BARNES GROUP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 17, 2012

Attached files

file filename
8-K - BARNES GROUP INC. FORM 8-K - BARNES GROUP INCform8-k12312011.htm
 
 
 
Exhibit 99.1



Barnes Group Inc.
123 Main Street
Bristol, CT 06010

NEWS RELEASE
            
BARNES GROUP INC. REPORTS
FOURTH QUARTER AND FULL YEAR 2011
FINANCIAL RESULTS

▪
Fourth quarter sales of $283 million, up 9.7%; full year sales up 13.7% to $1,169 million

▪
Fourth quarter diluted EPS from Continuing Operations of $0.43, up 87%; full year diluted EPS from Continuing Operations up 71% to $1.64

▪
Successful divestiture of the Barnes Distribution Europe businesses in fourth quarter

▪
2012 EPS from Continuing Operations guidance of $1.78 to $1.93 per diluted share

BRISTOL, Conn., February 17, 2012 - Barnes Group Inc. (NYSE: B), a diversified global manufacturer and logistics services company, today reported financial results for the fourth quarter and full year 2011. Fourth quarter 2011 sales totaled $283.3 million, up 9.7% from $258.2 million in the fourth quarter of 2010. Income from continuing operations was $23.8 million or $0.43 per diluted share, up 86% from the fourth quarter of 2010.
During the fourth quarter of 2011, Barnes Group completed the sale of its Barnes Distribution Europe (BDE) businesses which were comprised of the Company's European KENT, Toolcom and BD France distribution businesses and reported within the Company's Logistics and Manufacturing Services segment. The financial results of BDE, including the loss on sale for the periods presented, have been segregated and treated as discontinued operations for reporting purposes. For the year, the loss from discontinued operations, net of tax, was $26.9 million, or ($0.48) per diluted share. The loss on sale of $26.1 million includes a non-cash goodwill impairment charge of $16.8 million.
For the full year 2011, Barnes Group generated sales of $1,169 million, up 13.7%. Income from continuing operations was $91.6 million, or $1.64 per diluted share, compared to $54.0 million, or $0.96 per diluted share in 2010.
“Barnes Group's fourth quarter results cap a strong year of performance for our Company,” said Gregory F. Milzcik, Barnes Group Inc. President and Chief Executive Officer. “We generated solid organic growth with meaningful margin flow-through leading to an expansion in operating margins to 10.9%, up 250 basis points for the year. Coupled with our continuing focus on profitable growth and improved productivity, we delivered a 70% increase in income from continuing operations for 2011. In addition, we exit 2011 having achieved strong fourth quarter earnings per share from continuing operations, and a healthy backlog of $582 million, up 21% from 2010.”



Barnes Group Inc. / 2

($ millions; except per share data)
Three months ended December 31,
 
Twelve months ended December 31,
 
2011
 
2010
 
Change
 
2011
 
2010
 
Change
Net Sales
$
283.3

 
$
258.2

 
$
25.1

9.7

%
 
$
1,169.4

 
$
1,028.6

 
$
140.7

13.7
%
Operating Income
$
28.9

 
$
19.8

 
$
9.0

45.5

%
 
$
127.6

 
$
86.4

 
$
41.2

47.6
%
  % of Sales
10.2
%
 
7.7
%
 
 
2.5

pts.
 
10.9
%
 
8.4
%
 
 
2.5
pts.
Income from Continuing Operations
$
23.8

 
$
12.8

 
$
11.0

85.6

%
 
$
91.6

 
$
54.0

 
$
37.6

69.6
%
Net Income
$
0.1

 
$
11.5

 
$
(11.5
)
(99.4
)
%
 
$
64.7

 
$
53.3

 
$
11.4

21.5
%
Income from Continuing Operations Per Diluted Share
$
0.43

 
$
0.23

 
$
0.20

87.0

%
 
$
1.64

 
$
0.96

 
$
0.68

70.8
%
Loss from Discontinued Operations Per Diluted Share
$
(0.43
)
 
