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Barnes Group Inc. Reports Fourth Quarter and Full Year 2019 Financial Results

02/21/2020

Fourth Quarter 2019:

  • Sales of $370 million, down 4% from last year; Organic Sales down 4%
  • Operating Margin of 16.5%; Adjusted Operating Margin of 17.2%, up 190 bps
  • GAAP EPS of $0.80; Adjusted EPS of $0.86, up 2% versus prior year period 

Full Year 2019:

  • Sales of $1,491 million, down slightly from 2018; Organic Sales down 2%
  • Record Operating Income of $236.4 million; Adjusted Operating Income of $244.1 million, up 2%
  • Operating Margin of 15.9%; Adjusted Operating Margin of 16.4%, up 40 bps
  • GAAP EPS of $3.07; Adjusted EPS of $3.21, down slightly from 2018 

2020 Outlook:

  • 2020 Organic Sales Growth of 1% to 3%
  • 2020 Adjusted Net Income of $3.12 to $3.32 per Share; Down 3% to up 3% from 2019 Adjusted Net Income of $3.21 per Share

BRISTOL, Conn.--(BUSINESS WIRE)-- Barnes Group Inc. (NYSE: B), a global provider of highly engineered products, differentiated industrial technologies, and innovative solutions, today reported financial results for the fourth quarter and full year 2019.

“End market trends experienced throughout the year endured into the fourth quarter, as a weak global industrial manufacturing environment and lingering trade uncertainties unfavorably impacted revenues in our Industrial business, while sustained strength in Aerospace provided a partial offset. Evident in our 2019 performance is the power of our transformed portfolio, which allowed us to generate one of the best financial years in Barnes Group’s long history,” said Patrick J. Dempsey, President and Chief Executive Officer of Barnes Group Inc. “As a Company, we generated record operating profit in 2019 and increased operating margins over the previous year. Aerospace led the way with record sales and operating profit. With solid backlog in place, and an energized workforce, we anticipate another good year in 2020,” added Dempsey.

Fourth Quarter 2019 Highlights

Fourth quarter 2019 net sales of $370 million were down 4% from $384 million in the prior year period, with organic sales (1) declining 4%. Acquisition sales contributed 1%, while foreign exchange negatively impacted sales by 1%. Operating income was $61.3 million versus $52.2 million a year ago. On an adjusted basis, which excludes short-term purchase accounting adjustments for Gimatic and a $5.6 million non-cash impairment charge related to the disposition of the Seeger business this year, and IGS and Gimatic short-term purchase accounting adjustments and acquisition transaction costs last year, operating income was $63.5 million this year versus $58.6 million a year ago, an increase of 8%. Adjusted operating margin was 17.2%, up 190 bps from 15.3% in the prior year period.

Net income for the fourth quarter was $41.0 million, or $0.80 per diluted share, compared to $38.8 million, or $0.75 per diluted share, a year ago. On an adjusted basis, net income per share of $0.86 was up 2% from $0.84 a year ago. Adjusted net income per diluted share in the fourth quarter of 2019 excludes a $0.05 benefit related to the finalization of Gimatic short-term purchase accounting in our Industrial Segment and excludes an $0.11 non-cash impairment charge related to the disposition of the Seeger business. Fourth quarter 2018 adjusted net income per share excludes $0.11 of Industrial Gas Springs (“IGS”) and Gimatic short-term purchase accounting and acquisition cost adjustments in our Industrial Segment and a $0.02 benefit related to U.S. tax reform.

Full Year 2019 Highlights

For the full year 2019, Barnes Group generated net sales of $1,491 million, down slightly from $1,496 million in the prior year. Full year organic sales were down 2%. Acquisitions provided a 4% sales lift, while unfavorable foreign exchange was 2%. Operating income was a record $236.4 million versus $231.8 million a year ago. On an adjusted basis, operating income was $244.1 million this year versus $239.7 million a last year, an increase of 2%. Adjusted operating margin was 16.4%, up 40 bps from 16.0% in the prior year.

