Strong Aerospace Aftermarket Drives Top-line Growth
Comparisons are year-over-year unless noted otherwise
Third Quarter 2024:
- Sales of $388 million, up 7%; Organic Sales up 4%
- Operating Margin of 10.8%; Adjusted Operating Margin of 12.3%,
up 150 bps
- Adjusted EBITDA Margin of 19.8%, up 140 bps
- GAAP EPS of -$0.04; Adjusted EPS of $0.09, down 52%
Barnes Group Inc. (NYSE: B), a global provider of highly
engineered products, differentiated industrial technologies, and
innovative solutions, today reported financial results for the
third quarter of 2024.
“In the third quarter, despite ongoing production delays from
aircraft manufacturers, our Aerospace OEM business generated
extraordinarily strong orders in anticipation of a future industry
re-ramp. Meanwhile, our Aerospace aftermarket business continues to
deliver robust performance on strong top-line growth. With the MB
Aerospace integration and synergies progressing ahead of plan, we
are delivering on our strategy to scale Aerospace and transform
Barnes,” said Thomas J. Hook, President and Chief Executive Officer
of Barnes. “Over the last eighteen months, we have taken numerous
actions to unlock the underlying value of Barnes by growing
Aerospace, simplifying Industrial, investing in our businesses, and
streamlining costs. Collectively, these actions have helped to
position us for long-term profitable growth and led to outside
interest in Barnes. As such, we are excited about our pending
acquisition by Apollo Funds.”
Barnes to be Acquired by Apollo Funds
As announced on October 7, 2024, Barnes has entered into a
definitive agreement to be acquired by funds managed by affiliates
of Apollo Global Management, Inc. (NYSE: APO) (“Apollo”) (the
“Apollo Funds”) in an all-cash transaction that values Barnes at an
enterprise value of approximately $3.6 billion. Under the terms of
the agreement, Barnes shareholders will receive $47.50 per share in
cash. The transaction is subject to customary closing conditions,
including approval by Barnes shareholders and receipt of required
regulatory approvals. The transaction is expected to close in the
first quarter of 2025.
Third Quarter 2024 Highlights
Sales of $388 million were up 7% versus the same quarter a year
ago, with organic growth of 4%. The net beneficial impact of
acquisition and divestiture related sales was approximately 3%,
while foreign exchange increased sales by approximately 1%.
Adjusted operating income of $47.9 million increased 23% and
adjusted operating margin of 12.3% increased 150 bps. Adjusted
operating income excludes restructuring and transformation-related
charges of $3.8 million, additional costs related to the sale of
Associated Spring and Hänggi of $1.7 million, and MB Aerospace
short-term purchase accounting adjustments of $0.6 million.
Adjusted EBITDA was $76.9 million, up 16% from a year ago and
adjusted EBITDA margin was 19.8%, up 140 bps.
Interest expense was $19.6 million, down 14% from $22.8 million
a year ago due to last year’s one-time bridge financing fees of
$9.5 million that were included in interest expense, offset in part
by 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 Company's effective tax rate for the third quarter of 2024
was 110% driven by a $7.4 million tax provision related to the
Income Inclusion Rule under Pillar Two which significantly reduces
the benefit of tax holidays especially in Malaysia, a Canadian
discrete tax item of $3.0 million, and the non-deductibility of
transaction costs associated with the Company’s pending sale to
Apollo Funds impacting tax by $1.6 million.
Net loss was $2.1 million, or -$0.04 per share, compared to a
net loss of $21.7 million, or -$0.43 per share in the prior year.
On an adjusted basis, net income per share of $0.09 was down 53%
from $0.19. Adjusted net income per share excludes $0.06 of
restructuring and transformation-related charges, a $0.03
adjustment to the loss on sale of Associated Spring and Hänggi,
$0.03 of income tax effects on non-deductible merger costs, and
$0.01 of MB Aerospace short-term purchase accounting
adjustments.
