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|Barnes Group Announces Third Quarter Results|
BRISTOL, Conn.--(BUSINESS WIRE)--Oct. 12, 2001--
Barnes Group Inc. (NYSE: B) today announced earnings for the third quarter of 2001 of $0.30 per diluted share, compared with $0.49 per diluted share for the third quarter of 2000. Net income for the quarter ended September 30, 2001 was $5.7 million, down from $9.3 million for the same period a year ago.
Net sales for the third quarter of 2001 were $186.5 million, down two percent from net sales of $190.6 million in 2000. The decline in net sales in the most recent quarter reflected the impact of weak domestic economic conditions on Associated Spring and Barnes Distribution, which was largely offset by strong sales growth at Barnes Aerospace.
"Despite the decidedly negative environment in the manufacturing and heavy industrial sectors, which has persisted for nearly a year, we turned in a satisfactory performance this quarter," said Edmund M. Carpenter, Barnes Group Inc.'s President and CEO. "I am encouraged by the fact that we delivered another profitable quarter in which we generated approximately $9 million of free cash flow. Since the fourth quarter of 2000, we have challenged each of our three business groups to aggressively cut operating expenses. We are continuing to address costs throughout the organization, and will continue to do so going forward. Over the same timeframe, we have stepped up the activities of our sales, marketing, and R&D functions to more rapidly develop growth in customers and markets outside our traditional business lines," Carpenter added.
During the third quarter of 2001, Barnes Aerospace set a number of new milestones, as sales, operating profit, and backlog all reached record levels. Sales were $50.5 million in the quarter ended September 30, 2001, up 45 percent from $34.7 million in the same period a year ago. Organic sales grew approximately 21 percent, reflecting new customer development and increased sales to existing customers, while sales from Kratz/Apex totaled $12.1 million in the third quarter of 2001, up from $3.0 million a year ago, following the acquisition of Kratz/Apex in September, 2000.
Orders at Barnes Aerospace were $53 million during the third quarter of 2001, while order backlog increased to $168 million, compared with $130 million at September 30, 2000. Operating profit at Barnes Aerospace increased to $5.0 million for the quarter ended September 30, 2001, compared with $3.2 million in the comparable year-ago period. Operating profit increased as a result of the higher sales volume and the Kratz/Apex acquisition, partially offset by higher engineering and R&D expenses related to an above-normal level of new products put into production during the third quarter.
"Clearly, the performance of the team at Barnes Aerospace has been outstanding in the first nine months of this year. While we are concerned with the potential impact to Barnes Aerospace from the drop in air travel in the United States, I would point out that approximately 40 percent of Barnes Aerospace's backlog is tied to non-commercial facets of the aerospace industry. This includes products for use in business jets, direct and indirect sales to the U.S. government, and products used in land-based industrial gas turbines. Additionally, the product mix shift in our aerospace repair and overhaul business to newer, more efficient engines - which has been underway for the past year - leaves us well positioned," Carpenter continued.
Sales at Associated Spring were $65.2 million for the third quarter of 2001, down 18 percent from $79.9 million a year ago. Sales at Associated Spring continue to be pressured by lower production rates in the domestic transportation market and slow sales of telecommunications and electronics products. Operating profit at Associated Spring fell to $5.2 million in the third quarter of 2001, from $11.6 million for the same period a year ago. Operating profit fell as a result of the sales volume decline, partly offset by solid cost containment efforts.
Carpenter commented, "Business conditions in some of Associated Spring's markets remain challenging. Nevertheless, the team at Associated Spring has taken the right steps in this environment to increase long-term value. Among other things, this includes reducing operating costs at all levels of the organization, limiting capital expenditures, and fully funding the sales, marketing, and R&D functions to stimulate growth in customer segments both inside and outside our more traditional sectors."
Third quarter 2001 sales at Barnes Distribution were $73.0 million, down eight percent from $79.2 million in the third quarter of 2000. Barnes Distribution's operating profit for the third quarter of 2001 was $1.5 million, down from $2.7 million in the same period a year ago. Operating profit fell as a result of the sales volume decline, offset in part by consolidation-driven cost synergies.
