Barnes Group Q2 Profit Soars, Tightens 2013 Adj. Earnings Outlook

(RTTNews) - Aerospace and industrial equipment maker Barnes Group Inc. (B) on Friday reported a profit for the second quarter that rose more than eight-fold from last year as strong revenue growth and a gain from the sale of the company's North American distribution business more than offset a tax charge.

Looking ahead to fiscal 2013, the company tightened its outlook for adjusted earnings from continuing operations and lowered the top of its revenue guidance range.

Barnes Group's aerospace segment sales for the second quarter rose 3 percent from the prior-year period to $96.83 million, as a sales increase in original equipment manufacturing or OEM was partly offset by lower sales in the aftermarket business.

Industrial segment sales surged 40 percent to $170.56 million, driven by the Synventive acquisition's sales contribution and organic sales growth of 5 percent, inclusive of favorable pricing.

Britsol, Connecticut-based Barnes Group's net income for the quarter was $209.33 million or $3.82 per share, up from $24.83 million or $0.45 per share in the same quarter last year.

Income from continuing operations declined to $9.20 million or $0.17 per share from $19.49 million or $0.35 per share in the year ago quarter.

The results for the latest quarter included a tax charge of $16.6 million or $0.30 per share, associated with the April 16, 2013 U.S. Tax Court's unfavorable decision arising out of an IRS audit for the tax years 2000 through 2002.

Excluding the impact of the U.S. Tax Court's decision, adjusted earnings per share from continuing operations for the quarter were $0.47, compared to $0.35 in the prior-year period. On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.47 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's results also include a gain on sale of $194 million, net of tax, representing the sales price less the asset value of BDNA and net of transaction-related costs. In April, Barnes completed the sale of its Barnes Distribution North America or BDNA business to MSC Industrial Direct Co., Inc. (MSM) for $550 million.

Net sales from continuing operations grew 24 percent to $267.39 million from $215.31 million in the year-ago period, driven largely by the sales contribution of the Synventive business. Analysts had a consensus revenue estimate of $269.40 million.

Operating margin increased to 13.5 percent from 12.0 percent in the year-ago period.

Looking ahead to fiscal 2013, Barnes Group now forecasts reported earnings from continuing operations in a range of $1.43 to $1.53 per share, compared to the prior range of $1.71 to $1.86 per share.

The company currently projects adjusted earnings per share from continuing operations of $1.85 to $1.95, compared to the prior range of $1.83 to $1.98 per share. The revised outlook represents an increase of 22 percent to 28 percent from 2012's adjusted earnings per share from continuing operations of $1.52.

Barnes now expects 2013 revenue from continuing operations to grow 17 percent to 19 percent from 2012, compared to its prior outlook for revenue from continuing operations to increase 17 percent to 20 percent.

Analysts expect the company to report earnings of $1.91 per share for the year on revenues of $1.09 billion.

Excluding non-recurring costs of $10.5 million pre-tax associated with the company's CEO transition recorded in the first quarter, Barnes Group projects adjusted operating margins for the year in a range of 13.5 percent to 14 percent.

In Friday's regular session, B is trading at $33.04, up $0.25 or 0.76 percent on a volume of 178,011 shares.