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Share Name | Share Symbol | Market | Type |
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Barnes Group Inc | NYSE:B | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 37.39 | 1 | 13:20:37 |
Fourth Quarter 2017:
Full Year 2017:
2018 Outlook:
Barnes Group Inc. (NYSE: B), a global provider of highly engineered products and differentiated industrial technologies, today reported financial results for the fourth quarter and full year 2017.
Fourth quarter 2017 net sales of $373 million were up 15% from $324 million in the prior year period driven by strong organic sales growth (1) of 10%. Foreign exchange favorably impacted sales by approximately 4% while acquisition sales contributed 1%. Net loss for the fourth quarter was ($59.2) million, or ($1.10) per diluted share, compared to net income of $36.7 million, or $0.67 per diluted share, a year ago. In the fourth quarter of 2017, the Company recorded a charge of $96.7 million related to the new U.S. tax legislation. On an adjusted basis, net income was $0.71 per diluted share, up 6% from $0.67 last year. Adjusted net income per diluted share in the fourth quarter of 2017 excludes a $1.79 charge related to new U.S. tax laws and $0.02 per share related to restructuring actions within our Industrial Segment. Fourth quarter 2016 adjusted net income per share excludes $0.03 of FOBOHA short-term purchase accounting adjustments in our Industrial Segment and a $0.03 benefit related to a contract termination dispute in our Aerospace Segment.
For the full year 2017, Barnes Group generated net sales of $1,436 million, up 17% from $1,231 million in the prior year. Full year organic sales were up 11%, while acquisitions contributed 5% and favorable foreign exchange provided 1%. Net income for the year was $59.4 million, or $1.09 per diluted share, compared to $135.6 million, or $2.48 per diluted share, a year ago. On an adjusted basis, net income was $2.88 per diluted share, up 14% from $2.53 last year. For 2017, adjusted net income per share excludes a $1.77 charge related to tax law changes, $0.03 of FOBOHA short-term purchase accounting adjustments and a $0.01 benefit from restructuring actions. Adjusted net income per share for 2016 excludes $0.05 of FOBOHA short-term purchase accounting adjustments and acquisition transaction costs in our Industrial Segment and a contract termination arbitration award which offset related charges in our Aerospace Segment.
A table reconciling 2017 and 2016 non-GAAP adjusted results presented in this release to the Company’s GAAP results is included at the end of this press release.
“Barnes Group delivered a strong 2017 with double-digit organic sales and adjusted earnings per share growth,” said Patrick J. Dempsey, President and Chief Executive Officer of Barnes Group Inc. “Our sustained focus on enhancing our portfolio and pipeline of innovative products and services, advancing the Barnes Enterprise System (“BES”), and developing a high-performing global organization has resulted in continued progress along our transformation journey and positions us to perform well moving forward.”
“Accordingly, we expect 2018 to be another solid year as generally favorable end markets coupled with our BES emphasis on driving commercial, operational and financial excellence across our Company are anticipated to drive revenue, margin, and earnings growth,” added Dempsey.
Industrial
Aerospace
Additional Information
2018 Outlook
Barnes Group expects 2018 total revenue growth of 4% to 6%, with organic sales growth of 3% to 5%. Foreign exchange is anticipated to benefit revenues by approximately 1% for the year. Operating margin is forecasted to be in the range of 15.5% to 16.5%. Earnings are expected to be in the range of $2.98 to $3.13 per diluted share, up 3% to 9% from 2017’s adjusted diluted earnings per share of $2.88. Further, the Company anticipates capital expenditures of between $60 million to $65 million and cash conversion of greater than 100% of net income. Based upon our forecasted geographic mix of earnings, the effective tax rate for 2018 is expected to be between 25% and 26%. The Company does not expect the new Revenue Recognition standard to have a material impact on future revenues or net income.
