BRISTOL, Conn.--(BUSINESS WIRE)--Feb. 22, 2005--Barnes Group Inc.
(NYSE: B):
- Net sales for the quarter rise 14 percent to a record $251.6
million
- Net sales for the full year rise 12 percent to a record $994.7
million
- Barnes Aerospace achieves full year record operating profit,
sales, orders, and backlog
Barnes Group Inc. (NYSE: B) today announced financial results for
the quarter and year ended December 31, 2004. Net sales for the
quarter were $251.6 million, up 14 percent from $220.3 million in the
fourth quarter of 2003. Net income was $3.3 million or $0.14 per
diluted share in the fourth quarter of 2004, compared to $7.0 million,
or $0.29 per diluted share in the year-ago period.
Included in the fourth quarter results were pre-tax charges of
approximately $4.5 million, or $0.12 per diluted share, for actions
implemented to offset higher raw material costs going forward at
Associated Spring and to enable the realization of benefits from the
Kar Products integration and improved customer service levels at
Barnes Distribution. These charges include $3.5 million related to
severance costs, which are estimated to generate annual savings of
approximately $5.5 million, and $1.0 million in inventory and facility
charges. The charges were partially offset by a $0.7 million pre-tax
benefit related principally to the reduction of lease obligations on
idle facilities within Barnes Distribution.
For all of 2004, net sales were $994.7 million, up 12 percent from
$890.8 million last year. Barnes Group's net income was $33.4 million,
a slight increase from $33.0 million for the same period a year ago.
Diluted earnings per share were $1.40 for the year ended December 31,
2004, compared with $1.49 in 2003. Full-year results excluding the
fourth quarter charges of $4.5 million would have been $1.52 per
diluted share(1).
"Full year sales of just under $1 billion established a new record
for the Company, including sales of $252 million in the fourth
quarter," said Edmund M. Carpenter, President and Chief Executive
Officer, Barnes Group Inc. "The record sales year was driven by
organic growth in each of the Company's business segments."
Sales at Barnes Aerospace were $51.4 million for the fourth
quarter of 2004, up 19 percent from $43.4 million in the fourth
quarter of 2003, reflecting continued growth in both OEM sales and
aftermarket sales. Sales of components for the GE90-115B engine were
at the highest levels since the program began and our aftermarket
Revenue Sharing Programs continued to generate solid sales. Operating
profit increased to $5.5 million for the quarter, from $3.4 million in
the comparable year-ago period. Operating profit was positively
impacted by the profit contribution from the sharply higher sales
volume and the increased percentage of aftermarket activity.
Barnes Aerospace generated record orders of $71.5 million during
the quarter ended December 31, 2004, up 66 percent from orders of
$43.0 million in the fourth quarter of 2003. Order backlog reached a
record $193.8 million at December 31, 2004, up 31 percent from $147.7
million at December 31, 2003. Military orders in the fourth quarter
were strong at $23.9 million, and were approximately 33 percent of the
total orders received in the most recent quarter.
For all of 2004, sales at Barnes Aerospace were $205.9 million, an
increase of 24 percent from $165.7 million in 2003. Operating profit
rose 94 percent to a record $20.7 million from $10.7 million compared
to a year ago.
"In 2004, Barnes Aerospace achieved record results in operating
profits, sales, and orders, generated the highest backlog in its
history, and remains optimistic for its continued growth in 2005,"
stated Carpenter.
Sales at Barnes Distribution were $104.2 million for the fourth
quarter of 2004, up 6 percent from $98.3 million in the quarter ended
December 31, 2003. Sales from Barnes Distribution's strategic growth
initiatives - newly-opened national accounts, e-commerce platforms and
Tier 2 relationships with other industrial distributors - rose over 50
percent to $8.1 million in the most recent quarter.
Barnes Distribution had an operating loss of $1.1 million in the
fourth quarter, which includes $2.3 million of pre-tax charges related
to severance costs of $1.3 million and inventory and facility charges
of $1.0 million, compared to an operating profit of $1.0 million in
the fourth quarter of 2003. The charges in 2004 were partially offset
by a $0.7 million pre-tax benefit related principally to the reduction
of lease obligations.
