Barnes Group Announces Fourth Quarter and Full Year Financial Results

Business Wire, Feb 22, 2005

BRISTOL, Conn. -- Barnes Group Inc. (NYSE: B):

--Net sales for the quarter rise 14 percent to a record $251.6 million

--Net sales for the full year rise 12 percent to a record $994.7 million

--Barnes Aerospace achieves full year record operating profit, sales, orders, and backlog

Barnes Group Inc. (NYSE: B) today announced financial results for the quarter and year ended December 31, 2004. Net sales for the quarter were $251.6 million, up 14 percent from $220.3 million in the fourth quarter of 2003. Net income was $3.3 million or $0.14 per diluted share in the fourth quarter of 2004, compared to $7.0 million, or $0.29 per diluted share in the year-ago period.

Included in the fourth quarter results were pre-tax charges of approximately $4.5 million, or $0.12 per diluted share, for actions implemented to offset higher raw material costs going forward at Associated Spring and to enable the realization of benefits from the Kar Products integration and improved customer service levels at Barnes Distribution. These charges include $3.5 million related to severance costs, which are estimated to generate annual savings of approximately $5.5 million, and $1.0 million in inventory and facility charges. The charges were partially offset by a $0.7 million pre-tax benefit related principally to the reduction of lease obligations on idle facilities within Barnes Distribution.

For all of 2004, net sales were $994.7 million, up 12 percent from $890.8 million last year. Barnes Group's net income was $33.4 million, a slight increase from $33.0 million for the same period a year ago. Diluted earnings per share were $1.40 for the year ended December 31, 2004, compared with $1.49 in 2003. Full-year results excluding the fourth quarter charges of $4.5 million would have been $1.52 per diluted share(1).

"Full year sales of just under $1 billion established a new record for the Company, including sales of $252 million in the fourth quarter," said Edmund M. Carpenter, President and Chief Executive Officer, Barnes Group Inc. "The record sales year was driven by organic growth in each of the Company's business segments."

Sales at Barnes Aerospace were $51.4 million for the fourth quarter of 2004, up 19 percent from $43.4 million in the fourth quarter of 2003, reflecting continued growth in both OEM sales and aftermarket sales. Sales of components for the GE90-115B engine were at the highest levels since the program began and our aftermarket Revenue Sharing Programs continued to generate solid sales. Operating profit increased to $5.5 million for the quarter, from $3.4 million in the comparable year-ago period. Operating profit was positively impacted by the profit contribution from the sharply higher sales volume and the increased percentage of aftermarket activity.

Barnes Aerospace generated record orders of $71.5 million during the quarter ended December 31, 2004, up 66 percent from orders of $43.0 million in the fourth quarter of 2003. Order backlog reached a record $193.8 million at December 31, 2004, up 31 percent from $147.7 million at December 31, 2003. Military orders in the fourth quarter were strong at $23.9 million, and were approximately 33 percent of the total orders received in the most recent quarter.

For all of 2004, sales at Barnes Aerospace were $205.9 million, an increase of 24 percent from $165.7 million in 2003. Operating profit rose 94 percent to a record $20.7 million from $10.7 million compared to a year ago.

"In 2004, Barnes Aerospace achieved record results in operating profits, sales, and orders, generated the highest backlog in its history, and remains optimistic for its continued growth in 2005," stated Carpenter.

Sales at Barnes Distribution were $104.2 million for the fourth quarter of 2004, up 6 percent from $98.3 million in the quarter ended December 31, 2003. Sales from Barnes Distribution's strategic growth initiatives - newly-opened national accounts, e-commerce platforms and Tier 2 relationships with other industrial distributors - rose over 50 percent to $8.1 million in the most recent quarter.

Barnes Distribution had an operating loss of $1.1 million in the fourth quarter, which includes $2.3 million of pre-tax charges related to severance costs of $1.3 million and inventory and facility charges of $1.0 million, compared to an operating profit of $1.0 million in the fourth quarter of 2003. The charges in 2004 were partially offset by a $0.7 million pre-tax benefit related principally to the reduction of lease obligations.

For all of 2004, sales at Barnes Distribution were $424.8 million, up from $400.7 million in 2003. Operating profit was $13.8 million for 2004, down from $16.5 million in 2003.

"For Barnes Distribution, 2004 was an important year as critical initiatives were undertaken and completed providing the necessary operational structure for future growth," stated Carpenter. "With Barnes Distribution's customer service levels back to our targeted range, and the integration efforts now complete, we are well positioned for improved performance in 2005."