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 ~~September 30, 2021~~March 31, 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 ~~50,627,316~~50,699,128 shares of common stock as of ~~October~~April 27, ~~2021.~~2022.

Barnes Group Inc.

Index to Form 10-Q

For the Quarterly Period Ended ~~September 30, 2021~~March 31, 2022


		Page
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	34
	Consolidated Statements of Income for the three ~~and~~ ~~nine~~ months ended ~~September~~March ~~30, 2021~~3 1 , 202 2 and ~~2020~~202 1	34
	Consolidated Statements of Comprehensive Income (Loss) for the three ~~and~~ ~~nine~~ months ended ~~September~~March ~~30, 2021~~3 1 , 20 22 and ~~2020~~20 21	45
	Consolidated Balance Sheets as of ~~September~~March ~~30, 2021~~31 , 2022 and December 31, ~~2020~~20 21	56
	Consolidated Statements of Cash Flows for the three ~~and~~ ~~nine~~ months ended ~~September~~March ~~30, 2021~~31 , 2022 and ~~2020~~20 21	67
	Notes to Consolidated Financial Statements	78
	Report of Independent Registered Public Accounting Firm	2322

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2423

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3633

Item 4.	Controls and Procedures	3633

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	3734



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3734

Item 6.	Exhibits	3835

	Signatures	3936
	Exhibit Index	4037

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 INCOME

(Dollars in thousands, except per share data)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net sales	Net sales	$	325,059	$	269,059	$	947,846	$	835,266	Net sales	$	312,383	$	301,629

Cost of sales	Cost of sales	205,079		176,908		602,943		532,214		Cost of sales	207,190		194,696
Selling and administrative expenses	Selling and administrative expenses	76,271		60,908		230,271		212,380		Selling and administrative expenses	74,080		74,553
		281,350		237,816		833,214		744,594			281,270		269,249
Operating income	Operating income	43,709		31,243		114,632		90,672		Operating income	31,113		32,380

Interest expense	Interest expense	4,027		3,701		12,443		11,924		Interest expense	3,567		3,942
Other expense (income), net	Other expense (income), net	1,217		47		3,952		2,700		Other expense (income), net	1,630		1,463
Income before income taxes	Income before income taxes	38,465		27,495		98,237		76,048		Income before income taxes	25,916		26,975
Income taxes	Income taxes	10,602		12,137		26,501		30,390		Income taxes	5,432		7,593

Net income	Net income	$	27,863	$	15,358	$	71,736	$	45,658	Net income	$	20,484	$	19,382

Per common share:	Per common share:									Per common share:
Basic	Basic	$	0.55	$	0.30	$	1.41	$	0.90	Basic	$	0.40	$	0.38
Diluted	Diluted	0.55		0.30		1.40		0.89		Diluted	0.40		0.38

Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	50,905,202		50,833,157		50,925,702		50,886,094		Basic	51,022,417		50,933,666
Diluted	Diluted	51,060,684		50,937,093		51,085,509		51,123,024		Diluted	51,168,622		51,087,688

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net income	Net income	$	27,863	$	15,358	$	71,736	$	45,658	Net income	$	20,484	$	19,382
Other comprehensive (loss) income, net of tax
Other comprehensive loss, net of tax										Other comprehensive loss, net of tax
Unrealized gain (loss) on hedging activities, net of tax (1)	Unrealized gain (loss) on hedging activities, net of tax (1)	62		79		(488)		(1,447)		Unrealized gain (loss) on hedging activities, net of tax (1)	3,518		(652)
Foreign currency translation adjustments, net of tax (2)	Foreign currency translation adjustments, net of tax (2)	(25,383)		39,851		(51,669)		23,774		Foreign currency translation adjustments, net of tax (2)	(8,612)		(47,882)
Defined benefit pension and other postretirement benefits, net of tax (3)	Defined benefit pension and other postretirement benefits, net of tax (3)	3,640		2,209		10,165		2,667		Defined benefit pension and other postretirement benefits, net of tax (3)	2,504		3,632
Total other comprehensive (loss) income, net of tax		(21,681)		42,139		(41,992)		24,994
Total comprehensive income		$	6,182	$	57,497	$	29,744	$	70,652
Total other comprehensive loss, net of tax										Total other comprehensive loss, net of tax	(2,590)		(44,902)
Total comprehensive income (loss)										Total comprehensive income (loss)	$	17,894	$	(25,520)

(1) Net of tax of ~~$47~~$1,101 and ~~$73~~$(184) for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $(106) and $(481) for the nine months ended September 30, 2021 and 2020,~~ respectively.

(2) Net of tax of $0 and $0 for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $0 and $(66) for the nine months ended September 30, 2021 and 2020,~~ respectively.

(3) Net of tax of ~~$972~~$764 and ~~$844~~$1,069 for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $3,033 and $456 for the nine months ended September 30, 2021 and 2020,~~ respectively.

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

(Unaudited)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	93,475	$	79,145	Cash and cash equivalents	$	75,255	$	102,860
Accounts receivable, less allowances (2021 - $6,216; 2020 - $6,348)		260,146		251,460
Accounts receivable, less allowances (2022 - $5,863; 2021 - $5,625)						Accounts receivable, less allowances (2022 - $5,863; 2021 - $5,625)	272,345		262,257
Inventories	Inventories	238,842		238,008		Inventories	255,117		239,655
Prepaid expenses and other current assets	Prepaid expenses and other current assets	79,594		73,732		Prepaid expenses and other current assets	83,795		75,437

Total current assets	Total current assets	672,057		642,345		Total current assets	686,512		680,209

Deferred income taxes	Deferred income taxes	21,153		22,092		Deferred income taxes	17,883		21,976

Property, plant and equipment	Property, plant and equipment	905,301		910,378		Property, plant and equipment	909,281		904,895
Less accumulated depreciation	Less accumulated depreciation	(557,760)		(539,431)		Less accumulated depreciation	(573,995)		(563,433)
		347,541		370,947			335,286		341,462

Goodwill	Goodwill	967,481		1,011,580		Goodwill	945,407		955,370
Other intangible assets, net	Other intangible assets, net	517,324		564,132		Other intangible assets, net	486,835		500,246
Other assets	Other assets	61,033		65,130		Other assets	83,432		77,557

Total assets	Total assets	$	2,586,589	$	2,676,226	Total assets	$	2,555,355	$	2,576,820

Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current liabilities	Current liabilities					Current liabilities
Notes and overdrafts payable	Notes and overdrafts payable	$	1,799	$	2,115	Notes and overdrafts payable	$	978	$	1,900
Accounts payable	Accounts payable	124,603		112,428		Accounts payable	134,816		131,076
Accrued liabilities	Accrued liabilities	179,185		178,560		Accrued liabilities	144,852		175,583
Long-term debt - current	Long-term debt - current	1,969		2,276		Long-term debt - current	1,702		1,835

Total current liabilities	Total current liabilities	307,556		295,379		Total current liabilities	282,348		310,394

Long-term debt	Long-term debt	628,689		699,868		Long-term debt	594,976		599,932
Accrued retirement benefits	Accrued retirement benefits	91,685		98,171		Accrued retirement benefits	75,684		76,784
Deferred income taxes	Deferred income taxes	73,292		91,668		Deferred income taxes	65,557		66,704
Long-term tax liability	Long-term tax liability	52,114		59,063		Long-term tax liability	52,114		52,114
Other liabilities	Other liabilities	40,024		49,400		Other liabilities	43,646		42,126


Commitments and contingencies (Note 16)		0		0
Commitments and contingencies (Note 15)						Commitments and contingencies (Note 15)	0		0
Stockholders' equity	Stockholders' equity					Stockholders' equity
Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2021 - 64,283,591 shares; 2020 - 64,171,321 shares)		643		642
Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2022 - 64,356,438 shares; 2021 - 64,343,582 shares)						Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2022 - 64,356,438 shares; 2021 - 64,343,582 shares)	644		643
Additional paid-in capital	Additional paid-in capital	513,357		501,531		Additional paid-in capital	519,227		516,562
Treasury stock, at cost (2021 - 13,657,055 shares; 2020 - 13,530,074 shares)		(523,577)		(516,992)
Treasury stock, at cost (2022 - 13,659,544 shares; 2021 - 13,658,483 shares)						Treasury stock, at cost (2022 - 13,659,544 shares; 2021 - 13,658,483 shares)	(523,691)		(523,642)
Retained earnings	Retained earnings	1,567,113		1,519,811		Retained earnings	1,599,278		1,587,041
Accumulated other non-owner changes to equity	Accumulated other non-owner changes to equity	(164,307)		(122,315)		Accumulated other non-owner changes to equity	(154,428)		(151,838)
Total stockholders' equity	Total stockholders' equity	1,393,229		1,382,677		Total stockholders' equity	1,441,030		1,428,766
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	2,586,589	$	2,676,226	Total liabilities and stockholders' equity	$	2,555,355	$	2,576,820

See accompanying notes.

BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	71,736	$	45,658	Net income	$	20,484	$	19,382
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	68,004		66,045		Depreciation and amortization	22,301		21,992

Gain on disposition of property, plant and equipment	Gain on disposition of property, plant and equipment	(414)		(303)		Gain on disposition of property, plant and equipment	(1)		(50)
Stock compensation expense	Stock compensation expense	9,212		8,094		Stock compensation expense	2,534		2,306
Seeger divestiture charges		—		6,620
Changes in assets and liabilities, net of the effects of divestitures:

Changes in assets and liabilities:						Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(15,649)		103,161		Accounts receivable	(10,961)		(7,590)
Inventories	Inventories	(5,582)		(11,616)		Inventories	(15,154)		78
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(7,205)		(10,168)		Prepaid expenses and other current assets	(5,809)		(4,882)
Accounts payable	Accounts payable	17,827		(24,476)		Accounts payable	4,163		9,121
Accrued liabilities	Accrued liabilities	(1,051)		(7,981)		Accrued liabilities	(28,197)		(6,456)
Deferred income taxes	Deferred income taxes	(7,052)		(5,032)		Deferred income taxes	2,115		(101)
Long-term retirement benefits	Long-term retirement benefits	2,308		(2,517)		Long-term retirement benefits	(1,862)		(569)
Long-term tax liability		(6,949)		(6,949)

Other	Other	2,605		3,296		Other	1,074		2,381
Net cash provided by operating activities		127,790		163,832
Net cash (used) provided by operating activities						Net cash (used) provided by operating activities	(9,313)		35,612

Investing activities:	Investing activities:					Investing activities:
Proceeds from disposition of property, plant and equipment	Proceeds from disposition of property, plant and equipment	1,204		580		Proceeds from disposition of property, plant and equipment	60		83
Proceeds from the sale of businesses, net of cash sold		—		36,879

Capital expenditures	Capital expenditures	(26,735)		(30,170)		Capital expenditures	(7,405)		(7,855)

Other	Other	2,107		—		Other	(1,094)		3,758
Net cash (used) provided by investing activities		(23,424)		7,289
Net cash used by investing activities						Net cash used by investing activities	(8,439)		(4,014)

Financing activities:	Financing activities:					Financing activities:
Net change in other borrowings	Net change in other borrowings	(226)		6,794		Net change in other borrowings	(784)		5,354
Payments on long-term debt	Payments on long-term debt	(73,081)		(219,279)		Payments on long-term debt	(34,918)		(30,933)
Proceeds from the issuance of long-term debt	Proceeds from the issuance of long-term debt	25,000		75,000		Proceeds from the issuance of long-term debt	35,000		15,000

Proceeds from the issuance of common stock	Proceeds from the issuance of common stock	464		1,661		Proceeds from the issuance of common stock	153		125
Common stock repurchases		(5,229)		(15,550)

Dividends paid	Dividends paid	(24,293)		(24,302)		Dividends paid	(8,111)		(8,104)
Withholding taxes paid on stock issuances	Withholding taxes paid on stock issuances	(1,356)		(3,177)		Withholding taxes paid on stock issuances	(49)		(68)
Other	Other	(9,835)		(2,217)		Other	(3,665)		(5,816)
Net cash used by financing activities	Net cash used by financing activities	(88,556)		(181,070)		Net cash used by financing activities	(12,374)		(24,442)

Effect of exchange rate changes on cash flows	Effect of exchange rate changes on cash flows	(2,923)		675		Effect of exchange rate changes on cash flows	137		(2,331)
Increase (decrease) in cash, cash equivalents and restricted cash		12,887		(9,274)
(Decrease) increase in cash, cash equivalents and restricted cash						(Decrease) increase in cash, cash equivalents and restricted cash	(29,989)		4,825
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	91,468		93,805		Cash, cash equivalents and restricted cash at beginning of period	111,909		91,468
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	104,355		84,531		Cash, cash equivalents and restricted cash at end of period	81,920		96,293
Less: Restricted cash, included in Prepaid expenses and other current assets	Less: Restricted cash, included in Prepaid expenses and other current assets	(6,239)		—		Less: Restricted cash, included in Prepaid expenses and other current assets	(4,434)		(6,198)
Less: Restricted cash, included in Other assets	Less: Restricted cash, included in Other assets	(4,641)		(7,046)		Less: Restricted cash, included in Other assets	(2,231)		(5,195)
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	93,475	$	77,485	Cash and cash equivalents at end of period	$	75,255	$	84,900

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, ~~2020~~2021 has been derived from the ~~2020~~2021 financial statements of Barnes Group Inc. (the ~~“Company”~~"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, ~~2020.~~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 ~~nine-month~~three-month period ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021. Certain reclassifications have been made to prior year amounts to conform to current year presentation.~~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 ~~that COVID-19 has had~~ on its accounting estimates, assumptions and disclosures.

2. ~~Divestiture~~

On December 20, 2019, the Company entered into a Share Purchase and Transfer Agreement ("SPA") with the Kajo Neukirchen Group ("KNG") to sell the Seeger business, consisting of partnership interests and shares, respectively, of Seeger-Orbis GmbH & Co. OHG and Seeger-Orbis Mechanical Components (Tianjin) Co., Ltd. (“Seeger”) for 42,500 Euros, subject to certain adjustments. The Company completed the sale of the Seeger business to KNG effective February 1, 2020. Gross proceeds received were 38,964 Euros ($42,915) after consideration of post-closing adjustments, which were made during the fourth quarter of 2020, pursuant to the terms of the SPA. The Company yielded net cash proceeds of $36,062 after consideration of cash sold and transaction costs. Resulting tax charges of $4,211 were recognized in the first quarter of 2020 following the completion of the sale. Divestiture charges of $2,409 resulted from the completion of the sale and were recorded within Selling and Administrative expenses on the Consolidated Statements of Income in the quarter ended March 31, 2020.

The Company utilized the proceeds from the sale to reduce debt under the Amended Credit Agreement. Pursuant to the SPA, 6,000 Euros of the proceeds were placed in escrow and will be released through 2024, pending any potential settlement of claims. Cash related to a pending claim would remain in escrow until a final determination of the claim has been made. The Company has recorded the restricted cash in Prepaid Expenses and Other Current Assets and Other Assets (non-current) as of September 30, 2021.

3. Recent Accounting Standards

The Financial Accounting Standards Board ("FASB") establishes changes to accounting principles under U.S. ~~GAAP~~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 June 2016, the FASB amended its guidance related to credit losses on financial instruments. The amended guidance requires the use of a methodology of estimation that reflects expected credit losses on certain types of financial instruments, including trade receivables, as a replacement to the current methodology, which estimates losses based on incurred credit losses. This expected credit loss methodology requires that the Company consider a broader range of information when estimating credit losses on receivables. The amended guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted this amended guidance and applicable FASB updates related to the guidance during the first quarter of 2020 and it did not have a material impact on the Company's Consolidated Financial Statements.

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 is 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 has 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 9)8) and corresponding interest rate Swaps (Note ~~10)~~9) are tied to LIBOR, with each maturing 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. ~~See Note 9 as the~~The Company's Amended Credit ~~Facility~~Agreement was further amended in October 2021 and in April 2022 to address the replacement of LIBOR ~~defining certain applicable multi-currency borrowing rates that may be used as a replacement.~~ via the LIBOR Transition Agreement and Amendment No. 1, respectively (see Note 8).

