700,000 senior secured 364-day bridge loan facility ("Bridge Loan Facility"). The Bridge Loan Facility was only intended to be drawn to the extent that the Company did not obtain alternative financing prior to the closing of the Transaction. The Company recorded fees of $9,500 in conjunction with the Bridge Loan Facility and $1,000,000 backstop senior secured revolving credit facility into interest expense on the Condensed Consolidated Statements of Income in 2023. On the Acquisition Date, pursuant to the terms of the Agreement, the Company completed the Transaction for an aggregate purchase price of $728,448, subject to customary and specified closing adjustments, as set forth in the Agreement. Concurrently, the Company entered into a new Credit Agreement (the “Credit Agreement”) among the Company and certain of its subsidiaries, the issuing banks, lenders and other parties party thereto, and Bank of America, N.A., as administrative agent, as collateral agent and as swingline lender, which provides for senior secured financing of $1,650,000, consisting of a term loan facility (the “Term Loan Facility”) in an aggregate principal amount of $650,000, at an original issue discount of $4,875, and a revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Facilities”) in an aggregate principal amount of up to $1,000,000, including a letter of credit sub-facility of up to $50,000. Proceeds of the loans borrowed under the Senior Facilities on the Acquisition Date, net of a 0.75% original issue discount on the Term Loan Facility, were used to fund, in part, the transactions contemplated by the Agreement, including the consummation of the Transaction, the repayment in full of the 3.97% Senior Notes, and to pay related fees and expenses. As of the Acquisition Date, the Revolving Credit Facility had outstanding borrowings in an aggregate principal amount of approximately $698,000. Proceeds of any loans under the Revolving Credit Facility borrowed after the Acquisition Date will be used for general corporate purposes. The Company paid fees and expenses of $3,058 in conjunction with executing the Revolving Credit Facility. Such fees have been deferred within Other Assets on the Condensed Consolidated Balance Sheets and will be amortized into interest expense on the Condensed Consolidated Statements of Income through the maturity of the Credit Agreement with the previously recorded debt issuance costs. The Company incurred $8,283 of debt issuance costs in conjunction with executing the Term Loan Facility. Such fees have been recorded as a direct deduction from the carrying amount of the Term Loan Facility and will be amortized into interest expense on the Condensed Consolidated Statements of Income through the maturity of the Term Loan Facility. Cash used to pay these fees was recorded through financing activities on the Condensed Consolidated Statements of Cash Flows. On August 31, 2023, in connection with the Credit Agreement and the closing of the Transaction, the Bridge Loan Facility was terminated.

On March 19, 2024, the Company entered into a Refinancing Amendment (“Amendment No. 2”) to the Credit Agreement which replaced the outstanding principal amount of term loans under the Term Loan Facility (the “Existing Term Loans”) with an equal amount of new term loans (the “New Term Loans”) having substantially similar terms as the Existing Term Loans, except with respect to the interest rate applicable to the New Term Loans and certain other provisions. The interest rate margin applicable to the New Term Loans was reduced to 1.50%, in the case of ABR loans, and 2.50%, in the case of Term SOFR loans (with the Term SOFR floor remaining at 0.0%). The interest rate margin applicable to the Existing Term Loans was 2.00%, in the case of ABR loans, and 3.00%, in the case of Term SOFR loans. In addition, the Term SOFR adjustment applicable to the New Term Loans was reduced to 0.00%, from 0.10% for the Existing Term Loans. The Company recorded fees of $1,579 in conjunction with Amendment No. 2 within interest expense on the Condensed Consolidated Statements of Income in the three months ended March 31, 2024.

The Senior Facilities are guaranteed by each of the Company’s wholly owned domestic subsidiaries and are secured by substantially all assets of the Company and of each subsidiary guarantor, in each case subject to certain exceptions.

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Borrowings under the Senior Facilities bear interest at a rate per annum equal to, at the Company’s option, either Term SOFR (subject to a 0.00% floor) or an alternate base rate ("ABR"), in each case plus an applicable margin of (i) in the case of borrowings under the Term Loan Facility, 2.50% for Term SOFR loans and 1.50% for ABR loans and (ii) in the case of borrowings under the Revolving Credit Facility, initially, 2.375% for Term SOFR loans and 1.375% for ABR loans. The applicable margin for borrowings under the Revolving Credit Facility varies depending on the Company’s total net leverage ratio. At March 31, 2024, the applicable margin for borrowings under the Revolving Credit Facility was 2.125%. The Company is also required to pay a commitment fee initially equal to 0.35% per annum to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The commitment fee under the Revolving Credit Facility varies depending on the Company’s total net leverage ratio. At March 31, 2024, the commitment fee under the Revolving Credit Facility was 0.30%.

The Term Loan Facility matures on the seven-year anniversary of the Acquisition Date and amortizes in equal quarterly installments ($6,500 annually), starting with the first full fiscal quarter after the Acquisition Date, of 0.25% of the initial principal amount. The Revolving Credit Facility matures on the five-year anniversary of the Acquisition Date (August 31, 2028). In addition, the Company is required to prepay outstanding loans under the Term Loan Facility, subject to certain exceptions, with up to 50% of the Company’s annual excess cash flow (as defined under the Credit Agreement) in excess of the greater of $50,000 and 15.0% of Last Twelve Months ("LTM") Adjusted Consolidated EBITDA (as defined in the Credit Agreement) as of the applicable time, and with up to 100% of the net cash proceeds of certain recovery events and non-ordinary course asset sales (which percentages vary depending on the Company’s first lien secured net leverage ratio).

