Bristol, CT- Barnes Group Inc. (NYSE: B), an international aerospace and industrial manufacturing and service provider, today reported financial results for the first quarter 2012. Net sales grew 5 percent to $303.1 million from $289.6 million in the first quarter of 2011. Income from continuing operations for the first quarter was up 14 percent to $23.0 million, or $0.41 per diluted share, from $20.2 million, or $0.36 per diluted share, a year earlier.
In the first quarter of 2012, the Company changed its organizational structure to align its strategic business units into three reportable business segments: Aerospace, Industrial and Distribution. All previously reported financial information has been adjusted on a retrospective basis to reflect the segment realignment. "Barnes Group's first quarter results were a solid start to the year and in line with our expectations," said Gregory F. Milzcik, Barnes Group Inc. President and Chief Executive Officer. "We generated organic sales growth in each of our three operating segments, our backlog is strong and our end markets remain favorable. The overall performance creates an outlook that allows us to affirm our 2012 guidance expectation of record diluted earnings per share before all of our end markets fully recover."
Aerospace
-- First quarter 2012 net sales were $97.3 million, up 7 percent from $90.6 million in the same period last year with both the aftermarket and original equipment manufacturing businesses experiencing sales growth. In particular, the aerospace aftermarket business continued to see strong volumes of repair and overhaul activity.
-- Operating profit increased 4 percent to $14.2 million, from $13.7 million in the first quarter of 2011. The increase was primarily driven by the profit impact of higher sales volumes, mostly offset by increased management fees related to Revenue Sharing Programs (RSPs) and an unfavorable sales mix.
Industrial
-- Sales at Industrial were $115.3 million in the first quarter of 2012, up approximately 4 percent from $111.4 million in the same period last year. The sales growth was primarily driven by increases in the industrial manufacturing businesses based in North America which reflected continued improvement in the transportation industry, including automotive. The impact of foreign exchange decreased net sales by approximately $0.8 million.
-- Operating profit in the first quarter of 2012 was $10.1 million, a decrease of 8 percent from $11.0 million in the first quarter last year. The decline was primarily driven by higher costs associated with investments in new product introductions, a shift in sales mix to lower margin products and the outsourcing of certain manufacturing processes. Partially offsetting these declines was the profit impact of higher sales levels in the first quarter of 2012.
Distribution
-- First quarter 2012 net sales were $93.4 million, up 4 percent from $89.9 million in the same period last year. Sales growth was driven by the continued strengthening of our North American distribution end-markets. The impact of foreign exchange decreased net sales by approximately $0.2 million.
-- Segment operating profit increased 43 percent to $8.7 million, from $6.1 million in the first quarter of 2011 primarily as a result of the beneficial profit impact of higher sales volumes and lower cost structures. The operating profit increase was partially offset by an unfavorable sales mix of lower margin products.
Additional Information
-- Interest expense decreased $1.3 million in the first quarter of 2012 to $2.4 million primarily as a result of the redemption of the 3.75% Convertible Notes in 2011 and the maturity of interest rate swaps in place during the first quarter of 2011. The redemption of the 3.75% Convertible Notes, which were funded with the variable rate credit facility, resulted in a higher percentage of the Company's outstanding debt being carried at a lower average interest rate.
-- The Company's effective tax rate for the first quarter of 2012 was 22.9 percent, compared to 24.2 percent in the first quarter of 2011 and 21.7 percent for the full year 2011. The increase in the first quarter 2012 effective tax rate from the full year 2011 rate was primarily driven by the projected shift of income to higher-taxing jurisdictions, partially offset by the impact of a decrease in the planned repatriation of a portion of current year foreign earnings to the U.S.
2012 Outlook
Barnes Group is affirming its guidance for 2012. The Company expects revenue to grow 6 to 9 percent from 2011, operating margins to be approximately 12 percent, and earnings from continuing operations per diluted share are forecasted to be in the range of $1.78 to $1.93, up 9 to 18 percent from 2011.
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