Barnes Group Inc. (B Quick QuoteB - Free Report) reported adjusted earnings of 38 cents per share in first-quarter 2024, surpassing the Zacks Consensus Estimate of 35 cents. However, the bottom line declined 19% year over year due to the increasing cost of sales.

Inside the Headlines

Total revenues of $430.6 million beat the Zacks Consensus Estimate of $425 million. The top line increased 28.4% year over year, with organic sales growth of 4%.

Barnes Group reports revenues under two heads, namely Industrial and Aerospace. A brief snapshot of segmental sales is provided below:

Revenues from the Industrial segment amounted to $209 million, down 4% year over year. Also, organic sales were down 4% year over year. Our estimate for segmental revenues was $195.4 million.

The Aerospace segment’s sales totaled $221 million in the first quarter, up 89% year over year. Organic sales increased 19%, and acquisition-boosted sales rose 70%. The upside can be attributed to an 85% surge in Aerospace original equipment manufacturing sales and a 94% rise in aftermarket sales. Our estimate for segmental revenues was $229 million.

Margin Profile

In the reported quarter, Barnes Group’s cost of sales increased 32.6% year over year to $300.1 million. Selling and administrative expenses increased 5.9% to $90.9 million.

Adjusted operating income was $51.1 million, up 37.4% year over year, while the margin increased 80 basis points to 11.9%.

Balance Sheet & Cash Flow

At the end of the first quarter, Barnes Group had cash and cash equivalents of $81.6 million compared with $89.8 million recorded at the end of 2023. Long-term debt was $1.29 billion, up from $1.28 billion at the end of 2023. Liquidity available in the quarter included cash of $82 million and credit under revolving facilities of $344 million.

In the first three months of 2024, B used net cash of $2.3 million from operating activities against $32.2 million generated in the year-ago period. Capital expenditures totaled $12.8 million, up 17.4% year over year. Free cash outflow was $15.2 million against free cash inflow of $21.3 million a year ago.

In the first three months of 2024, Barnes Group rewarded its shareholders with dividends of $8.1 million, nearly flat year over year.

2024 Outlook

For 2024, Barnes Group expects total sales to increase in the range of 13-16% year over year and organic sales to grow 5-8%. Adjusted operating margin is estimated to be 12-14%, while adjusted EBITDA margin is projected to be 20-22%.

GAAP earnings are projected to be between $1.08 per share and $1.28 per share, while adjusted earnings are expected in the band of $1.62-$1.82.

For 2024, management expects capital expenditures of $60-$70 million, while free cash flow is likely to be between $75 million and $85 million. The adjusted effective tax rate is forecast] to be 31-33% for the year.

Zacks Rank & Stocks to Consider

Barnes Group currently carries a Zacks Rank #4 (Sell). Some better-ranked companies from the same space are discussed below:

Applied Industrial Technologies, Inc. (AIT Quick QuoteAIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has increased 1.2% in the past 60 days.

Ingersoll Rand plc (IR Quick QuoteIR - Free Report) currently carries a Zacks Rank of 2 (Buy). IR delivered a trailing four-quarter average earnings surprise of 15.9%.

In the past 60 days, the Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 1.6%.

Luxfer Holdings (LXFR Quick QuoteLXFR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 82.7%.

In the past 60 days, the Zacks Consensus Estimate for LXFR’s 2024 earnings has increased 111.4%.