Interest expense in 2019 increased $3.8 million to $20.6 million, primarily as a result of increased borrowings during the period, partially offset by the impact of lower average interest rates.

Other expense was $9.0 million in 2019 compared to $7.4 million last year, primarily driven by higher foreign currency losses this year compared to a year ago.

The Company’s effective tax rate in 2019 was 23.4% compared with 19.9% last year with the increase largely due to the absence of adjustments to certain valuation reserves and final adjustments related to U.S. tax reform.

Net income for the year was $158.4 million, or $3.07 per diluted share, compared to $166.2 million, or $3.15 per diluted share, a year ago. On an adjusted basis, 2019 net income per share was $3.21, down slightly from $3.22 for 2018. Adjusted net income per share for 2019 excludes $0.03 of Gimatic short-term purchase accounting adjustments and an $0.11 non-cash impairment charge related to the disposition of the Seeger business. For 2018 adjusted net income per share excludes $0.12 of IGS and Gimatic short-term purchase accounting adjustments and acquisition transaction costs and favorable tax adjustments of $0.05 per share related to U.S. tax reform.

2019 Full Year cash provided by operating activities was $248.3 million versus $237.2 million in the prior year period. In the third quarter of 2019, the Company made a discretionary $15 million U.S. pension contribution which reduced full year operating cash flow. Free cash flow was $195.0 million compared to $179.9 million last year. Capital expenditures were $53.3 million, down $4.0 million from a year ago.

Segment Performance

Industrial
Fourth quarter sales were $230.9 million, down 9% from $255.1 million in the prior year period. Organic sales decreased approximately 10% primarily related to softness in certain end markets due, in part, to ongoing trade uncertainties. Unfavorable foreign exchange decreased sales by $3.3 million, or 1%, while acquisition revenues contributed $4.6 million, or 2%.

Operating profit in the fourth quarter was $30.2 million, up 14% from $26.4 million in the prior year period. Excluding a short-term purchase accounting true-up benefit for Gimatic and a non-cash impairment charge related to the disposition of the Seeger business in this year’s fourth quarter, and IGS and Gimatic short-term purchase accounting adjustments and acquisition transaction costs last year, adjusted operating profit was $32.5 million versus an adjusted $32.8 million a year ago. Adjusted operating margin was 14.1%, up 120 bps from 12.9% last year, primarily driven by strong productivity.

Full year 2019 sales were $938.5 million, down 6% from $994.7 million last year. Organic sales were down 8%. Acquisitions contributed 5%, while unfavorable foreign exchange was 3%. Full year operating profit of $114.0 million was down 13% from $130.4 million in the prior year. On an adjusted basis, operating profit was $121.6 million for 2019 versus $138.3 million a year ago, a decrease of 12%. Adjusted operating margin was 13.0%, down 90 bps from 2018.

Aerospace
Fourth quarter sales were $139.3 million, up 8% from $129.1 million in the same period last year. Aerospace original equipment manufacturing (“OEM”) sales increased 7% due to the ramping of new engine programs while aftermarket sales increased 10% from continuing strength in maintenance, repair and overhaul, and spare parts sales.

Operating profit was $31.1 million, up 21% from $25.8 million in the prior year period, primarily reflecting the profit impact of higher sales volumes. Operating margin of 22.3% was up 230 bps from 20.0% a year ago.

Full year 2019 sales were a record $552.6 million, up 10% from $501.2 million last year. Operating profit was a record $122.5 million, up 21%, compared to $101.4 million a year ago. Operating margin was 22.2% versus 20.2% last year, up 200 bps.

Aerospace OEM backlog ended the year at $801 million, down 1% from the end of the third quarter of 2019. The Company expects to ship approximately 50% of this backlog over the next 12 months.

