BARNES GROUP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 29, 2011

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Barnes Group Inc. / 1

Exhibit 99.1
                            
Barnes Group Inc.
123 Main Street
Bristol, CT 06010
 
 
NEWS RELEASE
            
BARNES GROUP INC. REPORTS
FIRST QUARTER 2011 FINANCIAL RESULTS
 
▪
Quarterly Net Sales of $319 million, up 15%
▪
Quarterly Operating Margins expand to 9.2%, a 210 bps improvement
▪
First quarter 2011 diluted EPS of $0.34, up 62%
▪
2011 EPS Guidance raised to $1.23 to $1.38 per diluted share, up 30% to 45%
 
BRISTOL, Conn., April 29, 2011 - Barnes Group Inc. (NYSE: B), a diversified global manufacturer and logistical services company, today reported financial results for the first quarter 2011. Net sales grew 15 percent to $318.8 million from $278.1 million in the first quarter of 2010. Net income for the first quarter was up 61 percent to $19.1 million, or $0.34 per diluted share, from $11.8 million, or $0.21 per diluted share, a year earlier.
“Barnes Group's first quarter of 2011 was a good start to the year,” said Gregory F. Milzcik, President and Chief Executive Officer. “We delivered solid improvements in net sales, operating margin, net income and earnings per share, while continuing to strengthen our position in attractive and growing end-markets around the world. These results demonstrate positive and building momentum from our ongoing growth and profitability initiatives. These initiatives have contributed to the fundamental value of our business, and we expect to unlock more of this value in 2011 and the years ahead.”
($ millions; except per share data)
Three months ended March 31,
 
 
2011
 
2010
 
Change
 
Net Sales
$
318.8
 
 
$
278.1
 
 
$
40.6
 
14.6
%
 
Operating Income
$
29.4
 
 
$
19.7
 
 
$
9.8
 
49.7
%
 
  % of Sales
9.2
%
 
7.1
%
 
—
 
2.1
pts.
 
Net Income
$
19.1
 
 
$
11.8
 
 
$
7.2
 
61.2
%
 
  % of Sales
6.0
%
 
4.3
%
 
—
 
1.7
pts.
 
Net Income Per Diluted Share
$
0.34
 
 
$
0.21
 
 
$
0.13
 
61.9
%
 
 
Logistics and Manufacturing Services
•
First-quarter 2011 net sales were $150.0 million, up 11 percent from $135.3 million in the same period last year. This growth was driven by strengthening end-market demand in the Company's North American distribution businesses and increased overhaul and repair activity in the aerospace aftermarket business. Foreign currency translation positively affected first-quarter 2011 net sales by approximately $1.4 million.
 
 

 
 
Barnes Group Inc. / 2

•
Operating profit increased 56 percent to $13.0 million, from $8.3 million in the first quarter of 2010. This growth was driven primarily by the profit impact of the higher sales volumes in all businesses, particularly those in North America. These factors were partially offset by higher employee-related costs and other accruals.
Precision Components
•
First-quarter 2011 net sales were $171.6 million, up 18 percent from $145.8 million in the same period last year. This increase was primarily a result of improvements in North American and European industrial manufacturing markets, as well as greater demand from the Company's customers in the transportation industry, including automotive. Net sales in the aerospace original equipment manufacturing business also improved compared with the first quarter of 2010. Foreign exchange positively affected net sales by approximately $3.4 million in the first quarter.
 
•
Operating profit increased 45 percent to $16.4 million, from $11.3 million in the first quarter of 2010. This growth primarily reflected the profit impact of higher sales levels, combined with lower cost structures resulting from the Company's previous actions and lean initiatives. These factors were partially offset by higher costs related to investments in operational improvements, employee-related costs and investments in new product introductions.
Additional Information
•
During the quarter, Barnes Group exercised its right to redeem the remaining $92.5 million principal amount of the 3.75 percent Convertible Notes, effective April 5, 2011. The Company has elected to pay cash to holders of the 3.75 percent Convertible Notes surrendered for conversion, including the value of any residual value shares of common stock that might be payable. The Company intends to use borrowings under its senior credit facility to finance the redemption of the 3.75 percent Convertible Notes.
 