For all of 2004, sales at Barnes Distribution were $424.8 million,
up from $400.7 million in 2003. Operating profit was $13.8 million for
2004, down from $16.5 million in 2003.
"For Barnes Distribution, 2004 was an important year as critical
initiatives were undertaken and completed providing the necessary
operational structure for future growth," stated Carpenter. "With
Barnes Distribution's customer service levels back to our targeted
range, and the integration efforts now complete, we are well
positioned for improved performance in 2005."
Sales at Associated Spring were $97.0 million for the quarter
ended December 31, 2004, up 21 percent from $80.3 million in the
quarter ended December 31, 2003. Double digit sales growth occurred
across all of Associated Spring's key markets. DE-STA-CO
Manufacturing, which Barnes Group acquired on September 17, 2004,
contributed approximately $7.2 million in sales to Associated Spring
during the quarter. Light vehicle sales grew by 11 percent, as growth
in sales to transplants continued to outpace our sales to the U.S.
automakers. Industrial product sales were up a solid 35 percent, and
sales of nitrogen gas springs were up approximately 17 percent in the
fourth quarter.
Associated Spring's operating profit was $3.3 million for the
fourth quarter of 2004, down from $5.1 million in the fourth quarter
of 2003. Included in the fourth quarter results is a $2.2 million
pre-tax charge for severance costs. In addition, operating results
were negatively impacted by approximately $2.6 million related to
increased raw material prices.
For all of 2004, sales at Associated Spring were $373.5 million,
up from $333.1 million. Operating profit was $22.5 million, down from
$26.8 million in 2003.
"Within Associated Spring we continue to diversify our customer
base providing enhanced flexibility and increased opportunities for
margin improvement. Since 1999, we grew our other businesses which
significantly reduced the level of concentration of the Big-3 U.S.
automakers light vehicle sales in our total Company sales from 16
percent to less than 9 percent," Carpenter commented.
William C. Denninger, Barnes Group Inc.'s Chief Financial Officer,
commented, "Our cash flow and balance sheet remain very strong. We
generated over $54 million in cash flow from operating activities
during 2004 and ended the year with $36.3 million in cash on our
balance sheet. Our debt-to-capitalization ratio at year-end was 44%,
within our targeted leverage range. As a result, we are well
positioned to support the projected growth in our businesses in 2005."
"During 2004, we implemented critical and necessary actions to
address certain business realities. Our successful execution of these
efforts has positioned each of our business segments for continued
success in 2005," Carpenter added. The Company's targeted earnings for
the full year 2005, based on current market conditions, is in the
range of $1.70 to $1.80 per diluted share.
Barnes Group will conduct a conference call with investors to
discuss fourth quarter and full year 2004 results at 11:00 a.m. ET
today. A webcast of the live call, supporting materials and an
archived replay will be available on the Barnes Group investor
relations link at www.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
2004 sales of $994.7 million: Associated Spring, one of the world's
largest manufacturers of precision mechanical and nitrogen gas springs
and a global supplier of retaining rings, reed valves, shock discs,
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,
operating, and production supplies. As of December 31, 2004 over 6,000
dedicated employees at 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 the
Company; 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; uninsured claims;
increased competitive activities that could adversely affect customer
demand for the Company's products; the availability of raw materials
at prices that allow the Company to make and sell competitive
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. The Company assumes no obligation to update any
forward-looking statements contained in this release.
(1) Please reference the Non-GAAP Financial Measure Reconciliation
of this measurement at the end of this press release.
