- Sales of $302 million, down 9% from last year; Organic Sales
down 10%
- Operating Income of $32.4 million; Adjusted Operating Income
down 37% from last year’s $51.7 million
- Operating Margin of 10.7%; Adjusted Operating Margin down
490 bps from last year’s 15.6%
- GAAP EPS of $0.38; Adjusted EPS down 46% from last year’s
$0.71
- 2021 Sales Growth Expectation Increased to 11% to 13% with
Organic Sales Growth of 10% to 12%
- 2021 EPS Outlook Increased to $1.78 to $1.98; Up 9% to 21%
from 2020 Adjusted EPS of $1.64
Barnes Group Inc. (NYSE: B), a global provider of highly
engineered products, differentiated industrial technologies, and
innovative solutions, today reported financial results for the
first quarter of 2021.
“Barnes Group delivered a strong first quarter to open 2021 with
solid Industrial revenue growth and modest sequential improvement
in Aerospace. The additional sales volumes contributed to better
than expected operating profit in the quarter and allowed us to
exceed the high-end of our EPS outlook,” said Patrick J. Dempsey,
President and Chief Executive Officer of Barnes Group Inc. “Our
2021 return to growth focus is off to a good start with strong
orders and increasing backlog, factors which provide more
confidence in our second half expectation. With a heightened
conviction of an economic recovery in many of our end markets, we
have increased our financial performance outlook for 2021,” added
Dempsey.
First Quarter 2021 Highlights
First quarter 2021 net sales of $302 million were down 9% from
$331 million in the prior year period, with organic sales (1)
declining 10% driven by the impact of the global pandemic on the
Company’s aerospace related end markets. Divested Seeger sales had
a negative impact of 2%, while foreign exchange had a positive
impact of 3%. On a sequential basis, sales improved 4% from the
fourth quarter of 2020. Operating income was $32.4 million versus
$49.3 million a year ago. Operating margin decreased 420 bps to
10.7%. On an adjusted basis, which excludes $2.4 million of Seeger
divestiture adjustments in last year’s first quarter, operating
income was down 37% and adjusted operating margin was down 490 bps
from a year ago.
Interest expense was $3.9 million, a decrease of $0.4 million
from the prior year quarter due to the benefit of lower average
borrowings, partially offset by a higher average interest rate.
Other expense was $1.5 million, down $0.1 million from a year
ago.
The Company’s effective tax rate in the first quarter was 28.1%
compared with 31.5% a year ago. The decrease is largely due to the
absence of tax expense related to the completed sale of the Seeger
business and a reduction of the statutory tax rate at one of our
international operations, both of which occurred in the first
quarter of 2020. These benefits were offset in part by the impact
of the global intangible low-taxed income tax on foreign earnings
in the U.S in the first quarter of 2021.
Net income for the first quarter was $19.4 million, or $0.38 per
diluted share, compared to $29.7 million, or $0.58 per diluted
share, a year ago. On an adjusted basis, net income per share was
down 46% from $0.71 a year ago. Adjusted net income per diluted
share in the first quarter of 2020 excludes $0.13 of Seeger
divestiture adjustments.
First quarter 2021 cash provided by operating activities was
$35.6 million versus $47.2 million in the prior year period. Free
cash flow was $27.8 million compared to $35.3 million last year.
Capital expenditures were $7.9 million, down $4.1 million from a
year ago.
Segment Performance and End Market
Outlook
Industrial
First quarter sales were $220 million, up 10% from $199 million
in the prior year period. Organic sales increased 8% related to
volume increases due to stronger end markets. Divested Seeger
revenues of $5.0 million had a negative impact of 3%, while
favorable foreign exchange increased sales by $10.3 million, or 5%.
On a sequential basis, total Industrial sales increased 5% from the
fourth quarter of 2020.
Operating profit in the first quarter was $21.3 million, up 19%
from $17.9 million in the prior year period. The increase was
driven by the profit contribution of the higher sales volumes and
productivity, offset in part by higher personnel costs. Operating
margin was 9.7%, up 70 bps from a year ago. Excluding $2.4 million
of Seeger divestiture adjustments in last year’s first quarter,
adjusted operating profit was up 5% from last year’s $20.3 million
and adjusted operating margin was down 50 bps from a year ago.