Year-to-date cash provided by operating activities was $49.8
million versus $71.0 million a year ago. The decrease from the
prior year was primarily due to an increase in working capital and
divestiture related income tax payments. Capital expenditures of
$41.8 million year-to-date increased $4.4 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 $20.4
million.
Segment Performance
Aerospace
Third quarter sales in the Aerospace segment were $232 million,
up 49%. Organic sales increased 9%, and acquisition related sales
added 39%. Aerospace original equipment manufacturing (“OEM”) sales
increased 38%, while aftermarket sales increased 67%. On an organic
basis, OEM sales decreased 1% and aftermarket sales increased 27%.
Segment operating profit was $35.3 million versus $3.6 million a
year ago. Adjusted operating profit of $36.3 million was up 55%,
while adjusted operating margin increased 70 bps to 15.7%. Adjusted
operating profit excludes restructuring and transformation related
charges of $0.4 million and MB Aerospace short-term purchase
accounting adjustments of $0.6 million. Adjusted operating profit
benefited from the contribution of higher organic sales volumes,
inclusive of pricing, the contribution of MB Aerospace sales, and
positive productivity, partially offset by the amortization of
long-term acquired intangibles. Aerospace adjusted EBITDA was $55.9
million, up 52%, and adjusted EBITDA margin was 24.1%, up 60 bps
from a year ago.
Aerospace OEM backlog ended the third quarter at $1.80 billion,
up 19% sequentially from June 2024 on a strong book-to-bill of 2.9
times.
Industrial
Third quarter sales in the Industrial segment were $156 million,
down 24% primarily due to the sale of the Associated Spring and
Hänggi businesses. On an organic basis, sales were up 1% from a
year ago. Operating profit was $6.5 million versus $6.4 million in
the prior year. Adjusted operating profit was $11.6 million, down
26%, and adjusted operating margin was 7.4%, down 20 bps. The lower
adjusted operating profit reflects divested profits from the sale
of the Associated Spring and Hänggi businesses and lower
productivity, partially offset by positive pricing. Adjusted
operating profit excludes restructuring and transformation-related
charges of $3.4 million and additional costs related to the sale of
Associated Spring and Hänggi of $1.7 million. Adjusted EBITDA was
$21.6 million, down 25% from a year ago, and adjusted EBITDA margin
was 13.9%, down 20 bps.
Leverage
Barnes’ “Net Debt to EBITDA” ratio, as defined in our credit
agreements, was 3.35 times on September 30, 2024, down from 3.48
times on June 30, 2024.
Canceled Third Quarter 2024 Earnings Call and Suspension of
Guidance
Given the pending acquisition of Barnes by Apollo Funds, the
Company will not be conducting a third quarter 2024 conference call
and webcast. In addition, Barnes is suspending its financial
guidance for the full year 2024.
Non-GAAP Financial Measures
The financial statements included within this press release are
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP” or “U.S. GAAP”).
The Company provides additional information with respect to certain
non-GAAP financial measures, which include organic sales growth,
adjusted operating profit, adjusted operating margin, adjusted
EBITDA, adjusted EBITDA margin, adjusted EPS and Free Cash Flow.
While these financial measures do not constitute U.S. GAAP
measures, nor are they a substitute for U.S. GAAP measures, we
believe they provide useful 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. The Company believes that these non-GAAP measures provide
useful information to investors:
- Organic sales growth represents the total reported sales
increase within the Company’s ongoing businesses less the impact of
foreign currency translation and acquisitions/divestitures
completed in the preceding twelve months. Management believes that
organic sales growth provides an indication of baseline revenue
performance and growth.
- Adjusted operating profit, adjusted operating margin and
adjusted EPS provide an indication of our baseline profit
performance. Management believes that these metrics are useful to
investors as they exclude items that do not reflect our ongoing
results.
