- Net Sales of $315 million, down 2%;
Organic Sales up 4%
- Operating Margin of 16.1%; Adjusted
Operating Margin of 16.3%, up 90 bps
- Diluted Net Income per Share of
$0.61; Adjusted Diluted Net Income per Share of $0.62, up
5%
- 2015 EPS from Continuing Operations
Guidance Updated to $2.43 to $2.53 per diluted share; On an
Adjusted Basis, $2.45 to $2.55 per diluted share, up 5% to
9%
Barnes Group Inc. (NYSE: B), an international industrial and
aerospace manufacturer and service provider, today reported
financial results for the second quarter of 2015. Net sales of $315
million were down 2% from $322 million in the second quarter of
2014 as positive organic growth of approximately 4% was more than
offset by unfavorable foreign exchange of 6%. Net Income for the
second quarter was $34.2 million, or $0.61 per diluted share,
compared to $30.2 million, or $0.54 per diluted share in the prior
year period. On an adjusted basis, net income was $0.62 per diluted
share, up 5% from $0.59 a year ago. Second quarter 2015 adjusted
net income excludes $0.6 million pre-tax, or $0.01 per diluted
share, of the last remaining Männer short-term purchase accounting
adjustments. Second quarter 2014 adjusted net income excludes the
impact of Männer short-term purchase accounting adjustments of $1.9
million pre-tax, or $0.02 per diluted share, and costs related to
the closure of production operations at Associated Spring’s Saline,
Michigan facility which were $2.3 million pre-tax, or $0.03 per
diluted share.
A table reconciling second 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.
“Barnes Group performed well in the second quarter led by our
products and systems-based Industrial businesses serving the tool
& die and plastics end-markets,” said Patrick J. Dempsey,
President and Chief Executive Officer of Barnes Group Inc. “In
addition, our Aerospace Revenue Sharing Programs experienced
significant year-over-year growth which helped further expand
operating margins. While overall performance was solid, results
varied among our individual businesses as we are seeing softness
develop in certain North American industrial markets and within
China. Even so, we expect 2015 to be another year of good organic
growth, operating margin expansion and cash generation,” added
Dempsey.
Industrial
- Second quarter 2015 sales were $202.6
million, down 5% from $212.8 million in the same period last year.
Unfavorable foreign exchange reduced sales by approximately $20
million, or 9%. Organic sales growth remained solid, up 5% in the
quarter, primarily driven by favorable end-markets served by our
tool & die and plastics businesses.
- Operating profit in the second quarter
of 2015 was $30.0 million, compared to $28.8 million in the prior
year period, benefiting from $1.3 million in lower Männer
short-term purchase accounting adjustments and the absence of last
year’s $2.3 million Saline restructuring charge. Excluding these
items, adjusted operating profit of $30.6 million was down 7% from
$32.9 million a year ago. The operating profit benefit from the
contribution of organic sales growth was more than offset by lower
productivity, including incremental costs related to new product
introductions to support future growth programs, and the
unfavorable impact of foreign exchange. Adjusted operating margin
was 15.1%, down 40 bps from last year’s adjusted operating margin
of 15.5%.
Aerospace
- Second quarter 2015 sales were $112.4
million, up 3% from $109.3 million in the same period last year.
Spare part sales in Aerospace Aftermarket were up significantly,
while Aftermarket maintenance, repair and overhaul ("MRO") and
Aerospace original equipment manufacturing (“OEM”) sales were
essentially flat year-over-year.
- Operating profit was $20.7 million for
the second quarter of 2015, up 24% from $16.6 million in the prior
year period. The operating profit increase was primarily driven by
higher contributions from spare parts sales. In addition, the
Component Repair Programs in the MRO business and favorable product
mix in the OEM business likewise benefitted operating profit.
Operating margin was 18.4% in the quarter, up 320 bps from 15.2% a
year ago primarily from the favorable aftermarket
contribution.
- Aerospace backlog was $536 million at
the end of the second quarter of 2015, up 2% year-over-year, and
down 1% sequentially from the first quarter of 2015.
Additional Information
- Interest expense decreased $0.2 million
to $2.6 million in the second quarter primarily as a result of
lower average borrowings which was offset in part by a higher
average interest rate.
- The Company's effective tax rate from
continuing operations for the second quarter of 2015 was 28.4%
compared with 27.7% in the second 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 4% to 6%
with total revenue growth essentially flat after consideration of
unfavorable foreign exchange of approximately 5%. Operating margins
are forecasted to be about 16.5%. GAAP earnings from continuing
operations are now expected to be in the range of $2.43 to $2.53
per diluted share. Excluding $0.02 of the final Männer short-term
purchase accounting adjustments recorded in 2015, adjusted diluted
earnings per share from continuing operations is expected to be in
the range of $2.45 to $2.55, up 5% to 9% from 2014’s adjusted
diluted earnings per share of $2.34. Further, the Company
anticipates capital expenditures of approximately $55 million and
cash conversion to approximate 100% of net income.
