BARNES GROUP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 27, 2012

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8-K - BARNES GROUP INC. FORM 8-K - BARNES GROUP INCform8-k03312012.htm

Barnes Group Inc. / 1

 
 
 
Exhibit 99.1



Barnes Group Inc.
123 Main Street
Bristol, CT 06010

NEWS RELEASE
            
BARNES GROUP INC. REPORTS
FIRST QUARTER 2012 FINANCIAL RESULTS

▪
Quarterly Net Sales of $303 million, up 5%
▪
Quarterly Operating Margins expand to 10.9%, up 30 bps
▪
Quarterly Diluted EPS from Continuing Operations of $0.41, up 14%
▪
Affirms 2012 EPS from Continuing Operations guidance of $1.78 to $1.93 per diluted share

BRISTOL, Conn., April 27, 2012 - Barnes Group Inc. (NYSE: B), an international aerospace and industrial manufacturing and service provider, today reported financial results for the first quarter 2012. Net sales grew 5 percent to $303.1 million from $289.6 million in the first quarter of 2011. Income from continuing operations for the first quarter was up 14 percent to $23.0 million, or $0.41 per diluted share, from $20.2 million, or $0.36 per diluted share, a year earlier.
In the first quarter of 2012, the Company changed its organizational structure to align its strategic business units into three reportable business segments: Aerospace, Industrial and Distribution. All previously reported financial information has been adjusted on a retrospective basis to reflect the segment realignment.
“Barnes Group's first quarter results were a solid start to the year and in line with our expectations” said Gregory F. Milzcik, Barnes Group Inc. President and Chief Executive Officer. “We generated organic sales growth in each of our three operating segments, our backlog is strong and our end markets remain favorable.  The overall performance creates an outlook that allows us to affirm our 2012 guidance expectation of record diluted earnings per share before all of our end markets fully recover. ”


($ millions; except per share data)
Three months ended March 31,
 
2012
 
2011
 
Change
Net Sales
$303.1
 
$289.6
 
$13.5
4.7
%
Operating Income
$33.0
 
$30.7
 
$2.3
7.5
%
  % of Sales
10.9%
 
10.6%
 
 
0.3
pts.
Income from Continuing Operations
$23.0
 
$20.2
 
$2.8
13.7
%
Net Income
$22.2
 
$19.1
 
$3.1
16.4
%
Income from Continuing Operations Per Diluted Share
$0.41
 
$0.36
 
$0.05
13.9
%
Loss from Discontinued Operations Per Diluted Share
$(0.01)
 
$(0.02)
 
$0.01
 
 
Net Income Per Diluted Share
$0.40
 
$0.34
 
$0.06
17.6
%



Barnes Group Inc. / 2


Aerospace
•
First-quarter 2012 net sales were $97.3 million, up 7 percent from $90.6 million in the same period last year with both the aftermarket and original equipment manufacturing businesses experiencing sales growth. In particular, the aerospace aftermarket business continued to see strong volumes of repair and overhaul activity.

•
Operating profit increased 4 percent to $14.2 million, from $13.7 million in the first quarter of 2011. The increase was primarily driven by the profit impact of higher sales volumes, mostly offset by increased management fees related to Revenue Sharing Programs (RSPs) and an unfavorable sales mix. 
Industrial
•
Sales at Industrial were $115.3 million in the first quarter of 2012, up approximately 4 percent from $111.4 million in the same period last year. The sales growth was primarily driven by increases in the industrial manufacturing businesses based in North America which reflected continued improvement in the transportation industry, including automotive.  The impact of foreign exchange decreased net sales by approximately $0.8 million.

•
Operating profit in the first quarter of 2012 was $10.1 million, a decrease of 8 percent from $11.0 million in the first quarter last year.  The decline was primarily driven by higher costs associated with investments in new product introductions, a shift in sales mix to lower margin products and the outsourcing of certain manufacturing processes. Partially offsetting these declines was the profit impact of higher sales levels in the first quarter of 2012.
Distribution
•
First-quarter 2012 net sales were $93.4 million, up 4 percent from $89.9 million in the same period last year. Sales growth was driven by the continued strengthening of our North American distribution end-markets. The impact of foreign exchange decreased net sales by approximately $0.2 million.  

•
Segment operating profit increased 43 percent to $8.7 million, from $6.1 million in the first quarter of 2011 primarily as a result of the beneficial profit impact of higher sales volumes and lower cost structures.  The operating profit increase was partially offset by an unfavorable sales mix of lower margin products.
Additional Information
•
Interest expense decreased $1.3 million in the first quarter of 2012 to $2.4 million primarily as a result of the redemption of the 3.75% Convertible Notes in 2011 and the maturity of interest rate swaps in place during the first quarter of 2011.  The redemption of the 3.75% Convertible Notes, which were funded with the variable rate credit facility, resulted in a higher percentage of the Company's outstanding debt being carried at a lower average interest rate.

•
The Company's effective tax rate for the first quarter of 2012 was 22.9 percent, compared to 24.2 percent in the first quarter of 2011 and 21.7 percent for the full year 2011. The increase in the first quarter 2012 effective tax rate from the full year 2011 rate was primarily driven by the projected shift of income to higher-taxing jurisdictions, partially offset by the impact of a decrease in the planned repatriation of a portion of current year foreign earnings to the U.S.