The Company may generally prepay outstanding loans under the Senior Facilities at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to Term SOFR loans. Prepayments of the Term Loan Facility in connection with certain “repricing events” resulting in a lower yield occurring at any time during the first six months following the Company's execution of Amendment No. 2 must be accompanied by a 1.00% prepayment premium.

The Revolving Credit Facility requires that the Company maintain a maximum Total Net Leverage Ratio, as defined in the Credit Agreement, initially of 5.50 to 1.00 as of the last day of each fiscal quarter for which financials have been (or were required to be) delivered, commencing with the first full fiscal quarter after the Acquisition Date, stepping down to 4.00 to 1.00 over time. For material acquisitions in certain circumstances, such ratio may be increased by up to 0.50 to 1.00. The actual ratio, as defined, was 3.62 at March 31, 2024. The Revolving Credit Facility also requires that the Company not permit the Interest Coverage Ratio as of the last day of any test period to be less than 3.00 to 1.00. The actual ratio, as defined, was 3.58 as of March 31, 2024. At March 31, 2024, the Company was in compliance with all applicable covenants.

The Senior Facilities contain certain affirmative and negative covenants that limit the ability of the Company, among other things and subject to certain significant exceptions, to incur debt or liens, make investments, enter into certain mergers, consolidations, asset sales and acquisitions, pay dividends and make other restricted payments and enter into transactions with affiliates. The Senior Facilities also contain certain events of default, including relating to a change of control. If an event of default occurs, the lenders under the Senior Facilities will be entitled to take various actions, including the acceleration of amounts due under the Senior Facilities.

Borrowings and availability under the Revolving Credit Facility were $655,902 and $344,098, respectively, at March 31, 2024 and $642,988 and $357,012, respectively, at December 31, 2023, subject to covenants discussed above. The average interest rate on these borrowings was 6.77% and 6.76% on March 31, 2024 and December 31, 2023, respectively. The average interest rate excludes the impact of the Company’s interest swap agreements. See Note 10. Borrowings included Euro-denominated borrowings of 296,500 Euros ($320,902) at March 31, 2024 and 296,500 Euros ($327,988) at December 31, 2023. The fair value of the borrowings is based on observable Level 2 inputs. The borrowings were valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

Borrowings under the Term Loan Facility were $646,750 and $648,375 at March 31, 2024 and December 31, 2023, respectively. The average interest rate on these borrowings was 7.83% and 8.46% on March 31, 2024 and December 31, 2023, respectively. The average interest rate excludes the impact of the Company’s interest swap agreements. See Note 10. The fair value of the borrowings is based on the quoted market price of the borrowings on March 31, 2024, which represents Level 1 observable inputs.

In addition, the Company has approximately $81,000 in uncommitted short-term bank credit lines ("Credit Lines") and overdraft facilities. The Credit Lines are accessed locally and are available primarily within the U.S., Europe and Asia. The Credit Lines are subject to the applicable borrowing rates within each respective country and vary between jurisdictions (i.e. LIBOR, Euribor, etc.). Under the Credit Lines, $10,000 was borrowed at March 31, 2024 at an average rate of 7.83%. The Company had no borrowings under the Credit Lines at December 31, 2023. The Company had borrowed $25 and $16 under the
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overdraft facilities at March 31, 2024 and December 31, 2023, respectively. Repayments under the Credit Lines are due within one month after being borrowed. Repayments of the overdrafts are generally due within two days after being borrowed. The carrying amounts of the Credit Lines and overdrafts approximate fair value due to the short maturities of these financial instruments.

The Company also has finance leases under which $13,441 and $11,999 was outstanding at March 31, 2024 and December 31, 2023, respectively. The fair value of the finance leases is based on observable Level 2 inputs. These instruments were valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

10. Derivatives

The Company has manufacturing, service and sales facilities around the world and thus makes investments and conducts business transactions denominated in various currencies. The Company is also exposed to fluctuations in interest rates and commodity price changes. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Derivative financial instruments have been used by the Company to hedge its exposure to fluctuations in interest rates. On March 24, 2021, the Company entered into an interest rate swap agreement (the "2021 Swap") with one bank that commenced on January 31, 2022 and that converted the interest on $100,000 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. Effective, April 30, 2022, the Company amended the 2021 Swap (the "Amended 2021 Swap"), such that the one-month SOFR-based borrowing rate replaced the one-month LIBOR-based borrowing rate. The Amended 2021 Swap, which will expire on January 30, 2026, converts the interest on $100,000 of the Company's one-month SOFR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.075% plus the borrowing spread. On July 19, 2023, the Company entered into an interest rate swap agreement (the "Euribor Swap") with one bank that commenced on July 31, 2023, which converts the interest on €150,000 of the Company's Euribor-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 3.257% plus the borrowing spread. Under the Euribor Swap, €50,000 will expire on July 31, 2026, with the remaining balance of €100,000 expiring on July 31, 2028. On September 12, 2023, the Company entered into six additional interest rate swap agreements (the "2023 Swaps") with six different banks that commenced on September 29, 2023, which convert the interest on $600,000 of the Company's one-month SOFR-based borrowings from a variable rate plus the borrowing spread to a blended fixed rate of 4.321% plus the borrowing spread. Under the 2023 Swaps, $50,000 will expire on August 31, 2026, $100,000 will expire on August 31, 2027, $200,000 will expire on August 31, 2028, $50,000 will expire on August 31, 2029 and the remaining balance of $200,000 will expire on August 31, 2030. The execution of the interest rate swap agreements in 2023 did not have a material impact on our business, financial condition, results of operations or cash flow. These interest rate swap agreements (the "Swaps") are accounted for as cash flow hedges.

