Delivers Strong Aerospace Results and Solid Company-wide
Book-to-Bill
- Sales of $312 million, up 4% versus the prior year period;
Organic Sales up 6%
- Operating Margin of 10.0%; Adjusted Operating Margin of 10.2%,
down 50 bps from a year ago
- GAAP EPS of $0.40; Adjusted EPS of $0.41, up 8% versus the
prior year period
- Forecasts 2022 Organic Sales Growth of +8% to +10%
- Expects 2022 Adjusted EPS of $2.20 to $2.40; Up 13% to 24% from
2021 Adjusted EPS of $1.94
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 2022.
“Sustained recovery in aero-related end markets provided
tailwind for Barnes Aerospace which delivered over 20% sales growth
compared to last year, while expanding adjusted operating margin by
300 basis points. Barnes Industrial sales were down 1% organically
for the quarter led by softer automotive and general industrial
markets, and margins were impacted by inflationary headwinds,
supply chain challenges, and COVID-related operational
disruptions,” said Julie K. Streich, Interim Chief Executive
Officer and Senior Vice President Finance and Chief Financial
Officer of Barnes. “Customer demand remained healthy as indicated
by a Company-wide book-to-bill ratio of 1.15x, and our team’s
multipronged approach to mitigate the impacts of the current
macro-environment should support improved performance as the year
progresses,” added Streich.
First Quarter 2022 Highlights
First quarter 2022 net sales of $312 million were up 4% from
$302 million in the prior year period, with organic sales (1)
increasing 6%. Foreign exchange had a negative impact of 2%.
Operating income was $31.1 million versus $32.4 million a year ago.
Operating margin decreased 70 bps to 10.0%. Excluding $0.7 million
of restructuring charges in the current year quarter, adjusted
operating income was $31.8 million, down 2%, and adjusted operating
margin was 10.2%, down 50 bps from a year ago.
Interest expense for the first quarter of 2022 was $3.6 million,
a decrease of $0.4 million from the prior year primarily due to the
benefit of lower average borrowings. Other expense was $1.6
million, up $0.2 million from a year ago.
The Company’s effective tax rate was 21.0% compared with 28.1% a
year ago with the decrease largely due to an increase in projected
earnings in low tax jurisdictions and the absence of additional tax
expense related to the Global Intangible Low Income Tax recorded in
last year’s first quarter.
Net income for the first quarter was $20.5 million, or $0.40 per
diluted share, compared to $19.4 million, or $0.38 per diluted
share, a year ago. On an adjusted basis, which excludes $0.01 of
restructuring charges in the current year period, net income per
share of $0.41 was up 8% from a year ago.
First quarter cash used by operating activities was $9.3 million
versus cash provided from operating activities of $35.6 million in
the prior year primarily due to paid incentive compensation and an
increase in working capital in the current year period. Free cash
flow was a use of $16.7 million compared to a source of $27.8
million last year. Capital expenditures were $7.4 million, down
from $7.9 million a year ago.
Segment Performance
Industrial
First quarter sales were $212 million, down 4% from $220 million
in the prior year period. Organic sales decreased 1% while
unfavorable foreign exchange lowered sales by 3%. Operating profit
was $14.7 million, down 31% from $21.3 million in the prior year
period. Excluding $0.3 million in current year restructuring
charges, adjusted operating profit of $15.0 million was down 29%
from the prior year and adjusted operating margin of 7.1% was down
260 bps. The decrease in adjusted operating profit was primarily
driven by broad based inflation, supply chain challenges, and lower
productivity primarily driven by COVID-related absenteeism and
shutdowns.
Aerospace
First quarter sales were $101 million, up 23% from $82 million
last year, benefitting from ongoing recovery in aerospace end
markets. Aerospace original equipment manufacturing (“OEM”) sales
increased 18%, while aftermarket sales increased 34% compared to
the prior year period.
Operating profit was $16.4 million in the first quarter, up 48%
from $11.1 million in the prior year period. Excluding $0.4 million
of restructuring costs this year, adjusted operating profit of
$16.7 million was up 51% from a year ago. The increase in adjusted
operating profit was driven by the contribution of higher sales
volumes, offset in part by unfavorable productivity due to
COVID-related absenteeism and supply chain challenges. Adjusted
operating margin was 16.6%, up 300 bps from 13.6% last year.
