BRISTOL, Conn.--(BUSINESS WIRE)--Oct. 16, 2003--Barnes Group Inc.
(NYSE: B)
-- Net sales increase 13 percent to $222 million
-- Operating income up 40 percent, net income increases 29
percent to $9 million
-- Aerospace orders exceed $51 million, driving order backlog to
$149 million
Barnes Group Inc. (NYSE: B) today announced financial results for
the quarter ended September 30, 2003. Net sales for the third quarter
of 2003 were $222.2 million, up 13 percent from $196.8 million in the
third quarter of 2002. The Company reported a 40 percent increase in
operating income to $14.0 million, as net income increased to $9.0
million, or $0.38 per diluted share, in the third quarter of 2003,
from $6.9 million, or $0.36 per diluted share, in the comparable
year-ago period. Average diluted shares outstanding were 23.3 million
in the quarter ended September 30, 2003, up 21 percent from 19.2
million in the year-ago period.
"Our operating performance this quarter, despite the headwind of a
still-sluggish economic climate, clearly demonstrates the returns from
investments we continue to make to generate sustainable, profitable
growth for our Company," said Edmund M. Carpenter, Barnes Group Inc.'s
President and C.E.O. "Going forward, these investments should continue
to enhance our top- and bottom-line performance," Carpenter continued.
Sales at Barnes Distribution were $103.8 million for the quarter
ended September 30, 2003, up $31.8 million, or 44 percent, from $72.0
million in the quarter ended September 30, 2002. Kar Products, which
Barnes Group purchased in February 2003, contributed $30.8 million of
sales in the most recent quarter. Barnes Distribution generated
operating profit of $7.4 million in the third quarter of 2003, up
sharply from operating profit of $2.4 million in the third quarter of
2002.
The improvement in operating profit was driven primarily by the
operating profit contribution from Kar Products and higher gross
profit margin. Included in Barnes Distribution's operating profit is
an incremental year-over-year gain of $0.9 million from the sale of
distribution centers; the gain was essentially offset by approximately
$0.8 million of incremental severance expense.
"This was a solid quarter for Barnes Distribution; beyond tripling
operating profit, the integration of Kar is running ahead of our
original schedule, and our new sales growth initiatives are performing
very well," Carpenter stated. "Our national and regional customer
development efforts, e-commerce platforms and new Tier 2 relationships
together contributed $5.9 million in sales to the most recent quarter,
up from $1.8 million last year. We added more than 50 new national and
regional customers, bringing to 249 the total new customers gained
since January, 2002," Carpenter added.
Carpenter continued, "During the quarter, we continued to
integrate Kar Products into Barnes Distribution, achieving a number of
milestones. As a result of the progress we have made to date, we
believe that Kar will be substantially integrated in the United States
by the end of the year, and the integration in Canada, which includes
the construction of a new distribution center, will be completed in
the first half of 2004."
Sales at Associated Spring were $81.1 million for the quarter
ended September 30, 2003, up slightly compared with sales of $80.9
million in the quarter ended September 30, 2002. The increase
reflected higher sales of nitrogen gas springs and products for
industrial markets, combined with the positive impact on sales from
foreign currency translation. These were essentially offset by a
decline in sales related to the North American light vehicle market.
Associated Spring's operating profit was $4.9 million for the
third quarter of 2003, down from $6.5 million in the third quarter of
2002. Operating profit was positively impacted by the benefits from
the 2002 closure of Associated Spring's Dallas, Texas facility. This
was more than offset by certain incrementally higher personnel costs,
including pension and severance expenses totaling approximately $1.0
million, and a $0.5 million reduction in the carrying value of the
Dallas facility, which is currently held for sale.
Carpenter commented, "Associated Spring continues to successfully
leverage higher-growth segments of its key markets, such as nitrogen
gas springs and the non-U.S. automakers, to offset sales declines with
some domestic customers. Although this business remains quite
profitable, during the third quarter we began taking additional
actions aimed at improving operating margins to be more in line with
historical levels."
Sales at Barnes Aerospace were $39.4 million for the third quarter
of 2003, down from $45.8 million in the third quarter of 2002.
Operating profit was $2.0 million for the quarter ended September 30,
2003, up from $1.4 million in the comparable year-ago period,
reflecting the benefit of cost reduction efforts taken during 2002,
productivity and efficiency improvements and the absence of $0.7
million in severance that occurred in the 2002 period. These positives
were offset in part by the sales volume decline.
Barnes Aerospace recorded orders of $51.7 million during the third
quarter of 2003, up 32 percent from $39.1 million in the comparable
year-ago period. Backlog increased to $149.3 million, up four percent
from $143.0 million at September 30, 2002. Military orders were $18.1
million, or 35 percent of the orders received in the most recent
quarter; this included direct military orders that were particularly
strong at $9.8 million. Barnes Aerospace also received approximately
$10.3 million in orders related to a large commercial engine program
that will enter service in early 2004.
"It would appear that we have turned the corner at Barnes
Aerospace from a very challenging post-9/11 environment," Carpenter
stated. "As a result of the efforts taken to position the business for
this difficult part of the aerospace cycle, we are continuing to
report solid operating results. With the strong orders generated this
past quarter, Barnes Aerospace is very well positioned for top- and
bottom-line growth in 2004," Carpenter added.