The Company ~~is continuing to monitor the potential impact of the replacement of LIBOR, but~~ does not anticipate a material impact on our business, financial condition, results of operations or cash ~~flows.~~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 Account Standard 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 and will apply the guidance to future acquisitions.

4.3. 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 ~~including~~in healthcare, automation, packaging, aerospace, ~~transportation, manufacturing, automation, healthcare~~mobility and ~~packaging.~~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, and 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 transferred 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~~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
September 30, 2021 Three Months Ended
September 30, 2020
Industrial Aerospace Total Company Industrial Aerospace Total Company
Products and Services
Engineered Components Products $ 47,217 $ — $ 47,217 $ 41,746 $ — $ 41,746
Molding Solutions Products 119,956 — 119,956 103,684 — 103,684
Force & Motion Control Products 47,534 — 47,534 37,813 — 37,813
Automation Products 16,841 — 16,841 13,668 — 13,668
Aerospace Original Equipment Manufacturer Products — 64,058 64,058 — 52,023 52,023
Aerospace Aftermarket Products and Services — 29,453 29,453 — 20,125 20,125
$ 231,548 $ 93,511 $ 325,059 $ 196,911 $ 72,148 $ 269,059
Geographic Regions (A)
Americas $ 90,902 $ 70,231 $ 161,133 $ 73,677 $ 56,740 $ 130,417
Europe 83,255 16,002 99,257 80,470 10,139 90,609
Asia 56,370 6,586 62,956 41,255 4,704 45,959
Rest of World 1,021 692 1,713 1,509 565 2,074
$ 231,548 $ 93,511 $ 325,059 $ 196,911 $ 72,148 $ 269,059


		Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020						Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
		Industrial		Aerospace		Total Company		Industrial		Aerospace		Total Company				Industrial		Aerospace		Total Company		Industrial		Aerospace		Total Company
Products and Services
Product and Services															Product and Services
Engineered Components Products	Engineered Components Products	$	140,932	$	—	$	140,932	$	115,414	$	—	$	115,414		Engineered Components Products	$	46,964	$	—	$	46,964	$	48,286	$	—	$	48,286
Molding Solutions Products	Molding Solutions Products	351,115		—		351,115		294,869		—		294,869			Molding Solutions Products	103,036		—		103,036		108,547		—		108,547
Force & Motion Control Products	Force & Motion Control Products	141,512		—		141,512		112,250		—		112,250			Force & Motion Control Products	46,083		—		46,083		45,657		—		45,657
Automation Products	Automation Products	52,648		—		52,648		38,506		—		38,506			Automation Products	15,589		—		15,589		17,497		—		17,497
Aerospace Original Equipment Manufacturer Products		—		180,571		180,571		—		178,346		178,346
Aerospace Aftermarket Products and Services		—		81,068		81,068		—		95,881		95,881
Aerospace Original Equipment Manufacturing Products															Aerospace Original Equipment Manufacturing Products	—		65,629		65,629		—		55,528		55,528
Aerospace Aftermarket Product and Services															Aerospace Aftermarket Product and Services	—		35,082		35,082		—		26,114		26,114
		$	686,207	$	261,639	$	947,846	$	561,039	$	274,227	$	835,266			$	211,672	$	100,711	$	312,383	$	219,987	$	81,642	$	301,629

Geographic Regions (A)	Geographic Regions (A)														Geographic Regions (A)
Americas	Americas	$	266,798	$	194,878	$	461,676	$	208,232	$	196,945	$	405,177		Americas	$	86,005	$	72,497	$	158,502	$	82,895	$	59,009	$	141,904
Europe	Europe	262,023		43,416		305,439		230,685		49,742		280,427			Europe	82,369		19,821		102,190		88,674		14,151		102,825
Asia	Asia	153,876		21,329		175,205		118,511		23,937		142,448			Asia	41,819		7,318		49,137		46,760		7,647		54,407
Rest of World	Rest of World	3,510		2,016		5,526		3,611		3,603		7,214			Rest of World	1,479		1,075		2,554		1,658		835		2,493
		$	686,207	$	261,639	$	947,846	$	561,039	$	274,227	$	835,266			$	211,672	$	100,711	$	312,383	$	219,987	$	81,642	$	301,629

(A) Sales by geographic region are based on the location to which the product is ~~shipped.~~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 ~~each of~~ the three ~~and nine~~ month periods ended ~~September 30, 2021,~~March 31, 2022 and ~~approximately 90 percent and 85 percent of total revenue for each of the three and nine month periods ended September 30, 2020, respectively.~~March 31, 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 ~~each of~~ the three ~~and nine~~ month periods ended ~~September 30, 2021,~~March 31, 2022 and ~~approximately 10 percent and 15 percent for each of the three and nine month periods ended September 30, 2020, respectively.~~March 31, 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 revenues are 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 nine~~ month periods ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Contract Balances. The timing of revenue recognition, invoicing and cash collections affect 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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~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 may not have 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:

September 30, 2021 December 31, 2020 $ Change % Change
Unbilled receivables (contract assets) $ 37,063 $ 33,009 $ 4,054 12 %
Contract liabilities (26,290) (39,865) 13,575 (34) %
Net contract assets (liabilities) $ 10,773 $ (6,856) $ 17,629 NM

~~NM - Not Meaningful~~


	March 31, 2022		December 31, 2021		$ Change		% Change
Unbilled receivables (contract assets)	$	37,358	$	33,522	$	3,836	11	%
Contract liabilities	(18,108)		(25,374)		7,266		(29)	%
Net contract assets	$	19,250	$	8,148	$	11,102	136	%

Contract liabilities balances at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 include ~~$11,682~~$8,442 and ~~$12,750,~~$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, ~~include~~includes corresponding balances at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Changes in the net contract ~~asset~~assets during the ~~nine-month~~three-month period ended ~~September 30, 2021~~March 31, 2022 included a ~~$13,575~~$7,266 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 ~~$4,054~~$3,836 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 ~~30%~~60% of the revenue related to the contract liabilities balance as of December 31, 2021 during the three months ended March 31, 2022, respectively, and ~~85%~~approximately 40% of the revenue related to the contract liabilities balance as of December 31, 2020 during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021, ~~respectively, and approximately 25% and 75% of the revenue related to the contract liabilities balance as of December 31, 2019 during the three and nine months ended September 30, 2020,~~ 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 ~~September 30, 2021,~~March 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$175,029.~~$179,534. 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.

5.4. Stockholders' Equity

A schedule of consolidated changes in equity for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 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			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
December 31, 2021																December 31, 2021	64,344	$	643	$	516,562	13,658	$	(523,642)	$	1,587,041	$	(151,838)	$	1,428,766
Comprehensive income	Comprehensive income	—	—		—		—	—		19,382		(44,902)		(25,520)		Comprehensive income	—	—		—		—	—		20,484		(2,590)		17,894
Dividends declared ($0.16 per share)	Dividends declared ($0.16 per share)	—	—		—		—	—		(8,104)		—		(8,104)		Dividends declared ($0.16 per share)	—	—		—		—	—		(8,111)		—		(8,111)

Employee stock plans	Employee stock plans	12	—		2,406		1	(68)		(24)		—		2,314		Employee stock plans	12	1		2,665		2	(49)		(136)		—		2,481
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
Comprehensive income		—	—		—		—	—		27,863		(21,681)		6,182
Dividends declared ($0.16 per share)		—	—		—		—	—		(8,099)		—		(8,099)
Residual interest in subsidiary		—	—		2,177		—	—		—		—		2,177

Employee stock plans		84	1		3,826		23	(1,165)		(86)		—		2,576
September 30, 2021		64,284	$	643	$	513,357	13,657	$	(523,577)	$	1,567,113	$	(164,307)	$	1,393,229
March 31, 2022																March 31, 2022	64,356	$	644	$	519,227	13,660	$	(523,691)	$	1,599,278	$	(154,428)	$	1,441,030

A schedule of consolidated changes in equity for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 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, 2019 63,873 $ 639 $ 489,282 13,051 $ (498,074) $ 1,489,176 $ (210,495) $ 1,270,528
Comprehensive income — — — — — 29,733 (34,189) (4,456)
Dividends declared ($0.16 per share) — — — — — (8,133) — (8,133)
Common stock repurchases — — — 396 (15,550) — — (15,550)
Employee stock plans 17 — 2,743 2 (84) (88) — 2,571
March 31, 2020 63,890 $ 639 $ 492,025 13,449 $ (513,708) $ 1,510,688 $ (244,684) $ 1,244,960
Comprehensive income — — — — — 567 17,044 17,611
Dividends declared ($0.16 per share) — — — — — (8,072) — (8,072)
Employee stock plans 14 — 3,394 1 (53) (134) — 3,207
June 30, 2020 63,904 $ 639 $ 495,419 13,450 $ (513,761) $ 1,503,049 $ (227,640) $ 1,257,706
Comprehensive income — — — — — 15,358 42,139 57,497
Dividends declared ($0.16 per share) — — — — — (8,097) — (8,097)
Employee stock plans 237 2 3,601 76 (3,039) (14) — 550
September 30, 2020 64,141 $ 641 $ 499,020 13,526 $ (516,800) $ 1,510,296 $ (185,501) $ 1,307,656


	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

6.5. 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, the weighted-average number of common shares outstanding was increased by ~~155,482~~146,205 and ~~103,936~~154,022 for the three-month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and by 159,807 and 236,930 for the nine-month periods ended September 30, 2021 and 2020,~~ respectively.

The calculation of weighted-average diluted shares outstanding excludes all shares that would have been anti-dilutive. During the three-month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company excluded ~~501,242~~718,844 and 525,738 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive. During the nine-month periods ended September 30, 2021 and 2020, the Company excluded 508,812 and 488,401522,117 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive.

The Company granted ~~144,000~~115,600 stock options, ~~105,669~~144,524 restricted stock unit awards and ~~97,515~~121,860 performance share awards ("PSAs") in February ~~2021~~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 ~~2021~~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.

7.6. Inventories

The components of inventories consisted of:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Finished goods	Finished goods	$	86,776	$	79,833	Finished goods	$	91,070	$	88,954
Work-in-process	Work-in-process	67,350		76,542		Work-in-process	68,690		65,468
Raw material and supplies	Raw material and supplies	84,716		81,633		Raw material and supplies	95,357		85,233
		$	238,842	$	238,008		$	255,117	$	239,655

8.7. 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 ~~September 30, 2021:~~March 31, 2022:

Industrial Aerospace Total Company
December 31, 2020 $ 980,794 $ 30,786 $ 1,011,580
Foreign currency translation (44,099) — (44,099)
September 30, 2021 $ 936,695 $ 30,786 $ 967,481


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




Foreign currency translation	(9,963)		—		(9,963)
March 31, 2022	$	914,621	$	30,786	$	945,407

~~In the second quarter of 2021, management performed its annual impairment testing of goodwill and determined that there was no goodwill impairment.~~

Other Intangible Assets:

Other intangible assets consisted of:


			September 30, 2021				December 31, 2020						March 31, 2022				December 31, 2021
		Range of Life -Years	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization			Range of Life -Years	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized intangible assets:	Amortized intangible assets:										Amortized intangible assets:
Revenue Sharing Programs (RSPs)	Revenue Sharing Programs (RSPs)	Up to 30	$	299,500	$	(149,243)	$	299,500	$	(143,209)	Revenue Sharing Programs (RSPs)	Up to 30	$	299,500	$	(154,413)	$	299,500	$	(151,961)
Component Repair Programs (CRPs)	Component Repair Programs (CRPs)	Up to 30	111,839		(34,204)		111,839		(30,869)		Component Repair Programs (CRPs)	Up to 30	111,839		(36,927)		111,839		(35,632)
Customer relationships	Customer relationships	10-16	338,366		(134,180)		338,366		(118,752)		Customer relationships	10-16	337,189		(142,630)		337,189		(137,856)
Patents and technology	Patents and technology	4-11	123,433		(84,040)		123,433		(77,311)		Patents and technology	4-11	123,433		(87,831)		123,433		(86,002)
Trademarks/trade names	Trademarks/trade names	10-30	10,949		(10,542)		10,949		(10,377)		Trademarks/trade names	10-30	10,949		(10,634)		10,949		(10,587)
Other	Other	Up to 15	10,746		(5,160)		10,746		(4,580)		Other	Up to 10	7,777		(2,253)		7,450		(2,072)
			894,833		(417,369)		894,833		(385,098)				890,687		(434,688)		890,360		(424,110)
Unamortized intangible assets:	Unamortized intangible assets:										Unamortized intangible assets:
Trade names	Trade names		55,670		—		55,670		—		Trade names		55,670		—		55,670		—
Foreign currency translation	Foreign currency translation		(15,810)		—		(1,273)		—		Foreign currency translation		(24,834)		—		(21,674)		—
Other intangible assets	Other intangible assets		$	934,693	$	(417,369)	$	949,230	$	(385,098)	Other intangible assets		$	921,523	$	(434,688)	$	924,356	$	(424,110)

Estimated amortization of intangible assets for future periods is as follows: ~~2021~~2022 (remainder) - ~~$10,000; 2022~~$34,000; 2023 - ~~$42,000; 2023- $44,000;~~$46,000; 2024 - $44,000; 2025 - ~~$44,000~~$43,000; 2026 - $43,000 and ~~2026- $43,000.~~

~~In the second quarter of 2021, management performed its annual impairment testing of its trade names, which are indefinite-lived intangible assets. Based on this assessment, there were no impairments.~~2027 - $42,000.

9.8. Debt

Long-term debt and notes and overdrafts payable at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consisted of:


		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Carrying Amount		Fair Value		Carrying Amount		Fair Value			Carrying Amount		Fair Value		Carrying Amount		Fair Value
Amended Credit Agreement	Amended Credit Agreement	$	523,405	$	551,793	$	593,622	$	601,936	Amended Credit Agreement	$	490,743	$	500,666	$	495,262	$	516,380
3.97% Senior Notes	3.97% Senior Notes	100,000		108,090		100,000		109,151		3.97% Senior Notes	100,000		102,785		100,000		105,541
Borrowings under lines of credit and overdrafts	Borrowings under lines of credit and overdrafts	148		148		2,115		2,115		Borrowings under lines of credit and overdrafts	978		978		224		224
Finance leases	Finance leases	7,149		7,401		8,268		8,650		Finance leases	5,935		5,941		6,505		6,827
Other	Other	1,755		1,757		254		257		Other	—		—		1,676		1,676
		632,457		669,189		704,259		722,109			597,656		610,370		603,667		630,648
Less current maturities	Less current maturities	(3,768)				(4,391)				Less current maturities	(2,680)				(3,735)
Long-term debt	Long-term debt	$	628,689			$	699,868			Long-term debt	$	594,976			$	599,932

In October 2014, the Company entered into a Note Purchase Agreement (“Note Purchase Agreement”), among the Company and New York Life Insurance Company, New York Life Insurance and Annuity Corporation and New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account, as purchasers, for the issuance of $100,000 aggregate principal amount of 3.97% Senior Notes due October 17, 2024 (the “3.97% Senior Notes”). The 3.97% Senior Notes are senior unsecured obligations of the Company and pay interest semi-annually on April 17 and October 17 of each year at an annual rate of 3.97%. The 3.97% Senior Notes will mature on October 17, 2024 unless earlier prepaid in accordance with their terms. Subject to certain conditions, the Company may, at its option, prepay all or any part of the 3.97% Senior Notes in an amount equal to 100% of the principal amount of the 3.97% Senior Notes so prepaid, plus any accrued and unpaid interest to the date of prepayment, plus the Make-Whole Amount, as defined in the Note Purchase Agreement, with respect to such principal amount being prepaid. The fair value of the 3.97% Senior Notes was determined using the U.S. Treasury yield and a long-term credit spread for similar types of borrowings, which represent Level 2 observable inputs.

