Significant Progress Made on Transforming to an Aerospace
Focused Company
Comparisons are year-over-year unless noted otherwise
Second Quarter 2024:
- Sales of $382 million, up 13%; Organic Sales up 5%
- Operating Margin of -0.6%; Adjusted Operating Margin of 12.4%,
down 40 bps
- Adjusted EBITDA Margin of 20.0%, up 20 bps
- GAAP EPS of -$0.91; Adjusted EPS of $0.37, down 36%
- Records Automation goodwill impairment
2024 Outlook:
- Sales Growth of 10% to 12%; Organic Sales Growth of 4% to
6%
- Adjusted EBITDA Margin of 20% to 22%
- GAAP EPS of -$0.36 to -$0.16; Adjusted EPS of $1.55 to
$1.75
Barnes Group Inc. (NYSE: B), a global provider of highly
engineered products, differentiated industrial technologies, and
innovative solutions, today reported financial results for the
second quarter 2024.
“For the second quarter, strong Aerospace aftermarket and
Molding Solutions revenue growth partially offset lower than
expected Aerospace OEM sales, as industry supply chain and
productivity constraints continue to temper our Aerospace OEM
results," said Thomas J. Hook, President and Chief Executive
Officer of Barnes. “These industry factors will impact our overall
near-term Aerospace outlook, even as our aftermarket continues to
benefit from growing fleet opportunities and synergies from our
acquisition of MB Aerospace remain on track. Despite these
headwinds, we are making significant progress across the company in
transforming Barnes into a higher growth, higher value company, led
by a strong Aerospace business and a streamlined Industrial
business.”
Second Quarter 2024 Highlights
Sales of $382 million were up 13% versus the same quarter a year
ago, with organic growth(1) of 5%. The net beneficial impact of
acquisition and divestiture related sales was approximately 8%.
Foreign exchange did not have a meaningful impact on sales.
In the quarter, the sales and cash flow expectations for the
Automation business unit within the Industrial segment were
reduced, which among other factors, resulted in a non-cash
impairment charge of $53.7 million contributing to an operating
loss of $2.1 million, and operating margin of -0.6%.
Adjusted operating income of $47.6 million was up 9% and
adjusted operating margin of 12.4% was down 40 bps. Adjusted
operating income excludes the goodwill impairment charge, a $10.2
million pre-tax gain on the sale of the Associated Spring and
Hänggi businesses, restructuring and transformation related charges
of $5.4 million, MB Aerospace short-term purchase accounting
adjustments of $0.7 million, and shareholder advisory costs of $0.1
million. Adjusted EBITDA(2) was $76.5 million, up 14% from a year
ago and adjusted EBITDA margin was 20.0%, up 20 bps.
In early April, Barnes closed the divestiture of the Associated
Spring and Hänggi businesses, materially reducing its exposure to
automotive component manufacturing. The headline price of the
transaction was $175 million, and net cash proceeds of
approximately $150 million were used to reduce debt.
Interest expense was $20.8 million, up from $6.5 million a year
ago, due to higher average borrowings from the purchase of MB
Aerospace and a higher average interest rate given the
recapitalization of the Company’s debt structure.
The effective tax rate for the quarter was -112% compared with
23% last year primarily driven by the non-deductible goodwill
impairment charge and taxes tied to the sale of Associated Spring
and Hanggi. On an adjusted basis, the second quarter’s effective
tax rate was 31%.
Net loss was $46.8 million, or -$0.91 per share, compared to net
income of $17.4 million, or $0.34 per share in the prior year. On
an adjusted basis, net income per share of $0.37 was down 36% from
$0.58. Adjusted net income per share excludes a $1.05 non-cash
goodwill impairment charge, $0.14 of charges inclusive of tax
related to the Associated Spring and Hänggi divestiture, $0.08 of
restructuring and transformation related charges, and $0.01 of MB
Aerospace short-term purchase accounting adjustments.
Year-to-date cash provided by operating activities was $3.1
million versus $42.5 million in the first half of 2023. The
decrease from the prior year was primarily due to an increase in
working capital and divestiture related income tax payments.
Capital expenditures of $29.9 million year-to-date increased $8.2
million over the prior year, driven by investments related to the
Company’s restructuring program and investments for growth.
Year-to-date free cash flow, adjusted for the tax payments related
to the divestiture, was negative $14.5 million.