$
(0.02
)
 
$
(0.41
)


 
 
$
(0.48
)
 
$
(0.01
)
 
$
(0.47
)

 
Net Income Per Diluted Share
$
—

 
$
0.21

 
$
(0.21
)


 
 
$
1.16

 
$
0.95

 
$
0.21


 

Logistics and Manufacturing Services

•
Fourth quarter 2011 sales were $122.0 million, up 10% from $110.7 million in the same period last year. The increase in sales was driven by strong organic sales growth in our aerospace aftermarket business. Foreign exchange had a minimal impact on fourth quarter 2011 sales.

•
Operating profit of $15.7 million for the fourth quarter of 2011 was up 65% compared to prior year period of $9.5 million. Operating profit benefited from the impact of higher sales and additional productivity improvements, partially offset by higher management fees related to our aerospace aftermarket Revenue Sharing Programs (RSPs) and increased employee related costs.

•
Full year 2011 sales were $492.9 million, up 11% from $443.9 million in 2010. The increase was primarily due to strong organic sales growth in our aerospace aftermarket and North American Distribution businesses. Foreign exchange positively impacted sales by $3.2 million in 2011.

•
Full year 2011 operating profit increased 65% to $64.8 million from 2010 primarily due to the profit impact of higher sales volumes. Also contributing to the increase in operating profit were productivity improvements, including the favorable impact of a lower cost structure in the North American Distribution business. Segment operating profit increases were partially offset by higher employee related costs and management fees related to RSPs.


Precision Components

•
Fourth quarter 2011 sales were $163.6 million, up 9% from $149.5 million in the same period last year. Organic sales growth of $13.7 million was driven by the segment's aerospace OEM business and the North American and European industrial manufacturing businesses which benefited from improved industrial and transportation end-markets. Foreign exchange positively affected the quarter's sales by approximately $0.4 million.

•
Operating profit was $13.2 million in the fourth quarter, up 28% from the same period last year. Operating profit benefited from higher sales levels combined with productivity gains and lean initiatives. These improvements were partially offset by added costs for new product introductions and the outsourcing of certain manufacturing processes, as well as higher employee related costs.



Barnes Group Inc. / 3


•
Full year 2011 sales were $687.5 million, up 15% from $595.9 million in 2010. The 2011 organic sales growth of $74.9 million was primarily driven by the industrial manufacturing businesses based in North America and Europe reflecting improvements in the transportation and aerospace end-markets. The impact of foreign exchange increased sales by approximately $16.7 million in 2011.

•
Full year 2011 operating profit was up 33% to $62.8 million compared to $47.3 million in 2010. Operating profit improved primarily due to the benefit from higher sales levels combined with productivity improvements and lean initiatives. These improvements in operating profit were partially offset by higher costs associated with investments in new product introductions and outsourcing of certain manufacturing processes.
Additional Information
•
Interest expense in 2011 decreased $9.7 million from 2010 to $10.3 million as a result of lower average interest rates and lower debt discount amortization related to the 3.75% Convertible Notes. The lower average interest rates reflect the significant shift to a higher percentage of variable rate debt due to the retirement of the 7.80% Notes and the redemption of the 3.75% Convertible Notes, which were funded with the variable rate credit facility, and the expiration of the interest rate swap agreements.

•
Other expense was $0.4 million in 2011 compared to $2.6 million in 2010, consisting primarily of foreign exchange transaction losses of $0.2 million in 2011 which decreased from $1.7 million in 2010.

•
The Company's 2011 effective tax rate from continuing operations was 21.7%, compared to 15.4% in 2010. The rate increase was primarily driven by a shift in earnings to higher-tax jurisdictions and the incremental tax effect of the repatriation of a portion of current year foreign earnings to U.S. The company repatriated $17.5 million and $7.5 million in 2011 and 2010, respectively.
 
