As Barnes Group continues its ongoing restructuring process under a new CEO, the Bristol-based aerospace and industrial manufacturer announced Friday that its fourth-quarter profits declined 44.7%.
Barnes Group said that its net income for the fourth quarter was $15.6 million, or 30 cents per share, compared to $28.1 million, or 55 cents per share, a year ago.
The company’s fourth quarter revenues were $313 million, up 0.8%. Organic orders in both its industrial and aerospace segments were up by double digits in the fourth quarter. Headed into 2023, the aerospace segment has a backlog of $760 million and the industrial segment has a backlog of $260 million.
“Given ongoing labor productivity challenges, COVID-related absenteeism in our China operations and gross inflation concerns, it reflects some progress but not sufficient progress,” CEO Thomas Hook said of the company’s fourth quarter performance.
Several months after announcing a multi-phase restructuring last summer, Barnes gave some more details about its changes during an earnings call Friday.
In the company’s industrial segment, two strategic business units — engineered components and force and motion control — have been combined to create motion control solutions. A portion of savings from combining these units will be reinvested into enhancing the new unit’s salesforce to “drive top line growth,” Hook said.
Hook said the company is continuing to execute on the first two phases of the restructuring announced in July and October. As part of the company’s phase two actions in the fourth quarter of 2022, Barnes has consolidated one of its molding solutions sensor facilities into other operations. The company has also “eliminated the central structure” of its innovation hub, Hook said, which he called a “demonstrable step to rationalize overhead.”
“We remain focused on innovation and believe we are best served driving R&D from within the business in closer proximity to customer revenue generation,” Hook said.
Year performance
On the year, net income for 2022 was $13.5 million, or 26 cents per share, compared to $99.9 million, or $1.96 per share, a year ago.
Net sales in 2022 were $1.26 billion, up 0.2% from 2021’s $1.25 billion.
When asked why year-over-year performance hasn’t shown significant improvement since the restructuring efforts kicked off, Chief Financial Officer Julie Streich said savings as a result of the process haven’t been realized yet. The company said last year it expects to save about $26 million annually following the full rollout of changes.
“We are underway with the restructuring actions … we’re not expecting to see run-rate benefits for quite some time,” Streich said. “There’s an expense output and a delay between the activities getting kicked off, the facilities closing, the products transitioning, until when we see the results go through to the bottom line.”
The company said it expects organic sales growth of 6% to 8% in 2023 with an adjusted operating margin between 12.5% to 13.5%.
