- Net sales rise 16 percent to $360 million
- Net income rises 58 percent; diluted EPS of $0.49, up 44 percent
- Operating margin increases 1.9 percentage points to 11.2 percent
- Record sales and backlog at Barnes Aerospace
BRISTOL, Conn.--(BUSINESS WIRE)--Aug. 2, 2007--Barnes Group Inc.
(NYSE: B) today announced financial results for the quarter ended June
30, 2007. Net sales for the second quarter were $359.5 million, up 16
percent from $308.9 million in the second quarter of 2006. Operating
income increased 40 percent to $40.3 million in the second quarter of
2007, from $28.7 million in the second quarter of the prior year.
Operating margin increased 1.9 percentage points in the second quarter
2007 to 11.2 percent, from 9.3 percent in the second quarter 2006. Net
income grew 58 percent to $28.4 million, or $0.49 per diluted share,
in the second quarter of 2007, compared to $18.0 million, or $0.34 per
diluted share in the second quarter in the prior year.
"Barnes Group continued its sound performance, achieving 16
percent revenue growth, the 18th quarter of double-digit sales
increases, and strong increases in operating profit and net income for
the quarter," said Gregory F. Milzcik, President and Chief Executive
Officer, Barnes Group Inc. "Each of our businesses continues to
implement operational improvements to deliver sustainable, profitable
growth."
Sales at Barnes Aerospace were $92.4 million in the second quarter
2007, up 25 percent from $73.9 million in the second quarter 2006 as
original equipment manufacturer (OEM) sales of $62.3 million grew 21
percent and aftermarket sales of $30.1 million were up 36 percent.
Barnes Aerospace generated orders of $116.1 million in the second
quarter of 2007, down from a record $124.6 million in the year ago
quarter. Commercial orders were $69.4 million and military orders were
$17.1 million in the second quarter of 2007. At the end of the second
quarter 2007, order backlog was a record $439.5 million, up 6 percent
from $415.6 million at March 31, 2007.
Operating profit increased 75 percent to $18.6 million in the
second quarter 2007 at Barnes Aerospace, compared to $10.6 million in
the same period last year. Positively impacting operating profit were
the higher sales volume and an increased percentage in higher margin
aftermarket activity.
"Barnes Aerospace continues to leverage strong end markets in both
the OEM and aftermarket businesses leading to record results in the
second quarter of 2007," said Patrick J. Dempsey, President, Barnes
Aerospace. "By using the latest techniques in operational excellence,
Barnes Aerospace continues to deliver high-quality components and
value-added services that meet the needs of the global aerospace
industry."
Sales at Barnes Distribution were $150.7 million in the second
quarter of 2007, up 20 percent from $125.5 million in the second
quarter of 2006, including $22.2 million of incremental sales from the
KENT acquisition and organic sales growth of $1.3 million. The modest
increase in organic sales is primarily a result of Corporate and Tier
II account sales increases of 10 percent and 24 percent, respectively.
Foreign exchange positively affected sales by $1.7 million in the
second quarter of 2007.
Operating income at Barnes Distribution was $7.5 million in the
second quarter, down 16 percent from $8.9 million in the year-ago
quarter. Negatively impacting operating profit were pre-tax costs of
approximately $2.0 million associated with Project Catalyst.
Additionally, operating profit was negatively impacted by higher
product and freight costs, business mix, and incremental bad debt
expense as compared to the 2006 period. These costs were partially
offset by improved pricing and lower incentive compensation as
compared to the 2006 period.
"In the second quarter, Barnes Distribution began implementing the
initiatives of Project Catalyst by focusing on international sourcing,
network efficiencies, sales and marketing resources and continued KENT
integration," said Idelle K. Wolf, President, Barnes Distribution.
"The actions that we are currently undertaking will accelerate
improvements in Barnes Distribution's operations, including sales
growth and profitability, and position us for success in 2008."