- Adjusted EBITDA and Adjusted EBITDA margin provide adjusted
earnings before interest, income tax, depreciation and
amortization. Through acquisitions, the Company has incurred
significant amortization expense (acquired intangible assets) and
additional interest expense from debt-funded acquisitions.
Management believes these financial metrics are useful to investors
as they exclude the impact of these items.
- Free Cash Flow is defined by the Company as net cash provided
by operating activities less capital expenditures. The Company
believes that the free cash flow metric represents 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.
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
Certain statements in this press release are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended and Section 21E of the Securities Exchange Act
of 1934, as amended and 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 occurrence of any event, change or other circumstances that
could give rise to the termination of the Agreement and Plan of
Merger (the “Merger Agreement”) pursuant to which the Company has
agreed to be acquired by funds managed by affiliates of Apollo
Global Management, Inc. (the “Merger”) or extend the anticipated
timetable for completion of the Merger; the failure to obtain
approval of the proposed Merger from the Company’s shareholders or
certain required regulatory approvals or the failure to satisfy any
of the other closing conditions to the completion of the Merger
within the expected timeframes or at all; risks related to
disruption of management’s attention from the Company’s ongoing
business operations due to the Merger; the risk of any unexpected
costs or expenses resulting from the Merger; the risk of any
litigation relating to the Merger; the effect of the announcement
of the Merger on the ability of the Company to retain and hire key
personnel and maintain relationships with its customers, suppliers
and others with whom it does business, or on its operating results
and business generally; 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 September
30,
Nine months ended September
30,
2024
2023
% Change
2024
2023
% Change
Net sales
$
387,794
$
360,988
7.4
$
1,200,664
$
1,035,329
16.0
Cost of sales
259,402
253,490
2.3
817,686
704,358
16.1
Selling and administrative expenses
84,920
97,508
(12.9
)
255,314
271,688
(6.0
)
Goodwill impairment charge
-
-
-
53,694
-
100.0
Costs (gain) related to the sale of businesses
1,651
-
100.0
(5,420
)
-
NM
345,973
350,998
(1.4
)
1,121,274
976,046
14.9
Operating income
41,821
9,990
318.6
79,390
59,283
33.9
Operating margin
10.8
%
2.8
%
6.6
%
5.7
%
Interest expense
19,573
22,792
(14.1
)
65,216
34,612
88.4
Other expense (income), net
517
(874
)
NM
1,367
(2,427
)
NM
Income (loss) before income taxes
21,731
(11,928
)
NM
12,807
27,098
(52.7
)
Income taxes
23,875
9,802
143.6
59,824
18,318
226.6
Net (loss) income
$
(2,144
)
$
(21,730
)
(90.1
)
$
(47,017
)
$
8,780
(635.5
)
Common dividends
$
8,132
$
8,107
0.3
$
24,361
$
24,302
0.2
Per common share: Net (loss) income: Basic
$
(0.04
)
$
(0.43
)
(90.7
)
$
(0.92
)
$
0.17
(641.2
)
Diluted
(0.04
)
(0.43
)
(90.7
)
(0.92
)
0.17
(641.2
)
Dividends
0.16
0.16
-
0.48
0.48
-
Weighted average common shares outstanding: Basic
51,302,818
51,057,979
0.5
51,276,280
51,033,181
0.5
Diluted
51,302,818
51,057,979
0.5
51,276,280
51,223,978
0.1
NM - Not meaningful
BARNES GROUP INC.
OPERATIONS BY REPORTABLE BUSINESS SEGMENT (Dollars in
thousands) (Unaudited)
Three months ended September
30,
Nine months ended September
30,
2024
2023
% Change
2024
2023
% Change
Net sales Aerospace
$
231,934
$
156,090
48.6
$
671,262
$
395,362
69.8
Industrial
155,864
204,898
(23.9
)
529,406
639,977
(17.3
)
Intersegment sales
(4
)
-
(4
)
(10
)
Total net sales
$
387,794
$
360,988
7.4
$
1,200,664
$
1,035,329
16.0
Operating profit (loss) Aerospace
$
35,319
$
3,622
875.1
$
95,749
$
38,953
145.8
Industrial
6,502
6,368
2.1
(16,359
)
20,330
(180.5
)
Total operating profit (loss)
$
41,821
$
9,990
318.6
$
79,390
$
59,283
33.9
Operating margin
Change Change
Aerospace
15.2
%
2.3
%
1,290
bps.