Conference Call
Barnes Group Inc. will conduct a conference call with investors
to discuss second quarter 2015 results at 8:30 a.m. ET today, July
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 37826658. 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, July 24, 2015 until 11:59
p.m. (ET) on Friday, July 31, 2015, by dialing (404) 537-3406;
Conference ID 37826658.
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; acts of
terrorism, cybersecurity attacks or intrusions that could adversely
impact our businesses; 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 our pending acquisition
of Thermoplay S.p.A. 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 June 30, Six months ended June 30,
2015 2014 % Change
2015 2014 %
Change Net sales $ 314,941 $ 322,074 (2.2 ) $
615,515 $ 634,173 (2.9 ) Cost of sales 204,121 211,705 (3.6
) 402,477 426,261 (5.6 ) Selling and administrative expenses
60,171 64,988 (7.4 ) 118,494
127,406 (7.0 ) 264,292
276,693 (4.5 ) 520,971 553,667
(5.9 ) Operating income 50,649 45,381 11.6 94,544 80,506
17.4 Operating margin 16.1 % 14.1 % 15.4 % 12.7 %
Interest expense 2,586 2,804 (7.8 ) 5,306 6,123 (13.3 ) Other
expense (income), net 237 792 (70.1 )
318 1,027 (69.0 ) Income before
income taxes 47,826 41,785 14.5 88,920 73,356 21.2 Income
taxes 13,599 11,557 17.7 25,617
20,375 25.7 Net income $ 34,227
$ 30,228 13.2 $ 63,303 $ 52,981 19.5
Common dividends $ 6,555 $ 5,966 9.9 $ 13,126
$ 11,937 10.0 Per common share: Net income:
Basic $ 0.62 $ 0.55 12.7 $ 1.15 $ 0.97 18.6 Diluted 0.61 0.54 13.0
1.14 0.95 20.0 Dividends 0.12 0.11 9.1 0.24 0.22 9.1
Weighted average common shares outstanding: Basic 55,134,890
54,740,750 0.7 55,111,019 54,695,865 0.8 Diluted 55,695,258
55,927,881 (0.4 ) 55,677,166 55,950,467 (0.5 )
BARNES GROUP INC. OPERATIONS BY REPORTABLE BUSINESS
SEGMENT (Dollars in thousands) (Unaudited)
Three
months ended June 30, Six months ended June 30,
2015 2014 % Change
2015 2014 % Change
Net sales Industrial $ 202,589 $ 212,768 (4.8 ) $
402,938 $ 416,656 (3.3 ) Aerospace 112,356 109,310 2.8
212,581 217,521 (2.3 ) Intersegment sales (4 )
(4 ) - (4 ) (4 ) - Total net sales $ 314,941
$ 322,074 (2.2 ) $ 615,515 $ 634,173
(2.9 ) Operating profit Industrial $ 29,979 $ 28,765
4.2 $ 60,958 $ 48,140 26.6 Aerospace 20,670
16,616 24.4 33,586 32,366
3.8 Total operating profit $ 50,649 $ 45,381
11.6 $ 94,544 $ 80,506 17.4 Operating margin
Change Change Industrial 14.8 % 13.5 % 130
bps. 15.1 % 11.6 % 350 bps. Aerospace 18.4 %
15.2 % 320 bps. 15.8 % 14.9 % 90 bps. Total
operating margin 16.1 % 14.1 % 200 bps. 15.4 % 12.7 % 270 bps.
BARNES GROUP INC. CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (Unaudited)
June 30, 2015 December 31, 2014
Assets Current assets Cash and cash equivalents $ 81,967 $
46,039 Accounts receivable 283,918 275,890 Inventories 210,302
212,044 Deferred income taxes 27,628 31,849 Prepaid expenses and
other current assets 32,027 22,574 Total
current assets 635,842 588,396 Deferred income taxes
8,961 10,061 Property, plant and equipment, net 298,058 299,435
Goodwill 583,448 594,949 Other intangible assets, net 523,898
554,694 Other assets 28,436 26,350 Total
assets $ 2,078,643 $ 2,073,885
Liabilities and
Stockholders' Equity Current liabilities Notes and overdrafts
payable $ 21,789 $ 8,028 Accounts payable 107,030 94,803 Accrued
liabilities 123,003 161,397 Long-term debt - current 824
862 Total current liabilities 252,646 265,090
Long-term debt 474,730 495,844 Accrued retirement benefits 110,241
115,057 Deferred income taxes 66,198 70,147 Other liabilities
19,648 15,954 Total stockholders' equity 1,155,180
1,111,793 Total liabilities and stockholders' equity
$ 2,078,643 $ 2,073,885
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in
thousands) (Unaudited) Six
months ended June 30, 2015
2014 Operating activities: Net income $ 63,303
$ 52,981 Adjustments to reconcile net income to net cash provided
by operating activities: Depreciation and amortization 39,642
42,515 Amortization of convertible debt discount - 731 (Gain) loss
on disposition of property, plant and equipment (1,302 ) 78 Stock
compensation expense 4,890 4,108 Withholding taxes paid on stock
issuances (746 ) (806 ) Changes in assets and liabilities: Accounts
receivable (8,902 ) (39,359 ) Inventories (2,768 ) (6,409 ) Prepaid