2012 Outlook
“During 2011, we experienced improving conditions across our end-markets and generated a double-digit increase in both orders and backlog. We expect our positive momentum to continue into 2012, especially with the strength in the global commercial aerospace industry. Further, with the sale of BDE, a greater level of management's attention can be directed toward expanding our operations both organically and through acquisitions, bringing new products and processes to market and growing our geographic reach,” added Milzcik.
Barnes Group Inc. expects 2012 revenue to grow 6% to 9% from 2011 and forecasts operating margins of approximately 12%. Earnings from continuing operations per diluted share are forecasted to be in the range of $1.78 to $1.93, up 9% to 18% from 2011.
“Our improved financial performance and generally favorable end-markets will allow us to invest further in our businesses. For 2012, we expect capital expenditures to increase to a range of $45 to $50 million and cash conversion of greater than 90%,” said Christopher J. Stephens, Jr., Senior Vice President, Finance and Chief Financial Officer, Barnes Group Inc.






Barnes Group Inc. / 4

Conference Call
Barnes Group Inc. will conduct a conference call with investors to discuss fourth quarter and full year 2011 results at 8:30 a.m. EST today, February 17, 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) 679-8035 in the U.S. or (617) 213-4848 outside of the U.S. (request the Barnes Group Earnings Call), Participant Code: 31082129.

In addition, the call will be recorded and available for playback beginning at 12:00 p.m. (EST) on Friday, February 17, 2012 by dialing (617) 801-6888, Passcode: 17248138.

About Barnes Group

Founded in 1857, Barnes Group Inc. (NYSE:B) is an international aerospace and industrial components manufacturer and logistics services company serving a wide range of end markets and customers. The products and services provided by Barnes Group are critical components for 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.  Barnes Group, the Critical Components People.


Forward-Looking Statements

This release may contain 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 disruptions 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 acquisition of the BDE businesses by Berner SE 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, Planning and Investor Relations
860.583.7070










# # #



Barnes Group Inc. / 5



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,
 
2011
 
2010
 
% Change
 
2011
 
2010
 
% Change
Net sales
$
283,286

 
$
258,170

 
9.7

 
$
1,169,355

 
$
1,028,617

 
13.7

 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
188,147

 
171,686

 
9.6

 
772,398

 
678,186

 
13.9

Selling and administrative expenses
66,262

 
66,639

 
(0.6
)
 
269,402

 
264,033

 
2.0

 
254,409

 
238,325

 
6.7

 
1,041,800

 
942,219

 
10.6

Operating income
28,877

 
19,845

 
45.5

 
127,555

 
86,398

 
47.6

 
 
 
 
 
 
 
 
 
 
 
 
Operating margin
10.2
%
 
7.7
%
 
 
 
10.9
%
 
8.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
2,365

 
4,732

 
(50.0
)
 
10,271

 
19,984

 
(48.6
)
Other expense (income), net
167

 
460

 
(63.7
)
 
395

 
2,609

 
(84.9
)
Income from continuing operations before income taxes
26,345

 
14,653

 
79.8

 
116,889

 
63,805

 
83.2

 
 
 
 
 
 
 
 
 
 
 
 
Income taxes
2,586

 
1,850

 
39.8

 
25,316

 
9,827

 
NM

Income from continuing operations
23,759

 
$
12,803

 
85.6

 
$
91,573

 
$
53,978

 
69.6

 
 
 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations, net of income taxes
(23,693
)
 
$
(1,281
)
 
NM

 
$
(26,858
)
 
$
(700
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
66

 
$
11,522

 
(99.4
)
 
$
64,715

 
$
53,278

 
21.5

 
 
 
 
 
 
 
 
 
 
 
 
Common dividends
$
5,433

 
$
4,302

 
26.3

 
$
18,629

 
$
17,461

 
6.7

 
 
 
 
 
 
 
 
 
 
 
 
