Barnes Group Inc. (NYSE: B), a diversified global manufacturer
and logistical services company, today reported financial results
for the third quarter 2010. The Company reported net income of
$15.1 million, or $0.27 per diluted share, compared to $10.9
million, or $0.20 per diluted share in the third quarter of 2009.
Barnes Group’s third quarter 2010 sales totaled $289.9 million, an
increase of 11.4 percent from $260.3 million in the third quarter
of 2009.
($ millions; exceptper share data)
Three months ended September 30, Nine
months ended September 30, 2010 2009
Change 2010 2009
Change Net Sales $289.9 $260.3 $29.6 11.4% $849.9
$777.7 $72.2 9.3% Operating Income $24.8 $14.6 $10.3 70.6%
$68.2 $49.2 $19.0 38.7% % of Sales 8.6% 5.6% - 3.0 pts. 8.0% 6.3% -
1.7 pts. Net Income $15.1 $10.9 $4.2 38.7% $41.8 $32.8 $9.0 27.3% %
of Sales 5.2% 4.2% - 1.0 pts. 4.9% 4.2% - 0.7 pts. Net Income Per
Diluted Share $0.27 $0.20 $0.07
35.0% $0.75 $0.61
$0.14 23.0%
“Continued improvements in the current economic climate,
particularly within our industrial and automotive end markets, led
to double-digit sales growth for the second consecutive quarter,”
said Gregory F. Milzcik, President and Chief Executive Officer,
Barnes Group Inc. “This increase in sales, paired with our
continued focus on maintaining an efficient cost structure and
productivity, contributed to a meaningful improvement to our third
quarter operating profit.
“We also experienced continued growth in our backlog and strong
order rates, which position us well to build upon our success as we
move into the fourth quarter,” Milzcik said. “While we are seeing
strong growth in Precision Components and increased activity within
our distribution and aerospace aftermarket businesses, we continue
to remain cautious. Our 2010 diluted earnings per share guidance
has been tightened to $0.95 to $1.00 given current and anticipated
market conditions.”
Logistics and Manufacturing Services
- Third quarter 2010 sales at Logistics
and Manufacturing Services were $138.9 million, an increase of 5.8
percent from $131.3 million in the same period last year. The
increase in sales was driven primarily by revenue growth in the
North American distribution businesses as macro-economic
conditions, including industrial production, continued to improve.
The European-based distribution business experienced a slight
decline in sales compared to the same period last year mainly due
to the negative impact of foreign exchange. Aerospace aftermarket
reported an increase in sales over the prior year period reflecting
modest improvement in maintenance, repair and overhaul activity and
new product introduction. Foreign exchange negatively impacted
third quarter 2010 sales by $1.5 million.
- Operating profit was $10.8 million,
compared with $11.9 million in the third quarter of 2009. This
primarily results from increased personnel costs related to
expanding the sales force and improving productivity in the
distribution businesses. Operating profit was also impacted by
higher product and freight costs. Higher sales helped partially
offset the impact of these trends. Operating margin was 7.8 percent
compared to 9.0 percent in the prior year.
Precision Components
- Order rates within Precision Components
experienced an increase over the prior year and outpaced sales for
the fourth consecutive quarter. Third quarter 2010 sales were
$154.0 million, up 18.4 percent from $130.0 million in the same
period last year. Year-over-year sales growth continued to be
driven by improved market demand primarily from the industrial
manufacturing businesses in North America and Europe and from
improvements in the transportation industry, including automotive.
Sales in the aerospace original equipment manufacturing business
were relatively flat compared to the third quarter of 2009. Foreign
exchange negatively affected sales by $1.2 million in the third
quarter.
- Operating profit for the third quarter
of 2010 increased significantly to $14.0 million, as compared with
$2.7 million in the third quarter of 2009. The higher operating
profit was due primarily to the increase in 2010 sales levels, as
well as a lower fixed cost structure, and a focus on lean
initiatives to improve operating efficiency. Sales gains helped
offset higher personnel costs and expenses associated with
increases in new product introductions. Included in Precision
Components third quarter 2009 results are $3.4 million (pre-tax)
for restructuring charges related to moving operations in two
facilities that provided a more cost effective manufacturing
footprint. Operating margin was 9.1 percent compared to 2.1 percent
in the prior year.
Additional Information
- Other income, net of other expenses,
decreased $2.0 million in the third quarter of 2010, compared to
the same period of 2009 primarily as a result of a $1.5 million
gain in 2009 on the repurchase of certain convertible notes.
