- Net Sales of $301 million, down 4%;
Organic Sales up 3%
- Operating Margin of 14.6%; Adjusted
Operating Margin of 14.9%, up 120 bps
- Diluted Net Income per Share of
$0.52; Adjusted Diluted Net Income per Share of $0.53, up
6%
- 2015 EPS from Continuing Operations
Guidance Updated to $2.43 to $2.58 per diluted share; On an
Adjusted Basis, $2.45 to $2.60 per diluted share, up 5% to
11%
Barnes Group Inc. (NYSE: B), an international industrial and
aerospace manufacturer and service provider, today reported
financial results for the first quarter of 2015. Net sales of $301
million were down 4% from $312 million in the first quarter of 2014
as positive organic growth of 3% was more than offset by
unfavorable foreign exchange of 6%. Net Income for the first
quarter was $29.1 million, or $0.52 per diluted share, compared to
$22.8 million, or $0.41 per diluted share in the prior year period.
On an adjusted basis, net income was $0.53 per diluted share, up 6%
from $0.50 a year ago. First quarter 2015 adjusted net income
excludes $0.9 million pre-tax, or $0.01 per diluted share, of
Männer short-term purchase accounting adjustments. First quarter
2014 adjusted net income excludes the impact of Männer short-term
purchase accounting adjustments of $4.9 million pre-tax, or $0.06
per diluted share, and costs related to the closure of production
operations at Associated Spring’s Saline, Michigan facility which
were $2.8 million pre-tax, or $0.03 per diluted share.
A table reconciling first quarter 2015 and 2014 non-GAAP
adjusted results presented in this release to our GAAP results is
included at the end of this press release.
“We continue to generate solid organic revenue growth and
improved margins in our Industrial business, while Aerospace is
positioned for an expected sales ramp through the end of the year,”
said Patrick J. Dempsey, President and Chief Executive Officer of
Barnes Group Inc. “Barnes Group’s first quarter progressed
generally as expected, and organic orders were strong. This sets us
up well for delivering on our increased 2015 performance
expectation,” added Dempsey.
Industrial
- First quarter 2015 sales were $200.3
million, down 2% from $203.9 million in the same period last year.
Unfavorable foreign exchange reduced sales by approximately $20.0
million, or 10%. Organic sales growth remained strong, up 8% in the
quarter, benefitting from favorable tool & die and automotive
end markets.
- Operating profit in the first quarter
of 2015 was $31.0 million, compared to $19.4 million in the prior
year period, benefiting from $4.0 million in lower Männer
short-term purchase accounting adjustments and the absence of last
year’s $2.8 million Saline restructuring charge. Excluding these
items, adjusted operating profit of $31.8 million was up 18% from
$27.0 million a year ago, primarily from the profit contribution of
strong organic sales growth. The impact of unfavorable foreign
exchange on operating profit for the quarter was not meaningful.
Adjusted operating margin was 15.9%, up 260 bps from last year’s
adjusted operating margin of 13.3%.
Aerospace
- First quarter 2015 sales were $100.2
million, down 7% from $108.2 million in the same period last year.
Lower sales from the original equipment manufacturing ("OEM") and
aftermarket maintenance, repair and overhaul ("MRO") businesses
were partially offset by higher aerospace spare parts sales.
- Operating profit was $12.9 million for
the first quarter of 2015, down 18% from $15.8 million in the prior
year period. Operating profit was impacted by lower contributions
from reduced sales in the OEM and MRO businesses, and was partially
offset by increased profit contributions from the Component Repair
Programs and spare parts business. Operating margin was 12.9% in
the quarter, down 170 basis points from 14.6% a year ago.
- Aerospace backlog was $542 million at
the end of the first quarter of 2015, down 2% year-over-year, and
up 4% sequentially from the end of 2014.
Additional Information
- Interest expense decreased $0.6 million
to $2.7 million in the first quarter primarily as a result of lower
average borrowings and a lower average interest rate.
- The Company's effective tax rate from
continuing operations for the first quarter of 2015 was 29.2%
compared with 27.9% in the first quarter of 2014 and 27.6% for the
full year 2014. The effective tax rate increase in 2015 over the
full year 2014 rate is primarily due to the expiration of certain
tax holidays.
2015 Outlook
Barnes Group now expects 2015 organic revenue growth of 6% to 8%
with total revenue growth of 1% to 3% after consideration of
unfavorable foreign exchange of approximately 5%. Operating margins
are forecasted to be in the range of 16% to 17%. GAAP earnings from
continuing operations are now expected to be in the range of $2.43
to $2.58 per diluted share. Excluding an approximate $0.02 of
remaining Männer short-term purchase accounting adjustments
anticipated to be recorded in 2015, adjusted diluted earnings per
share from continuing operations is expected to be in the range of
$2.45 to $2.60, up 5% to 11% from 2014’s adjusted diluted earnings
per share of $2.34. Further, the Company still anticipates capital
expenditures of approximately $55 to $60 million and cash
conversion to approximate 100% of net income.