14.3
%
9.9
%
440
bps. Industrial
4.2
%
3.1
%
110
bps.
-3.1
%
3.2
%
(630
)
bps. Total operating margin
10.8
%
2.8
%
800
bps.
6.6
%
5.7
%
90
bps.
BARNES GROUP INC. CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (Unaudited)
September 30,2024 December 31,2023
Assets Current assets Cash and cash equivalents
$
80,675
$
89,827
Accounts receivable
327,063
353,923
Inventories
353,230
365,221
Prepaid expenses and other current assets
105,763
97,749
Total current assets
866,731
906,720
Deferred income taxes
8,289
10,295
Property, plant and equipment, net
351,735
402,697
Goodwill
1,081,960
1,183,624
Other intangible assets, net
655,927
706,471
Other assets
110,390
98,207
Total assets
$
3,075,032
$
3,308,014
Liabilities and Stockholders' Equity Current
liabilities Notes and overdrafts payable
$
506
$
16
Accounts payable
142,571
164,264
Accrued liabilities
226,637
221,462
Long-term debt - current
9,765
10,868
Total current liabilities
379,479
396,610
Long-term debt
1,135,162
1,279,962
Accrued retirement benefits
36,540
45,992
Deferred income taxes
117,010
120,608
Long-term tax liability
7,400
21,714
Other liabilities
94,955
80,865
Total stockholders' equity
1,304,486
1,362,263
Total liabilities and stockholders' equity
$
3,075,032
$
3,308,014
BARNES GROUP INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in thousands) (Unaudited)
Nine months ended September 30,
2024
2023
Operating activities: Net (loss) income
$
(47,017
)
$
8,780
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: Depreciation and amortization
89,837
79,196
Gain on disposition of property, plant and equipment
(9
)
(202
)
Stock compensation expense
10,530
8,121
Non-cash goodwill impairment charge
53,694
-
Gain on sale of businesses
(3,894
)
-
Changes in assets and liabilities, net of the effects of
acquisition and divestiture: Accounts receivable
(4,587
)
(5,273
)
Inventories
(21,481
)
(8,699
)
Prepaid expenses and other current assets
(11,629
)
5,367
Accounts payable
(4,641
)
(11,629
)
Accrued liabilities
5,510
22,437
Deferred income taxes
683
(3,541
)
Long-term retirement benefits
(12,364
)
(13,096
)
Long-term tax liability
(9,972
)
(13,029
)
Other
5,090
2,541
Net cash provided by operating activities
49,750
70,973
Investing activities: Proceeds from disposition of
property, plant and equipment
223
6,990
Proceeds from the sale of businesses
160,869
-
Capital expenditures
(41,822
)
(37,405
)
Business acquisitions, net of cash acquired
159
(718,782
)
Other
-
(921
)
Net cash provided (used) by investing activities
119,429
(750,118
)
Financing activities: Net change in other borrowings
242
(167
)
Payments on long-term debt
(321,318
)
(268,580
)
Proceeds from the issuance of long-term debt
170,000
1,006,333
Payments of debt issuance costs
-
(11,341
)
Proceeds from the issuance of common stock
176
277
Dividends paid
(24,361
)
(24,302
)
Withholding taxes paid on stock issuances
(1,391
)
(857
)
Cash settlement of foreign currency hedges related to intercompany
financing
(1,070
)
(6,346
)
Other
(232
)
(2,625
)
Net cash (used) provided by financing activities