Aerospace OEM backlog ended the first quarter at $716 million,
up 5% sequentially from December 2021. The Company expects to
convert approximately 45% of this backlog to revenue over the next
12 months.
Balance Sheet and Liquidity
Barnes’ balance sheet and liquidity profile remain
well-positioned and supportive of ongoing investments in growth
initiatives. The Company has liquidity of $75 million in cash and
approximately $510 million available under the revolving credit
facility, subject to covenants which would have allowed $206
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 2.4 times at quarter end.
Updated 2022 Outlook
With solid first quarter orders, Barnes continues to expect 2022
organic sales growth of 8% to 10% and negative foreign exchange of
approximately 2%. Adjusted operating margin is now forecasted to be
in the range of 12.5% to 13.5%, down slightly from our prior view
given ongoing supply chain and inflationary pressures. Adjusted
earnings are expected to be in the range of $2.20 to $2.40 per
diluted share, up 13% to 24% from 2021’s adjusted earnings of $1.94
per share. The updated adjusted earnings per share forecast is
$0.05 lower at the high end of our previous range reflecting the
macroeconomic headwinds in our Industrial segment. 2022 adjusted
earnings per share are anticipated to exclude a $0.03 impact
related to residual restructuring activities. The Company forecasts
capital expenditures of between $50 and $55 million and cash
conversion of greater than 100% of net income. The effective tax
rate for 2022 is expected to be approximately 24% to 25%.
Conference Call Information
Barnes will conduct a conference call with investors to discuss
first quarter 2022 results at 8:30 a.m. ET today, April 29, 2022.
The public may access the conference through a live audio webcast
available on the Investor Relations section of Barnes’ website at
www.barnesgroupinc.com.
The conference is also available by direct dial at (888)
510-2379 in the U.S. or (646) 960-0691 outside of the U.S.;
Conference ID 1137078. 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 29, 2022, until
11:59 p.m. (ET) on Friday, May 6, 2022, by dialing (647) 362-9199;
Conference ID 1137078.
Note:
(1) Organic sales growth represents the total reported sales
increase 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
Barnes Group Inc. (NYSE: B) pioneers technologies to help change
the world. Employees across the globe are dedicated to Persistent
Ingenuity™ – advancing what’s possible and delivering to the
highest standards. We serve a wide range of end markets and
customers, including healthcare, automation, packaging, aerospace,
mobility, and manufacturing, delivering breakthrough products and
services to shape a more inclusive and sustainable world. For more
information, visit www.barnesgroupinc.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," "may,"
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: the Company’s ability to
manage economic, business and geopolitical conditions, including
global price inflation and shortages impacting the availability of
materials; the duration and severity of the COVID-19 pandemic,
including its impacts across our business on demand, supply chains,
operations and liquidity; failure to successfully negotiate
collective bargaining agreements or potential strikes, work
stoppages or other similar events; 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; challenges associated with the introduction or development
of new products or transfer of work; higher risks in global
operations and markets; the impact of intense competition; the
physical and operational risks from natural disasters, severe
weather events, climate change which may limit accessibility to
sufficient water resources, outbreaks of contagious diseases and
other adverse public health developments; war, terrorism and other
international conflicts; the failure to achieve anticipated cost
savings and benefits associated with workforce reductions and
restructuring actions; currency fluctuations and foreign currency
exposure; impacts from goodwill impairment and related charges; 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; changes or
uncertainties in laws, regulations, rates, policies or
interpretations that impact the Company’s business operations or
tax status, including those that address climate change,
environmental, health and safety matters, and the materials
processed by our products or their end markets; fluctuations in the
pricing or availability of raw materials, freight, transportation,
utilities and other items required by our operations; labor
shortages or other business interruptions at transportation
centers, shipping ports, our suppliers’ facilities or our
facilities; disruptions in information technology systems,
including as a result of cybersecurity attacks or data security
breaches; the ability to hire and retain senior management and
qualified personnel; the continuing impact of prior acquisitions
and divestitures, and any other future strategic actions, 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
litigation and governmental proceedings; the impact of actual,
potential or alleged defects or failures of our products or
third-party products within which our products are integrated,
including product liabilities, product recall costs and uninsured
claims; future repurchases of common stock; future levels of
indebtedness; 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.