Sales at Barnes Industrial were $118.7 million in the second
quarter 2007, up 6 percent from $112.1 million in the same quarter
last year. The Heinz Hanggi acquisition from last year contributed
$4.2 million of incremental sales in the second quarter and foreign
currency exchange favorably impacted sales by $2.6 million. Improved
end markets within Barnes Industrial's specialty operations are
generating strong orders and backlog, over the prior year.
Operating profit at Barnes Industrial increased 55 percent to
$14.3 million in the second quarter of 2007, compared to $9.2 million
in the second quarter 2006. Driving this improvement were the profit
contribution from Heinz Hanggi sales and higher profits from
operational improvements, primarily in the specialty businesses.
"Our second quarter results demonstrate the continued benefits of
operational improvements throughout Barnes Industrial," said Jerry W.
Burris, President, Barnes Industrial. "Barnes Industrial remains
focused on profitable sales growth and strengthening performance
worldwide."
William C. Denninger, Barnes Group Inc.'s Senior Vice President,
Finance and Chief Financial Officer, commented, "For each of our
business segments, the second quarter was another financially solid
quarter with strong contributions to the balance sheet and cash flow."
In the third quarter of 2007, the Company is realigning its
Raymond division, the stock spring catalog and custom solutions
business with approximately $50 million in revenues during 2006. This
business currently resides within Barnes Distribution and will be
transferred to Barnes Industrial. The transfer of the stock spring
catalog and custom solutions business strengthens its relationship
with Barnes Industrial's global sales channels and manufacturing of
engineered spring components. "With greater focus on leveraging common
synergies and integrating business activities and results, Barnes
Industrial will maximize their strategic initiatives and Barnes
Distribution will enhance their focus on their Vendor Managed
Inventory supply chain solution," said Denninger.
For the first six months of 2007, Barnes Group net sales were
$720.2 million, up 18 percent from $608.8 million in the same six
months a year ago. Net income increased 54 percent to $56.0 million,
or $0.99 per diluted share, for the six months ended June 30, 2007,
from $36.5 million, or $0.70 per diluted share, in the same period in
2006.
Barnes Group will conduct a conference call with investors to
discuss second quarter results at 1:00 p.m. EDT today, August 2, 2007.
A web cast of the live call and an archived replay will be available
on the Barnes Group investor relations link at www.barnesgroupinc.com.
Celebrating its 150th anniversary in 2007, Barnes Group Inc.
(NYSE:B) is an international aerospace and industrial components
manufacturer and full-service distribution company focused on
achieving consistent, sustainable, and predictable results. Founded in
1857, Barnes Group consists of three businesses: Barnes Aerospace,
Barnes Distribution and Barnes Industrial. Nearly 6,500 dedicated
employees at more than 65 locations worldwide contribute to Barnes
Group Inc.'s success. For more information, visit
www.barnesgroupinc.com.