2020 Outlook

Barnes Group expects 2020 organic sales to be up 1% to 3%, with total revenue down slightly given the divestiture of the Seeger business; a 4% impact on sales. Foreign exchange is not anticipated to have a meaningful impact on 2020 sales. Operating margin is forecasted to be in the range of 16.0% to 17.0%. Adjusted earnings are expected to be in the range of $3.12 to $3.32 per diluted share, down 3% to up 3% from 2019’s adjusted earnings of $3.21 per share. Adjusted earnings per share for 2020 are anticipated to exclude a $0.10 impact, primarily taxes, related to the divesture of the Seeger business. Further, the Company forecasts capital expenditures of approximately $60 million and cash conversion of greater than 100% of net income. Excluding the tax charge related to the Seeger divestiture, the effective tax rate for 2020 is expected to be approximately 24.0% to 24.5%.

“2019, while presenting challenges in certain of our Industrial end markets, generated solid results for Barnes Group. As 2020 unfolds, we anticipate organic revenue growth to return, especially after the first quarter. With a well-positioned balance sheet and the expectation of sustained, solid cash generation, we anticipate ongoing investments in both organic growth opportunities and strategic acquisitions, all with an eye towards a strengthened portfolio built to support our future,” said Christopher J. Stephens, Jr., Senior Vice President, Finance and Chief Financial Officer, Barnes Group Inc.

Conference Call Information

Barnes Group Inc. will conduct a conference call with investors to discuss fourth quarter and full year 2019 results at 8:30 a.m. ET today, February 21, 2020. The public may access the conference through a live audio webcast available on the Investor Relations section of Barnes Group’s website at www.BGInc.com. The conference is also available by direct dial at (844) 884-8225 in the U.S. or (647) 689-4194 outside of the U.S.; Conference ID 7982879. Supplemental materials will be posted to the Investor Relations section of the Company's website prior to the conference call.

In addition, the call will be recorded and available for playback from 12:00 p.m. (ET) on Friday, February 21, 2020 until 11:59 p.m. (ET) on Friday, February 28, 2020, by dialing (416) 621-4642; Conference ID 7982879.

Note:
(1) Organic sales growth represents the total reported sales increase within the Company’s ongoing businesses less the impact of foreign currency translation and acquisition and divestitures completed in the preceding twelve months.

About Barnes Group
Barnes Group Inc. (NYSE: B) is a global provider of highly engineered products, differentiated industrial technologies, and innovative solutions, serving a wide range of end markets and customers. Its specialized products and services are used in far-reaching applications including aerospace, transportation, manufacturing, automation, healthcare, and packaging. Barnes Group’s skilled and dedicated employees around the globe are committed to the highest performance standards and achieving consistent, sustainable profitable growth. For more information, visit www.BGInc.com.

Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future operating and financial performance and financial condition, and often contain words such as "anticipate," "believe," "expect," "plan," "estimate," "project," and similar terms. These forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements. These include, among others: difficulty maintaining relationships with employees, including unionized employees, customers, distributors, suppliers, business partners or governmental entities; failure to successfully negotiate collective bargaining agreements or potential strikes, work stoppages or other similar events; difficulties leveraging market opportunities; changes in market demand for our products and services; rapid technological and market change; the ability to protect and avoid infringing upon intellectual property rights; introduction or development of new products or transfer of work; higher risks in global operations and markets; the impact of intense competition; acts of terrorism, cybersecurity attacks or intrusions that could adversely impact our businesses; uncertainties relating to conditions in financial markets; currency fluctuations and foreign currency exposure; future financial performance of the industries or customers that we serve; our dependence upon revenues and earnings from a small number of significant customers; a major loss of customers; inability to realize expected sales or profits from existing backlog due to a range of factors, including changes in customer sourcing decisions, material changes, production schedules and volumes of specific programs; the impact of government budget and funding decisions; government tariffs, trade agreements and trade policies; the impact of new or revised tax laws and regulations; the adoption of laws, directives or regulations that impact the materials processed by our products or their end markets; changes in raw material or product prices and availability; restructuring costs or savings; the continuing impact of prior acquisitions and divestitures; integration of acquired businesses; and any other future strategic actions, including acquisitions, divestitures, restructurings, or strategic business realignments, and our ability to achieve the financial and operational targets set in connection with any such actions; the outcome of pending and future legal, governmental, or regulatory proceedings and contingencies; product liabilities and uninsured claims; future repurchases of common stock; future levels of indebtedness; and numerous other matters of a global, regional or national scale, including those of a political, economic, business, competitive, environmental, regulatory and public health nature; and other risks and uncertainties described in documents filed with or furnished to the Securities and Exchange Commission ("SEC") by the Company, including, among others, those in the Management's Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors sections of the Company's filings. The Company assumes no obligation to update its forward-looking statements.

