UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 20, 2015

BARNES GROUP INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

 
 
 
1-4801
 
06-0247840
(Commission File Number)
 
(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

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





1



Item 2.02
 
Results of Operations and Financial Condition.

On February 20, 2015, Barnes Group Inc. issued a press release announcing the financial results of operations for the fourth quarter and year ended December 31, 2014. A copy is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Current Report on 8-K and the exhibit attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Exchange Act or Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Item 9.01
 
Financial Statements and Exhibits.

Exhibit 99.1: Press Release issued February 20, 2015, announcing the financial results of operations for the fourth quarter and year ended December 31, 2014.

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

Dated:  February 20, 2015
BARNES GROUP INC.
 
(Registrant)
 
 
 
 
By:
/s/ CHRISTOPHER J. STEPHENS, JR.
 
 
     Christopher J. Stephens, Jr.
     Senior Vice President, Finance and
     Chief Financial Officer

EXHIBIT INDEX
Exhibit No.
 
Document Description    
99.1
 
Press Release, dated February 20, 2015, announcing the financial results of operations for the fourth quarter and year ended December 31, 2014.


2




 
 
 
Exhibit 99.1



Barnes Group Inc.
123 Main Street
Bristol, CT 06010
NEWS RELEASE


BARNES GROUP INC. REPORTS
FOURTH QUARTER AND FULL YEAR 2014
FINANCIAL RESULTS

Fourth Quarter 2014:
Sales of $310 million, up 7%; Organic Sales up 6%
Operating Margin of 15.7%; Adjusted Operating Margin of 16.1%, up 190 bps
Diluted EPS from Continuing Operations of $0.60, up 28%;
Up 9% to $0.62 on an Adjusted Basis
Full Year 2014:
Sales of $1,262 million, up 16%; Organic Sales up 6%
Operating Margin of 14.3%; Adjusted Operating Margin of 15.4%, up 250 bps
Diluted EPS from Continuing Operations of $2.16, up 65%;
Up 28% to $2.34 on an Adjusted Basis
2015 Guidance:
2015 EPS from Continuing Operations of $2.40 to $2.55 per diluted share;
On an Adjusted Basis, $2.42 to $2.57 per diluted share, up 3% to 10%


BRISTOL, Conn., February 20, 2015 - Barnes Group Inc. (NYSE: B), an international industrial and aerospace manufacturer and service provider, today reported financial results for the fourth quarter and full year 2014.
Fourth quarter net sales of $310 million were up 7% from $291 million in the fourth quarter of 2013, driven by organic sales growth of 6% and one additional month of acquisition revenues from the Männer business versus the prior year period. Unfavorable foreign exchange reduced sales by 3%. Income from continuing operations for the fourth quarter was $33.3 million, or $0.60 per diluted share, compared to $26.3 million, or $0.47 per diluted share in the prior year period. On an adjusted basis, income from continuing operations was $0.62 per diluted share, up 9% from $0.57 a year ago. Fourth quarter 2014 adjusted diluted earnings from continuing operations exclude the impact of Männer short-term purchase accounting adjustments of $0.8 million pre-tax and costs related to the closure of production operations at Associated Spring’s Saline, Michigan facility which were $0.5 million pre-tax. Together, these two items contributed $0.02 to adjusted diluted earnings from continuing operations.
For the full year, Barnes Group generated net sales of $1,262 million, up 16% from last year; organic sales growth was 6% while acquisitions contributed 10%. Income from continuing operations was $120.5 million, or $2.16 per diluted share, compared to $72.3 million, or $1.31 per diluted share in 2013. On an adjusted basis, income from continuing operations was $2.34 per diluted share, up 28% from $1.83 a year





ago. 2014 adjusted diluted earnings from continuing operations exclude the impact of Männer short-term purchase accounting adjustments of $8.5 million pre-tax, or $0.11 per diluted share, and costs related to the closure of production operations at the Saline, Michigan facility which were $6.0 million pre-tax, or $0.07 per diluted share. For 2013, income from continuing operations included $7.3 million pre-tax, or $0.10 per diluted share, of short-term purchase accounting adjustments and transaction costs related to the acquisition of Männer, $10.5 million pre-tax, or $0.12 per diluted share, of non-recurring CEO transition costs, and a tax charge of $16.4 million, or $0.30 per diluted share, associated with the April 2013 U.S. Tax Court’s unfavorable decision.
A table reconciling 2013 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’s continued execution of its profitable growth strategy has delivered another year of excellent financial performance with an impressive 250 basis point gain in adjusted operating margin and a 28% increase in adjusted earnings from continued operations,” said Patrick J. Dempsey, President and Chief Executive Officer of Barnes Group Inc. “Our relentless focus on driving differentiated industrial technologies and innovative solutions to the customers and end markets we serve is fueling our growth engine and we look forward to carrying that momentum into 2015,” added Dempsey.


