BRISTOL, Conn.--(BUSINESS WIRE)--Oct. 24, 2005--Barnes Group Inc.
- 11th consecutive quarter of double-digit sales growth
- Third quarter net income $0.70 per diluted share; $0.55 per
diluted share from current period operations, a 38 percent
increase over the prior-year quarter
- Full-year 2005 estimated adjusted net income per diluted share
raised to $2.15 - $2.20
Barnes Group Inc. (NYSE: B) today announced financial results for
the quarter ended September 30, 2005. Net sales for the third quarter
2005 were $271.5 million, up 11 percent from $243.9 million in the
third quarter 2004. Net income increased 81 percent to $17.4 million,
or $0.70 per diluted share, in the third quarter of 2005 from $9.6
million, or $0.40 per diluted share, in the third quarter of 2004. Net
income from operations, excluding retroactive tax benefits and a
positive out-of-period adjustment related to accounts payable, would
have been $13.7 million, or $0.55 per diluted share(1), a 42 percent
increase from $9.6 million, or $0.40 per diluted share, in the
comparable year-ago quarter.
Included in Barnes Group's third quarter results were retroactive
tax benefits of multi-year Pioneer Status granted by the Singapore
Ministry of Trade and Industry, for the production of aircraft engine
components for original equipment manufacturers (OEMs) and the spare
parts market. The tax benefits include approximately $1.1 million, or
$0.04 per diluted share for the first half of 2005, and approximately
$1.5 million, or $0.06 per diluted share, for the periods prior to
January 1, 2005, for a total retroactive tax benefit of approximately
$2.6 million or $0.10 per diluted share. A second item is an
out-of-period $1.8 million favorable pre-tax adjustment related to
accounts payable. The related after-tax impact is approximately $1.1
million, or $0.05 per diluted share.(1)
Operating income grew 47 percent to $22.6 million for the third
quarter 2005 from $15.4 million in the third quarter of the prior
year. Operating income, excluding the positive adjustment related to
accounts payable, was $20.8 million(1), a 36 percent increase, from
$15.4 million in the third quarter 2004.
"This marks the 11th consecutive quarter in which Barnes Group has
posted double-digit sales growth over the comparable prior year
quarter," said Edmund M. Carpenter, President and Chief Executive
Officer, Barnes Group Inc. "We had a strong third quarter with solid
growth in all three business segments, as the organization continues
to focus on reducing operational costs and improving after-tax
operating results."
"Considering the strong first three quarters and current market
conditions, we are increasing our full-year 2005 estimate of diluted
earnings per share to $2.15 - $2.20. This excludes the benefits from
the gain on the sale of NASCO in the second quarter, retroactive
Pioneer Status tax benefits and the positive adjustment related to
accounts payable," Carpenter continued.
Sales at Barnes Distribution were a record $114.0 million for the
quarter ended September 30, 2005, up 7 percent, or $7.0 million, from
$107.0 million in the quarter ended September 30, 2004, including $2.1
million from the Toolcom acquisition, which was announced in August
2005. Sales from Corporate Accounts and Tier II were up 10 percent and
39 percent, respectively, for the third quarter of 2005, compared to
the third quarter of 2004.
Barnes Distribution reported operating profit of $8.6 million.
Excluding the accounts payable adjustment, operating profit would have
been $6.8 million(1), up 17% in the third quarter, compared with $5.8
million in the year-ago quarter. The increase in operating profit was
primarily driven by higher sales volume and the beneficial effects of
the distribution network's increased operational effectiveness.
"Barnes Distribution continues to realize benefits from its
strategic sales focus and distribution network investments," said A.
Keith Drewett, President, Barnes Distribution. "As the operational
improvements and global sourcing capabilities accelerate, we expect to
improve profitability and expand the range of products and services we
offer our customers."
Sales at Associated Spring were $100.2 million for the third
quarter of 2005, up 14 percent from $88.3 million in the third quarter
of 2004. Specialty operations including Nitrogen Gas Products and
Seeger-Orbis Retaining Rings continued strong sales growth. Barnes
Precision Valve contributed an incremental $6.1 million to Associated
Spring's sales in the third quarter of 2005.