Aerospace
First quarter sales were $82 million, down 38% from $132 million
last year as global aerospace end markets continue to be impacted
by the global pandemic. Aerospace original equipment manufacturing
(“OEM”) sales decreased 32% while aftermarket sales decreased 48%.
On a sequential basis, Aerospace sales increased 2% from the fourth
quarter of 2020.
Operating profit was $11.1 million, down 65% from $31.4 million
in the prior year period, reflecting the impact of lower sales
volumes, offset in part by better productivity. Operating margin
was 13.6% versus 23.9% a year ago.
Aerospace OEM backlog ended the first quarter at $600 million,
up 5% from December 2020. The Company expects to ship approximately
45% of this backlog over the next 12 months.
Balance Sheet and
Liquidity
Barnes Group’s balance sheet remains well-positioned with
sufficient liquidity to fund operations. The Company has liquidity
of $85 million in cash and approximately $441 million available
under the revolving credit facility, subject to covenants which
would have allowed $143 million under our current credit
agreements. With respect to the balance sheet, our “Debt to EBITDA”
ratio, as defined in our credit agreements, was approximately 3.1
times at quarter end. The Company is in full compliance with all
covenants under its amended credit agreements.
Updated 2021 Outlook
Barnes Group now expects 2021 organic sales to be up 10% to 12%,
up from the prior 6% to 8% expectation. Foreign exchange is
anticipated to have an approximate 2% favorable impact on 2021
sales, while divested revenues will have an approximate negative 1%
impact. Operating margin is forecasted to be approximately 13%.
Earnings per share are now expected to be in the range of $1.78 to
$1.98, up 9% to 21% from 2020’s adjusted earnings per share of
$1.64 and above our prior expectation of $1.65 to $1.90. Further,
the Company forecasts capital expenditures of approximately $50
million and cash conversion of greater than 100% of net income. The
effective tax rate for 2021 is expected to be approximately
30%.
Conference Call
Information
Barnes Group Inc. will conduct a conference call with investors
to discuss first quarter 2021 results at 8:30 a.m. ET today, April
30, 2021. 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 (844) 884-8225 in the U.S. or (647) 689-4194
outside of the U.S.; Conference ID 3882647. 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 30, 2021 until 11:59
p.m. (ET) on Friday, May 7, 2021, by dialing (416) 621-4642;
Conference ID 3882647.
Note:
(1) Organic sales decline represents the total reported sales
decrease within the Company’s ongoing businesses less the impact of
foreign currency translation and acquisition and divestitures
completed in the preceding twelve months.
About Barnes Group
Barnes Group Inc. (NYSE: B) 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 aerospace, transportation,
manufacturing, automation, healthcare, and packaging. The skilled
and dedicated employees of Barnes Group around the globe are
committed to the highest performance standards and achieving
consistent, sustainable profitable growth. Barnes Group is
committed to corporate accountability and furthering environmental,
social and governance principles as evidenced by our listing as one
of America’s Most Responsible Companies by Newsweek. 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," "estimate," "project," "continue," "will," "should," 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, 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 and avoid infringing upon intellectual property rights;
introduction or development of new products or transfer of work;
higher risks in global operations and markets; the impact of
intense competition; acts of terrorism, cybersecurity attacks or
intrusions that could adversely impact our businesses; the impacts
of the COVID-19 pandemic on our business, including on demand,
supply chains, operations and our ability to maintain sufficient
liquidity throughout the unknown duration and severity of the
pandemic; 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;
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 or revised tax laws and regulations; the adoption of laws,
directives or regulations that impact the materials processed by
our products or their end markets; changes in raw material or
product prices and availability; the continuing impact of prior
acquisitions and 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,
governmental, or regulatory proceedings and contingencies; product
liabilities 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.