Industrial

Fourth quarter 2014 sales were $198.2 million, up 8% from $183.7 million in the same period last year. The Männer business, acquired in October 2013, provided $10.4 million of “acquisition” sales while Industrial’s organic sales grew 7% over the prior year period. Unfavorable foreign exchange negatively impacted sales by $9.0 million, or 5%.

Operating profit of $27.0 million in the fourth quarter was up 74% from $15.5 million in the prior year period. Operating profit benefited from the contribution of Männer and higher organic sales, and was partially offset by $0.8 million of Männer short-term purchase accounting adjustments and $0.5 million of restructuring charges related to the closure of production operations at the Saline, Michigan facility.  Last year’s fourth quarter included $7.3 million of short-term purchase accounting adjustments and transaction costs associated with the Männer acquisition. Excluding the acquisition related expenses and Saline closure costs, adjusted operating profit was $28.3 million, up 24% from a year ago. Adjusted operating margin was 14.3%, up 190 bps from last year’s adjusted operating margin of 12.4%.

Full year 2014 sales were $822.1 million, up 20% from $687.6 million last year. The Männer business provided $113.7 million of “acquisition” sales increase while unfavorable foreign exchange negatively impacted sales by $7.3 million, or 1%. Industrial’s organic sales grew 4% over the prior year.

Full year operating profit of $108.4 million was up 51% from $71.9 million in the prior year period. Operating profit benefited from the contribution of Männer and higher organic sales, and was partially offset by $8.5 million of Männer short-term purchase accounting adjustments and $6.0 million of restructuring charges related to the closure of production operations at the Saline, Michigan facility.  For 2013, operating profit included $7.3 million of short-term purchase accounting adjustments and transaction costs related to the acquisition of Männer and $6.6 million of non-recurring CEO transition costs. Excluding these items, adjusted operating profit was $122.9





million for 2014 versus $85.8 million a year ago, an increase of 43%. Adjusted operating margin was 14.9%, up 240 bps from last year’s adjusted operating margin of 12.5%.


Aerospace

Fourth quarter 2014 sales were $112.0 million, up 4% from $107.4 million in the same period last year. Increased sales from the original equipment manufacturing ("OEM") business and aftermarket maintenance, repair and overhaul ("MRO") businesses were partially offset by lower aerospace spare parts sales. 

Operating profit was $21.6 million for the fourth quarter of 2014 as compared to $18.6 million for the prior year period. Operating profit in the quarter benefited from the contributions of increased sales in the OEM business, higher sales and profits in the MRO business, and were partially offset by increased employee related costs and the profit impact of lower spare parts sales. Operating margin was 19.3% in the quarter, up 200 basis points from 17.3% a year ago. 

Full year 2014 sales were $440.0 million, up 9% from $404.0 million in the same period last year. Increased sales from the OEM and MRO businesses were partially offset by lower aerospace spare parts sales.

Operating profit was $71.6 million for the full year 2014 as compared to $51.3 million for the prior year. Operating profit benefited from the contributions of increased sales in the OEM business, higher profits in the MRO business, and the absence of an $8.6 million inventory valuation adjustment taken in the third quarter of 2013. These benefits were partially offset by increased employee related costs and the profit impact of lower spare parts sales. For 2013, operating profit included $3.9 million of non-recurring CEO transition costs. Excluding this item, adjusted operating profit for 2013 was $55.2 million. 2014 operating margin increased to 16.3%.

Aerospace backlog was $523 million at the end of the fourth quarter, down 6% from last year-end and up 2% from the third quarter of 2014.

Additional Information
Interest expense decreased $1.7 million to $11.4 million in 2014 primarily as a result of a lower average interest rate, offset in part by higher average borrowings for the year.