Associated Spring's operating profit increased 55 percent to $6.6
million in the quarter ended September 30, 2005, compared with $4.3
million in the comparable quarter last year. Driving this improvement
was the increase in profit contribution from specialty operations,
partially offset by higher than anticipated domestic operating costs.
"In the third quarter, Associated Spring's specialty operations
continued to generate strong top and bottom line growth," said Gregory
F. Milzcik, President, Associated Spring. "We continue to be focused
on profitable sales, and improvements to the operational effectiveness
of our domestic legacy spring business."
Sales at Barnes Aerospace were a record $59.3 million for the
quarter ended September 30, 2005, up 15 percent from $51.7 million in
the quarter ended September 30, 2004. Sales were up in the OEM and
aftermarket segments 9 percent and 36 percent, respectively, in the
third quarter 2005, compared to the third quarter 2004. Orders were
down slightly to $69.8 million in the third quarter from $73.1 million
in the prior-year quarter. Backlog increased 46 percent to $255.7
million at September 30, 2005, compared to $174.9 million in the
year-ago quarter.
Operating profit at Barnes Aerospace grew 36 percent to $7.4
million in the third quarter, from $5.5 million in the third quarter
of 2004. The increase in operating profit was driven by higher sales
volume and an increased percentage of higher margin aftermarket
activity.
"Barnes Aerospace continued its strong results with record sales,
operating profit and backlog in the third quarter of 2005," said
Patrick Dempsey, President, Barnes Aerospace. "This was a balanced
quarter with growth in both the OEM and aftermarket businesses.
Focusing on leveraging our products and technologies, Barnes Aerospace
continues to provide positive financial results."
William C. Denninger, Barnes Group Inc.'s Chief Financial Officer,
commented, "We continued to strengthen our balance sheet during the
third quarter 2005 with a successful $100 million, 3.75 percent
convertible senior subordinated debt offering. And, our debt to
capitalization ratio at quarter-end of 42 percent was at the low end
of our targeted range, even after using $36.0 million in cash for the
Toolcom and Service Plus Distributions (SPD) acquisitions and for
aerospace aftermarket RSP payments during the quarter."
For the nine months ended September 30, 2005, Barnes Group net
sales were $825.8 million, up 11 percent from $743.1 million in the
comparable period in 2004. Net income increased 60 percent to $48.9
million, or $2.02 per diluted share, for the nine months ended
September 30, 2005, from $30.5 million, or $1.28 per diluted share, in
the year-ago period. Net income, excluding the gain on the sale of
NASCO, retroactive tax benefits and the positive out-of-period
adjustment related to accounts payable, was $42.2 million, or $1.74
per diluted share(1), a 38 percent increase from $30.5 million, or
$1.28 per diluted share in the comparable year-ago period.
Barnes Group will conduct a conference call with investors to
discuss third quarter results at 9:30 a.m. EDT today. A web cast 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: Barnes Distribution, an international,
full-service distributor of maintenance, repair, operating, and
production supplies; 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; and 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. Over 5,900 dedicated employees
at more than 60 locations worldwide contribute to Barnes Group Inc.'s
success.
This release may contain forward-looking statements within the
meaning of 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 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; integration of acquired businesses; changes
in raw material prices and availability; uninsured claims; and
numerous other matters of global, regional or national scale,
including those of a political, economic, business, competitive,
regulatory and public health nature. We assume no obligation to update
our forward-looking statements.