Amendment maintained the borrowing availability of $1,000,000 along with access to request an additional $200,000 through an accordion feature. The Sixth Amendment and the First NPA Amendment provided for an increase in the Company’s maximum ratio of Consolidated Senior Debt, as defined, to Consolidated EBITDA, as defined, from 3.25 times (or, if a certain ~~Permitted Acquisition~~permitted acquisition above $150,000 is consummated, 3.50 times) to 3.75 times in each case at the end of the four fiscal quarters, beginning with December 31, 2020, and regardless of whether a ~~Permitted Acquisition,~~permitted acquisition, as defined, is consummated, providing additional financing flexibility and access to liquidity. Additionally, the Sixth Amendment requires the Company to maintain a maximum ratio of Consolidated Total Debt, as defined, to Consolidated EBITDA, of not more than 3.75 times in each case, at the end of the four fiscal quarters, beginning with December 31, 2020 and regardless of whether a permitted acquisition is consummated. Furthermore, the First NPA Amendment provides for (i) adjustments to the ratio of Consolidated Total Debt ~~as defined,~~ to Consolidated EBITDA, as defined, to conform to a more restrictive total leverage ratio that may be required under the ~~Amended Credit Agreement,~~Sixth Amendment, (ii) an increase in the amount of allowable add-back for restructuring charges when calculating Consolidated EBITDA from $15,000 to $25,000 and (iii) a required fee payment equal to 0.50% per annum times the daily outstanding principal amount of the note during each of the four fiscal quarters, following the quarter ended December 31, 2020, if the Company’s Senior Leverage Ratio, as defined, exceeds 3.25 times. In October 2020, the Company paid fees and expenses of $1,384 in conjunction with executing the ~~Amendments; such~~Amendments. Such fees have been deferred within Other Assets on the accompanying Consolidated Balance Sheet and are being amortized into interest expense on the Consolidated Statements of Income.

On February 10, 2021, the Company and certain of its subsidiaries entered into the sixth amended and restated senior unsecured revolving credit agreement (the "Amended Credit Agreement") and retained Bank of America, N.A. as the Administrative Agent for the lenders. The Amended Credit Agreement maintains the $1,000,000 of availability ~~within~~under the facility, while increasing the available borrowings under the accordion feature from $200,000 to $250,000 (aggregate availability of $1,250,000) and extends the maturity date through February 2026. The Amended Credit Agreement also adjusts the interest rate to either the Eurocurrency rate, as defined in the Amended Credit Agreement, plus a margin of 1.175% to 1.775% or the base rate, as defined in the Amended Credit Agreement, plus a margin of 0.175% ~~and~~to 0.775%, depending on the Company's leverage ratio at the time of the borrowing. Multi-currency borrowings, pursuant to the Amended Credit Agreement, bear 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% toand 1.775%. As with the earlier facility, the Company's borrowing capacity is limited by various debt covenants in the Amended Credit

Agreement, as described further below. The Amended Credit Agreement requires the Company to maintain a Senior Debt Ratio of not more than ~~3.75~~3.25 times at the end of each fiscal quarter ~~ending on or before September 30, 2021, after which the ratio will revert to 3.25 times~~ (or, if a permitted acquisition above $150,000 is consummated, 3.50 times at the end of each of the first four fiscal quarters ending after the consummation of any such acquisition). In addition, the Amended Credit Agreement requires the Company to maintain a Total Debt Ratio of not more than 3.75 for each fiscal quarter (or, if a permitted acquisition above $150,000 is consummated, 4.25 times at the end of each of the first four fiscal quarters ending after the consummation of any such ~~acquisition, however, such increase in the ratio will not be effective during any period prior to October 1, 2021)~~acquisition). A ratio of Consolidated EBITDA to Consolidated Cash Interest Expense, as defined, of not less than 4.25, is required at the end of each fiscal quarter. The Company paid fees and expenses of ~~$4,208 in the first quarter of 2021~~$4,306 in conjunction with executing the Amended Credit ~~Agreement; such~~Agreement. Such fees have been deferred within Other Assets on the Consolidated Balance Sheets and are being amortized into interest expense on the Consolidated Statements of Income through their maturity. Cash used to pay these fees ~~has been~~was recorded through other financing activities on the Consolidated Statements of Cash Flows. The Company ~~subsequently~~further amended the Amended Credit Agreement on October 11, 2021, defining certain applicable multi-currency borrowing rates that may be used as replacement rates for LIBOR, which is expected to be discontinued by reference rate reform. See Note 3.2.

On April 6, 2022, the Company entered into Amendment No. 1 (“Amendment No. 1”) to the Amended Credit Agreement, which (i) replaced the LIBOR interest rate for U.S. dollar loans to a term Secured Overnight Financing Rate (or "SOFR", as defined in the Amended 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 (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 is required to be paid by the Company under the Amended Credit Agreement and is 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 $1,034 in conjunction with executing Amendment No. 1. Such fees will be deferred within Other Assets on the Consolidated Balance Sheet and will be amortized on the Consolidated Statements of Income.

Borrowings and availability under the Amended Credit Agreement were ~~$523,405~~$490,743 and ~~$476,595,~~$509,257, respectively, at ~~September 30, 2021~~March 31, 2022 and ~~borrowings~~$495,262 and ~~availability under the Sixth Amendment were $593,622 and $406,378,~~$504,738, respectively, at December 31, ~~2020,~~2021, subject to covenants in the Company's revolving debt

agreements. At ~~September 30, 2021,~~March 31, 2022, additional borrowings of ~~$282,826~~$329,702 of Total Debt (including ~~$282,826~~$206,054 of Senior Debt) would have been allowed under the financial covenants. The average interest rate on these borrowings was ~~1.47%~~1.38% and ~~1.42%~~1.48% on ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Borrowings included Euro-denominated borrowings of ~~330,450~~310,000 Euros ($~~383,405)~~345,743) at ~~September 30, 2021~~March 31, 2022 and ~~344,450~~318,450 Euros ($~~423,622)~~360,262) at December 31, ~~2020.~~2021. 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.

At ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all applicable covenants. The Company ~~currently~~ anticipates ~~that it will maintain~~continued compliance ~~with all~~in each of ~~its covenants in~~ the next four quarters while continuing to monitor its future compliance based on current and future economic conditions. The Company's most restrictive financial covenant is the Senior Debt Ratio, which required the Company to maintain a ratio of Consolidated Senior Debt to Consolidated EBITDA of not more than ~~3.75~~3.25 times at ~~September 30, 2021.~~March 31, 2022. The actual ratio at ~~September 30, 2021~~March 31, 2022 was ~~2.59~~2.42 times, as defined. As noted above, the Amended Credit Agreement requires the Company to maintain a Senior Debt Ratio of not more than 3.75 times at the end of each fiscal quarter ending on or before September 30, 2021, after which the ratio will revert to 3.25 times in subsequent periods.

In addition, the Company has approximately ~~$87,000~~$71,000 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, the~~The Company had no borrowings under the Credit Lines at ~~September 30, 2021 while $2,100 was borrowed at~~March 31, 2022 or December 31, ~~2020 at an average interest rate of 1.10%.~~2021. The Company had ~~also~~ borrowed ~~$148~~$978 and ~~$15~~$224 under the overdraft facilities at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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 several finance leases under which ~~$7,149~~$5,935 and ~~$8,268~~$6,505 was outstanding at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The fair value of the finance leases are 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.

Other debt includes bank ~~acceptances and other foreign bank borrowings.~~acceptances. Bank acceptances represent financial instruments accepted by certain China-based vendors in lieu of cash paid on payables, generally range from three to six months in maturity and are guaranteed by banks. The Company had ~~$1,651 of~~no bank acceptances outstanding at ~~September 30, 2021. There were no~~March 31, 2022 and $1,676 of bank acceptances outstanding at December 31, ~~2020.~~2021. The carrying amounts of the bank acceptances approximate fair value due to the short maturities of these financial instruments. At September 30, 2021 and December 31, 2020, the Company also had other foreign bank borrowings of $104 and $254, respectively. The fair value of the other foreign bank borrowings was 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.~~9. 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 April 28, 2017, the Company entered into an interest rate swap agreement (the "2017 Swap") with 1 bank which ~~converts~~converted the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.92% plus the borrowing spread. The 2017 Swap ~~expires~~expired on January 31, 2022. On March 24, 2021, the Company entered into a new interest rate swap agreement (the "2021 Swap") with this same bank that ~~will commence~~commenced on January 31, 2022 and ~~will convert~~that converts the interest on the first $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. On April 6, 2022, the Company entered into Amendment No. 1 to the Amended Credit Agreement, which replaced the LIBOR interest rate for U.S. dollar loans with the SOFR rate (see Note 8). As a result of the replacement of LIBOR pursuant to Amendment No. 1, the Company plans to subsequently amend the 2021 Swap, effective April 29, 2022, such that the one-month SOFR-based borrowing rate replaces the one-month LIBOR-based borrowing rate. The Company does not anticipate any material impact on our business, financial condition, results of operations or cash flow as a result of this change.The 2021 Swap will expire on January 30, 2026. These interest rate swap agreements ~~(collectively, the~~(the "Swaps") ~~remained in place at September 30, 2021 and~~ 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, Canadian 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 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 derivatives were not material to the Company's Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021. The activity related to the derivatives that have been designated hedging instruments was not material to the Company's Consolidated Financial Statements for the periods ended ~~September 30, 2021~~March 31, 2022 or ~~2020.~~2021. The Company recognized ~~(losses)~~losses of $1,251 and ~~gains of $(2,991) and $3,079~~$3,302 related to the foreign exchange contracts that are not accounted for as hedging instruments within other expense (income), net, in the Consolidated Statements of Income for the three month periods ended ~~September 30,~~March 31, 2022 and 2021, and 2020, respectively. The Company recognized losses of $3,404 and $2,743 related to the foreign exchange contracts that are not accounted for as hedging instruments within other expense (income), net, in the Consolidated Statements of Income for the nine month periods ended September 30, 2021 and 2020, respectively. Such ~~gains and~~ losses were substantially offset by net ~~losses and~~ gains recorded on the underlying hedged asset or liability (the "underlying"). Offsetting net gains ~~or 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 ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ as presented on the Consolidated Statements of Cash Flows, include ~~$1,070~~$3,615 and ~~$1,880~~$1,567, respectively, of net cash payments related to the settlement of foreign currency hedges related to intercompany financing.

~~11.~~10. 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:~~basis as of March 31, 2022 and December 31, 2021:

Fair Value Measurements Using
Description Total Quoted Prices in Active Markets for
Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
September 30, 2021
Asset derivatives $ 195 $ — $ 195 $ —
Liability derivatives (2,774) — (2,774) —
Bank acceptances 11,303 — 11,303 —
Rabbi trust assets 3,317 3,317 — —
Total $ 12,041 $ 3,317 $ 8,724 $ —
December 31, 2020
Asset derivatives $ 1,642 $ — $ 1,642 $ —
Liability derivatives (1,988) — (1,988) —
Bank acceptances 13,267 — 13,267 —
Rabbi trust assets 3,233 3,233 — —
Total $ 16,154 $ 3,233 $ 12,921 $ —


			Fair Value Measurements Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2022
Asset derivatives	$	7,848	$	—	$	7,848	$	—
Liability derivatives	(80)		—		(80)		—
Bank acceptances	12,347		—		12,347		—
Rabbi trust assets	2,855		2,855		—		—
Total	$	22,970	$	2,855	$	20,115	$	—

December 31, 2021
Asset derivatives	$	375	$	—	$	375	$	—
Liability derivatives	(107)		—		(107)		—
Bank acceptances	13,240		—		13,240		—
Rabbi trust assets	3,001		3,001		—		—
Total	$	16,509	$	3,001	$	13,508	$	—

The derivative contracts are valued using observable current market information as of the reporting date such as the prevailing LIBOR-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 ~~less than~~ 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.

~~12.~~11. Pension and Other Postretirement Benefits

Pension and other postretirement benefits expenses consisted of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Pensions	Pensions	2021		2020		2021		2020		Pensions	2022		2021
Service cost	Service cost	$	1,633	$	1,620	$	4,912	$	4,704	Service cost	$	1,555	$	1,741
Interest cost	Interest cost	3,186		3,815		9,562		11,438		Interest cost	3,434		3,172
Expected return on plan assets	Expected return on plan assets	(6,963)		(7,594)		(20,897)		(22,391)		Expected return on plan assets	(7,281)		(6,972)
Amortization of prior service cost	Amortization of prior service cost	83		128		248		281		Amortization of prior service cost	108		85
Amortization of actuarial losses	Amortization of actuarial losses	3,999		3,502		12,005		10,148		Amortization of actuarial losses	3,139		3,926
Curtailment loss		—		—		—		484

Special termination benefits										Special termination benefits	136		—
Net periodic benefit cost	Net periodic benefit cost	$	1,938	$	1,471	$	5,830	$	4,664	Net periodic benefit cost	$	1,091	$	1,952


	Three Months Ended March 31,
Other Postretirement Benefits	2022		2021
Service cost	$	24	$	25
Interest cost	206		206
Amortization of prior service cost	—		7
Amortization of actuarial losses	9		70

Net periodic benefit cost	$	239	$	308

Three Months Ended
September 30, Nine Months Ended
September 30,
Other Postretirement Benefits 2021 2020 2021 2020
Service cost $ 27 $ 20 $ 77 $ 61
Interest cost 203 259 615 780
Amortization of prior service cost 7 6 22 20
Amortization of actuarial losses 54 9 194 27
Net periodic benefit cost $ 291 $ 294 $ 908 $ 888

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 cost other than the service cost component are included in Other income (expense) on the Consolidated Statements of Income.

~~13.~~12. Income Taxes

During the second quarter of 2021, the Italian tax authorities released Tax Guidance related to the application of tax basis realignment rules for intangible property ("Realignment") which provides Italian taxpayers with the opportunity to step up the basis of goodwill and intangibles to their fair market value and amortize the step up over 18 years for tax purposes in exchange for paying a 3% tax on the step up, payable over a three years period. The Company opted to elect the Realignment in June 2021 and accordingly recorded a tax payable of $3,008 and a long-term tax payable of $6,016. The Company subsequently made its first required installment payment of $3,008 during the third quarter of 2021, reducing the long-term tax payable accordingly. The Company also recorded a deferred tax asset of $83,921 related to the Realignment. Accounting guidance requires that when a deferred tax asset is realigned for tax purposes, a corresponding revaluation reserve also be recorded. Under Italian tax rules, any dividends paid out of this revaluation reserve are subject to tax at a 24% rate. Accordingly, the Company recorded a deferred tax liability of $72,190 related to the potential 24% tax due on any dividends, paid out of the revaluation reserve. The deferred tax asset and liability balances have been presented on a net basis on the Consolidated Balance Sheets. The Company also recorded a one time $2,707 benefit to the provision in the first nine months of 2021 related to this election and related accounting.

The Company's effective tax rate for the first ~~nine months~~quarter of ~~2021~~2022 was ~~27.0%~~21.0% compared with ~~40.0%~~28.1% in the first ~~nine months~~quarter of ~~2020~~2021 and ~~37.6%~~21.9% for the full year ~~2020.~~2021. The decrease in the first ~~nine months~~quarter of ~~2021~~2022 effective tax rate from the full year ~~2020~~2021 rate is ~~primarily due to the absence of~~driven by an increase in projected earnings in low tax ~~expense related to the completed sale of the Seeger business~~jurisdictions and higher income in ~~2020, the benefit related to the~~jurisdictions with tax ~~basis of goodwill and intangibles (discussed above), a net benefit related to the resolution of a foreign tax matter and a favorable mix in earnings based on tax jurisdictions. The tax rate benefits~~holidays. These items were partially offset by ~~tax expense~~the absence of benefits related to the ~~revaluation~~realignment of ~~UK deferred taxes resulting from a legislative increase~~tax basis goodwill and intangibles, and the favorable Mutual Aid Process Approval, both recorded in ~~the corporate tax rate.~~2021.

The Aerospace and Industrial segments have ~~a number of~~several multi-year tax holidays in Singapore, China and ~~China.~~Malaysia. The Company was granted a tax holiday in China ~~expired at~~that was approved in December 2021. As a result of this tax holiday, the ~~end of 2020. The Company has re-applied for approval of a potential three-year holiday in~~ China ~~which could reduce the~~ tax rate was reduced from 25% to 15% and is effective for a three year period commencing January 1, 2021 (retroactively). The Company anticipates a decision on its application for the holiday in the fourth quarter of 2021. These holidays are subject to the Company meeting certain commitments in the respective jurisdictions. 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 Singapore tax holiday is scheduled to expire in December 2022. These holidays are subject to the Company meeting certain commitments in the respective jurisdictions.

