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Barnes Group Inc. (B)
Q2 2018 Earnings Conference Call
April 27, 2018 8:30 AM ET
William Pitts – Director-Investor Relations
Patrick Dempsey – President and Chief Executive Officer
Chris Stephens – Senior Vice President-Finance and Chief Financial Officer
Christopher Glynn – Oppenheimer
Michael Ciarmoli – SunTrust
Edward Marshall – Sidoti
Pete Skibitski – Drexel
Timothy Wojs – Baird
Matt Summerville – Alembic
Previous Statements by B
» Barnes Group's (B) CEO Patrick Dempsey on Q4 2017 Results - Earnings Call Transcript
» Barnes Group's (B) CEO Patrick Dempsey on Q3 2017 Results - Earnings Call Transcript
» Barnes Group's (B) CEO Patrick Dempsey on Q2 2017 Results - Earnings Call Transcript
» Barnes Group's (B) CEO Patrick Dempsey on Q1 2017 Results - Earnings Call Transcript
I would now like to turn the conference over to William Pitts, Director of Investor Relations, please go ahead.
Good morning, and thank you for joining us for our First Quarter 2018 Earnings Call. With me are Barnes Group's President and Chief Executive Officer, Patrick Dempsey; and Senior Vice President of Finance and Chief Financial Officer, Chris Stephens.
If you have not received a copy of our earnings press release, you can find it on the Investor Relations section of our corporate website at bginc.com. During our call, we will be referring to the earnings release supplement slides, which are also posted on our website. Included in our slides for this quarter is information related to the impact of U.S. tax reform, which Chris will cover shortly.
Our discussion today includes certain non-GAAP financial measures, which provide additional information, we believe, is helpful to investors. These measures have been reconciled to the related GAAP measures in accordance with SEC regulations. You will find a reconciliation table on our website as part of our press release and in the Form 8-K submitted to the SEC.
In addition, with our adoption of the FASB’s amended its guidance, for the presentation of pension costs, you'll find a summary of the reclassification adjustments made to our previously recorded financial results on our Investor Relations website and in this morning’s separate Form 8-k submitted to the SEC.
Be advised that certain statements 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 subject to risks and uncertainties that may cause actual results to differ materially from those projected. Please consider the risks and uncertainties that are mentioned in today's call and are described in our periodic filings with the Securities and Exchange Commission. These filings are available through the Investor Relations section of our corporate website at bginc.com.
We'll now open today's call in our usual fashion with remarks from Patrick, followed by a review of our first quarter results and our updated 2018 outlook from Chris. After that, we'll open up the call for questions. Patrick?
Thanks, Bill, and good morning, everyone.
Barnes Group opened the year with solid first quarter performance, exceeding the expectation we had shared with you on our February call. In doing so we now have heightened expectations for 2018 and our end markets remain generally favorable in support of this enhanced outlook. We ended the quarter with record backlog in each of our segments and total backlog now exceeds $1.1 billion.
In the first quarter, net sales increased 7% with each segment seeing an increase. Organic sales were up 1%, primarily driven by aerospace strength, while industrial organic sales were down slightly as foreign exchange provided the revenue lift there.
Operating income was essentially flat to last year's first quarter and earnings per share improved to $0.72, up from an adjusted $0.71 a year ago. At our Industrial Segment, sales grew 8% over the prior year period. So our organic sales declined slightly. With healthy end markets and favorable FX, we saw a record quarter for orders, which were up 12% in total. Organic orders were up mid-single digits. This result was achieved even with the non-recurrence of a sizable heavy duty suspension order in our Nitrogen Gas Products business, that we booked in Q1 last year. As such we're feeling positive about our prospects for the remainder of 2018.
At Molding Solutions, total sales increased 15% while organic sales were essentially flat. Sales in the quarter were impacted in part by mold validation time issues. And while the molds have been manufactured, revenue recognition doesn't occur until final validation and customer acceptance. While we see some to leverage shifting to the right, we still expect Molding Solutions to deliver higher quarterly sales in the three remaining quarters.
Within the SBU and with respect to hot runners, we anticipate automotive program launch trend in both Europe and Asia to offset softening demand in North America, given the exceptional year there in 2017. With our molds business we see very strong medical and personal care end markets with a corresponding benefit for hot runners. In particular, Männer generated record quarterly orders and saw a backlog increase to an all time high in the first quarter. For the year we continue to forecast Molding Solutions sales growth in the opened the year.
Moving to Nitrogen Gas Products, the global tool and die market has maintained its strength entering the year. And while we don't envision significant - excuse me, and while we don't envision significant growth over the record 2017, sales level we remain positive in our outlook. In the quarter, organic sales declined 7% relative to last year's strong first quarter. So keep in mind that this quarter sales are sustained at a high level.