“2017 was a good year for Barnes Group even as we dealt with some operational challenges within one of our Industrial businesses. As we move beyond this in the first half of 2018, we anticipate solid revenue growth, improved financial performance, and good cash generation. With our supportive balance sheet, we will continue to invest in organic growth opportunities and strategic acquisitions that position us well for the 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 2017 results at 8:30 a.m. ET today, February 16, 2018. 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 (866) 393-4306 in the U.S. or (734) 385-2616 outside of the U.S.; Conference ID 3989187. 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 16, 2018 until 11:59 p.m. (ET) on Friday, February 23, 2018, by dialing (404) 537-3406; Conference ID 3989187.
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 GroupBarnes 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, 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 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; the impact of new or revised tax laws and regulations; changes in raw material or product prices and availability; integration of acquired businesses; restructuring costs or savings; the continuing impact of prior acquisitions and divestitures; 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 and uninsured claims; product liabilities; 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, 2017 2016%Change
2017 2016%Change
Net sales $ 373,048 $ 324,167 15.1 $ 1,436,499 $ 1,230,754 16.7 Cost of sales 246,933 208,271 18.6 939,288 790,299 18.9 Selling and administrative expenses 76,511 64,522 18.6 286,933 248,277 15.6 323,444 272,793 18.6 1,226,221 1,038,576 18.1 Operating income 49,604 51,374 (3.4 ) 210,278 192,178 9.4 Operating margin 13.3 % 15.8 % 14.6 % 15.6 % Interest expense 3,934 3,057 28.7 14,571 11,883 22.6 Other expense (income), net (767 ) (2,351 ) NM 8 (2,326 ) NM Income before income taxes 46,437 50,668 (8.4 ) 195,699 182,621 7.2 Income taxes 105,685 13,954 NM 136,284 47,020 NM Net (loss) income $ (59,248 ) $ 36,714 NM $ 59,415 $ 135,601 (56.2 ) Common dividends $ 7,509 $ 6,991 7.4 $ 29,551 $ 27,435 7.7 Per common share: Net (loss) income: Basic $ (1.10 ) $ 0.68 NM $ 1.10 $ 2.50 (56.0 ) Diluted (1.10 ) 0.67 NM 1.09 2.48 (56.0 ) Dividends 0.14 0.13 7.7 0.55 0.51 7.8 Weighted average common shares outstanding: Basic 53,874,164 54,133,060 (0.5 ) 54,073,407 54,191,013 (0.2 ) Diluted 53,874,164 54,574,734 (1.3 ) 54,605,298 54,631,313 (0.0 ) NM - Not MeaningfulBARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
(Unaudited)
Three months ended December 31, Twelve months ended December 31, 2017 2016%Change
2017 2016%Change
Net sales Industrial $ 254,334 $ 215,682 17.9 $ 973,890 $ 824,216 18.2 Aerospace 118,718 108,486 9.4 462,617 406,541 13.8 Intersegment sales (4 ) (1 ) (8 ) (3 ) Total net sales $ 373,048 $ 324,167 15.1 $ 1,436,499 $ 1,230,754 16.7 Operating profit Industrial $ 26,899 $ 30,232 (11.0 ) $ 127,056 $ 129,677 (2.0 ) Aerospace 22,705 21,142 7.4 83,222 62,501 33.2 Total operating profit $ 49,604 $ 51,374 (3.4 ) $ 210,278 $ 192,178 9.4 Operating margin Change Change Industrial 10.6 % 14.0 % (340 ) bps. 13.0 % 15.7 % (270 ) bps. Aerospace 19.1 % 19.5 % (40 ) bps. 18.0 % 15.4 % 260 bps. Total operating margin 13.3 % 15.8 % (250 ) bps. 14.6 % 15.6 % (100 ) bps. BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)December 31,2017
December 31,2016