Conference Call
Barnes Group Inc. will conduct a conference call with investors
to discuss first quarter 2015 results at 8:30 a.m. ET today, April
24, 2015. The public may access the conference through a live audio
webcast available on the Investor Relations section of Barnes
Group’s website at www.BGInc.com. The conference is also available
by direct dial at (877) 201-0168 in the U.S. or (647) 788-4901
outside of the U.S.; Conference ID 98642025. Supplemental materials
will be posted to the Investor Relations section of the Company's
website prior to the conference call.
In addition, the call will be recorded and available for
playback from 12:00 p.m. (ET) on Friday, April 24, 2015 until 11:59
p.m. (ET) on Friday, May 1, 2015, by dialing (404) 537-3406;
Conference ID 98642025.
About Barnes Group
Founded in 1857, Barnes Group Inc. (NYSE: B) is an international
industrial and aerospace manufacturer and service provider, serving
a wide range of end markets and customers. The highly engineered
products, differentiated industrial technologies, and innovative
solutions delivered by Barnes Group are used in far-reaching
applications that provide transportation, manufacturing, healthcare
products, and technology to the world. Barnes Group’s approximately
4,500 skilled and dedicated employees, at more than 60 locations
worldwide, are committed to achieving consistent and sustainable
profitable growth. For more information, visit www.BGInc.com.
Forward-Looking Statements
This press release contains 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," "strategy," "estimate," "project," 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,
including unionized employees, customers, distributors, suppliers,
business partners or governmental entities; 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 intellectual property rights; introduction or development
of new products or transfer of work; higher risks in international
operations and markets; the impact of intense competition; 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, uncertainties relating to
conditions in financial markets; currency fluctuations and foreign
currency exposure; future financial performance of the industries
or customers that we serve; 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 insourcing
decisions, material changes, production schedules and volumes of
specific programs; the impact of government budget and funding
decisions; changes in raw material or product prices and
availability; integration of acquired businesses; restructuring
costs or savings; the continuing impact of prior acquisitions and
divestitures and any other future strategic actions, including
acquisitions, joint ventures, divestitures, restructurings, or
strategic business realignments, and our ability to achieve the
financial and operational targets set in connection with any such
actions; the outcome of pending and future legal, governmental, or
regulatory proceedings and contingencies 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, economic, business, competitive,
environmental, regulatory and public health nature. The Company
assumes no obligation to update our forward-looking statements.
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited) Three months ended March 31,
2015 2014 % Change
Net sales $ 300,573 $ 312,099 (3.7 ) Cost of
sales 198,355 214,557 (7.6 ) Selling and administrative expenses
58,323 62,418 (6.6 )
256,678 276,975 (7.3 ) Operating income
43,895 35,124 25.0 Operating margin 14.6 % 11.3 %
Interest expense 2,720 3,319 (18.0 ) Other expense (income), net
81 234 (65.4 ) Income before
income taxes 41,094 31,571 30.2 Income taxes 12,018
8,819 36.3 Net income $ 29,076 $
22,752 27.8 Common dividends $ 6,571 $ 5,971
10.0 Per common share: Net income: Basic $
0.53 $ 0.42 26.2 Diluted 0.52 0.41 26.8 Dividends 0.12 0.11 9.1
Weighted average common shares outstanding: Basic 55,086,882
54,650,481 0.8 Diluted 55,658,797 55,972,753 (0.6 )
BARNES GROUP INC. OPERATIONS BY REPORTABLE BUSINESS
SEGMENT (Dollars in thousands) (Unaudited)
Three months ended March 31, 2015
2014 % Change Net sales
Industrial $ 200,349 $ 203,888 (1.7 ) Aerospace 100,224
108,212 (7.4 ) Intersegment sales - (1
) NM Total net sales $ 300,573 $ 312,099 (3.7
) Operating profit Industrial $ 30,979 $ 19,374 59.9
Aerospace 12,916 15,750 (18.0 )
Total operating profit $ 43,895 $ 35,124 25.0
Operating margin
Change Industrial 15.5 % 9.5
% 600 bps. Aerospace 12.9 % 14.6 % (170 ) bps.
