Barnes Group Inc. Reports First Quarter 2008 Financial Results

Business Wire, May 2, 2008

* Quarterly net sales rise 8% to a record $388.6 million

* Net income increases 21% to a record $33.4 million

* First quarter diluted EPS increases 20% to $0.60

* 2008 full-year guidance raised to $2.30 to $2.39 per diluted share

BRISTOL, Conn. -- Barnes Group Inc. (NYSE: B), a leading aerospace and industrial components manufacturer and distributor, today reported first quarter 2008 net income growth of 21 percent to $33.4 million, or $0.60 per diluted share, compared to the prior year first quarter. The increase in net income reflects 8 percent revenue growth driven primarily by strong demand in the international industrial and aerospace manufacturing and aftermarket businesses. Operating income improved 16 percent over the prior year first quarter and operating margin increased 0.8 percentage points to 12.8 percent. First quarter improvements were driven primarily by record operating profit in Barnes Aerospace, continued strength in Barnes Industrial, and improved contributions from Barnes Distribution due to the positive impact of organizational and operational initiatives.

"Companies that have embraced globalization, like Barnes Group, are well positioned for success through these uncertain economic times," said Gregory F. Milzcik, President and Chief Executive Officer, Barnes Group Inc. "Our record first quarter results demonstrate the success we are achieving in executing our strategies. We will continue to make progress in delivering on our growth strategies and remain diligent in taking the necessary and deliberate steps for achieving consistent, sustainable, and predictable results," continued Milzcik.

"Once again Barnes Group's operations provided solid overall financial performance," said William C. Denninger, Senior Vice President, Finance and Chief Financial Officer, Barnes Group Inc. "We believe we are well positioned in this business environment, given our international reach in the aerospace and industrial markets as well as our ongoing transformation of Barnes Distribution. As a result, we expect to continue to realize sales and earnings growth while prudently investing in our future. The Company's targeted earnings for full year 2008, based on current market conditions, have increased to $2.30 to $2.39 per diluted share from $2.20 to $2.30 per diluted share, reflecting an anticipated increase over 2007 reported results of 31 percent to 36 percent," continued Denninger.

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On February 19, 2008, the Company sold the net assets of Spectrum Plastics Molding Resources, Inc., a business of Barnes Industrial, for approximately $6.4 million. The transaction loss of $1.2 million, or $0.8 million after-tax ($0.01 per diluted earnings per share), was recorded in the first quarter of 2008. Spectrum Plastics sales in 2007 were approximately $13.0 million.

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

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Through the first quarter of 2008, Barnes Aerospace continued to achieve sales and operating profit success. Barnes Aerospace generated sales of $112.3 million in the first quarter of 2008, an increase of 23 percent over the first quarter of 2007. The first quarter 2008 sales increase reflects growth of 26 percent in aftermarket sales. Contributing to aftermarket sales growth was the positive impact of additional Revenue Sharing Programs (RSPs) since the first quarter of 2007, strong industry fundamentals, and continued benefits from long-term maintenance and repair contracts.

Manufacturing sales increased 22 percent for the quarter on the strength of the sales order backlog. The total order backlog at Barnes Aerospace at the end of the first quarter of 2008 was $465.6 million, down slightly from a record $472.6 million at December 31, 2007. This total includes adjustments for delays in Boeing's 787 airplane delivery schedule as well as raw material horizon changes. Approximately 61 percent of the backlog at March 31, 2008 is expected to be shipped within the next 12 months. Barnes Aerospace is focused on meeting increased sales volume in its manufacturing and aftermarket businesses by adding capacity in Singapore, Ogden, Utah, West Chester, Ohio and through rigorous lean enterprise activities. Costs related to the new Ogden, Utah facility are estimated at approximately $2.0 million for full year 2008, with approximately $0.2 million incurred in the first quarter of 2008. This new state-of-the-art manufacturing facility will enable Barnes Aerospace to take advantage of the growth opportunities for a wide range of aircraft engine and airframe applications, particularly the GEnx and Trent 1000 engines.

Barnes Aerospace's first quarter 2008 operating profit was a record $22.3 million, an increase of 33 percent from the 2007 period. Barnes Aerospace has generated quarter-over-quarter growth in operating profit for 17 consecutive quarters. Operating profit for the first quarter of 2008 was positively impacted by profit contribution from aftermarket RSPs as well as a sales volume increase in the manufacturing business, and operational improvements. This was partially offset by increased expenditures in its maintenance, repair, and overhaul (MRO) business to increase production capacity for current and expected future demand.