Yahoo Finance Barnes Group Inc (B) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth and Strategic ...
First Quarter Revenue: $431 million, up 28% reported, 4% organic.
Adjusted EBITDA: $80 million, up 38%.
Adjusted EBITDA Margin: Increased by 130 basis points.
Net Cash Proceeds: Approximately $150 million from divestiture, used to reduce debt.
OEM Backlog: Grew to $1.46 billion, up 19% since December 2023.
Aerospace Revenue: Expected to reach $1 billion annually by 2025.
Adjusted Net Income Per Share: $0.38, down from $0.47 year-over-year.
Free Cash Flow: Negative $15.2 million.
Net Debt to EBITDA Ratio: Improved to 3.62 times.
Full Year Sales Outlook: Expected to increase by 13% to 16%, with organic growth of 5% to 8%.
Adjusted EPS Guidance: Between $1.62 and $1.82, reflecting improved performance and financial adjustments.
Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: On the second half, better in industrial. I've heard that probably a number of times over the course of my covering Barnes in the last 20 years, what underpins the second half better outlook for industrial today versus what the Company has talked about in the past that, again, just seemingly hasn't come to fruition more times than not. So help me with that first, please. A: Thomas Hook - Barnes Group Inc - President, Chief Executive Officer, Director: Certainly, Matt, thanks for the question. Last year largely was for the industrial portfolio, implementing the strategy of integrate, consolidate and rationalize. It was standing up teams to do the transformation, integrating the management teams and putting them in place, which took place in the third and fourth quarter of last year, which gave us a real solid foundation start on the integration side, series of transformation projects were implemented last year, we had to stand up the systems to manage those transformation projects. So heading in to 2024, we have a much stronger foundation to kick the year off. Handsets delivered some very nice solid results as we've closed the first quarter that momentum in those teams that have been in place have significantly on a sequential basis, improved penetration through the commercial market. Excellence initiatives into the market are overall sales funnel is healthier. Our overall look into the markets are healthier and it's resulting in sequential orders increase on all the businesses that we have in industrial. And it's that momentum and the effect of the full year of the transformation project savings coming into effect that make that trajectory into the second half stronger. We're not expecting any macro shifts in the markets, but it's just our operational performance and execution that will deliver against that and we feel very well positioned to do that.
Q: Got it. And you think the bigger picture around the industrial segment today, do you view any of these businesses as core at this juncture? A: Thomas Hook - Barnes Group Inc - President, Chief Executive Officer, Director: And just to review the $38 million of run rate savings, how much will be actually realized from the towards the 30 run rate number you build to get that. So how much is actually realized ex spring and heavy in '24 versus what was actually realized in the P&L in '23? Thank you. That was sort of a big picture perspective, I'll give you the macro and then I'll let Julie talk to the run rate savings on the $38 million big picture perspective is we're strategically looking at the entire industrial portfolio, how it is comprised of six together and evaluating all of our strategic alternatives that's been started in 2023 has been a very active process. Indeed, this year we hit a clear major milestone exiting automotive components with the Associated Spring and Panini divestiture. We're looking at all the other business for how they fit into Barnes Industrial portfolio evaluating our alternatives, nothing to communicate at this time, we mark our macro perspective on the synergies. We expect to be able to anticipate the full extent of those synergies in 2024 for industrial that we've outlined as we head into 2025 part of the three-year program. But I'll Julie give you the progression of how that incrementally works in from last year to this year from a numbers perspective.
Q: Hey, good morning. And so that's is good news for you and CMT. Cfm 56 kind of shop visit PQX expansions here. And just a question on our free cash flow guidance, I believe it on adjusted. So curious what the current year impacts are. You gave us the deal taxes, so that $16 million comes back next year and done, but in terms of other transaction costs, restructuring, cash, et cetera. So we can think about a bridge to open otherwise clean operating cash number. A: Thomas Hook - Barnes Group Inc - President, Chief Executive Officer, Director: It is I'll let Julie answer the free cash flow guidance question. But yes, we I would reiterate the aftermarket. Cfm56 expansion is very good news. And given our positioning with expansions in our MRO facilities, both in the Americas and in Singapore, we feel very well-positioned on the aftermarket side to respond to increase requirements from customers to grow the aftermarket business going forward. And I think that does really position the aerospace aftermarket. Well, prospectively, I'll let Julie talk to the free cash flow guidance question met, Chris.
Q: Hi, good morning, guys. On two micromolar. Um, I was curious, you guys called out lower productivity in some of your aerospace facilities. Can you give any more detail on that if you kind of what the drivers were with that? And then also, do you have any idea of the sales trajectory within MD moving forward? That would also be great. A: Thomas Hook - Barnes Group Inc - President, Chief Executive Officer, Director: Thank you. It is from a aerospace side, we can address very nicely in the aftermarket, our aerospace aerospace, aftermarket facility, productivity issues on the aftermarket side. Now, where not only are you adding capacity in the Americas and Asia. We've also corrected the operational productivity issues we had and that aftermarket facility and the OEM side, we have a mix of both supply chain challenges, supply chain inputs, which are in that if symmetrical there have jumpy as well as we have some labor productivity in the plants with lower tenured employees and inefficiencies on the goods side is we have each of those facilities identified. We have made leadership changes. We put in additional resources. We brought in external resources now that are helping that corrective action journey to get that resolved in those situations. And we are expecting good progress over the course of 2024 to directly address those more aggressively. And we're for the second half of the year. We're projecting that we'll be able to work our way out of those challenges just like we did the aftermarket facility. We can't control the supply chain on a symmetries, but we are expecting relief over the course of the second half of the year on some of that supply chain and consistency that hurts OEM production flow. And we're expecting that also to be a positive, Sam as well. I didn't quite catch your question then. And the second part of your question, could you just repeat that?
Q: Hi, good morning. Tom and Julie, I'm on for Myles Walton today. And I wanted to add one quick question on So kind of taking into account everything we talk about so far in aerospace guy getting kicked up at the bottom end on. Can you just talk about the moving pieces? So your latest 2024 sales outlook for OE aftermarket RSP, any major changes you're talking about? A: Thomas Hook - Barnes Group Inc - President, Chief Executive Officer, Director: I'll give a little macro and then Julie can chime in. Is we expect, obviously, with some of the changes on the new deliveries of aircraft, well,
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
