QUOTE AND NEWS
Benzinga  Mar 14  Comment 
Barnes Group Inc. (NYSE: B), an international industrial and aerospace manufacturer and service provider, today announced the planned closure of production operations at its Associated Spring facility located in Saline, Michigan. The Saline...
SeekingAlpha  Feb 21  Comment 
Start Time: 08:30 End Time: 09:34 Barnes Group Inc. (B) Q4 2013 Earnings Conference Call February 21, 2014, 08:30 AM ET Executives William Pitts - Director of IR Patrick J. Dempsey - CEO and President Christopher J. Stephens -...
StreetInsider.com  Feb 21  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Barnes+Group%2C+Inc.+%28B%29+Tops+Q4+EPS+by+5c%3B+Issues+Light+FY14+EPS+Outlook/9200163.html for the full story.
StreetInsider.com  Feb 12  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Dividends/Barnes+Group%2C+Inc.+%28B%29+Declares+%240.11+Quarterly+Dividend%3B+1.2%25+Yield/9158676.html for the full story.
Benzinga  Feb 10  Comment 
Below are the top small-cap industrial equipment & components stocks on the NYSE and the NASDAQ in terms of operating margin. The trailing-twelve-month operating margin at Sun Hydraulics (NASDAQ: SNHY) is 26.70%. Sun Hydraulics' ROE for the...
StreetInsider.com  Jan 14  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Upgrades/Jefferies+Upgrades+Barnes+Group+%28B%29+to+Buy%3B+%2444+PT/9052045.html for the full story.
DailyFinance  Jan 9  Comment 
Barnes Group Inc. (NYSE: B) today announced that its fourth quarter 2013 and full year results will be made public on Friday, February 21, 2014, before the market opens, and that the fourth quarter and full year 2013 results...
Benzinga  Dec 23  Comment 
Below are the top small-cap industrial equipment & components stocks on the NYSE and the NASDAQ in terms of dividend yield. Chase (NYSE: CCF) has a dividend yield of 1.40%. Chase's shares closed at $31.98 on Friday. Barnes Group (NYSE: B)...
DailyFinance  Dec 19  Comment 
Barnes Group Inc. (NYSE: B), an international industrial and aerospace manufacturer and service provider, today announced classification for cash distributions for the 2013 calendar year to assist its stockholders in their tax...
Benzinga  Nov 20  Comment 
In a report published Wednesday, Jefferies analyst R. Scott Graham reiterated a Hold rating on the Barnes Group (NYSE: B) and raised the price target from $37.00 to $38.00. In the report, Jefferies says "Aerospace OE sales have performed well...




 

Barnes Group (B) makes parts used in a range of manufacturing and industrial applications, from parts for jet engines to mechanical springs. The company's customers are found in markets ranging from farm equipment to medical devices and include General Electric, Rolls-Royce, and the U.S. Department of Defense.

The company's international exposure is larger than its international sales, because a good portion of Barnes Group's sales to its biggest client, GE, are destined for international end markets even though they are booked as domestic sales.[1] General Electric and its affiliates accounted for 21% of the company’s total sales in 2009.[2]

A number of Barnes Group's major customers operate in the transportation and aerospace markets, exposing the firm to two cyclical industries[3]. Lower consumer demand for the products of Barnes Group's customers means lower production levels and less demand for the parts used to make those products. Barnes Group is making efforts to limit its exposure to lower margin businesses in the auto industry. Demand for airplanes has remained strong in spite of the tougher economic environment and rising fuel costs.

Barnes Group has a large backlog ($428 million at the end of 2009) which partially insulates the company from economic shocks.[2]

Company Overview

The products and services provided by Barnes Group are critical components for far-reaching applications in transportation, communication, manufacturing and technology.

Business and Financial Metrics

First Quarter 2010 Results[4]

Barnes reported net income of $11.8 million, or $0.21 per diluted share, compared to $11.5 million, or $0.22 per diluted share in the first quarter of 2009. Barnes Group's first quarter 2010 sales totaled $278.1 million, an increase of 6 percent from $262.2 million in the first quarter of 2009.

Business Segments[2]

Barnes Group has two business segments: Logistics and Manufacturing Services and Precision Components.

Logistics and Manufacturing Services

Logistics and Manufacturing Services provides value-added logistical support and repair services, including inventory management, technical sales, and supply chain solutions for maintenance, repair, operating, and production supplies and services. Repair services provided include the manufacturing of spare parts for the refurbishment and repair of highly engineered components and assemblies for commercial and military aviation

Products and services from this segment are available in more than 32 countries.

The aerospace aftermarket business competes with aerospace original equipment manufacturers (“OEMs”), service centers of major commercial airlines and other independent service companies for the repair and overhaul of turbine engine components.

In 2009 sales by Logistics and Manufacturing Services to its largest customer, General Electric Company, accounted for approximately 16% of its total sales and sales to its next two largest customers accounted for approximately 8% of its total sales.

