Barnes Group Inc. (B - Free Report) delivered impressive results for the first quarter of 2021. Its earnings surpassed estimates by 22.58%, whereas sales exceeded the same by 11.18%. Notably, the company’s shares gained 3.27% yesterday, ending the trading session at $51.55.
Its adjusted earnings in the reported quarter were 38 cents per share. It surpassed the Zacks Consensus Estimate of 31 cents. However, the bottom line decreased 46.5% from the year-ago quarter figure of 71 cents due to lower sales generation and weakness in margins.
Top-Line Results
In the reported quarter, Barnes’ net sales decreased 8.8% year over year to $301.6 million. Organic sales in the first quarter declined 10% year over year due to the adverse impacts of the pandemic on aerospace end markets. Divestitures too lowered sales by 2%, while movements in foreign currencies had a positive impact of 3%.
It is worth noting here that first-quarter sales rose 4% from fourth-quarter 2020.
The company’s revenues surpassed the Zacks Consensus Estimate of $271 million.
Barnes reports revenues under two heads — Industrial and Aerospace. A brief snapshot of the segmental sales is provided below:
Revenues generated from Industrial amounted to $220 million, increasing 10.5% year over year. The segment gained from strengthening end-market businesses. Organic sales were up 8% year over year and movements in foreign currencies had a positive impact of 5%, partially offset by an adverse divestiture impact of 3%.
Aerospace’s sales were $81.6 million in the first quarter, down 37.9% from the year-ago quarter. The reported quarter’s performance was adversely impacted by weakness in aerospace end markets due to the pandemic. Aftermarket sales were down 48%, while that of original equipment manufacturing declined 32%.
Margin Profile
In the reported quarter, Barnes’ cost of sales decreased 6.5% year over year to $194.7 million. Notably, cost of sales represented 64.6% of net sales versus 63% in the year-ago quarter. Selling and administrative expenses increased 2% year over year to $74.6 million, and represented 24.7% of net sales.
Adjusted operating income in the reported quarter decreased 37.5% year over year to $32.4 million, whereas margin fell 490 basis points to 10.7%. Interest expenses totaled $3.9 million in the reported quarter, down 8.8% year over year.
Balance Sheet & Cash Flow
Exiting the first quarter, Barnes’ cash and cash equivalents were $84.9 million, up 7.3% from $79.2 million recorded in the last reported quarter. Long-term debt was $664 million, reflecting a 5.1% decline from $699.9 million in the last reported quarter.
In the reported quarter, the company repaid long-term debt of $30.9 million. Also, it received $15 million as proceeds from the issuance of long-term debts. Liquidity available in the quarter included cash of $85 million and credit under revolving facilities of $441 million.
In the quarter under review, the company generated net cash of $35.6 million from operating activities, down 24.5% from the year-ago quarter. Capital expenditure totaled $7.9 million, decreasing 34.1% year over year. Free cash flow was $27.8 million versus $35.3 million in the year-ago quarter.
In the first quarter, Barnes paid out dividends amounting to $8.1 million, representing a 0.4% decrease from the prior-year quarter’s disbursement. No shares were repurchased in the quarter.
Outlook
For 2021, Barnes anticipates earnings of $1.78-$1.98 per share, above the previously stated $1.65-$1.90. The revised projection suggests year-over-year growth of 9-21%. Movements in foreign currencies are expected to boost sales by 2%. Divestiture impact is expected to be adverse 1%.
Organic sales for the year are expected to rise 10-12% (on a year-over-year basis) versus 6-8% mentioned earlier. Operating margin is predicted to be 13% versus the previously stated 12-14%.
The company anticipates capital expenditure of $50 million, down from the previously mentioned $55 million. Cash conversion is expected to exceed 100% of net income. Effective tax rate for 2021 is expected to be 30%.
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Barnes Group Inc. (B - Free Report) delivered impressive results for the first quarter of 2021. Its earnings surpassed estimates by 22.58%, whereas sales exceeded the same by 11.18%. Notably, the company’s shares gained 3.27% yesterday, ending the trading session at $51.55.
Its adjusted earnings in the reported quarter were 38 cents per share. It surpassed the Zacks Consensus Estimate of 31 cents. However, the bottom line decreased 46.5% from the year-ago quarter figure of 71 cents due to lower sales generation and weakness in margins.
Top-Line Results
In the reported quarter, Barnes’ net sales decreased 8.8% year over year to $301.6 million. Organic sales in the first quarter declined 10% year over year due to the adverse impacts of the pandemic on aerospace end markets. Divestitures too lowered sales by 2%, while movements in foreign currencies had a positive impact of 3%.
It is worth noting here that first-quarter sales rose 4% from fourth-quarter 2020.
The company’s revenues surpassed the Zacks Consensus Estimate of $271 million.
Barnes reports revenues under two heads — Industrial and Aerospace. A brief snapshot of the segmental sales is provided below:
Revenues generated from Industrial amounted to $220 million, increasing 10.5% year over year. The segment gained from strengthening end-market businesses. Organic sales were up 8% year over year and movements in foreign currencies had a positive impact of 5%, partially offset by an adverse divestiture impact of 3%.
Aerospace’s sales were $81.6 million in the first quarter, down 37.9% from the year-ago quarter. The reported quarter’s performance was adversely impacted by weakness in aerospace end markets due to the pandemic. Aftermarket sales were down 48%, while that of original equipment manufacturing declined 32%.
Margin Profile
In the reported quarter, Barnes’ cost of sales decreased 6.5% year over year to $194.7 million. Notably, cost of sales represented 64.6% of net sales versus 63% in the year-ago quarter. Selling and administrative expenses increased 2% year over year to $74.6 million, and represented 24.7% of net sales.
Adjusted operating income in the reported quarter decreased 37.5% year over year to $32.4 million, whereas margin fell 490 basis points to 10.7%. Interest expenses totaled $3.9 million in the reported quarter, down 8.8% year over year.
Balance Sheet & Cash Flow
Exiting the first quarter, Barnes’ cash and cash equivalents were $84.9 million, up 7.3% from $79.2 million recorded in the last reported quarter. Long-term debt was $664 million, reflecting a 5.1% decline from $699.9 million in the last reported quarter.
In the reported quarter, the company repaid long-term debt of $30.9 million. Also, it received $15 million as proceeds from the issuance of long-term debts. Liquidity available in the quarter included cash of $85 million and credit under revolving facilities of $441 million.
In the quarter under review, the company generated net cash of $35.6 million from operating activities, down 24.5% from the year-ago quarter. Capital expenditure totaled $7.9 million, decreasing 34.1% year over year. Free cash flow was $27.8 million versus $35.3 million in the year-ago quarter.
In the first quarter, Barnes paid out dividends amounting to $8.1 million, representing a 0.4% decrease from the prior-year quarter’s disbursement. No shares were repurchased in the quarter.
Outlook
For 2021, Barnes anticipates earnings of $1.78-$1.98 per share, above the previously stated $1.65-$1.90. The revised projection suggests year-over-year growth of 9-21%. Movements in foreign currencies are expected to boost sales by 2%. Divestiture impact is expected to be adverse 1%.
Organic sales for the year are expected to rise 10-12% (on a year-over-year basis) versus 6-8% mentioned earlier. Operating margin is predicted to be 13% versus the previously stated 12-14%.
The company anticipates capital expenditure of $50 million, down from the previously mentioned $55 million. Cash conversion is expected to exceed 100% of net income. Effective tax rate for 2021 is expected to be 30%.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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