Segment Performance
Aerospace
Second quarter sales in the Aerospace segment were $218 million,
up 79%. Organic sales increased 8%, and sales related to the
acquisition of MB Aerospace added 71%. Aerospace original equipment
manufacturing (“OEM”) sales increased 75%, while aftermarket sales
increased 84%. On an organic basis, OEM sales increased 1%, and
aftermarket sales increased 19%. Segment operating profit was $29.3
million, up 77%. Adjusted operating profit of $32.3 million was up
56%, while adjusted operating margin declined 220 bps to 14.8%.
Adjusted operating profit excludes restructuring and
transformation-related charges of $2.2 million, and MB Aerospace
short-term purchase accounting adjustments of $0.7 million.
Adjusted operating profit benefited from the contribution of higher
organic sales volumes, inclusive of pricing, and the contribution
of MB Aerospace sales, partially offset by the amortization of long
term acquired intangibles for the MB Aerospace acquisition and
lower productivity. Aerospace adjusted EBITDA was $50.4 million, up
64%, and adjusted EBITDA margin was 23.1% versus 25.2% a year
ago.
Aerospace OEM backlog ended the second quarter at $1.51 billion,
up 3% sequentially from March 2024. The Company expects to convert
approximately 40% of this backlog to revenue over the next 12
months.
Industrial
Second quarter sales in the Industrial segment were $164
million, down 24% due to the sale of the Associated Spring and
Hänggi businesses. On an organic basis, sales were up 3% from a
year ago. Operating loss was $31.5 million versus operating income
of $9.4 million in the prior year. Adjusted operating profit was
$15.3 million, down 33%, and adjusted operating margin was 9.3%,
down 120 bps. Adjusted operating profit reflects the impact of the
divested businesses partially offset by positive pricing and Barnes
Transformation Office (BTO) cost initiatives. Adjusted operating
profit excludes a $53.7 million non-cash goodwill impairment
charge, a $10.2 million pre-tax gain on the sale of the divested
businesses and restructuring and transformation related charges of
$3.2 million. Adjusted EBITDA was $25.1 million, down 28% from a
year ago, and adjusted EBITDA margin was 15.3%, down 70 bps.
Balance Sheet and Liquidity
As of June 30, 2024, the Company had $66 million in cash and
$419 million available borrowing capacity under its revolving
credit facility. The “Net Debt to EBITDA” ratio, as defined in our
credit agreements, was 3.48 times, down from 3.62 times at March
31, 2024. Barnes remains focused on achieving a leverage ratio of
3.0x or lower by the end of 2024 and reaffirms its long-term
leverage goal of 2.5x by 2025.
Updated 2024 Full Year Outlook
The Company is updating its full year 2024 guidance to the
following:
2024
Guidance
Organic sales growth
4% to 6%
Adjusted operating margin
12% to 14%
Adjusted EBITDA margin
20% to 22%
Adjusted earnings per share
$1.55 to $1.75
Capital expenditures
$55 million to $65 million
Free cash flow
$45 million to $55 million
Adjusted effective tax rate
33% to 34%
The Company’s 2024 Adjusted EPS guidance excludes a $1.05
non-cash goodwill impairment charge, $0.40 related to restructuring
and transformation activities, $0.35 of divestiture impacts related
to the sale of the Associated Spring and Hänggi businesses, $0.06
of MB Aerospace short-term purchase accounting adjustments, $0.02
of acquisition-related impacts, and $0.03 of shareholder advisory
costs.
Conference Call Information
Barnes will conduct a conference call with investors to discuss
the second quarter 2024 results at 8:30 a.m. ET today, July 26,
2024. The public may access the conference through a live audio
webcast available on the Investor Relations section of Barnes’
website at www.onebarnes.com.
The conference is also available by direct dial at (888)
510-2379 in the U.S. or (646) 960-0691 outside of the U.S.;
Conference ID 1137078. Supplemental materials will be posted to the
Investor Relations section of the Company's website prior to the
conference call.
In addition, the call will be recorded and available for
playback from 12:00 p.m. (ET) on Friday, July 26, 2024, until 11:59
p.m. (ET) on Friday, August 2, 2024, by dialing (609) 800-9909;
Conference ID 1137078.
Notes:
(1) Organic sales growth represents the total reported sales
increase within the Company’s ongoing business less the impact of
foreign currency translation and acquisitions and divestitures
completed in the preceding twelve months.