The Company also uses derivative financial instruments to hedge its exposures to fluctuations in foreign currency exchange rates. The Company has various contracts outstanding which primarily hedge recognized assets or liabilities and anticipated transactions in various currencies including the Euro, British pound sterling, U.S. dollar, Japanese yen, Singapore dollar, Korean won, Swedish kroner, Chinese renminbi, Mexican peso, Hong Kong dollar and Swiss franc. Certain foreign currency derivative instruments are treated as cash flow hedges of forecasted transactions. All foreign exchange contracts are due within two years.

The Company does not use derivatives for speculative or trading purposes or to manage commodity exposures.

The Company records the derivatives at fair value on the Condensed Consolidated Balance Sheets within Prepaid Expenses and Other Current Assets, Other Assets, Accrued Liabilities or Other Liabilities depending on their fair value and remaining contractual period. Changes in the fair market value of derivatives accounted for as cash flow hedges are recorded to accumulated other comprehensive income (loss) and reclassified to earnings in a manner that matches the earnings impact of the hedged transaction. Reclassifications to earnings for the Swaps are recorded through interest expense and reclassifications to earnings for foreign exchange contracts are recorded through net sales. Changes in the fair market value of the foreign exchange contracts that are not designated hedging instruments are recorded directly to earnings through Other expense (income), net.

The fair values of the Amended 2021 Swap were $6,183 and $5,976 as of March 31, 2024 and December 31, 2023, respectively, and were recorded in Other Assets in the Condensed Consolidated Balance Sheets for the periods. The fair values of the Euribor Swap were $(3,545) and $(5,485) as of March 31, 2024 and December 31, 2023, respectively, and were recorded in Other Liabilities in the Condensed Consolidated Balance Sheets for the periods. The fair values of the 2023 Swaps were $(9,352) and $(19,984) as of March 31, 2024 and December 31, 2023, respectively, and were recorded in Other Liabilities in the Condensed Consolidated Balance Sheets for the periods. The fair values of the Company's other derivatives were not
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material to the Company's Condensed Consolidated Balance Sheets as of March 31, 2024 or December 31, 2023. See Note 11. The activity related to the derivatives that have been designated hedging instruments was not material to the Company's Condensed Consolidated Financial Statements for the periods ended March 31, 2024 or 2023. The Company recognized losses of $11,903 and gains of $(1,599) related to the foreign exchange contracts that are not accounted for as hedging instruments within other expense (income), net, in the Condensed Consolidated Statements of Income for the three-month periods ended March 31, 2024 and 2023, respectively. Such losses (gains) were substantially offset by net gains (losses) recorded on the underlying hedged asset or liability (the "underlying"). Offsetting net gains (losses) on the underlying are also recorded within Other expense (income), net.

The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. Other financing cash flows during the three month periods ended March 31, 2024 and 2023, as presented on the Condensed Consolidated Statements of Cash Flows, include $11,213 and $(1,353), respectively, of net cash payments (proceeds) related to the settlement of foreign currency hedges related to intercompany financing.

11. Fair Value Measurements

The provisions of the accounting standard for fair value define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard classifies the inputs used to measure fair value into the following hierarchy:

Level 1    Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2    Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3    Unobservable inputs for the asset or liability.

The following table provides the assets and liabilities reported at fair value and measured on a recurring basis as of March 31, 2024 and December 31, 2023:
Fair Value Measurements Using
DescriptionTotalQuoted Prices in Active Markets for
Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
March 31, 2024
Asset derivatives$6,183 $ $6,183 $ 
Liability derivatives(14,018) (14,018) 
Bank acceptances10,002  10,002  
Rabbi trust assets1,994 1,994   
Total$4,161 $1,994 $2,167 $ 
December 31, 2023
Asset derivatives$6,420 $ $6,420 $ 
Liability derivatives(25,885) (25,885) 
Bank acceptances 12,161  12,161  
Rabbi trust assets1,923 1,923   
Total$(5,381)$1,923 $(7,304)$ 

The derivative contracts are valued using observable current market information as of the reporting date such as the prevailing SOFR-based interest rates and foreign currency spot and forward rates. Bank acceptances represent financial instruments accepted from certain China-based customers in lieu of cash paid on receivables, have maturities of one year or less and are guaranteed by banks. The carrying amounts of the bank acceptances, which are included within prepaid expenses and other current assets, approximate fair value due to their short maturities. The fair values of rabbi trust assets are based on quoted market prices from various financial exchanges.
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12. Pension and Other Postretirement Benefits

Pension and other postretirement benefits (income) cost consisted of the following:
Three Months Ended
March 31,
Pensions20242023
Service cost$300 $773 
Interest cost4,628 4,895 
Expected return on plan assets(7,407)(7,534)
Amortization of prior service cost27 87 
Amortization of actuarial losses602 417 
Curtailment loss1,370  
Net periodic benefit income$(480)$(1,362)

Three Months Ended
March 31,
Other Postretirement Benefits20242023
Service cost$10 $13 
Interest cost262 285 
Amortization of prior service cost 3 
Amortization of actuarial gains(40)(25)
Net periodic benefit cost$232 $276 

The service cost component of net periodic benefit cost is included within Cost of sales and Selling and administrative expenses. The components of net periodic benefit (income) cost other than the service cost component are included in Other expense (income), net on the Condensed Consolidated Statements of Income. See Note 14.