(1) Please reference the Non-GAAP Financial Measure Reconciliation
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 September 30,
2005 2004 % Change
------------ ------------
As restated,
note 1
Net sales $ 271,518 $ 243,928 11.3
Cost of sales (see note 2) 172,070 159,379 8.0
Selling and administrative
expenses 76,824 69,187 11.0
------------ ------------
248,894 228,566 8.9
------------ ------------
Operating income 22,624 15,362 47.3
Operating margin 8.3% 6.3%
Other income (see note 3) 532 313 69.9
Interest expense 4,387 3,757 16.8
Other expenses 174 363 (52.0)
------------ ------------
Income before income taxes 18,595 11,555 60.9
Income taxes (see note 4) 1,241 1,965 (36.9)
------------ ------------
Net income $ 17,354 $ 9,590 81.0
============ ============
Per common share:
Net income - basic $ 0.73 $ 0.41 78.0
Net income - diluted 0.70 0.40 75.0
Dividends 0.22 0.20 10.0
Average common shares
outstanding - basic 23,697,410 23,139,339 2.4
- diluted 24,660,478 23,779,636 3.7
Nine months ended September 30,
2005 2004 % Change
------------ ------------
As restated,
note 1
Net sales $ 825,768 $ 743,107 11.1
Cost of sales (see note 2) 526,572 485,718 8.4
Selling and administrative
expenses 231,618 208,504 11.1
------------ ------------
758,190 694,222 9.2
------------ ------------
Operating income 67,578 48,885 38.2
Operating margin 8.2% 6.6%
Other income (see note 3) 10,064 1,719 NM
Interest expense 12,892 11,263 14.5
Other expenses 716 621 15.3
------------ ------------
Income before income taxes 64,034 38,720 65.4
Income taxes (see note 4) 15,165 8,216 84.6
------------ ------------
Net income $ 48,869 $ 30,504 60.2
============ ============
Per common share:
Net income - basic $ 2.08 $ 1.32 57.6
Net income - diluted 2.02 1.28 57.8
Dividends 0.62 0.60 3.3
Average common shares
outstanding - basic 23,497,229 23,080,477 1.8
- diluted 24,248,899 23,842,586 1.7
NM - Not meaningful
Notes:
1) Restated to reflect the retroactive adjustment of changing the
method of valuing certain U.S. inventories from LIFO to FIFO.
2) Third quarter 2005 cost of sales includes a $1,814 ($1,141 after
tax, or $0.05 diluted EPS) positive adjustment related to accounts
payable. Refer to page 8, Note 1).
3) Year to date 2005 other income includes the $8,892 gain ($4,030
after tax, or $0.17 diluted EPS) on the sale of the NASCO
investment in April.
4) Third quarter 2005 taxes include a $2,553 benefit ($0.10 diluted
EPS) of which $1,473 ($0.06 diluted EPS) relates to prior years,
related to being granted Pioneer tax status in Singapore.
BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
Unaudited
Three Months Ended September 30,
----------------------------------
2005 2004 % Change
---------- ---------- ----------
As restated,
note 1
Net sales
Barnes Distribution $ 113,959 $ 106,960 6.5
Associated Spring 100,249 88,265 13.6
Barnes Aerospace 59,301 51,724 14.6
Intersegment sales (1,991) (3,021) 34.1
---------- ----------
Total net sales $ 271,518 $ 243,928 11.3
========== ==========
Operating profits
Barnes Distribution (note 2) $ 8,588 $ 5,798 48.1
Associated Spring 6,634 4,274 55.2
Barnes Aerospace 7,449 5,464 36.3
---------- ----------
Total operating profit 22,671 15,536 45.9
Interest income 469 264 77.7
Interest expense (4,387) (3,757) 16.8
Other income (expense) (note 3) (158) (488) 67.6
---------- ----------
Income before income taxes $ 18,595 $ 11,555 60.9
========== ==========
Nine Months Ended September 30,
----------------------------------
2005 2004 % Change
---------- ---------- ----------
As restated,
note 1
Net sales
Barnes Distribution $ 340,906 $ 320,597 6.3
Associated Spring 321,283 276,426 16.2
Barnes Aerospace 171,237 154,480 10.8
Intersegment sales (7,658) (8,396) 8.8
---------- ----------
Total net sales $ 825,768 $ 743,107 11.1
========== ==========
Operating profits
Barnes Distribution (note 2) $ 21,081 $ 14,739 43.0
Associated Spring 26,631 19,965 33.4
Barnes Aerospace 20,073 15,067 33.2
---------- ----------
Total operating profit 67,785 49,771 36.2
Interest income 903 816 10.7
Interest expense (12,892) (11,263) 14.5
Other income (expense) (note 3) 8,238 (604) NM
---------- ----------
Income before income taxes $ 64,034 $ 38,720 65.4
========== ==========
NM - Not meaningful
Notes:
1) Restated to reflect the retroactive adjustment of changing the
method of valuing certain U.S. inventories from LIFO to FIFO.
