(Source: Business Wire)
Barnes Group Inc. (NYSE: B), a diversified global manufacturer and logistical services company, today reported financial results for the second quarter 2009. The Company reported income from continuing operations of $10.4 million, or $0.19 per diluted share, compared to $35.3 million, or $0.61 per diluted share in the prior year period. Barnes Group's second quarter 2009 sales totaled $255.2 million, down 33 percent from $378.9 million in the second quarter of 2008. Barnes Group's first half 2009 cash from operations of $47.9 million improved 19% over the prior year period level of $40.2 million.
($ millions; except per share data) Three months ended June 30, Six months ended June 30, 2009 2008 Change 2009 2008 Change Net Sales $255.2 $378.9 ($123.7) (32.6) % $517.4 $762.9 ($245.6) (32.2) % Operating Income $14.1 $51.0 ($36.9) (72.3) % $34.6 $102.6 ($68.0) (66.3) % % of Sales 5.5 % 13.5 % - (8.0) pts. 6.7 % 13.4 % - (6.7) pts. Income from Continuing Operations $10.4 $35.3 ($24.8) (70.4) % $21.9 $69.0 ($47.1) (68.2) % % of Sales 4.1 % 9.3 % - (5.2) pts. 4.2 % 9.0 % - 4.8 pts. Net Income $10.4 $33.5 ($23.1) (68.8) % $21.9 $65.9 ($44.0) (66.8) % % of Sales 4.1 % 8.8 % - (4.7) pts. 4.2 % 8.6 % - (4.4) pts. Income from Continuing Operations Per Diluted Share $0.19 $0.61 ($0.42) (68.9) % $0.41 $1.21 ($0.80) (66.1) % Net Income Per Diluted Share $0.19 $0.58 ($0.39) (67.2) % $0.41 $1.16 ($0.75) (64.7) % -------------------------------------------------------------------------------
"The continued economic weakness throughout the second quarter had a substantial impact on our businesses, particularly our transportation and industrial manufacturing businesses," said Gregory F. Milzcik, President and Chief Executive Officer, Barnes Group Inc. "As we have done since the beginning of the economic downturn, we continue to focus on managing our business prudently by adjusting our cost structure, driving increased productivity in our core processes, and maximizing cash flow generation. While we have been adjusting to the economic realities we have also been investing in our processes and strategies to generate momentum and opportunities to succeed for the eventual improvement in customer demand for our products and services. We remain confident that the strategic and proactive cost measures we have taken, combined with the Barnes Enterprise System principles, position us for long-term growth.
"In addition, we continue to make progress in strengthening our balance sheet through debt reductions driven by working capital improvements. Our focus on working capital management led to the generation of cash from operating activities in the first half of 2009 of $47.9 million. Our ability to generate cash, control and reduce costs, and streamline operations has proven invaluable as we navigate today's economy while positioning our company to maximize its potential when the economy improves." Milzcik added.
Logistics and Manufacturing Services
Second quarter 2009 sales at Logistics and Manufacturing Services were $136.6 million, down 27 percent from $186.4 million in the same period last year. The decline in sales was driven by declines across all end markets and throughout North America and Europe. Foreign exchange negatively impacted sales by $6.3 million in the second quarter.
Operating profit was $12.5 million, compared with $24.6 million in the second quarter of 2008. Operating profit was driven lower primarily by the reduced sales volumes in each of the businesses as a result of the current macroeconomic conditions on our end-markets. Profitability pressures were partially offset by the positive impact of operational and productivity actions implemented in 2008 and through the first half of 2009.
Precision Components
Second quarter 2009 sales at Precision Components were $120.3 million, down 39 percent from $195.7 million in the same period last year. The world-wide industrial manufacturing businesses reported significant sales declines primarily resulting from the overall global recession and were severely impacted by its effect on the transportation industry. The aerospace original equipment manufacturing business experienced year-over-year sales declines due to reductions in customer inventory and production levels primarily due to lower activity for the GE90 engine related to the Boeing 777 aircraft. Foreign exchange adversely affected sales by $4.0 million in the second quarter.
Operating profit for the second quarter of 2009 was $1.7 million, compared with $26.4 million in the second quarter of 2008. The profit impact of lower sales volumes was partially offset by the benefits of cost reduction actions, including personnel reductions and plant consolidations, taken in 2008 and through the first half of 2009.
Additional Information
Other Income, net of other expenses, increased $2.0 million in the second quarter of 2009 compared to the same period of 2008 primarily as a result of a $2.3 million gain on the repurchase of certain convertible notes.
The Company's effective tax rate from continuing operations for the first half of 2009 was 8.9 percent, as compared to the first quarter 2009 rate of 18.7 percent. The decrease in the effective tax rate resulted in a benefit of $0.5 million for the second quarter of 2009. Changes in the Company's tax rate are largely based on the projected mix of income between taxing jurisdictions.
Conference Call
The Company will conduct a conference call with investors to discuss second quarter 2009 results at 8:30 a.m. EDT today, August 3, 2009. 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, 5,000 dedicated employees at more than 60 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; changes in raw material prices and availability; our dependence upon revenues and earnings from a small number of significant customers; uninsured claims; and numerous other matters of global, regional or national scale, including those of a political, economic, business, competitive, regulatory and public health nature. The Company assumes no obligation to update our forward-looking statements.