(177,954
)
692,392
Effect of exchange rate changes on cash flows
(2,590
)
(2,190
)
(Decrease) increase in cash, cash equivalents and restricted
cash
(11,365
)
11,057
Cash, cash equivalents and restricted cash at beginning of
the period
92,040
81,128
Cash, cash equivalents and restricted cash at end of
period
80,675
92,185
Less: Restricted cash, included in Prepaid expenses and
other current assets
-
(2,145
)
Cash and cash equivalents at end of period
$
80,675
$
90,040
BARNES GROUP INC. RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW (Dollars
in thousands) (Unaudited)
Nine months ended September
30,
2024
2023
Free cash flow: Net cash provided by operating activities
$
49,750
$
70,973
Capital expenditures
(41,822
)
(37,405
)
Free cash flow(1)
$
7,928
$
33,568
Free cash flow (as adjusted): Free cash flow (from
above)
$
7,928
$
33,568
Income tax payments related to the sale of the businesses
12,472
-
Free cash flow (as adjusted) (1)
$
20,400
$
33,568
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 $12.5 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 September
30,
Nine months ended September
30,
2024
2023
% Change
2024
2023
% Change
SEGMENT RESULTS
Operating Profit - Aerospace Segment (GAAP)
$
35,319
$
3,622
875.1
$
95,749
$
38,953
145.8
Restructuring/reduction in force and transformation
related charges
355
3,922
2,993
6,263
Shareholder advisory costs
-
-
1,078
-
Acquisition related costs
-
7,817
-
11,376
MB Short-term purchase accounting adjustments
643
8,019
3,469
8,019
Operating Profit - Aerospace Segment as adjusted
(Non-GAAP) (1)
$
36,317
$
23,380
55.3
$
103,289
$
64,611
59.9
Operating Margin - Aerospace Segment (GAAP)
15.2
%
2.3
%
1,290
bps.
14.3
%
9.9
%
440
bps.
Operating Margin - Aerospace Segment as adjusted (Non-GAAP)
(1)
15.7
%
15.0
%
70
bps.
15.4
%
16.3
%
(90
)
bps.
Operating Profit (Loss) - Industrial Segment
(GAAP)
$
6,502
$
6,368
2.1
$
(16,359
)
$
20,330
(180.5
)
Restructuring/reduction in force and transformation
related charges
3,398
9,277
10,286
34,711
Shareholder advisory costs
-
-
1,022
-
Costs (gain) related to the sale of businesses
1,651
-
(5,420
)
-
Goodwill impairment charge
-
-
53,694
-
Operating Profit - Industrial Segment as adjusted
(Non-GAAP) (1)
$
11,551
$
15,645
(26.2
)
$
43,223
$
55,041
(21.5
)
Operating Margin - Industrial Segment (GAAP)
4.2
%
3.1
%
110
bps.
-3.1
%
3.2
%
(630
)
bps.
Operating Margin - Industrial Segment as adjusted
(Non-GAAP) (1)
7.4
%
7.6
%
(20
)
bps.
8.2
%
8.6
%
(40
)
bps.
CONSOLIDATED RESULTS Operating Income
(GAAP)
$
41,821
$
9,990
318.6
$
79,390
$
59,283
33.9
Restructuring/reduction in force and transformation
related charges
3,753
13,199
13,279
40,974
Shareholder advisory costs
-
-
2,100
-
Costs (gain) related to the sale of businesses
1,651
-
(5,420
)
-
Acquisition related costs
-
7,817
-
11,376
MB Short-term purchase accounting adjustments
643
8,019
3,469
8,019
Goodwill impairment charge
-
-
53,694
-
Operating Income as adjusted (Non-GAAP) (1)
$
47,868
$
39,025
22.7
$
146,512
$
119,652
22.4
Operating Margin (GAAP)
10.8
%
2.8
%
800
bps.
