Barnes Group Announces Third Quarter Financial Results.Business Editors BRISTOL Bristol, cities, United States Bristol. 1 Industrial city (1990 pop. 60,640), Hartford co., central Conn., on the Pequabuck River; settled 1727, inc. 1785. Its clock-making industry dates from 1790. , Conn.--(BUSINESS WIRE)--Oct. 16, 2003 Barnes Group Inc. (NYSE NYSE See: New York Stock Exchange : B) -- Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increase 13 percent to $222 million -- Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. up 40 percent, net income increases 29 percent to $9 million -- Aerospace orders exceed $51 million, driving order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. to $149 million Barnes Group Inc. (NYSE: B) today announced financial results for the quarter ended September September: see month. 30, 2003. Net sales for the third quarter of 2003 were $222.2 million, up 13 percent from $196.8 million in the third quarter of 2002. The Company reported a 40 percent increase in operating income to $14.0 million, as net income increased to $9.0 million, or $0.38 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, in the third quarter of 2003, from $6.9 million, or $0.36 per diluted share, in the comparable year-ago period. Average diluted shares outstanding were 23.3 million in the quarter ended September 30, 2003, up 21 percent from 19.2 million in the year-ago period. "Our operating performance this quarter, despite the headwind head·wind or head wind n. A wind blowing directly against the course of an aircraft or ship. headwind Noun a wind blowing directly against the course of an aircraft or ship of a still-sluggish economic climate, clearly demonstrates the returns from investments we continue to make to generate sustainable, profitable growth for our Company," said Edmund Edmund, 921–46, king of Wessex (939–46), half brother and successor of Athelstan. Immediately after his accession he had to face an invasion of Irish vikings led by Olaf Guthfrithson. M. Carpenter, Barnes Group Inc.'s President and C.E.O. "Going forward, these investments should continue to enhance our top- top- pref. Variant of topo-. and bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. performance," Carpenter continued. Sales at Barnes Distribution were $103.8 million for the quarter ended September 30, 2003, up $31.8 million, or 44 percent, from $72.0 million in the quarter ended September 30, 2002. Kar KAR Kentucky Administrative Regulations KAR King's African Rifles KAR Kainate Receptor (neuroscience) KAR Kirby Air Ride (game) KAR Key Account Representative KAR Alpha-Keto Acid Reductase Products, which Barnes Group purchased in February February: see month. 2003, contributed $30.8 million of sales in the most recent quarter. Barnes Distribution generated operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $7.4 million in the third quarter of 2003, up sharply from operating profit of $2.4 million in the third quarter of 2002. The improvement in operating profit was driven primarily by the operating profit contribution from Kar Products and higher gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. . Included in Barnes Distribution's operating profit is an incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. year-over-year gain of $0.9 million from the sale of distribution centers; the gain was essentially offset by approximately $0.8 million of incremental severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expense. "This was a solid quarter for Barnes Distribution; beyond tripling operating profit, the integration of Kar is running ahead of our original schedule, and our new sales growth initiatives are performing very well," Carpenter stated. "Our national and regional customer development efforts, e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. platforms and new Tier 2 relationships together contributed $5.9 million in sales to the most recent quarter, up from $1.8 million last year. We added more than 50 new national and regional customers, bringing to 249 the total new customers gained since January January: see month. , 2002," Carpenter added. Carpenter continued, "During the quarter, we continued to integrate Kar Products into Barnes Distribution, achieving a number of milestones. As a result of the progress we have made to date, we believe that Kar will be substantially integrated in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. by the end of the year, and the integration in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , which includes the construction of a new distribution center, will be completed in the first half of 2004." Sales at Associated Spring were $81.1 million for the quarter ended September 30, 2003, up slightly compared with sales of $80.9 million in the quarter ended September 30, 2002. The increase reflected higher sales of nitrogen gas springs and products for industrial markets, combined with the positive impact on sales from foreign currency translation. These were essentially offset by a decline in sales related to the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. light vehicle market. Associated Spring's operating profit was $4.9 million for the third quarter of 2003, down from $6.5 million in the third quarter of 2002. Operating profit was positively impacted by the benefits from the 2002 closure of Associated Spring's Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. facility. This was more than offset by certain incrementally higher personnel costs, including pension and severance expenses totaling approximately $1.0 million, and a $0.5 million reduction in the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. facility, which is currently held for sale. Carpenter commented, "Associated Spring continues to successfully leverage higher-growth segments of its key markets, such as nitrogen gas springs and the non-U.S. automakers, to offset sales declines with some domestic customers. Although this business remains quite profitable, during the third quarter we began taking additional actions aimed at improving operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: to be more in line with historical levels." Sales at Barnes Aerospace were $39.4 million for the third quarter of 2003, down from $45.8 million in the third quarter of 2002. Operating profit was $2.0 million for the quarter ended September 30, 2003, up from $1.4 million in the comparable year-ago period, reflecting the benefit of cost reduction efforts taken during 2002, productivity and efficiency improvements and the absence of $0.7 million in severance that occurred in the 2002 period. These positives were offset in part by the sales volume decline. Barnes Aerospace recorded orders of $51.7 million during the third quarter of 2003, up 32 percent from $39.1 million in the comparable year-ago period. Backlog increased to $149.3 million, up four percent from $143.0 million at September 30, 2002. Military orders were $18.1 million, or 35 percent of the orders received in the most recent quarter; this included direct military orders that were particularly strong at $9.8 million. Barnes Aerospace also received approximately $10.3 million in orders related to a large commercial engine program that will enter service in early 2004. "It would appear that we have turned the corner at Barnes Aerospace from a very challenging post- post- word element [L.], after; behind. post- pref. 1. After; later: postpartum. 