Bristol-based aerospace and industrial manufacturer Barnes Group said its profits fell nearly 13% in the first quarter, which was better than expected given the ongoing COVID-19 pandemic.
For the three months ended March 31, Barnes reported profits of $29.7 million, or 58 cents per diluted share, down from $34 million, or 65 cents, in the first quarter of 2019.
The drop came as net sales fell 12.2% led by declines in the company’s industrial segment.
Despite that sales decrease, a combination of lower expenses and cost of sales helped Barnes maintain its operating income, which was down 2.6% from the year-ago level.
Higher income taxes, related to the company’s Seeger divestiture, were the main driver of the lower profits.
The company also announced that its top executives will be taking pay cuts amid economic uncertainty from the pandemic.
“First quarter 2020 business performance unfolded ahead of our expectation, as record aerospace aftermarket sales and operating profit drove the results,” CEO Patrick J. Dempsey said in a statement.
“However, during March, as the COVID-19 pandemic spread globally, we began to experience pressure in several of our end markets.”
Barnes’ shares were trading around $36.50 before noon Friday, down from their Thursday closing price of $37.56. That’s down from $63.27 at the start of 2020.
Barnes pulled its full-year 2020 guidance earlier this month, and said Friday that the current environment “does not allow for the forecast of performance with reasonable precision.”
The company expects the global shutdown in several of its end markets to significantly impact second quarter financials. Organic sales are expected to fall 30%, with an operating margin of 8.5% to 10%.
“The company believes that a recovery will commence in the third quarter, though the pace of the recovery is not readily determinable at the present time,” Barnes said Friday.
The company has enacted temporary pay reductions and employee furloughs, it said, but did not disclose how many have been impacted.
The board of directors on Thursday approved pay cuts for executives, including Dempsey, who will see his pay reduced it by 30%, effective May 1 until Oct. 31. Other corporate officers will take a 15% cut to their base salaries, through the end of July, and non-management board members have elected to reduce their annual cash retainers and other fees by 15% to 30% for the next three months, according to a U.S. Securities & Exchange Commission filing.