13. Income Taxes

The Company's effective tax rate for the first three months of 2024 was 85.2% compared with 20.9% in the first three months of 2023 and 51.9% for the full year 2023. The increase in the effective tax rate during the first three months of 2024, as compared with the rate for the full year 2023, is driven primarily by the inclusion of $6,794 of tax expense (rate impact of 51.6%) relating to the Sale of the Associated Spring and Hanggi businesses. The Company determined during the first quarter of 2024, in conjunction with the Sale, that its investment in a certain disposed foreign subsidiary no longer met the classification as "permanently reinvested". The Company has therefore recognized income taxes related to this entity as of March 31, 2024, in advance of the completion of the Sale on April 4, 2024.

The Aerospace and Industrial segments have a number of multi-year tax holidays in Malaysia and Singapore. The tax holiday in China expired at the end of 2023. The Company plans to re-apply for approval of a potential three-year holiday in China but, under China rules, cannot file the application until after June 2024 and does not expect a decision regarding approval of the holiday until the end of 2024. Aerospace was granted an income tax holiday for operations recently established in Malaysia. This holiday commenced effective November 2020 (retroactively) and remains effective for a period of ten years. The Aerospace business was granted additional tax holidays in Singapore under the Pioneer program in the fourth quarter of 2022. This holiday provides reduced tax rates for certain Aerospace programs manufactured at the Singapore location and will continue through December 2025. All of the holidays are subject to the Company meeting certain commitments in the respective jurisdictions.

In October 2021, the Organization for Economic Co-operation and Development ("OECD") introduced an inclusive framework to address tax challenges arising from the digitalization of the economy through a two-pillar solution. One of the components of the solution is the implementation of a global minimum corporate tax rate of 15% for large multinational corporations (“Pillar Two”). The OECD continues to release additional guidance on the two-pillar solution with implementation to begin in 2024 while reporting of the tax applicable will not occur until 2026. As of the first quarter of 2024, the Company does not anticipate any additional taxes in 2024 relating to the implementation of Pillar Two.
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On August 31, 2023, the Company completed its acquisition of MB Aerospace by acquiring all of the issued and outstanding shares of capital stock of MB Aerospace Holdings Inc., a Delaware corporation, in a taxable stock transaction. For accounting purposes, the assets and liabilities of MB Aerospace have been stepped up to fair market value which require the recording of deferred taxes on the associated step up. The Company has also determined that it is unlikely to recognize a tax benefit associated with MB Aerospace disallowed interest, net operating loss and credit carryforwards. As a result, the Company booked a valuation allowance associated with these carryforwards. Additionally, the Company evaluated the impact of the MB Aerospace acquisition on the deferred tax assets of the Company. The Company determined that it was unlikely to be able to utilize legacy disallowed interest carryforwards and recorded a corresponding valuation allowance. The Company will continue to evaluate associated Pillar Two impacts, and how they will be applied within the combined group of companies.

14. Changes in Accumulated Other Comprehensive Income (Loss) by Component

The following tables set forth the changes in accumulated other comprehensive income (loss), net of tax, by component for the three month periods ended March 31, 2024 and 2023:
Gains and Losses on Cash Flow HedgesPension and Other Postretirement Benefit ItemsForeign Currency ItemsTotal
December 31, 2023$(14,504)$(100,776)$(79,849)$(195,129)
Other comprehensive income (loss) before reclassifications 11,518 (218)(38,683)(27,383)
Amounts reclassified from accumulated other comprehensive income to the Condensed Consolidated Statements of Income(2,171)1,484  (687)
Net current-period other comprehensive income (loss)9,347 1,266 (38,683)(28,070)
March 31, 2024$(5,157)$(99,510)$(118,532)$(223,199)
Gains and Losses on Cash Flow HedgesPension and Other Postretirement Benefit ItemsForeign Currency ItemsTotal
December 31, 2022$5,941 $(108,640)$(117,801)$(220,500)
Other comprehensive income (loss) before reclassifications (352)11,249 18,473 29,370 
Amounts reclassified from accumulated other comprehensive income to the Condensed Consolidated Statements of Income(534)373  (161)
Net current-period other comprehensive income (loss) (886)11,622 18,473 29,209 
March 31, 2023$5,055 $(97,018)$(99,328)$(191,291)

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The following table sets forth the reclassifications out of accumulated other comprehensive loss by component for the three month periods ended March 31, 2024 and 2023:
Details about Accumulated Other Comprehensive Income (Loss) ComponentsAmount Reclassified from Accumulated Other Comprehensive Income (Loss)Affected Line Item in the Condensed Consolidated Statements of (Loss) Income
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2023
Cash flow hedges
Interest rate contracts
$2,844 $865 Interest expense
Foreign exchange contracts
(64)(159)Net sales
2,780 706 Total before tax
(609)(172)Tax expense
2,171 534 Net of tax
Pension and other postretirement benefit items
Amortization of prior service costs$(27)$(90)(A)
Amortization of actuarial losses(562)(392)(A)
Curtailment loss(1,370) (A)
(1,959)(482)Total before tax
475 109 Tax benefit
(1,484)(373)Net of tax
Total reclassifications in the period$687 $161 
(A) These accumulated other comprehensive income (loss) components are included within the computation of net periodic Pension and Other Postretirement Benefits cost. See Note 12.