The Company's effective tax rate from continuing operations for 2014 was 27.6% compared with 32.8% in 2013. Included in the full year 2013 income tax is a charge of approximately $16 million associated with the April 2013 U.S. Tax Court’s unfavorable decision. Excluding this charge, the full year 2013 adjusted effective tax rate was 17.5%. The effective tax rate increase in 2014 over the adjusted full year 2013 rate is due to a mix of earnings attributable to higher-taxing jurisdictions, the expiration of certain tax holidays, and the increase in the repatriation of a portion of current foreign earnings to the U.S.












2015 Outlook
Barnes Group expects 2015 organic revenue growth of 6% to 9% with total revenue growth of 3% to 6% after consideration of unfavorable foreign exchange. Operating margins are forecasted to be in the range of 16% to 17%. GAAP earnings from continuing operations are expected to be in the range of $2.40 to $2.55 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 $2.42 to $2.57, up 3% to 10% from 2014’s adjusted diluted earnings per share of $2.34. Further, the Company anticipates capital expenditures of approximately $55 to $60 million and cash conversion to approximate 100% of net income.
“Enhanced investments in our businesses, and the smooth integration of recent acquisitions that brought innovative technologies to Barnes Group, have advanced our ability to deliver differentiated industrial technologies to market,” said Christopher J. Stephens, Jr., Senior Vice President, Finance and Chief Financial Officer, Barnes Group Inc. “Our solid balance sheet and the strong cash flow expectation for 2015 position us favorably for further growth investments and acquisition opportunities that support our strategy.”
Conference Call
Barnes Group Inc. will conduct a conference call with investors to discuss fourth quarter and full year 2014 results at 8:30 a.m. ET today, February 20, 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 49092873. 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, February 20, 2015 until 11:59 p.m. (ET) on Friday, February 27, 2015, by dialing (404) 537-3406; Conference ID 49092873.

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.

Contact:
Barnes Group Inc.
William Pitts
Director, Investor Relations
860.583.7070



# # #











































BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)

 
Three months ended December 31,
 
Twelve months ended December 31,
 
2014
 
2013
 
% Change
 
2014
 
2013
 
% Change
Net sales
$
310,173

 
$
291,136

 
6.5

 
$
1,262,006

 
$
1,091,566

 
15.6

 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
196,977

 
193,555

 
1.8

 
829,648

 
738,170

 
12.4

Selling and administrative expenses
64,613

 
63,515

 
1.7

 
252,384

 
230,195

 
9.6

 
261,590

 
257,070

 
1.8

 
1,082,032

 
968,365

 
11.7

Operating income
48,583

 
34,066

 
42.6

 
179,974

 
123,201

 
46.1

 
 
 
 
 
 
 
 
 
 
 
 
Operating margin
15.7
%
 
11.7
%
 
 
 
14.3
%
 
11.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
2,834

 
3,091

 
(8.3
)
 
11,392

 
13,090

 
(13.0
)
Other expense (income), net
314

 
835

 
(62.4
)
 
2,082

 
2,537

 
(17.9
)
Income from continuing operations before income taxes
45,435

 
30,140

 
50.7

 
166,500

 
107,574

 
54.8

Income taxes
12,177

 
3,827

 
NM

 
45,959

 
35,253

 
30.4

Income from continuing operations
33,258

 
26,313

 
26.4

 
120,541

 
72,321

 
66.7

 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income from discontinued operations, net of income taxes
(1,746
)
 
511

 
NM

 
(2,171
)
 
198,206

 
NM

Net income
$
31,512

 
$
26,824

 
17.5

 
$
118,370

 
$
270,527

 
(56.2
)
Common dividends
$
6,539

 
$
5,927

 
10.3

 
$
24,464

 
$
22,422

 
9.1

 
 
 
 
 
 
 
 
 
 
 
 
Per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
     Income from continuing operations
$
0.60

 
$
0.49

 
22.4

 
$
2.20

 
$
1.34

 
64.2

     (Loss) income from discontinued operations, net of income taxes
(0.03
)
 
0.01

 
NM

 
(0.04
)
 
3.68

 
NM

     Net income
$
0.57

 
$
0.50

 
14.0

 
$
2.16

 
$
5.02

 
(57.0
)
 
 
 
 
 
 
 
 
 
 
 
 
Diluted:
 
 
 
 
 
 
 
 
 
 
 