Category: Earnings
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited) Three months ended March
31,
2022
2021
% Change
Net sales
$
312,383
$
301,629
3.6
Cost of sales
207,190
194,696
6.4
Selling and administrative expenses
74,080
74,553
(0.6
)
281,270
269,249
4.5
Operating income
31,113
32,380
(3.9
)
Operating margin
10.0
%
10.7
%
Interest expense
3,567
3,942
(9.5
)
Other expense (income), net
1,630
1,463
11.4
Income before income taxes
25,916
26,975
(3.9
)
Income taxes
5,432
7,593
(28.5
)
Net income
$
20,484
$
19,382
5.7
Common dividends
$
8,111
$
8,104
0.1
Per common share: Net income:
Basic
$
0.40
$
0.38
5.3
Diluted
0.40
0.38
5.3
Dividends
0.16
0.16
-
Weighted average common shares outstanding:
Basic
51,022,417
50,933,666
0.2
Diluted
51,168,622
51,087,688
0.2
BARNES GROUP INC. OPERATIONS
BY REPORTABLE BUSINESS SEGMENT (Dollars in thousands)
(Unaudited) Three months ended March
31,
2022
2021
% Change
Net sales Industrial
$
211,672
$
219,992
(3.8
)
Aerospace
100,711
81,642
23.4
Intersegment sales
(0
)
(5
)
Total net sales
$
312,383
$
301,629
3.6
Operating profit
Industrial
$
14,734
$
21,295
(30.8
)
Aerospace
16,379
11,085
47.8
Total operating profit
$
31,113
$
32,380
(3.9
)
Operating margin
Change
Industrial
7.0
%
9.7
%
(270
)
bps. Aerospace
16.3
%
13.6
%
270
bps. Total operating margin
10.0
%
10.7
%
(70
)
bps.
BARNES
GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in
thousands) (Unaudited)
March 31,2022 December31, 2021 Assets
Current assets Cash and cash equivalents
$
75,255
$
102,860
Accounts receivable
272,345
262,257
Inventories
255,117
239,655
Prepaid expenses and other current assets
83,795
75,437
Total current assets
686,512
680,209
Deferred income taxes
17,883
21,976
Property, plant and equipment, net
335,286
341,462
Goodwill
945,407
955,370
Other intangible assets, net
486,835
500,246
Other assets
83,432
77,557
Total assets
$
2,555,355
$
2,576,820
Liabilities and Stockholders' Equity
Current liabilities Notes and overdrafts payable
$
978
$
1,900
Accounts payable
134,816
131,076
Accrued liabilities
144,852
175,583
Long-term debt - current
1,702
1,835
Total current liabilities
282,348
310,394
Long-term debt
594,976
599,932
Accrued retirement benefits
75,684
76,784
Deferred income taxes
65,557
66,704
Long-term tax liability
52,114
52,114
Other liabilities
43,646
42,126
Total stockholders' equity
1,441,030
1,428,766
Total liabilities and stockholders' equity
$
2,555,355
$
2,576,820
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in
thousands) (Unaudited) Three months
ended March 31,
2022
2021
Operating activities: Net income
$
20,484
$
19,382
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
22,301
21,992
Gain on disposition of property, plant and equipment
(1
)
(50
)
Stock compensation expense
2,534
2,306
Changes in assets and liabilities: Accounts receivable
(10,961
)
(7,590
)
Inventories
(15,154
)
78
Prepaid expenses and other current assets
(5,809
)
(4,882
)
Accounts payable
4,163
9,121
Accrued liabilities
(28,197
)
(6,456
)
Deferred income taxes
2,115
(101
)
Long-term retirement benefits
(1,862
)
(569
)
Other
1,074
2,381
Net cash (used) provided by operating activities
(9,313
)
35,612
Investing activities: Proceeds from disposition of
property, plant and equipment
60
83
Capital expenditures
(7,405
)
(7,855
)
Other
(1,094
)
3,758
Net cash used by investing activities
(8,439
)
(4,014
)
Financing activities: Net change in other borrowings
(784
)
5,354
Payments on long-term debt
(34,918
)
(30,933
)
Proceeds from the issuance of long-term debt
35,000
15,000