(2) While Barnes reports financial results in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
provides additional information with respect to a non-GAAP measure,
“Adjusted Earnings Before Interest, Income Tax, Depreciation and
Amortization” (Adjusted EBITDA). With the acquisition of MB
Aerospace, the largest transaction in Barnes’ history, the Company
incurred related expenses, including acquired intangible assets and
additional interest expense from the debt-funded acquisition.
Accordingly, the Company uses Adjusted EBITDA, among other
measures, to monitor our business performance. While EBITDA is not
a U.S. GAAP measure, nor is it a substitute for a U.S. GAAP
measure, we believe it provides helpful information to investors in
understanding the ongoing operating performance of the Company.
Investors should consider non-GAAP measures in addition to, not as
a substitute for, or as superior to, measures of financial
performance prepared in accordance with U.S. GAAP. Tables
reconciling non-GAAP to GAAP financial measures, including forward
looking outlook information, are presented at the end of this press
release.
About Barnes
Barnes Group Inc. (NYSE: B) leverages world-class manufacturing
capabilities and market-leading engineering to develop advanced
processes, automation solutions, and applied technologies for
industries ranging from aerospace and medical & personal care
to mobility and packaging. With a celebrated legacy of pioneering
excellence, Barnes delivers exceptional value to customers through
advanced manufacturing capabilities and cutting-edge industrial
technologies. Barnes Aerospace specializes in the production and
servicing of intricate fabricated and precision-machined components
for both commercial and military turbine engines, nacelles, and
airframes. Barnes Industrial excels in advancing the processing,
control, and sustainability of engineered plastics and delivering
innovative, custom-tailored solutions for industrial automation and
metal forming applications. Established in 1857 and headquartered
in Bristol, Connecticut, USA, the Company has manufacturing and
support operations around the globe. For more information, visit
please visit www.onebarnes.com.
Forward-Looking Statements
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements often address our expected future
operating and financial performance and financial condition, and
often contain words such as "anticipate," "believe," "expect,"
"plan," "estimate," "project," "continue," "will," "should," "may,"
and similar terms. These forward-looking statements do not
constitute guarantees of future performance and are subject to a
variety of risks and uncertainties that may cause actual results to
differ materially from those expressed in the forward-looking
statements. These risks and uncertainties include, among others:
the Company’s ability to manage economic, business and geopolitical
conditions, including rising interest rates, global price inflation
and shortages impacting the availability of materials; the duration
and severity of unforeseen events such as an epidemic or a
pandemic, including their impacts across our business on demand,
supply chains, operations and liquidity; failure to successfully
negotiate collective bargaining agreements or potential strikes,
work stoppages or other similar events; changes in market demand
for our products and services; rapid technological and market
change; the ability to protect and avoid infringing upon
intellectual property rights; challenges associated with the
introduction or development of new products or transfer of work;
higher risks in global operations and markets; the impact of
intense competition; the physical and operational risks from
natural disasters, severe weather events, and climate change which
may limit accessibility to sufficient water resources, outbreaks of
contagious diseases and other adverse public health developments;
acts of war, terrorism and other international conflicts; the
failure to achieve anticipated cost savings and benefits associated
with workforce reductions and restructuring actions; currency
fluctuations and foreign currency exposure; impacts from goodwill
impairment and related charges; our dependence upon revenues and
earnings from a small number of significant customers; a major loss
of customers; inability to realize expected sales or profits from
existing backlog due to a range of factors, including changes in
customer sourcing decisions, material changes, production schedules
and volumes of specific programs; the impact of government budget
and funding decisions; our ability to successfully integrate and
achieve anticipated synergies associated with recently announced
and future acquisitions, including the acquisition of MB Aerospace;
government-imposed sanctions, tariffs, trade agreements and trade
policies; changes or uncertainties in laws, regulations, rates,
policies or interpretations that impact the Company’s business
operations or tax status, including those that address climate
change, environmental, health and safety matters, and the materials
processed by our products or their end markets; fluctuations in the
pricing or availability of raw materials, freight, transportation,
energy, utilities and other items required by our operations; labor
shortages or other business interruptions at transportation
centers, shipping ports, our suppliers’ facilities or our
facilities; disruptions in information technology systems,
including as a result of cybersecurity attacks or data security
breaches; the ability to hire and retain senior management and
qualified personnel; the continuing impact of prior acquisitions
and divestitures, and any ongoing and future strategic actions, and
our ability to achieve the financial and operational targets set in
connection with any such actions; the ability to achieve social and
environmental performance goals; the outcome of pending and future
litigation and governmental proceedings; the impact of actual,
potential or alleged defects or failures of our products or
third-party products within which our products are integrated,
including product liabilities, product recall costs and uninsured
claims; future repurchases of common stock; future levels of
indebtedness; the impact of shareholder activism; and other risks
and uncertainties described in documents filed with or furnished to
the Securities and Exchange Commission ("SEC") by the Company,
including, among others, those in the Management's Discussion and
Analysis of Financial Condition and Results of Operations and Risk
Factors sections of the Company's filings. The Company assumes no
obligation to update its forward-looking statements.