Barnes Group Inc. / 3

2012 Outlook
Barnes Group is affirming its guidance for 2012. The Company expects revenue to grow 6 to 9 percent from 2011, operating margins to be approximately 12 percent, and earnings from continuing operations per diluted share are forecasted to be in the range of $1.78 to $1.93, up 9 to 18 percent from 2011.
Conference Call
Barnes Group Inc. will conduct a conference call with investors to discuss first quarter 2012 results at 8:30 a.m. EST today, April 27, 2012. A webcast of the live call and an archived replay will be available on the Barnes Group investor relations link at www.BGInc.com. The conference is also available by direct dial at (888) 680-0892 in the U.S. or (617) 213-4858 outside of the U.S. (request the Barnes Group Earnings Call), Participant Code: 85371500.

In addition, the call will be recorded and available for playback beginning at 12:00 p.m. (EST) on Friday, April 27, 2012 by dialing (617) 801-6888, Passcode: 10561780.

About Barnes Group

Founded in 1857, Barnes Group Inc. (NYSE:B) is an international aerospace and industrial manufacturing and service provider, serving a wide range of end markets and customers. The products and services provided by Barnes Group are used in far-reaching applications that provide transportation, communication, manufacturing and technology to the world. Barnes Group's approximately 4,400 dedicated employees, at more than 50 locations worldwide, are committed to achieving consistent and sustainable profitable growth. For more information, visit www.BGInc.com.

Forward-Looking Statements

This release contains certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based upon management's good faith expectations and beliefs concerning future developments and their potential effect upon the Company and can be identified by the use of words such as "anticipated," "believe," "expect," "plans," "strategy," "estimate," "project," and other words of similar meaning in connection with a discussion of future operating or financial performance. 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 described in our periodic filings with the Securities and Exchange Commission, include, among others, uncertainties arising from the current or worsening conditions in 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; restructuring costs or savings; the impact of the divestiture in 2011 of our Barnes Distribution Europe businesses and any other future strategic actions, including acquisitions, joint ventures, divestitures, restructurings, or strategic business realignments, and our ability to achieve the financial and operational targets set in connection with any such actions; introduction or development of new products or transfer of work; changes in raw material or product prices and availability; foreign currency exposure; our dependence upon revenues and earnings from a small number of significant customers; a major loss of customers; the outcome of pending and future claims or litigation or governmental, regulatory proceedings, investigations, inquiries, and audits; uninsured claims and litigation; outcome of contingencies; future repurchases of common stock; future levels of indebtedness; and numerous other matters of global, regional or national scale, including those of a political, economic, business, competitive, environmental, regulatory and public health nature. The Company assumes no obligation to update our forward-looking statements.

Contact:
Barnes Group Inc.
William Pitts
Director, Investor Relations
860.583.7070
# # #







Barnes Group Inc. / 4


BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)

 
Three months ended March 31,
 
2012
 
2011
 
% Change
Net sales
$
303,096

 
$
289,590

 
4.7

 
 
 
 
 
 
Cost of sales
201,781

 
190,910

 
5.7

Selling and administrative expenses
68,302

 
67,963

 
0.5

 
270,083

 
258,873

 
4.3

Operating income
33,013

 
30,717

 
7.5

 
 
 
 
 
 
Operating margin
10.9
%
 
10.6
%
 
 
 
 
 
 
 
 
Interest expense
2,368

 
3,655

 
(35.2
)
Other expense (income), net
853

 
408

 
NM

Income from continuing operations before income taxes
29,792

 
26,654

 
11.8

Income taxes
6,818

 
6,457

 
5.6

Income from continuing operations
22,974

 
20,197

 
13.7

 
 
 
 
 
 
Loss from discontinued operations, net of income taxes
(767
)
 
(1,125
)
 
31.8

Net income
$
22,207

 
$
19,072

 
16.4

Common dividends
$
5,459

 
$
4,351

 
25.5

 
 
 
 
 
 
Per common share:
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
     Income from continuing operations
$
0.42

 
$
0.37

 
13.5

     Loss from discontinued operations, net of income taxes
(0.01
)
 
(0.02
)
 
50.0

     Net income
$
0.41

 
$
0.35

 
17.1

 
 
 
 
 
 
Diluted:
 
 
 
 
 
     Income from continuing operations
$
0.41

 
$
0.36

 
13.9

     Loss from discontinued operations, net of income taxes
(0.01
)
 
(0.02
)
 
50.0

     Net income
$
0.40

 
$
0.34

 
17.6

 
 
 
 
 
 
  Dividends
0.10

 
0.08

 
25.0

 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
    Basic
54,805,636

 
54,715,953

 
0.2

    Diluted
55,455,579

 
55,603,892

 
(0.3
)





Barnes Group Inc. / 5


BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
(Unaudited)

 
Three months ended March 31,
 
2012
 
2011
 
% Change
Net sales
 
 
 
 
 
