We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Barnes Group (B) Q4 Earnings Surpass, Revenues Miss Mark
Read MoreHide Full Article
Barnes Group Inc. (B - Free Report) reported mixed fourth-quarter 2022 results, wherein earnings surpassed estimates by 8.3%. However, sales missed the same by 2.4%.
The adjusted earnings in the reported quarter were 52 cents per share, surpassing the Zacks Consensus Estimate of 48 cents. Our estimate for fourth-quarter adjusted earnings was 48 cents. However, the bottom line decreased 5.5% from the year-ago quarter’s 55 cents. Following the lackluster performance, the company’s shares have declined 8.2% since its fourth-quarter 2022 earnings release on Feb 17.
Top-Line Results
Barnes’ net sales of $313.4 million in the reported quarter increased 0.8% year over year. Organic sales in the quarter grew 5%.
B’s revenues missed the Zacks Consensus Estimate of $321 million. Our estimate for net sales in the reported quarter was $322.5 million.
Barnes reports revenues under two heads, namely Industrial and Aerospace. A brief snapshot of the segmental sales is provided below:
Revenues generated from Industrial amounted to $205 million, decreasing 2.5% year over year. Our estimate for segmental revenues was $210.9 million. The segment suffered adverse impacts due to lower productivity, inclusive of COVID-related absenteeism in China. Organic sales were up 4% year over year, and movement in foreign currencies had a negative impact of 7%.
Aerospace’s sales were $108.5 million in the fourth quarter, up 7.7% from the year-ago quarter on the back of an improvement in the aftermarket sales. Our estimate for segmental revenues was $111.7 million.
Aftermarket sales were up 27% year over year, while the same for original equipment manufacturing decreased 2%.
Barnes Group, Inc. Price, Consensus and EPS Surprise
In the reported quarter, Barnes’ cost of sales increased 5.2% year over year to $211.4 million. The cost of sales represented 67.4% of net sales compared with 64.6% in the year-ago quarter. Selling and administrative expenses increased 4.2% to $77.9 million and represented 24% of net sales.
Adjusted operating income in the reported quarter decreased 1% year over year to $35 million, whereas margins decreased 20 basis points to 11.2%. Inflationary headwinds, increasing interest rates and supply-chain challenges affected the results in the quarter. Interest expenses totaled $4.4 million in the reported quarter, up 16.2% year over year.
The adjusted effective tax rate in the reported quarter was 18.6%.
Balance Sheet & Cash Flow
While exiting the fourth quarter, Barnes’ cash and cash equivalents were $76.9 million compared with $102.9 million recorded in the fourth quarter of 2021. Long-term debt was $569.6 million, down from $599.9 million in the fourth quarter of 2021.
In 2022, B repaid a long-term debt of $108.4 million. Proceeds from the issuance of long-term debts were $98.3 million. Liquidity available in the quarter included cash of $77 million and credit under revolving facilities of $533 million.
In 2022, Barnes generated net cash of $75.6 million from operating activities compared with $167.8 million generated in the year-ago period. Capital expenditure totaled $35.1 million, almost in line with the year-ago figure. Free cash flow was $40.5 million compared with $133.7 million a year ago.
In 2022, Barnes paid out dividends of $32.4 million, flat year over year.
Outlook
For 2023, Barnes anticipates adjusted earnings of $2.10-$2.30 per share. The anticipated figure is up 6%-16% from 2022’s figure of $1.98 per share.
Organic sales for the year are expected to rise 6-8% from the year-ago reported figure.
The adjusted operating margin is predicted to be 12.5-13.5%. Barnes anticipates a capital expenditure of approximately $50 million. Cash conversion is expected to be approximately 100% of net income. The effective tax rate for 2023 is expected to be 24.5%-25.5%.
Zacks Rank & Stocks to Consider
B currently has a Zacks Rank #4 (Sell). Some top-ranked companies from the Industrial Products sector are discussed below:
Image: Bigstock
Barnes Group (B) Q4 Earnings Surpass, Revenues Miss Mark
Barnes Group Inc. (B - Free Report) reported mixed fourth-quarter 2022 results, wherein earnings surpassed estimates by 8.3%. However, sales missed the same by 2.4%.