Category: Earnings
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF (LOSS)
INCOME (Dollars in thousands, except per share data)
(Unaudited) Three months ended June 30, Six
months ended June 30,
2024
2023
% Change
2024
2023
% Change Net sales
$
382,232
$
338,984
12.8
$
812,870
$
674,341
20.5
Cost of sales
258,188
224,625
14.9
558,284
450,868
23.8
Selling and administrative expenses
82,667
88,350
(6.4
)
170,394
174,180
(2.2
)
Goodwill impairment charge
53,694
-
100.0
53,694
-
100.0
Gain on the sale of businesses
(10,204
)
-
NM
(7,071
)
-
NM
384,345
312,975
22.8
775,301
625,048
24.0
Operating (loss) income
(2,113
)
26,009
(108.1
)
37,569
49,293
(23.8
)
Operating margin
-0.6
%
7.7
%
4.6
%
7.3
%
Interest expense
20,812
6,512
219.6
45,643
11,819
286.2
Other expense (income), net
(845
)
(2,894
)
(70.8
)
850
(1,553
)
NM
(Loss) income before income taxes
(22,080
)
22,391
(198.6
)
(8,924
)
39,027
(122.9
)
Income taxes
24,741
5,039
391.0
35,949
8,516
322.1
Net (loss) income
$
(46,821
)
$
17,352
(369.8
)
$
(44,873
)
$
30,511
(247.1
)
Common dividends
$
8,118
$
8,099
0.2
$
16,229
$
16,195
0.2
Per common share: Net (loss) income: Basic
$
(0.91
)
$
0.34
(367.6
)
$
(0.88
)
$
0.60
(246.7
)
Diluted
(0.91
)
0.34
(367.6
)
(0.88
)
0.60
(246.7
)
Dividends
0.16
0.16
-
0.32
0.32
-
Weighted average common shares outstanding: Basic
51,302,547
51,051,780
0.5
51,263,503
51,020,648
0.5
Diluted
51,302,547
51,225,545
0.2
51,263,503
51,245,163
0.0
NM - Not meaningful
BARNES GROUP INC. OPERATIONS
BY REPORTABLE BUSINESS SEGMENT (Dollars in thousands)
(Unaudited) Three months ended June 30, Six
months ended June 30,
2024
2023
% Change
2024
2023
% Change Net sales Aerospace
$
217,958
$
122,015
78.6
$
439,328
$
239,272
83.6
Industrial
164,274
216,971
(24.3
)
373,542
435,079
(14.1
)
Intersegment sales
-
(2
)
-
(10
)
Total net sales
$
382,232
$
338,984
12.8
$
812,870
$
674,341
20.5
Operating (loss) profit Aerospace
$
29,344
$
16,580
77.0
$
60,430
$
35,331
71.0
Industrial
(31,457
)
9,429
(433.6
)
(22,861
)
13,962
(263.7
)
Total operating (loss) profit
$
(2,113
)
$
26,009
(108.1
)
$
37,569
$
49,293
(23.8
)
Operating margin
Change Change
Aerospace
13.5
%
13.6
%
(10
)
bps.
13.8
%
14.8
%
(100
)
bps. Industrial
-19.1
%
4.3
%
(2,340
)
bps.
-6.1
%
3.2
%
(930
)
bps. Total operating margin
-0.6
%
7.7
%
(830
)
bps.
4.6
%
7.3
%
(270
)
bps.