•
Interest expense decreased $1.5 million in the first quarter of 2011 to $3.7 million. The decrease was primarily a result of lower interest rates and lower debt discount amortization related to the 3.75 percent Convertible Notes.
 
•
The Company's effective tax rate for the first quarter of 2011 was 24.5 percent, compared to 16.8 percent in the first quarter and full year 2010. The increase in the first quarter 2011 effective tax rate from the full year 2010 rate was primarily driven by the projected shift of income to higher-taxing jurisdictions and the planned repatriation of a portion of current year foreign earnings.
Revised 2011 Outlook
Barnes Group is updating its guidance for 2011. The Company now expects revenue to grow 8 to 11 percent from 2010, and earnings per diluted share to be in the range of $1.23 to $1.38, up 30 to 45 percent.
Conference Call
Barnes Group Inc. will conduct a conference call with investors to discuss first-quarter 2011 results at 8:30 a.m. EST today, April 29, 2011. A webcast of the live call and an archived replay will be available on the Barnes Group investor relations link at www.BGInc.com.
 
Barnes Group Inc. (NYSE:B) is a diversified global manufacturer and logistical services company focused on providing precision component manufacturing and operating service support. Founded in 1857, approximately 4,900 dedicated

 
 
Barnes Group Inc. / 3

employees at more than 67 locations worldwide are committed to achieving consistent and sustainable profitable growth. For more information, visit www.BGInc.com. Barnes Group, the Critical Components People.
 
This release may contain certain forward-looking statements as defined in the Private Securities Litigation and 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, 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; restructuring costs or savings; 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.
Chris Stephens
SVP of Finance & Chief Financial Officer
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,
 
2011
 
2010
 
% Change
Net sales
$
318,754
 
 
$
278,137
 
 
14.6
 
 
 
 
 
 
 
Cost of sales
203,175
 
 
178,023
 
 
14.1
 
Selling and administrative expenses
86,130
 
 
80,447
 
 
7.1
 
 
289,305
 
 
258,470
 
 
11.9
 
Operating income
29,449
 
 
19,667
 
 
49.7
 
 
 
 
 
 
 
Operating margin
9.2
%
 
7.1
%
 
 
 
 
 
 
 
 
Interest expense
3,668
 
 
5,118
 
 
(28.3
)
Other expense (income), net
505
 
 
324
 
 
55.9
 
Income before income taxes
25,276
 
 
14,225
 
 
77.7
 
 
 
 
 
 
 
Income taxes
6,204
 
 
2,396
 
 
NM
 
Net income
$
19,072
 
 
$
11,829
 
 
61.2
 
 
 
 
 
 
 
Common dividends
$
4,351
 
 
$
4,396
 
 
(1.0
)
 
 
 
 
 
 
Per common share:
 
 
 
 
 
  Net income:
 
 
 
 
 
    Basic
$
0.35
 
 
$
0.21
 
 
66.7
 
    Diluted
0.34
 
 
0.21
 
 
61.9
 
  Dividends
0.08
 
 
0.08
 
 
—
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
    Basic
54,715,953
 
 
55,393,625
 
 
(1.2
)
    Diluted
55,603,892
 
 
55,965,287
 
 
(0.6
)
 
 

 
 
Barnes Group Inc. / 5

 
BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT
(Dollars in thousands)
(Unaudited)
 
 
Three months ended March 31,
 
2011
 
2010
 
% Change
Net sales
 
 
 
 
 
   Logistics and Manufacturing Services
$
150,019
 
 
$
135,282
 
 
10.9
 
   Precision Components
171,573
 
 
145,781
 
 
17.7
 
   Intersegment sales
(2,838
)
 
(2,926
)
 
3.0
 
Total net sales
$
318,754
 
 
$
278,137
 
 
14.6
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
   Logistics and Manufacturing Services
$
13,010
 
 
$
8,324
 
 
56.3
 
   Precision Components
16,439
 
 
11,343
 
 
44.9
 
Total operating profit
29,449
 
 
19,667
 
 
49.7
 
 
 
 
 
 
 