   Aerospace
$
97,250

 
$
90,560

 
7.4

   Industrial
115,348

 
111,430

 
3.5

   Distribution
93,425

 
89,912

 
3.9

   Intersegment sales
(2,927
)
 
(2,312
)
 
(26.6
)
Total net sales
$
303,096

 
$
289,590

 
4.7

 
 
 
 
 
 
Operating profit
 
 
 
 
 
   Aerospace
$
14,218

 
$
13,683

 
3.9

   Industrial
10,105

 
10,958

 
(7.8
)
   Distribution
8,690

 
6,076

 
43.0

Total operating profit
$
33,013

 
$
30,717

 
7.5

 
 
 
 
 
 
Operating margin
 
 
 
 
 
   Aerospace
14.6
%
 
15.1
%
 

   Industrial
8.8
%
 
9.8
%
 

   Distribution
9.3
%
 
6.8
%
 
 
Total operating margin
10.9
%
 
10.6
%
 





Barnes Group Inc. / 6


BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)

 
March 31, 2012
 
December 31, 2011
Assets
 
 
 
Current assets
 
 
 
  Cash and cash equivalents
$
77,489

 
$
62,505

  Accounts receivable
205,642

 
200,460

  Inventories
216,906

 
216,520

  Deferred income taxes
27,363

 
28,829

  Prepaid expenses and other current assets
24,623

 
21,680

    Total current assets
552,023

 
529,994

 
 
 
 
Deferred income taxes
44,452

 
47,661

Property, plant and equipment, net
213,060

 
210,784

Goodwill
372,498

 
366,104

Other intangible assets, net
269,158

 
272,092

Other assets
14,227

 
13,730

Total assets
$
1,465,418

 
$
1,440,365

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Current liabilities
 
 
 
  Notes and overdrafts payable
$
5,719

 
$
12,364

  Accounts payable
92,686

 
92,524

  Accrued liabilities
60,734

 
92,250

  Long-term debt - current
540

 
540

    Total current liabilities
159,679

 
197,678

 
 
 
 
Long-term debt
369,550

 
333,148

Accrued retirement benefits
151,095

 
152,696

Other liabilities
35,666

 
34,443

 
 
 
 
Total stockholders' equity
749,428

 
722,400

Total liabilities and stockholders' equity
$
1,465,418

 
$
1,440,365





Barnes Group Inc. / 7


BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

 
Three months ended March 31,
 
2012
 
2011
Operating activities:
 
 
 
Net income
$
22,207

 
$
19,072

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
  Depreciation and amortization
13,063

 
14,034

  Amortization of convertible debt discount
537

 
610

  Gain on disposition of property, plant and equipment
(97
)
 
(104
)
  Stock compensation expense
2,100

 
2,102

  Withholding taxes paid on stock issuances
(683
)
 
(624
)
  Loss on the sale of businesses
767

 
—

  Changes in assets and liabilities:
 
 
 
    Accounts receivable
(1,512
)
 
(25,739
)
    Inventories
1,091

 
1,561

    Prepaid expenses and other current assets
(2,272
)
 
(413
)
    Accounts payable
(672
)
 
120

    Accrued liabilities
(29,379
)
 
(12,518
)
    Deferred income taxes
4,869

 
5,269

    Long-term retirement benefits
(3,725
)
 
(6,636
)
  Other
25

 
(1,385
)
Net cash provided (used) by operating activities
6,319

 
(4,651
)
 
 
 
 
Investing activities:
 
 
 
Proceeds from disposition of property, plant and equipment
135

 
114

Payments related to the sale of businesses
(363
)
 
—

Capital expenditures
(7,281
)
 
(12,488
)
Other
(1,418
)
 
(3,211
)
Net cash used by investing activities
(8,927
)
 
(15,585
)
 
 
 
 
Financing activities:
 
 
 
Net change in other borrowings
(6,688
)
 
(526
)
Payments on long-term debt
(13,135
)
 
(60,489
)
Proceeds from the issuance of long-term debt
49,000

 
80,300

Proceeds from the issuance of common stock
3,324

 
7,759

Common stock repurchases
(11,141
)
 
—

Dividends paid
(5,459
)
 
(4,351
)
Excess tax benefit on stock awards
1,227

 
492

Other
(65
)
 
(83
)
Net cash provided by financing activities
17,063

 
23,102

 
 
 
 
Effect of exchange rate changes on cash flows
529

 
511

Increase in cash and cash equivalents
14,984

 
3,377

 
 
 
 
Cash and cash equivalents at beginning of period
62,505

 
13,450

Cash and cash equivalents at end of period
$
77,489

 
$
16,827





Barnes Group Inc. / 8



BARNES GROUP INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING
ACTIVITIES TO FREE CASH FLOW
 
(Dollars in thousands)
(Unaudited)

 
Three months ended March 31,
 
2012
 
2011
Free cash flow:
 
 
 
Net cash provided (used) by operating activities
$
6,319

 
$
(4,651
)
Capital expenditures
(7,281
)
 
(12,488
)
Free cash flow (1)
$
(962
)
 
$
(17,139
)
 
 
 
 
 
 
 
 
(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.



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