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited) Three months ended March 31,
2021
2020
%Change Net sales
$
301,629
$
330,671
(8.8
)
Cost of sales
194,696
208,248
(6.5
)
Selling and administrative expenses
74,553
73,110
2.0
269,249
281,358
(4.3
)
Operating income
32,380
49,313
(34.3
)
Operating margin
10.7
%
14.9
%
Interest expense
3,942
4,324
(8.8
)
Other expense (income), net
1,463
1,594
(8.2
)
Income before income taxes
26,975
43,395
(37.8
)
Income taxes
7,593
13,662
(44.4
)
Net income
$
19,382
$
29,733
(34.8
)
Common dividends
$
8,104
$
8,133
(0.4
)
Per common share: Net income: Basic
$
0.38
$
0.58
(34.5
)
Diluted
0.38
0.58
(34.5
)
Dividends
0.16
0.16
-
Weighted average common shares outstanding: Basic
50,933,666
51,061,132
(0.2
)
Diluted
51,087,688
51,501,857
(0.8
)
BARNES GROUP INC. OPERATIONS BY REPORTABLE BUSINESS
SEGMENT (Dollars in thousands) (Unaudited)
Three months ended March 31,
2021
2020
%Change Net sales Industrial
$
219,992
$
199,100
10.5
Aerospace
81,642
131,571
(37.9
)
Intersegment sales
(5
)
-
Total net sales
$
301,629
$
330,671
(8.8
)
Operating profit Industrial
$
21,295
$
17,924
18.8
Aerospace
11,085
31,389
(64.7
)
Total operating profit
$
32,380
$
49,313
(34.3
)
Operating margin
Change Industrial
9.7
%
9.0
%
70
bps. Aerospace
13.6
%
23.9
%
(1,030
)
bps. Total operating margin
10.7
%
14.9
%
(420
)
bps.
BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (Unaudited)
March 31,2021 December 31,2020 Assets Current
assets Cash and cash equivalents
$
84,900
$
79,145
Accounts receivable
252,548
251,460
Inventories
233,465
238,008
Prepaid expenses and other current assets
77,490
73,732
Total current assets
648,403
642,345
Deferred income taxes
21,653
22,092
Property, plant and equipment, net
356,272
370,947
Goodwill
971,851
1,011,580
Other intangible assets, net
541,148
564,132
Other assets
60,937
65,130
Total assets
$
2,600,264
$
2,676,226
Liabilities and Stockholders' Equity Current
liabilities Notes and overdrafts payable
$
7,507
$
2,115
Accounts payable
118,756
112,428
Accrued liabilities
169,277
178,560
Long-term debt - current
2,051
2,276
Total current liabilities
297,591
295,379
Long-term debt
664,015
699,868
Accrued retirement benefits
94,066
98,171
Deferred income taxes
88,117
91,668
Long-term tax liability
59,063
59,063
Other liabilities
46,045
49,400
Total stockholders' equity
1,351,367
1,382,677
Total liabilities and stockholders' equity
$
2,600,264
$
2,676,226
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in thousands) (Unaudited)
Three months ended March 31,
2021
2020
Operating activities: Net income
$
19,382
$
29,733
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
21,992
23,617
Gain on disposition of property, plant and equipment
(50
)
(123
)
Stock compensation expense
2,306
2,552
Seeger divestiture charges
-
6,620
Changes in assets and liabilities, net of the effects of
divestitures: Accounts receivable
(7,590
)
9,592
Inventories
78
(12,788
)
Prepaid expenses and other current assets
(4,882
)
(3,227
)
Accounts payable
9,121
1,328
Accrued liabilities
(6,456
)
(7,885
)
Deferred income taxes
(101
)
462
Long-term retirement benefits
(569
)
(3,518
)
Other
2,381
826
Net cash provided by operating activities
35,612
47,189
Investing activities: Proceeds from disposition of
property, plant and equipment
83
185
Proceeds from the sale of businesses, net of cash sold
-
36,879
Capital expenditures
(7,855
)
(11,912
)
Other
3,758
-
Net cash (used) provided by investing activities
(4,014
)
25,152