15. Information on Business Segments

The Company is organized based upon the nature of its products and services and reports under two global business segments: Aerospace and Industrial. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. The Company has not aggregated operating segments for purposes of identifying these two reportable segments.

Aerospace is a global manufacturer of complex fabricated and precision machined components and assemblies for turbine engines, nacelles and structures for both commercial and defense-related aircraft. The Aerospace Aftermarket business provides aircraft engine component MRO services, including services performed under our Component Repair Programs (“CRPs”), for many of the world’s major turbine engine manufacturers, commercial airlines and the defense market. The Aerospace Aftermarket activities also include the manufacture and delivery of aerospace aftermarket spare parts, including through revenue sharing programs (“RSPs”) under which the Company receives an exclusive right to supply designated aftermarket parts over the life of specific aircraft engine programs.
Industrial is a global provider of highly-engineered, high-quality precision components, products and systems for critical applications serving a diverse customer base in end-markets such as industrial equipment, automation, personal care, packaging, electronics, mobility and medical devices. Focused on innovative custom solutions, Industrial participates in the design phase of components and assemblies whereby customers receive the benefits of application and systems engineering, new product development, testing and evaluation, and the manufacturing of final products. Products are sold primarily through its direct sales force and global distribution channels. Industrial's Molding Solutions business designs and manufactures customized hot runner systems, advanced mold cavity sensors and process control systems, and precision high cavitation mold assemblies - collectively, the enabling technologies for many complex injection molding applications. The Automation business designs and develops robotic grippers, advanced end-of-arm tooling systems, sensors and other automation components for intelligent robotic handling solutions and industrial automation applications. The Motion Control Solutions business provides innovative cost-effective force and motion control solutions for a wide range of metal forming and other industrial markets and manufactures and supplies precision mechanical products used in mobility and industrial applications. See Note 3 as the Company completed the Sale of its Associated Spring™ and Hänggi™ businesses, both within the Motion Control Solutions business, in April 2024.
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The following tables set forth information about the Company's operations by its two reportable segments:
Three Months Ended
March 31,
20242023
Net sales
Aerospace(A)
$221,371 $117,256 
Industrial209,267 218,109 
Intersegment sales (8)
Total net sales$430,638 $335,357 
Operating profit
Aerospace(A)
$31,087 $18,751 
Industrial8,595 4,533 
Total operating profit39,682 23,284 
Interest expense24,831 5,308 
Other expense (income), net1,696 1,340 
Income before income taxes$13,155 $16,636 
(A) The results of MB Aerospace have been included within the Company's Consolidated Financial Statements in the Aerospace segment for the three months ended March 31, 2024.

March 31, 2024 December 31, 2023
Assets 
Aerospace$1,498,177 $1,465,347 
Industrial1,609,467 1,685,304 
Other (A)
166,123 157,363 
Total assets$3,273,767  $3,308,014 
(A) "Other" assets include corporate-controlled assets, the majority of which are cash and cash equivalents and deferred tax assets.

16. Commitments and Contingencies

Product Warranties

The Company provides product warranties in connection with the sale of certain products. From time to time, the Company is subject to customer claims with respect to product warranties. The Company accrues its estimated exposure for warranty claims at the time of sale based upon the length of the warranty period, historical experience and other related information known to the Company. Liabilities related to product warranties and extended warranties were not material as of March 31, 2024 and December 31, 2023.

In July 2021, a customer asserted breach of contract and contractual warranty claims regarding a part manufactured by the Company. The Company disputes the asserted claims and no litigation or other proceeding has been initiated. While it is currently not possible to determine the ultimate outcome of this matter, the Company intends to vigorously defend its position and believes that the ultimate resolution will not have a material adverse effect on the Company’s consolidated financial position or liquidity, but could be material to the consolidated results of operations of any one period.

Litigation
The Company is subject to litigation from time to time in the ordinary course of business and various other suits, proceedings and claims are pending involving the Company and its subsidiaries. The Company records a loss contingency liability when a loss is considered probable and the amount can be reasonably estimated. While it is not possible to determine the ultimate disposition of each of these proceedings and whether they will be resolved consistent with the Company's beliefs, the Company expects that the outcome of such proceedings, individually or in the aggregate, will not have a material adverse effect on financial condition or results of operations.

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Supplier Finance Programs

The Company participates in a Supplier Finance Program (the "Program") under which it agrees to pay a third-party finance provider the stated amount of confirmed invoices from participating suppliers based on the original invoice due date. Suppliers, at their sole discretion, may elect to finance confirmed invoices prior to their scheduled due date at a discounted price with the Company's third-party finance provider. Outstanding obligations related to the Program were not material as of March 31, 2024 and December 31, 2023. These obligations were recorded within Accounts Payable on the Condensed Consolidated Balance Sheets. The Company does not have any assets nor any other forms of guarantees pledged as security to the third-party finance provider as part of the Program.