     Income from continuing operations
$
0.60

 
$
0.47

 
27.7

 
$
2.16

 
$
1.31

 
64.9

     (Loss) income from discontinued operations, net of income taxes
(0.03
)
 
0.01

 
NM

 
(0.04
)
 
3.61

 
NM

     Net income
$
0.57

 
$
0.48

 
18.8

 
$
2.12

 
$
4.92

 
(56.9
)
 
 
 
 
 
 
 
 
 
 
 
 
  Dividends
0.12

 
0.11

 
9.1

 
0.45

 
0.42

 
7.1

 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
    Basic
54,896,444

 
53,983,034

 
1.7

 
54,791,030

 
53,860,308

 
1.7

    Diluted
55,485,643

 
55,332,376

 
0.3

 
55,723,267

 
54,973,344

 
1.4

NM - Not Meaningful








BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
(Unaudited)

 
Three months ended December 31,
 
Twelve months ended December 31,
 
 
2014
 
2013
 
% Change
 
2014
 
2013
 
% Change
 
Net sales
 
 
 
 
 
 
 
 
 
 
 
 
   Industrial
$
198,165

 
$
183,739

 
7.9
 
$
822,051

 
$
687,550

 
19.6
 
   Aerospace
112,009

 
107,399

 
4.3
 
439,959

 
404,021

 
8.9
 
   Intersegment sales
(1
)
 
(2
)
 
50.0
 
(4
)
 
(5
)
 
20.0
 
Total net sales
$
310,173

 
$
291,136

 
6.5
 
$
1,262,006

 
$
1,091,566

 
15.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
 
 
 
 
 
   Industrial
$
27,015

 
$
15,483

 
74.5
 
$
108,360

 
$
71,888

 
50.7
 
   Aerospace
21,568

 
18,583

 
16.1
 
71,614

 
51,313

 
39.6
 
Total operating profit
$
48,583

 
$
34,066

 
42.6
 
$
179,974

 
$
123,201

 
46.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating margin
 
 
 
 
Change
 
 
 
 
 
Change
 
   Industrial
13.6
%
 
8.4
%
 
520
bps.
13.2
%
 
10.5
%
 
270
bps.
   Aerospace
19.3
%
 
17.3
%
 
200
bps.
16.3
%
 
12.7
%
 
360
bps.
Total operating margin
15.7
%
 
11.7
%
 
400
bps.
14.3
%
 
11.3
%
 
300
bps.




































BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)

 
December 31, 2014
 
December 31, 2013
Assets
 
 
 
Current assets
 
 
 
  Cash and cash equivalents
$
46,039

 
$
70,856

  Accounts receivable
275,890

 
258,664

  Inventories
212,044

 
211,246

  Deferred income taxes
31,849

 
18,226

  Prepaid expenses and other current assets
22,574

 
18,204

    Total current assets
588,396

 
577,196

 
 
 
 
Deferred income taxes
10,061

 
2,314

Property, plant and equipment, net
299,435

 
302,558

Goodwill
594,949

 
649,697

Other intangible assets, net
554,694

 
534,293

Other assets
26,350

 
57,615

Total assets
$
2,073,885

 
$
2,123,673

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Current liabilities
 
 
 
  Notes and overdrafts payable
$
8,028

 
$
1,074

  Accounts payable
94,803

 
88,721

  Accrued liabilities
161,397

 
154,514

  Long-term debt - current
862

 
56,009

    Total current liabilities
265,090

 
300,318

 
 
 
 
Long-term debt
495,844

 
490,341

Accrued retirement benefits
115,057

 
80,884

Deferred income taxes
70,147

 
94,506

Other liabilities
15,954

 
16,210

 
 
 
 
Total stockholders' equity
1,111,793

 
1,141,414

Total liabilities and stockholders' equity
$
2,073,885

 
$
2,123,673





















BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

 
Twelve months ended December 31,
 
2014
 
2013
Operating activities:
 
 
 
Net income
$
118,370

 
$
270,527

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
  Depreciation and amortization
81,395

 
65,052

  Amortization of convertible debt discount
731

 
2,391

  Loss (gain) on disposition of property, plant and equipment
143

 
(887
)
  Stock compensation expense
7,603

 
18,128

  Withholding taxes paid on stock issuances
(4,367
)
 