Assets Current assets Cash and cash equivalents $ 145,290 $ 66,447 Accounts receivable 348,943 287,123 Inventories 241,962 227,759 Prepaid expenses and other current assets 32,526 27,163 Total current assets 768,721 608,492 Deferred income taxes 12,161 25,433 Property, plant and equipment, net 359,298 334,489 Goodwill 690,223 633,436 Other intangible assets, net 507,042 522,258 Other assets 28,271 13,431 Total assets $ 2,365,716 $ 2,137,539 Liabilities and Stockholders' Equity Current liabilities Notes and overdrafts payable $ 5,669 $ 30,825 Accounts payable 127,521 112,024 Accrued liabilities 181,241 156,967 Long-term debt - current 1,330 2,067 Total current liabilities 315,761 301,883 Long-term debt 525,597 468,062 Accrued retirement benefits 89,000 109,350 Deferred income taxes 73,505 66,446 Long-term tax liability 79,770 - Other liabilities 21,762 23,440 Total stockholders' equity 1,260,321 1,168,358 Total liabilities and stockholders' equity $ 2,365,716 $ 2,137,539 BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)Twelve months endedDecember 31,
2017 2016 Operating activities: Net income $ 59,415 $ 135,601 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 90,150 80,154 Gain on disposition of property, plant and equipment (246 ) (349 ) Stock compensation expense 12,279 11,493 Effect of U.S. tax reform on deferred tax assets 4,152 - Changes in assets and liabilities, net of the effects of acquisitions: Accounts receivable (50,082 ) (23,057 ) Inventories (173 ) 1,989 Prepaid expenses and other current assets (4,241 ) 569 Accounts payable 12,018 11,778 Accrued liabilities 14,439 15,825 Deferred income taxes 3,589 (2,210 ) Long-term retirement benefits (16,349 ) (15,492 ) Long-term tax liability 79,770 - Other (801 ) 1,345 Net cash provided by operating activities 203,920 217,646 Investing activities: Proceeds from disposition of property, plant and equipment 2,594 780 Capital expenditures (58,712 ) (47,577 ) Business acquisitions, net of cash acquired (8,922 ) (128,613 ) Component Repair Program payments - (4,100 ) Other (3,000 ) - Net cash used by investing activities (68,040 ) (179,510 ) Financing activities: Net change in other borrowings (25,304 ) 8,375 Payments on long-term debt (73,161 ) (321,506 ) Proceeds from the issuance of long-term debt 129,118 303,277 Proceeds from the issuance of common stock 2,408 4,611 Common stock repurchases (40,791 ) (20,520 ) Dividends paid (29,551 ) (27,435 ) Withholding taxes paid on stock issuances (5,380 ) (4,885 ) Other (21,090 ) 4,771 Net cash used by financing activities (63,751 ) (53,312 ) Effect of exchange rate changes on cash flows 6,714 (2,303 ) Increase (decrease) in cash and cash equivalents 78,843 (17,479 ) Cash and cash equivalents at beginning of year 66,447 83,926 Cash and cash equivalents at end of year $ 145,290 $ 66,447 BARNES GROUP INC. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (Dollars in thousands) (Unaudited)Twelve months endedDecember 31,
2017 2016 Free cash flow: Net cash provided by operating activities $ 203,920 $ 217,646 Capital expenditures (58,712 ) (47,577 ) Free cash flow(1) $ 145,208 $ 170,069 Free cash flow to net income cash conversion ratio (as adjusted): Net income 59,415 135,601 Effects of U.S. tax reform 96,700 - Net income (as adjusted)(2) $ 156,115 $ 135,601 Free cash flow to net income cash conversion ratio (as adjusted)(2) 93 % 125 %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 effects of U.S. tax reform, commonly referred to as the Tax Cuts and Jobs Act, from 2017 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, 2017 2016 % Change 2017 2016 % ChangeSEGMENT RESULTS
