BARNES GROUP INC [B] Filings

10-Q 1 b-20220630.htm 10-Q b-20220630

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 June 30, 2022


☐			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 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

Connecticut

06010

(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

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 filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller 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 Act).

Yes

☐

☒

The registrant had outstanding 50,517,934 shares of common stock as of July 27, 2022.

Barnes Group Inc.

Index to Form 10-Q

For the Quarterly Period Ended June 30, 2022


		Page
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of (Loss) Income for the three and six months ended June 30, 2022 and 2021	3
	Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 3 0 , 2022 and 2021	4
	Consolidated Balance Sheets as of June 30 , 2022 and December 31, 2021	5
	Consolidated Statements of Cash Flows for the six months ended June 30 , 2022 and 2021	6
	Notes to Consolidated Financial Statements	7
	Report of Independent Registered Public Accounting Firm	24

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	38

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	39



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 6.	Exhibits	40

	Signatures	41
	Exhibit Index	42

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.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net sales	$	321,268	$	321,158	$	633,651	$	622,787

Cost of sales	212,754		203,168		419,944		397,864
Selling and administrative expenses	68,507		79,447		142,587		154,000
Goodwill impairment charge	68,194		—		68,194		—
	349,455		282,615		630,725		551,864
Operating (loss) income	(28,187)		38,543		2,926		70,923

Interest expense	3,325		4,475		6,893		8,416
Other expense (income), net	(403)		1,272		1,226		2,734
(Loss) income before income taxes	(31,109)		32,796		(5,193)		59,773
Income taxes	8,443		8,305		13,875		15,900


Net (loss) income	$	(39,552)	$	24,491	$	(19,068)	$	43,873

Per common share:
Basic	$	(0.78)	$	0.48	$	(0.37)	$	0.86
Diluted	(0.78)		0.48		(0.37)		0.86

Weighted average common shares outstanding:
Basic	51,004,375		50,933,222		51,013,346		50,933,373
Diluted	51,004,375		51,102,303		51,013,346		51,095,198

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Dollars in thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net (loss) income	$	(39,552)	$	24,491	$	(19,068)	$	43,873
Other comprehensive (loss) income, net of tax
Unrealized (loss) gain on hedging activities, net of tax (1)	(116)		102		3,402		(550)
Foreign currency translation adjustments, net of tax (2)	(73,193)		21,596		(81,805)		(26,286)
Defined benefit pension and other postretirement benefits, net of tax (3)	3,347		2,893		5,851		6,525
Total other comprehensive (loss) income, net of tax	(69,962)		24,591		(72,552)		(20,311)
Total comprehensive (loss) income	$	(109,514)	$	49,082	$	(91,620)	$	23,562

(1) Net of tax of $(25) and $31 for the three months ended June 30, 2022 and 2021, respectively, and $1,076 and $(153) for the six months ended June 30, 2022 and 2021, respectively.

(2) Net of tax of $0 and $0 for the three and six months ended June 30, 2022 and 2021, respectively.

(3) Net of tax of $852 and $992 for the three months ended June 30, 2022 and 2021, respectively, and $1,616 and $2,061 for the six months ended June 30, 2022 and 2021, respectively.

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

(Unaudited)


	June 30, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	72,278	$	102,860
Accounts receivable, less allowances (2022 - $5,726; 2021 - $5,625)	281,773		262,257
Inventories	260,633		239,655
Prepaid expenses and other current assets	75,739		75,437

Total current assets	690,423		680,209

Deferred income taxes	18,682		21,976

Property, plant and equipment	890,966		904,895
Less accumulated depreciation	(570,792)		(563,433)
	320,174		341,462

Goodwill	827,131		955,370
Other intangible assets, net	461,161		500,246
Other assets	83,525		77,557

Total assets	$	2,401,096	$	2,576,820

Liabilities and Stockholders' Equity
Current liabilities
Notes and overdrafts payable	$	4	$	1,900
Accounts payable	137,561		131,076
Accrued liabilities	145,795		175,583
Long-term debt - current	1,502		1,835

Total current liabilities	284,862		310,394

Long-term debt	582,537		599,932
Accrued retirement benefits	74,309		76,784
Deferred income taxes	60,100		66,704
Long-term tax liability	39,086		52,114
Other liabilities	40,108		42,126