(2,090
)
  Loss (gain) on the sale of businesses
1,586

 
(313,708
)
  Changes in assets and liabilities, net of the effects of acquisitions/divestitures:
 
 
 
    Accounts receivable
(21,367
)
 
(23,764
)
    Inventories
(10,092
)
 
2,079

    Prepaid expenses and other current assets
(7,137
)
 
(2,172
)
    Accounts payable
8,123

 
2,384

    Accrued liabilities
24,402

 
(9,891
)
    Deferred income taxes
(9,841
)
 
3,412

    Long-term retirement benefits
(7,584
)
 
(642
)
  Other
4,933

 
(729
)
Net cash provided by operating activities
186,898

 
10,090

 
 
 
 
Investing activities:
 
 
 
Proceeds from disposition of property, plant and equipment
849

 
1,767

(Payments for) proceeds from the sale of businesses
(1,181
)
 
538,942

Change in restricted cash
4,886

 

Capital expenditures
(57,365
)
 
(57,304
)
Business acquisitions, net of cash acquired

 
(307,264
)
Component Repair Program payments
(70,100
)
 
(16,639
)
Other
(1,338
)
 
(2,058
)
Net cash (used) provided by investing activities
(124,249
)
 
157,444

 
 
 
 
Financing activities:
 
 
 
Net change in other borrowings
7,009

 
(2,753
)
Payments on long-term debt
(332,336
)
 
(555,195
)
Proceeds from the issuance of long-term debt
293,291

 
450,253

Payment of assumed liability to Otto Männer Holding AG
(19,796
)
 

Premium paid on convertible debt redemption
(14,868
)
 

Proceeds from the issuance of common stock
11,460

 
13,491

Common stock repurchases
(8,389
)
 
(68,608
)
Dividends paid
(24,464
)
 
(22,422
)
Excess tax benefit on stock awards
4,888

 
3,899

Other
(338
)
 
(1,472
)
Net cash used by financing activities
(83,543
)
 
(182,807
)
 
 
 
 
Effect of exchange rate changes on cash flows
(3,923
)
 
(227
)
Decrease in cash and cash equivalents
(24,817
)
 
(15,500
)
 
 
 
 
Cash and cash equivalents at beginning of year
70,856

 
86,356

Cash and cash equivalents at end of year
$
46,039

 
$
70,856









BARNES GROUP INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(Dollars in thousands)
(Unaudited)

 
Twelve months ended December 31,
 
2014
 
2013
Free cash flow:
 
 
 
Net cash provided by operating activities
$
186,898

 
$
10,090

Capital expenditures
(57,365
)
 
(57,304
)
Free cash flow (1)
$
129,533

 
$
(47,214
)
 
 
 
 
Free cash flow to net income cash conversion ratio (as adjusted):
 
 
 
Free cash flow (from above)
$
129,533

 
$
(47,214
)
Income tax (reduction) payments related to the gain on the sale of BDNA
(12,608
)
 
130,004

Free cash flow (as adjusted)(2)
116,925

 
82,790

 
 
 
 
Net income
118,370

 
270,527

Gain on the sale of BDNA, net of income taxes

 
(195,317
)
Net income (as adjusted)(2)
$
118,370

 
$
75,210

 
 
 
 
Free cash flow to net income cash conversion ratio (as adjusted)(2)
99
%
 
110
%
 
 
 
 
Notes:
 
 
 
(1) The Company defines free cash flow as net cash provided by operating activities less capital expenditures. In 2013, net cash provided by operating activities is negatively impacted by $130.0 million of estimated income tax payments related to the gain on the sale of BDNA. The proceeds from the sale are reflected in investing activities. 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.
 
(2) For the purpose of calculating the cash conversion ratio, the Company has excluded the income tax payments related to the gain on the sale of BDNA made during 2013 and the utilization of the related year-end 2013 income tax receivable to offset 2014 payments from free cash flow and the gain on the sale of BDNA from net income.
















BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
 
 
Three months ended December 31,
 
Twelve months ended December 31,
 
 
 
2014
 
2013
 
% Change
 
2014
 
2013
 
% Change
 
 
SEGMENT RESULTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit - Industrial Segment (GAAP)
$
27,015

 
$
15,483

 
74.5

 
$
108,360

 
$
71,888

 
50.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Männer short-term purchase accounting adjustments
792

 
5,456

 
 
 
8,504

 
5,456

 
 
 
 
Männer acquisition transaction costs

 
1,823

 
 
 

 
1,823

 
 
 
 
Restructuring charges
467

 

 
 
 
6,020

 

 
 
 
 
CEO transition costs

 

 
 
 

 
6,589

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit - Industrial Segment as adjusted (Non-GAAP) (1)
$
28,274

 
$
22,762

 
24.2

 
$
122,884

 
$
85,756

 
43.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Margin - Industrial Segment (GAAP)
13.6
%
 
8.4
%
 
520

bps.
13.2
%
 
10.5
%
 
270
bps.
 
Operating Margin - Industrial Segment as adjusted (Non-GAAP) (1)
14.3
%
 
12.4
%
 
190

bps.
14.9
%
 
12.5
%
 
240
bps.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Profit - Aerospace Segment (GAAP)
$
21,568

 
$
18,583

 
16.1

 
$
71,614

 
$
51,313

 
39.6
 
 
CEO transition costs

 

 
 
 

 
3,903

 
 
 
 
Operating Profit - Aerospace Segment as adjusted (Non-GAAP) (1)
$
21,568

 
$
18,583

 
16.1

 
$
71,614

 
$
55,216

 
29.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Margin - Aerospace Segment (GAAP)
19.3
%
 
17.3
%
 
200

bps.
16.3
%
 
12.7
%
 
360
bps.
 
Operating Margin - Aerospace Segment as adjusted (Non-GAAP) (1)
19.3
%
 
17.3
%
 
200

bps.
16.3
%
 
13.7
%
 
260
bps.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED RESULTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income (GAAP)
$
48,583

 
$
34,066

 
42.6

 
$
179,974

 
$
123,201

 
46.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Männer short-term purchase accounting adjustments
792

 
5,456

 
 
 
8,504

 
5,456

 
 
 
 
Männer acquisition transaction costs

 
1,823

 
 
 

 
1,823

 
 
 
 
Restructuring charges
467

 

 
 
 
6,020

 

 
 
 
 
CEO transition costs

 

 
 
 

 
10,492

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income as adjusted (Non-GAAP) (1)
$
49,842

 
$
41,345

 
20.6

 
$
194,498

 
$
140,972

 
38.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Margin (GAAP)
15.7
%
 
11.7
%
 
400

bps.
14.3
%
 
11.3
%
 
300
bps.
 
Operating Margin as adjusted (Non-GAAP) (1)
16.1
%
 
14.2
%
 
190

bps.
15.4
%
 
12.9
%
 
250
bps.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Income from Continuing Operations per Share (GAAP)
$
0.60

 
$
0.47

 
27.7

 
$
2.16

 
$
1.31

 
64.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Männer short-term purchase accounting adjustments
0.01

 
0.07

 
 
 
0.11

 
0.07

 
 
 
 
Männer acquisition transaction costs

 
0.03

 
 
 

 
0.03

 
 
 
 
Restructuring charges
0.01

 

 
 
 
0.07

 

 
 
 
 
CEO transition costs

 

 
 
 

 
0.12

 
 
 
 
April 2013 tax court decision

 

 
 
 

 
0.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Income from Continuing Operations per Share as adjusted (Non-GAAP) (1)
$
0.62

 
$
0.57

 
8.8

 
$
2.34

 
$
1.83

 
27.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full Year 2015 Outlook
 
 
 
 
 
 
Diluted Income from Continuing Operations per Share (GAAP)
 
 
 
 
$
2.40

to
$
2.55

 
 
 
 
 
 
Männer short-term purchase accounting adjustments
 
 
 
 
 
0.02

 
 
 
 
 
 
 
Diluted Income from Continuing Operations per Share as adjusted (Non-GAAP) (1)
 
 
 
 
$
2.42

to
$
2.57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The Company has excluded the following from its "as adjusted" financial measurements: 1) short-term purchase accounting adjustments related to its Männer acquisition in 2014, 2) restructuring charges related to the closure of production operations at the Company's Associated Spring facility located in Saline, Michigan in 2014, 3) short-term purchase accounting adjustments and transaction costs related to its Männer acquisition in 2013, 4) CEO transition costs associated with the modification of outstanding equity awards in 2013 and 5) the tax charge associated with the April 2013 tax court decision in 2013. 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.
 
 
 




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