Year-to-date, other income, net of other expenses, decreased $4.8
million, primarily as a result of a $3.8 million gain in 2009 on
the repurchase of certain convertible notes.
- The Company’s effective tax rate for
the first nine months of 2010 was 17.7 percent compared to 5.1
percent in 2009. Included in the 2009 year-to-date tax expense is a
$1.6 million tax benefit related to the third quarter 2009
restructuring actions. Changes to the Company’s tax rate are
largely based on changes in the projected mix of income between
taxing jurisdictions.
- Barnes Group generated $47.0 million in
cash from operations for the first nine months of 2010, compared to
$125.7 million in 2009. Cash flow in 2010 includes additional
investments in working capital driven by increased customer
demand.
Conference Call
The Company will conduct a conference call with investors to
discuss third quarter 2010 results at 8:30 a.m. ET today, October
29, 2010. A webcast of the live call and an archived replay will be
available on the Barnes Group investor relations link at
www.BGInc.com.
Barnes Group Inc. (NYSE:B) is a diversified global manufacturer
and logistical services company focused on providing precision
component manufacturing and operating service support. Founded in
1857, over 4,800 dedicated employees at locations on four
continents worldwide are committed to achieving consistent and
sustainable profitable growth. For more information, visit
www.BGInc.com. Barnes Group, the Critical Components People.
This release may contain certain forward-looking statements as
defined in the Private Securities Litigation and Reform Act of
1995. Forward-looking statements are made based upon management’s
good faith expectations and beliefs concerning future developments
and their potential effect upon the Company and can be identified
by the use of words such as “anticipated,” “believe,” “expect,”
“plans,” “strategy,” “estimate,” “project,” and other words of
similar meaning in connection with a discussion of future operating
or financial performance. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to
differ materially from those expressed in the forward-looking
statements. The risks and uncertainties, which are described in our
periodic filings with the Securities and Exchange Commission,
include, among others, uncertainties arising from the behavior of
financial markets; future financial performance of the industries
or customers that we serve; changes in market demand for our
products and services; successful integration of acquired
businesses; introduction of new products or transfer of work;
changes in raw material prices and availability; foreign currency
exposure; our dependence upon revenues and earnings from a small
number of significant customers; uninsured claims; and numerous
other matters of 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 September 30, Nine months ended September
30, 2010 2009 % Change 2010
2009 % Change Net sales $ 289,901 $ 260,339
11.4 $ 849,930 $ 777,690 9.3 Cost of sales 184,989 170,491
8.5 540,833 503,369 7.4 Selling and administrative expenses
80,079 75,291 6.4 240,915
225,161 7.0 265,068 245,782
7.8 781,748 728,530 7.3
Operating income 24,833 14,557 70.6 68,182 49,160 38.7
Operating margin 8.6 % 5.6 % 8.0 % 6.3 % Other income 56
1,545 (96.4 ) 290 4,205 (93.1 ) Interest expense 5,177 5,293 (2.2 )
15,273 17,234 (11.4 ) Other expenses 829 293
NM 2,451 1,558 57.3
Income before income taxes 18,883 10,516 79.6 50,748 34,573 46.8
Income taxes (benefit) 3,779 (373 ) NM
8,992 1,778 NM Net income $
15,104 $ 10,889 38.7 $ 41,756 $ 32,795
27.3 Common dividends $ 4,373 $ 4,357 0.4 $
13,159 $ 21,220 (38.0 ) Per common share: Net
income: Basic $ 0.27 $ 0.20 35.0 $ 0.75 $ 0.61 23.0 Diluted 0.27
0.20 35.0 0.75 0.61 23.0 Dividends 0.08 0.08 - 0.24 0.40 (40.0 )
Average common shares outstanding: Basic 55,346,517
54,257,791 2.0 55,428,865 53,462,672 3.7 Diluted 55,839,970
54,563,199 2.3 56,048,170 53,710,453 4.4 Notes: 2009 third
quarter Other income included a $1,485 gain on the purchase of
certain convertible debt and income taxes included the related tax
expense of $563. 2009 year-to-date Other income included a $3,773
gain on the purchase of certain convertible debt and income taxes
included the related tax expense of $1,431.
