Barnes Group Inc. (B - Free Report) reported mixed second-quarter 2022 results, wherein its earnings surpassed estimates by 16.7%. However, sales missed the same by 2%.
Its adjusted earnings in the reported quarter were 56 cents per share, surpassing the Zacks Consensus Estimate of 48 cents. Also, the bottom line increased 24.4% from the year-ago quarter’s figure of 45 cents.
Top-Line Results
In the reported quarter, Barnes’ net sales of 321.3 million were flat year over year. Organic sales in the quarter grew 5% on strengthening segmental businesses.
B’s revenues missed the Zacks Consensus Estimate of $328 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 $212.1 million, decreasing 9.6% year over year. The segment suffered adverse impacts of inflation, supply-chain issues and lower productivity. Organic sales were down 3% year over year, and movements in foreign currencies had a negative impact of 6%.
Aerospace’s sales were $109.2 million in the second quarter, up 26.2% from the year-ago quarter’s level on the back of an improvement in the aerospace markets.
Aftermarket sales were up 55% year over year, while the same for original equipment manufacturing increased 14%.
Margin Profile
In the reported quarter, Barnes’ cost of sales increased 4.7% year over year to $212.8 million. The cost of sales represented 66.2% of net sales compared with 63.3% in the year-ago quarter. Selling and administrative expenses decreased 13.8% to $68.5 million and represented 21.3% of net sales.
Adjusted operating income in the reported quarter increased 2% year over year to $40.1 million, whereas margins increased 30 basis points to 12.5%. Growth in sales was offset by inflationary headwinds, increasing interest rates and supply-chain challenges. Interest expenses totaled $3.3 million in the reported quarter, down 25.7% year over year.
The adjusted effective tax rate in the reported quarter was 22.8%, lower than 25.3% a year ago.
Balance Sheet & Cash Flow
While exiting the second quarter, Barnes’ cash and cash equivalents were $72.3 million, down 29.7% from $102.9 million recorded in the fourth quarter of 2021. Long-term debt was $582.5 million, reflecting a 2.9% decline from $599.9 million in the fourth quarter of 2021.
In the first six months of 2022, B repaid a long-term debt of $70.4 million. Proceeds from the issuance of long-term debts were $80 million. Liquidity available in the quarter included cash of $72.3 million and credit under revolving facilities of $521 million.
In the first six months of 2022, Barnes generated net cash of $8.5 million from operating activities compared with $85.7 million generated in the year-ago period. Capital expenditure totaled $13.5 million, decreasing 23.3%. Free cash outflow was $5 million compared with free cash inflow of $68.2 million a year ago.
In the first six months of the year, Barnes paid out dividends of $16.2 million, flat year over year.
Outlook
For 2022, Barnes anticipates adjusted earnings of $1.90-$2.05 per share compared with $2.20-$2.40 predicted earlier.
Organic sales for the year are expected to rise 5-6% from the year-ago reported figure compared with 8-10% anticipated earlier. Adverse movements in foreign currencies are expected to hurt sales 3%.
The adjusted operating margin is predicted to be 11-12%, down from 12.5-13.5% anticipated earlier due to the lackluster performance of the Industrial segment and macroeconomic headwinds. Barnes anticipates a capital expenditure of $40-$45 million. Cash conversion is expected to be approximately 100% of net income. The effective tax rate for 2022 is expected to be 24-25%.
Zacks Rank & Stocks to Consider
Barnes currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies from the industrial products sector are discussed below:
Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
GEF’s earnings estimates have increased 17.8% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 19.4% in the past six months.
Titan International, Inc. presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 56.4%, on average.
In the past 60 days, TWI’s earnings estimates have increased 43.3% for 2022. The stock has surged 72.2% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank #2 (Buy). VMI’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, the stock’s earnings estimates have increased 3.8% for 2022. The stock has risen 26.8% in the past six months.
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Barnes Group Inc. (B - Free Report) reported mixed second-quarter 2022 results, wherein its earnings surpassed estimates by 16.7%. However, sales missed the same by 2%.
Its adjusted earnings in the reported quarter were 56 cents per share, surpassing the Zacks Consensus Estimate of 48 cents. Also, the bottom line increased 24.4% from the year-ago quarter’s figure of 45 cents.
Top-Line Results
In the reported quarter, Barnes’ net sales of 321.3 million were flat year over year. Organic sales in the quarter grew 5% on strengthening segmental businesses.
B’s revenues missed the Zacks Consensus Estimate of $328 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 $212.1 million, decreasing 9.6% year over year. The segment suffered adverse impacts of inflation, supply-chain issues and lower productivity. Organic sales were down 3% year over year, and movements in foreign currencies had a negative impact of 6%.
Aerospace’s sales were $109.2 million in the second quarter, up 26.2% from the year-ago quarter’s level on the back of an improvement in the aerospace markets.
Aftermarket sales were up 55% year over year, while the same for original equipment manufacturing increased 14%.
Margin Profile
In the reported quarter, Barnes’ cost of sales increased 4.7% year over year to $212.8 million. The cost of sales represented 66.2% of net sales compared with 63.3% in the year-ago quarter. Selling and administrative expenses decreased 13.8% to $68.5 million and represented 21.3% of net sales.
Adjusted operating income in the reported quarter increased 2% year over year to $40.1 million, whereas margins increased 30 basis points to 12.5%. Growth in sales was offset by inflationary headwinds, increasing interest rates and supply-chain challenges. Interest expenses totaled $3.3 million in the reported quarter, down 25.7% year over year.
The adjusted effective tax rate in the reported quarter was 22.8%, lower than 25.3% a year ago.
Balance Sheet & Cash Flow
While exiting the second quarter, Barnes’ cash and cash equivalents were $72.3 million, down 29.7% from $102.9 million recorded in the fourth quarter of 2021. Long-term debt was $582.5 million, reflecting a 2.9% decline from $599.9 million in the fourth quarter of 2021.
In the first six months of 2022, B repaid a long-term debt of $70.4 million. Proceeds from the issuance of long-term debts were $80 million. Liquidity available in the quarter included cash of $72.3 million and credit under revolving facilities of $521 million.
In the first six months of 2022, Barnes generated net cash of $8.5 million from operating activities compared with $85.7 million generated in the year-ago period. Capital expenditure totaled $13.5 million, decreasing 23.3%. Free cash outflow was $5 million compared with free cash inflow of $68.2 million a year ago.
In the first six months of the year, Barnes paid out dividends of $16.2 million, flat year over year.
Outlook
For 2022, Barnes anticipates adjusted earnings of $1.90-$2.05 per share compared with $2.20-$2.40 predicted earlier.
Organic sales for the year are expected to rise 5-6% from the year-ago reported figure compared with 8-10% anticipated earlier. Adverse movements in foreign currencies are expected to hurt sales 3%.
The adjusted operating margin is predicted to be 11-12%, down from 12.5-13.5% anticipated earlier due to the lackluster performance of the Industrial segment and macroeconomic headwinds. Barnes anticipates a capital expenditure of $40-$45 million. Cash conversion is expected to be approximately 100% of net income. The effective tax rate for 2022 is expected to be 24-25%.
Zacks Rank & Stocks to Consider
Barnes currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies from the industrial products sector are discussed below:
Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
GEF’s earnings estimates have increased 17.8% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 19.4% in the past six months.
Titan International, Inc. presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 56.4%, on average.
In the past 60 days, TWI’s earnings estimates have increased 43.3% for 2022. The stock has surged 72.2% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank #2 (Buy). VMI’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, the stock’s earnings estimates have increased 3.8% for 2022. The stock has risen 26.8% in the past six months.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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