Commitments and contingencies (Note 15)
Stockholders' equity
Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2022 - 64,379,072 shares; 2021 - 64,343,582 shares)	644		643
Additional paid-in capital	522,775		516,562
Treasury stock, at cost (2022 - 13,862,554 shares; 2021 - 13,658,483 shares)	(530,518)		(523,642)
Retained earnings	1,551,583		1,587,041
Accumulated other non-owner changes to equity	(224,390)		(151,838)
Total stockholders' equity	1,320,094		1,428,766
Total liabilities and stockholders' equity	$	2,401,096	$	2,576,820

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Six Months Ended June 30,
	2022		2021
Operating activities:
Net (loss) income	$	(19,068)	$	43,873
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	44,861		44,683

Loss (gain) on disposition of property, plant and equipment	47		(76)
Stock compensation expense	6,015		5,632
Non-cash goodwill impairment charge	68,194		—
Changes in assets and liabilities:
Accounts receivable	(30,232)		(12,660)
Inventories	(26,671)		89
Prepaid expenses and other current assets	(5,165)		(3,473)
Accounts payable	10,196		13,880
Accrued liabilities	(30,674)		1,721
Deferred income taxes	(1,261)		(5,101)
Long-term retirement benefits	(1,871)		889
Long-term tax liability	(6,949)		(6,949)
Other	1,097		3,213
Net cash provided by operating activities	8,519		85,721

Investing activities:
Proceeds from disposition of property, plant and equipment	92		136


Capital expenditures	(13,523)		(17,567)


Other	(1,645)		2,924
Net cash used by investing activities	(15,076)		(14,507)

Financing activities:
Net change in other borrowings	(1,372)		(2,184)
Payments on long-term debt	(70,369)		(56,502)
Proceeds from the issuance of long-term debt	80,000		25,000


Proceeds from the issuance of common stock	246		210
Common stock repurchases	(6,721)		(5,229)
Dividends paid	(16,192)		(16,194)
Withholding taxes paid on stock issuances	(154)		(191)
Other	(9,825)		(3,477)
Net cash used by financing activities	(24,387)		(58,567)

Effect of exchange rate changes on cash flows	(4,475)		(1,252)
(Decrease) increase in cash, cash equivalents and restricted cash	(35,419)		11,395
Cash, cash equivalents and restricted cash at beginning of period	111,909		91,468
Cash, cash equivalents and restricted cash at end of period	76,490		102,863
Less: Restricted cash, included in Prepaid expenses and other current assets	(2,122)		(6,970)
Less: Restricted cash, included in Other assets	(2,090)		(4,759)
Cash and cash equivalents at end of period	$	72,278	$	91,134

See accompanying notes.

BARNES GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(All dollar amounts included in the notes are stated in thousands except per share data)

(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated balance sheet and the related unaudited consolidated statements of income, comprehensive 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 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, 2021 has been derived from the 2021 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, 2021. 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 six-month period ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The COVID-19 pandemic ("COVID-19") has resulted in a disruption in business activities worldwide and has caused weakened economic conditions, both in the United States and abroad. COVID-19 has had, and may continue to have, a significant negative impact on the Company's ongoing operations and the end markets in which it serves. The Company has assessed the impacts on its accounting estimates, assumptions and disclosures.

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 Consolidated Financial Statements and related disclosures.

Recently Adopted Accounting Standards

In December 2019, the FASB amended its guidance related to income taxes. The amended guidance simplifies the accounting for income taxes, eliminating certain exceptions to the general income tax principles, in an effort to reduce the cost and complexity of application. The amended guidance is effective for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. Early adoption was permitted in any interim or annual period. The guidance requires application on either a prospective, retrospective or modified retrospective basis, contingent on the income tax exception being applied. The Company adopted this guidance, on a prospective basis, on January 1, 2021 and it did not have a material impact on the Company's Consolidated Financial Statements.

