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![]() | Exhibit 99.1 Barnes Group Inc. 123 Main Street Bristol, CT 06010 |
• | Sales of $370 million, up 4%; Organic Sales up 4% |
• | Operating Margin of 16.0%, Up 230 bps; Adjusted Operating Margin of 16.4%, Up 250 bps |
• | Diluted EPS of $0.75, up 15% from Last Year; Adjusted Diluted EPS of $0.78, Up 18% |
• | 2018 Expected Sales Growth of 4% to 5%; Organic Sales Growth of 2% to 3% |
• | 2018 Expected Adjusted Net Income of $3.21 to $3.26 per Share; Up 11% to 13% from 2017 |
• | Third quarter 2018 sales were $244.1 million, up 2% from $240.4 million in the prior year period. Driven by strength in the Molding Solutions business, Industrial organic sales increased by 2%. Unfavorable foreign exchange decreased sales by $4.1 million, or 2%, while acquisition revenues contributed $2.9 million, or 1%. |
• | Operating profit in the third quarter was $33.3 million, up 10% from $30.3 million in the prior year period. The increase was driven by the profit impact of positive organic sales volume and improved cost productivity. Excluding IGS short-term purchase accounting adjustments and acquisition transaction costs this year, and FOBOHA short-term purchase accounting adjustments and restructuring expenses last year, adjusted operating profit of $34.9 million was up 12% from an adjusted $31.1 million a year ago. Adjusted operating margin was 14.3%, up 140 bps. |
• | Third quarter 2018 sales were $125.7 million, up 8% from $116.8 million in the same period last year. Aerospace original equipment manufacturing (“OEM”) sales increased 3% while aftermarket sales increased 19% from sustained growth in maintenance, repair and overhaul, and spare parts sales. |
• | Operating profit was $25.7 million for the third quarter of 2018, up 39% as compared to $18.6 million in the prior year period, reflecting the profit impact from higher sales volumes and productivity improvements, offset in part by scheduled price deflation. Operating margin of 20.5% was up 460 bps from 15.9% a year ago, benefitting from the higher aftermarket contribution. |
• | Aerospace OEM backlog ended the third quarter 2018 at $807 million, up 14% compared to a year ago, and down slightly from the second quarter of 2018. The Company expects to ship approximately 45% of this backlog over the next 12 months. |
• | Third quarter interest expense increased $0.3 million to $4.1 million as a result of higher average borrowings, partially offset by a lower average interest rate. |
• | Other expense, net for the quarter was $2.4 million versus $1.5 million in the prior year period. |
• | The Company’s effective tax rate was 25.6% in the third quarter of 2018 compared with 19.1% in the third quarter of 2017. The primary driver of last year’s lower tax rate was the settlement of tax audits along with the closure of tax years for various tax jurisdictions. For the full year 2017, the Company’s effective tax rate was 69.6%. Excluding the impact of discrete tax expense related to the Tax Cuts and Jobs Act, the effective tax rate for 2017 would have been 20.2%. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
2018 | 2017 (1) | % Change | 2018 | 2017 (1) | % Change | ||||||||||||||||
Net sales | $ | 369,797 | $ | 357,156 | 3.5 | $ | 1,111,772 | $ | 1,063,451 | 4.5 | |||||||||||