~~14.~~13. 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 ~~nine-month~~three-month periods ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Gains and Losses on Cash Flow Hedges		Pension and Other Postretirement Benefit Items		Foreign Currency Items		Total			Gains and Losses on Cash Flow Hedges		Pension and Other Postretirement Benefit Items		Foreign Currency Items		Total
December 31, 2020		$	(757)	$	(142,119)	$	20,561	$	(122,315)
December 31, 2021										December 31, 2021	$	160	$	(112,307)	$	(39,691)	$	(151,838)
Other comprehensive (loss) income before reclassifications	Other comprehensive (loss) income before reclassifications	(1,115)		614		(51,669)		(52,170)		Other comprehensive (loss) income before reclassifications	3,415		12		(8,612)		(5,185)
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	627		9,551		—		10,178		Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	103		2,492		—		2,595
Net current-period other comprehensive (loss) income	Net current-period other comprehensive (loss) income	(488)		10,165		(51,669)		(41,992)		Net current-period other comprehensive (loss) income	3,518		2,504		(8,612)		(2,590)
September 30, 2021		$	(1,245)	$	(131,954)	$	(31,108)	$	(164,307)
March 31, 2022										March 31, 2022	$	3,678	$	(109,803)	$	(48,303)	$	(154,428)


		Gains and Losses on Cash Flow Hedges		Pension and Other Postretirement Benefit Items		Foreign Currency Items		Total			Gains and Losses on Cash Flow Hedges		Pension and Other Postretirement Benefit Items		Foreign Currency Items		Total
December 31, 2019		$	(115)	$	(144,047)	$	(66,333)	$	(210,495)
December 31, 2020										December 31, 2020	$	(757)	$	(142,119)	$	20,561	$	(122,315)
Other comprehensive (loss) income before reclassifications	Other comprehensive (loss) income before reclassifications	(2,305)		(5,733)		23,774		15,736		Other comprehensive (loss) income before reclassifications	(888)		498		(47,882)		(48,272)
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	858		8,400		—		9,258		Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	236		3,134		—		3,370
Net current-period other comprehensive (loss) income	Net current-period other comprehensive (loss) income	(1,447)		2,667		23,774		24,994		Net current-period other comprehensive (loss) income	(652)		3,632		(47,882)		(44,902)

September 30, 2020		$	(1,562)	$	(141,380)	$	(42,559)	$	(185,501)
March 31, 2021										March 31, 2021	$	(1,409)	$	(138,487)	$	(27,321)	$	(167,217)

The following table sets forth the reclassifications out of accumulated other comprehensive income (loss) by component for the three-month periods ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Details about Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Consolidated Statements of Income
Three Months Ended
September 30, 2021 Three Months Ended
September 30, 2020
(Losses)/gains on cash flow hedges
Interest rate contracts $ (468) $ (449) Interest expense
Foreign exchange contracts 219 237 Net sales
(249) (212) Total before tax
75 85 Tax benefit
(174) (127) Net of tax
Pension and other postretirement benefit items
Amortization of prior service costs $ (90) $ (134) (A)
Amortization of actuarial losses (4,053) (3,511) (A)
(4,143) (3,645) Total before tax
972 844 Tax benefit
(3,171) (2,801) Net of tax
Total reclassifications in the period $ (3,345) $ (2,928)

~~The following table sets forth the reclassifications out of accumulated other comprehensive income (loss) by component for the nine-month periods ended September 30, 2021 and 2020:~~


Details about Accumulated Other Comprehensive Income (Loss) Components	Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)				Affected Line Item in the Consolidated Statements of Income	Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)				Affected Line Item in the Consolidated Statements of Income
		Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020				Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
(Losses)/gains on cash flow hedges	(Losses)/gains on cash flow hedges						(Losses)/gains on cash flow hedges
Interest rate contracts	Interest rate contracts	$	(1,377)	(866)		Interest expense	Interest rate contracts	$	(166)	$	(449)	Interest expense
Foreign exchange contracts	Foreign exchange contracts	517		(213)		Net sales	Foreign exchange contracts	30		128		Net sales
		(860)		(1,079)		Total before tax		(136)		(321)		Total before tax
		233		221		Tax benefit		33		85		Tax benefit
		(627)		(858)		Net of tax		(103)		(236)		Net of tax

Pension and other postretirement benefit items	Pension and other postretirement benefit items						Pension and other postretirement benefit items
Amortization of prior service costs	Amortization of prior service costs	$	(270)	$	(301)	(A)	Amortization of prior service costs	$	(108)	$	(92)	(A)
Amortization of actuarial losses	Amortization of actuarial losses	(12,199)		(10,175)		(A)	Amortization of actuarial losses	(3,148)		(3,996)		(A)
Curtailment loss		—		(484)		(A)

		(12,469)		(10,960)		Total before tax		(3,256)		(4,088)		Total before tax
		2,918		2,560		Tax benefit		764		954		Tax benefit
		(9,551)		(8,400)		Net of tax		(2,492)		(3,134)		Net of tax

Total reclassifications in the period	Total reclassifications in the period	$	(10,178)	$	(9,258)		Total reclassifications in the period	$	(2,595)	$	(3,370)

(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.~~

11.

~~15.~~14. Information on Business Segments

The Company is organized based upon the nature of its products and services and reports under 2 global business segments: Industrial and Aerospace. 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 2 reportable segments.

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 ~~transportation,~~mobility, industrial equipment, automation, personal care, packaging, electronics, 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 Force & Motion Control business provides innovative cost effective force and motion control solutions for a wide range of metal forming and other industrial markets. The Automation business designs and develops ~~pneumatic~~ robotic grippers, advanced end-of-arm tooling systems, sensors and other automation components for intelligent robotic handling solutions and industrial automation applications. Industrial's Engineered Components business manufactures and supplies precision mechanical products used in ~~transportation~~mobility and industrial applications, including mechanical springs, and high-precision punched and fine-blanked components.

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 maintenance, repair and overhaul ("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 ~~business~~activities also ~~manufactures~~include the manufacture and ~~supplies~~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.

The following tables set forth information about the Company's operations by its 2 reportable segments:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net sales	Net sales									Net sales
Industrial	Industrial	$	231,549	$	196,916	$	686,220	$	561,047	Industrial	$	211,672	$	219,992
Aerospace	Aerospace	93,511		72,148		261,639		274,227		Aerospace	100,711		81,642
Intersegment sales	Intersegment sales	(1)		(5)		(13)		(8)		Intersegment sales	—		(5)
Total net sales	Total net sales	$	325,059	$	269,059	$	947,846	$	835,266	Total net sales	$	312,383	$	301,629

Operating profit	Operating profit									Operating profit
Industrial	Industrial	$	30,067	$	24,438	$	78,635	$	42,063	Industrial	$	14,734	$	21,295
Aerospace	Aerospace	13,642		6,805		35,997		48,609		Aerospace	16,379		11,085
Total operating profit	Total operating profit	43,709		31,243		114,632		90,672		Total operating profit	31,113		32,380
Interest expense	Interest expense	4,027		3,701		12,443		11,924		Interest expense	3,567		3,942
Other expense (income), net	Other expense (income), net	1,217		47		3,952		2,700		Other expense (income), net	1,630		1,463
Income before income taxes	Income before income taxes	$	38,465	$	27,495	$	98,237	$	76,048	Income before income taxes	$	25,916	$	26,975


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Industrial	Industrial	$	1,840,602	$	1,908,389	Industrial	$	1,825,695	$	1,827,903
Aerospace	Aerospace	590,251		623,547		Aerospace	590,204		583,043
Other (A)	Other (A)	155,736		144,290		Other (A)	139,456		165,874
Total assets	Total assets	$	2,586,589	$	2,676,226	Total assets	$	2,555,355	$	2,576,820

(A) "Other" assets include corporate-controlled assets, the majority of which are cash and cash equivalents and deferred tax assets.

~~16.~~15. 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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

~~During the quarter ended September 30,~~In July 2021, a customer asserted breach of contract and contractual warranty claims regarding a part manufactured by the Company. While the Company disputes the asserted claims, the Company and the customer are in discussions seeking to resolve the matter. 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.

~~17.~~

16. Business Reorganizations

In June 2020, the Company announced restructuring and workforce reduction actions ("Actions") which were implemented across its businesses and functions in response to the macroeconomic disruption in global industrial and aerospace end markets arising from COVID-19. During 2020, a resulting pre-tax charge of $19,116 was recorded ($18,158 through operating profit), primarily related to employee severance and termination benefits (recorded largely during the second quarter of 2020). These actions were substantially complete as of December 31, 2020 and reduced the Company’s global workforce by approximately 8%. A corresponding liability of ~~$3,503,~~$1,105, per below, remained and was included within accrued liabilities as of ~~September 30, 2021.~~March 31, 2022. The Company does not expect any additional costs related to the Actions to be significant.

The following table sets forth the change in the liability related to these actions:


December 31, ~~2020~~2021	$	~~13,151~~
~~Severance expense~~	~~(810)~~1,222
Payments	~~(8,838)~~(117)
~~September 30, 2021~~March 31, 2022	$	~~3,503~~1,105

In ~~June~~ 2021, the Company initiated additional restructuring actions ("Restructurings") at ~~two~~a number of locations. The Restructurings ~~include~~included a transfer of manufacturing capabilities to leverage existing capacity which is expected to reduce labor and infrastructure costs. The Restructurings resulted in pre-tax charges of ~~$1,460,~~$2,869, primarily related to employee severance and termination benefits, in 2021 (recorded primarily during the second and ~~have been recorded within Selling~~fourth quarters of 2021) and ~~Administrative Expenses~~$616 in the ~~accompanying Consolidated Statements~~first quarter of ~~Income.~~2022. The Company expects to incur additional charges of approximately ~~$2,500~~$1,200 related to these ~~actions~~Restructurings through the remainder of 2022.

With respect to the unaudited consolidated financial information of Barnes Group Inc. for the three-month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated ~~October 29, 2021~~May 2, 2022 appearing herein, states that they did not audit and they do not express an opinion on that unaudited consolidated financial information. Accordingly, the degree of reliance on their report should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended, for their report on the unaudited consolidated financial information because that report is not a “report” or a “part” of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Securities Act of 1933, as amended.

2221

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Barnes Group Inc.

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidatedbalance sheetof Barnes Group Inc.and its subsidiaries~~(the~~ (the “Company”) as of ~~September 30, 2021~~,March 31, 2022, and the related consolidated statements of income and of comprehensive income (loss) for the three-month ~~and nine-month~~periods ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~and the consolidated statement of cash flows for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~including the related notes (collectively referred to as the “interim financialinformation”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial informationforit to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, ~~2020,~~2021, and the related consolidated statements of income, of comprehensive income (loss), of changes in stockholders’ equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 22, ~~2021, which included a paragraph describing a change in the manner of accounting for leases in the 2019 financial statements,~~2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, ~~2020,~~2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
~~October 29, 2021~~May 2, 2022

2322

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, ~~2020.~~2021. 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.bginc.com~~www.barnesgroupinc.com.

~~Third~~First Quarter Highlights

The Company reported net sales of ~~$325.1~~$312.4 million in the ~~third~~first quarter of ~~2021,~~2022, an increase of ~~$56.0~~$10.8 million or ~~20.8%~~3.6%, from the ~~third~~first quarter of ~~2020.~~2021. Organic sales increased by ~~$54.3~~$16.7 million, or ~~20.2%~~5.5%, including ~~increases~~an increase of ~~$32.9~~$19.1 million, or ~~16.7%, and $21.4 million, or 29.6%~~23.4%, at ~~Industrial and~~ Aerospace ~~respectively. Sequentially, sales increased approximately 1% in the third quarter of 2021 as compared with the second quarter of 2021, with an increase in Aerospace sales being~~ partially offset by a ~~slight~~ decrease ~~in Industrial sales.~~of $2.4 million, or 1.1%, at Industrial. The year-over-year increase at Aerospace was driven by a volume ~~increase~~increases within both the Aerospace Original Equipment Manufacturing ("OEM") and Aerospace Aftermarket businesses, reflecting improving Aerospace end markets. From an Industrial standpoint, end-markets ~~improved on a year-over-year basis, however declined slightly on a sequential basis as pressures resulting from semiconductor shortages and~~remained under pressure given the ongoing impacts of global supply chain ~~sourcing~~ constraints ~~impacted~~and semiconductor shortages on near-term automotive and broader industrial production. The ~~weakening~~strengthening of the U.S. dollar against foreign currencies ~~increased~~decreased net sales within the Industrial segment by approximately ~~$1.7~~$5.9 million. Operating margins ~~increased~~decreased from ~~11.6%~~10.7% in the ~~2020~~2021 period to ~~13.4%~~10.0% in the current period, largely a result of ~~the profit impact of~~ increased ~~sales volumes,~~raw material, utility, labor and freight costs, partially offset by an increase in ~~employee related costs, including incentive compensation.~~sales volume within the Aerospace Aftermarket business.

Impact of ~~COVID-19~~Macroeconomic Trends

~~The~~Several macroeconomic trends, partially driven by the ongoing effects of the COVID-19 pandemic, resulted in a disruption in business activities worldwide and caused weakened economic conditions throughout the 2020 period, both in the United States and abroad. COVID-19 had a significant impact on order rates within Industrial and, on a more targeted basis, Aerospace end-markets. Industrial sales volumes gradually strengthened throughoutcontinued to present challenges across our businesses during the first ~~six months of 2021, although recent signs of softness in orders during the third~~ quarter of ~~2021 have been driven by broader~~2022, with impacts including labor and supply chain ~~constraints. Similar~~constraints and inflationary pressures ~~also resulted~~resulting in increased freight, utility, labor and raw material costs, amongst others. The Company has remained focused on cost ~~increases. The Aerospace Aftermarket business remains impacted by lower passenger traffic~~management and productivity initiatives to mitigate these impacts, in addition to taking pricing actions to partially recover costs. Management also continues to evaluate the ongoing development of events in Ukraine and the removal of aircraft from service. Although sales volumes have increased within the Aerospace OEM business, management anticipates continued sales pressure as the production of certain wide body aircraft has been lowered. COVID-19 may continue to have further negativepotential for impacts on the Company's ~~operations, customers and supply chain despite preventative measures taken.~~

The Company currently maintains sufficient liquidity and continues to closely monitor its cash generation, usage and preservation including the management of working capital to generate cash. The Company took several actions in 2020 to better align costs with the current business environment, including restructuring and workforce reductions (the "Actions"). Resulting pre-tax charges of $18.2 million were recorded through operating profit in 2020 (primarily during the second quarter of 2020). See Note 17.Consolidated Financial Statements.

RESULTS OF OPERATIONS

Net Sales


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		Change				2021		2020		Change				(in millions)	2022		2021		Change
Industrial	Industrial	$	231.5	$	196.9	$	34.6	17.6	%	$	686.2	$	561.0	$	125.2	22.3	%	Industrial	$	211.7	$	220.0	$	(8.3)	(3.8)	%
Aerospace	Aerospace	93.5		72.1		21.4		29.6	%	261.6		274.2		(12.6)		(4.6)	%	Aerospace	100.7		81.6		19.1		23.4	%

Total	Total	$	325.1	$	269.1	$	56.0	20.8	%	$	947.8	$	835.3	$	112.6	13.5	%	Total	$	312.4	$	301.6	$	10.8	3.6	%

The Company reported net sales of ~~$325.1~~$312.4 million in the ~~third~~first quarter of ~~2021,~~2022, an increase of ~~$56.0~~$10.8 million, or ~~20.8%~~3.6%, from the ~~third~~first quarter of ~~2020.~~2021. Organic sales increased by ~~$54.3~~$16.7 million, or ~~20.2%~~5.5%, including ~~increases~~an increase of ~~$32.9~~$19.1 million at ~~Industrial and $21.4~~Aerospace, partially offset by a decrease of $2.4 million at ~~Aerospace. Industrial sales declined slightly on a sequential basis whereas Aerospace sales improved 8% in the third quarter of 2021, as compared with the second quarter of 2021.~~Industrial. The year-over-year increase at Aerospace was driven by improved sales within both the OEM ~~business~~ and Aftermarket businesses, resulting primarily from continuing global improvement in aerospace markets. From an Industrial standpoint, sales decreased compared with the prior year period, as continuing pressures resulting from global supply chain constraints and semiconductor shortages impacted near-term automotive and broader industrial production. The strengthening of the U.S. dollar against foreign currencies decreased net sales within the Industrial segment by approximately $5.9 million.

