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Barnes Group Inc. (B)
Q1 2008 Earnings Call
May 2, 2008 8:30 pm ET
Brian D. Koppy – Director of Investor Relations & Communications
Gregory F. Milzcik – President, Chief Executive Officer & Director
William C. Denninger – Chief Financial Officer, Senior Vice President Finance & Director
Analyst for Peter Lisnic – Robert W. Baird
Christophe Glynn – Oppenheimer
Edward Marshall – Sidoti & Company
Matt J. Summerville – KeyBanc Capital Markets
[David Sacks – Hoffy Capital]
Previous Statements by B
» Barnes Group Inc. Q3 2009 Earnings Call Transcript
» Barnes Group Inc. Q4 2008 Earnings Call Transcript
» Barnes Group Inc. Q3 2008 Earnings Call Transcript
Brian D. Koppy
This is Brian Koppy, Director of Investor Relations and Communications for Barnes Group and with me this morning are Barnes Group President and CEO Greg Milzcik and Senior Vice President of Finance and Chief Financial Officer Bill Denninger.
I want to remind everyone that certain statements that we make on today’s call both during the opening remarks and during the question and answer session may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subjects to risk and uncertainties that may cause actual results to differ materially from those contained in the financial statements.
We encourage everyone to consider these risks and uncertainties that are described in our periodic filings with the Securities & Exchange Commission which are available through the investor relations section of our corporate website at www.BarnesGroupInc.com.
Our detailed press release was issued this morning and we hope you’ve had a chance to review it. As a result we will begin today’s call with only a brief opening statement by Greg Milzcik and then open the call up to answer your questions.
Now, let me turn the call over to Greg.
Gregory F. Milzcik
As you saw in the press release this morning Barnes Group has a record start for the year driven by strong performance across the businesses. Revenues were up 8% with strong organic growth at Barnes Aerospace. Earnings per diluted share were $0.60 and increase of 20% over last year and we raised our full year outlook to $2.30 to $2.39 a share, an increase of approximately 33% over 2007 results.
Importantly, sales and operating profit per employee were both up 18% and 10% respectively in the quarter. These key productivity measures are being driven by our enterprise wide operational improvements. As our business landscape becomes more competitive and the economic environment becomes more uncertain a fully integrated operating system which standardizes, aligns and enhances our operations will enable us to continue to meet and exceed our customer’s expectations for service, quality and delivery.
Our businesses are demonstrating continued improvement. Barnes Aerospace delivered 23% top line growth along with a 33% operating profit growth. Sales in the commercial aerospace manufacturing businesses are expected to continue to grow based on the strong commercial engine order backlog.
Increased outsourcing trends, capability expansion and strategic platform positioning are expected to add to Barnes Aerospace growth potential. In addition, our current backlog does not reflect the nearly 1,000 Boeing 787 aircraft scheduled for delivery over the next eight years. Capacity expansion, new product introduction and enterprise wide investments along with a dynamic industrial setting including globalization and dollarization efforts should enable Barnes Aerospace to continue to deliver solid results throughout the rest of the year and beyond.
Turning now to Barnes Distribution, during the first quarter we realized a number of benefits from the organizational and operational initiatives undertaken in 2007 which reaffirm our expectations for continued momentum throughout the rest of the year. We believe we have made substantial progress within Barnes Distribution North America.
We are focused on targeted market segment initiatives and a change in sales force compensation which focuses on market pricing, customer retention and penetration and adding new customers to our core markets. However, Barnes Distribution Europe and specifically the United Kingdom had results which underperformed our expectations during the first quarter.
We have taken aggressive actions to solidify and stabilize the business including a new management team, added focus on operational efficiencies through deployment of lean experts and we have expanded our successful global sourcing efforts to include our European businesses. As we move throughout the year improved performance in Europe is expected as a result of these actions and the strengthening of our fulfillment operations and the recruitment of sales representatives in certain territories.
Barnes Industrial continues to benefit from its globally diverse businesses. Strong growth from Barnes Industrial’s businesses in Asia and Europe are providing balance within the group as North American businesses have seen pressure in the transportation and consumer home products end markets.
As of the end of the first quarter approximately 59% of Barnes Industrial sales were from outside North America. Barnes Industrial will continue to implement operational improvements to enhance its market competitiveness, grow profitably and expand its global presence and customer base.
In summary, we expect the momentum to continue throughout 2008 as we realize the benefits of our global diversification strategy and drive process improvements and cost reduction activities. Barnes Group ongoing operational improvements including lean enterprise and systematic goal deployment, key elements within an integrated operating system will continue to help drive the company’s business activities to new levels of efficiency and effectiveness to meet the customers’ needs and improve their performance.
We are looking forward to a successful 2008 with increased stock holder value and remain committed to positioning all of our businesses for consistent sustainable and predictable profitable growth over the long term.