Precision Components

Precision Components is a global supplier of engineered components for critical applications focused on providing solutions for a diverse industrial, transportation and aerospace customer base. It is equipped to produce virtually every type of precision spring, from fine hairsprings for electronics and instruments to large heavy-duty springs for machinery as well as precision-machined and fabricated components and assemblies for OEM turbine engine, airframe and industrial gas turbine builders throughout the world, and the military. It is also the largest manufacturer and supplier of precision mechanical springs, compressor reed valves and nitrogen gas products based in North America and among the world’s largest manufacturers of precision mechanical products and nitrogen gas products. Precision Components also manufactures high-precision punched and fine-blanked components used in transportation and industrial applications, nitrogen gas springs and manifold systems used to precisely control stamping presses, and retention rings that position parts on a shaft or other axis.

Precision Components competes with a broad base of large and small companies engaged in the manufacture and sale of custom metal components and assemblies while the aerospace manufacturing business competes with both the leading jet engine OEMs and a large number of machining and fabrication companies.

Sales by Precision Components to its largest customer, General Electric, accounted for approximately 27% of its sales in 2009. Sales to its next five largest customers in 2009 accounted for approximately 18% of its total sales.

Trends and Forces

Barnes Group's sales are affected by the strength of the dollar

With 40% of sales coming from outside the U.S., Barnes Group's earnings are greatly impacted by the relative strength of the dollar[5]. Barnes Group owns manufacturing, sales and distribution facilities around the world, and the majority of its foreign operations use the local currency as their functional currency. These include the Brazilian real, British pound sterling, Canadian dollar, Chinese yuan, Euro, Korean won, Mexican peso, Singapore dollar, Swedish krona, Swiss franc and Thai baht. Barnes Group does not engage in speculative currency hedging.

Demand for Barnes Group products internationally is understated because a good portion of Barnes Group's sales to its biggest client, GE, although counting as domestic sales, is actually for end markets that are international. If international sales growth continues to outpace domestic sales growth, a weakening dollar will have favorable results on the company's earnings.

Barnes Group's major customers operate in cyclical industries

A substantial portion of Barnes Group's customers (AirBus, Lockheed Martin (LMT), Volvo, Goodrich Corporation, etc) are found in the transportation and aerospace markets, two generally cyclical industries[6]. When consumer demand is high, production levels rise along with demand for Barnes Group's engineered components. Conversely, when consumer demand is weak, production levels fall along with demand for the parts used to make those goods. In the transportation market, automakers and heavy-duty trucks have seen softer demand as gas prices continue to climb and consumers tighten their spending. This in turn translates into lower demand from auto manufacturers for Barnes Group's products. However, demand for airplanes has remained fairly strong even given the current economic downturn and rising fuel prices, powered mainly by increased demand from countries like China and India.

Barnes Group faces client concentration issues

Although Barnes Group's customer list numbers in the hundreds, a significant portion of its earnings depend on a small number of core customers. General Electric and its affiliates accounted for 21% of the company’s total sales in 2009.[2] Additionally, 20% of BI's sales were to its three largest customers[7]. A loss of any one of these core customers will significantly impair the company's earnings.

Competition

Barnes Group faces numerous competitors in each of its business segments. BA competes with leading jet engine manufacturers and a number of machining and fabrication companies like Ladish (LDSH) and Triumph Group (TGI). BD's competitors include Fastenal Company (FAST), Lawson Products (LAWS), W.W. Grainger (GWW) and MSC Industrial Direct Company (MSM). BI's closest competition is from firms that manufacture and sell custom metal components like NHK Spring and Chuo Spring.

Barnes Group vs. Competitors
Company Revenue (millions USD) Net Income (millions USD) Active Customers Orders Entered Backlog (millions USD) New Orders (millions USD)
Barnes Group $1,440[8] $101[9] $580[10]
Ladish (LDSH) $425[11] $32[12] $611[13] $534[14]
Triumph Group (TGI) $1,151[15] $67[16] $1,278[17]
W.W. Grainger $6,418[18] $420[19]
MSC Industrial Direct Company (MSM) $1,688[20] $174[21] 390[22] 5,729[23]



References

  1. B 2007 10K, Item 1A, pg.5
  2. 2.0 2.1 2.2 2.3 Barnes Group 2009 Annual Report
  3. B 2007 10K, Item 1A, pg.10
  4. Barnes Group Investor Relations
  5. B 2007 10K, Item 1A, pg.5
  6. B 2007 10K, Item 1A, pg.10
  7. B 2007 10K, Item 1A, pg.5
  8. B 2007 10K, Item 6, pg.16
  9. B 2007 10K, Item 6, pg.16
  10. B 2007 10K, Item 1, pg.3
  11. LDSH 2007 10K, Item 6, pg.14
  12. LDSH 2007 10K, Item 6, pg.14
  13. LDSH 2007 10K, Item 1, pg.6
  14. LDSH 2007 10K, Item 1, pg.6
  15. TGI 2007 10K, Item 6, pg.27
  16. TGI 2007 10K, Item 6, pg.27
  17. TGI 2007 10K, Item 1, pg.14
  18. GWW 2007 10K, Item 6, pg.10
  19. GWW 2007 10K, Item 6, pg.10
  20. MSM 2007 10K, Item 6, pg.24
  21. MSM 2007 10K, Item 6, pg.24
  22. MSM 2007 10K, Item 6, pg.24
  23. MSM 2007 10K, Item 6, pg.24
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