Barnes Group Q3 Earnings: Aerospace Sales Jump 49%, Suspends Guidance Due To Buyout By Apollo

Barnes Group, Inc. B reported a third-quarter FY24 sales increase of 7% year-over-year to $388 million (organic sales: +4%), beating the consensus of $380.3 million.

The net impact of acquisition and divestiture-related sales contributed about 3% to revenue, while foreign exchange fluctuations added approximately 1%.

In Aerospace segment, sales surged 49% to $232 million. Original equipment manufacturing (OEM) sales rose by 38%, and aftermarket sales surged by 67%.

Aerospace OEM backlog ended the third quarter at $1.80 billion, up 19% sequentially.

In the Industrial segment, sales stood at $156 million, down 24% due to the sale of the Associated Spring and Hänggi businesses. 

Total adjusted operating income rose 23% to $47.9 million, with adjusted operating margin increasing 150 bps to 12.3%.

Adjusted EBITDA increased 16% to $76.9 million, with an adjusted EBITDA margin of 19.8%, up 140 bps from a year ago.

Adjusted EPS of $0.09 missed the consensus of $0.39.

Year-to-date, operating cash flow stood at $49.8 million and free cash flow (adjusted for the tax payments related to the divestiture) came in at $20.4 million.

Thomas J. Hook, President and Chief Executive Officer, said, “In the third quarter, despite ongoing production delays from aircraft manufacturers, our Aerospace OEM business generated extraordinarily strong orders in anticipation of a future industry re-ramp. Meanwhile, our Aerospace aftermarket business continues to deliver robust performance on strong top-line growth.”

”With the MB Aerospace integration and synergies progressing ahead of plan, we are delivering on our strategy to scale Aerospace and transform Barnes.”

This month, Barnes inked a deal to be acquired by funds managed by affiliates of Apollo Global Management, Inc. APO in an all-cash transaction valued at around $3.6 billion.

The agreement stipulates that Barnes shareholders will receive $47.50 per share in cash, representing a premium of about 22% over the undisturbed closing share price on June 25, 2024.

Given the pending acquisition, the company will not hold a conference call or webcast for the quarter and is also suspending its full-year 2024 financial guidance.

Price Action: B shares closed higher by 0.06% at $46.70 on Thursday.

Photo: Courtesy of Pasuwan via Shutterstock

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