Barnes Group Inc., the industrial conglomerate that built its Molding Solutions Group around hot runners, molds and controllers, wants to do the same for automation.
Company officials announced the plan in a third-quarter conference call on Oct. 26. They also discussed tariffs, and how a moderation in the global automotive sector is impacting its Synventive hot-runner business.
Barnes on Sept. 9 signed a deal to buy Gimatic srl, an Italian maker of end-of-arm tooling automation and sensors for automotive, packaging, health care, food and beverage and other markets. President and CEO Patrick Dempsey told financial analysts that Barnes will make more automation-related acquisitions.
"It's not a one-shot deal and it's very much based on the thorough processes on the playbook that we executed with Molding Solutions," Dempsey said. He said Barnes officials have "identified a number of key technologies that will complement Gimatic and associated potential acquisition targets."
Barnes took about five years to build Molding Solutions, starting with the 2012 acquisition of Synventive Molding Solutions. Forming the automation group will take about the same amount of time, Dempsey said. Gimatic shares some of the same customer base with Molding Solutions, he added.
The Gimatic acquisition is not completed yet, but Dempsey said Barnes and Gimatic teams have been working closely since it was announced. "Our intentions are to hit the ground running the day after the deal is closed," Dempsey said.
Once the deal is final, Barnes will hold a separate conference call to explain more about the plan to build an automation group.
Barnes, which is traded on the New York Stock Exchange, reported overall sales of $370 million in the third quarter, a 3.5 percent increase from the first quarter of 2017 sales of $357 million.
Net profit was $39.1 million, a gain of 10.7 percent from the year-ago first quarter profit figure of $35.3 million.
"Year-over-year operating profit and margins were up impressively in both our aerospace and our industrial businesses," Dempsey said.
Molding Solutions accounts for about one-third of sales in the industrial business segment, which generated third-quarter sales of $244.1 million, a 1.6 percent increase in the third quarter from the year-earlier period. Operating profit jumped 10 percent.
Dempsey said the tariffs are having a "disruptive impact" on new automotive projects.
"There's a lot of noise in the system," and Synventive is feeling the effects, he said.
"Synventive came off a record year in 2017 and the primary driver behind that was all three regions — North America, Europe and Asia all peaked at the same time — with the primary driver being North America. And that's relative to model changes," Dempsey said, answering an analyst's question.
"As we come into 2018 we see the pullback in North America, which is to be expected. … But as we go into 2019, we're looking at that [Synventive] business to continue to be very successful in the context that it's the market leader in the automotive hot runner space."
Dempsey said Barnes is well-positioned to handle tariffs and other global issues.
"From a Barnes perspective, there isn't much product we have that's moving from the U.S. to China and vice versa. Our model has primarily been local-for-local. That said, we're not immune to the tariffs because we have supply chains than are moving back and forth," he said.
Dempsey praised the management team.
"They have done a wonderful job of mitigating any potential headwinds that we are facing," he said. The company has explored alternative supply channels, pricing and in some cases has appealed the government for exclusions from some tariffs.
"Some of our products, which we're shipping internally, have been caught in the tariffs web. So we're pursuing exclusion as well," Dempsey said.