expenses and other current assets (10,448 ) (3,204 ) Accounts
payable 14,742 12,796 Accrued liabilities (14,202 ) 2,934 Deferred
income taxes 629 1,307 Long-term retirement benefits (745 ) (4,326
) Other 1,818 1,567 Net cash
provided by operating activities 85,911 64,913
Investing
activities: Proceeds from disposition of property, plant and
equipment 2,058 474 Payments for the sale of businesses - (1,181 )
Capital expenditures (22,376 ) (25,802 ) Component Repair Program
payments (19,000 ) (41,000 ) Other (651 ) (858 )
Net cash used by investing activities (39,969 ) (68,367 )
Financing activities: Net change in other borrowings
13,738 11,186 Payments on long-term debt (85,821 ) (78,467 )
Proceeds from the issuance of long-term debt 68,722 90,383 Payment
of assumed liability to Otto Männer Holding AG - (19,796 ) Proceeds
from the issuance of common stock 9,691 9,395 Common stock
repurchases (11,465 ) (8,389 ) Dividends paid (13,126 ) (11,937 )
Excess tax benefit on stock awards 1,574 2,671 Other 8,487
(137 ) Net cash used by financing activities
(8,200 ) (5,091 ) Effect of exchange rate changes on cash
flows (1,814 ) (71 ) Increase (decrease) in
cash and cash equivalents 35,928 (8,616 ) Cash and cash
equivalents at beginning of period 46,039
70,856 Cash and cash equivalents at end of period $
81,967 $ 62,240
BARNES GROUP
INC. RECONCILIATION OF NET CASH PROVIDED BY OPERATING
ACTIVITIES TO FREE CASH FLOW (Dollars in thousands)
(Unaudited) Six months ended June
30, 2015 2014 Free
cash flow: Net cash provided by operating activities $
85,911 $ 64,913 Capital expenditures (22,376 )
(25,802 ) Free cash flow(1) $ 63,535 $ 39,111
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 June 30,
Six months ended June 30, 2015
2014 % Change 2015
2014 % Change
SEGMENT
RESULTS
Operating Profit - Industrial Segment (GAAP) $ 29,979 $
28,765 4.2 $ 60,958 $ 48,140 26.6 Männer short-term purchase
accounting adjustments 630 1,881 1,481 6,782 Restructuring charges
- 2,302 - 5,052
Operating Profit - Industrial Segment as adjusted
(Non-GAAP) (1) $ 30,609 $ 32,948 (7.1 ) $
62,439 $ 59,974 4.1
Operating Margin -
Industrial Segment (GAAP) 14.8 % 13.5 % 130 bps. 15.1 % 11.6 %
350 bps.
Operating Margin - Industrial Segment as adjusted
(Non-GAAP) (1) 15.1 % 15.5 %
(40 ) bps. 15.5 %
14.4 % 110 bps.
CONSOLIDATED
RESULTS
Operating Income (GAAP) $ 50,649 $ 45,381 11.6 $ 94,544 $
80,506 17.4 Männer short-term purchase accounting
adjustments 630 1,881 1,481 6,782 Restructuring charges -
2,302 - 5,052
Operating Income as adjusted (Non-GAAP) (1) $
51,279 $ 49,564 3.5 $ 96,025 $ 92,340
4.0
Operating Margin (GAAP) 16.1 % 14.1 % 200 bps.
15.4 % 12.7 % 270 bps.
Operating Margin as adjusted
(Non-GAAP) (1) 16.3 % 15.4 %
90 bps. 15.6 %
14.6 % 100 bps.
Diluted Net Income
per Share (GAAP) $ 0.61 $ 0.54 13.0 $ 1.14 $ 0.95 20.0
Männer short-term purchase accounting adjustments 0.01 0.02 0.02
0.09 Restructuring charges - 0.03
- 0.06
Diluted Net Income per
Share as adjusted (Non-GAAP) (1) $ 0.62 $ 0.59
5.1 $ 1.16 $ 1.10 5.5
Full-Year 2014
Full-Year 2015 Outlook Diluted Income from Continuing
Operations per Share (GAAP) $ 2.16 $ 2.43 to $ 2.53
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 $ 2.55
Notes:
(1) The Company has excluded short-term purchase accounting
adjustments related to its Männer acquisition in 2015 and 2014 and
restructuring charges related to the closure of production
operations at the Company's Associated Spring facility located in
Saline, Michigan in 2014 from its "as adjusted" financial
measurements. Management believes that these adjustments provide
the Company and its investors with an indication of our baseline
performance excluding items that are not considered to be
reflective of our ongoing results. Management does not intend
results excluding the adjustments to represent results as defined
by GAAP, and the reader should not consider it as an alternative
measurement calculated in accordance with GAAP, or as an indicator
of the Company's performance. Accordingly, the measurements have
limitations depending on their use.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150724005031/en/
Barnes Group Inc.William PittsDirector, Investor
Relations860-583-7070
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