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Unaudited
Three months ended December 31,
---------------------------------------
%
2004 2003 Change
----------- ----------- ------
Net sales $ 251,602 $ 220,337 14.2
Cost of sales 168,242 144,642 16.3
Selling and administrative
expenses 75,719 66,929 13.1
----------- -----------
243,961 211,571 15.3
----------- -----------
Operating income (1) 7,641 8,766 (12.8)
Operating margin 3.0% 4.0%
Other income 426 1,044 (59.1)
Interest expense 4,127 3,634 13.6
Other expenses 689 139 NM
----------- -----------
Income before income taxes 3,251 6,037 (46.1)
Income taxes (benefit) (22) (919) NM
----------- -----------
Net income $ 3,273 $ 6,956 (53.0)
=========== ===========
Per common share:
Net income:
Basic $ .14 $ .31 (54.8)
Diluted .14 .29 (51.7)
Dividends .20 .20 ---
Average common shares
outstanding:
Basic 23,181,431 22,770,950 1.8
Diluted 23,817,543 23,796,154 0.1
Twelve months ended December 31,
---------------------------------------
%
2004 2003 Change
----------- ----------- ------
Net sales $ 994,709 $ 890,818 11.7
Cost of sales 654,572 576,835 13.5
Selling and administrative
expenses 284,223 261,983 8.5
----------- -----------
938,795 838,818 11.9
----------- -----------
Operating income (1) 55,914 52,000 7.5
Operating margin 5.6% 5.8%
Other income 2,145 3,337 (35.7)
Interest expense 15,390 15,840 (2.8)
Other expenses 1,310 1,129 16.0
----------- -----------
Income before income taxes 41,359 38,368 7.8
Income taxes (benefit) 7,958 5,353 48.7
----------- -----------
Net income $ 33,401 $ 33,015 1.2
=========== ===========
Per common share:
Net income:
Basic $ 1.45 $ 1.54 (5.8 )
Diluted 1.40 1.49 (6.0 )
Dividends .80 .80 ---
Average common shares
outstanding:
Basic 23,105,853 21,475,336 7.6
Diluted 23,836,463 22,101,560 7.8
NM-not meaningful
Footnote:
(1) Fourth quarter 2004 operating results include pre-tax charges
of approximately $4.5 million for actions implemented to offset higher
raw material costs going forward at Associated Spring, and to enable
the realization of benefits from the Kar Products integration and
improved customer service levels at Barnes Distribution combined with
inventory and facility charges. This charge was partially offset by
$0.7 million of benefits related to the reduction of lease obligations
on idle facilities.
BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
Unaudited
Three months ended Twelve months ended
December 31, December 31,
--------------------------- ---------------------------
% %
2004 2003 Change 2004 2003 Change
-------- -------- ------ -------- -------- ------
Net Sales
Barnes
Distri-
bution $104,155 $ 98,330 5.9 $424,752 $400,651 6.0
Associated
Spring 97,024 80,315 20.8 373,450 333,085 12.1
Barnes
Aerospace 51,384 43,365 18.5 205,864 165,728 24.2
Intersegment
sales (961) (1,673) (42.6) (9,357) (8,646) 8.2
-------- -------- -------- --------
Total net
sales $251,602 $220,337 14.2 $994,709 $890,818 11.7
======== ======== ======== ========
Operating
profit (loss)
(1)
Barnes
Distri-
bution $ (1,077) $ 984 NM $ 13,756 $ 16,507 (16.7)
Associated
Spring 3,347 5,131 (34.8) 22,493 26,764 (16.0)
Barnes
Aerospace 5,525 3,375 63.7 20,704 10,677 93.9
-------- -------- -------- --------
Total
operating
profit 7,795 9,490 (17.9) 56,953 53,948 5.6
Interest
income 272 318 (14.5) 1,088 1,386 (21.5)
Interest
expense (4,127) (3,634) 13.6 (15,390) (15,840) (2.8)
Other net
income
(expense) (689) (137) NM (1,292) (1,126) 14.7
-------- -------- -------- --------
Income before
income taxes $ 3,251 $ 6,037 (46.1) $ 41,359 $ 38,368 7.8
======== ======== ======== ========
NM-not meaningful
Footnote:
(1) Fourth quarter 2004 operating results include pre-tax charges
of approximately $4.5 million ($2.3 million at Barnes Distribution and
$2.2 million at Associated Spring) for actions implemented to offset
higher raw material costs going forward at Associated Spring, and to
enable the realization of benefits from the Kar Products integration
and improved customer service levels at Barnes Distribution combined
with inventory and facility charges. This charge was partially offset
by $0.7 million of benefits related to the reduction of lease
obligations on idle facilities.