BARNES GROUP INC. CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) (Unaudited)
June 30, 2024 December 31, 2023 Assets Current
assets Cash and cash equivalents
$
65,909
$
89,827
Accounts receivable
345,482
353,923
Inventories
350,292
365,221
Prepaid expenses and other current assets
104,689
97,749
Total current assets
866,372
906,720
Deferred income taxes
-
10,295
Property, plant and equipment, net
351,879
402,697
Goodwill
1,046,822
1,183,624
Other intangible assets, net
662,666
706,471
Other assets
109,348
98,207
Total assets
$
3,037,087
$
3,308,014
Liabilities and Stockholders' Equity Current
liabilities Notes and overdrafts payable
$
6,547
$
16
Accounts payable
152,271
164,264
Accrued liabilities
217,793
221,462
Long-term debt - current
10,518
10,868
Total current liabilities
387,129
396,610
Long-term debt
1,149,386
1,279,962
Accrued retirement benefits
36,825
45,992
Deferred income taxes
115,950
120,608
Long-term tax liability
-
21,714
Other liabilities
71,299
80,865
Total stockholders' equity
1,276,498
1,362,263
Total liabilities and stockholders' equity
$
3,037,087
$
3,308,014
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in thousands) (Unaudited)
Six months ended June 30,
2024
2023
Operating activities: Net (loss) income
$
(44,873
)
$
30,511
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: Depreciation and amortization
59,563
46,913
Gain on disposition of property, plant and equipment
(50
)
(180
)
Stock compensation expense
6,464
4,832
Non-cash goodwill impairment charge
53,694
-
Gain on sale of businesses
(5,545
)
-
Changes in assets and liabilities, net of the effects of
divestiture: Accounts receivable
(12,173
)
(18,102
)
Inventories
(23,011
)
(9,743
)
Prepaid expenses and other current assets
(12,532
)
(5,183
)
Accounts payable
2,862
(2,300
)
Accrued liabilities
(645
)
16,745
Deferred income taxes
3,454
779
Long-term retirement benefits
(10,336
)
(10,636
)
Long-term tax liability
(17,372
)
(13,029
)
Other
3,550
1,860
Net cash provided by operating activities
3,050
42,467
Investing activities: Proceeds from disposition of
property, plant and equipment
344
149
Proceeds from the sale of businesses
146,041
-
Capital expenditures
(29,854
)
(21,617
)
Business acquisitions, net of cash acquired
159
-
Other
-
(722
)
Net cash provided (used) by investing activities
116,690
(22,190
)
Financing activities: Net change in other borrowings
6,568
7,775
Payments on long-term debt
(233,207
)
(112,927
)
Proceeds from the issuance of long-term debt
110,000
101,208
Proceeds from the issuance of common stock
122
189
Dividends paid
(16,229
)
(16,195
)
Withholding taxes paid on stock issuances
(141
)
(376
)
Cash settlement of foreign currency hedges related to intercompany
financing
(9,967
)
(1,176
)
Other
(232
)
(2,588
)
Net cash used by financing activities
(143,086
)
(24,090
)
Effect of exchange rate changes on cash flows
(2,784
)
(466
)
Decrease in cash, cash equivalents and restricted cash
(26,130
)
(4,279
)
Cash, cash equivalents and restricted cash at beginning of
the period
92,039
81,128
Cash, cash equivalents and restricted cash at end of period
65,909
76,849
Less: Restricted cash, included in Prepaid expenses and
other current assets
-
(2,176
)
Cash and cash equivalents at end of period
$
65,909
$
74,673
BARNES GROUP INC. RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (Dollars
in thousands) (Unaudited)
Six months ended June
30,
2024
2023
Free cash flow: Net cash provided by operating
activities
$
3,050
$
42,467
Capital expenditures
(29,854
)
(21,617
)
Free cash flow(1)
$
(26,804
)
$
20,850
Free cash flow (as adjusted): Free cash flow
(from above)
$
(26,804
)
$
20,850
Income tax payments related to the sale of the businesses
12,280
-
Free cash flow (as adjusted) (1)
$
(14,524
)
$
20,850
Notes: (1)
The Company defines free cash flow as net cash provided by
operating activities less capital expenditures. In 2024, net cash
provided by operating activities was negatively impacted by $12.3
million of estimated income tax payments related to the pre-tax
gain related to the sale of the Associated Spring™ and Hänggi™
businesses (the "Businesses"). The proceeds from the sale are
reflected in investing activities. 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.