Recently Issued Accounting Standards

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 Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, identified the Secured Overnight Financing Rate (“SOFR”) as its preferred benchmark alternative to U.S. dollar LIBOR. Published by the Federal Reserve Bank of New York, SOFR represents a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is calculated based on directly observable U.S. Treasury-backed repurchase transactions. In March 2020, in response to this transition, the FASB issued guidance related to this rate reform, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued by reference rate reform, and addresses operational issues likely to arise in modifying contracts to replace discontinued reference rates with new rates. In January 2021, the FASB issued further clarifying guidance regarding derivatives, as it relates to this transition. The guidance is effective through December 31, 2022. The Company’s Amended Credit Agreement (Note 8) and corresponding interest rate Swaps (Note 9) each mature in February 2026. In March 2021, the ICE Benchmark Association announced that it will extend the publication of overnight, 1, 3, 6 and 12 month LIBOR rates until June 30, 2023, while ceasing publication of all other LIBOR rates including 1 week and 2 month rates. The Company's Amended Credit Agreement was further amended in October 2021 and in April 2022 to address the replacement of LIBOR via the LIBOR Transition Agreement and Amendment No. 1, respectively (see Note 8), with SOFR. The Company's corresponding interest rate Swaps were amended in May 2022 to address the replacement of LIBOR. The

Company does not anticipate a material impact on our business, financial condition, results of operations or cash flow as a result of this change.

In October 2021, the FASB amended its guidance related to business combinations. The amended guidance requires entities to recognize and measure contract assets and contract liabilities acquired in business combinations on the acquisition date in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers. The new guidance is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the amended guidance as the guidance will be applicable to future acquisitions.

3. 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 healthcare, automation, packaging, aerospace, 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:


	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	Industrial		Aerospace		Total Company		Industrial		Aerospace		Total Company
Products and Services
Engineered Components Products	$	48,287	$	—	$	48,287	$	45,429	$	—	$	45,429
Molding Solutions Products	101,209		—		101,209		122,612		—		122,612
Force & Motion Control Products	47,260		—		47,260		48,321		—		48,321
Automation Products	15,359		—		15,359		18,311		—		18,311
Aerospace Original Equipment Manufacturing Products	—		69,503		69,503		—		60,985		60,985
Aerospace Aftermarket Products and Services	—		39,650		39,650		—		25,500		25,500
	$	212,115	$	109,153	$	321,268	$	234,673	$	86,485	$	321,158

Geographic Regions (A)
Americas	$	88,970	$	80,766	$	169,736	$	93,001	$	65,638	$	158,639
Europe	74,770		18,663		93,433		90,094		13,263		103,357
Asia	46,670		8,347		55,017		50,746		7,096		57,842
Rest of World	1,705		1,377		3,082		832		488		1,320
	$	212,115	$	109,153	$	321,268	$	234,673	$	86,485	$	321,158

(A) Sales by geographic region are based on the location to which the product is shipped and services are delivered.


	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	Industrial		Aerospace		Total Company		Industrial		Aerospace		Total Company
Products and Services
Engineered Components Products	$	95,251	$	—	$	95,251	$	93,715	$	—	$	93,715
Molding Solutions Products	204,245		—		204,245		231,159		—		231,159
Force & Motion Control Products	93,343		—		93,343		93,978		—		93,978
Automation Products	30,948		—		30,948		35,808		—		35,808
Aerospace Original Equipment Manufacturing Products	—		135,132		135,132		—		116,513		116,513
Aerospace Aftermarket Products and Services	—		74,732		74,732		—		51,614		51,614
	$	423,787	$	209,864	$	633,651	$	454,660	$	168,127	$	622,787

Geographic Regions (A)
Americas	$	174,975	$	153,263	$	328,238	$	175,896	$	124,647	$	300,543
Europe	157,139		38,484		195,623		178,768		27,414		206,182
Asia	88,489		15,665		104,154		97,506		14,743		112,249
Rest of World	3,184		2,452		5,636		2,490		1,323		3,813
	$	423,787	$	209,864	$	633,651	$	454,660	$	168,127	$	622,787

(A) 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 80 percent of total revenue for the three and six month periods ended June 30, 2022 and June 30, 2021. A majority of revenue within the Industrial segment and Aerospace Original Equipment Manufacturing 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 20 percent of total revenue for the three and six month periods ended June 30, 2022 and June 30, 2021. 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 Engineered Components 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.