2423

improvement in aerospace markets. OEM and Aftermarket sales improved sequentially by 5% and 16%, respectively, in the third quarter of 2021, as compared with the second quarter of 2021. From an Industrial standpoint, end-markets improved year-over-year and declined slightly on a sequential basis as continuing pressures resulting from semiconductor shortages and global supply chain sourcing constraints impacted near-term automotive and broader industrial production. Medical end markets in which the Company participates remain solid and order activity remains favorable. General industrial markets demonstrated significant strength in the year-over-year period, although sequential sales and orders rates have tapered. The Automation business experienced organic sales growth during the current period as a result of further penetration into end markets. The weakening of the U.S. dollar against foreign currencies increased net sales within the Industrial segment by approximately $1.7 million.

The Company reported net sales of $947.8 million in the first nine months of 2021, an increase of $112.6 million, or 13.5%, from the first nine months of 2020. Organic sales increased by $93.5 million driven by an increase of $106.1 million at Industrial, partially offset by a decrease of $12.6 million at Aerospace. The Company completed the sale of its Seeger business on February 1, 2020, reducing sales by $5.3 million during the first nine months of 2021 relative to the prior year period. The weakening of the U.S. dollar against foreign currencies increased net sales within the Industrial segment by approximately $24.4 million. The decrease at Aerospace was driven by organic sales declines within the Aftermarket businesses, due primarily to the effect of COVID-19 on airline travel, whereas improvements within Industrial were driven by recovering end-markets within each of the businesses.

Expenses and Operating Income


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended March 31,
(in millions)	(in millions)	2021			2020			Change				2021			2020			Change				(in millions)	2022			2021			Change
Cost of sales	Cost of sales	$	205.1		$	176.9		$	28.2	15.9	%	$	602.9		$	532.2		$	70.7	13.3	%	Cost of sales	$	207.2		$	194.7		$	12.5	6.4	%
% sales	% sales	63.1		%	65.8		%					63.6		%	63.7		%					% sales	66.3		%	64.5		%
Gross profit (1)	Gross profit (1)	$	120.0		$	92.2		$	27.8	30.2	%	$	344.9		$	303.1		$	41.9	13.8	%	Gross profit (1)	$	105.2		$	106.9		$	(1.7)	(1.6)	%
% sales	% sales	36.9		%	34.2		%					36.4		%	36.3		%					% sales	33.7		%	35.5		%
Selling and administrative expenses	Selling and administrative expenses	$	76.3		$	60.9		$	15.4	25.2	%	$	230.3		$	212.4		$	17.9	8.4	%	Selling and administrative expenses	$	74.1		$	74.6		$	(0.5)	(0.6)	%
% sales	% sales	23.5		%	22.6		%					24.3		%	25.4		%					% sales	23.7		%	24.7		%
Operating income	Operating income	$	43.7		$	31.2		$	12.5	39.9	%	$	114.6		$	90.7		$	24.0	26.4	%	Operating income	$	31.1		$	32.4		$	(1.3)	(3.9)	%
% sales	% sales	13.4		%	11.6		%					12.1		%	10.9		%					% sales	10.0		%	10.7		%

(1) Sales less cost of sales.

Cost of sales in the ~~third~~first quarter of ~~2021~~2022 increased ~~15.9%~~6.4% from the ~~2020~~2021 period and gross profit margin ~~increased~~decreased from ~~34.2%~~35.5% in the ~~2020~~2021 period to ~~36.9%~~33.7% in the ~~2021~~2022 period. Gross profit margins decreased at Industrial and increased at ~~both Aerospace and Industrial.~~Aerospace. Within Industrial, gross profit and gross profit margin ~~increased~~decreased primarily as a result ~~of the profit contribution of higher sales volumes within each of the businesses, partially offset by~~ increased global ~~sourcing costs,~~supply chain constraints and inflationary pressures, including increased freight, labor, utilities and raw ~~material.~~material costs. Within Aerospace, higher volumes ~~within~~in both the Aftermarket and OEM businesses contributed to an increase in both gross profit and gross profit margin during the ~~third~~first quarter of ~~2021.~~2022, with operating margins specifically benefiting from significant growth within the higher margin Aftermarket business. Operating margins within both segments were also impacted by unfavorable productivity, partially driven by labor availability, in part due to COVID-19. Selling and administrative expenses in the ~~third~~first quarter of ~~2021 increased 25.2%~~2022 decreased 0.6% from the ~~2020 period. Sales~~2021 period whereas sales increased by ~~20.8%~~3.6% between the comparable ~~2020~~2021 and ~~2021~~2022 periods. As a percentage of sales, selling and administrative costs ~~increased~~decreased from ~~22.6%~~24.7% in the ~~third~~first quarter of ~~2020~~2021 to ~~23.5%~~23.7% in the ~~2021~~2022 period. The ~~increase~~decrease in selling and administrative costs as a percentage of sales was primarily driven by ~~an increase in employee~~lower amortization of certain intangibles related ~~costs, including~~to earlier acquisitions and lower incentive ~~compensation within both segments, and investments in growth and innovation.~~compensation. Operating income in the ~~third~~first quarter of ~~2021 increased~~2022 decreased by ~~39.9%~~3.9% to ~~$43.7~~$31.1 million compared with the ~~third~~first quarter of ~~2020 and~~2021 whereas operating income margin ~~increased~~decreased from ~~11.6%~~10.7% to ~~13.4%~~10.0%, driven by the items above.

Cost of sales in the first nine months of 2021 increased 13.3% from the 2020 period and gross profit margin increased slightly from 36.3% in the 2020 period to 36.4% in the 2021 period. Gross profit margins declined at Aerospace and increased slightly at Industrial. Within Aerospace, lower volumes within the Aftermarket business on a year to date basis contributed to a decrease in gross profit during the first nine months of 2021. Gross profit margin also decreased during the first nine months of 2021 at Aerospace, given the mix of products between the OEM and Aftermarket businesses. Within Industrial, gross profit increased primarily as a result of the profit contribution of increased sales volumes. Gross profit margins at Industrial between the 2021 and 2020 periods increased slightly as the profit contribution of increased sales volumes was partially offset by an increase in global sourcing costs. Within Aerospace, a reduction in gross profit in the first nine months of 2021 was driven by significantly

lower volumes within the Aftermarket businesses as compared with the 2020 period. Selling and administrative expenses in the first nine months of 2021 increased 8.4% from the 2020 period. Sales, however, increased by 13.5% between the comparable 2021 and 2020 periods. As a percentage of sales, selling and administrative costs decreased from 25.4% in the first nine months of 2020 to 24.3% in the 2021 period. The decrease in selling and administrative costs as a percentage of sales was driven by the absence of $18.0 million of pre-tax charges related to restructuring and workforce actions and $2.4 million of divestiture charges related to the completion of the Seeger sale during the 2020 period. Partially offsetting this decrease were investments in growth and innovation, and an increase in employee related costs, including incentive compensation within both segments. Operating income in the first nine months of 2021 increased 26.4% to $114.6 million from the first nine months of 2020 and operating income margin increased from 10.9% in the 2020 period to 12.1% in the 2021 period, primarily driven by the items noted above.Interest expense

Interest expense

~~Interest expense increased~~ decreased by ~~$0.3 million in the third quarter of 2021 and by $0.5~~$0.4 million in the first ~~nine months~~quarter of ~~2021~~2022 as compared with the prior year ~~periods,~~period primarily as a result of ~~higher interest rates, partially offset by~~ decreased average borrowings during the period.

Other expense (income), net

~~Other expense (income), net in the third quarter of 2021 was $1.2 million compared to $0.0 million in the third quarter of 2020.~~

Other expense (income), net in the first ~~nine months~~quarter of ~~2021~~2022 was ~~$4.0~~$1.6 million compared to ~~$2.7~~$1.5 million in the first ~~nine months~~quarter of 2020. This increase in expense was primarily caused by an increase in other components of net periodic benefit costs, from $0.8 million in the nine months ended September 30, 2020 to $1.7 million in the nine months ended September 30, 2021.

Income Taxes

During the second quarter of 2021, the Italian tax authorities released Tax Guidance related to the application of tax basis realignment rules for intangible property ("Realignment") which provides Italian taxpayers with the opportunity to step up the basis of goodwill and intangibles to their fair market value and amortize the step up over 18 years for tax purposes in exchange for paying a 3% tax on the step up, payable over a three year period. The Company opted to elect the Realignment in June 2021 and accordingly recorded a tax payable of $3.0 million and a long-term tax payable of $6.0 million. The Company subsequently made its first required installment payment of $3.0 million during the third quarter of 2021, reducing the long-term tax payable accordingly. The Company also recorded a deferred tax asset of $83.9 million related to the Realignment. Accounting guidance requires that when a deferred tax asset is realigned for tax purposes, a corresponding revaluation reserve also be recorded. Under Italian tax rules, any dividends paid out of this revaluation reserve are subject to tax at a 24% rate. Accordingly, the Company recorded a deferred tax liability of $72.2 million related to the potential 24% tax due on any dividends, paid out of the revaluation reserve. The deferred tax asset and liability balances have been presented on a net basis on the Consolidated Balance Sheets. The Company also recorded a one time $2.7 million benefit to the provision in the first nine months of 2021 related to this election and related accounting.

The Company's effective tax rate for the first ~~nine~~three months of 2022 was 21.0% compared with 28.1% in the first three months of 2021 ~~was 27.0% compared with 40.0% in the first nine months of 2020~~ and ~~37.6%~~21.9% for the full year ~~2020.~~2021. The decrease in the first ~~nine months~~quarter of ~~2021~~2022 effective tax rate from the full year ~~2020~~2021 rate is ~~primarily due to the absence of~~driven by an increase in projected earnings in low tax ~~expense related to the completed sale of the Seeger business~~jurisdictions and higher income in ~~2020, the benefit related to the~~jurisdictions with tax ~~basis of goodwill and intangibles (discussed above), a net benefit related to the resolution of a foreign tax matter and a favorable mix in earnings based on tax jurisdictions. The tax rate benefits~~holidays. These items were partially offset by ~~tax expense~~the absence of benefits related to the ~~revaluation~~realignment of ~~UK deferred taxes resulting from a legislative increase~~tax basis goodwill and intangibles, and the favorable Mutual Aid Process Approval, both recorded in ~~the corporate tax rate.~~2021.

The Singapore tax holiday is scheduled to expire in December 2022.

These holidays are subject to the Company meeting certain commitments in the respective jurisdictions.

2624

Income and Income per Share


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
(in millions, except per share)	(in millions, except per share)	2021		2020		Change				2021		2020		Change				(in millions, except per share)	2022		2021		Change
Net income	Net income	$	27.9	$	15.4	$	12.5	81.4	%	$	71.7	$	45.7	$	26.1	57.1	%	Net income	$	20.5	$	19.4	$	1.1	5.7	%
Net income per common share:	Net income per common share:																	Net income per common share:
Basic	Basic	$	0.55	$	0.30	$	0.25	83.3	%	$	1.41	$	0.90	$	0.51	56.7	%	Basic	$	0.40	$	0.38	$	0.02	5.3	%
Diluted	Diluted	0.55		0.30		0.25		83.3	%	1.40		0.89		0.51		57.3	%	Diluted	0.40		0.38		0.02		5.3	%
Weighted average common shares outstanding:	Weighted average common shares outstanding:																	Weighted average common shares outstanding:
Basic	Basic	50.9		50.8		0.1		0.1	%	50.9		50.9		—		0.1	%	Basic	51.0		50.9		0.1		0.2	%
Diluted	Diluted	51.1		50.9		0.1		0.2	%	51.1		51.1		—		(0.1)	%	Diluted	51.2		51.1		0.1		0.2	%

Basic and diluted net income per common share increased for the ~~three and nine month periods~~three-month period ended ~~September 30, 2021~~March 31, 2022 as compared to ~~2020. The increases were~~2021 due to the ~~increases~~increase in net income for the ~~periods.~~period. Basic and diluted weighted average common shares outstanding were ~~largely~~ consistent for the periods and were only slightly impacted by the repurchase of ~~396,000 and~~ 100,000 shares during ~~2020 and~~ 2021 ~~respectively,~~ 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.

Financial Performance by Business Segment

Industrial


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended March 31,
(in millions)	(in millions)	2021			2020			Change				2021			2020			Change				(in millions)	2022			2021			Change
Sales	Sales	$	231.5		$	196.9		$	34.6	17.6	%	$	686.2		$	561.0		$	125.2	22.3	%	Sales	$	211.7		$	220.0		$	(8.3)	(3.8)	%
Operating profit	Operating profit	30.1			24.4			5.6		23.0	%	78.6			42.1			36.6		86.9	%	Operating profit	14.7			21.3			(6.6)		(30.8)	%
Operating margin	Operating margin	13.0		%	12.4		%					11.5		%	7.5		%					Operating margin	7.0		%	9.7		%

Sales at Industrial were ~~$231.5~~$211.7 million in the ~~third~~first quarter of ~~2021, a $34.6~~2022, an $8.3 million, or ~~17.6% increase~~3.8%, decrease from the ~~third~~first quarter of ~~2020.~~2021. Organic sales ~~increased~~decreased by ~~$32.9~~$2.4 million, or ~~16.7%~~1.1%, during the ~~2021~~2022 period, primarily driven by lower volume, partially offset by pricing actions, reflecting inflationary pressures. The sales decline was driven by softer year-over-year transportation and personal care markets, partially offset by comparable strength within the packaging and medical markets. Medical sales, although having improved ~~volumes across each~~on a year-over-year basis, declined sequentially since the end of 2021. The deepening impacts of COVID-19 during the ~~businesses. On a sequential basis, Industrial declined slightly in~~second half of 2021 and the ~~third~~first quarter of ~~2021, as compared with the second quarter of 2021, as pressures resulting from semiconductor shortages and~~2022 continued to pressure Industrial performance. This pressure drove global supply chain ~~sourcing~~ constraints ~~impacted near-term~~and labor availability challenges, in addition to semiconductor shortages, with these factors continuing to impact automotive and broader industrial production. The Automation business also saw ~~strong~~a year-over-year organic sales ~~growth,~~decline, although ~~sequential~~ sales ~~and order rates both declined relative to the second quarter of 2021. Orders within the personal care and packaging markets demonstrated softness~~increased modestly on ~~both~~ a ~~year-over-year and~~ sequential basis. ~~Volumes within our medical markets remained solid, consistent with this market trend throughout the pandemic.~~ Foreign currency ~~increased~~decreased sales on a year-over-year basis by approximately ~~$1.7~~$5.9 million as the U.S. dollar weakened against foreign currencies. During the first nine months of 2021, this segment reported sales of $686.2 million, a 22.3% increase from the first nine months of 2020. Organic sales increased by $106.1 million, or 18.9%, during the 2021 period, primarily a result of recovering end-markets, the lessened impacts of COVID-19 and related sales improvements within each of the businesses. The Company completed the sale of its Seeger business in February 2020, reducing sales by $5.3 million during the first nine months of 2021 relative to the prior year period. Foreign currency increased sales by approximately $24.4 million as the U.S. dollar weakenedstrengthened against foreign currencies.