Cost of sales | 236,880 | 235,406 | 0.6 | 711,622 | 697,493 | 2.0 | |||||||||||||||
Selling and administrative expenses | 73,854 | 72,852 | 1.4 | 220,575 | 210,023 | 5.0 | |||||||||||||||
310,734 | 308,258 | 0.8 | 932,197 | 907,516 | 2.7 | ||||||||||||||||
Operating income | 59,063 | 48,898 | 20.8 | 179,575 | 155,935 | 15.2 | |||||||||||||||
Operating margin | 16.0 | % | 13.7 | % | 16.2 | % | 14.7 | % | |||||||||||||
Interest expense | 4,054 | 3,748 | 8.2 | 12,078 | 10,638 | 13.5 | |||||||||||||||
Other expense (income), net | 2,447 | 1,469 | 66.6 | 5,157 | (3,965 | ) | NM | ||||||||||||||
Income before income taxes | 52,562 | 43,681 | 20.3 | 162,340 | 149,262 | 8.8 | |||||||||||||||
Income taxes | 13,453 | 8,348 | 61.2 | 34,983 | 30,599 | 14.3 | |||||||||||||||
Net income | $ | 39,109 | $ | 35,333 | 10.7 | $ | 127,357 | $ | 118,663 | 7.3 | |||||||||||
Common dividends | $ | 8,201 | $ | 7,518 | 9.1 | $ | 23,996 | $ | 22,042 | 8.9 | |||||||||||
Per common share: | |||||||||||||||||||||
Net income: | |||||||||||||||||||||
Basic | $ | 0.76 | $ | 0.65 | 16.9 | $ | 2.42 | $ | 2.19 | 10.5 | |||||||||||
Diluted | 0.75 | 0.65 | 15.4 | 2.40 | 2.17 | 10.6 | |||||||||||||||
Dividends | 0.16 | 0.14 | 14.3 | 0.46 | 0.41 | 12.2 | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||
Basic | 51,569,764 | 54,066,509 | (4.6 | ) | 52,555,130 | 54,140,551 | (2.9 | ) | |||||||||||||
Diluted | 52,080,676 | 54,570,677 | (4.6 | ) | 53,091,468 | 54,649,723 | (2.9 | ) |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||
2018 | 2017 (1) | % Change | 2018 | 2017 (1) | % Change | |||||||||||||||
Net sales | ||||||||||||||||||||
Industrial | $ | 244,133 | $ | 240,390 | 1.6 | $ | 739,677 | $ | 719,556 | 2.8 | ||||||||||
Aerospace | 125,665 | 116,767 | 7.6 | 372,102 | 343,899 | 8.2 | ||||||||||||||
Intersegment sales | (1 | ) | (1 | ) | (7 | ) | (4 | ) | ||||||||||||
Total net sales | $ | 369,797 | $ | 357,156 | 3.5 | $ | 1,111,772 | $ | 1,063,451 | 4.5 | ||||||||||
Operating profit | ||||||||||||||||||||
Industrial | $ | 33,329 | $ | 30,336 | 9.9 | $ | 104,004 | $ | 95,117 | 9.3 | ||||||||||
Aerospace | 25,734 | 18,562 | 38.6 | 75,571 | 60,818 | 24.3 | ||||||||||||||
Total operating profit | $ | 59,063 | $ | 48,898 | 20.8 | $ | 179,575 | $ | 155,935 | 15.2 | ||||||||||
Operating margin | Change | Change | ||||||||||||||||||
Industrial | 13.7 | % | 12.6 | % | 110 | bps. | 14.1 | % | 13.2 | % | 90 | bps. | ||||||||
Aerospace | 20.5 | % | 15.9 | % | 460 | bps. | 20.3 | % | 17.7 | % | 260 | bps. | ||||||||
Total operating margin | 16.0 | % | 13.7 | % | 230 | bps. | 16.2 | % | 14.7 | % | 150 | bps. |
September 30, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 79,387 | $ | 145,290 | |||
Accounts receivable | 372,531 | 348,943 | |||||
Inventories | 258,374 | 241,962 | |||||
Prepaid expenses and other current assets | 53,281 | 32,526 | |||||
Total current assets | 763,573 | 768,721 | |||||
Deferred income taxes | 11,336 | 12,161 | |||||
Property, plant and equipment, net | 358,868 | 359,298 | |||||
Goodwill | 688,227 | 690,223 | |||||
Other intangible assets, net | 489,977 | 507,042 | |||||
Other assets | 32,462 | 28,271 | |||||
Total assets | $ | 2,344,443 | $ | 2,365,716 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities | |||||||
