Barnes Group Second Quarter Net Income Up 12 Percent; Sales Increase 10 Percent to Record $230 Million.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)--July 17, 2003 Barnes Group Inc. (NYSE NYSE See: New York Stock Exchange : B) today announced financial results for the quarter ended June June: see month. 30, 2003. 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 for the second quarter of 2003 were a record $229.6 million, up 10 percent from $209.4 million in the second quarter of 2002. The Company reported a 16 percent increase in 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. to $16.0 million, as net income increased to $9.7 million, or $0.46 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 second quarter of 2003, from $8.7 million, or $0.45 per diluted share, in the comparable year-ago period. "We continued to successfully execute on our business strategies this past quarter, generating the highest quarterly sales in our Company's history while achieving higher profitability than a year ago. We attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. these results despite the dampening effects of the war in Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. , SARS and the weak industrial economy in many of our end markets," said Edmund M. Carpenter, Barnes Group Inc.'s President and C.E.O. Sales at Barnes Distribution were $104.7 million for the quarter ended June 30, 2003, up 41 percent from $74.3 million in the quarter ended June 30, 2002. Kar Products, which Barnes Group purchased on February 6, 2003, contributed $31.0 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 $4.9 million in the second quarter of 2003, up 42 percent from operating profit of $3.5 million in the second quarter of 2002. The improvement in operating profit was driven primarily by 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. operating profit contributed by Kar Products. "Excluding Kar, sales at Barnes Distribution were essentially flat versus a year ago. While the industrial economy remains a hurdle HURDLE, Eng. law. A species of sledge, used to draw traitors to execution. to sales expansion, several of our growth initiatives continued to accelerate," Carpenter stated. "Our increased focus on new national and regional customer development and our 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 together contributed $3.4 million in sales to the most recent quarter. More than 40 new national and regional customers were added this quarter, bringing to 191 the total new customers gained since January, 2002. And, new Tier 2 relationships we've launched with four strategic partners in the MRO MRO In currencies, this is the abbreviation for the Mauritanian Ouguiya. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. marketplace are showing some very promising early results," Carpenter added. Carpenter continued, "The integration of Kar Products continues to go well, as a number of critical functions were consolidated this past quarter. During the third quarter, a key integration of the order entry system is scheduled to take place, paving the way to the initial phase of the distribution center consolidation. Thus, we believe our original estimate of having a fully-integrated operation within the first 12 months of our ownership is right on schedule." Sales at Associated Spring were $86.6 million for the quarter ended June 30, 2003, down two percent from $88.0 million in the quarter ended June 30, 2002. The decline reflected lower sales into the light vehicle, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and electronics markets, as well as a planned drop in sales related to heavy trucks. Partially offsetting this were higher sales of nitrogen gas springs and products used in industrial markets. Associated Spring's operating profit was $9.1 million for the second quarter of 2003, up from $7.7 million in the second quarter of 2002. Operating profit growth reflected the benefits from the 2002 closure of Associated Spring's Dallas facility and the absence of $0.8 million of purchase price accounting adjustments related to Seeger-Orbis that were incurred in the year-ago period. Partially offsetting this was the lower profit contribution on the lower sales volume. Carpenter commented, "Our sales of products destined des·tine tr.v. des·tined, des·tin·ing, des·tines 1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic. 2. for light vehicles were down only four percent this quarter, even as light vehicle production in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. fell by nearly nine percent. By positioning Associated Spring over the past several years to be less dependent on a handful of customers, we have been able to partially mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. our
exposure to this most recent turn in the industry's cycle. Through
steps taken in early 2002, Associated Spring has also improved its
current profitability, even on lower sales volume."
Sales at Barnes Aerospace were $40.6 million for the second quarter of 2003, down from $49.4 million in the second quarter of 2002. Operating profit was $2.6 million for the quarter ended June 30, 2003, down from $3.0 million in the comparable year-ago period, reflecting the lower sales volume. The sales volume impact on operating profit was partially offset by the benefits from reduced employment levels and other productivity actions taken throughout Barnes Aerospace in 2002. Barnes Aerospace recorded orders of $29.0 million during the second quarter of 2003; 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. was $136.2 million at June 30, 2003, compared with $151.8 million at year-end 2002. Impacting orders in the second quarter of 2003 were commercial OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and delivery deferrals and lower repair and overhaul volume stemming from SARS and the Iraqi conflict; a military order deferral deferral - Waiting for quiet on the Ethernet. triggered by a delay in program funding; and a modest reduction in orders due to a cancellation of a particular component. Direct and indirect orders for the U.S. military were approximately 30 percent of the net orders booked during the second quarter of 2003. "Operating profit margin Operating profit margin The ratio of operating profit to net sales. at Barnes Aerospace increased even as sales declined, confirming the success of the actions taken last year to properly position the business. Orders in the second quarter were clearly impacted by the strain on the commercial aerospace sector caused by SARS and the war. Orders were further affected by our decision not to manufacture a particular component, as the pricing was inconsistent with generating sustainable, profitable growth," Carpenter stated. William C. Denninger, Barnes Group Inc.'s Chief Financial Officer, commented, "We completed a successful common stock offering this past quarter, raising $42 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). that were used to pay down our existing debt, significantly strengthening our balance sheet. Through the offering, we have also greatly increased the trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. in our stock, providing a higher degree of liquidity for our investors." For the first six months of 2003, Barnes Group's net sales were $448.3 million, up 11 percent from $403.6 million in the same period a year ago. Net income was $17.1 million, or $0.82 per diluted share, for the six months ended June 30, 2003, up 11 percent from $15.4 million, or $0.81 per diluted share, in the same period of 2002. Barnes Group will conduct a conference call with investors to discuss second quarter 2003 results on Thursday, July 17, 2003 at 10:30 AM 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 6,200 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 Six months ended
June 30 June 30
2003 2002 2003 2002
Net sales $229,587 $209,385 $448,321 $403,621
Cost of sales 146,312 142,206 288,542 272,504
Selling and admin.
expenses 67,290 53,417 130,584 105,798
213,602 195,623 419,126 378,302
Operating income 15,985 13,762 29,195 25,319
Other income 1,067 774 1,680 1,201
Interest expense 4,135 3,628 8,245 7,018
Other expenses 699 74 977 211
Income before income
taxes 12,218 10,834 21,653 19,291
Income taxes 2,471 2,167 4,547 3,858
Net income $9,747 $8,667 $17,106 $15,433
Per common share:
Net income
- basic $.46 $.46 $.84 $.83
- diluted .46 .45 .82 .81
Dividends .20 .20 .40 .40
Average common shares
outstanding
- basic 20,989,236 18,751,084 20,484,491 18,624,929
- diluted 21,387,610 19,290,127 20,864,974 19,158,789
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Unaudited
June June
2003 2002
Assets
Current assets
Cash and short-term investments $ 51,071 $ 38,025
Accounts receivable 128,569 119,939
Inventories 104,407 88,440
Deferred income taxes and prepaid expenses 27,710 30,822
Total current assets 311,757 277,226
Deferred income taxes 20,014 3,607
Property, plant and equipment 156,577 164,741
Goodwill 222,795 168,969
Other assets 84,836 74,814
$ 795,979 $689,357
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 72,921 $ 69,693
Accrued liabilities 75,069 69,495
Long-term debt - current 6,762 8,279
Total current liabilities 154,752 147,467
Long-term debt 245,513 242,011
Deferred income taxes 6,366 6,999
Other liabilities 94,244 73,993
Stockholders' equity 295,104 218,887
$ 795,979 $689,357
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