BARNES GROUP INC. NON-GAAP FINANCIAL MEASURE
RECONCILIATION ADJUSTED OPERATING PROFIT AND ADJUSTED
DILUTED EARNINGS PER SHARE (Dollars in thousands, except per
share data) (Unaudited) Three months ended
June 30, Six months ended June 30,
2024
2023
% Change
2024
2023
% Change SEGMENT RESULTS
Operating Profit - Aerospace Segment (GAAP)
$
29,344
$
16,580
77.0
$
60,430
$
35,331
71.0
Restructuring/reduction in force and transformation related
charges
2,247
545
2,638
2,314
Shareholder advisory costs
50
-
1,078
-
Acquisition related costs
-
3,559
-
3,559
MB Short-term purchase accounting adjustments
685
-
2,826
-
Operating Profit - Aerospace Segment as adjusted
(Non-GAAP) (1)
$
32,326
$
20,684
56.3
$
66,972
$
41,204
62.5
Operating Margin - Aerospace Segment (GAAP)
13.5
%
13.6
%
(10
)
bps.
13.8
%
14.8
%
(100
)
bps.
Operating Margin - Aerospace Segment as adjusted (Non-GAAP)
(1)
14.8
%
17.0
%
(220
)
bps.
15.2
%
17.2
%
(200
)
bps.
Operating (Loss) Profit - Industrial Segment
(GAAP)
$
(31,457
)
$
9,429
(433.6
)
$
(22,861
)
$
13,962
(263.7
)
Restructuring/reduction in force and transformation related
charges
3,167
13,351
6,888
25,461
Shareholder advisory costs
50
-
1,022
-
Gain on the sale of businesses
(10,204
)
-
(7,071
)
-
Goodwill impairment charge
53,694
-
53,694
-
Operating Profit - Industrial Segment as adjusted
(Non-GAAP) (1)
$
15,250
$
22,780
(33.1
)
$
31,672
$
39,423
(19.7
)
Operating Margin - Industrial Segment (GAAP)
-19.1
%
4.3
%
(2,340
)
bps.
-6.1
%
3.2
%
(930
)
bps.
Operating Margin - Industrial Segment as adjusted
(Non-GAAP) (1)
9.3
%
10.5
%
(120
)
bps.
8.5
%
9.1
%
(60
)
bps.
CONSOLIDATED
RESULTS Operating (Loss) Income (GAAP)
$
(2,113
)
$
26,009
(108.1
)
$
37,569
$
49,293
(23.8
)
Restructuring/reduction in force and transformation related
charges
5,414
13,896
9,526
27,775
Shareholder advisory costs
100
-
2,100
-
Gain on the sale of businesses
(10,204
)
-
(7,071
)
-
Acquisition related costs
-
3,559
-
3,559
MB Short-term purchase accounting adjustments
685
-
2,826
-
Goodwill impairment charge
53,694
-
53,694
-
Operating Income as adjusted (Non-GAAP) (1)
$
47,576
$
43,464
9.5
$
98,644
$
80,627
22.3
Operating Margin (GAAP)
-0.6
%
7.7
%
(830
)
bps.
4.6
%
7.3
%
(270
)
bps.
Operating Margin as adjusted (Non-GAAP) (1)
12.4
%
12.8
%
(40
)
bps.
12.1
%
12.0
%
10
bps.
