Barnes Group Inc. (B - Free Report) reported adjusted earnings of 41 cents per share in fourth-quarter 2023, surpassing the Zacks Consensus Estimate of adjusted earnings of 35 cents per share. The bottom line declined 21% year over year due to the increasing cost of sales.
Inside the Headlines
Total revenues of $415.5 million missed the Zacks Consensus Estimate of $420 million. Nevertheless, the top line increased 32.6% year over year, with organic sales growth of 2%.
Barnes reports revenues under two heads, namely Industrial and Aerospace. A brief snapshot of the segmental sales is provided below:
Revenues from the Industrial segment amounted to $203 million, down 1% year over year. While organic sales were down 4% year over year, favorable foreign currency movements increased sales by 3%. Our estimate for segmental revenues was $198.1 million.
The Aerospace segment’s sales totaled $213 million in the fourth quarter, up 96% from the year-ago quarter’s figure. Organic sales increased 15% and acquisition-boosted sales rose 81%. The upside can be attributed to a 109% surge in Aerospace original equipment manufacturing sales and a 77% rise in aftermarket sales. Our estimate for segmental revenues was $220.4 million.
Margin Profile
In the reported quarter, Barnes’ cost of sales increased 44% year over year to $304.4 million. Selling and administrative expenses increased 4.5% to $81.4 million.
Adjusted operating income was $47.7 million, up 36% year over year, while the margin increased 30 basis points to 11.5%.
Balance Sheet & Cash Flow
At the end of the fourth quarter, Barnes had cash and cash equivalents of $89.8 million compared with $76.9 million recorded at the end of 2022. Long-term debt was $1,280 million, up from $569.6 million at the end of 2022.
Liquidity available in the quarter included cash of $90 million and credit under revolving facilities of $357 million.
In 2023, Barnes generated net cash of $112.4 million from operating activities compared with $75.6 million generated in the year-ago period. Capital expenditures totaled $55.7 million, up 58.7% from the year-ago quarter’s figure. Free cash flow was $56.7 million compared with $40.5 million a year ago.
In 2023, Barnes rewarded its shareholders with dividends of $32.4 million, nearly flat year over year.
2024 Outlook
For 2024, Barnes expects total sales to increase in the range of 12-16% year over year and organic sales to grow 4-8%. Adjusted operating margin is estimated to be 12-14%, while the adjusted EBITDA margin is projected to be 20-22%.
GAAP earnings are projected to be $0.94 to $1.19 per share, while the adjusted earnings are expected to be in the band of $1.55-$1.80.
For 2024, Barnes expects capital expenditures of $60-$70 million, while free cash flow is likely to be $75-$85 million. The adjusted effective tax rate is forecasted to be 30-32% for the year.
Zacks Rank & Stocks to Consider
Barnes currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the same space are discussed below:
Parker-Hannifin Corporation (PH - Free Report) carries a Zacks Rank #2 (Buy). PH delivered a trailing four-quarter average earnings surprise of 14.4%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Flowserve Corporation (FLS - Free Report) presently has a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady.
Ingersoll-Rand plc (IR - Free Report) presently has a Zacks Rank of 2. IR delivered a trailing four-quarter average earnings surprise of 15.9%. In the past 60 days, the Zacks Consensus Estimate for Ingersoll-Rand’s 2024 earnings has increased 1.6%.
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Barnes Group Inc. (B - Free Report) reported adjusted earnings of 41 cents per share in fourth-quarter 2023, surpassing the Zacks Consensus Estimate of adjusted earnings of 35 cents per share. The bottom line declined 21% year over year due to the increasing cost of sales.
Inside the Headlines
Total revenues of $415.5 million missed the Zacks Consensus Estimate of $420 million. Nevertheless, the top line increased 32.6% year over year, with organic sales growth of 2%.
Barnes reports revenues under two heads, namely Industrial and Aerospace. A brief snapshot of the segmental sales is provided below:
Revenues from the Industrial segment amounted to $203 million, down 1% year over year. While organic sales were down 4% year over year, favorable foreign currency movements increased sales by 3%. Our estimate for segmental revenues was $198.1 million.
The Aerospace segment’s sales totaled $213 million in the fourth quarter, up 96% from the year-ago quarter’s figure. Organic sales increased 15% and acquisition-boosted sales rose 81%. The upside can be attributed to a 109% surge in Aerospace original equipment manufacturing sales and a 77% rise in aftermarket sales. Our estimate for segmental revenues was $220.4 million.
Margin Profile
In the reported quarter, Barnes’ cost of sales increased 44% year over year to $304.4 million. Selling and administrative expenses increased 4.5% to $81.4 million.
Adjusted operating income was $47.7 million, up 36% year over year, while the margin increased 30 basis points to 11.5%.
Balance Sheet & Cash Flow
At the end of the fourth quarter, Barnes had cash and cash equivalents of $89.8 million compared with $76.9 million recorded at the end of 2022. Long-term debt was $1,280 million, up from $569.6 million at the end of 2022.
Liquidity available in the quarter included cash of $90 million and credit under revolving facilities of $357 million.
In 2023, Barnes generated net cash of $112.4 million from operating activities compared with $75.6 million generated in the year-ago period. Capital expenditures totaled $55.7 million, up 58.7% from the year-ago quarter’s figure. Free cash flow was $56.7 million compared with $40.5 million a year ago.
In 2023, Barnes rewarded its shareholders with dividends of $32.4 million, nearly flat year over year.
2024 Outlook
For 2024, Barnes expects total sales to increase in the range of 12-16% year over year and organic sales to grow 4-8%. Adjusted operating margin is estimated to be 12-14%, while the adjusted EBITDA margin is projected to be 20-22%.
GAAP earnings are projected to be $0.94 to $1.19 per share, while the adjusted earnings are expected to be in the band of $1.55-$1.80.
For 2024, Barnes expects capital expenditures of $60-$70 million, while free cash flow is likely to be $75-$85 million. The adjusted effective tax rate is forecasted to be 30-32% for the year.
Zacks Rank & Stocks to Consider
Barnes currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the same space are discussed below:
Parker-Hannifin Corporation (PH - Free Report) carries a Zacks Rank #2 (Buy). PH delivered a trailing four-quarter average earnings surprise of 14.4%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Flowserve Corporation (FLS - Free Report) presently has a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady.
Ingersoll-Rand plc (IR - Free Report) presently has a Zacks Rank of 2. IR delivered a trailing four-quarter average earnings surprise of 15.9%. In the past 60 days, the Zacks Consensus Estimate for Ingersoll-Rand’s 2024 earnings has increased 1.6%.
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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