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Unaudited
December 31, December 31,
2004 2003
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 36,335 $ 49,788
Accounts receivable 138,941 119,130
Inventories 122,894 109,780
Deferred income taxes and prepaid expenses 37,759 33,402
------------ ------------
Total current assets 335,929 312,100
Deferred income taxes 25,070 22,790
Property, plant and equipment 166,284 154,088
Goodwill 221,856 220,118
Other intangible assets, net 125,447 61,923
Other assets 53,737 59,801
------------ ------------
$ 928,323 $ 830,820
============ ============
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ - - $ 10,000
Accounts payable 135,983 97,155
Accrued liabilities 79,039 78,520
Long-term debt-current 9,410 6,804
------------ ------------
Total current liabilities 224,432 192,479
Long-term debt 258,635 224,213
Accrued retirement benefits 85,685 77,455
Other liabilities 17,686 14,934
Stockholders' equity 341,885 321,739
------------ ------------
$ 928,323 $ 830,820
============ ============
BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
Unaudited
Following is a reconciliation of results excluding certain fourth
quarter charges(1) to the Company's reported results:
Three months ended Twelve months ended
December 31, December 31,
--------------------------- -------------------------
% %
2004 2003 Change 2004 2003 Change
-------- -------- ------ ------- -------- ------
Segment results:
Barnes
Distribution
Operating
profit
(loss), as
reported $ (1,077) $ 984 NM $13,756 $16,507 (16.7)
Fourth
quarter
charges(1) 2,326 - - NM 2,326 - - NM
-------- ------- ------- -------
Operating
profit,
excluding
fourth
quarter
charges $ 1,249 $ 984 26.9 $16,082 $16,507 (2.6)
======== ======= ======= =======
Associated
Spring
Operating
profit, as
reported $ 3,347 $ 5,131 (34.8) $22,493 $26,764 (16.0)
Fourth
quarter
charges(1) 2,184 - - NM 2,184 - - NM
-------- ------- ------- -------
Operating
profit,
excluding
fourth
quarter
charges $ 5,531 $ 5,131 7.8 $24,677 $26,764 (7.8)
======== ======= ======= =======
Consolidated
results:
Barnes Group
Inc.
Operating
income, as
reported $ 7,641 $ 8,766 (12.8) $55,914 $52,000 7.5
Fourth
quarter
charges(1) 4,510 - - NM 4,510 - - NM
-------- ------- ------- -------
Operating
income,
excluding
fourth
quarter
charges $ 12,151 $ 8,766 38.6 $60,424 $52,000 16.2
======== ======= ======= =======
Net income,
as reported $ 3,273 $ 6,956 (53.0) $33,401 $33,015 1.2
Fourth
quarter
charges,
after tax(1) 2,792 - - NM 2,792 - - NM
-------- ------- ------- -------
Net income,
excluding
fourth
quarter
charges $ 6,065 $ 6,956 (12.8) $36,193 $33,015 9.6
======== ======= ======= =======
Net income
per common
share
-diluted,
as
reported $ 0.14 $ 0.29 (51.7) $ 1.40 $ 1.49 (6.0)
Fourth
quarter
charges(1) 0.12 - - NM 0.12 - - NM
-------- ------- ------- -------
Net income
per common
share-
diluted,
excluding
fourth
quarter
charges $ 0.26 $ 0.29 (10.3) $ 1.52 $ 1.49 2.0
======== ======= ======= =======
NM - not meaningful
Footnote: (1) The Company has presented certain financial
measurements, excluding certain fourth quarter charges. The fourth
quarter charges which aggregate $4,510 include severance costs of
$2,184 at Associated Spring and $1,298 at Barnes Distribution and
$1,028 of inventory and facility charges at Barnes Distribution. These
charges relate to discrete actions taken in the fourth quarter.
These fourth quarter charges represent discrete actions taken by
management, and management believes that providing results excluding
the discrete charges, is useful to investors and reflects actions
announced by the Company in December, 2004. Management does not intend
results excluding the fourth quarter charges 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 operating performance. Accordingly, the
measurements have limitations depending on their use.
CONTACT: Barnes Group Inc.
Brian D. Koppy, 860-973-2126
Investor Relations
or
Stephen J. McKelvey, 860-973-2132
Corporate Communications
SOURCE: Barnes Group Inc.