Diluted Net (Loss) Income per Share (GAAP)
$
(0.91
)
$
0.34
(367.6
)
$
(0.88
)
$
0.60
(246.7
)
Restructuring/reduction in force and transformation related
charges
0.08
0.19
0.14
0.39
Shareholder advisory costs
-
-
0.03
-
Loss related to sale of businesses, net of tax
0.14
-
0.35
-
MB Short-term purchase accounting adjustments
0.01
-
0.04
-
Acquisition related costs
-
0.05
0.02
0.05
Goodwill impairment charge
1.05
-
1.05
-
Diluted Net Income per Share as adjusted (Non-GAAP)
(1)
$
0.37
$
0.58
(36.2
)
$
0.75
$
1.04
(27.9
)
Full-Year 2023 Full-Year 2024 Outlook
Operating Margin (GAAP)
6.1
%
7.1
%
to
9.1
%
Restructuring/reduction in force and transformation related
charges
3.2
%
1.6
%
Divestiture transaction costs/loss related to sale of businesses,
net of tax
0.1
%
-0.4
%
MB Short-term purchase accounting adjustments
1.3
%
0.3
%
Shareholder advisory costs
-
0.1
%
Acquisition related costs
0.8
%
-
Goodwill impairment charge
-
3.3
%
Operating Margin as adjusted (Non-GAAP) (1)
11.5
%
12.0
%
to
14.0
%
Diluted Net Income (Loss) per Share (GAAP)
$
0.31
$
(0.36
)
to
$
(0.16
)
Restructuring/reduction in force and transformation related
charges
0.66
0.40
Divestiture transaction costs/loss related to sale of businesses,
net of tax
0.02
0.35
MB Short-term purchase accounting adjustments
0.29
0.06
Shareholder advisory costs
-
0.03
Acquisition related costs
0.37
0.02
Goodwill impairment charge
-
1.05
Diluted Net Income per Share as adjusted (Non-GAAP)
(1)
$
1.65
$
1.55
to
$
1.75
Notes: (1) The Company
has excluded the following from its "as adjusted" financial
measurements for 2024: 1) charges related to
restructuring/reduction in force actions at certain businesses and
transformation costs (consulting/professional fees related to
business and portfolio transformation initiatives), 2) a pre-tax
gain related to the divestiture of the Businesses, including $7.1M
reflected within operating profit ($10.2 million in the second
quarter), $1.5M reflected within other expense, net ($0.2 million
in the second quarter) and a $23.7M charge reflected within income
taxes ($16.9 million in the second quarter), 3) shareholder
advisory costs, 4) short-term purchase accounting adjustments
related to its MB Aerospace acquisition, 5) acquisition costs
related to the acquisition of MB Aerospace, including $1.6M
reflected within interest expense ($0.0 million in the second
quarter), and 6) goodwill impairment charge recorded in the second
quarter of 2024 related to the Automation reporting unit. The
Company has excluded the following from its "as adjusted" financial
measurements for 2023: 1) charges related to
restructuring/reduction in force actions at certain businesses and
business transformation costs (consulting fees related to
transformation initiatives), including $27.8M reflected within
operating profit ($13.9M in the second quarter) and ($1.1M)
reflected within other expense (income), net, for both the
year-to-date and quarter-to-date periods and 2) acquisition
transaction costs related to the planned acquisition of MB
Aerospace. The tax effects of the restructuring related actions,
acquisition related actions, and shareholder advisory costs were
calculated based on the respective tax jurisdictions and ranged
from approximately 15% to approximately 30%. The goodwill
impairment charge did not have a tax effect as it is not deductible
for book purposes. Management believes that these adjustments
provide the Company and its investors with an indication of our
baseline performance excluding items that are not considered to be
reflective of our ongoing results. Management does not intend
results excluding the adjustments to represent results as defined
by GAAP, and the reader should not consider it as an alternative
measurement calculated in accordance with GAAP, or as an indicator
of the Company's performance. Accordingly, the measurements have
limitations depending on their use.
BARNES GROUP INC.
NON-GAAP FINANCIAL MEASURE RECONCILIATION EBITDA, EBITDA
MARGIN, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (Dollars
in thousands) (Unaudited) Three months ended June
30,
2024
2023
Aerospace Industrial Other (1) Total
Aerospace Industrial Other (1) Total
Net Sales
$
217,958
164,274
-
$
382,232
$
122,015
216,971
(2
)
$
338,984
Net (Loss) Income
$
(46,821
)
$
17,352
Interest expense
