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Barnes Group (B) Q3 Earnings Surpass, Revenues Miss Mark
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Barnes Group Inc. (B - Free Report) reported mixed third-quarter 2022 results, wherein earnings surpassed estimates by 2.1%. However, sales missed the same by 2.8%.
The adjusted earnings in the reported quarter were 49 cents per share, surpassing the Zacks Consensus Estimate of 48 cents. However, the bottom line decreased 10.9% from the year-ago quarter’s 55 cents. Despite the lackluster performance, the company’s shares have gained 0.4% since its third-quarter 2022 earnings release on Oct 28.
Top-Line Results
In the reported quarter, Barnes’ net sales of $314.7 million decreased 3.2% year over year. Organic sales in the quarter grew 2.4%.
B’s revenues missed the Zacks Consensus Estimate of $324 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 $204 million, decreasing 11.9% year over year. The segment suffered adverse impacts of inflation, supply-chain issues and lower productivity. Organic sales were down 4% year over year, and movement in foreign currencies had a negative impact of 8%.
Aerospace’s sales were $110.8 million in the third quarter, up 18.5% from the year-ago quarter on the back of an improvement in the aftermarket and original equipment manufacturing market.
Aftermarket sales were up 55% year over year, while the same for original equipment manufacturing increased 2%.
In the reported quarter, Barnes’ cost of sales increased 1.7% year over year to $208.6 million. The cost of sales represented 66.3% of net sales compared with 63.1% in the year-ago quarter. Selling and administrative expenses decreased 0.2% to $76.1 million and represented 24.2% of net sales.
Adjusted operating income in the reported quarter decreased 11% year over year to $39 million, whereas margins decreased 110 basis points to 12.4%. Inflationary headwinds, increasing interest rates and supply-chain challenges affected the results in the quarter. Interest expenses totaled $3.4 million in the reported quarter, down 16.6% year over year.
The adjusted effective tax rate in the reported quarter was 27.6%.
Balance Sheet & Cash Flow
While exiting the third quarter, Barnes’ cash and cash equivalents were $71.6 million compared with $102.9 million recorded in the fourth quarter of 2021. Long-term debt was $556.4 million, down from $599.9 million in the fourth quarter of 2021.
In the first nine months of 2022, B repaid a long-term debt of $80.8 million. Proceeds from the issuance of long-term debts were $85.1 million. Liquidity available in the quarter included cash of $72 million and credit under revolving facilities of $547 million.
In the first nine months of 2022, Barnes generated net cash of $43.5 million from operating activities compared with $127.8 million generated in the year-ago period. Capital expenditure totaled $21.7 million, decreasing 18.7%. Free cash flow was $21.8 million compared with $101.1 million a year ago.
In the first nine months of the year, Barnes paid out dividends of $24.3 million, flat year over year.
Outlook
For 2022, Barnes anticipates adjusted earnings of $1.90-$2.00 per share compared with $1.90-$2.05 predicted earlier. The anticipated figure is down 2%-up 3% from 2021’s figure of $1.94 per share.
Organic sales for the year are expected to rise 5-6% from the year-ago reported figure. Adverse movement in foreign currencies are expected to hurt sales 4% compared with 3% anticipated earlier.
The adjusted operating margin is predicted to be 11.5-12%, up modestly on the low end from 11-12% anticipated earlier. Barnes anticipates a capital expenditure of approximately $35 million compared with $40-$45 million predicted earlier. Cash conversion is expected to be approximately 90% of net income compared with 100% of net income predicted earlier. The effective tax rate for 2022 is expected to be 24.5% compared with 24-25% predicted earlier.
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:
EPAC’s earnings estimates have increased 9.1% for fiscal 2023 (ending August 2023) in the past 60 days. The company’s shares have gained 20.8% in the past six months.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank #1 and a trailing four-quarter earnings surprise of 24.8%, on average.
AIT’s earnings estimates have increased 3% for fiscal 2023 (ending June 2023) in the past 60 days. The company’s shares have risen 12.5% in the past six months.
IDEX Corporation (IEX - Free Report) presently has a Zacks Rank of 2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 1.5% for 2022. The stock has rallied 11.8% in the past six months.
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Barnes Group (B) Q3 Earnings Surpass, Revenues Miss Mark
Barnes Group Inc. (B - Free Report) reported mixed third-quarter 2022 results, wherein earnings surpassed estimates by 2.1%. However, sales missed the same by 2.8%.