BARNES GROUP
INC. OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands) Unaudited
Three months ended September 30,
Nine months ended September 30, 2010 2009 %
Change 2010 2009 % Change Net Sales
Logistics and Manufacturing Services $ 138,937 $ 131,309 5.8 $
412,679 $ 410,546 0.5 Precision Components 154,012 130,041
18.4 446,397 371,560 20.1 Intersegment sales (3,048 )
(1,011 ) NM (9,146 ) (4,416 ) NM Total
net sales $ 289,901 $ 260,339 11.4 $ 849,930 $
777,690 9.3 Operating profit Logistics and
Manufacturing Services $ 10,799 $ 11,871 (9.0 ) $ 29,296 $ 38,777
(24.5 ) Precision Components 14,034
2,686 NM 38,886 10,383 NM
Total operating profit 24,833 14,557 70.6 68,182 49,160 38.7
Interest income 56 54 2.7 211 371 (43.2 ) Interest expense
(5,177 ) (5,293 ) (2.2 ) (15,273 ) (17,234 ) (11.4 ) Other
income (expense), net (829 ) 1,198 NM
(2,372 ) 2,276 NM Income before income taxes $
18,883 $ 10,516 79.6 $ 50,748 $ 34,573
46.8 Notes: 2009 third quarter Other income (expense), net
included a $1,485 gain on the purchase of certain convertible debt.
2009 year-to-date Other income (expense), net included a $3,773
gain on the purchase of certain convertible debt.
BARNES
GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in
thousands) Unaudited
September 30,2010
December 31,2009
Assets Current assets Cash and cash equivalents $ 23,724 $
17,427 Accounts receivable 189,693 160,269 Inventories 211,902
190,792 Deferred income taxes 9,040 23,630 Prepaid expenses and
other current assets 14,577 10,562 Total
current assets 448,936 402,680 Deferred income taxes
40,344 30,650 Property, plant and equipment, net 219,755 224,963
Goodwill 381,421 373,564 Other intangible assets, net 294,193
303,689 Other assets 18,964 16,444 Total
assets $ 1,403,613 $ 1,351,990
Liabilities and
Stockholders' Equity Current liabilities Notes and overdrafts
payable $ 8,012 $ 4,595 Accounts payable 97,014 85,588 Accrued
liabilities 80,189 73,538 Long-term debt - current 107,322
25,567 Total current liabilities 292,537 189,288
Long-term debt 241,679 321,306 Accrued retirement benefits
106,100 118,693 Other liabilities 36,894 37,990
Stockholders' equity 726,403 684,713 Total
liabilities and stockholders' equity $ 1,403,613 $ 1,351,990
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in thousands) Unaudited
Nine months ended September 30, 2010
2009 Operating activities: Net income $ 41,756 $
32,795 Adjustments to reconcile net income to net cash from
operating activities: Depreciation and amortization 38,988 38,558
Amortization of convertible debt discount 4,251 4,558 Loss on
disposition of property, plant and equipment 253 813 Gain on
repurchase of convertible notes -- (3,773 ) Stock compensation
expense 5,619 3,279 Withholding taxes paid on stock issuances (287
) (610 ) Changes in assets and liabilities: Accounts receivable
(27,671 ) 14,694 Inventories (19,492 ) 50,757 Prepaid expenses and
other current assets (5,420 ) 4,378 Accounts payable 11,359 4,615
Accrued liabilities 5,906 (3,054 ) Deferred income taxes 4,469
(2,741 ) Long-term retirement benefits (12,155 ) (16,503 ) Other
(579 ) (2,030 ) Net cash provided by operating
activities 46,997 125,736
Investing activities:
Proceeds from disposition of property, plant and equipment 1,384
981 Capital expenditures (22,463 ) (24,847 ) Other (2,393 )
(1,737 ) Net cash used by investing activities
(23,472 ) (25,603 )
Financing activities: Net change
in other borrowings 3,384 (4,861 ) Payments on long-term debt
(243,658 ) (181,242 ) Proceeds from the issuance of long-term debt
241,667 94,900 Proceeds from the issuance of common stock 3,871
5,621 Common stock repurchases (9,014 ) (314 ) Dividends paid
(13,159 ) (21,220 ) Other (160 ) (797 ) Net
cash used by financing activities (17,069 ) (107,913 )
Effect of exchange rate changes on cash flows (159 )
1,043 Increase (decrease) in cash and cash
equivalents 6,297 (6,737 ) Cash and cash equivalents at
beginning of period 17,427 20,958
Cash and cash equivalents at end of period $ 23,724 $
14,221
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