Notes and overdrafts payable | $ | 63 | $ | 5,669 | |||
Accounts payable | 130,756 | 127,521 | |||||
Accrued liabilities | 203,481 | 181,241 | |||||
Long-term debt - current | 2,496 | 1,330 | |||||
Total current liabilities | 336,796 | 315,761 | |||||
Long-term debt | 560,645 | 525,597 | |||||
Accrued retirement benefits | 82,901 | 89,000 | |||||
Deferred income taxes | 64,746 | 73,505 | |||||
Long-term tax liability | 72,305 | 79,770 | |||||
Other liabilities | 20,145 | 21,762 | |||||
Total stockholders' equity | 1,206,905 | 1,260,321 | |||||
Total liabilities and stockholders' equity | $ | 2,344,443 | $ | 2,365,716 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
Operating activities: | |||||||
Net income | $ | 127,357 | $ | 118,663 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 70,405 | 68,535 | |||||
Loss (gain) on disposition of property, plant and equipment | 124 | (96 | ) | ||||
Stock compensation expense | 8,850 | 8,472 | |||||
Changes in assets and liabilities, net of the effects of acquisitions: | |||||||
Accounts receivable | (12,136 | ) | (26,773 | ) | |||
Inventories | (24,525 | ) | (11,454 | ) | |||
Prepaid expenses and other current assets | (7,186 | ) | (2,398 | ) | |||
Accounts payable | 4,824 | 14,134 | |||||
Accrued liabilities | 9,765 | 28,889 | |||||
Deferred income taxes | (13,758 | ) | (18,063 | ) | |||
Long-term retirement benefits | 544 | (11,469 | ) | ||||
Long-term tax liability | (7,465 | ) | — | ||||
Other | 1,162 | (677 | ) | ||||
Net cash provided by operating activities | 157,961 | 167,763 | |||||
Investing activities: | |||||||
Proceeds from disposition of property, plant and equipment | 491 | 401 | |||||
Capital expenditures | (40,168 | ) | (41,957 | ) | |||
Business acquisitions, net of cash acquired | (30,837 | ) | (8,922 | ) | |||
Revenue sharing program payments | (5,800 | ) | — | ||||
Other | (1,000 | ) | (3,000 | ) | |||
Net cash used by investing activities | (77,314 | ) | (53,478 | ) | |||
Financing activities: | |||||||
Net change in other borrowings | (5,542 | ) | (14,103 | ) | |||
Payments on long-term debt | (381,887 | ) | (60,897 | ) | |||
Proceeds from the issuance of long-term debt | 414,989 | 89,118 | |||||
Proceeds from the issuance of common stock | 721 | 1,731 | |||||
Common stock repurchases | (138,275 | ) | (23,300 | ) | |||
Dividends paid | (23,996 | ) | (22,042 | ) | |||
Withholding taxes paid on stock issuances | (5,149 | ) | (4,851 | ) | |||
Other | (3,598 | ) | (17,773 | ) | |||
Net cash used by financing activities | (142,737 | ) | (52,117 | ) | |||
Effect of exchange rate changes on cash flows | (3,813 | ) | 5,856 | ||||
(Decrease) increase in cash and cash equivalents | (65,903 | ) | 68,024 | ||||
Cash and cash equivalents at beginning of period | 145,290 | 66,447 | |||||
Cash and cash equivalents at end of period | $ | 79,387 | $ | 134,471 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
Free cash flow: | |||||||
Net cash provided by operating activities | $ | 157,961 | $ | 167,763 | |||
Capital expenditures | (40,168 | ) | (41,957 | ) | |||
Free cash flow (1) | $ | 117,793 | $ | 125,806 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||
2018 | 2017 (2) | % Change | 2018 | 2017 (2) | % Change | |||||||||||||||||||
SEGMENT RESULTS | ||||||||||||||||||||||||