17. Business Reorganizations

In July 2022, Company management, commenced a systematic multi-phased initiative to significantly reduce costs and integrate the Company's operations, decreasing complexity and focusing on improved performance across Industrial. More specifically, at this time, the Company announced a restructuring program to further reduce costs within the Industrial segment and, more broadly, transform our businesses in response to macroeconomic disruptions. Additional actions were subsequently announced in October 2022, April 2023 (including Aerospace) and September 2023 (including Aerospace). Management continues to adjust its cost structures to align with market conditions.

2022 Actions

The Company authorized restructuring actions (“2022 Actions”) focused on the consolidation of two manufacturing sites and a number of branch offices and changes in infrastructure to eliminate certain roles across a number of locations in the Industrial segment businesses in July and October 2022. The 2022 Actions resulted in pre-tax charges of $17,986 and $10,328 recorded in 2022 (recorded in second half of 2022) and 2023 (recorded primarily in the first and third quarters of 2023), respectively. Of the aggregate pre-tax charges of $10,328 recorded in 2023, $3,990 were recorded in the first quarter, primarily within Cost of sales in the accompanying Condensed Consolidated Statements of Income, and primarily related to $1,593 of accelerated depreciation of assets and $2,397 of transfer of work charges.

During the first quarter of 2024, additional pre-tax charges of $2,367 related to the 2022 Actions, including $1,553 primarily related to site consolidation and transfer of work charges, and $724 of accelerated depreciation of assets, were recorded within Cost of sales, and $90 of expenses were recorded within Selling and administrative expenses in the accompanying Condensed Consolidated Statements of Income. The Company does not expect any additional costs related to the 2022 Actions to be significant.

A corresponding liability of $509, per below, related to the employee termination costs remained and was included within accrued liabilities as of March 31, 2024.

The following table sets forth the change in the liability for the employee termination benefits related to the 2022 Actions:
December 31, 2023$538 
Payments(29)
March 31, 2024$509 

April 2023 Actions

In April 2023, the Company authorized restructuring actions (“April 2023 Actions”) focused on manufacturing footprint optimization, including the consolidation of manufacturing sites and optimization of production. These actions include the geographic transfer of certain programs within both the Industrial and Aerospace segments and changes in infrastructure to drive improvements and efficiencies in business processes, including the elimination of certain roles across several locations. The April 2023 Actions resulted in pre-tax charges of $13,783 in 2023 (recorded primarily in the second and third quarters of 2023).

During the first quarter of 2024, additional pre-tax charges of $595 related to the April 2023 Actions, primarily related to $470 of transfer of work charges, were recorded within Cost of sales and $125 of expenses were recorded within selling and administrative expenses, in the accompanying Condensed Consolidated Statements of Income. Of the aggregate charges recorded, $232 was reflected within the results of the Industrial segment and $363 was reflected within the results of the Aerospace segment.
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A corresponding liability of $1,699, per below, related to the employee termination costs remained and was included within accrued liabilities as of March 31, 2024. The Company expects to incur additional costs of approximately $13,000 related to the April 2023 Actions, which are primarily related to transfer of work charges. Of the aggregate, approximately $10,000 and $3,000 relate to the Aerospace and Industrial segments, respectively. The April 2023 Actions are expected to be completed throughout multiple periods, with completion in 2025.

The following table sets forth the change in the liability for the employee termination benefits related to the April 2023 Actions:
December 31, 2023$6,247 
Payments(4,548)
March 31, 2024$1,699 

September 2023 Actions

In September 2023, the Company authorized restructuring actions (“September 2023 Actions”) including organizational realignment within a Barnes Industrial business and within Barnes Aerospace following the MB Aerospace acquisition. Resulting pre-tax charges of $7,878 were recorded primarily in the third quarter of 2023 related to employee termination costs, primarily employee severance and other termination benefits, which are expected to be paid in cash by the end of 2025. The Company does not expect any additional costs related to the September 2023 Actions to be significant.

A corresponding liability of $1,563, per below, related to the employee termination costs remained and was included within accrued liabilities as of March 31, 2024.

The following table sets forth the change in the liability for the employee termination benefits related to the September 2023 Actions:
December 31, 2023$2,736 
Employee severance and other termination benefits23 
Payments(1,196)
March 31, 2024$1,563 
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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, 2023. 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.onebarnes.com.

First Quarter Highlights

On January 11, 2024, the Company entered into a Share Purchase and Asset Agreement ("SPA") with One Equity Partners ("OEP") to sell its Associated Spring™ and Hänggi™ businesses (the "Businesses"). The Company completed the sale of the Businesses to OEP on April 4, 2024. See Note 3 of the Consolidated Financial Statements for additional discussion related to the divestiture of the Businesses.