This release may contain certain forward-looking statements as
defined in the Private Securities Litigation and 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;
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, 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 June 30,
------------------------------
%
2007 2006 Change
---------- -------- ------
Net sales $359,526 $308,927 16.4
Cost of sales 219,832 198,370 10.8
Selling and administrative expenses 99,399 81,839 21.5
---------- ----------
319,231 280,209 13.9
---------- ----------
Operating income 40,295 28,718 40.3
Operating margin 11.2% 9.3%
Other income 389 582 (33.0)
Interest expense 6,489 5,751 12.8
Other expenses 321 (190) NM
---------- ----------
Income before income taxes 33,874 23,739 42.7
Income taxes 5,487 5,721 (4.1)
---------- ----------
Net income $ 28,387 $ 18,018 57.5
========== ==========
Per common share:
Net income:
Basic $ 0.53 $ 0.36 47.2
Diluted 0.49 0.34 44.1
Dividends $ 0.140 $ 0.125 12.0
Average common shares outstanding:
Basic 53,134,347 50,401,132 5.4
Diluted 57,730,886 52,925,307 9.1
NM- not meaningful
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Unaudited
Six months ended June 30,
-------------------------------
%
2007 2006 Change
----------- ---------- ------
Net sales $720,176 $608,778 18.3
Cost of sales 440,749 389,003 13.3
Selling and administrative expenses 195,964 162,950 20.3
----------- ----------
636,713 551,953 15.4
----------- ----------
Operating income 83,463 56,825 46.9
Operating margin 11.6% 9.3%
Other income 631 877 (28.0)
Interest expense 13,461 10,138 37.8
Other expenses 661 385 71.6
----------- ----------
Income before income taxes 69,972 47,179 48.3
Income taxes 13,930 10,699 30.2
----------- ----------
Net income $ 56,042 $ 36,480 53.6
=========== ==========
Per common share:
Net income:
Basic $ 1.06 $ 0.74 43.2
Diluted 0.99 0.70 41.4
Dividends $ 0.265 $ 0.235 12.8
Average common shares outstanding:
Basic 52,855,972 49,334,094 7.1
Diluted 56,461,052 51,846,565 8.9
NM- not meaningful
BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
Unaudited
Three months ended June Six months ended June 30,
30,
-------------------------- ----------------------------
% %
2007 2006 Change 2007 2006 Change
--------- --------- ------ --------- --------- ------
Net Sales
Barnes
Aerospace $ 92,418 $ 73,920 25.0 $183,610 $140,863 30.3
Barnes
Distribution 150,683 125,507 20.1 303,186 249,899 21.3
Barnes
Industrial 118,707 112,118 5.9 238,277 223,108 6.8
Intersegment
sales (2,282) (2,618) 12.9 (4,897) (5,092) 3.8
--------- --------- --------- ---------
Total net sales$359,526 $308,927 16.4 $720,176 $608,778 18.3
========= ========= ========= =========
Operating
profit
Barnes
Aerospace $ 18,582 $ 10,622 74.9 $ 35,424 $ 19,168 84.8
Barnes
Distribution 7,475 8,871 (15.7) 17,639 17,824 (1.0)
Barnes
Industrial 14,266 9,213 54.8 30,455 19,843 53.5
-------- -------- -------- --------
Total operating
profit 40,323 28,706 40.5 83,518 56,835 46.9
Interest
income 251 322 (22.0) 439 562 (21.9)
Interest
expense (6,489) (5,751) 12.8 (13,461) (10,138) 32.8
Other income
(expense),
net (211) 462 NM (524) (80) NM
--------- --------- --------- ---------
Income before
income taxes $ 33,874 $ 23,739 42.7 $ 69,972 $ 47,179 48.3
========= ========= ========= =========
NM- not meaningful
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Unaudited
June 30, June 30,
2007 2006
----------- -----------
Assets
Current assets
Cash and cash equivalents $ 22,393 $ 37,576
Accounts receivable 222,247 183,368
Inventories 204,065 174,466
Deferred income taxes 22,594 21,671
Prepaid expenses 16,547 15,482
---------- ----------
Total current assets 487,846 432,563
Deferred income taxes 27,810 21,730
Property, plant and equipment, net 217,213 244,307
Goodwill 363,512 291,631
Other intangible assets, net 306,102 217,519
Other assets 51,333 50,307
---------- ----------
Total assets $1,453,816 $1,258,057
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Notes and overdrafts payable $ 10,521 $ - -
Accounts payable 182,344 144,411
Accrued liabilities 106,212 87,472
Long-term debt-current 51,939 21,060
---------- ----------
Total current liabilities 351,016 252,943
Long-term debt 377,935 386,446
Accrued retirement benefits 113,495 89,195
Other liabilities 34,690 39,562
Stockholders' equity 576,680 489,911
---------- ----------
Total liabilities and stockholders' equity $1,453,816 $1,258,057
========== ==========
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.