The adjusted earnings in the reported quarter were 49 cents per share, surpassing the Zacks Consensus Estimate of 48 cents. However, the bottom line decreased 10.9% from the year-ago quarter’s 55 cents. Despite the lackluster performance, the company’s shares have gained 0.4% since its third-quarter 2022 earnings release on Oct 28.
Top-Line Results
In the reported quarter, Barnes’ net sales of $314.7 million decreased 3.2% year over year. Organic sales in the quarter grew 2.4%.
B’s revenues missed the Zacks Consensus Estimate of $324 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 $204 million, decreasing 11.9% year over year. The segment suffered adverse impacts of inflation, supply-chain issues and lower productivity. Organic sales were down 4% year over year, and movement in foreign currencies had a negative impact of 8%.
Aerospace’s sales were $110.8 million in the third quarter, up 18.5% from the year-ago quarter on the back of an improvement in the aftermarket and original equipment manufacturing market.
Aftermarket sales were up 55% year over year, while the same for original equipment manufacturing increased 2%.
Barnes Group, Inc. Price and Consensus
Barnes Group, Inc. price-consensus-chart | Barnes Group, Inc. Quote
Margin Profile
In the reported quarter, Barnes’ cost of sales increased 1.7% year over year to $208.6 million. The cost of sales represented 66.3% of net sales compared with 63.1% in the year-ago quarter. Selling and administrative expenses decreased 0.2% to $76.1 million and represented 24.2% of net sales.
Adjusted operating income in the reported quarter decreased 11% year over year to $39 million, whereas margins decreased 110 basis points to 12.4%. Inflationary headwinds, increasing interest rates and supply-chain challenges affected the results in the quarter. Interest expenses totaled $3.4 million in the reported quarter, down 16.6% year over year.
The adjusted effective tax rate in the reported quarter was 27.6%.
Balance Sheet & Cash Flow
While exiting the third quarter, Barnes’ cash and cash equivalents were $71.6 million compared with $102.9 million recorded in the fourth quarter of 2021. Long-term debt was $556.4 million, down from $599.9 million in the fourth quarter of 2021.
In the first nine months of 2022, B repaid a long-term debt of $80.8 million. Proceeds from the issuance of long-term debts were $85.1 million. Liquidity available in the quarter included cash of $72 million and credit under revolving facilities of $547 million.
In the first nine months of 2022, Barnes generated net cash of $43.5 million from operating activities compared with $127.8 million generated in the year-ago period. Capital expenditure totaled $21.7 million, decreasing 18.7%. Free cash flow was $21.8 million compared with $101.1 million a year ago.
In the first nine months of the year, Barnes paid out dividends of $24.3 million, flat year over year.
Outlook
For 2022, Barnes anticipates adjusted earnings of $1.90-$2.00 per share compared with $1.90-$2.05 predicted earlier. The anticipated figure is down 2%-up 3% from 2021’s figure of $1.94 per share.
Organic sales for the year are expected to rise 5-6% from the year-ago reported figure. Adverse movement in foreign currencies are expected to hurt sales 4% compared with 3% anticipated earlier.
The adjusted operating margin is predicted to be 11.5-12%, up modestly on the low end from 11-12% anticipated earlier. Barnes anticipates a capital expenditure of approximately $35 million compared with $40-$45 million predicted earlier. Cash conversion is expected to be approximately 90% of net income compared with 100% of net income predicted earlier. The effective tax rate for 2022 is expected to be 24.5% compared with 24-25% predicted earlier.
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:
Enerpac Tool Group Corp. (EPAC - Free Report) delivered an average four-quarter earnings surprise of 3.4%. EPAC presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
EPAC’s earnings estimates have increased 9.1% for fiscal 2023 (ending August 2023) in the past 60 days. The company’s shares have gained 20.8% in the past six months.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank #1 and a trailing four-quarter earnings surprise of 24.8%, on average.
AIT’s earnings estimates have increased 3% for fiscal 2023 (ending June 2023) in the past 60 days. The company’s shares have risen 12.5% in the past six months.
IDEX Corporation (IEX - Free Report) presently has a Zacks Rank of 2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 1.5% for 2022. The stock has rallied 11.8% in the past six months.