 
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
Three months ended December 31, Twelve months ended December 31,

 

2019

 

 

2018

 

%
Change

 

2019

 

 

2018

 

%
Change
 
Net sales

$

370,171

 

$

384,117

 

(3.6

)

$

1,491,118

 

$

1,495,889

 

(0.3

)

 
Cost of sales

 

226,784

 

 

251,902

 

(10.0

)

 

944,154

 

 

963,524

 

(2.0

)

Selling and administrative expenses

 

82,131

 

 

80,026

 

2.6

 

 

310,516

 

 

300,601

 

3.3

 

 

 

308,915

 

 

331,928

 

(6.9

)

 

1,254,670

 

 

1,264,125

 

(0.7

)

 
Operating income

 

61,256

 

 

52,189

 

17.4

 

 

236,448

 

 

231,764

 

2.0

 

 
Operating margin

 

16.5

%

 

13.6

%

 

15.9

%

 

15.5

%

 
Interest expense

 

4,774

 

 

4,763

 

0.2

 

 

20,629

 

 

16,841

 

22.5

 

Other expense (income), net

 

2,932

 

 

2,271

 

29.1

 

 

8,975

 

 

7,428

 

20.8

 

 
Income before income taxes

 

53,550

 

 

45,155

 

18.6

 

 

206,844

 

 

207,495

 

(0.3

)

 
Income taxes

 

12,577

 

 

6,325

 

98.8

 

 

48,494

 

 

41,309

 

17.4

 

 
Net income

$

40,973

 

$

38,830

 

5.5

 

$

158,350

 

$

166,186

 

(4.7

)

 
Common dividends

$

8,130

 

$

8,210

 

(1.0

)

$

32,544

 

$

32,206

 

1.0

 

 
Per common share:
 
Net income:
Basic

$

0.80

 

$

0.75

 

6.7

 

$

3.09

 

$

3.18

 

(2.8

)

Diluted

 

0.80

 

 

0.75

 

6.7

 

 

3.07

 

 

3.15

 

(2.5

)

Dividends

 

0.16

 

 

0.16

 

-

 

 

0.64

 

 

0.62

 

3.2

 

 
Weighted average common shares outstanding:
Basic

 

51,025,733

 

 

51,575,394

 

(1.1

)

 

51,213,518

 

 

52,304,190

 

(2.1

)

Diluted

 

51,379,008

 

 

52,082,632

 

(1.4

)

 

51,633,169

 

 

52,831,606

 

(2.3

)

 
 
 
BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
(Unaudited)
 
Three months ended December 31, Twelve months ended December 31,

 

2019

 

 

2018

 

%
Change

 

2019

 

 

2018

 

%
Change
Net sales
 
Industrial

$

230,913

 

$

255,058

 

(9.5

)

$

938,507

 

$

994,735

 

(5.7

)

 
Aerospace

 

139,258

 

 

129,060

 

7.9

 

 

552,611

 

 

501,162

 

10.3

 

 
Intersegment sales

 

-

 

 

(1

)

 

-

 

 

(8

)

 
Total net sales

$

370,171

 

$

384,117

 

(3.6

)

$

1,491,118

 

$

1,495,889

 

(0.3

)

 
Operating profit
 
Industrial

$

30,177

 

$

26,400

 

14.3

 

$

113,968

 

$

130,404

 

(12.6

)

 
Aerospace

 

31,079

 

 

25,789

 

20.5

 

 

122,480

 

 

101,360

 

20.8

 

 
Total operating profit

$

61,256

 

$

52,189

 

17.4

 

$

236,448

 

$

231,764

 

2.0

 

 
Operating margin Change Change
 
Industrial

 

13.1

%

 

10.4

%

270

 

bps.