The adjusted earnings in the reported quarter were 52 cents per share, surpassing the Zacks Consensus Estimate of 48 cents. Our estimate for fourth-quarter adjusted earnings was 48 cents. However, the bottom line decreased 5.5% from the year-ago quarter’s 55 cents. Following the lackluster performance, the company’s shares have declined 8.2% since its fourth-quarter 2022 earnings release on Feb 17.
Top-Line Results
Barnes’ net sales of $313.4 million in the reported quarter increased 0.8% year over year. Organic sales in the quarter grew 5%.
B’s revenues missed the Zacks Consensus Estimate of $321 million. Our estimate for net sales in the reported quarter was $322.5 million.
Barnes reports revenues under two heads, namely Industrial and Aerospace. A brief snapshot of the segmental sales is provided below:
Revenues generated from Industrial amounted to $205 million, decreasing 2.5% year over year. Our estimate for segmental revenues was $210.9 million. The segment suffered adverse impacts due to lower productivity, inclusive of COVID-related absenteeism in China. Organic sales were up 4% year over year, and movement in foreign currencies had a negative impact of 7%.
Aerospace’s sales were $108.5 million in the fourth quarter, up 7.7% from the year-ago quarter on the back of an improvement in the aftermarket sales. Our estimate for segmental revenues was $111.7 million.
Aftermarket sales were up 27% year over year, while the same for original equipment manufacturing decreased 2%.
Barnes Group, Inc. Price, Consensus and EPS Surprise
Barnes Group, Inc. price-consensus-eps-surprise-chart | Barnes Group, Inc. Quote
Margin Profile
In the reported quarter, Barnes’ cost of sales increased 5.2% year over year to $211.4 million. The cost of sales represented 67.4% of net sales compared with 64.6% in the year-ago quarter. Selling and administrative expenses increased 4.2% to $77.9 million and represented 24% of net sales.
Adjusted operating income in the reported quarter decreased 1% year over year to $35 million, whereas margins decreased 20 basis points to 11.2%. Inflationary headwinds, increasing interest rates and supply-chain challenges affected the results in the quarter. Interest expenses totaled $4.4 million in the reported quarter, up 16.2% year over year.
The adjusted effective tax rate in the reported quarter was 18.6%.
Balance Sheet & Cash Flow
While exiting the fourth quarter, Barnes’ cash and cash equivalents were $76.9 million compared with $102.9 million recorded in the fourth quarter of 2021. Long-term debt was $569.6 million, down from $599.9 million in the fourth quarter of 2021.
In 2022, B repaid a long-term debt of $108.4 million. Proceeds from the issuance of long-term debts were $98.3 million. Liquidity available in the quarter included cash of $77 million and credit under revolving facilities of $533 million.
In 2022, Barnes generated net cash of $75.6 million from operating activities compared with $167.8 million generated in the year-ago period. Capital expenditure totaled $35.1 million, almost in line with the year-ago figure. Free cash flow was $40.5 million compared with $133.7 million a year ago.
In 2022, Barnes paid out dividends of $32.4 million, flat year over year.
Outlook
For 2023, Barnes anticipates adjusted earnings of $2.10-$2.30 per share. The anticipated figure is up 6%-16% from 2022’s figure of $1.98 per share.
Organic sales for the year are expected to rise 6-8% from the year-ago reported figure.
The adjusted operating margin is predicted to be 12.5-13.5%. Barnes anticipates a capital expenditure of approximately $50 million. Cash conversion is expected to be approximately 100% of net income. The effective tax rate for 2023 is expected to be 24.5%-25.5%.
Zacks Rank & Stocks to Consider
B currently has a Zacks Rank #4 (Sell). Some top-ranked companies from the Industrial Products sector are discussed below:
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE’s earnings surprise in the last four quarters was 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 15% in the past six months.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 3.2%, on average.
AOS’ earnings estimates have increased 4.1% for 2023 in the past 60 days. Shares of A. O. Smith have risen 9.7% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Valmont’s earnings estimates have remained steady for 2022. The stock has rallied 15.8% in the past six months.