Operating profit at Industrial in the ~~third~~first quarter of 2022 decreased 30.8% from the first quarter of 2021 ~~increased 23.0% from the third quarter of 2020~~ to ~~$30.1~~$14.7 million. ~~Operating profit benefited from the impact of increased organic sales volumes, partially offset by an increase in employee related costs, including incentive compensation,~~Global supply chain constraints and ~~investments in growth and innovation. Global sourcing also~~inflationary pressures impacted the current period as ~~supply chain constraints drove~~ freight, utilities, labor and raw material cost increases ~~across~~impacted the broader industry. Inflationary pressures and increased global sourcing costs of approximately $8.0 million were partially offset by pricing and procurement actions taken by the Company, providing a recovery of approximately $5.0 million. Operating profit was also impacted by lower productivity, due in part to COVID-19 related absenteeism, and restructuring charges resulting from a 2021 action. Lower incentive compensation served as a partial offset. Operating margin ~~increased~~decreased from ~~12.4%~~9.7% in the ~~2020~~2021 period to ~~13.0%~~7.0% in the ~~2021~~2022 period, driven primarily by increased organic sales volumes. Operating profit in the first nine months of 2021 was $78.6 million, an increase of $36.6 million from the first nine months of 2020, driven by the profit impact of increased organic sales and the absence of $15.8 million of restructuring charges and $2.4 million of divestiture charges related to the completion of the Seeger sale during the 2020 period. Partially offsetting these benefits were the increase in employee related costs, global sourcing and investments in growth and innovation. Research and development costs increased in the first nine months of 2021 period as the Company continues to invest in innovation.

~~Operating margin increased from 7.5% in the 2020 period to 11.5% in the 2021 period, primarily a result of~~ the increased ~~organic sales and the absence of the prior period restructuring costs.~~costs described above.

Outlook: In Industrial, management remains focused on generating organic sales growth through the introduction of new products and services and by leveraging the benefits of its diversified products and global industrial end-markets. ~~This being the case, our~~Our end markets ~~continue to recover from~~remain impacted by the ongoing impacts of COVID-19, including absenteeism and, more recently, lockdowns in China, and increasing supply chain constraints. Markets within Europe generally improved during the first quarter of 2022 as order rates increased, although growth remained sequentially flat within our key regions of North America ~~Europe~~ and China ~~although having demonstrated recovery throughout the first half of the year, softened during the third quarter~~ as supply chain disruptions impacted demand and shipments across ~~most~~ Industrial businesses and regions. ~~General industrial end markets have shown significant year-over-year improvement, although order rates were sequentially flat as compared with the second quarter of 2021.~~ For overall industrial end-markets,

the manufacturing Purchasing Managers' Index ("PMI") ~~are~~remains above 50 ~~in most regions. PMI~~ within the United States and Europe, ~~and~~however, China ~~however, have~~has shown ~~slight~~continued deterioration since the ~~second~~last quarter of ~~2021.~~2021, falling below 50 during the first quarter of 2022 with slowing growth. Global ~~forecasted~~light vehicle production ~~for~~through the first three months of 2022 declined modestly as compared with the comparable 2021 period, largely a result of the impacts of the semiconductor shortage, albeit production varied by key region, with growth in China. Production of light vehicles ~~has continued~~is being forecasted to ~~decline due to~~improve in 2022 although the semiconductor ~~shortages that have impacted, and~~shortage may continue to impact near-term automotive ~~builds, tempering overall strength~~builds. Management expects this shortage and broader supply constraints to continue into the second quarter of 2022, with an expectation that semiconductor chip supply will improve as the year goes on. Our customers and the markets we serve may impose emissions reduction or other environmental standards and requirements, including our conventional fuel-based automotive markets, thereby impacting sales volumes within ~~the transportation markets during the first nine months of 2021.~~our automotive end markets. Management also ~~continues to track~~tracks closely the impact of pricing changes and lead times on raw materials and freight, given the increasing pressure of supply chain constraints. Management remains focused on labor constraints ~~primarily during~~that have impacted the ~~back end of the current quarter.~~business throughout 2021 and into 2022. Within our Molding Solutions business, global medical markets remain healthy and are expected to remain favorable given the recent demands of COVID-19, an aging population and expanded medical applications. The automotive hot runner and tool and die markets remain strong following the release of projects with automotive original equipment manufacturers related to model launches, including new electric vehicles. Orders within the ~~packaging~~personal care market have declined on both a year-over-year and sequential basis. ~~Proposed environmental~~Sales volumes at certain of our businesses is dependent upon the need for equipment used to produce plastic products, which may be significantly influenced by the demand for plastic products, the capital investment needs of companies in the plastic injection molding and plastics processing industries, changes in technological advances and changes in laws or regulations ~~affecting~~such as those related to single-use plastics, product and packaging composition, and ~~disposability may impact future sales within these end markets.~~recycling. Automation ~~end-markets continue to trend positively from~~orders increased slightly on a sequential basis, although they trended downward on a year-over-year ~~standpoint. Although order activity declined sequentially during the third quarter of 2021, we continue~~standpoint as management continues to focus on further expansion into adjacent ~~end-markets. Overall industrial~~ end-markets ~~may be impacted by uncertainty related~~that provide new applications. Management continues to ~~current~~evaluate the ongoing development of events in Ukraine and the potential ~~future tariffs.~~for impacts on the Company. Within the segment, our exposure in Russia is minimal, with historical annual sales of less than $2.0 million. As noted above, our sales were ~~positively~~negatively impacted by ~~$1.7~~$5.9 million from fluctuations in foreign currencies. To the extent that the U.S. dollar fluctuates relative to other foreign currencies, our sales may be impacted relative to the prior year periods. The relative impact on operating profit is not expected to be as significant as the impact on sales as most of our businesses have expenses primarily denominated in local currencies, where their revenues reside, however operating margins may be impacted. Management is focused on sales growth through innovation, acquisition and expanding geographic reach. Strategic investments in new technologies, manufacturing processes and product development are expected to provide benefits over the long term and management continues to evaluate such opportunities.

The Company is focused on the proactive management of costs to mitigate ~~any residual~~the ongoing impacts of COVID-19 and ~~increasing~~the continuing risks of supply chain constraints on operating profit. Management also remains focused on strategic investments and new product and process introductions, as well as driving productivity by leveraging the Barnes Enterprise System ("BES"). ~~Cost saving initiatives taken earlier, including discretionary spending initiatives, continue to provide benefit.~~ The Company continues to manage its cost structure to align with the intake of orders and sales given remaining uncertainty within certain end-markets ~~as we close out 2021.~~during 2022. Management will continue to explore opportunities for additional cost savings, while working closely with vendors and customers as it relates to the timing of deliveries and pricing initiatives. It is anticipated that operating profit will continue to be impacted by changes in sales volume, mix and pricing, inflation, labor and freight costs, utilities and the levels of investments in growth and innovation that are made within each of the Industrial businesses. The ongoing events and uncertainty within Ukraine have also driven delivery and other logistical challenges, further magnifying the impacts of increased freight costs, mentioned above. Operating profit may also be impacted by enactment of or changes in tariffs, trade agreements and trade policies that may affect the cost, lead times and/or availability of goods, including but not limited to, steel and aluminum. Costs associated with new product and process introductions, restructuring and other cost initiatives, strategic investments and the integration of acquisitions may negatively impact operating profit.

Aerospace


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended March 31,
(in millions)	(in millions)	2021			2020			Change				2021			2020			Change				(in millions)	2022			2021			Change
Sales	Sales	$	93.5		$	72.1		$	21.4	29.6	%	$	261.6		$	274.2		$	(12.6)	(4.6)	%	Sales	$	100.7		$	81.6		$	19.1	23.4	%
Operating profit	Operating profit	13.6			6.8			6.8		100.5	%	36.0			48.6			(12.6)		(25.9)	%	Operating profit	16.4			11.1			5.3		47.8	%
Operating margin	Operating margin	14.6		%	9.4		%					13.8		%	17.7		%					Operating margin	16.3		%	13.6		%

The Aerospace segment reported sales of ~~$93.5~~$100.7 million in the ~~third~~first quarter of ~~2021,~~2022, a ~~29.6%~~23.4% increase from the ~~third~~first quarter of ~~2020.~~2021. Sales increased ~~23%~~18.2% and 34.3% within the OEM business and 46% within the Aftermarket business relative to the 2020 period. On a sequential basis, Aerospace sales improved 8% in the third quarter of 2021 relative to the second quarter of 2021, with OEM and Aftermarket ~~sales improving by 5% and 16%,~~businesses, respectively, relative to the ~~prior~~comparable 2021 period. The year-over-year increase in

OEM sales was driven primarily by growing narrow body airframe production including the return to flight of the Boeing 737 MAX. Sales within OEM, although having increased since the comparable 2020 period as well as sequentially since the second quarter of 2021, continued to experience the impact of earlier reductions in engine and airframe build schedules, in addition to higher levels of inventory within the supply chain. The order schedules of our OEM customers have continued to stabilize throughout 2021, although OEM orders declined sequentially in the current period as customers continue to normalize their aircraft production schedules.production. Sales within the Aftermarket Maintenance Repair and Overhaul ("MRO") and spare parts businesses also improved during the ~~third~~first quarter of ~~2021 on a year-over-year basis. Airline~~2022 relative to the comparable period as airline traffic and aircraft utilization have improved significantly relative to the third quarter of 2020. The MRO business continued to demonstrate signs of a gradual recovery as the distribution of vaccines increased, certain domestic health and travel restrictions were lifted and passenger traffic improved.significantly. Sales

within the segment are largely denominated in U.S. dollars and therefore were not significantly impacted by changes in foreign currency. During the first nine months of 2021, the Aerospace segment reported sales of $261.6 million, a 4.6% decrease from the first nine months of 2020, driven by declines within the Aftermarket businesses, partially offset by an increase within OEM. The sales decline during the first nine months of 2021 resulted from lower sales volumes, primarily during the first quarter of 2021, due to the impact of COVID-19. Aerospace segment sales during the first quarter of 2021 were down 38% relative to the comparable 2020 quarter, thereby weighing on the first nine months of 2021.

Operating profit at Aerospace in the ~~third~~first quarter of 2022 increased 47.8% from the first quarter of 2021 ~~more than doubled since the third quarter of 2020~~ to ~~$13.6~~$16.4 million. The increase in operating profit resulted from the profit contribution of higher volumes within the OEM and Aftermarket businesses, as discussed above, ~~and favorable productivity. These benefits were~~ partially offset by ~~an increase~~unfavorable productivity, in ~~employee~~part due to COVID-19 related ~~costs, including incentive compensation.~~absenteeism and supply chain challenges, and restructuring charges resulting from a 2021 action. Operating margin increased from ~~9.4%~~13.6% in the ~~the 2020~~2021 period to ~~14.6%~~16.3% in the ~~2021~~2022 period, driven primarily by the profit contribution of increased sales. Operating margin decreased from 17.7% in the first nine months of 2020 to 13.8% in the first nine months of 2021, a result of mix across the businesses and, more specifically, the comparably lower Aftermarket sales during the first nine months of 2021. Operating profit in the first nine months of 2021 decreased 25.9% from the first nine months of 2020 to $36.0 million, driven by lower Aftermarket performance within the current nine-month period, partially offset by the absence of $2.2 million of restructuring charges during the 2020 period.

Outlook: Sales in the Aerospace OEM business are based on the general state of the aerospace market driven by the worldwide economy and are supported by its order backlog through participation in certain strategic commercial and defense-related engine and airframe programs. OEM sales and orders grew ~~modestly~~ in ~~the first nine months of 2021~~2022 relative to the ~~similar 2020~~comparable 2021 period, ~~and~~although management ~~anticipates gradual order improvement over the remainder of 2021~~expects orders to temper slightly during 2022 as customer aircraft production schedules continue to normalize, albeit at lower levels. The Company expects, however, that the OEM business will ~~continue to~~ see ~~lingering softness~~recovery in demand for its manufactured components ~~relative to pre-pandemic levels~~ as ~~aircraft production rates at Boeing and Airbus have been reduced. Narrow~~narrow body airframe production is ~~beginning to ramp,~~ramping, whereas wide body airframe production remains under ~~pressure given continued international travel restrictions.~~pressure. The duration and depth of the aerospace market disruptions remain uncertain at this time, however a full recovery to pre-pandemic levels is expected to take several years. Aerospace management continues to work with customers to evaluate engine and airframe build schedules, giving management the ability to react timely to such changes. Management is also working closely with suppliers to align raw material schedules with production requirements. Management also remains focused on labor constraints that impacted the business throughout 2021 and that continued during the first quarter of 2022, resulting, in part, from COVID-related absenteeism. The business remains focused on executing long-term agreements while expanding our share of production on key programs. Backlog at OEM was ~~$665.1~~$716.3 million at ~~September 30, 2021,~~March 31, 2022, an increase of ~~16.3%~~5.3% since December 31, ~~2020,~~2021, at which time backlog was ~~$572.0~~$680.1 million. OEM orders increased backlog through the first six months of 2021, however levels declined in the current quarter, largely as Aerospace customers continued to adjust orders based on their changing aircraft production schedules. Approximately ~~40%~~45% of OEM backlog is expected to be recognized over the next 12 months. If COVID-19 continues to have a material impact on the ~~aviation~~aerospace industry, including our more significant OEM customers, it will continue to materially affect our Aerospace business and results of operations. The Aerospace OEM business may also be impacted by changes in the content levels on certain platforms, changes in customer sourcing decisions, adjustments to customer inventory levels, labor and commodity ~~and labor~~ availability (including the availability of commodities sourced in Russia) and pricing, vendor sourcing capacity and the use of alternate materials. Additional impacts may include the redesign of parts, quantity of parts per engine, cost schedules agreed to under contract with the engine and airframe manufacturers, as well as the pursuit and duration of new programs. Fluctuations in fuel costs and potential changes in regulatory requirements could impact airlines' decisions on maintaining, deferring or canceling new aircraft purchases, in part based on the value associated with new fuel-efficient technologies and targets established by airlines to reduce greenhouse gas emissions.

COVID-19 continues to impact our Aerospace Aftermarket businesses. Reduced aircraft utilization, ~~increased levels of~~ aircraft removed from service and reduced airline profitability, as compared with pre-COVID-19 levels, are expected to continue to ~~negatively~~ impact our business in the mid-term. The Aftermarket business has, however, showed strong signs of a ~~gradual~~ recovery during ~~the first nine months of~~ 2021 ~~as domestic~~and early 2022. Domestic and international passenger traffic have improved ~~the distribution of vaccines increased~~ and certain domestic health and travel restrictions were lifted. ~~Travel~~International travel restrictions ~~especially on an international basis,~~and more recent geopolitical considerations continue to impact wide body aircraft utilization and corresponding Aftermarket orders, although freight-related air traffic remains strong. Sales in the Aerospace Aftermarket business may continue to be impacted by inventory management and changes in customer sourcing, deferred or limited maintenance activity during engine shop visits and the use of surplus (used) material during the engine repair and overhaul process. Management believes that its Aerospace Aftermarket business continues to be competitively positioned based on well-established long-term customer relationships, including maintenance and repair contracts in the MRO business and long-term Revenue Sharing Programs ("RSPs") and Component Repair Programs ("CRPs"). The MRO business may also be

impacted by airlines that closely manage their aftermarket costs as engine performance and quality improves. Fluctuations in fuel costs and potential changes in regulatory requirements and their ~~impact~~corresponding impacts on airline profitability and behaviors within the aerospace industry could also impact levels and frequency of aircraft maintenance and overhaul activities, and airlines' decisions on maintaining, deferring or canceling new aircraft purchases, in part based on the economics associated with new ~~fuel efficient~~fuel-efficient technologies.

Given the pressures on sales growth resulting from COVID-19, the Company remains focused on the proactive management of costs and improved productivity ~~as it takes action~~ to mitigate continued pressure on operating profit. Certain cost savings actions taken in the prior year remain in effect and have been critical in partially offsetting the lower profit contribution of lower Aftermarket ~~sales.~~sales relative to pre-COVID-19 levels. Aerospace will continue to explore opportunities for additional productivity ~~throughout 2021 and into~~in 2022, including working closely with vendors and customers as it relates to the timing of deliveries and pricing initiatives. Management also remains focused on strategic investments and new product and process introductions. Driving productivity through the application of ~~the Barnes Enterprise System~~BES continues as a key initiative. Operating profit is expected to be affected by the impact of the changes in sales volume noted above, mix and pricing, particularly as they relate to the higher profit Aftermarket RSP spare

parts business, and investments made in each of its businesses. Operating profits may also be impacted by potential changes in tariffs, trade agreements and trade policies that may affect the cost and/or availability of goods and ~~labor.~~labor constraints. Costs associated with new product and process introductions, the physical transfer of work to other global regions, additional productivity initiatives and restructuring activities may also negatively impact operating profit.