 

12.1

%

 

13.1

%

(100

)

bps.
 
Aerospace

 

22.3

%

 

20.0

%

230

 

bps.

 

22.2

%

 

20.2

%

200

 

bps.
 
Total operating margin

 

16.5

%

 

13.6

%

290

 

bps.

 

15.9

%

 

15.5

%

40

 

bps.
 
 
 
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 
 
December 31,
2019 (1)
December 31,
2018
Assets
Current assets
Cash and cash equivalents

$

93,805

$

100,719

Accounts receivable

 

348,974

 

382,253

Inventories

 

232,706

 

265,990

Prepaid expenses and other current assets

 

67,532

 

57,184

Assets held for sale

 

21,373

 

-

 
Total current assets

 

764,390

 

806,146

 
 
Deferred income taxes

 

21,235

 

20,474

Property, plant and equipment, net

 

356,603

 

370,531

Goodwill

 

933,022

 

955,524

Other intangible assets, net

 

581,116

 

636,538

Other assets

 

53,924

 

19,757

Assets held for sale

 

28,045

 

-

 
Total assets

$

2,738,335

$

2,808,970

 
Liabilities and Stockholders' Equity
Current liabilities
Notes and overdrafts payable

$

7,724

$

2,137

Accounts payable

 

118,509

 

143,419

Accrued liabilities

 

209,992

 

206,782

Long-term debt - current

 

2,034

 

5,522

Liabilities held for sale

 

4,616

 

-

 
Total current liabilities

 

342,875

 

357,860

 
Long-term debt

 

825,017

 

936,357

Accrued retirement benefits

 

93,358

 

104,302

Deferred income taxes

 

88,408

 

106,559

Long-term tax liability

 

66,012

 

72,961

Other liabilities

 

45,148

 

27,875

Liabilities held for sale

 

6,989

 

-

 
Total stockholders' equity

 

1,270,528

 

1,203,056

 
Total liabilities and stockholders' equity

$

2,738,335

$

2,808,970

 

Notes:
(1) The Company adopted the amended standard related to accounting for leases in the first quarter of 2019.

 

 BARNES GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
 
Twelve months ended December 31,

 

2019

 

 

2018

 

Operating activities:
Net income

$

158,350

 

$

166,186

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

 

99,059

 

 

94,238

 

Loss on disposition of property, plant and equipment

 

236

 

 

71

 

Stock compensation expense

 

13,306

 

 

12,158

 

Non-cash impairment charge related to divestiture

 

5,600

 

 

-

 

Changes in assets and liabilities, net of the effects of acquisitions:
Accounts receivable

 

29,212

 

 

(10,960

)

Inventories

 

11,482

 

 

(12,369

)

Prepaid expenses and other current assets

 

(10,640

)

 

(2,890

)

Accounts payable

 

(22,546

)

 

12,489

 

Accrued liabilities

 

2,336

 

 

(580

)

Deferred income taxes

 

(12,025

)

 

(18,876

)

Long-term retirement benefits

 

(16,233

)

 

1,632

 

Long-term tax liability

 

(6,949

)

 

(6,809

)

Other

 

(2,887

)

 

2,909

 

 
Net cash provided by operating activities

 

248,301

 

 

237,199

 

 
Investing activities:
Proceeds from disposition of property, plant and equipment

 

577

 

 

1,374

 

Capital expenditures

 

(53,286

)

 

(57,273

)

Business acquisitions, net of cash acquired

 

(6,061

)

 

(430,487

)

Revenue Sharing Program payments

 

-

 

 

(5,800

)

Other

 

(3,450

)

 

(1,000

)

 
Net cash used by investing activities

 