   Interest expense
3,668
 
 
5,118
 
 
(28.3
)
   Other expense (income), net
505
 
 
324
 
 
55.9
 
Income before income taxes
$
25,276
 
 
$
14,225
 
 
77.7
 
 

 
 
Barnes Group Inc. / 6

 
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 
 
March 31, 2011
 
December 31, 2010
Assets
 
 
 
Current assets
 
 
 
  Cash and cash equivalents
$
16,827
 
 
$
13,450
 
  Accounts receivable
230,050
 
 
197,715
 
  Inventories
217,313
 
 
216,382
 
  Deferred income taxes
7,165
 
 
10,449
 
  Prepaid expenses and other current assets
13,371
 
 
12,212
 
    Total current assets
484,726
 
 
450,208
 
 
 
 
 
Deferred income taxes
41,078
 
 
42,722
 
Property, plant and equipment, net
225,185
 
 
218,434
 
Goodwill
393,394
 
 
384,241
 
Other intangible assets, net
289,291
 
 
290,798
 
Other assets
17,188
 
 
16,854
 
Total assets
$
1,450,862
 
 
$
1,403,257
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Current liabilities
 
 
 
  Notes and overdrafts payable
$
4,568
 
 
$
4,930
 
  Accounts payable
98,268
 
 
98,191
 
  Accrued liabilities
75,588
 
 
86,602
 
  Long-term debt - current
93,272
 
 
93,141
 
    Total current liabilities
271,696
 
 
282,864
 
 
 
 
 
Long-term debt
280,076
 
 
259,647
 
Accrued retirement benefits
108,140
 
 
112,886
 
Other liabilities
36,239
 
 
35,741
 
 
 
 
 
Total stockholders' equity
754,711
 
 
712,119
 
Total liabilities and stockholders' equity
$
1,450,862
 
 
$
1,403,257
 
 

 
 
Barnes Group Inc. / 7

 
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
 
Three months ended March 31,
 
2011
 
2010
Operating activities:
 
 
 
Net income
$
19,072
 
 
$
11,829
 
Adjustments to reconcile net income to net cash from operating activities:
 
 
 
  Depreciation and amortization
14,034
 
 
12,671
 
  Amortization of convertible debt discount
610
 
 
1,389
 
  Gain on disposition of property, plant and equipment
(104
)
 
(54
)
  Stock compensation expense
2,102
 
 
1,777
 
  Withholding taxes paid on stock issuances
(624
)
 
(71
)
  Changes in assets and liabilities:
 
 
 
    Accounts receivable
(25,739
)
 
(17,193
)
    Inventories
1,561
 
 
(1,578
)
    Prepaid expenses and other current assets
(413
)
 
(3,940
)
    Accounts payable
120
 
 
8,225
 
    Accrued liabilities
(12,518
)
 
(793
)
    Deferred income taxes
5,269
 
 
314
 
    Long-term retirement benefits
(6,636
)
 
(5,575
)
  Other
(1,385
)
 
756
 
Net cash (used) provided by operating activities
(4,651
)
 
7,757
 
 
 
 
 
Investing activities:
 
 
 
Proceeds from disposition of property, plant and equipment
114
 
 
64
 
Capital expenditures
(12,488
)
 
(5,868
)
Other
(3,211
)
 
(785
)
Net cash used by investing activities
(15,585
)
 
(6,589
)
 
 
 
 
Financing activities:
 
 
 
Net change in other borrowings
(526
)
 
(3,062
)
Payments on long-term debt
(60,489
)
 
(78,593
)
Proceeds from the issuance of long-term debt
80,300
 
 
80,900
 
Proceeds from the issuance of common stock
7,759
 
 
2,419
 
Dividends paid
(4,351
)
 
(4,396
)
Excess tax benefit on stock awards
492
 
 
—
 
Other
(83
)
 
(56
)
Net cash provided (used) by financing activities
23,102
 
 
(2,788
)
 
 
 
 
Effect of exchange rate changes on cash flows
511
 
 
(454
)
Increase (decrease) in cash and cash equivalents
3,377
 
 
(2,074
)
 
 
 
 
Cash and cash equivalents at beginning of period
13,450
 
 
17,427
 
Cash and cash equivalents at end of period
$
16,827
 
 
$
15,353
 
 

 

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