Barnes Group Inc. B defied market expectations by announcing impressive fourth-quarter 2023 adjusted earnings of 41 cents per share, surpassing the Zacks Consensus Estimate of 35 cents per share. Although the bottom line reflected a 21% year-over-year decline, it can be attributed to rising cost of sales.
Inside the Headlines
Despite total revenues of $415.5 million missing the Zacks Consensus Estimate of $420 million, the top line witnessed a remarkable 32.6% year-over-year growth, propelled by a 2% organic sales increase. Barnes reports revenues under two heads – Industrial and Aerospace – with a brief snapshot of the segmental sales provided below:
- Revenues from the Industrial segment amounted to $203 million, down 1% year over year.
- The Aerospace segment’s sales totaled $213 million, marking a significant 96% increase from the year-ago quarter’s figure.
Margin Profile
In the reported quarter, Barnes’ cost of sales increased 44% year over year to $304.4 million. Despite selling and administrative expenses rising 4.5% to $81.4 million, the company’s adjusted operating income surged by 36% year over year to $47.7 million, with the margin increasing 30 basis points to 11.5%.
Balance Sheet & Cash Flow
At the end of the fourth quarter, Barnes had cash and cash equivalents of $89.8 million compared with $76.9 million recorded at the end of 2022. However, long-term debt increased from $569.6 million at the end of 2022 to $1,280 million. It’s notable that the company generated net cash of $112.4 million from operating activities in 2023, a significant increase from the $75.6 million generated in the year-ago period.
2024 Outlook
Looking ahead to 2024, Barnes anticipates a 12-16% year-over-year increase in total sales and a 4-8% organic sales growth. The company projects an adjusted operating margin of 12-14% and an adjusted EBITDA margin of 20-22%. Furthermore, it expects GAAP earnings of $0.94 to $1.19 per share, with adjusted earnings ranging between $1.55 and $1.80.
Zacks Rank & Stocks to Consider
While Barnes currently carries a Zacks Rank #3 (Hold), some better-ranked companies from the same space are:
- Parker-Hannifin Corporation (PH) holding a Zacks Rank #2 (Buy).
- Flowserve Corporation (FLS) currently ranked 2 by Zacks.
- Ingersoll-Rand plc (IR) also presently holding a Zacks Rank of 2.
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