(62,220

)

 

(493,186

)

 
Financing activities:
Net change in other borrowings

 

5,490

 

 

(5,145

)

Payments on long-term debt

 

(341,419

)

 

(433,904

)

Proceeds from the issuance of long-term debt

 

236,552

 

 

841,036

 

Proceeds from the issuance of common stock

 

5,492

 

 

1,131

 

Common stock repurchases

 

(50,347

)

 

(138,275

)

Dividends paid

 

(32,544

)

 

(32,206

)

Withholding taxes paid on stock issuances

 

(6,059

)

 

(5,395

)

Other

 

(9,158

)

 

(11,678

)

 
Net cash (used) provided by financing activities

 

(191,993

)

 

215,564

 

 
Effect of exchange rate changes on cash flows

 

(1,002

)

 

(4,148

)

 
Decrease in cash and cash equivalents

 

(6,914

)

 

(44,571

)

 
Cash and cash equivalents at beginning of year

 

100,719

 

 

145,290

 

 
Cash and cash equivalents at end of year

$

93,805

 

$

100,719

 

 
 
BARNES GROUP INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(Dollars in thousands)
(Unaudited)
 
 
Twelve months ended December 31,

 

2019

 

 

2018

 

Free cash flow:
 
Net cash provided by operating activities

$

248,301

 

$

237,199

 

Capital expenditures

 

(53,286

)

 

(57,273

)

 
Free cash flow(1)

$

195,015

 

$

179,926

 

 
Free cash flow to net income cash conversion ratio (as adjusted):
 
Net income

$

158,350

 

$

166,186

 

Non-cash impairment charge related to divestiture

 

5,600

 

 

-

 

Effects of U.S. tax reform

 

-

 

 

(2,613

)

Net income (as adjusted)(2)

$

163,950

 

$

163,573

 

 
Free cash flow to net income cash conversion ratio (as adjusted)(2)

 

119

%

 

110

%

 
 

Notes:
(1) The Company defines free cash flow as net cash provided by operating activities less capital expenditures. The Company believes that the free cash flow metric is useful to investors and management as a measure of cash generated by business operations that can be used to invest in future growth, pay dividends, repurchase stock and reduce debt. This metric can also be used to evaluate the Company's ability to generate cash flow from business operations and the impact that this cash flow has on the Company's liquidity.

(2) For the purpose of calculating the cash conversion ratio, the Company has excluded the non-cash impairment charge related to the divestiture of the Seeger business from 2019 net income and the effects of U.S. tax reform, commonly referred to as the Tax Cuts and Jobs Act, from 2018 net income.

 
BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
 
Three months ended December 31, Twelve months ended December 31,

 

2019

 

 

2018

 

% Change

 

2019

 

 

2018

 

% Change
SEGMENT RESULTS
Operating Profit - Industrial Segment (GAAP)

$

30,177

 

$

26,400

 

 

14.3

 

$

113,968

 

$

130,404

 

(12.6

)

 
IGS short-term purchase accounting adjustments

 

-

 

 

1,727

 

 

-

 

 

2,887

 

Acquisition transaction costs

 

-

 

 

1,983

 

 

-

 

 

2,350

 

Gimatic short-term purchase accounting adjustments

 

(3,313

)

 

2,707

 

 

2,060

 

 

2,707

 

Seeger divestiture non-cash impairment charge

 

5,600

 

 

-

 

 

5,600

 

 

-

 

 
Operating Profit - Industrial Segment as adjusted (Non-GAAP) (1)

$

32,464

 

$

32,817

 

 

(1.1

)

$

121,628

 

$

138,348

 

(12.1

)

 
Operating Margin - Industrial Segment (GAAP)

 

13.1

%

 

10.4

%

 

270

 

bps.

 

12.1

%

 

13.1

%

(100

)

bps.
Operating Margin - Industrial Segment as adjusted (Non-GAAP) (1)

 

14.1

%

 

12.9

%

 

120

 

bps.