6.6
%
5.7
%
90
bps.
Operating Margin as adjusted (Non-GAAP) (1)
12.3
%
10.8
%
150
bps.
12.2
%
11.6
%
60
bps.
Diluted Net (Loss) Income per Share
(GAAP)
$
(0.04
)
$
(0.43
)
(90.7
)
$
(0.92
)
$
0.17
(641.2
)
Restructuring/reduction in force and transformation
related charges
0.06
0.19
0.20
0.58
Shareholder advisory costs
-
-
0.03
-
Loss related to sale of businesses, net of tax
0.03
-
0.38
-
MB Short-term purchase accounting adjustments
0.01
0.12
0.05
0.12
Acquisition related costs
-
0.31
0.02
0.36
Income tax effects of non-deductible merger costs
0.03
-
0.03
-
Goodwill impairment charge
-
-
1.05
-
Diluted Net Income per Share as adjusted
(Non-GAAP) (1)
$
0.09
$
0.19
(52.6
)
$
0.84
$
1.23
(31.7
)
Full-Year 2023 Operating
Margin (GAAP)
6.1
%
Restructuring/reduction in force and transformation related
charges
3.2
%
Divestiture transaction costs
0.1
%
MB Short-term purchase accounting adjustments
1.3
%
Acquisition related costs
0.8
%
Operating Margin as adjusted (Non-GAAP) (1)
11.5
%
Diluted Net Income (Loss) per Share (GAAP)
$
0.31
Restructuring/reduction in force and transformation
related charges
0.66
Divestiture transaction costs
0.02
MB Short-term purchase accounting adjustments
0.29
Acquisition related costs
0.37
Diluted Net Income per Share as adjusted
(Non-GAAP) (1)
$
1.65
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 related costs (consulting/professional fees related
to business and portfolio transformation initiatives), 2) a pre-tax
gain related to the divestiture of the Businesses, including $5.4M
reflected within operating profit ($1.7 million of costs related to
the divestiture in the third quarter), $1.5M reflected within other
expense, net ($0.0 million in the third quarter) and a $23.7M
charge reflected within income taxes ($0.0 million in the third
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 third quarter), 6) goodwill impairment charge recorded in the
second quarter of 2024 related to the Automation reporting unit,
and 7) income tax effects of non-deductible merger costs. 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 $41.0M reflected within
operating profit ($13.2 million in the third quarter) and ($1.1M)
reflected within other expense (income), net ($0.0 million in the
third quarter), 2) acquisition transaction costs related to the
acquisition of MB Aerospace, including $11.4M reflected within
operating profit ($7.8 million in the third quarter) and $9.6M
reflected within interest expense, and 3) short-term purchase
accounting adjustments related to its MB Aerospace acquisitions,
including $8.0M all reflected within operating profit in the third
quarter. 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 September
30,
2024
2023
Aerospace Industrial Other (1) Total
Aerospace Industrial Other (1) Total
Net Sales
$
231,934
155,864
(4
)
$
387,794
$
156,090
204,898
-
$
360,988
Net Loss
$
(2,144
)
$
(21,730
)
Interest expense
19,573
22,792
Other expense (income), net
517
(874
)
Income taxes
23,875
9,802
Operating Profit (GAAP)
$
35,319
$
6,502
$
-
$
41,821
