Barnes Group Inc. Reports Fourth Quarter and Full Year 2007 Financial Results

Business Wire, Feb 15, 2008

* 2007 annual net sales rise 14 percent to $1.44 billion

* 2007 net income increases 37% with diluted EPS up 27%

* Full year 2008 diluted EPS projected to increase 25% to 30%

BRISTOL, Conn. -- Barnes Group Inc. (NYSE: B), a leading aerospace and industrial components manufacturer and distributor, today reported fourth quarter 2007 net income of $17.6 million, or $0.30 per diluted share. Net income for the full year 2007 was $101.3 million, an increase of 37 percent, and full year diluted earnings per share of $1.76, a 27 percent increase over 2006. Results were driven by strong Aerospace and Industrial segment performance. Fourth quarter 2007 sales increased 9 percent and for the full year 2007, Barnes Group's net sales were $1.44 billion, up 14 percent from $1.26 billion in 2006.

Included in fourth quarter and full year 2007 reported results are charges of approximately $2.6 million pre-tax, or $2.2 million after-tax, for a reduction-in-force resulting from production realignment and product rationalization at Barnes Industrial, and additional tax expense of $2.4 million due to recent foreign tax law changes. These charges were described in our November 2, 2007 third quarter 2007 earnings press release, though the full amount of the charges was not clearly defined at that time. As the Company detailed, the estimated cost of the reduction-in-force within Barnes Industrial and the additional tax expense were excluded from the 2007 full year guidance, which at the time was $1.79 to $1.83 per diluted share.

Excluding the Barnes Industrial reduction-in-force charge and the additional tax expense, fourth quarter adjusted net income increased 20 percent to $22.2 million compared to the prior-year quarter, and on a comparable basis diluted earnings per share of $0.38 increased 12 percent. Adjusted net income for the full-year 2007 increased 43 percent to $105.9 million, or $1.84 per diluted share, up 32 percent. References to adjusted net income, adjusted net income per diluted share, adjusted operating profit, adjusted operating income, adjusted income taxes, and adjusted tax rate for the fourth quarter and full year 2007 are non-GAAP financial measures which are detailed on the non-GAAP financial reconciliations at the end of this press release.

"Barnes Group's results are reaching new heights as we continue to deliver on our commitments. We have demonstrated an ability to succeed in challenging environments by delivering full year reported diluted earnings per share growth of 27%," said Gregory F. Milzcik, President and Chief Executive Officer, Barnes Group Inc. "Customer demand remains very strong, particularly in Aerospace and among our European based industrial businesses, and we are making the necessary investments to maximize both our potential in the marketplace and long-term stockholder value. As an organization we remain committed to exceeding customer expectations by ensuring quality and on-time delivery of our products and services. Ongoing investments in our business such as lean enterprise activities and systematic goal deployment will allow us to adapt in an uncertain economic environment and remain focused on achieving our objective of profitable growth," continued Milzcik.

"The strength of Barnes Group's global operations provides the platform for ongoing balanced, sustainable, and consistent financial performance," said William C. Denninger, Senior Vice President, Finance and Chief Financial Officer, Barnes Group Inc. "We believe the investments we have made within all three of our segments and particularly Project Catalyst within Barnes Distribution, position the Company for another year of improved performance. The Company's targeted earnings for full-year 2008, based on current market conditions, are in the range of $2.20 to $2.30 per diluted share, which reflects an increase over 2007 reported results of 25 percent to 30 percent."

[TABLE OMITTED]

As previously reported, Barnes Group realigned its reportable business segments during 2007 by transferring the stock spring catalog and custom solutions business from Barnes Distribution to Barnes Industrial, whose engineered springs business manufactures many of the spring products sold by this business. Segment information has been adjusted on a retrospective basis to reflect this change.

Barnes Aerospace

[TABLE OMITTED]

Barnes Aerospace delivered another strong quarter, culminating a very successful year of significant operational activity. Capacity expansion, transfer of production, new product introductions, and enterprise-wide investments were successfully undertaken in a dynamic industrial setting, including globalization, dollarization, and outsourcing. Barnes Aerospace's momentum is expected to continue, based on new Revenue Sharing Programs (RSPs), product expansion within the aftermarket maintenance, repair and overhaul (MRO) business, and increased production capabilities driven by rigorous lean enterprise activities implemented throughout its worldwide operations. Full year 2007 operating margins were at a record 18.9 percent, a 4.5 point improvement over 2006.