William C. Denninger, Barnes Group Inc.'s Chief Financial Officer,
commented, "In addition to a strong operating performance in the third
quarter, we further strengthened our balance sheet by reducing
borrowings at September 30, 2003 by approximately $9 million compared
to June 30, while at the same time increasing cash by $12 million, to
$63 million. Our debt-to-capitalization ratio at quarter-end was 45
percent, which is within our targeted leverage range."
For the first nine months of 2003, Barnes Group's net sales were
$670.5 million, up 12 percent from $600.4 million in the same period a
year ago. Net income was $26.1 million, or $1.21 per diluted share,
for the nine months ended September 30, 2003, up 17 percent from $22.3
million, or $1.17 per diluted share, in the same period of 2002.
Barnes Group will conduct a conference call with investors to
discuss third quarter 2003 results on Thursday, October 16, 2003 at
12:00 PM ET. A webcast of the live call, supporting materials and an
archived replay will be available on the Barnes Group investor
relations website (ir.barnesgroupinc.com).
Barnes Group Inc. (www.barnesgroupinc.com) is a diversified
international manufacturer of precision metal components and
assemblies and a distributor of industrial supplies, serving a wide
range of markets and customers. Founded in 1857 and headquartered in
Bristol, Connecticut, Barnes Group consists of three businesses with
2002 sales of $784 million: Associated Spring, one of the world's
largest manufacturers of precision mechanical and nitrogen gas springs
and a global supplier of retaining rings and injection-molded plastic
components; Barnes Aerospace, a manufacturer and repairer of
highly-engineered assemblies and components for commercial and
military aircraft engines, airframes, and land-based industrial gas
turbines; and Barnes Distribution, an international, full-service
distributor of maintenance, repair and operating supplies. Over 6,100
dedicated employees at more than 60 locations worldwide contribute to
Barnes Group Inc.'s success.
This release may contain certain forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks and uncertainties that
may cause actual results to differ materially from those contained in
the statements. Investors are encouraged to consider these risks and
uncertainties as described within the Company's periodic filings with
the Securities and Exchange Commission, including the following: the
ability of the Company to integrate newly acquired businesses and to
realize acquisition synergies on schedule; changes in market demand
for the types of products and services produced and sold by Barnes
Group; the Company's success in identifying, and attracting customers
in, new markets; the Company's ability to develop new and enhanced
products to meet customers' needs timely; the effectiveness of the
Company's marketing and sales programs; increased competitive
activities including pricing, advertising and promotions that could
adversely affect customer demand for the Company's products; changes
in economic, political and public health conditions, worldwide and in
the locations where the Company does business; interest and foreign
exchange rate fluctuations; and regulatory changes.
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
--------------------------- ------------------------
Three months ended Nine months ended
September 30 September 30
--------------------------- ------------------------
2003 2002 2003 2002
--------------------------- ------------------------
Net sales $ 222,160 $ 196,799 $ 670,481 $ 600,420
Cost of sales 143,651 134,524 432,193 407,028
Selling and
admin.
expenses 64,470 52,256 195,054 158,054
--------------------------- ------------------------
208,121 186,780 627,247 565,082
--------------------------- ------------------------
Operating income 14,039 10,019 43,234 35,338
Other income 613 2,156 2,293 3,357
Interest expense 3,961 3,877 12,206 10,895
Other expenses 13 167 990 378
--------------------------- ------------------------
Income before
income taxes 10,678 8,131 32,331 27,422
Income taxes 1,725 1,215 6,272 5,073
--------------------------- ------------------------
Net income $ 8,953 $ 6,916 $ 26,059 $ 22,349
=========================== ========================
Per common share:
Net income
- basic $ .40 $ .37 $ 1.24 $ 1.20
- diluted .38 .36 1.21 1.17
Dividends .20 .20 .60 .60
Average common
shares outstanding
- basic 22,561,901 18,839,580 21,038,719 18,697,265
- diluted 23,257,839 19,150,751 21,531,951 19,156,896
----------------------------------------------------
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
------------------------------
September September
2003 2002
------------------------------
Assets
Current assets
Cash and short-term investments $ 63,253 $ 38,923
Accounts receivable 128,282 111,216
Inventories 105,704 85,413
Deferred income taxes and prepaid expenses 28,826 28,092
--------- ---------
Total current assets 326,065 263,644
Deferred income taxes 21,966 7,342
Property, plant and equipment 152,392 160,950
Goodwill 220,092 169,529
Other assets 99,938 71,712
--------- ---------
$820,453 $673,177
========= =========
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 2,000 $ - -
Accounts payable 93,265 68,526
Accrued liabilities 81,860 63,494
Long-term debt - current 24,794 8,227
--------- ---------
Total current liabilities 201,919 140,247
Long-term debt 216,229 234,345
Deferred income taxes 6,496 6,840
Other liabilities 93,714 74,300
Stockholders' equity 302,095 217,445
--------- ---------
$820,453 $673,177
========= =========
CONTACT: Barnes Group Inc.
Investors:
Phillip J. Penn, 860-973-2126
Media:
Stephen J. McKelvey, 860-973-2132
SOURCE: Barnes Group Inc.