Operating Profit - Industrial Segment (GAAP) $ 26,899 $ 30,232 (11.0 ) $ 127,056 $ 129,677 (2.0 ) Acquisition transaction costs - (14 ) - 1,164 FOBOHA short-term purchase accounting adjustments - 1,786 2,294 2,316 Restructuring actions 1,406 - 13 - Operating Profit - Industrial Segment as adjusted (Non-GAAP) (1) $ 28,305 $ 32,004 (11.6 ) $ 129,363 $ 133,157 (2.8 ) Operating Margin - Industrial Segment (GAAP) 10.6 % 14.0 % (340 ) bps. 13.0 % 15.7 % (270 ) bps. Operating Margin - Industrial Segment as adjusted (Non-GAAP) (1) 11.1 % 14.8 % (370 ) bps. 13.3 % 16.2 % (290 ) bps. Operating Profit - Aerospace Segment (GAAP) $ 22,705 $ 21,142 7.4 $ 83,222 $ 62,501 33.2 Contract termination dispute charges - 7 - 3,005 Contract termination arbitration award - (1,371 ) - (1,371 ) Operating Profit - Aerospace Segment as adjusted (Non-GAAP) (1) $ 22,705 $ 19,778 14.8 $ 83,222 $ 64,135 29.8 Operating Margin - Aerospace Segment (GAAP) 19.1 % 19.5 % (40 ) bps. 18.0 % 15.4 % 260 bps. Operating Margin - Aerospace Segment as adjusted (Non-GAAP) (1) 19.1 % 18.2 % 90 bps. 18.0 % 15.8 % 220 bps.CONSOLIDATED RESULTS
Operating Income (GAAP) $ 49,604 $ 51,374 (3.4 ) $ 210,278 $ 192,178 9.4 Acquisition transaction costs - (14 ) - 1,164 FOBOHA short-term purchase accounting adjustments - 1,786 2,294 2,316 Restructuring actions 1,406 - 13 - Contract termination dispute charges - 7 - 3,005 Contract termination arbitration award - (1,371 ) - (1,371 ) Operating Income as adjusted (Non-GAAP) (1) $ 51,010 $ 51,782 (1.5 ) $ 212,585 $ 197,292 7.8 Operating Margin (GAAP) 13.3 % 15.8 % (250 ) bps. 14.6 % 15.6 % (100 ) bps. Operating Margin as adjusted (Non-GAAP) (1) 13.7 % 16.0 % (230 ) bps. 14.8 % 16.0 % (120 ) bps. Diluted Net (Loss) Income per Share (GAAP) $ (1.10 ) $ 0.67 NM $ 1.09 $ 2.48 (56.0 ) Acquisition transaction costs - - - 0.02 FOBOHA short-term purchase accounting adjustments - 0.03 0.03 0.03 Restructuring actions 0.02 - (0.01 ) - Contract termination dispute charges - - - 0.03 Contract termination arbitration award - (0.03 ) - (0.03 ) Effects of U.S. tax reform 1.79 - 1.77 - Diluted Net Income per Share as adjusted (Non-GAAP) (1) $ 0.71 $ 0.67 6.0 $ 2.88 $ 2.53 13.8 Full-Year 2018 Outlook Diluted Net Income per Share (GAAP) $ 2.98 to $ 3.13 NM - Not MeaningfulNotes:(1) The Company has excluded the following from its "as adjusted" financial measurements for 2017: 1) short-term purchase accounting adjustments related to its FOBOHA acquisition, 2) the net loss (gain) from restructuring actions related to the closure and consolidation of two manufacturing facilities within the Industrial segment and 3) the effects of U.S. tax reform commonly referred to as the Tax Cuts and Jobs Act ($96,700). The Company has excluded the following from its "as adjusted" financial measurements for 2016: 1) transaction costs related to its FOBOHA acquisition, 2) short-term purchase accounting adjustments related to its FOBOHA acquisition, 3) charges related to the contract termination dispute and 4) operating income related to the contract termination arbitration award and the non-operating interest income awarded. The tax effects of these items, excluding the effects of U.S. tax reform which impacted tax expense directly, were calculated based on the respective tax jurisdiction of each item and range from approximately 19% to 37%. 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180216005058/en/
Barnes Group Inc.William PittsDirector, Investor Relations860-583-7070
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