B Barnes Dashboard

Management Discussion

• 2020 vs. 2019:
• COVID-19 began to impact sales during the first quarter of 2020. Beginning late in the first quarter, Industrial and Aerospace business units began to experience the negative impact on demand for certain products and services due to COVID-19's disruption of global manufacturing and consumer spending. The Company's global manufacturing, in certain regions, operated at reduced levels during the first quarter. As described further below, the impacts of COVID-19 significantly increased during the second quarter of 2020, however both segments reflected sequential sales improvements in the third and fourth quarters of 2020. Customer orders and corresponding demand for certain product, although sequentially improving during the second half of 2020, remained soft relative to the prior year period, impacting sales volumes accordingly.
• The Company reported net sales of $1,124.4 million in 2020, a decrease of $366.7 million, or 24.6%, from 2019. Organic sales decreased by $325.6 million, including decreases of $127.3 million and $198.3 million at Industrial and Aerospace, respectively. Sales at Industrial and Aerospace reflected sequential improvements of 19.3% and 2.3%, respectively, in the third quarter of 2020, as compared with the second quarter of 2020, followed by sequential improvements of 6.2% and 10.9%, respectively, in the fourth quarter of 2020, as compared with the third quarter of 2020. The year-over-year decrease at Industrial was driven by organic sales declines across the Industrial business units, driven primarily by the impact of COVID-19. The Automation business was organically flat relative to the 2019 period. Automotive end markets remained soft relative to the prior year period, reflecting the impacts of both COVID-19 and broader global economic uncertainty, although these end markets saw the most sequential improvement during the second half of 2020 as automotive production improved throughout the year. Potential changes in regulatory requirements related to personal care and packaging markets continued to impact Industrial sales, although orders within both markets improved in the second half of 2020 versus a year ago, reflecting a release of previously deferred projects by customers. An increase in volumes within medical end-markets also benefited sales. The Company completed the sale of its Seeger business on February 1, 2020, reducing sales by $51.2 million during the 2020 period. The sales decrease at Aerospace relative to the 2019 period was driven by declines in sales within both the OEM and Aftermarket businesses, resulting primarily from a global slowdown in aerospace markets driven by COVID-19, and more specifically a resultant decline in aircraft utilization and the removal of aircraft from service by certain airlines. See additional discussion related to the anticipated financial impacts of COVID-19 within the segment outlooks below. See discussion related to COVID-19's risk on the Company's Consolidated Financial Statements within "Part I - Item 1A - Risk Factors." The weakening of the U.S. dollar against foreign currencies increased net sales within the Industrial segment by approximately $10.2 million. The Company's international sales decreased by 25.2% year-over-year while domestic sales decreased by 23.6%. Excluding the impact of foreign currency translation on sales, however, the Company's international sales in 2020 decreased by 26.4% from 2019.