Per common share:
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
     Income from continuing operations
$
0.43

 
$
0.23

 
87.0

 
$
1.66

 
$
0.97

 
71.1

     Loss from discontinued operations, net of income taxes
(0.43
)
 
(0.02
)
 
NM

 
(0.49
)
 
(0.01
)
 
NM

     Net income
$
—

 
$
0.21

 
NM

 
$
1.17

 
$
0.96

 
21.9

Diluted:
 
 
 
 
 
 
 
 
 
 
 
     Income from continuing operations
$
0.43

 
$
0.23

 
87.0

 
$
1.64

 
$
0.96

 
70.8

     Loss from discontinued operations, net of income taxes
(0.43
)
 
(0.02
)
 
NM

 
(0.48
)
 
(0.01
)
 
NM

     Net income
$
—

 
$
0.21

 
NM

 
$
1.16

 
$
0.95

 
22.1

 
 
 
 
 
 
 
 
 
 
 
 
  Dividends
0.10

 
0.08

 
25.0

 
0.34

 
0.32

 
6.3

 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
    Basic
54,888,879

 
54,757,849

 
0.2

 
55,214,586

 
55,259,732

 
(0.1
)
    Diluted
55,451,632

 
55,561,753

 
(0.2
)
 
55,931,882

 
55,925,187

 
NM





Barnes Group Inc. / 6


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

 
Three months ended December 31,
 
Twelve months ended December 31,
 
2011
 
2010
 
% Change
 
2011
 
2010
 
% Change
Net sales
 
 
 
 
 
 
 
 
 
 
 
   Logistics and Manufacturing Services
$
122,029

 
$
110,745

 
10.2

 
$
492,910

 
$
443,941

 
11.0

   Precision Components
163,572

 
149,514

 
9.4

 
687,546

 
595,911

 
15.4

   Intersegment sales
(2,315
)
 
(2,089
)
 
(10.8
)
 
(11,101
)
 
(11,235
)
 
1.2

Total net sales
$
283,286

 
$
258,170

 
9.7

 
$
1,169,355

 
$
1,028,617

 
13.7

 
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
 
 
 
 
   Logistics and Manufacturing Services
$
15,702

 
$
9,540

 
64.6

 
$
64,764

 
$
39,140

 
65.5

   Precision Components
13,175

 
10,305

 
27.9

 
62,791

 
47,258

 
32.9

Total operating profit
28,877

 
19,845

 
45.5

 
127,555

 
86,398

 
47.6

 
 
 
 
 
 
 
 
 
 
 
 
   Interest expense
2,365

 
4,732

 
(50.0
)
 
10,271

 
19,984

 
(48.6
)
   Other expense (income), net
167

 
460

 
(63.7
)
 
395

 
2,609

 
(84.9
)
Income from continuing operations before income taxes
$
26,345

 
$
14,653

 
79.8

 
$
116,889

 
$
63,805

 
83.2





Barnes Group Inc. / 7


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

 
December 31, 2011
 
December 31, 2010
Assets
 
 
 
Current assets
 
 
 
  Cash and cash equivalents
$
62,505

 
$
13,450

  Accounts receivable
200,460

 
197,715

  Inventories
216,520

 
216,382

  Deferred income taxes
28,829

 
10,449

  Prepaid expenses and other current assets
21,680

 
12,212

    Total current assets
529,994

 
450,208

 
 
 
 
Deferred income taxes
47,661

 
42,722

Property, plant and equipment, net
210,784

 
218,434

Goodwill
366,104

 
384,241

Other intangible assets, net
272,092

 
290,798

Other assets
13,730

 
16,854

Total assets
$
1,440,365

 
$
1,403,257

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Current liabilities
 
 
 
  Notes and overdrafts payable
$
12,364

 
$
4,930

  Accounts payable
92,524

 
98,191

  Accrued liabilities
92,250

 
86,602

  Long-term debt - current
540

 
93,141

    Total current liabilities
197,678

 
282,864

 
 