Total operating margin 14.6 % 11.3 % 330 bps. NM -
Not Meaningful
BARNES GROUP
INC. CONSOLIDATED BALANCE SHEETS (Dollars in
thousands) (Unaudited)
March 31,2015
December 31,2014
Assets Current assets Cash and cash equivalents $ 45,622 $
46,039 Accounts receivable 286,002 275,890 Inventories 211,617
212,044 Deferred income taxes 26,721 31,849 Prepaid expenses and
other current assets 27,760 22,574 Total
current assets 597,722 588,396 Deferred income taxes
8,837 10,061 Property, plant and equipment, net 292,122 299,435
Goodwill 568,778 594,949 Other intangible assets, net 528,999
554,694 Other assets 27,179 26,350 Total
assets $ 2,023,637 $ 2,073,885
Liabilities and
Stockholders' Equity Current liabilities Notes and overdrafts
payable $ 16,424 $ 8,028 Accounts payable 103,015 94,803 Accrued
liabilities 139,303 161,397 Long-term debt - current 780
862 Total current liabilities 259,522 265,090
Long-term debt 462,791 495,844 Accrued retirement benefits 111,182
115,057 Deferred income taxes 64,514 70,147 Other liabilities
19,605 15,954 Total stockholders' equity 1,106,023
1,111,793 Total liabilities and stockholders' equity
$ 2,023,637 $ 2,073,885
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in thousands) (Unaudited)
Three months ended March 31,
2015 2014 Operating
activities: Net income $ 29,076 $ 22,752 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 19,122 20,782 Amortization of
convertible debt discount - 731 (Gain) loss on disposition of
property, plant and equipment (1,334 ) 78 Stock compensation
expense 2,577 1,865 Withholding taxes paid on stock issuances (488
) (463 ) Changes in assets and liabilities: Accounts receivable
(13,777 ) (32,802 ) Inventories (6,229 ) 802 Prepaid expenses and
other current assets (5,944 ) (2,763 ) Accounts payable 9,921 9,676
Accrued liabilities (13,493 ) (3,131 ) Deferred income taxes 3,740
3,834 Long-term retirement benefits (2,878 ) (4,964 ) Other
2,373 580 Net cash provided by
operating activities 22,666 16,977
Investing
activities: Proceeds from disposition of property, plant and
equipment 2,010 382 Capital expenditures (10,960 ) (15,074 ) Other
(321 ) (467 ) Net cash used by investing
activities (9,271 ) (15,159 )
Financing activities:
Net change in other borrowings 8,425 559 Payments on long-term debt
(55,821 ) (26,151 ) Proceeds from the issuance of long-term debt
26,722 39,283 Payment of assumed liability to Otto Männer Holding
AG - (19,796 ) Proceeds from the issuance of common stock 4,956
7,262 Common stock repurchases - (8,389 ) Dividends paid (6,571 )
(5,971 ) Excess tax benefit on stock awards 914 2,246 Other
10,033 (76 ) Net cash used by financing
activities (11,342 ) (11,033 ) Effect of exchange rate
changes on cash flows (2,470 ) (230 ) Decrease
in cash and cash equivalents (417 ) (9,445 ) Cash and cash
equivalents at beginning of period 46,039
70,856 Cash and cash equivalents at end of period $
45,622 $ 61,411
BARNES
GROUP INC. RECONCILIATION OF NET CASH PROVIDED BY OPERATING
ACTIVITIES TO FREE CASH FLOW (Dollars in thousands)
(Unaudited)
Three months ended March 31, 2015
2014 Free cash flow: Net cash
provided by operating activities $ 22,666 $ 16,977 Capital
expenditures (10,960 ) (15,074 ) Free cash
flow(1) $ 11,706 $ 1,903
Notes:
(1) The Company defines free cash flow as net cash provided by
operating activities less capital expenditures. The Company
believes that the free cash flow metric is useful to investors and
management as a measure of cash generated by business operations
that can be used to invest in future growth, pay dividends,
repurchase stock and reduce debt. This metric can also be used to
evaluate the Company's ability to generate cash flow from business
operations and the impact that this cash flow has on the Company's
liquidity.
BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION (Dollars in
thousands, except per share data) (Unaudited)
Three months ended March 31, 2015
2014 % Change
SEGMENT
RESULTS
Operating Profit - Industrial Segment (GAAP) $ 30,979 $
19,374 59.9 Männer short-term purchase
accounting adjustments 851 4,901 Restructuring charges -
2,750
Operating Profit - Industrial
Segment as adjusted (Non-GAAP) (1) $ 31,830 $
27,025 17.8
Operating Margin - Industrial Segment
(GAAP) 15.5 % 9.5 % 600 bps.
Operating Margin - Industrial
Segment as adjusted (Non-GAAP) (1)
15.9 %
13.3 %
260 bps.
CONSOLIDATED
RESULTS
Operating Income (GAAP) $ 43,895 $ 35,124 25.0 Männer
short-term purchase accounting adjustments 851 4,901 Restructuring
charges - 2,750
Operating
Income as adjusted (Non-GAAP) (1) $ 44,746 $
42,775 4.6
Operating Margin (GAAP) 14.6 % 11.3
% 330 bps.
Operating Margin as adjusted (Non-GAAP)
(1) 14.9 %
13.7 %
120 bps.
Diluted Net Income per Share (GAAP) $ 0.52 $ 0.41 26.8
Männer short-term purchase accounting adjustments 0.01 0.06
Restructuring charges - 0.03
Diluted Net Income per Share as adjusted (Non-GAAP)
(1) $ 0.53 $ 0.50 6.0
Full-Year 2014 Full-Year 2015 Outlook
Diluted Income from Continuing Operations per Share (GAAP) $
2.16 $ 2.43 to $ 2.58 Männer short-term purchase accounting
adjustments 0.11 0.02 Restructuring charges 0.07
0.00
Diluted Income from Continuing
Operations per Share as adjusted (Non-GAAP) (1) $ 2.34
$ 2.45 to $
2.60
Barnes Group Inc.William PittsDirector, Investor
Relations860-583-7070
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