Operating Profit - Industrial Segment (GAAP) | $ | 33,329 | $ | 30,336 | 9.9 | $ | 104,004 | $ | 95,117 | 9.3 | ||||||||||||||
FOBOHA short-term purchase accounting adjustments | — | 501 | — | 2,294 | ||||||||||||||||||||
Restructuring actions | — | 260 | — | 6,055 | ||||||||||||||||||||
IGS short-term purchase accounting adjustments | 1,160 | — | 1,160 | — | ||||||||||||||||||||
Acquisition transaction costs | 366 | — | 366 | — | ||||||||||||||||||||
Operating Profit - Industrial Segment as adjusted (Non-GAAP) (1) | $ | 34,855 | $ | 31,097 | 12.1 | $105,530 | $ | 103,466 | 2.0 | |||||||||||||||
Operating Margin - Industrial Segment (GAAP) | 13.7 | % | 12.6 | % | 110 | bps. | 14.1 | % | 13.2 | % | 90 | bps. | ||||||||||||
Operating Margin - Industrial Segment as adjusted (Non-GAAP) (1) | 14.3 | % | 12.9 | % | 140 | bps. | 14.3 | % | 14.4 | % | (10 | ) | bps. | |||||||||||
CONSOLIDATED RESULTS | ||||||||||||||||||||||||
Operating Income (GAAP) | $ | 59,063 | $ | 48,898 | 20.8 | $ | 179,575 | $ | 155,935 | 15.2 | ||||||||||||||
FOBOHA short-term purchase accounting adjustments | — | 501 | — | 2,294 | ||||||||||||||||||||
Restructuring actions | — | 260 | — | 6,055 | ||||||||||||||||||||
IGS short-term purchase adjustments | 1,160 | — | 1,160 | — | ||||||||||||||||||||
Acquisition transaction costs | 366 | — | 366 | — | ||||||||||||||||||||
Operating Income as adjusted (Non-GAAP) (1) | $ | 60,589 | $ | 49,659 | 22.0 | $ | 181,101 | $ | 164,284 | 10.2 | ||||||||||||||
Operating Margin (GAAP) | 16.0 | % | 13.7 | % | 230 | bps. | 16.2 | % | 14.7 | % | 150 | bps. | ||||||||||||
Operating Margin as adjusted (Non-GAAP) (1) | 16.4 | % | 13.9 | % | 250 | bps. | 16.3 | % | 15.4 | % | 90 | bps. | ||||||||||||
Diluted Net Income per Share (GAAP) | $ | 0.75 | $ | 0.65 | 15.4 | $ | 2.40 | $ | 2.17 | 10.6 | ||||||||||||||
FOBOHA short-term purchase accounting adjustments | — | 0.01 | — | 0.03 | ||||||||||||||||||||
Restructuring actions | — | — | — | (0.03 | ) | |||||||||||||||||||
Effects of U.S. tax reform | — | — | (0.03 | ) | — | |||||||||||||||||||
IGS short-term purchase accounting adjustments | 0.02 | — | 0.02 | — | ||||||||||||||||||||
Acquisition transaction costs | 0.01 | — | 0.01 | — | ||||||||||||||||||||
Diluted Net Income per Share as adjusted (Non-GAAP) (1) | $ | 0.78 | $ | 0.66 | 18.2 | $ | 2.40 | $ | 2.17 | 10.6 | ||||||||||||||
Full-Year 2017 | Full-Year 2018 Outlook | |||||||||||||||||||||||
Diluted Net Income per Share (GAAP) | $ | 1.09 | $ | 3.19 | to | $ | 3.24 | |||||||||||||||||
FOBOHA short-term purchase accounting adjustments | 0.03 | |||||||||||||||||||||||
Effects of U.S. tax reform | 1.77 | |||||||||||||||||||||||
IGS short-term purchase accounting adjustments | — | (0.03 | ) | |||||||||||||||||||||
Acquisition transaction costs | — | 0.04 | ||||||||||||||||||||||
Restructuring actions | (0.01 | ) | 0.01 | |||||||||||||||||||||
Diluted Net Income per Share as adjusted (Non-GAAP) (1) | $ | 2.88 | $ | 3.21 | to | $ | 3.26 | |||||||||||||||||
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Ticker: BEvents:
CIK: 9984
Form Type: 8-K Corporate News
Accession Number: 0000009984-18-000080
Submitted to the SEC: Fri Oct 26 2018 6:35:48 AM EST
Accepted by the SEC: Fri Oct 26 2018
Period: Friday, October 26, 2018
Industry: Miscellaneous Fabricated Metal Products