2) Third Quarter 2005 includes a $1,814 positive adjustment related to
accounts payable. Refer to page 8, Note (1).
3) Year to date 2005 other income includes the $8,892 gain on the sale
of NASCO investment in April.
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Unaudited
September 30, September 30,
Assets 2005 2004
-------------- -------------
Current assets As restated,
note 1
Cash and cash equivalents $ 31,489 $ 33,696
Accounts receivable 163,281 146,880
Inventories 158,465 135,565
Deferred income taxes and prepaid
expenses 35,662 35,794
-------------- -------------
Total current assets 388,897 351,935
Deferred income taxes 14,670 16,162
Property, plant and equipment 157,276 159,714
Goodwill 234,084 225,497
Other intangible assets, net 165,894 103,830
Other assets 48,075 59,310
-------------- -------------
Total assets $ 1,008,896 $ 916,448
============== =============
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ - $ 3,500
Accounts payable 141,746 114,383
Accrued liabilities 80,316 75,185
Long-term debt - current 21,614 7,626
-------------- -------------
Total current liabilities 243,676 200,694
Long-term debt 266,382 270,361
Accrued retirement benefits 84,589 78,657
Other liabilities 18,387 15,212
Stockholders' equity 395,862 351,524
-------------- -------------
Total liabilities and stockholders'
equity $ 1,008,896 $ 916,448
============== =============
Footnote:
1) Restated to reflect the retroactive adjustment of changing the
method of valuing certain U.S. inventories from LIFO to FIFO.
BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
Unaudited
Following is a reconciliation of results excluding certain
adjustments to the Company's reported results:
Three months ended September 30,
------------------------------------
%
2005 2004 Change
----------- ----------- ----------
As Restated
Segment results:
Barnes Distribution
Operating profit, as
reported $ 8,588 $ 5,798 48.1
Accounts payable adjustment
(see note 1) (1,814) - NM
----------- -----------
Operating profit, excluding
adjustment $ 6,774 $ 5,798 16.8
=========== ===========
Consolidated Results
Barnes Group Inc.
Cost of sales, as reported $ 172,070 $ 159,379 8.0
Accounts payable adjustment
(see note 1) 1,814 - NM
----------- -----------
Cost of sales, excluding
adjustment $ 173,884 $ 159,379 9.1
=========== ===========
Operating income, as
reported $ 22,624 $ 15,362 47.3
Accounts payable adjustment
(see note 1) (1,814) - NM
----------- -----------
Operating income, excluding
adjustment $ 20,810 $ 15,362 35.5
=========== ===========
Income taxes, as reported $ 1,241 $ 1,965 (36.9)
Accounts payable adjustment
(see note 1) (673) - NM
Singapore tax benefit (see
note 2) 2,553 - NM
Gain on sale of NASCO (see
note 3) - - NM
----------- -----------
Income taxes, excluding
adjustments $ 3,121 $ 1,965 58.8
=========== ===========
Net income, as reported $ 17,354 $ 9,590 81.0
Accounts payable adjustment
(see note 1) (1,141) - NM
Singapore tax benefit (see
note 2) (2,553) - NM
Gain on sale of NASCO (see
note 3) - - NM
----------- -----------
Net income, excluding
adjustments $ 13,660 $ 9,590 42.4
=========== ===========
Net income per common share
- diluted, as reported $ 0.70 $ 0.40 75.0
Accounts payable adjustment
(see note 1) (0.05) - NM
Singapore tax benefit (see
note 2) (0.10) - NM
Gain on sale of NASCO (see
note 3) - - NM
----------- -----------
Net income per common share
- diluted, excluding
adjustments $ 0.55 $ 0.40 37.5
=========== ===========
Nine months ended September 30,
------------------------------------
%
2005 2004 Change
----------- ----------- ----------
As Restated
Segment results:
Barnes Distribution
Operating profit, as
reported $ 21,081 $ 14,739 43.0
Accounts payable adjustment
(see note 1) (1,814) - NM
----------- -----------
Operating profit, excluding
adjustment $ 19,267 $ 14,739 30.7
=========== ===========
Consolidated Results
Barnes Group Inc.