$
3,622
$
6,368
$
-
$
9,990
Operating Margin (GAAP)
15.2
%
4.2
%
10.8
%
2.3
%
3.1
%
2.8
%
Other expense (income), net
-
-
(517
)
(517
)
-
-
874
874
Depreciation (2)
9,317
4,222
-
13,539
5,863
7,560
-
13,423
Amortization (3)
10,864
5,871
-
16,735
12,460
6,400
-
18,860
EBITDA (Non-GAAP) (4)
$
55,500
$
16,595
$
(517
)
$
71,578
$
21,945
$
20,328
$
874
$
43,147
EBITDA Margin (Non-GAAP) (4)
23.9
%
10.6
%
18.5
%
14.1
%
9.9
%
12.0
%
Restructuring/reduction in force and transformation
related charges
355
3,351
-
3,706
3,922
8,481
-
12,403
Shareholder advisory costs
-
-
-
-
-
-
-
-
Acquisition transaction costs
-
-
-
-
7,817
-
-
7,817
MB Short-term purchase accounting adjustments
-
-
-
-
3,019
-
-
3,019
Costs (gain) related to the sale of businesses
-
1,651
-
1,651
-
-
-
-
Adjusted EBITDA (Non-GAAP) (4)
$
55,855
$
21,597
$
(517
)
$
76,935
$
36,703
$
28,809
$
874
$
66,386
Adjusted EBITDA Margin (Non-GAAP) (4)
24.1
%
13.9
%
19.8
%
23.5
%
14.1
%
18.4
%
Nine months ended September
30,
2024
2023
Aerospace Industrial Other (1) Total
Aerospace Industrial Other (1) Total
Net Sales
$
671,262
529,406
(4
)
$
1,200,664
$
395,362
639,977
(10
)
$
1,035,329
Net (Loss) Income
$
(47,017
)
$
8,780
Interest expense
65,216
34,612
Other expense (income), net
1,367
(2,427
)
Income taxes
59,824
18,318
Operating Profit (Loss) (GAAP)
$
95,749
$
(16,359
)
$
-
$
79,390
$
38,953
$
20,330
$
-
$
59,283
Operating Margin (GAAP)
14.3
%
-3.1
%
6.6
%
9.9
%
3.2
%
5.7
%
Other expense (income), net
-
-
(1,367
)
(1,367
)
-
-
2,427
2,427
Depreciation (2)
24,636
13,803
-
38,439
15,683
21,429
-
37,112
Amortization (3)
33,714
17,684
-
51,398
22,757
19,327
-
42,084
EBITDA (Non-GAAP) (4)
$
154,099
$
15,128
$
(1,367
)
$
167,860
$
77,393
$
61,086
$
2,427
$
140,906
EBITDA Margin (Non-GAAP) (4)
23.0
%
2.9
%
14.0
%
19.6
%
9.5
%
13.6
%
Restructuring/reduction in force and transformation
related charges
2,993
9,515
-
12,508
6,263
31,526
-
37,789
Shareholder advisory costs
1,078
1,022
-
2,100
-
-
-
-
Acquisition transaction costs
-
-
-
-
11,376
-
-
11,376
MB Short-term purchase accounting adjustments
1,540
-
-
1,540
3,019
-
-
3,019
Gain related to the sale of businesses
-
(5,420
)
-
(5,420
)
-
-
-
-
Pension related loss (gain)
-
-
1,526
1,526
-
-
(1,144
)
(1,144
)
Goodwill impairment charge
-
53,694
-
53,694
-
-
-
-
Adjusted EBITDA (Non-GAAP) (4)
$
159,710
$
73,939
$
159
$
233,808
$
98,051
$
92,612
$
1,283
$
191,946
Adjusted EBITDA Margin (Non-GAAP) (4)
23.8
%
14.0
%
19.5
%
24.8
%
14.5
%
18.5
%
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 third
quarter). Depreciation in 2023 includes $3.2 million ($0.8 million
related to the third quarter) of similar accelerated depreciation
charges.(3) Amortization expense in 2024 includes $1.9 million
($0.6 million related to the third quarter) of short-term purchase
accounting adjustments related to backlog amortization, attributed
to the acquisition of MB Aerospace. Amortization expense in 2023
includes $5.0 million ($5.0 million related to the third 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.