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 and six month periods ended June 30, 2022 and 2021.

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 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 Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021.

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 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 Consolidated Balance Sheets on an individual contract basis at the end of each reporting period.

Net contract assets (liabilities) consisted of the following:


	June 30, 2022		December 31, 2021		$ Change		% Change
Unbilled receivables (contract assets)	$	36,401	$	33,522	$	2,879	9	%
Contract liabilities	(19,868)		(25,374)		5,506		(22)	%
Net contract assets	$	16,533	$	8,148	$	8,385	103	%

Contract liabilities balances at June 30, 2022 and December 31, 2021 include $10,242 and $9,364, respectively, of customer advances for which the Company has an unconditional right to collect payment. Accounts receivable, as presented on the Consolidated Balance Sheet, includes corresponding balances at June 30, 2022 and December 31, 2021, respectively.

Changes in the net contract assets during the six month period ended June 30, 2022 included a $5,506 decrease in contract liabilities, driven primarily by revenue recognized in the current period, partially offset by new customer advances and deposits.

Adding to this net contract assets increase was a $2,879 increase in contract assets, driven primarily by contract progress (i.e., unbilled receivable), partially offset by earlier contract progress being invoiced to the customer.

The Company recognized approximately 40% and over 90% of the revenue related to the contract liabilities balance as of December 31, 2021 during the three and six months ended June 30, 2022, respectively, and approximately 15% and 55% of the revenue related to the contract liabilities balance as of December 31, 2020 during the three and six months ended June 30, 2021, respectively, 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 June 30, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $182,869. The Company expects to recognize revenue on approximately 70% of the remaining performance obligations over the next 12 months, with the remainder to be recognized within 24 months.

4. Stockholders' Equity

A schedule of consolidated changes in equity for the six months ended June 30, 2022 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, 2021	64,344	$	643	$	516,562	13,658	$	(523,642)	$	1,587,041	$	(151,838)	$	1,428,766
Comprehensive income (loss)	—	—		—		—	—		20,484		(2,590)		17,894
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,111)		—		(8,111)

Employee stock plans	12	1		2,665		2	(49)		(136)		—		2,481
March 31, 2022	64,356	$	644	$	519,227	13,660	$	(523,691)	$	1,599,278	$	(154,428)	$	1,441,030
Comprehensive loss	—	—		—		—	—		(39,552)		(69,962)		(109,514)
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,081)		—		(8,081)
Common stock repurchases	—	—		—		200	(6,721)		—		—		(6,721)
Employee stock plans	23	—		3,548		3	(106)		(62)		—		3,380
June 30, 2022	64,379	$	644	$	522,775	13,863	$	(530,518)	$	1,551,583	$	(224,390)	$	1,320,094

A schedule of consolidated changes in equity for the six months ended June 30, 2021 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, 2020	64,171	$	642	$	501,531	13,530	$	(516,992)	$	1,519,811	$	(122,315)	$	1,382,677
Comprehensive income (loss)	—	—		—		—	—		19,382		(44,902)		(25,520)
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,104)		—		(8,104)



Employee stock plans	12	—		2,406		1	(68)		(24)		—		2,314
March 31, 2021	64,183	$	642	$	503,937	13,531	$	(517,060)	$	1,531,065	$	(167,217)	$	1,351,367
Comprehensive income	—	—		—		—	—		24,491		24,591		49,082
Dividends declared ($0.16 per share)	—	—		—		—	—		(8,090)		—		(8,090)
Common stock repurchases	—	—		—		100	(5,229)		—		—		(5,229)
Employee stock plans	17	—		3,417		3	(123)		(31)		—		3,263
June 30, 2021	64,200	$	642	$	507,354	13,634	$	(522,412)	$	1,547,435	$	(142,626)	$	1,390,393

5. Net (Loss) 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. No potentially dilutive shares have been included in the diluted earnings per share calculations for the three- and six-month periods ended June 30, 2022 due to the Company’s reported net losses for the periods. For the purpose of computing diluted net income per common share for the three- and six-month periods ended June 30, 2021, the weighted-average number of common shares outstanding was increased by 169,081 and 161,825, respectively.