"While our distribution business continues to be negatively impacted by the recession in the manufacturing and industrial sectors, the aggressive efforts undertaken by Barnes Distribution to consolidate infrastructure and reduce costs in the year following the Curtis acquisition have allowed the business to remain profitable, but have not been sufficient to offset the full impact of the top-line erosion," Carpenter stated.
For the first nine months of 2001, Barnes Group's net income was $19.9 million, down from $27.8 million for the same period a year ago. Diluted earnings per share were $1.05 for the nine months ended September 30, 2001, compared with $1.48 per share in the same period of 2000. Net sales for the first nine months of 2001 were $585.2 million, up six percent from net sales of $552.0 million last year.
Commenting on Barnes Group's financial position, William C. Denninger, the Company's Chief Financial Officer, noted, "We remain in excellent financial condition. Free cash flow, as noted above, was approximately $9 million for the third quarter; thus, we have generated over $36 million in free cash flow in the first nine months of this year. We utilized this strong cash flow, in part, by repurchasing 157,327 shares of our common stock during the third quarter, and will continue to return capital to investors going forward as our cash flow permits."
Carpenter concluded, "While the tragic events of September 11 have created a roadblock for the stalled domestic economy, I believe that the steps that Associated Spring and Barnes Distribution have executed in the past year will enable them to effectively manage through the current economic conditions. And, I am similarly confident that Barnes Aerospace will take the appropriate actions necessary to navigate through any near-term disruptions in the commercial aircraft market. At the same time, I believe the strength of our underlying businesses remains quite sound, and our ability to generate long-term shareholder value is intact."
Barnes Group Inc. (www.barnesgroupinc.com) is a diversified international manufacturer of precision metal parts and 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 2000 sales of $740 million: Associated Spring, North America's largest manufacturer of precision mechanical and nitrogen gas springs; Barnes Aerospace, a manufacturer and repairer of highly engineered aircraft engine and airframe components and assemblies; and Barnes Distribution, an international distributor of maintenance, repair and operating supplies. Nearly 5,400 dedicated employees at more than 50 locations worldwide contribute to Barnes Group Inc.'s success.
This release may contain certain forward-looking statements as defined in the Public 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 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: 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, changes in worldwide economic and political conditions, interest and foreign exchange rate fluctuations, regulatory changes, and the ability of the Company to integrate newly acquired businesses and to realize acquisition synergies on schedule.
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 2001 2000 2001 2000 Net sales $ 186,500 $ 190,570 $ 585,214 $ 552,041 Cost of sales 125,178 123,550 391,630 362,715 Selling and admin. expenses 49,702 50,058 154,771 140,471 ----------- ----------- ----------- ----------- 174,880 173,608 546,401 503,186 Operating income 11,620 16,962 38,813 48,855 Other income 958 973 3,699 3,350 Interest expense 3,848 4,008 12,567 10,250 Other expenses 1,127 1,151 3,429 2,742 Income before income taxes 7,603 12,776 26,516 39,213 Income taxes 1,901 3,441 6,629 11,372 Net income $ 5,702 $ 9,335 $ 19,887 $ 27,841 Per common share: Net income - basic $ .31 $ .50 $ 1.07 $ 1.50 - diluted .30 .49 1.05 1.48 Dividends .20 .20 .60 .59 Average common shares outstanding - basic 18,481,546 18,601,009 18,536,308 18,551,378 - diluted 18,998,071 18,870,208 18,949,447 18,759,413 BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) Unaudited September September 2001 2000 Assets Current assets Cash and short-term investments $ 37,934 $ 44,808 Accounts receivable 115,839 122,033 Inventories 81,447 94,340 Deferred income taxes and prepaid expenses 25,939 19,546 Total current assets 261,159 280,727 Deferred income taxes 7,635 22,713 Property, plant and equipment 155,520 165,335 Goodwill 161,877 147,578 Other assets 62,379 56,280 -------- -------- $648,570 $672,633 Liabilities and Stockholders' Equity Current liabilities Notes payable $ 5,082 $ 41,262 Accounts payable 70,581 57,312 Accrued liabilities 61,313 64,513 Long-term debt - current 1,459 -- Total current liabilities 138,435 163,087 Long-term debt 232,021 230,000 Other liabilities 77,582 79,570 Stockholders' equity 200,532 199,976 -------- -------- $648,570 $672,633