BARNES GROUP
INC. NON-GAAP FINANCIAL MEASURE RECONCILIATION
Organic Sales and Organic Sales Growth (Decrease) (1)
(Dollars in millions) (Unaudited)
Three months ended September
30,
Nine months ended September
30,
2024
2023
Organic Sales Growth
(Decrease)
2024
2023
Organic Sales Growth
(Decrease)
Aerospace Net sales (GAAP)
$
231.9
$
156.1
48.6
%
$
671.3
$
395.4
69.8
%
Acquisition sales (2)
(61.1
)
-
(39.1
%)
(229.4
)
-
(58.0
%)
Foreign currency translation
(0.6
)
-
(0.4
%)
(0.6
)
-
(0.2
%)
Organic sales (Non-GAAP)
$
170.2
$
156.1
$
14.1
9.0
%
$
441.3
$
395.4
$
45.9
11.6
%
OEM Net sales (GAAP)
$
137.8
$
99.9
37.9
%
$
405.0
$
248.0
63.3
%
Acquisition sales (2)
(38.2
)
-
(38.2
%)
(144.8
)
-
(58.4
%)
Foreign currency translation
(0.6
)
-
(0.6
%)
(0.6
)
-
(0.2
%)
Organic sales (Non-GAAP)
$
99.0
$
99.9
$
(0.9
)
(0.9
%)
$
259.6
$
248.0
$
11.6
4.7
%
Aftermarket Net sales (GAAP)
$
94.1
$
56.2
67.4
%
$
266.2
$
147.4
80.6
%
Acquisition sales (2)
(22.9
)
-
(40.7
%)
(84.6
)
-
(57.4
%)
Foreign currency translation
-
-
0.0
%
-
-
0.0
%
Organic sales (Non-GAAP)
$
71.2
$
56.2
$
15.0
26.7
%
$
181.6
$
147.4
$
34.2
23.2
%
Industrial Net sales (GAAP)
$
155.9
$
204.9
(23.9
%)
$
529.4
$
640.0
(17.3
%)
Divestiture sales (3)
-
(51.8
)
25.3
%
-
(109.4
)
17.1
%
Foreign currency translation
(1.5
)
-
(0.7
%)
0.2
-
0.0
%
Organic sales (Non-GAAP)
$
154.4
$
153.1
$
1.3
0.6
%
$
529.6
$
530.6
$
(1.0
)
(0.2
%)
Total Company Net sales (GAAP)
387.8
361.0
7.4
%
$
1,200.7
$
1,035.4
16.0
%
Acquisition sales (2)
(61.1
)
-
(16.9
%)
(229.4
)
-
(22.2
%)
Divestiture sales (3)
-
(51.8
)
14.3
%
-
(109.4
)
10.6
%
Foreign currency translation
(2.1
)
-
(0.6
%)
(0.4
)
-
(0.0
%)
Organic sales (Non-GAAP)
$
324.6
$
309.2
$
15.4
4.3
%
$
970.9
$
926.0
$
44.9
4.3
%
Notes: (1) Organic sales
and Organic sales growth (decrease) represent the total reported
net sales and total reported net sales increase (decrease),
respectively, within the Company’s ongoing businesses, less the
impacts of foreign currency translation and the sales related to
any acquisitions or divestitures that were completed within the
preceding twelve months.(2) "Acquisition sales" includes the net
sales contributed by MB Aerospace from July 1, 2024 through August
31, 2024 and from January 1, 2024 through August 31, 2024, during
the three and nine month periods ended September 30, 2024,
respectively. The acquisition of MB Aerospace was completed on
August 31, 2023.(3) "Divestiture sales" includes the net sales
contributed by the divested businesses from July 1, 2023 through
September 30, 2023 and from April 4, 2023 through September 30,
2023, during the three and nine month periods ended September 30,
2023, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241025629370/en/
Investors: Barnes Group Inc. William Pitts Vice
President, Investor Relations ir@onebarnes.com 860.583.7070
Barnes (NYSE:B)
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De Oct 2024 à Nov 2024
Barnes (NYSE:B)
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De Nov 2023 à Nov 2024