 

13.0

%

 

13.9

%

(90

)

bps.
 
 
 
CONSOLIDATED RESULTS
Operating Income (GAAP)

$

61,256

 

$

52,189

 

 

17.4

 

$

236,448

 

$

231,764

 

2.0

 

 
IGS short-term purchase accounting adjustments

 

-

 

 

1,727

 

 

-

 

 

2,887

 

Acquisition transaction costs

 

-

 

 

1,983

 

 

-

 

 

2,350

 

Gimatic short-term purchase accounting adjustments

 

(3,313

)

 

2,707

 

 

2,060

 

 

2,707

 

Seeger divestiture non-cash impairment charge

 

5,600

 

 

-

 

 

5,600

 

 

-

 

 
Operating Income as adjusted (Non-GAAP) (1)

$

63,543

 

$

58,606

 

 

8.4

 

$

244,108

 

$

239,708

 

1.8

 

 
Operating Margin (GAAP)

 

16.5

%

 

13.6

%

 

290

 

bps.

 

15.9

%

 

15.5

%

40

 

bps.
Operating Margin as adjusted (Non-GAAP) (1)

 

17.2

%

 

15.3

%

 

190

 

bps.

 

16.4

%

 

16.0

%

40

 

bps.
 
Diluted Net Income per Share (GAAP)

$

0.80

 

$

0.75

 

 

6.7

 

$

3.07

 

$

3.15

 

(2.5

)

 
Effects of U.S. tax reform

 

-

 

 

(0.02

)

 

-

 

 

(0.05

)

IGS short-term purchase accounting adjustments

 

-

 

 

0.03

 

 

-

 

 

0.04

 

Acquisition transaction costs

 

-

 

 

0.04

 

 

-

 

 

0.04

 

Gimatic short-term purchase accounting adjustments

 

(0.05

)

 

0.04

 

 

0.03

 

 

0.04

 

Seeger divestiture non-cash impairment charge

 

0.11

 

 

-

 

 

0.11

 

 

-

 

 
Diluted Net Income per Share as adjusted (Non-GAAP) (1)

$

0.86

 

$

0.84

 

 

2.4

 

$

3.21

 

$

3.22

 

(0.3

)

 
 
Full-Year 2020 Outlook
Diluted Net Income per Share (GAAP)

$

3.02

 

to

$

3.22

 

 
Seeger divestiture adjustments (2)

0.10

 
Diluted Net Income per Share as adjusted (Non-GAAP)

$

3.12

 

to

$

3.32

 

 
 
 
 

Notes:
(1) The Company has excluded short-term purchase accounting adjustments related to its Gimatic acquisition and the non-cash impairment charge related to the divestiture of the Seeger business from its “as adjusted” financial measurements for 2019. The Company has excluded the following from its "as adjusted" financial measurements for 2018: 1) $2,613 of adjustments made in 2018 to reduce the tax expense recorded in December 2017 related to the U.S. tax reform (commonly referred to as the Tax Cuts and Jobs Act), 2) short-term purchase accounting adjustments related to its Industrial Gas Springs (IGS) and Gimatic acquisitions and 3) transaction costs related to the IGS and Gimatic acquisitions. The tax effects of these items, excluding 1) the effects of U.S. tax reform which impacted tax expense directly and 2) the non-cash impairment charge which was recorded pre-tax in 2019, were calculated based on the respective tax jurisdiction of each item. In 2018, the tax effect on the acquisition transaction costs, based on the countries in which such costs originated, approximated 2% as the majority of these costs are not expected to be deductible. The remaining items include tax effects that range from approximately 22% to 28%. Management believes that these adjustments provide the Company and its investors with an indication of our baseline performance excluding items that are not considered to be reflective of our ongoing results. 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 performance. Accordingly, the measurements have limitations depending on their use.

(2) Divestiture adjustments in 2020 include tax charges related to the divestiture of the Seeger business.

Barnes Group Inc.
William Pitts
Director, Investor Relations
860.583.7070

Source: Barnes Group Inc.

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