Cost of sales, as reported $ 526,572 $ 485,718 8.4
Accounts payable adjustment
(see note 1) 1,814 - NM
----------- -----------
Cost of sales, excluding
adjustment $ 528,386 $ 485,718 8.8
=========== ===========
Operating income, as
reported $ 67,578 $ 48,885 38.2
Accounts payable adjustment
(see note 1) (1,814) - NM
----------- -----------
Operating income, excluding
adjustment $ 65,764 $ 48,885 34.5
=========== ===========
Income taxes, as reported $ 15,165 $ 8,216 84.6
Accounts payable adjustment
(see note 1) (673) - NM
Singapore tax benefit (see
note 2) 1,473 - NM
Gain on sale of NASCO (see
note 3) (4,862) - NM
----------- -----------
Income taxes, excluding
adjustments $ 11,103 $ 8,216 35.1
=========== ===========
Net income, as reported $ 48,869 $ 30,504 60.2
Accounts payable adjustment
(see note 1) (1,141) - NM
Singapore tax benefit (see
note 2) (1,473) - NM
Gain on sale of NASCO (see
note 3) (4,030) - NM
----------- -----------
Net income, excluding
adjustments $ 42,225 $ 30,504 38.4
=========== ===========
Net income per common share
- diluted, as reported $ 2.02 $ 1.28 57.8
Accounts payable adjustment
(see note 1) (0.05) - NM
Singapore tax benefit (see
note 2) (0.06) - NM
Gain on sale of NASCO (see
note 3) (0.17) - NM
----------- -----------
Net income per common share
- diluted, excluding
adjustments $ 1.74 $ 1.28 35.9
=========== ===========
NM - not meaningful
Notes: The Company has presented certain financial measurements,
excluding certain retroactive tax benefits, a positive adjustment
related to accounts payable and the gain on the sale of NASCO as
follows:
1) As part of management's on-going internal control assessment,
during the third quarter of 2005, the Company identified and
recorded an adjustment to accounts payable and cost of sales at
Barnes Distribution. The Company determined that cost of sales was
overstated in prior periods due to inaccuracies in recording
inventory receipts from 2000 through 2005. This overstatement was
corrected in the third quarter of 2005 as a reduction to cost of
sales of $1,814. The after-tax effect of this adjustment was
$1,141. Management concluded that such corrections were
immaterial, both quantitatively and qualitatively, to the 2005
financial statements and to the previously reported results of the
prior years to which they relate.
2) During the third quarter of 2005, the Company was granted Pioneer
tax status in Singapore and recorded retroactive tax benefits of
$2,553 of which $1,473 related to periods prior to January 1, 2005
and $1,080 related to the first half of 2005.
3) During the second quarter of 2005, the Company sold its 45 percent
interest in NHK-Associated Spring Suspension Components Inc.
("NASCO"), resulting in a pre-tax gain of $8,892 and an after-tax
gain of $4,030.
These adjustments represent out-of-period or discrete items and
management believes that providing results excluding these items is
useful to investors. 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 operating
performance. Accordingly, the measurements have limitations depending
on their use.
CONTACT: Barnes Group Inc.
Investor Relations
Brian D. Koppy, 860-973-2126
or
Corporate Communications
Stephen J. McKelvey, 860-973-2132
SOURCE: Barnes Group Inc.