 
 
Long-term debt
333,148

 
259,647

Accrued retirement benefits
152,696

 
112,886

Other liabilities
34,443

 
35,741

 
 
 
 
Total stockholders' equity
722,400

 
712,119

Total liabilities and stockholders' equity
$
1,440,365

 
$
1,403,257





Barnes Group Inc. / 8


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

 
Twelve months ended December 31,
 
2011
 
2010
Operating activities:
 
 
 
Net income
$
64,715

 
$
53,278

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
  Depreciation and amortization
58,904

 
52,770

  Amortization of convertible debt discount
2,158

 
5,727

  (Gain) loss on disposition of property, plant and equipment
(379
)
 
266

  Stock compensation expense
8,319

 
7,655

  Withholding taxes paid on stock issuances
(1,124
)
 
(440
)
   Loss on the sale of businesses
26,128

 
—

  Changes in assets and liabilities, net of effects of acquisitions/divestitures:
 
 
 
    Accounts receivable
(24,707
)
 
(35,891
)
    Inventories
(12,384
)
 
(24,006
)
    Prepaid expenses and other current assets
59

 
(3,139
)
    Accounts payable
615

 
12,466

    Accrued liabilities
11,226

 
11,456

    Deferred income taxes
5,386

 
(1,566
)
    Long-term retirement benefits
(18,367
)
 
(12,135
)
  Other
475

 
(681
)
Net cash provided by operating activities
121,024

 
65,760

 
 
 
 
Investing activities:
 
 
 
Proceeds from disposition of property, plant and equipment
3,620

 
1,498

Proceeds from the sale of businesses, net of cash sold
22,492

 
—

Investment in restricted cash
(11,664
)
 
—

Capital expenditures
(37,082
)
 
(28,759
)
Business acquisitions, net of cash acquired
(3,495
)
 
—

Other
(4,483
)
 
(3,038
)
Net cash used by investing activities
(30,612
)
 
(30,299
)
 
 
 
 
Financing activities:
 
 
 
Net change in other borrowings
7,168

 
347

Payments on long-term debt
(411,661
)
 
(359,542
)
Proceeds from the issuance of long-term debt
392,390

 
359,917

Premium paid on convertible debt redemption
(9,803
)
 
—

Proceeds from the issuance of common stock
28,579

 
5,746

Common stock repurchases
(34,066
)
 
(28,100
)
Dividends paid
(18,629
)
 
(17,461
)
Excess tax benefit on stock awards
8,056

 
—

Other
(2,229
)
 
(207
)
Net cash used by financing activities
(40,195
)
 
(39,300
)
 
 
 
 
Effect of exchange rate changes on cash flows
(1,162
)
 
(138
)
Increase (decrease) in cash and cash equivalents
49,055

 
(3,977
)
 
 
 
 
Cash and cash equivalents at beginning of year
13,450

 
17,427

Cash and cash equivalents at end of year
$
62,505

 
$
13,450




Barnes Group Inc. / 9




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

 
Twelve months ended December 31,
 
2011
 
2010
Free cash flow:
 
 
 
Net cash provided by operating activities
$
121,024

 
$
65,760

Capital expenditures
(37,082
)
 
(28,759
)
Free cash flow (1)
$
83,942

 
$
37,001

 
 
 
 
Free cash flow to net income (excluding the loss on the sale of businesses) cash conversion ratio:
 
 
 
Free cash flow (from above)
$
83,942

 
$
37,001

 
 
 
 
Net income
64,715

 
53,278

Add: Loss on the sale of businesses
26,128

 
—

Net income (excluding the loss on the sale of businesses)
$
90,843

 
$
53,278

 
 
 
 
Free cash flow to net income (excluding the loss on the sale of businesses) cash conversion ratio:
92
%
 
69
%
 
 
 
 
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.



Stock widget

Investing forum

BARNES GROUP INC Reports