LIQUIDITY AND CAPITAL RESOURCES

Management assesses the Company's liquidity in terms of its overall ability to generate cash to fund its operating and investing activities. Of particular importance in the management of liquidity are cash flows generated from operating activities, capital expenditure levels, dividends, capital stock transactions, effective utilization of surplus cash positions overseas and adequate lines of credit. The Company currently maintains sufficient liquidity and will continue to evaluate ways to enhance its liquidity position as it navigates through the disrupted business environment that has resulted from ~~COVID-19.~~COVID-19 and more recent geopolitical uncertainty, in addition to the macroeconomic trends discussed above.

The Company believes that its ability to generate cash from operations in excess of its internal operating needs is one of its financial strengths. Management continues to focus on cash flow and working capital management, and anticipates that operating activities in ~~2021~~2022 will generate sufficient cash to fund operations. See additional discussion regarding currently available debt facilities below.

To better align costs with the current business environment, the Company has taken several actions. During 2020, the Company announced the Actions that were taken across the businesses and functions in response to the macroeconomic disruption in global industrial and aerospace end markets. A resulting pre-tax charge of $18.2 million was recorded through operating profit during 2020 (Note 17), primarily related to employee severance and other termination benefits. The Actions were substantially completed in 2020 and, at the time of the Actions being taken, reduced the Company’s global workforce by approximately 8%. The Company continues to invest within its businesses, with its estimate of ~~2021~~2022 capital spending to be approximately ~~$40~~$50 to $55 million.

In October 2014, the Company entered into a Note Purchase Agreement (“Note Purchase Agreement”), among the Company and New York Life Insurance Company, New York Life Insurance and Annuity Corporation and New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account, as purchasers, for the issuance of $100.0 million aggregate principal amount of 3.97% senior notes due October 17, 2024 (the “3.97% Senior Notes”). The 3.97% Senior Notes are senior unsecured obligations of the Company and pay interest semi-annually on April 17 and October 17 of each year at an annual rate of 3.97%. The 3.97% Senior Notes will mature on October 17, 2024 unless earlier prepaid in accordance with their terms. Subject to certain conditions, the Company may, at its option, prepay all or any part of the 3.97% Senior Notes in an amount equal to 100% of the principal amount of the 3.97% Senior Notes so prepaid, plus any accrued and unpaid interest to the date of prepayment, plus the Make-Whole Amount, as defined in the Note Purchase Agreement, with respect to such principal amount being prepaid. The Note Purchase Agreement contains customary affirmative and negative covenants that are similar to the covenants required under the Amended Credit Agreement, as discussed below. At ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all covenants under the Note Purchase Agreement.

On October 8, 2020, the Company entered into the sixth amendment to its fifth amended and restated revolving credit agreement with Bank of America (the “Sixth Amendment”) and the first amendment to the Note Purchase Agreement with New York Life (the “First NPA Amendment” and, collectively with the Sixth Amendment, the "Amendments"). The Sixth Amendment maintained the borrowing availability of $1,000.0 million along with access to request an additional $200.0 million through an accordion feature. The Sixth Amendment and the First NPA Amendment provided for an increase in the Company’s maximum ratio of Consolidated Senior Debt, as defined, to Consolidated EBITDA, as defined, from 3.25 times (or, if a certain permitted acquisition above $150.0 million is consummated, 3.50 times) to 3.75 times in each case at the end of the four fiscal quarters, beginning with December 31, 2020, and regardless

of whether a permitted acquisition, as defined, is consummated, providing additional financing flexibility and access to liquidity. Additionally, the Sixth Amendment requires the Company to maintain a maximum ratio of Consolidated Total Debt, as defined, to Consolidated EBITDA, of not more than 3.75 times in each case, at the end of the four fiscal quarters, beginning with December 31, 2020 and regardless of whether a permitted acquisition, as defined, is consummated. Furthermore, the First NPA Amendment provides for (i) adjustments to the ratio of Consolidated Total Debt ~~as defined,~~ to Consolidated EBITDA ~~as defined,~~ to conform to a more restrictive total leverage ratio that may be required under the ~~Amended Credit Agreement,~~Sixth Amendment, (ii) an increase in the amount of allowable add-back for restructuring charges when calculating Consolidated EBITDA from $15.0 million to $25.0 million and (iii) a required fee payment equal to 0.50% per annum times the daily outstanding principal amount of the note during each of the four fiscal quarters, following the quarter ended December 31, 2020, if the Company’s Senior Leverage Ratio, as defined, exceeds 3.25 times. In October 2020, the Company paid fees and expenses of $1.4 million in conjunction with executing the ~~Amendments; such~~Amendments. Such fees have been deferred within Other Assets on the accompanying Consolidated Balance Sheet and are being amortized on the Consolidated Statements of Income.

or the base rate, as defined in the Amended Credit Agreement, plus a margin of 0.175% ~~and~~to 0.775%, depending on the Company's leverage ratio at the time of the borrowing. Multi-currency borrowings, pursuant to the Amended Credit Agreement, bear 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% to 1.775%. As with the earlier facility, the Company's borrowing capacity is limited by various debt covenants in the Amended Credit Agreement, as described further below. The Amended Credit Agreement requires the Company to maintain a Senior Debt Ratio of not more than ~~3.75~~3.25 times at the end of each fiscal quarter ~~ending on or before September 30, 2021, after which the ratio will revert to 3.25 times~~ (or, if a permitted acquisition above $150.0 million is consummated, 3.50 times at the end of each of the first four fiscal quarters ending after the consummation of any such acquisition). In addition, the Amended Credit Agreement requires the Company to maintain a Total Debt Ratio of not more than 3.75 for each fiscal quarter (or, if a permitted acquisition above $150.0 million is consummated, 4.25 times at the end of each of the first four fiscal quarters ending after the consummation of any such ~~acquisition, however, such increase in the ratio will not be effective during any period prior to October 1, 2021.~~acquisition). A ratio of Consolidated EBITDA to Consolidated Cash Interest Expense, as defined, of not less than 4.25, is required at the end of each fiscal quarter. The Amended Credit Agreement also contemplates the potential replacement of LIBOR (as defined below) with a successor financing rate, pursuant to the intent of the United Kingdom's Financial Conduct Authority to phase out use of LIBOR. See additional discussion immediately below regarding the Company's ongoing evaluation related to this potential change in financing rates. The Company paid fees and expenses of ~~$4.2~~$4.3 million in conjunction with executing the Amended Credit ~~Agreement; such~~Agreement. Such fees ~~will be~~have been deferred within Other assets on the Consolidated Balance Sheets and will be amortized into interest expense on the Consolidated Statements of Income through its maturity. The Company subsequently amended the Credit Agreement on October 11, 2021 (the "LIBOR Transition Amendment"), defining certain applicable multi-currency borrowing rates that may be used as replacement rates for LIBOR, which is expected to be discontinued by reference rate reform. See Note 32 of the Consolidated Financial Statements, as well as discussion below.

On April 6, 2022, the Company entered into Amendment No. 1 to the Amended Credit Agreement (“Amendment No. 1”), which (i) replaced the LIBOR interest rate for U.S. dollar loans to a term Secured Overnight Financing Rate (or "SOFR", as defined in the Amended 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 (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 is required to be paid by the Company under the Amended Credit Agreement and is 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 $1.0 million in conjunction with executing Amendment No. 1. Such fees will be deferred within Other Assets on the Consolidated Balance Sheet and will be amortized on the Consolidated Statements of Income.

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”)~~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 Amended Credit Agreement and corresponding interest rate ~~Swap~~swap are tied to LIBOR, with each maturing in February 2026, as noted above. 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 ~~Facility~~Agreement was further amended in October 2021 and in April 2022 to address the replacement of LIBOR ~~defining certain applicable multi-currency borrowing rates that may be used~~via the LIBOR Transition Agreement and Amendment No. 1, respectively, as ~~a replacement.~~detailed above. The Company ~~is continuing to monitor the potential impact of the replacement of LIBOR, but~~ does not anticipate a material impact on our business, financial condition, results of operations ~~and~~or cash ~~flows.~~flows

At ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all applicable covenants. The Company anticipates continued compliance under the Agreements in each of the next four quarters. The Company's most restrictive financial covenant is the Senior Debt Ratio, which required the Company to maintain a ratio of Consolidated Senior Debt to Consolidated EBITDA of not more than ~~3.75~~3.25 times at ~~September 30, 2021.~~March 31, 2022. The actual ratio at ~~September 30, 2021~~March 31, 2022 was ~~2.59~~2.42 times, as defined. ~~As noted~~

above, the Amended Credit Agreement requires the Company to maintain a Senior Debt Ratio of not more than 3.75 times at the end of each fiscal quarter ending on or before September 30, 2021, after which the ratio will revert to 3.25 times in subsequent periods.

Management did not repurchase any shares during the ~~third~~first quarter of ~~2021.~~2022. Management will continue to evaluate additional repurchases based on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. See "Part II - Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds".

Operating cash flow may be supplemented with external borrowings to meet near-term business expansion needs and the Company's current financial commitments. The Company has assessed its credit facilities in conjunction with the Amended Credit Facility and currently expects that its bank syndicate, comprised of 12 banks, will continue to support its recently executed Amended Credit Agreement, which matures in February 2026. At ~~September 30, 2021,~~March 31, 2022, the Company had ~~$476.6~~$509.3 million unused and available for borrowings under its $1,000.0 million Amended Credit Facility, subject to covenants in the Company's revolving debt agreements. At ~~September 30, 2021,~~March 31, 2022, additional borrowings of ~~$282.8~~$329.7 million of Total Debt ~~as defined,~~ including ~~$282.8~~$206.1 million of Senior Debt would have been allowed under the financial covenants. The Company intends to use borrowings under its Amended Credit Agreement to support the Company's ongoing growth initiatives. The Company continues to analyze potential acquisition targets and end markets that meet its strategic criteria with an emphasis on proprietary, highly-engineered industrial technologies. The Company believes its credit facilities and access to capital markets, coupled with cash generated from operations, are adequate for its anticipated future requirements. The Company ~~has not drawn on its debt agreements as a result of COVID-19, as it believes the availability of those funds are not at risk given the strength of the underlying bank syndicate. The Company~~ maintains communication with its bank syndicate as it continues to monitor its cash requirements.

The Company had no borrowings under short-term bank credit lines at ~~September 30, 2021.~~March 31, 2022.

~~On April 28, 2017, the~~The Company entered into an interest rate swap agreement (the "2017 Swap"), with one bank, which ~~converts~~converted the interest on the first $100.0 million of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.92% plus the borrowing spread. The 2017 Swap ~~expires~~expired on January 31, 2022. On March 24, 2021, the Company entered into a new interest rate swap agreement (the "2021 Swap") with this same bank that ~~will commence~~commenced on January 31, 2022 and ~~will convert~~that converted the interest on the first $100.0 million 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. The 2021 Swap will expire on January 30, 2026. ~~These~~On April 6, 2022, the Company entered into Amendment No. 1 to the Amended Credit Agreement, which replaced the LIBOR interest rate for U.S. dollar loans with the SOFR rate (see Note 8). As a result of the replacement of LIBOR pursuant to Amendment No. 1, the Company plans to subsequently amend the 2021 Swap, effective April 29, 2022, such that the one-month SOFR-based borrowing rate replaces the one-month LIBOR-based borrowing rate. The Company does not anticipate any material impact on our business, financial condition, results of operations or cash flow as a result of this change. The 2021 Swap remained in place at March 31, 2022 and these interest rate swap agreements (the "Swaps") ~~remained in place at September 30, 2021 and~~ are accounted for as cash flow hedges. At ~~September 30,~~March 31, 2022 and December 31, 2021, the Company's total borrowings were comprised of ~~33%~~34% fixed rate debt and ~~67%~~66% variable rate debt. ~~At December 31, 2020, the Company's total borrowings were comprised of 30% fixed rate debt and 70% variable rate debt.~~

The Company completed the sale of the Seeger business to KNG effective February 1, 2020. Gross proceeds received were 39.0 million Euros ($42.9 million) after consideration of post-closing adjustments, which were made during the fourth quarter of 2020, pursuant to the terms of the SPA. The Company yielded net cash proceeds of $36.1 million after consideration of cash sold and transaction costs. Resulting tax charges of $4.2 million were recognized in the first quarter of 2020 following the completion of the sale. The Company utilized the proceeds from the sale to reduce debt under the Amended Credit Facility.

At ~~September 30, 2021,~~March 31, 2022, the Company held ~~$93.5~~$75.3 million in cash and cash equivalents, the majority of which was held by foreign subsidiaries. These amounts have no material regulatory or contractual restrictions and, on a long-term basis, are expected to primarily fund international investments.

The Company currently does not plan to make any additional discretionary contributions to its U.S. Qualified pension plans in 2021, however approximately $4.7 million is expected to be made into its U.S. Non-qualified and international pension plans throughout 2021.

Cash Flow


		Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		Change		(in millions)	2022		2021		Change
Operating activities	Operating activities	$	127.8	$	163.8	$	(36.0)	Operating activities	$	(9.3)	$	35.6	$	(44.9)
Investing activities	Investing activities	(23.4)		7.3		(30.7)		Investing activities	(8.4)		(4.0)		(4.4)
Financing activities	Financing activities	(88.6)		(181.1)		92.5		Financing activities	(12.4)		(24.4)		12.1
Exchange rate effect	Exchange rate effect	(2.9)		0.7		(3.6)		Exchange rate effect	0.1		(2.3)		2.5
Increase (decrease) in cash		$	12.9	$	(9.3)	$	22.2
(Decrease) increase in cash, cash equivalents and restricted cash								(Decrease) increase in cash, cash equivalents and restricted cash	$	(30.0)	$	4.8	$	(34.8)

Operating activities ~~provided $127.8~~used $9.3 million in the first ~~nine~~three months of ~~2021 compared to $163.8~~2022 and provided $35.6 million in the first ~~nine~~three months of ~~2020.~~2021. Operating cash flows in the ~~2021~~2022 period were ~~positively~~negatively impacted by ~~improved operating results reflecting a recovery within our end-markets which was offset by a reduction in cash provided by working capital.~~higher outflows for accrued liabilities, primarily related to incentive compensation. The ~~2021~~2022 period also included a use of cash for working capital of ~~$3.4~~$22.0 million compared to ~~$67.1~~$1.6 million of cash provided by working capital in the ~~2020 period which was driven by a reduction in accounts receivable due to the decline in sales in the~~2021 period.

Investing activities used ~~$23.4~~$8.4 million in the first ~~nine~~three months of ~~2021 and generated $7.3~~2022 compared to $4.0 million in the first ~~nine~~three months of ~~2020. Net cash proceeds of $36.9 million from the sale of the Seeger business were included in investing activities for the 2020 period. See Note 2 of the Consolidated Financial Statements.~~2021. Investing activities in the ~~2021~~2022 period included capital expenditures of ~~$26.7~~$7.4 million compared to ~~$30.2~~$7.9 million in the ~~2020~~2021 period. The Company expects capital spending in ~~2021~~2022 to approximate ~~$40~~$50 to $55 million.

Financing activities in the first ~~nine~~three months of ~~2021~~2022 included a net decrease in borrowings of ~~$48.3~~$0.7 million compared to ~~$137.5~~$10.6 million in the comparable ~~2020~~2021 period. During the first nine months of 2021 and 2020, the Company repurchased 0.1 million shares and 0.4 million shares, respectively, of the Company's stock at a cost of $5.2 million and $15.6 million, respectively. Total cash used to pay dividends was ~~$24.3~~$8.1 million in both the 2022 and 2021 ~~and 2020~~ periods.