The calculation of weighted-average diluted shares outstanding excludes all shares that would have been anti-dilutive. During the three-month periods ended June 30, 2022 and 2021, the Company excluded 875,544 and 503,078 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive. During the six month periods ended June 30, 2022 and 2021, the Company excluded 797,194 and 512,598 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive.

The Company granted 115,600 stock options, 144,524 restricted stock unit awards and 121,860 performance share awards ("PSAs") in February 2022 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) with each metric being weighted equally. The metrics for awards granted in 2022 include the Company’s total shareholder return (“TSR”), return on invested capital (“ROIC”) and operating income before depreciation and amortization growth ("EBITDA growth"). 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 250% 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.

On July 14, 2022, the Company granted Thomas J. Hook, newly appointed President and Chief Executive Officer, an award of performance stock options to purchase 1,183,406 shares of Barnes common stock at a purchase price of $30.32 in connection with his appointment based on a grant date fair value of $10,000. The stock options have a ten-year term and cliff-vest in five years, subject to continued service and the achievement of compound annual growth rates (“CAGRs”) in the price of the Company’s common shares above the option exercise price as of the fifth anniversary of the grant date, with 0% vesting at a CAGR of less than 5%, 33.3% vesting at a CAGR of 5%, 66.6% vesting at a CAGR of 7% and 100% vesting at a CAGR of 9% or greater, with linear interpolation between such CAGR levels. The fair value of the options is determined using a Monte Carlo valuation method as the award contains a market condition.

6. Inventories

The components of inventories consisted of:


	June 30, 2022		December 31, 2021
Finished goods	$	93,349	$	88,954
Work-in-process	70,057		65,468
Raw material and supplies	97,227		85,233
	$	260,633	$	239,655

7. 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 June 30, 2022:


	Industrial		Aerospace		Total Company
December 31, 2021	$	924,584	$	30,786	$	955,370



Impairment charge	(68,194)		—		(68,194)
Foreign currency translation	(60,045)		—		(60,045)
June 30, 2022	$	796,345	$	30,786	$	827,131

As of April 1, 2022, management performed its annual impairment testing of goodwill. The Company utilizes the option to first assess qualitative factors to determine whether it is necessary to perform the Step 1 quantitative goodwill impairment test in accordance with applicable accounting standards. Under the qualitative assessment, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, overall reporting unit performance and events directly affecting a reporting unit. If the Company determines that the Step 1 quantitative impairment test is required, management estimates the fair value of the reporting unit primarily using an income approach, which reflects management’s cash flow projections, and also evaluates the fair value using a market approach. Inherent in management’s development of cash flow projections are assumptions and estimates, including those related to future earnings and growth rates and the weighted average cost of capital. The Company compares the fair value of the reporting unit with the carrying value of the reporting unit. If the fair values were to fall below the carrying values, the Company would recognize a

non-cash impairment charge to income from operations for the amount by which the carrying amount of any reporting unit exceeds the reporting unit’s fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit.

Based on our assessment as of April 1, the estimated fair value of the Automation reporting unit, which represents the 2018 acquisition of Gimatic, exceeded its carrying value, while the estimated fair value of each of the remaining reporting units significantly exceeded their carrying values. The Company evaluated deteriorating macro-economic conditions subsequent to the date of the assessment, including inflationary pressures, rising interest rates, worsening global supply chain constraints and demand outlook, which materialized during the second quarter of 2022, which impacted performance and outlook at Automation and resulted in a triggering event. Management revised its cash flow projections and weighted average cost of capital, resulting in a non-cash goodwill impairment charge of $68,194 related to the Automation reporting unit as the estimated fair value of the reporting unit declined below its carrying value. The goodwill impairment charge was recorded during the three-month period ended June 30, 2022.

Based on our second quarter assessments and as noted above, the estimated fair value for each of the remaining reporting units significantly exceeded their carrying values, and there was no impairment at any other reporting units in 2022.

Other Intangible Assets:

Other intangible assets consisted of:

June 30, 2022

December 31, 2021

Range of
Life -Years

Gross Amount

Accumulated Amortization

Gross Amount

Accumulated Amortization

Amortized intangible assets:

Revenue Sharing Programs (RSPs)

Up to 30

299,500

(157,737)

299,500