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) Unaudited Three months ended June 30, Six months ended June 30, 2009 2008 %Change 2009 2008 %Change Net sales $ 255,201 $ 378,910 (32.6 ) $ 517,352 $ 762,909 (32.2 ) Cost of sales 165,712 232,279 (28.7 ) 332,878 469,550 (29.1 ) Selling and administrative expenses 75,343 95,621 (21.2 ) 149,871 190,757 (21.4 ) 241,055 327,900 (26.5 ) 482,749 660,307 (26.9 ) Operating income 14,146 51,010 (72.3 ) 34,603 102,602 (66.3 ) Operating margin 5.5 % 13.5 % 6.7 % 13.4 % Other income 2,501 105 NM 2,659 302 NM Interest expense 6,004 6,847 (12.3 ) 11,941 13,850 (13.8 ) Other expenses 686 284 NM 1,263 2,186 (42.2 ) Income from continuing operations before income taxes 9,957 43,984 (77.4 ) 24,058 86,868 (72.3 ) Income taxes (benefit) (490 ) 8,712 NM 2,152 17,883 (88.0 ) Income from continuing operations 10,447 35,272 (70.4 ) 21,906 68,985 (68.2 ) Loss from discontinued operations, net of taxes - - (1,747 ) NM - - (3,100 ) NM Net income $ 10,447 $ 33,525 (68.8 ) $ 21,906 $ 65,885 (66.8 ) Common Dividends $ 8,493 $ 8,693 (2.3 ) $ 16,863 $ 16,273 3.6 Per common share: Basic: Income from continuing operations $ 0.20 $ 0.65 (69.2 ) $ 0.41 $ 1.28 (68.0 ) Loss from discontinued operations, net of taxes - - (0.03 ) NM - - (0.06 ) NM Net income $ 0.20 $ 0.62 (67.7 ) $ 0.41 $ 1.22 (66.4 ) Diluted: Income from continuing operations $ 0.19 $ 0.61 (68.9 ) $ 0.41 $ 1.21 (66.1 ) Loss from discontinued operations, net of taxes - - (0.03 ) NM - - (0.05 ) NM Net income $ 0.19 $ 0.58 (67.2 ) $ 0.41 $ 1.16 (64.7 ) Dividends $ 0.16 $ 0.16 - - $ 0.32 $ 0.30 6.7 Average common shares outstanding: Basic 53,377,592 54,294,170 (1.7 ) 53,058,524 54,210,884 (2.1 ) Diluted 53,642,123 57,353,889 (6.5 ) 53,277,490 56,720,508 (6.1 ) NM- not meaningful Notes: 1) Results for 2008 have been adjusted to reflect discontinued operations and the change in the accounting for convertible debt. 2) 2009 second quarter Other Income included a pretax $2,288 gain on the purchase of certain convertible notes and income taxes included the related tax expense of $868. 3) 2008 year to date Other expenses included a pretax $1,237 transaction loss on the sale of Spectrum Plastics and income taxes included the related tax benefit of $394. -------------------------------------------------------------------------------
BARNES GROUP INC. OPERATIONS BY REPORTABLE BUSINESS SEGMENT (Dollars in thousands) Unaudited Three months ended June 30, Six months ended June 30, 2009 2008 %Change 2009 2008 %Change Net Sales Logistics and Manufacturing Services $ 136,565 $ 186,448 (26.8 ) $ 279,237 $ 377,036 (25.9 ) Precision Components 120,323 195,666 (38.5 ) 241,519 392,787 (38.5 ) Intersegment sales (1,687 ) (3,204 ) 47.3 (3,404 ) (6,914 ) 50.8 Total net sales $ 255,201 $ 378,910 (32.6 ) $ 517,352 $ 762,909 (32.2 ) Operating profit Logistics and Manufacturing Services $ 12,455 $ 24,639 (49.5 ) $ 26,906 $ 50,235 (46.4 ) Precision Components 1,691 26,367 (93.6 ) 7,697 52,336 (85.3 ) Total operating profit 14,146 51,006 (72.3 ) 34,603 102,571 (66.3 ) Interest income 159 89 77.5 317 278 14.1 Interest expense (6,004 ) (6,847 ) (12.3 ) (11,941 ) (13,850 ) (13.8 ) Other income (expense), net 1,656 (264 ) NM 1,079 (2,131 ) NM Income from continuing operations before income taxes $ 9,957 $ 43,984 (77.4 ) $ 24,058 $ 86,868 (72.3 ) NM- not meaningful Notes: 1) Results for 2008 have been adjusted to reflect discontinued operations and the change in the accounting for convertible debt. 2) 2009 second quarter Other income (expense), net included a $2,288 gain on the purchase of certain convertible debt. 3) 2008 year-to-date Other income (expense), net included a $1,237 transaction loss on the sale of Spectrum Plastics. -------------------------------------------------------------------------------
BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) Unaudited June 30, December 31, 2009 2008 Assets Current assets Cash and cash equivalents $ 16,122 $ 20,958 Accounts receivable 193,434 173,215 Inventories 206,025 240,805 Deferred income taxes 26,081 27,650 Prepaid expenses and other current assets 15,223 14,881 Total current assets 456,885 477,509 Deferred income taxes 31,033 31,133 Property, plant and equipment, net 236,159 235,035 Goodwill 364,791 361,930 Other intangible assets, net 310,083 316,817 Other assets 13,970 12,931 Total assets $ 1,412,921 $ 1,435,355 Liabilities and Stockholders' Equity Current liabilities Notes and overdrafts payable $ 3,791 $ 8,905 Accounts payable 78,121 80,495 Accrued liabilities 77,888 84,372 Long-term debt-current 15,394 15,386 Total current liabilities 175,194 189,158 Long-term debt 431,690 441,670 Accrued retirement benefits 141,875 164,796 Other liabilities 40,938 41,156 Stockholders' equity 623,224 598,575 Total liabilities and stockholders' equity $ 1,412,921 $ 1,435,355 Note: 1) Results for 2008 have been adjusted to reflect discontinued operations and the change in the accounting for convertible debt. -------------------------------------------------------------------------------
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