Barnes Group (B)
Q4 2012 Earnings Call
February 22, 2013 8:30 am ET
William Pitts - Director of Investor Relations
Gregory F. Milzcik - Chief Executive Officer, President, Executive Director and Ex-Officio Member of Executive Committee
Patrick J. Dempsey - Chief Operating Officer and Senior Vice President
Christopher J. Stephens - Chief Financial Officer and Senior Vice President of Finance
Edward Marshall - Sidoti & Company, LLC
Matt J. Summerville - KeyBanc Capital Markets Inc., Research Division
Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division
R. Scott Graham - Jefferies & Company, Inc., Research Division
Previous Statements by B
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I would now like to turn the conference over to your host for today, Mr. William Pitts, Director, Investor Relations. Please proceed, sir.
Thank you, Frances. Good morning, and thank you for joining us today. With me is Barnes Group President and CEO, Greg Milzcik; Senior Vice President of Finance and Chief Financial Officer, Chris Stephens; and Senior Vice President and Chief Operating Officer, Patrick Dempsey. If you have not received a copy of our earnings press release, you can find it on the Investor Relations section of our corporate website at bginc.com. During our call, we will be referring to the earnings release supplement slides, which are also posted on our website.
Our discussion today includes certain non-GAAP financial measures, which provide additional information that we believe is helpful to investors. These measures have been reconciled to the related GAAP measures in accordance with SEC regulations. You will find a reconciliation table on our website as part of our press release, and in the Form 8-K submitted to the SEC.
I want to remind everybody that certain statements we make on today's call, both during the opening remarks and during the question-and-answer session, may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Please consider the risks and uncertainties that are mentioned in today's call and are described in our periodic filings with the Securities and Exchange Commission. These filings are available through the Investor Relations section of our corporate website at bginc.com.
So let's begin today's call with opening remarks from Greg, followed by a more detailed review of the quarter and full year results and our initial 2013 outlook discussion from Chris. After that, we'll open up the call for questions. Greg?
Gregory F. Milzcik
Thanks, Bill, and good morning. As you would expect from our press releases, we certainly have a lot to talk about today. First, we announced that we had entered into a definitive agreement to sell our Barnes Distribution North America business, BDNA, to MSC Industrial Direct for $550 million. This is a good transaction for both companies. It is an excellent opportunity for BDNA and its employees to further develop their full potential as part of MSC, where the primary focus is on industrial distribution.
As I think about the significant evolution of our portfolio with the sale of Barnes Distribution Europe in 2011, the acquisition of Synventive in 2012 and now this announcement on BDNA, we have succeeded in advancing along the strategic path that I've discussed with you for some time.
Second, this morning, we have reported fourth quarter and full year results that delivered one of our best years of financial performance. Despite some enduring challenges in a few of our global end markets, we managed to deliver record fourth quarter net income, improving operating margins and generated solid cash flow, allowing us to move quickly to pay down debt associated with the acquisition.
We ended 2012 with record year end backlog of $677 million, up 16% from 2011, driven by growth in our Aerospace OEM business. This backlog gives us confidence heading into 2013 as it supports continued sales growth.
And finally, we announced my retirement from Barnes Group and our board's selection of Patrick Dempsey as our new President and Chief Executive Officer. After serving as President and CEO since 2006, and with the first phase of our transformation complete, that is the move to a more closely aligned differentiated Aerospace and Industrial base business, I feel it's the right time for me to pass the leadership baton over to Patrick. I will continue as Executive Vice Chairman until our Annual Shareholders Meeting on May 3 to ensure a smooth transition.
Patrick has been with -- been our Chief Operating Officer since 2012. He joined the company in 2000 and has served in several leadership positions over the years. As COO, Patrick has been responsible for oversight and direction of the company's global business segments.
To close my comments today, I'm extremely pleased with the performance that the company delivered in 2012, and I have all the confidence that Patrick will lead Barnes Group to delivering sustained performance. Right, Patrick?
Patrick J. Dempsey
Thanks, Greg. I appreciate the opportunity and looking forward to the challenge.
Gregory F. Milzcik
Now let me hand the call over to Chris to go through the financials.
Christopher J. Stephens
All right. Good morning. All right. Thanks, Greg, and good morning, everybody. I would like to begin by highlighting key points of our fourth quarter and full year results, and then end with color on our 2013 guidance. I will also provide additional details on the BDNA announcement.