2. Behind; posterior to: postaxial. 9/11 environment," Carpenter stated. "As a result of the efforts taken to position the business for this difficult part of the aerospace cycle, we are continuing to report solid operating results. With the strong orders generated this past quarter, Barnes Aerospace is very well positioned for top- and bottom-line growth in 2004," Carpenter added. William C. Denninger, Barnes Group Inc.'s Chief Financial Officer, commented, "In addition to a strong operating performance in the third quarter, we further strengthened our balance sheet by reducing borrowings at September 30, 2003 by approximately $9 million compared to June 30, while at the same time increasing cash by $12 million, to $63 million. Our debt-to-capitalization ratio at quarter-end was 45 percent, which is within our targeted leverage range." For the first nine months of 2003, Barnes Group's net sales were $670.5 million, up 12 percent from $600.4 million in the same period a year ago. Net income was $26.1 million, or $1.21 per diluted share, for the nine months ended September 30, 2003, up 17 percent from $22.3 million, or $1.17 per diluted share, in the same period of 2002. Barnes Group will conduct a conference call with investors to discuss third quarter 2003 results on Thursday, October 16, 2003 at 12:00 PM ET. A webcast of the live call, supporting materials and an archived replay will be available on the Barnes Group investor relations Investor relations The process by which the corporation communicates with its investors. website (ir.barnesgroupinc.com). Barnes Group Inc. (www.barnesgroupinc.com) is a diversified diversified (di·verˑ·s international manufacturer of precision metal components and assemblies and a distributor of industrial supplies, serving a wide range of markets and customers. Founded in 1857 and headquartered in Bristol, Connecticut Bristol is a city located in Hartford County, Connecticut, 20 miles (32 km) southwest of Hartford. According to 2006 Census Bureau estimates, the population of the city is 61,353. , Barnes Group consists of three businesses with 2002 sales of $784 million: Associated Spring, one of the world's largest manufacturers of precision mechanical and nitrogen gas springs and a global supplier of retaining rings and injection-molded plastic components; Barnes Aerospace, a manufacturer and repairer of highly-engineered assemblies and components for commercial and military aircraft engines, airframes, and land-based industrial gas turbines; and Barnes Distribution, an international, full-service distributor of maintenance, repair and operating supplies. Over 6,100 dedicated employees at more than 60 locations worldwide contribute to Barnes Group Inc.'s success. This release may contain certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements. Investors are encouraged to consider these risks and uncertainties as described within the Company's periodic filings with the Securities and Exchange Commission, including the following: the ability of the Company to integrate newly acquired businesses and to realize acquisition synergies on schedule; changes in market demand for the types of products and services produced and sold by Barnes Group; the Company's success in identifying, and attracting customers in, new markets; the Company's ability to develop new and enhanced products to meet customers' needs timely; the effectiveness of the Company's marketing and sales programs; increased competitive activities including pricing, advertising and promotions that could adversely affect customer demand for the Company's products; changes in economic, political and public health conditions, worldwide and in the locations where the Company does business; interest and foreign exchange rate fluctuations; and regulatory changes.
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
--------------------------- ------------------------
Three months ended Nine months ended
September 30 September 30
--------------------------- ------------------------
2003 2002 2003 2002
--------------------------- ------------------------
Net sales $ 222,160 $ 196,799 $ 670,481 $ 600,420
Cost of sales 143,651 134,524 432,193 407,028
Selling and
admin.
expenses 64,470 52,256 195,054 158,054
--------------------------- ------------------------
208,121 186,780 627,247 565,082
--------------------------- ------------------------
Operating income 14,039 10,019 43,234 35,338
Other income 613 2,156 2,293 3,357
Interest expense 3,961 3,877 12,206 10,895
Other expenses 13 167 990 378
--------------------------- ------------------------
Income before
income taxes 10,678 8,131 32,331 27,422
Income taxes 1,725 1,215 6,272 5,073
--------------------------- ------------------------
Net income $ 8,953 $ 6,916 $ 26,059 $ 22,349
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Per common share:
Net income
- basic $ .40 $ .37 $ 1.24 $ 1.20
- diluted .38 .36 1.21 1.17
Dividends .20 .20 .60 .60
Average common
shares outstanding
- basic 22,561,901 18,839,580 21,038,719 18,697,265
- diluted 23,257,839 19,150,751 21,531,951 19,156,896
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BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
------------------------------
September September
2003 2002
------------------------------
Assets
Current assets
Cash and short-term investments $ 63,253 $ 38,923
Accounts receivable 128,282 111,216
Inventories 105,704 85,413
Deferred income taxes and prepaid expenses 28,826 28,092
--------- ---------
Total current assets 326,065 263,644
Deferred income taxes 21,966 7,342
Property, plant and equipment 152,392 160,950
Goodwill 220,092 169,529
Other assets 99,938 71,712
--------- ---------
$820,453 $673,177
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Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 2,000 $ - -
Accounts payable 93,265 68,526
Accrued liabilities 81,860 63,494
Long-term debt - current 24,794 8,227
--------- ---------
Total current liabilities 201,919 140,247
Long-term debt 216,229 234,345
Deferred income taxes 6,496 6,840
Other liabilities 93,714 74,300
Stockholders' equity 302,095 217,445
--------- ---------
$820,453 $673,177
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