The Company reported net sales of $430.6 million in the first quarter of 2024, an increase of $95.3 million or 28.4% from the first quarter of 2023. Organic sales increased by $12.8 million, or 3.8%, including an increase of $21.9 million, or 18.7%, at Aerospace, partially offset by a decrease of $9.1 million, or 4.2%, at Industrial. The year-over-year increase at Aerospace was driven by volume increases within both the Original Equipment Manufacturing ("OEM") and the Aftermarket businesses, reflecting continued strength in aerospace end markets. The acquisition of MB Aerospace in August 2023 provided incremental sales of $82.2 million within the Aerospace segment during the three months ended March 31, 2024. From an Industrial standpoint, the year-over-year decrease was driven by volume decreases within the each of the businesses, partially offset by favorable pricing initiatives. The weakening of the U.S. dollar against foreign currencies increased net sales within the Industrial segment by approximately $0.3 million. Operating margins increased from 6.9% in the 2023 period to 9.2% in the current period, largely a result of lower pre-tax charges related to restructuring and transformation related actions and favorable pricing initiatives, partially offset by $2.1 million of short-term purchase accounting adjustments and $5.4 million of increased amortization costs on other acquired long-term intangible assets related to the acquisition of MB Aerospace. As well, divestiture transaction costs related to the sale of the Associated Spring and Hanggi businesses and shareholder advisory costs approximated $3.1 million and $2.0 million, respectively. Pre-tax charges related to restructuring, transformation approximated $4.1 million within the current period, compared with $13.9 million in the prior year period.

Impact of Macroeconomic Trends and Management Actions

Certain of the macroeconomic trends that have presented challenges across our businesses in the prior year, including rising interest rates, inflationary pressures and labor constraints began to stabilize during recent periods, whereas supply chain constraints continue to linger, thereby continuing to impact the performance of the businesses. Management continues to take actions to mitigate the lingering impacts of these events and circumstances and remains proactive in addressing any potential future impacts.

Management has continued to implement pricing actions and drive productivity initiatives to mitigate these macroeconomic pressures. Management also continues to focus on driving core business execution through revenue growth, margin expansion, and new business development. Management's attention also remains directed towards integrating our existing businesses, consolidating operations and facilities where appropriate, and rationalizing operational costs and investments; all with the goal of improving profitability and return on invested capital. Management is leading a systematic multi-phased initiative to significantly reduce costs and integrate the Company's operations, decreasing complexity and focusing on improved performance across Industrial. More specifically, the Company has announced restructuring programs (see Note 17 of the Consolidated Financial Statements) to further reduce costs primarily within both segments, in response to changes in macroeconomic factors. Management also continues to evaluate the ongoing geopolitical risks, such as the Russia-Ukraine war, China-Taiwan relations and Red Sea freight disruptions, for any potential for impacts on the Company's Consolidated Financial Statements.





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RESULTS OF OPERATIONS

Net Sales
Three Months Ended
March 31,
(in millions)20242023Change
Aerospace$221.4 $117.3 $104.1 88.8 %
Industrial209.3 218.1 (8.8)(4.1)%
Total$430.6 $335.4 $95.3 28.4 %

The Company reported net sales of $430.6 million in the first quarter of 2024, an increase of $95.3 million from the first quarter of 2023. Organic sales increased by $12.8 million, or 3.8%, including an increase of $21.9 million at Aerospace, partially offset by a decrease of $9.1 million at Industrial. The year-over-year increase at Aerospace was driven by volume increases within both the OEM and the Aftermarket businesses, reflecting ongoing strength within aerospace end markets. The acquisition of MB Aerospace in August 2023 provided incremental sales of $82.2 million within the segment during the three months ended March 31, 2024, impacting both the OEM and Aftermarket businesses. From an Industrial standpoint, the year-over-year decrease was primarily driven by volume decreases across each of the businesses, partially offset by favorable pricing actions. The weakening of the U.S. dollar against foreign currencies increased net sales within the Industrial segment by approximately $0.3 million.

Expenses and Operating Income
Three Months Ended
March 31,
(in millions)20242023Change
Cost of sales$300.1 $226.2 $73.9 32.6 %
% sales69.7 %67.5 %
Gross profit (1)
$130.5 $109.1 $21.4 19.6 %
% sales30.3 %32.5 %
Selling and administrative expenses$90.9 $85.8 $5.0 5.9 %
% sales21.1 %25.6 %
Operating income$39.7 $23.3 $16.4 70.4 %
% sales9.2 %6.9 %
(1) Sales less cost of sales    .

Cost of sales in the first quarter of 2024 increased 32.6% from the 2023 period and gross profit margin decreased from 32.5% in the 2023 period to 30.3% in the 2024 period. Within Industrial, gross profit and gross profit margin decreased primarily as a result of the profit contribution of lower sales within each of the businesses, offset by pricing actions taken by the businesses. Gross profit increased and gross profit margin decreased within Aerospace during the first quarter of 2024. Within Aerospace, higher volumes within both the OEM and Aftermarket business, driven by the acquisition of MB Aerospace positively impacted gross profit. Unfavorable productivity and $2.1 million of short-term purchase accounting adjustments related to the acquisition of MB Aerospace negatively impacted both gross profit and gross profit margin within the segment, partially offset by a favorable Aftermarket mix. As well, $2.7 million of pre-tax charges related to restructuring and transformation related actions (aggregate of $4.1 million, including selling and administrative costs) impacted gross profit across the segments. Pre-tax charges impacting gross profit related to restructuring and workforce reduction actions during the comparable three month period of 2023 were $3.4 million (aggregate of $13.9 million). Selling and administrative expenses in the first quarter of 2024 increased 5.9% from the 2023 period, whereas sales increased by 28.4% between the comparable 2024 and 2023 periods. As a percentage of sales, selling and administrative costs decreased from 25.6% in the first quarter of 2023 to 21.1% in the 2024 period. The decrease in selling and administrative costs as a percentage of sales was primarily driven by an increase in sales
partially offset by $3.1 million of divestiture transaction costs, $5.4 million of long-term purchase accounting adjustments related to the acquisition of MB Aerospace, $2.0 million of shareholder advisory costs and $1.4 million (aggregate of $4.1 million) of restructuring and transformation related charges. Pre-tax charges impacting selling and administrative expenses related to restructuring and workforce reduction actions during the comparable three month period of 2023 were $10.5 million
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(aggregate of $13.9 million). Operating income in the first quarter of 2024 increased by 70.4% to $39.7 million, compared with the first quarter of 2023, and operating income margin increased from 6.9% to 9.2%, driven by the items noted above.