Other financing cash flows during the first ~~nine~~three months of 2022 and 2021 ~~and 2020~~ include ~~$1.1~~$3.6 million and ~~$1.9~~$1.6 million, respectively, of net cash payments resulting from the settlement of foreign currency hedges related to intercompany financing. Other financing cash flows during the first nine months of 2021 also include $4.2 million of payments made in conjunction with executing the Amended Credit Agreement and $4.2 million of payments related to the residual interest in a subsidiary.

The Company maintains borrowing facilities with banks to supplement internal cash generation. At ~~September 30, 2021, $523.4~~March 31, 2022, $490.7 million was borrowed at an average interest rate of ~~1.47%~~1.38% under the Company's $1,000.0 million Amended Credit Facility which matures in February 2026. As of ~~September 30, 2021,~~March 31, 2022, the Company had no borrowings under short-term bank credit lines. At ~~September 30, 2021,~~March 31, 2022, the Company's total borrowings were comprised of ~~33%~~34% fixed rate debt and ~~67%~~66% variable rate debt. The interest payments on $100.0 million of the variable rate interest debt have been converted into payment of fixed interest plus the borrowing spread under the terms of the ~~respective~~ interest rate ~~swaps~~swap that ~~were~~was executed in ~~April 2017 and~~ March 2021.

Debt Covenants

As noted above, borrowing capacity is limited by various debt covenants in the Company's debt agreements. Following is a reconciliation of Consolidated EBITDA, a key metric in the debt covenants, to the Company's net income (in millions):


	Four Fiscal Quarters Ended ~~September 30, 2021~~March 31, 2022
Net income	$	~~89.5~~101.0
Add back:
Interest expense	~~16.5~~15.8
Income taxes	~~34.2~~25.8
Depreciation and amortization	~~90.8~~92.5
Adjustment for non-cash stock based compensation	~~11.4~~11.7

Workforce reduction and restructuring charges	~~1.6~~1.5


Other adjustments	~~0.2~~ (1.0)
Consolidated EBITDA, as defined within the Amended Credit Agreement	$	~~244.1~~247.3

Consolidated Senior Debt, as defined, as of ~~September 30, 2021~~March 31, 2022	$	~~632.5~~597.7
Ratio of Consolidated Senior Debt to Consolidated EBITDA	~~2.59~~2.42
Maximum	~~3.75~~3.25
Consolidated Total Debt, as defined, as of ~~September 30, 2021~~March 31, 2022	$	~~632.5~~597.7
Ratio of Consolidated Total Debt to Consolidated EBITDA	~~2.59~~2.42
Maximum	3.75
Consolidated Cash Interest Expense, as defined, as of ~~September 30, 2021~~March 31, 2022	$	~~16.5~~15.8
Ratio of Consolidated EBITDA to Consolidated Cash Interest Expense	~~14.83~~15.62
Minimum	4.25

The Amended Credit Agreement allows for certain adjustments within the calculation of the financial covenants. Other adjustments ~~consist~~consists primarily of ~~due diligence and transaction expenses~~net gains on the sale of assets as permitted under the Amended Credit Agreement. The Company's financial covenants are measured as of the end of each fiscal quarter. At ~~September 30, 2021,~~March 31, 2022, additional borrowings of ~~$282.8~~$329.7 million of Total Debt, including $206.1 million of Senior Debt, would have been allowed under the covenants. ~~Additional borrowings for Total Debt would also have been limited to $282.8 million at September 30, 2021.~~ Senior Debt includes primarily the borrowings under the Amended Credit Agreement, the 3.97% Senior Notes and the borrowings under the lines of credit. The Company's unused committed credit facilities at ~~September 30, 2021~~March 31, 2022 were ~~$476.6~~$509.3 million; however, the borrowing capacity was limited by the debt covenants to ~~$282.8~~$329.7 million of Total Debt and $206.1 million of Senior Debt at ~~September 30, 2021.~~March 31, 2022.

OTHER MATTERS

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting policies are disclosed in Note 1 of the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. The most significant areas involving

management judgments and estimates are described in 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, ~~2020.~~2021. Actual results could differ from those estimates. There have been no material changes to such judgments and estimates.

~~Critical Accounting Policies~~

Goodwill and Indefinite-Lived Intangible Assets: Goodwill and indefinite-lived intangible assets are subject to impairment testing annually or earlier if an event or change in circumstances indicates that the fair value of a reporting unit has been reduced below its carrying value. Management completes their annual impairment assessments during the second quarter of each year as of April 1. 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 the 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 unit performance and events directly affecting a 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 the income approach, which reflects management’s cash flow projections, and also evaluates the fair value using the market approach. Inherent in management’s development of cash flow projections are assumptions and estimates,

including those related to future earnings and growth 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 second quarter assessment, 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. There was no goodwill impairment at any reporting units. Many of the factors used in assessing fair value are outside the control of management, and these assumptions and estimates can change in future periods as a result of both Company-specific and overall economic conditions, including the impacts of the COVID-19 pandemic. Management’s quantitative assessment includes a review of the potential impacts of current and projected market conditions from a market participant’s perspective on reporting units’ projected cash flows, growth rates and cost of capital to assess the likelihood of whether the fair value would be less than the carrying value. The Company also completed its annual impairment testing of its trade names, indefinite-lived intangible assets, in the second quarter of 2021 and determined that there were no impairments.

EBITDA

Earnings before interest expense, income taxes, and depreciation and amortization ("EBITDA") for the first ~~nine~~three months of ~~2021~~2022 was ~~$178.7~~$51.8 million compared to ~~$154.0~~$52.9 million in the first ~~nine~~three months of ~~2020.~~2021. EBITDA is a measurement not in accordance with generally accepted accounting principles (“GAAP”). The Company defines EBITDA as net income plus interest expense, income taxes, and depreciation and amortization which the Company incurs in the normal course of business. The Company does not intend EBITDA to represent cash flows from operations as defined by GAAP, and the reader should not consider it as an alternative to net income, net cash provided by operating activities or any other items calculated in accordance with GAAP, or as an indicator of the Company's operating performance. The Company's definition of EBITDA may not be comparable with EBITDA as defined by other companies. The Company believes EBITDA is commonly used by financial analysts and others in the industries in which the Company operates and, thus, provides useful information to investors. Accordingly, the calculation has limitations depending on its use.

Following is a reconciliation of EBITDA to the Company's net income (in millions):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Net income	Net income	$	71.7	$	45.7	Net income	$	20.5	$	19.4
Add back:	Add back:					Add back:
Interest expense	Interest expense	12.4		11.9		Interest expense	3.6		3.9
Income taxes	Income taxes	26.5		30.4		Income taxes	5.4		7.6
Depreciation and amortization	Depreciation and amortization	68.0		66.0		Depreciation and amortization	22.3		22.0
EBITDA	EBITDA	$	178.7	$	154.0	EBITDA	$	51.8	$	52.9

FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future operating and financial performance and financial condition, and often contain words such as "anticipate," "believe," "expect," "plan," "estimate," "project," "continue," "will," "should," "may," and similar terms. These forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements. These include, among others: ~~difficulty maintaining relationships with employees, customers, distributors, suppliers,~~the Company’s ability to manage economic, business ~~partners or governmental entities;~~and geopolitical conditions, including global price inflation and shortages impacting the availability of materials; the duration and severity of the COVID-19 pandemic, including its impacts across our business on demand, supply chains, operations and liquidity; failure to successfully negotiate collective bargaining agreements or potential strikes, work stoppages or other similar events; ~~difficulties leveraging market opportunities;~~ changes in market demand for our products and services; rapid technological and market change; the ability to protect and avoid infringing upon intellectual property rights; challenges associated with the introduction or development of new products or transfer of work; higher risks in global operations and markets; the impact of intense competition; the physical and operational risks from natural disasters, severe weather events, climate change which may limit accessibility to sufficient water resources, outbreaks of contagious diseases and other adverse public health developments; acts of war, terrorism ~~cybersecurity attacks or intrusions that could adversely impact our businesses; the continuing impact of the COVID-19 pandemic on our business, including on demand, supply chains, operations~~ and ~~our ability to maintain sufficient liquidity;~~other international conflicts; the failure to achieve anticipated cost savings and benefits associated with workforce reductions and restructuring actions; ~~uncertainties relating to conditions in financial markets;~~ currency fluctuations and foreign currency exposure; ~~future financial performance of the industries or customers that we serve;~~impacts from goodwill impairment and related charges; our dependence upon revenues and earnings from a small number of significant customers; a major loss of customers; inability to realize expected sales or profits from existing backlog due to a range of factors, including

changes in customer sourcing decisions, material changes, production schedules and volumes of specific programs; the impact of government budget and funding decisions; government tariffs, trade agreements and trade policies; ~~the impact of new~~changes or ~~revised tax~~uncertainties in laws, ~~and regulations; the adoption of laws, directives~~regulations, rates, policies or ~~regulations~~interpretations that impact the Company’s business operations or tax status, including those that address climate change, environmental, health and safety matters, and the materials processed by our products or their end markets; fluctuations in the pricing ~~quality~~ or availability of raw materials, ~~supplies,~~ freight, transportation, utilities and other items required by our operations; labor shortages or other business interruptions at transportation centers, shipping ports, our suppliers’ facilities or our facilities; disruptions in information technology systems, including as a result of cybersecurity attacks or data

security breaches; the ability to hire and retain senior management and qualified personnel; the continuing impact of prior acquisitions and ~~divestitures;~~divestitures, and any other future strategic actions, ~~including acquisitions, divestitures, restructurings, or strategic business realignments,~~ and our ability to achieve the financial and operational targets set in connection with any such actions; the ability to achieve social and environmental performance goals; the outcome of pending and future ~~legal,~~litigation and governmental ~~or regulatory proceedings and contingencies;~~proceedings; the impact of actual, potential or alleged defects or failures of our products or third-party products within which our products are integrated, including product liabilities, product recall costs and uninsured claims; future repurchases of common stock; future levels of indebtedness; ~~and numerous other matters of a global, regional or national scale, including those of a political, social, economic, business, competitive, environmental, regulatory and public health nature;~~ and other risks and uncertainties described in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by the Company, including, among others, those in the Management's Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors sections of the Company's filings. The Company assumes no obligation to update its forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For discussion of the Company’s exposure to market risk, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. There have been no material changes to such risk during the ~~nine-months~~three-months ended ~~September 30, 2021.~~March 31, 2022.

Item 4. Controls and Procedures

Management, including the Company's ~~President and~~Interim Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon, and as of the date of, our evaluation, the ~~President and~~Interim Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective, in all material respects and designed to provide reasonable assurance that information required to be disclosed in the reports the Company files and submits under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported as and when required and (ii) is accumulated and communicated to the Company's management, including our ~~President and~~Interim Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the Company's ~~third~~first quarter of ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

3633

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to litigation from time to time in the ordinary course of business and various other suits, proceedings and claims are pending against us and our subsidiaries. While it is not possible to determine the ultimate disposition of each of these proceedings and whether they will be resolved consistent with our beliefs, we expect that the outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on our consolidated financial position, cash flows or results of operations.

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

Period

(a)
Total Number of Shares (or Units) Purchased (b)
Average Price Paid Per Share (or Unit)

(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs

(d)
Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(2)
July 1-31, 2021 6,812 $ 49.36 — 3,604,000
August 1-31, 2021 16,234 $ 50.18 — 3,604,000
September 1-30, 2021 334 $ 44.76 — 3,604,000
Total 23,380 (1) $ 49.86 —


Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(2)
January 1-31, 2022	786		$	46.70	—	3,604,000
February 1-28, 2022	104		$	45.25	—	3,604,000
March 1-31, 2022	171		$	42.15	—	3,604,000
Total	1,061	(1)	$	45.83	—

(1)All acquisitions of equity securities during the ~~third~~first quarter of ~~2021~~2022 were the result of the operation of the terms of the Company's stockholder-approved equity compensation plans and the terms of the equity rights granted pursuant to those plans to pay for the related income tax upon issuance of shares. The purchase price of a share of stock used for tax withholding is the market price on the date of issuance.

(2)At March 31, 2019, 1.5 million shares of common stock had not been purchased under the publicly announced Repurchase Program (the “Program”). On April 25, 2019, the Board of Directors of the Company increased the number of shares authorized for repurchase under the Program by 3.5 million shares of common stock (5.0 million authorized, in total). The Program permits open market purchases, purchases under a Rule 10b5-1 trading plan and privately negotiated transactions.

3734

Item 6. Exhibits


Exhibit 10.1			L ~~IBOR~~ ~~Transition~~ Amendment No. 1 to Sixth Amended and Restated Senior Unsecured Revolving Credit Agreement, dated as of ~~October~~April 6, 2022.
Exhibit 10.2			Covenant Agreement and Release of Claims, dated March 11, 2022.
Exhibit 10.3			11 ~~, 2021.~~Offer Letter to Ian Reason, dated March 17, 2022.
Exhibit 15			Letter regarding unaudited interim financial information.
Exhibit ~~31.1~~			~~Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
~~Exhibit 31.2~~31			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32			Certification pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH			XBRL Taxonomy Extension Schema Document.
Exhibit 101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
Exhibit 101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
Exhibit 101.LAB			XBRL Taxonomy Extension Label Linkbase Document.
Exhibit 101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

3835

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		Barnes Group Inc.
		(Registrant)




Date:	~~October 29, 2021~~May 2, 2022	/s/ JULIE K. STREICH
		Julie K. Streich
		~~Senior Vice President, Finance~~Interim Chief Executive Officer and
		Senior Vice President, Finance and Chief Financial Officer
		(Interim Principal Executive Officer and
		Principal Financial Officer)

Date:	~~October 29, 2021~~May 2, 2022	/s/ MARIAN ACKER
		Marian Acker
		Vice President, Controller
		(Principal Accounting Officer)

3936

EXHIBIT INDEX

Barnes Group Inc.

Quarterly Report on Form 10-Q

For the Quarter ended ~~September 30, 2021~~March 31, 2022

Exhibit No.

Description

Reference

10.1

~~LIBOR Transition Amendment,~~Amendment No. 1 to Sixth Amended and Restated Senior Unsecured Revolving Credit Agreement, dated as of ~~October~~April 6, 2022.

Incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on April 8, 2022.

10.2

Covenant Agreement and Release of Claims, dated March 11, 2022.

Incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on March 15, 2022.

10.3

~~11,~~ ~~2021.~~Offer Letter to Ian Reason, dated March 17, 2022.

Filed with this report.

Letter regarding unaudited interim financial information.

Filed with this report.

~~31.1~~

~~Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~Filed with this report.~~

~~31.2~~31

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed with this report.

Certification pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Furnished with this report.

Exhibit 101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Filed with this report.

Exhibit 101.SCH

XBRL Taxonomy Extension Schema Document.

Filed with this report.

Exhibit 101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

Filed with this report.

Exhibit 101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

Filed with this report.

Exhibit 101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

Filed with this report.

Exhibit 101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

Filed with this report.

104

Cover Page Interactive Data File (formatted is Inline XBRL and contained in Exhibit 101).

Filed with this report.

4037


	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
	Industrial		Aerospace		Total Company		Industrial		Aerospace		Total Company
Products and Services
Engineered Components Products	$	47,217	$	—	$	47,217	$	41,746	$	—	$	41,746
Molding Solutions Products	119,956		—		119,956		103,684		—		103,684
Force & Motion Control Products	47,534		—		47,534		37,813		—		37,813
Automation Products	16,841		—		16,841		13,668		—		13,668
Aerospace Original Equipment Manufacturer Products	—		64,058		64,058		—		52,023		52,023
Aerospace Aftermarket Products and Services	—		29,453		29,453		—		20,125		20,125
	$	231,548	$	93,511	$	325,059	$	196,911	$	72,148	$	269,059

Geographic Regions (A)
Americas	$	90,902	$	70,231	$	161,133	$	73,677	$	56,740	$	130,417
Europe	83,255		16,002		99,257		80,470		10,139		90,609
Asia	56,370		6,586		62,956		41,255		4,704		45,959
Rest of World	1,021		692		1,713		1,509		565		2,074
	$	231,548	$	93,511	$	325,059	$	196,911	$	72,148	$	269,059