Financing activities: Net change in other borrowings
5,354
20,775
Payments on long-term debt
(30,933
)
(108,521
)
Proceeds from the issuance of long-term debt
15,000
75,000
Proceeds from the issuance of common stock
125
183
Common stock repurchases
-
(15,550
)
Dividends paid
(8,104
)
(8,133
)
Withholding taxes paid on stock issuances
(68
)
(84
)
Other
(5,816
)
(7,252
)
Net cash used by financing activities
(24,442
)
(43,582
)
Effect of exchange rate changes on cash flows
(2,331
)
(3,111
)
Increase in cash, cash equivalents and restricted cash
4,825
25,648
Cash, cash equivalents and restricted cash at beginning of
period
91,468
93,805
Cash, cash equivalents and restricted cash at end of period
96,293
119,453
Less: Restricted cash, included in Prepaid expenses and
other current assets
(6,198
)
-
Less: Restricted cash, included in Other assets
(5,195
)
(6,626
)
Cash and cash equivalents at end of period
$
84,900
$
112,827
BARNES GROUP INC. RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES TO FREE CASH FLOW (Dollars in
thousands) (Unaudited) Three months
ended March 31,
2021
2020
Free cash flow: Net cash provided by operating
activities
$
35,612
$
47,189
Capital expenditures
(7,855
)
(11,912
)
Free cash flow(1)
$
27,757
$
35,277
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,
2021
2020
% Change
SEGMENT RESULTS Operating
Profit - Industrial Segment (GAAP)
$
21,295
$
17,924
18.8
Seeger divestiture adjustments
-
2,409
Operating Profit - Industrial Segment as adjusted
(Non-GAAP) (1)
$
21,295
$
20,333
4.7
Operating Margin - Industrial Segment (GAAP)
9.7
%
9.0
%
70
bps.
Operating Margin - Industrial Segment as adjusted
(Non-GAAP) (1)
9.7
%
10.2
%
(50
)
bps.
CONSOLIDATED
RESULTS Operating Income (GAAP)
$
32,380
$
49,313
(34.3
)
Seeger divestiture adjustments
-
2,409
Operating Income as adjusted (Non-GAAP) (1)
$
32,380
$
51,722
(37.4
)
Operating Margin (GAAP)
10.7
%
14.9
%
(420
)
bps.
Operating Margin as adjusted (Non-GAAP) (1)
10.7
%
15.6
%
(490
)
bps.
Diluted Net Income per Share (GAAP)
$
0.38
$
0.58
(34.5
)
Seeger divestiture adjustments
-
0.13
Diluted Net Income per Share as adjusted (Non-GAAP)
(1)
$
0.38
$
0.71
(46.5
)
Full-Year 2020 Full-Year 2021 Outlook
Diluted Net Income per Share (GAAP)
$
1.24
$
1.78
to
$
1.98
Restructuring/reduction in force charges
0.27
-
Seeger divestiture adjustments
0.13
-
Diluted Net Income per Share as adjusted (Non-GAAP)
(1)
$
1.64
$
1.78
to
$
1.98
Notes: (1) The
Company has excluded the following from its "as adjusted" financial
measurements for 2020: 1) adjustments related to the divestiture of
the Seeger business, including $2.5M reflected within the
Industrial segment's operating profit and $4.2M of tax expense and
2) charges taken in 2020 related to restructuring and workforce
reduction actions to be implemented across its businesses,
including $18.2M reflected within operating profit and $1.0M
reflected within other expense (income), net. The tax charges
resulting from the divestiture were recorded in the first quarter
of 2020 following the completion of the sale. The tax effects of
the restructuring actions in 2020 were calculated based on the
respective tax jurisdictions and averaged approximately 27%.
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: https://www.businesswire.com/news/home/20210430005043/en/
Barnes Group Inc. William Pitts Director, Investor Relations
860.583.7070
Barnes (NYSE:B)
Historical Stock Chart
From Feb 2024 to Mar 2024
Barnes (NYSE:B)
Historical Stock Chart
From Mar 2023 to Mar 2024