20,812
6,512
Other expense (income), net
(845
)
(2,894
)
Income taxes
24,741
5,039
Operating Profit (Loss) (GAAP)
$
29,344
$
(31,457
)
$
-
$
(2,113
)
$
16,580
$
9,429
$
-
$
26,009
Operating Margin (GAAP)
13.5
%
-19.1
%
-0.6
%
13.6
%
4.3
%
7.7
%
Other expense (income), net
-
-
845
845
-
-
2,894
2,894
Depreciation (2)
7,463
3,990
-
11,453
4,867
6,393
-
11,260
Amortization (3)
11,214
5,887
-
17,101
5,191
6,413
-
11,604
EBITDA (Non-GAAP) (4)
$
48,021
$
(21,580
)
$
845
$
27,286
$
26,638
$
22,235
$
2,894
$
51,767
EBITDA Margin (Non-GAAP) (4)
22.0
%
-13.1
%
7.1
%
21.8
%
10.2
%
15.3
%
Restructuring/reduction in force and transformation related
charges
2,247
3,167
-
5,414
545
12,555
-
13,100
Shareholder advisory costs
50
50
-
100
-
-
-
-
Acquisition transaction costs
-
-
-
-
3,559
-
-
3,559
MB Short-term purchase accounting adjustments
42
-
-
42
-
-
-
-
Pension related loss
-
-
156
156
-
-
(1,144
)
(1,144
)
Gain on the sale of businesses
-
(10,204
)
-
(10,204
)
-
-
-
-
Goodwill impairment charge
-
53,694
-
53,694
-
-
-
-
Adjusted EBITDA (Non-GAAP) (4)
$
50,360
$
25,127
$
1,001
$
76,488
$
30,742
$
34,790
$
1,750
$
67,282
Adjusted EBITDA Margin (Non-GAAP) (4)
23.1
%
15.3
%
20.0
%
25.2
%
16.0
%
19.8
%
Six months ended June 30,
2024
2023
Aerospace Industrial Other (1) Total
Aerospace Industrial Other (1) Total
Net Sales
$
439,328
373,542
-
$
812,870
$
239,272
435,079
(10
)
$
674,341
Net (Loss) Income
$
(44,873
)
$
30,511
Interest expense
45,643
11,819
Other expense (income), net
850
(1,553
)
Income taxes
35,949
8,516
Operating Profit (Loss) (GAAP)
$
60,430
$
(22,861
)
$
-
$
37,569
$
35,331
$
13,962
$
-
$
49,293
Operating Margin (GAAP)
13.8
%
-6.1
%
4.6
%
14.8
%
3.2
%
7.3
%
Other expense (income), net
-
-
(850
)
(850
)
-
-
1,553
1,553
Depreciation (2)
15,319
9,581
-
24,900
9,820
13,869
-
23,689
Amortization (3)
22,850
11,813
-
34,663
10,297
12,927
-
23,224
EBITDA (Non-GAAP) (4)
$
98,599
$
(1,467
)
$
(850
)
$
96,282
$
55,448
$
40,758
$
1,553
$
97,759
EBITDA Margin (Non-GAAP) (4)
22.4
%
-0.4
%
11.8
%
23.2
%
9.4
%
14.5
%
Restructuring/reduction in force and transformation related
charges
2,638
6,164
-
8,802
2,314
23,072
-
25,386
Shareholder advisory costs
1,078
1,022
-
2,100
-
-
-
-
Acquisition transaction costs
-
-
-
-
3,559
-
-
3,559
MB Short-term purchase accounting adjustments
1,540
-
-
1,540
-
-
-
-
Gain on the sale of businesses
-
(7,071
)
-
(7,071
)
-
-
-
-
Pension related loss (gain)
-
-
1,526
1,526
-
-
(1,144
)
(1,144
)
Goodwill impairment charge
-
53,694
-
53,694
-
-
-
-
Adjusted EBITDA (Non-GAAP) (4)
$
103,855
$
52,342
$
676
$
156,873
$
61,321
$
63,830
$
409
$
125,560
Adjusted EBITDA Margin (Non-GAAP) (4)
23.6
%
14.0
%
19.3
%
25.6
%
14.7
%
18.6
%
Notes: (1) "Other"
includes intersegment sales and items that are included within
Other expense (income), net that are not allocated to the Company's
reportable business segments.(2) Depreciation expense in 2024
includes $0.7 million of accelerated depreciation charges related
to restructuring actions ($0.0 million related to the second
quarter). Depreciation in 2023 includes $2.4 million ($0.8 million
related to the second quarter) of similar accelerated depreciation
charges.(3) Amortization expense in 2024 includes $1.3 million
($0.6 million related to the second quarter) of short-term purchase
accounting adjustments related to backlog amortization, attributed
to the acquisition of MB Aerospace.(4) The Company defines EBITDA
as net income plus interest expense, income taxes, and depreciation
and amortization which the Company incurs in the normal course of
business; in addition to these adjustments, the Company also
excludes the impact of its "as adjusted items" above ("Adjusted
EBITDA"). The Company does not intend EBITDA nor Adjusted EBITDA to
represent cash flows from operations as defined by GAAP, and the
reader should not consider it as an alternative to net income, net
cash provided by operating activities or any other items calculated
in accordance with GAAP, or as an indicator of the Company's
operating performance. Accordingly, the measurements have
limitations depending on their use.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240726914672/en/
Investors: Barnes Group Inc. William Pitts Vice
President, Investor Relations ir@onebarnes.com 860.583.7070
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