Interest expense

Interest expense increased by $19.5 million in the first quarter of 2024 as compared with the prior year period, primarily a result of a higher average interest rate, given the recapitalization of the Company's debt structure since the prior year period and higher average borrowings, largely related to the acquisition of MB Aerospace.

Other expense (income), net

Other expense (income), net in the first quarter of 2024 was $1.7 million compared to $1.3 million in the first quarter of 2023. This increase in expense was primarily driven by a reduction in income from the other components of net periodic benefit costs related to pension and other postretirement benefits.

Income Taxes

The Company's effective tax rate for the first three months of 2024 was 85.2% compared with 20.9% in the first three months of 2023 and 51.9% for the full year 2023. The increase in the effective tax rate during the first three months of 2024, as compared with the rate for the full year 2023, is driven primarily by the inclusion of $6.8 million of tax expense (rate impact of 51.6%) relating to the Sale of the Associated Spring and Hanggi businesses. The Company determined during the first quarter of 2024, in conjunction with the Sale, that its investment in a certain disposed foreign subsidiary no longer met the classification as "permanently reinvested". The Company has therefore recognized income taxes related to this entity as of March 31, 2024, in advance of the completion of the Sale on April 4, 2024.

The Aerospace and Industrial segments have a number of multi-year tax holidays in Malaysia and Singapore. The tax holiday in China expired at the end of 2023. The Company plans to re-apply for approval of a potential three-year holiday in China but, under China rules, cannot file the application until after June 2024 and does not expect a decision regarding the approval of the holiday until the end of 2024. Aerospace was granted an income tax holiday for operations recently established in Malaysia. This holiday commenced effective November 2020 (retroactively) and remains effective for a period of ten years. The Aerospace business was granted additional tax holidays in Singapore under the Pioneer program in the fourth quarter of 2022. This holiday provides reduced tax rates for certain Aerospace programs manufactured at the Singapore location and will continue through December 2025. All of the holidays are subject to the Company meeting certain commitments in the respective jurisdictions.

Income and income per Share
Three Months Ended
March 31,
(in millions, except per share)20242023Change
Net income$1.9 $13.2 $(11.2)(85.2)%
Net income per common share:
Basic$0.04 $0.26 $(0.22)(84.6)%
Diluted0.04 0.26 (0.22)(84.6)%
Weighted average common shares outstanding:
Basic51.2 51.0 0.2 0.5 %
Diluted51.3 51.3 — 0.1 %

Basic and diluted net income per common share decreased from the three months periods ended March 31, 2024 and March 31, 2023 due to decreases in net income during the periods. Basic and diluted weighted average common shares outstanding were consistent for the periods during the first three months of 2023 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.

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Financial Performance by Business Segment

Aerospace
Three Months Ended
March 31,
(in millions)20242023Change
Sales$221.4 $117.3 $104.1 88.8 %
Operating profit31.1 18.8 12.3 65.8 %
Operating margin14.0 %16.0 %

The Aerospace segment reported sales of $221.4 million in the first quarter of 2024, an 88.8% increase from the first quarter of 2023. Excluding MB Aerospace, organic sales increased 15.8% and 23.4% within the OEM and Aftermarket businesses, respectively, relative to the comparable 2023 period. The acquisition of MB Aerospace provided incremental sales of $82.2 million within the segment during the three months ended March 31, 2024, impacting both the OEM and Aftermarket businesses. The year-over-year increase in organic OEM sales was driven primarily by continued growth within narrow-body airframe production, although wide-body airframe production also continued to improve during the 2024 period. Organic sales within the Aftermarket Maintenance Repair and Overhaul ("MRO") also improved during the first quarter of 2024 relative to the comparable period as airline traffic and aircraft utilization have continued to ramp. Sales within the segment are largely denominated in U.S. dollars and therefore were not significantly impacted by changes in foreign currency.

Operating profit at Aerospace in the first quarter of 2024 increased 65.8% from the first quarter of 2023 to $31.1 million, largely a result of the contribution of higher organic sales volumes, inclusive of pricing, favorable mix and the contribution of MB Aerospace sales, partially offset by unfavorable productivity, restructuring and transformation related charges and acquisition related costs related to the acquisition of MB Aerospace. More specifically, operating results were impacted by $2.1 million of short-term purchase accounting adjustments (amortization of customer backlog and inventory step-up), $5.4 million of increased amortization costs for other acquired long-term intangible assets and $0.4 million of pre-tax restructuring and transformation related cha