Proceeds from the issuance of common stock
153
125
Dividends paid
(8,111
)
(8,104
)
Withholding taxes paid on stock issuances
(49
)
(68
)
Other
(3,665
)
(5,816
)
Net cash used by financing activities
(12,374
)
(24,442
)
Effect of exchange rate changes on cash flows
137
(2,331
)
(Decrease) increase in cash, cash equivalents and restricted
cash
(29,989
)
4,825
Cash, cash equivalents and restricted cash at beginning of
period
111,909
91,468
Cash, cash equivalents and restricted cash at end of period
81,920
96,293
Less: Restricted cash, included in Prepaid expenses and
other current assets
(4,434
)
(6,198
)
Less: Restricted cash, included in Other assets
(2,231
)
(5,195
)
Cash and cash equivalents at end of period
$
75,255
$
84,900
BARNES GROUP INC. RECONCILIATION OF NET
CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(Dollars in thousands) (Unaudited)
Three months ended March 31,
2022
2021
Free cash flow: Net cash (used) provided by operating
activities
$
(9,313
)
$
35,612
Capital expenditures
(7,405
)
(7,855
)
Free cash flow(1)
$
(16,718
)
$
27,757
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,
2022
2021
% Change
SEGMENT RESULTS Operating
Profit - Industrial Segment (GAAP)
$
14,734
$
21,295
(30.8
)
Restructuring/reduction in force charges
304
-
Operating Profit - Industrial Segment as adjusted
(Non-GAAP) (1)
$
15,038
$
21,295
(29.4
)
Operating Margin - Industrial Segment (GAAP)
7.0
%
9.7
%
(270
)
bps.
Operating Margin - Industrial Segment as adjusted
(Non-GAAP) (1)
7.1
%
9.7
%
(260
)
bps.
Operating Profit - Aerospace Segment (GAAP)
$
16,379
$
11,085
47.8
Restructuring/reduction in force charges
354
-
Operating Profit - Aerospace Segment as adjusted
(Non-GAAP) (1)
$
16,733
$
11,085
51.0
Operating Margin - Aerospace Segment (GAAP)
16.3
%
13.6
%
270
bps.
Operating Margin - Aerospace Segment as adjusted (Non-GAAP)
(1)
16.6
%
13.6
%
300
bps.
CONSOLIDATED
RESULTS Operating Income (GAAP)
$
31,113
$
32,380
(3.9
)
Restructuring/reduction in force charges
658
-
Operating Income as adjusted (Non-GAAP) (1)
$
31,771
$
32,380
(1.9
)
Operating Margin (GAAP)
10.0
%
10.7
%
(70
)
bps.
Operating Margin as adjusted (Non-GAAP) (1)
10.2
%
10.7
%
(50
)
bps.
Diluted Net Income per Share (GAAP)
$
0.40
$
0.38
5.3
Restructuring/reduction in force charges
0.01
-
Diluted Net Income per Share as adjusted (Non-GAAP)
(1)
$
0.41
$
0.38
7.9
Full-Year 2021 Full-Year 2022 Outlook
Diluted Net Income per Share (GAAP)
$
1.96
$
2.17
to
$
2.37
Foreign tax matters
(0.04
)
-
Restructuring/reduction in force charges
0.02
0.03
Diluted Net Income per Share as adjusted (Non-GAAP)
(1)
$
1.94
$
2.20
to
$
2.40
Notes: (1) The Company
has excluded charges related to restructuring actions at certain
businesses from its "as adjusted" financial measurements for 2022.
The Company has excluded the following from its "as adjusted"
financial measurements for 2021: 1) the impact of certain foreign
tax matters including a benefit related to the Italy tax
realignment, partially offset by a charge related to the UK tax
rate and 2) charges related to restructuring actions at certain
businesses. The tax effects of the restructuring actions were
calculated based on the respective tax jurisdictions and ranged
from approximately 15% to approximately 30%. 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/20220429005065/en/
Investors: Barnes Group Inc. William Pitts Vice President,
Investor Relations 860.583.7070
Barnes (NYSE:B)
Historical Stock Chart
From Mar 2024 to Apr 2024
Barnes (NYSE:B)
Historical Stock Chart
From Apr 2023 to Apr 2024